-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MWk6LVdjiTWsdl1zzdGSsd5PG9+yi5TWbf0s9zAQJpyhLsJAc+WW+qbvg/+fydMy 5AYh5CByjveIHe3Q9263xw== 0000898904-01-500009.txt : 20010524 0000898904-01-500009.hdr.sgml : 20010524 ACCESSION NUMBER: 0000898904-01-500009 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 30 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010523 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMTRAN INC CENTRAL INDEX KEY: 0000898904 STANDARD INDUSTRIAL CLASSIFICATION: AIR TRANSPORTATION, NONSCHEDULED [4522] IRS NUMBER: 351617970 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: SEC FILE NUMBER: 000-21642 FILM NUMBER: 1646400 BUSINESS ADDRESS: STREET 1: 7337 W WASHINGTON ST CITY: INDIANAPOLIS STATE: IN ZIP: 02861 BUSINESS PHONE: 3172474000 10-K/A 1 form10ka.txt United States Securities and Exchange Commission Washington, D.C. 20549 FORM 10-K/A (Amendment No. 1) [X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 2000. [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Transition Period From to ------------------------- --------------------------. Commission file number 000-21642 AMTRAN, INC. (Exact name of registrant as specified in its charter) Indiana 35-1617970 ---------------------------- ------------------------------ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 7337 West Washington Street Indianapolis, Indiana 46231 - ------------------------------------ ------------------------------ (Address of principal executive offices) (Zip Code) (317) 247-4000 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Title of each class Common Stock, No Par Value Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ______ ------- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ X ] The aggregate market value of shares of the registrant's Common Stock held by non-affiliates of the registrant (based on closing price of shares of Common Stock on the NASDAQ National Market on February 28, 2001) was approximately $34.8 million. Applicable Only to Registrants Involved in Bankruptcy Proceedings During the Preceding Five Years Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by the court. Yes ______ No ______ Applicable Only to Corporate Registrants Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practical date. Common Stock, Without Par Value - 11,380,195 shares outstanding as of February 28, 2001. List hereunder the following documents if incorporated by reference and the Part of the Form 10-K into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933. Portions of the Amtran, Inc. Proxy Statement to be filed within 120 days after the close of the last fiscal year are incorporated by reference into Part III. NOTE On April, 2, 2001, Amtran, Inc. filed its Annual Report on Form 10-K for the fiscal year ended December 31, 2000. The purpose of this amendment is to refile Exhibits 3.(i)(b), 3.(i)(c), 4.9, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16, 4.17, 4.18, 4.19, 10.5, 10.6(a)-10.6(n) and 10.7 to include conformed signatures indicating that the agreements have been executed. In addition, the contents of Exhibits 10.5 and 10.7 are being refiled as one document. Signatures Pursuant to the requirement of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. AMTRAN, INC. -------------------------------- (Registrant) Date May 23, 2001 by /s/ J. George Mikelsons ------------------------------- ------------------------------------ J. George Mikelsons Chairman On behalf of the Registrant and as Director Date May 23, 2001 /s/ John P. Tague ------------------------------- ------------------------------------ John P. Tague President and Chief Executive Officer Director Date May 23, 2001 /s/ James W. Hlavacek -------------------------------- ------------------------------------ James W. Hlavacek Executive Vice President and Chief Operating Officer Director Date May 23, 2001 /s/ Kenneth K. Wolff -------------------------------- ------------------------------------ Kenneth K. Wolff Executive Vice President and Chief Financial Officer Director Date May 23, 2001 /s/ Robert A. Abel ------------------------------- ------------------------------------ Robert A. Abel Director Date May 23, 2001 /s/ William P. Rogers, Jr. ------------------------------- ------------------------------------ William P. Rogers, Jr. Director Date May 23, 2001 /s/ Andrejs P. Stipnieks ------------------------------- ------------------------------------ Andrejs P. Stipnieks Director Date May 23, 2001 /s/ David M. Wing ------------------------------- ------------------------------------ David M. Wing Vice President and Controller Chief Accounting Officer Index to Exhibits Exhibit No. 3.(i)(a) Restated Articles of Incorporation of Amtran, Inc. (incorporated by reference to Exhibit 3(a) to the Registrant's Registration Statement on Form S-1 dated March 16, 1993, File No. 33-59630 (the "S-1")) 3.(i)(b) Articles of Amendment to the Restated Articles of Incorporation adopted as of September 19, 2000 3.(i)(c) Articles of Amendment to the Restated Articles of Incorporation adopted as of December 28, 2000 3(ii) Bylaws of Amtran, Inc., as amended, (incorporated by reference to Exhibit 3(b) to the S-1). 4.1 Indenture dated as of July 24, 1997, by and among Amtran, Inc., as issuer, American Trans Air, Inc., Ambassadair Travel Club, Inc., ATA Vacations, Inc., Amber Travel, Inc., American Trans Air Training Corporation, American Trans Air Execujet, Inc. and Amber Air Freight Corporation, as guarantors, and First Security Bank, N.A., as trustee (incorporated by reference to Exhibit 4.1 to the Registrant's Registration Statement on S-4 dated October 6, 1997, File No. 333-37283). 4.2 Indenture dated as of December 11, 1998, by and among Amtran, Inc., as issuer, American Trans Air, Inc., Ambassadair Travel Club, Inc., ATA Vacations, Inc., Amber Travel, Inc., American Trans Air Training Corporation, American Trans Air Execujet, Inc. and Amber Air Freight Corporation, as guarantors, and First Security Bank, N.A., as trustee (incorporated by reference to Exhibit 4.4 to the Registrant's Registration Statement on S-3 dated August 26, 1998, File No. 333-52655 (the "1998 S-3")). 4.3 First Supplemental Indenture dated as of December 11, 1998, by and among Amtran, Inc., as issuer, American Trans Air, Inc., Ambassadair Travel Club, Inc., ATA Vacations, Inc., Amber Travel, Inc., American Trans Air Training Corporation, American Trans Air Execujet, Inc. and Amber Air Freight Corporation, as guarantors, and First Security Bank, N.A., as trustee, to the Indenture dated as of December 11, 1998 (incorporated by reference to Exhibit 4.4 to the 1998 S-3). 4.4 First Supplemental Indenture dated as of December 21, 1999, by and among Amtran, Inc., as issuer, American Trans Air, Inc., Ambassadair Travel Club, Inc., ATA Vacations, Inc., Amber Travel, Inc., American Trans Air Training Corporation, American Trans Air Execujet, Inc. and Amber Air Freight Corporation, Chicago Express Airlines, Inc., as guarantors, and First Security Bank, N.A., as trustee, to the Indenture dated as of July 24, 1997 (incorporated by reference to Exhibit 4.1 to Amtran, Inc.'s Registration Statement on S-4 dated January 25, 2000, File No. 333-95371). 4.5 Pass Through Trust Agreement, dated as of February 15, 2000, between American Trans Air, Inc. and Wilmington Trust Company, as Trustee, made with respect to the formation of American Trans Air 2000-1G-O Pass Through Trust and the issuance of 8.039% Initial American Trans Air 2000-1G-O Pass Through Trust Certificates and 8.039% Exchange American Trans Air 2000-1G-O Pass Through Certificates (incorporated by reference to Exhibit 4.5 to the Registrant's Registration Statement on S-4 dated August 11, 2000, File No. 333-43606 (the "August 2000 S-4")). 4.6 Pass Through Trust Agreement, dated as of February 15, 2000, between American Trans Air, Inc. and Wilmington Trust Company, as Trustee, made with respect to the formation of American Trans Air 2000-1G-S Pass Through Trust and the issuance of 8.039% Initial American Trans Air 2000-1G-S Pass Through Certificates and 8.039% Exchange American Trans Air 2000-1G-S Pass Through Certificates (incorporated by reference to Exhibit 4.6 to the August 2000 S-4). 4.7 Pass Through Trust Agreement, dated as of February 15, 2000, between American Trans Air, Inc. and Wilmington Trust Company, as Trustee, made with respect to the formation of American Trans Air 2000-1C-O Pass Through Trust and the issuance of 9.644% Initial American Trans Air 2000-1C-O Pass Through Certificates and 9.644% Exchange American Trans Air 2000-1C-O Pass Through Certificates (incorporated by reference to Exhibit 4.7 to the August 2000 S-4). 4.8 Pass Through Trust Agreement, dated as of February 15, 2000, between American Trans Air, Inc. and Wilmington Trust Company, as Trustee, made with respect to the formation of American Trans Air 2000-1C-S Pass Through Trust and the issuance of 9.644% Initial American Trans Air 2000-1C-S Pass Through Certificates and 9.644% Exchange American Trans Air 2000-1C-S Pass Through Certificates (incorporated by reference to Exhibit 4.8 to the August 2000 S-4). 4.9 Purchase and Investor Rights Agreement dated as of December 13, 2000, between Amtran, Inc. and Boeing Capital Corporation. 4.10 Purchase and Investor Rights Agreement dated as of September 19, 2000, between Amtran, Inc. and International Lease Finance Corporation. 4.11 Pass Through Trust Agreement, dated as of December 16, 1996, among Amtran, Inc., American Trans Air, Inc. and Wilmington Trust Company, as Trustee, made with respect to the formation of American Trans Air 1996-1A Pass Through Trust and the issuance of 7.37% American Trans Air 1996-1A Pass Through Trust Certificates. 4.12 Pass Through Trust Agreement, dated as of December 16, 1996, among Amtran, Inc., American Trans Air, Inc. and Wilmington Trust Company, as Trustee, made with respect to the formation of American Trans Air 1996-1B Pass Through Trust and the issuance of 7.64% American Trans Air 1996-1B Pass Through Trust Certificates. 4.13 Pass Through Trust Agreement, dated as of December 16, 1996, among Amtran, Inc., American Trans Air, Inc. and Wilmington Trust Company, as Trustee, made with respect to the formation of American Trans Air 1996-1C Pass Through Trust and the issuance of 7.82% American Trans Air 1996-1C Pass Through Trust Certificates. 4.14 Pass Through Trust Agreement, dated as of December 23, 1997, between Amtran, Inc., American Trans Air, Inc. and Wilmington Trust Company, as Trustee, made with respect to the formation of American Trans Air 1997-1A-O Pass Through Trust and the issuance of 6.99% American Trans Air 1997-1A-O Pass Through Trust Certificates. 4.15 Pass Through Trust Agreement, dated as of December 23, 1997, between Amtran, Inc., American Trans Air, Inc. and Wilmington Trust Company, as Trustee, made with respect to the formation of American Trans Air 1997-1A-S Pass Through Trust and the issuance of 6.99% American Trans Air 1997-1A-S Pass Through Trust Certificates. 4.16 Pass Through Trust Agreement, dated as of December 23, 1997, between Amtran, Inc., American Trans Air, Inc. and Wilmington Trust Company, as Trustee, made with respect to the formation of American Trans Air 1997-1B-O Pass Through Trust and the issuance of 7.19% American Trans Air 1997-1B-O Pass Through Trust Certificates. 4.17 Pass Through Trust Agreement, dated as of December 23, 1997, between Amtran, Inc., American Trans Air, Inc. and Wilmington Trust Company, as Trustee, made with respect to the formation of American Trans Air 1997-1B-S Pass Through Trust and the issuance of 7.19% American Trans Air 1997-1B-S Pass Through Trust Certificates. 4.18 Pass Through Trust Agreement, dated as of December 23, 1997, between Amtran, Inc., American Trans Air, Inc. and Wilmington Trust Company, as Trustee, made with respect to the formation of American Trans Air 1997-1C-O Pass Through Trust and the issuance of 7.46% American Trans Air 1997-1C-O Pass Through Trust Certificates. 4.19 Pass Through Trust Agreement, dated as of December 23, 1997, between Amtran, Inc., American Trans Air, Inc. and Wilmington Trust Company, as Trustee, made with respect to the formation of American Trans Air 1997-1C-S Pass Through Trust and the issuance of 7.46% American Trans Air 1997-1C-S Pass Through Trust Certificates. 4.20 Form of Common Stock Certificate of Amtran, Inc. (incorporated by reference to Exhibit 4 to the S-1). 4.21 Form of Series A1 Preferred Stock Certificate of Amtran, Inc.+ 4.22 Form of Series B Preferred Stock Certificate of Amtran, Inc. + 4.23 Form of 1996 Class A American Trans Air, Inc. Pass Through Certificates (included in Exhibit 4.11). 4.24 Form of 1996 Class B American Trans Air, Inc. Pass Through Certificates (included in Exhibit 4.12). 4.25 Form of 1996 Class C American Trans Air, Inc. Pass Through Certificates (included in Exhibit 4.13). 4.26 Form of 1997 Class A American Trans Air, Inc. Pass Through Certificates (included in Exhibit 4.14). 4.27 Form of 1997 Class B American Trans Air, Inc. Pass Through Certificates (included in Exhibit 4.16). 4.28 Form of 1997 Class C American Trans Air, Inc. Pass Through Certificates (included in Exhibit 4.18). 4.29 Form of 2000 Class G American Trans Air, Inc. Pass Through Certificates (included in Exhibit 4.5). 4.30 Form of 2000 Class C American Trans Air, Inc. Pass Through Certificates (included in Exhibit 4.7). 4.31 The Registrant hereby agrees to furnish to the Commission, upon request, copies of certain additional instruments relating to long-term debt of the kind described in Item 601(b)(4)(iii)(A) of Regulation S-K. 10.1 1993 Incentive Stock Plan for Key Employees of Amtran, Inc. and its Subsidiaries (incorporated by reference to Exhibit 10(r)(r) to the S-1). 10.2 1996 Incentive Stock Plan for Key Employees of Amtran, Inc. and its Subsidiaries (incorporated by reference to the Registrant's Registration Statement on S-8 dated June 20, 1997, File No. 333-29715). 10.3 2000 Incentive Stock Plan for Key Employees of Amtran, Inc. and its Subsidiaries (incorporated by reference to Exhibit A to the Registrant's Proxy Statement dated April 5, 2000). 10.4 Stock Option Plan for Non-Employee Directors (incorporated by reference to Appendix A to the Registrant's Proxy Statement dated April 15, 1994). 10.5 Aircraft General Terms Agreement dated as of June 30, 2000, between The Boeing Company ("Boeing") and American Trans Air, Inc.; Purchase Agreement Number 2285 dated as of June 30, 2000, between Boeing and American Trans Air, Inc.; Purchase Agreement Number 2262 dated as of June 30, 2000, between Boeing and American Trans Air, Inc. * 10.6(a) Aircraft Lease Agreement dated as of September 20, 2000, between Amtran, Inc. and International Lease Finance Corporation. * 10.6(b) Aircraft Lease Agreement dated as of September 20, 2000, between Amtran, Inc. and International Lease Finance Corporation. * 10.6(c) Aircraft Lease Agreement dated as of September 20, 2000, between Amtran, Inc. and International Lease Finance Corporation. * 10.6(d) Aircraft Lease Agreement dated as of September 20, 2000, between Amtran, Inc. and International Lease Finance Corporation. * 10.6(e) Aircraft Lease Agreement dated as of September 20, 2000, between Amtran, Inc. and International Lease Finance Corporation. * 10.6(f) Aircraft Lease Agreement dated as of September 20, 2000, between Amtran, Inc. and International Lease Finance Corporation. * 10.6(g) Aircraft Lease Agreement dated as of September 20, 2000, between Amtran, Inc. and International Lease Finance Corporation. * 10.6(h) Aircraft Lease Agreement dated as of September 20, 2000, between Amtran, Inc. and International Lease Finance Corporation. * 10.6(i) Aircraft Lease Agreement dated as of September 20, 2000, between Amtran, Inc. and International Lease Finance Corporation. * 10.6(j) Aircraft Lease Agreement dated as of September 20, 2000, between Amtran, Inc. and International Lease Finance Corporation. * 10.6(k) Aircraft Lease Agreement dated as of September 20, 2000, between Amtran, Inc. and International Lease Finance Corporation. * 10.6(l) Aircraft Lease Agreement dated as of September 20, 2000, between Amtran, Inc. and International Lease Finance Corporation. * 10.6(m) Aircraft Lease Agreement dated as of September 20, 2000, between Amtran, Inc. and International Lease Finance Corporation. * 10.6(n) Aircraft Lease Agreement dated as of September 20, 2000, between Amtran, Inc. and International Lease Finance Corporation. * 10.7 Aircraft Financing Agreement dated as of December 6, 2000, between Amtran, Inc. and General Electric Capital Corporation. * 21 Subsidiaries of Amtran, Inc.+ 23 Consent of Independent Auditors.+ 27 Financial Data Schedule.+ *Portions of this exhibit have been omitted pursuant to a request for confidential treatment and filed separately with the Securities and Exchange Commission. + Previously filed as an exhibit to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2000. EX-3.(I)(B) 2 file002.txt AMTRAN, INC., 2000 10-K, EXHIBIT 3.(I)(B) ARTICLES OF AMENDMENT TO THE ARTICLES OF INCORPORATION OF AMTRAN, INC. Date of Incorporation: October 23, 1984 AMTRAN, INC. (hereinafter referred to as the "CORPORATION"), an Indiana corporation existing pursuant to the provisions of the Indiana Business Corporation Law, as amended (hereinafter referred to as the "ACT"), desiring to give notice of corporate action effectuating amendment of its Articles of Incorporation, as previously restated (the "ARTICLES OF INCORPORATION"), certifies the following facts: ARTICLE I THE AMENDMENT 1. NAME. The name of the Corporation following this amendment continues to be Amtran, Inc. 2. CREATION OF NEW ARTICLE XIII. Upon effectiveness of these Articles of Amendment, the Corporation's Articles of Incorporation shall be amended by adding a new Article XIII, the exact text of which is as follows: ARTICLE XIII DESIGNATIONS, RIGHTS AND PREFERENCES OF SERIES A1 PREFERRED STOCK The designations, rights, preferences, limitations and restrictions of the shares of Preferred Stock, without par value, to be designated as "Series A1 Preferred Stock" (in addition to those set forth elsewhere in the Corporation's Articles of Incorporation) are hereby fixed as follows: 1. NUMBER OF SHARES. The number of shares of Series A1 Preferred Stock shall initially be 500 shares, which number from time to time may be increased or decreased (but not decreased below the number of shares of the series then outstanding) in accordance with the provisions of the Act, subject to the rights of holders of the Series A1 Preferred Stock under Section 8 hereof. Shares of Series A1 Preferred Stock redeemed or purchased by the Corporation, or exchanged for subordinated debt of the Corporation in accordance with the provisions hereof, shall be canceled and shall revert to authorized but unissued shares of Preferred Stock undesignated as to series. 2. DEFINITIONS AND CONSTRUCTION. As used in this Article XII, (a) "business day" means each day that is not a Saturday, Sunday or other day on which banking institutions in the City of New York are authorized or required by law or executive order to be closed; (b) "herein", "hereof", "hereunder" and other like words mean or refer to this Article XII; (c) "Junior Stock" means the Common Stock and any other class or series of stock of the Corporation hereafter authorized, the terms of which do not expressly provide that such class or series ranks senior to or on a parity with the Series A1 Preferred Stock as to dividend distributions and distributions upon the liquidation, winding up or dissolution of the Corporation; (d) "outstanding", when used with reference to shares of stock, means issued shares, excluding shares held by the Corporation or a subsidiary; (e) "Parity Stock" means any class or series of stock of the Corporation authorized, (including but not limited to any preferred stock whether convertible or not, that is issued to an equipment lessor) the terms of which expressly provide that such class or series will rank on a parity with the Series A1 Preferred Stock as to dividend distributions and distributions upon the liquidation, winding up or dissolution of the Corporation; (f) "person" means any corporation, partnership, trust, organization, association or other entity or individual; (g) headings are for convenience of reference only and shall not define, limit or affect any of the provisions hereof; and (h) references to Sections are to Sections of this Article XII. 3. DIVIDENDS. The holders of Series A1 Preferred Stock shall be entitled to receive, when and if declared by the Board of Directors, but only out of funds legally available therefor, cumulative cash dividends at the annual rate of 8.44% of the Liquidation Amount (as defined below) (the "DIVIDEND RATE") per share, and no more, payable semiannually in equal amounts of 4.22% of the Liquidation Amount on the 15th day of December and June, respectively, in each year (or if any such date is not a business day, on the next succeeding business day) commencing on June 15, 2001, with respect to the semiannual dividend period (or portion thereof) ending on the day preceding such respective dividend payment date, to holders of record on the respective date, not more than 60 nor less than ten days preceding such dividend payment date, fixed for such purpose by the Board of Directors in advance of payment of each particular dividend. Dividends payable on the Series A1 Preferred Stock for any period shorter than a full semiannual period shall be computed on the basis of a 360-day year consisting of twelve 30-day months. Dividends on shares of Series A1 Preferred Stock shall be cumulative from the last dividend payment date, or if no dividends have been paid on the outstanding shares of Series A1 Preferred Stock, from the date of issuance, whether or not the Corporation has the funds legally available therefor. Accumulations of dividends on the Series A1 Preferred Stock shall bear interest at the Dividend Rate. Interest on accumulations of dividends shall be payable in cash, or at the option of the Corporation, in additional shares of Series A1 Preferred Stock valued at their Liquidation Amount (as defined below). So long as any shares of Series A1 Preferred Stock remain outstanding, the Corporation may not pay or declare any dividend, nor make any distribution on any Junior Stock, other than a dividend payable solely in Junior Stock, and shall not purchase, redeem or otherwise acquire for consideration, directly or indirectly, any Junior Stock (other than as a result of a reclassification of Junior Stock into Junior Stock, or the exchange or conversion of one share of Junior Stock for or into another share of Junior Stock, and other than through the use of the proceeds of a substantially contemporaneous sale of other shares of Junior Stock), unless (i) all accrued and unpaid dividends (including any interest thereon) on all outstanding shares of Series A1 Preferred Stock have been paid in full and the full dividend thereon for the then current semiannual dividend period shall have been paid or declared and set apart for payment and (ii) all prior redemption requirements with respect to Series A1 Preferred Stock shall have been complied with. When dividends are not paid in full upon the Series A1 Preferred Stock and any Parity Stock, all dividends declared upon shares of Series A1 Preferred Stock and all Parity Stock shall be declared PRO RATA so that the amount of dividends declared per share on the Series A1 Preferred Stock and all such Parity Stock shall in all cases bear to each other the same ratio that accrued dividends per share on the shares of Series A1 Preferred Stock and all such Parity Stock bear to each other. Subject to the foregoing, and not otherwise, such dividends (payable in cash, stock or otherwise) as may be determined by the Board of Directors may be declared and paid on any Junior Stock from time to time out of any funds legally available therefor, and the Series A1 Preferred Stock shall not be entitled to participate therein. 4. LIQUIDATION RIGHTS. (a) In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary (any such event being a "LIQUIDATION TRANSACTION") the Series A1 Preferred Stock shall rank prior to any shares of Junior Stock, so that in the event of any Liquidation Transaction, whether voluntary or involuntary, the holders of Series A1 Preferred Stock shall be entitled to receive out of the assets of the Corporation available for distribution to its stockholders, whether from capital, surplus or earnings, before any distribution is made to holders of Junior Stock, an amount per share equal to $100,000 per share (the "LIQUIDATION AMOUNT") for each outstanding share of Series A1 Preferred Stock, plus an amount equal to all accrued and unpaid dividends (including any interest thereon) (such sum being referred to as the "LIQUIDATION PREFERENCE" for the Series A1 Preferred Stock). (b) If, upon any Liquidation Transaction, the assets of the Corporation, or proceeds thereof, shall be insufficient to pay the full Liquidation Preference to all holders of the Series A1 Preferred Stock, then such assets, or the proceeds thereof, shall be divided and distributed PRO RATA among the holders of the Series A1 Preferred Stock and the holders of any Parity Stock in accordance with the aggregate respective liquidation preferences of the Series A1 Preferred Stock and all such Parity Stock. (c) For purposes of this Section 4, any sale, conveyance, exchange or transfer (for cash, shares of stock, securities or other consideration) of assets of the Corporation representing all or substantially all of the assets of the Corporation and its subsidiaries (other than Lockheed 1011 and Boeing 727 aircraft) determined on a consolidated basis in a single transaction or series of related transactions shall be deemed a Liquidation Transaction. Notwithstanding anything contained herein to the contrary, a sale, conveyance, exchange or transfer (for cash, shares of stock, securities, or other consideration) of any or all Lockheed 1011 or Boeing 727 aircraft shall not be deemed a Liquidation Transaction. (d) After payment shall have been made in full to all holders of Series A1 Preferred Stock, as provided in this Section 4, the holders of the Junior Stock shall, subject to the respective terms and provisions applying thereto, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the shares of Series A1 Preferred Stock shall not be entitled to share therein. 5. REDEMPTION. (a) OPTIONAL REDEMPTION. The Corporation may redeem for cash, in whole at any time, or in part from time to time, the shares of Series A1 Preferred Stock at the time outstanding, upon notice given as hereinafter specified, at the redemption price in effect at the redemption date as provided in this Section 5; PROVIDED, HOWEVER, that prior to the third anniversary of the date of issuance of the Series A1 Preferred Stock, no shares of Series A1 Preferred Stock may be redeemed except as provided in paragraph (b) below or pursuant to Section 9(b) hereof. The redemption price per share shall equal the Liquidation Amount plus all accrued and unpaid dividends (including any interest thereon) and the redemption premium specified below. If redeemed during the 12-month period commencing on the date of issuance of the Series A1 Preferred Stock of the years set forth below the redemption premiums shall be as follows: 2003 4.22% 2004 3.38% 2005 2.53% 2006 1.69% 2007 and thereafter no redemption premium (b) REDEMPTION IN THE CASE OF A PUBLIC OFFERING OF COMMON STOCK. Prior to the third anniversary of the date of issuance of the Series A1 Preferred Stock, with the proceeds of one more sales of its Common Stock in a public offering, the Corporation may redeem the shares of the Series A1 Preferred Stock at the time outstanding, in whole at any time, or in part from time to time, upon notice given as hereinafter specified at a price equal to the Liquidation Amount plus all accrued and unpaid dividends (including any interest thereon) plus an amount equal to the Dividend Rate times the Liquidation Amount of the Series A1 Preferred Stock to be redeemed. Sales of the Corporation's Common Stock in a public offering shall include the sale by the Corporation of securities that are convertible, exchangeable or exercisable for Common Stock ("CONVERTIBLE SECURITIES"). The proceeds from such public offerings that the Corporation shall be entitled to use to redeem the Series A1 Preferred Stock in accordance with the terms of this paragraph (b) shall equal the net amount that the Corporation received at the time of issuance of such Convertible Securities; PROVIDED, HOWEVER, that the Corporation shall not be entitled to redeem any shares of Series A1 Preferred Stock with any such proceeds prior to the time the related Convertible Securities are converted, exchanged or exercised for Common Stock. (c) MANDATORY REDEMPTION. The Corporation shall redeem any outstanding shares of Series A1 Preferred Stock in equal semiannual installments each December 28 and June 28, beginning on such date in 2010 and ending on such date in 2015 which is the anniversary of the date of the issuance of the Series A1 Preferred Stock for an amount in cash equal to the Liquidation Amount plus all accrued and unpaid dividends (including any interest thereon). (d) NOTICE OF REDEMPTION. Notice of every redemption of Series A1 Preferred Stock shall be mailed by first class mail, postage prepaid, addressed to the holders of record of the shares to be redeemed at their respective last addresses as they appear in the books of the Corporation. Such mailing shall be at least ten days and not more than 60 days prior to the date fixed for redemption. Any notice that is mailed in the manner herein provided shall be conclusively presumed to have been duly given to any holder of Series A1 Preferred Stock designated for redemption, whether or not the shareholder receives such notice by mail. Furthermore, the validity of the proceedings for the redemption of any shares of Series A1 Preferred Stock of any shareholder shall not be affected by any defect in any notice given to any other shareholder. Such notice shall set forth (A) the time and date for the redemption; (B) the number of shares to be redeemed and if less than all shares of Series A1 Preferred Stock held by a holder are to be redeemed, the number of such holder's shares to be redeemed; (C) the redemption price; (D) the place or places where certificates for the shares are to be surrendered for redemption; and (E) that dividends on the shares to be redeemed will cease to accrue on the redemption date (unless the Corporation shall default in redeeming the shares on the redemption date. (e) REDEMPTIONS IN PART. In case of any redemption of only a part of the shares of Series A1 Preferred Stock at the time outstanding, the redemption may be PRO RATA, by lot or by any other method as may be determined by the Board of Directors in its sole discretion to be equitable as set forth in a certificate of the Secretary or Assistant Secretary of the Corporation filed with the transfer agent or agents for the Series A1 Preferred Stock. The Board of Directors shall have full power and authority, subject to the provisions herein contained, to prescribe the terms and conditions upon which Series A1 Preferred Stock shall be redeemed from time to time. (f) EFFECT OF REDEMPTION. If notice of redemption shall have been duly given, and if on or before the redemption date specified therein all funds necessary for such redemptions shall have been set aside by the Corporation, separate and apart from its other funds, in trust for the PRO RATA benefit of the holders of the shares called for redemption, so as to be and continue to be available therefor, then, notwithstanding that any certificate for shares so called for redemption shall not have been surrendered for cancellation, on and after such redemption date, all shares so called for redemption shall no longer be deemed outstanding and all rights with respect to such shares shall forthwith on such redemption date cease and terminate, except only the right of the holders thereof to receive the amount payable on redemption thereof, without interest. Any funds so deposited and unclaimed at the end of two years from such redemption date shall, to the extent permitted by law, be released or repaid to the Corporation, after which time the holders of the shares so called for redemption shall look only to the Corporation for payment thereof. Any funds so deposited or set aside by the Corporation which shall not be required for such redemption because of the exercise of any right of exchange by the Corporation set forth in Section 6 below subsequent to the date of such deposit shall be released or repaid to the Corporation forthwith. 6. EXCHANGE FOR EXCHANGE NOTES. (a) OPTIONAL EXCHANGE FOR EXCHANGE NOTES. On any dividend payment date or as otherwise provided in Section 9(b) hereof, upon notice given in accordance with paragraph (b) below, the Corporation may, at its option, in whole, but not in part, exchange all outstanding shares of Series A1 Preferred Stock for subordinated notes of the Corporation, the terms of which are set forth in Annex B to the Purchase and Investor Rights Agreement dated as of December 13, 2000 between the Corporation and Boeing Capital Corporation (the "EXCHANGE NOTES"). The Exchange Notes shall be issued under the Indenture dated as of December 11, 1998, among the Corporation, the Guarantors named therein and First Security Bank, as trustee, as the same may be amended from time to time or under an indenture having substantially the same terms (in either case, the "INDENTURE"). Holders of outstanding shares of Series A1 Preferred Stock shall be entitled to receive for each share of Series A1 Preferred Stock held, an Exchange Note, the principal amount of which shall equal the Liquidation Amount plus any accrued and unpaid dividends (including any interest thereon) through the date of exchange of the shares of Series A1 Preferred Stock for which it is exchanged (the "EXCHANGE AMOUNT"). Notwithstanding anything foregoing to the contrary, Exchange Notes shall only be issued in principal amounts of $1,000 and integral multiples of $1,000 in excess thereof. Any holder that as a result of such exchange would have been entitled to receive Exchange Notes the aggregate principal amount of which would not have equaled $1,000 or integral multiples thereof shall be entitled to receive an amount in cash equal to the difference between the Exchange Amount and the aggregate principal amount of the Exchange Notes to be issued to such holder. Such amount shall be payable to any such holder at the time the Exchange Notes are issued or shall have been set aside for the payment thereof. (b) NOTICE OF EXCHANGE. Notice of the exchange of all outstanding shares of Series A1 Preferred Stock for Exchange Notes shall be mailed by first class mail, postage prepaid, addressed to the holders of record of the Series A1 Preferred Stock at their respective last addresses as they appear on the books of the Corporation. Such mailing shall be at least ten days and not more than 60 days prior to the date fixed for the exchange (the "EXCHANGE DATE"). Any notice that is mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the shareholder receives such notice by mail. Such notice shall set forth (A) the Exchange Date; (B) the place or places where certificates for the shares are to be surrendered for exchange; (C) that dividends on the shares to be exchanged shall cease to accrue on the Exchange Date (unless the Corporation shall default in issuing the Exchange Notes on the Exchange Date or in making the any required payment in connection with such exchange); and (D) the aggregate principal amount of Exchange Notes that shall be issued in exchange for the outstanding shares of Series A1 Preferred Stock. (c) EFFECT OF EXCHANGE. Notwithstanding that any certificate for shares of Series A1 Preferred Stock shall not have been surrendered for cancellation upon the Exchange Date set forth in the notice described in paragraph (b) above, on and after such Exchange Date, all shares of Series A1 Preferred Stock shall be deemed no longer outstanding and all rights with respect to such shares shall forthwith on such Exchange Date cease and terminate. 7. STATUS OF SHARES. Upon any redemption, repurchase, exchange or other acquisition by the Corporation of shares of Series A1 Preferred Stock, the shares of Series A1 Preferred Stock, so redeemed, repurchased, exchanged or acquired shall be retired and canceled and shall not be available for reissuance. 8. VOTING RIGHTS. (a) The holders of shares of the Series A1 Preferred Stock shall not have the right to vote on or consent to any matter as shareholders of the Corporation, except as required by applicable law or as otherwise provided below. All matters on which the holders of the Series A1 Preferred Stock have the right to vote may be approved at an annual or special meeting by holders of the minimum number of shares of Series A1 Preferred Stock that would be required to approve a matter if all shares were present and voting at a meeting called to consider such matter or may be approved by one or more written consents signed by all of the holders of shares of Series A1 Preferred Stock. (b) The consent of holders of at least a majority of the outstanding shares of Series A1 Preferred Stock (voting separately as a class but excluding from any calculation any shares of Series A1 Preferred Stock held by the Corporation or any subsidiary thereof), shall be necessary to amend, alter or repeal any of the provisions of this Article XIII of the Articles of Incorporation of the Corporation which would adversely affect the powers, preferences or rights of the holders of the shares of Series A1 Preferred Stock then outstanding. (c) If at any time the equivalent of three semiannual dividends payable on the outstanding shares of Series A1 Preferred Stock are accrued and unpaid, whether or not consecutive and whether or not declared, the holders of all outstanding shares of Series A1 Preferred Stock, voting as a single class, together with the holders entitled to vote all other series of preferred stock of the Corporation that rank PARI PASSU with or senior to the Series A1 Preferred Stock and have similar voting rights, shall be entitled to elect at the next annual meeting of shareholders of the Corporation 25% of the directors to the Corporation's Board of Directors, but no less than three directors (or such greater number as shall be provided in any other series of preferred stock that shall at the time be entitled to vote with the Series A1 Preferred Stock to elect directors). The proportion of the total vote of all holders of preferred stock entitled to vote for such directors attributable to the holders of the Series A1 Preferred Stock shall be based on the percentage the aggregate Liquidation Amount for all outstanding shares of Series A1 Preferred Stock bears to the aggregate liquidation amounts of all other shares of preferred stock entitled to vote. Such directors shall serve until all accumulated and unpaid dividends have been paid or declared and funds sufficient for their payment have been set aside therefor. (d) In the event that Moody's Investors Service, Inc. ("MOODY'S") or Standard and Poor's Corporation ("S&P") shall advise the Corporation in writing that its senior unsecured credit rating will be reduced to C1 (in the case of Moody's) or C+ (in the case of S&P) as a result of (i) the acquisition by the Corporation or a subsidiary of the assets and liabilities of a third party in a single transaction or a series of related transactions, the net asset value of which equals 10% or more of the Corporation's net consolidated assets as set forth in its most recent publicly available balance sheet; or (ii) a merger with a third party in a single transaction or a series of related transactions involving either the acquisition or disposition of 10% or more of the Corporation's consolidated net assets as set forth in its most recent publicly available balance sheet (in either case, a "MATERIAL TRANSACTION") then, unless the Corporation shall offer to purchase all shares of Series A1 Preferred Stock then outstanding at a price equal to their Liquidation Amount plus all accrued and unpaid dividends (including any interest thereon) and shall purchase any and all shares of Series A1 Preferred Stock tendered pursuant to such offer prior to or concurrently with the consummation of the Material Transaction, the affirmative vote of at least a majority of the Series A1 Preferred Stock shall be required prior to the consummation of the Material Transaction (voting separately as a single class but excluding from any calculation any shares held by the Corporation or any subsidiary thereof) given in person or by proxy at any annual meeting or special meeting of shareholders called for such purpose. Notwithstanding anything foregoing to the contrary, a Material Transaction shall not include any sale, conveyance, exchange or transfer (for cash, shares of stock, securities or other consideration) of any or all Lockheed 1011 or Boeing 727 aircraft. (e) For the avoidance of doubt, except as otherwise set forth in this Section 8 or as required by law, the holders of the Series A1 Preferred Stock shall not have the right to vote or consent with respect to (i) the increase or decrease in the amount of authorized capital stock of any class, other than capital stock that is of the same class as the Series A1 Preferred Stock, (ii) the authorization, creation (by way of reclassification or otherwise) or issuance by the Board of Directors of any series of Preferred Stock that will rank subordinate to the Series A1 Preferred Stock as to dividend distributions and distributions upon the liquidation, winding up or dissolution of the Corporation or any obligation or security convertible into or exercisable for or exchangeable into or evidencing a right to purchase, shares of any series of Preferred Stock that will rank subordinate to the Series A1 Preferred Stock or the issuance by the Board of Directors of any previously authorized class of capital stock of the Corporation that will rank subordinate to the Series A1 Preferred Stock, or (iii) any merger, acquisition, disposition or share exchange involving the Corporation where no shareholder vote is otherwise required or pursuant to which the holders of the Series A1 Preferred Stock receive cash at least equal to the Liquidation Amount. (f) The consent of holders of at least a majority of the outstanding shares of Series A1 Preferred Stock (voting separately as a class but excluding from any calculation any shares of Series A1 Preferred Stock held by the Corporation or any subsidiary thereof) given in person or by proxy, at any annual meeting or special meeting of the shareholders called for such purpose, shall be necessary to (i) increase the authorized number of shares of Series A1 Preferred Stock and (ii) to authorize, create (by way of reclassification or otherwise) or issue by the Board of Directors of any series of Preferred Stock that will rank PARI PASSU with or senior to the Series A1 Preferred Stock as to dividend distributions or distributions upon the liquidation, winding up or dissolution of the Corporation or any obligation or security convertible into or exercisable for or exchangeable into or evidencing a right to purchase shares of any series of Preferred Stock that will rank PARI PASSU with or senior to the Series A1 Preferred Stock or issue by the Board of Directors of any previously authorized class of capital stock of the Corporation that will rank PARI PASSU with or senior to the Series A1 Preferred Stock. 9. TAX TREATMENT OF SERIES A1 PREFERRED STOCK. (a) The Corporation will treat the Series A1 Preferred Stock as equity for federal income tax purposes and expects that holders of Series A1 Preferred Stock will be entitled to the 70% dividends-received deduction that is set forth in Section 243(a)(1) of the Internal Revenue Code of 1986, as amended (the "CODE"). In the event that within the period between December 28, 2000 and June 28, 2002 one or more amendments to the Code are enacted that reduce the percentage (the "DRD PERCENTAGE") of the dividends-received deduction set forth in Code Section 243(a)(1) (or any successor provision) below 70%, the Corporation shall, unless otherwise prohibited by law, pay to holders of the outstanding shares of Series A1 Preferred Stock such additional dividends ("ADDITIONAL AMOUNTS") as may be necessary to ensure that the amount of any dividend payments such shareholders are entitled to receive net of any U.S. Federal income tax liability arising in respect of such payments, equal the net after-tax amount that would have remained in the absence of such reduction in the DRD Percentage. Notwithstanding the foregoing, the Corporation shall only be required to pay such additional amounts to the extent of any change in the DRD Percentage from 70% to a DRD Percentage of not less than 50% and for purposes of this paragraph, the DRD Percentage shall be deemed to be 50% if the actual DRD Percentage is reduced below 50%. For purposes of this paragraph, it shall be assumed that dividends paid to corporate holders of Series A1 Preferred Stock will be subject to the highest marginal tax rate applicable to corporations. (b) Notwithstanding anything contained herein to the contrary, if the Corporation has or will become obligated to pay additional amounts pursuant to paragraph (a) above with respect to the Series A1 Preferred Stock, the Corporation may at its option, in its sole discretion, at any time either (i) redeem all outstanding shares of Series A1 Preferred Stock at their Liquidation Amount plus all accrued and unpaid dividends (including any interest thereon) to the date of redemption or (ii) exchange each outstanding share of Series A1 Preferred Stock for an Exchange Note, the principal amount of which equals the Exchange Amount. With respect to any redemption pursuant to this paragraph (b), the procedures for redemption set forth in Section 5 hereof shall apply, and with respect to any exchange, the procedures for the issuance of Exchange Notes set forth in Section 6 hereof shall apply. ARTICLE II The foregoing amendment was adopted on December 28, 2000. ARTICLE III MANNER OF ADOPTION AND VOTE Section 1. ACTION BY DIRECTORS. The amendment set forth above was adopted by the Board of Directors of the Corporation and shareholder action was not required. ARTICLE IV COMPLIANCE WITH LEGAL REQUIREMENTS The manner of the adoption of the Articles of Amendment and the vote by which they were adopted constitute full legal compliance with the provisions of the Act, the Articles of Incorporation, and the Bylaws of the Corporation. IN WITNESS WHEREOF, the undersigned Corporation has caused these Articles of Amendment to be signed and verified by a duly authorized officer, acting for and on behalf of such Corporation; and the undersigned verifies subject to the penalties of perjury that the facts contained herein are true this 28th day of December, 2000. AMTRAN, INC. by /s/ Brian T. Hunt ----------------------------- Name: Brian T. Hunt Title: Secretary EX-3.(I)(C) 3 file003.txt AMTRAN, INC., 2000 10-K, EXHIBIT 3.(I)(C) ARTICLES OF AMENDMENT TO THE ARTICLES OF INCORPORATION OF AMTRAN, INC. Date of Incorporation: October 23, 1984 AMTRAN, INC. (hereinafter referred to as the "CORPORATION"), an Indiana corporation existing pursuant to the provisions of the Indiana Business Corporation Law, as amended (hereinafter referred to as the "ACT"), desiring to give notice of corporate action effectuating amendment of its Articles of Incorporation, as previously restated (the "ARTICLES OF INCORPORATION"), certifies the following facts: ARTICLE I THE AMENDMENT 1. NAME. The name of the Corporation following this amendment continues to be Amtran, Inc. 2. CREATION OF NEW ARTICLE XII. Upon effectiveness of these Articles of Amendment, the Corporation's Articles of Incorporation shall be amended by adding a new Article XII, the exact text of which is as follows: ARTICLE XII DESIGNATIONS, RIGHTS AND PREFERENCES OF SERIES B PREFERRED STOCK The designations, rights, preferences, limitations and restrictions of the shares of Preferred Stock, without par value, to be designated as "Series B Preferred Stock" (in addition to those set forth elsewhere in the Corporation's Articles of Incorporation) are hereby fixed as follows: 1. NUMBER OF SHARES. The number of shares of Series B Preferred Stock shall initially be 300 shares, which number from time to time may be increased or decreased (but not decreased below the number of shares of the series then outstanding) in accordance with the provisions of the Act, subject to the rights of holders of the Series B Preferred Stock under Section 8 hereof. Shares of Series B Preferred Stock redeemed or purchased by the Corporation, or converted into Common Stock of the Corporation in accordance with the provisions hereof, shall be canceled and shall revert to authorized but unissued shares of Preferred Stock undesignated as to series. 2. DEFINITIONS AND CONSTRUCTION. As used in this Article XII, (a) "business day" means each day that is not a Saturday, Sunday or other day on which banking institutions in the City of New York are authorized or required by law or executive order to be closed; (b) "Common Stock" means the common stock of the Corporation, without par value; (c) "herein", "hereof", "hereunder" and other like words mean or refer to this Article XII; (d) "Junior Stock" means the Common Stock and any other class or series of stock of the Corporation hereafter authorized, the terms of which do not expressly provide that such class or series ranks senior to or on a parity with the Series B Preferred Stock as to dividend distributions and distributions upon the liquidation, winding up or dissolution of the Corporation; (e) "outstanding", when used with reference to shares of stock, means issued shares, excluding shares held by the Corporation or a subsidiary; (f) "Parity Stock" means any class or series of stock of the Corporation authorized, the terms of which expressly provide that such class or series will rank on a parity with the Series B Preferred Stock as to dividend distributions and distributions upon the liquidation, winding up or dissolution of the Corporation; (g) "person" means any corporation, partnership, trust, organization, association or other entity or individual; (h) "Series A Preferred Stock means, collectively, all series of preferred stock designated as Series A1, Series A2, Series A3 or any other series designated by the words "Series A" in which the A is immediately followed by any number; (i) headings are for convenience of reference only and shall not define, limit or affect any of the provisions hereof; and (j) references to Sections are to Sections of this Article XII. 3. DIVIDENDS. The holders of Series B Preferred Stock shall be entitled to receive, when and if declared by the Board of Directors, but only out of funds legally available therefor, cumulative cash dividends at the annual rate of 5.0% of the Liquidation Amount (as defined below) (the "DIVIDEND RATE") per share, and no more, payable quarterly in equal amounts of 1.25% of the Liquidation Amount on the 15th day of December, March, June and September, respectively, in each year (or if any such date is not a business day, on the next succeeding business day) commencing on December 15, 2000, with respect to the quarterly dividend period (or portion thereof) ending on the day preceding such respective dividend payment date, to holders of record on the respective date, not more than 60 nor less than ten days preceding such dividend payment date, fixed for such purpose by the Board of Directors in advance of payment of each particular dividend. If the Corporation fails to pay any quarterly dividend and such failure is not cured within ten days of the date on which the dividend was payable, whether or not the funds are legally available therefor, the Dividend Rate shall increase as follows: (i) if the Corporation has issued on or prior to December 31, 2000, any series of Series A Preferred Stock, the Dividend Rate shall increase to the highest rate of interest per annum payable on any such series of Series A Preferred Stock issued and outstanding on such date, and (ii) if the Corporation has not issued on or before December 31, 2000, any series of Series A Preferred Stock, the Dividend Rate shall increase to 9.8% per annum. Following the payment of all accrued and unpaid dividends that have become due and payable, the Dividend Rate will revert to the original Dividend Rate. Dividends payable on the Series B Preferred Stock for any period shorter than a full quarterly period shall be computed on the basis of a 360-day year consisting of twelve 30-day months. Dividends on shares of Series B Preferred Stock shall be cumulative from the last dividend payment date, or if no dividends have been paid on the outstanding shares of Series B Preferred Stock, from the date of issuance, whether or not the Corporation has the funds legally available therefor. Accumulations of dividends on outstanding shares of Series B Preferred Stock shall bear interest at the rate of 9.5% per annum. So long as any shares of Series B Preferred Stock remain outstanding, the Corporation may not pay or declare any dividend, nor make any distribution on any Junior Stock, other than a dividend payable solely in Junior Stock, and shall not purchase, redeem or otherwise acquire for consideration, directly or indirectly (other than as a result of a reclassification of Junior Stock into Junior Stock, or the exchange or conversion of one share of Junior Stock for or into another share of Junior Stock, and other than through the use of the proceeds of a substantially contemporaneous sale of other shares of Junior Stock), unless (i) all accrued and unpaid dividends (including any interest thereon) on all outstanding shares of Series B Preferred Stock have been paid in full and the full dividend thereon for the then current quarterly dividend period shall have been paid or declared and set apart for payment and (ii) all prior redemption requirements with respect to Series B Preferred Stock shall have been complied with. When dividends are not paid in full upon the Series B Preferred Stock and any Parity Stock, all dividends declared upon shares of Series B Preferred Stock and all Parity Stock shall be declared PRO RATA so that the amount of dividends declared per share on the Series B Preferred Stock and all such Parity Stock shall in all cases bear to each other the same ratio that accrued dividends per share on the shares of Series B Preferred Stock and all such Parity Stock bear to each other. Subject to the foregoing, and not otherwise, such dividends (payable in cash, stock or otherwise) as may be determined by the Board of Directors may be declared and paid on any Junior Stock from time to time out of any funds legally available therefor, and the Series B Preferred Stock shall not be entitled to participate therein. 4. LIQUIDATION RIGHTS. (a) In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary (any such event being a "LIQUIDATION TRANSACTION") the Series B Preferred Stock shall rank prior to any shares of Junior Stock, so that in the event of any Liquidation Transaction, whether voluntary or involuntary, the holders of Series B Preferred Stock shall be entitled to receive out of the assets of the Corporation available for distribution to its stockholders, whether from capital, surplus or earnings, before any distribution is made to holders of Junior Stock, an amount per share equal to $100,000 per share (the "LIQUIDATION AMOUNT") for each outstanding share of Series B Preferred Stock, plus an amount equal to all accrued and unpaid dividends (including any interest thereon) (such sum being referred to as the "LIQUIDATION PREFERENCE" for the Series B Preferred Stock). (b) If, upon any Liquidation Transaction, the assets of the Corporation, or proceeds thereof, shall be insufficient to pay the full Liquidation Preference to all holders of the Series B Preferred Stock, then such assets, or the proceeds thereof, shall be divided and distributed PRO RATA among the holders of the Series B Preferred Stock and the holders of any Parity Stock in accordance with the aggregate respective liquidation preferences of the Series B Preferred Stock and all such Parity Stock. (c) After payment shall have been made in full to all holders of Series B Preferred Stock, as provided in this Section 4, the holders of the Junior Stock shall, subject to the respective terms and provisions applying thereto, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the shares of Series B Preferred Stock shall not be entitled to share therein. 5. REDEMPTION AND REPURCHASE. (a) CHANGE OF CONTROL. (i) OPTIONAL REDEMPTION BY THE CORPORATION. If, on or before the third anniversary of the initial issuance of the Series B Preferred Stock, any person (other than J. George Mikelsons or any person or entity controlled by him) acquires or enters into an agreement with the Corporation to acquire capital stock of the Corporation representing a majority of the voting power represented by all outstanding capital stock of the Corporation (such event being referred to as a "Change of Control"), the Corporation may redeem for cash, in whole at any time, all shares of Series B Preferred Stock at the time outstanding, upon notice given as hereinafter specified within 30 days following a Change of Control, at a redemption price per share equal to the sum of (i) the Liquidation Amount, (ii) all accrued and unpaid dividends (including any interest thereon) to the date of redemption, and (iii) a premium equal to 9.5% per annum of the Liquidation Amount calculated from the date of issuance of the shares of Series B Preferred Stock to the date of redemption. (ii) MANDATORY REPURCHASE AT THE OPTION OF THE HOLDER. If a Change of Control occurs on or before the third anniversary of the initial issuance of the Series B Preferred Stock, all but not less than all of the holders of Series B Preferred Stock may require the Corporation to repurchase for cash, in whole at any time, all shares of Series B Preferred Stock at the time outstanding, upon notice given as hereinafter specified within 45 days following a Change of Control, at a purchase price ("Repurchase Price") per share equal to the sum of (i) the Liquidation Amount, (ii) all accrued and unpaid dividends (including any interest thereon) to the date of repurchase, and (iii) a premium equal to the difference between (x) the amount obtained when the highest rate of interest per annum payable on any series of Series A Preferred Stock issued and outstanding on the date of repurchase is multiplied by the Liquidation Amount calculated from the date of issuance of the shares of Series B Preferred Stock to the date of repurchase and (y) 5% per annum of the Liquidation Amount calculated from the date of issuance of the shares of Series B Preferred Stock to the date of repurchase. A notice of mandatory repurchase under this section 5(a)(ii) (a "Repurchase Notice") may be given to the Corporation at any time within the 45 days following a Change of Control, by all but not less than all of the holders of Series B Preferred Stock. To be valid, a Repurchase Notice must (i) specify a date of repurchase (the "Repurchase Date") that is a business day not earlier than 45 days following the date of receipt by the Corporation of the Repurchase Notice, (ii) be signed by all registered holders of Series B Preferred Stock and (iii) be delivered to the Corporation at its corporate headquarters to the attention of its Corporate Secretary by first class mail, overnight courier or by hand. Once given, a Repurchase Notice will be irrevocable. On and after the Repurchase Date, the sole right of the holders of Series B Preferred Stock shall be to receive the Repurchase Price without interest against delivery of certificates representing Series B Preferred Stock. (b) OPTIONAL REDEMPTION. On or after the third anniversary of the initial issuance of the Series B Preferred Stock, the Corporation may redeem for cash, in whole at any time, or in part from time to time, the shares of Series B Preferred Stock at the time outstanding, upon notice given as hereinafter specified, at the redemption price in effect at the redemption date as provided in this Section 5. If redeemed during the 12-month period commencing on the anniversary date of the initial issuance of Series B Preferred Stock in the years set forth below the redemption price shall be the Liquidation Amount plus all accrued and unpaid dividends (including any interest thereon) to the date of redemption plus a premium (expressed as a percentage of the Liquidation Amount) as follows: 2003 3.60% 2004 3.30% 2005 3.00% 2006 2.70% 2007 2.40% 2008 2.10% 2009 1.80% 2010 1.50% 2011 1.20% 2012 .90% 2013 .60% 2014 .30% 2015 and thereafter no redemption premium. (c) MANDATORY REDEMPTION. The Corporation shall redeem any outstanding shares of Series B Preferred Stock on the anniversary of the initial issuance of the Series B Preferred Stock in 2015 for an amount in cash equal to the Liquidation Amount plus all accrued and unpaid dividends (including any interest thereon). (d) NOTICE OF REDEMPTION. So long as the Series B Preferred Stock is not registered under the Securities Act of 1933, as amended (the "SECURITIES ACT"), notice of every redemption of Series B Preferred Stock shall be mailed by first class mail, postage prepaid, addressed to the holders of record of the shares to be redeemed at their respective last addresses as they appear on the books of the Corporation. If the Corporation registers the outstanding shares of Series B Preferred Stock under the Securities Act, then such notice shall be made by mail as described in the preceding sentence and, the Corporation shall also publish any notice of redemption by means of the Dow Jones News Service or such other similar news wire service or newspaper. Such mailing and any such publication shall be at least ten days and not more than 45 days prior to the date fixed for redemption. Any notice that is mailed or published, as the case may be, in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the shareholder receives such notice. Furthermore, the validity of the proceedings for the redemption of any shares of Series B Preferred Stock of any shareholder shall not be affected by any defect in any notice given to any other shareholder. Such notice shall set forth (A) the time and date for the redemption; (B) the number of shares to be redeemed and if less than all shares of Series B Preferred Stock held by a holder are to be redeemed, the number of such holder's shares to be redeemed; (C) the redemption price; (D) the place or places where certificates for the shares are to be surrendered for redemption; (E) that dividends on the shares to be redeemed will cease to accrue on the redemption date (unless the Corporation shall default in redeeming the shares on the redemption date); and (F) that the right to convert such shares shall terminate at the close of business on the redemption date. (e) REDEMPTIONS IN PART. In case of any redemption of only a part of the shares of Series B Preferred Stock at the time outstanding, the redemption may be PRO RATA, by lot or by any other method as may be determined by the Board of Directors in its sole discretion to be equitable as set forth in a certificate of the Secretary or Assistant Secretary of the Corporation filed with the transfer agent or agents for the Series B Preferred Stock. The Board of Directors shall have full power and authority, subject to the provisions herein contained, to prescribe the terms and conditions upon which Series B Preferred Stock shall be redeemed from time to time. (f) EFFECT OF REDEMPTION. If notice of redemption shall have been duly given, and if on or before the redemption date specified therein all funds necessary for such redemptions shall have been set aside by the Corporation, separate and apart from its other funds, in trust for the PRO RATA benefit of the holders of the shares called for redemption, so as to be and continue to be available therefor, then, notwithstanding that any certificate for shares so called for redemption shall not have been surrendered for cancellation, on and after such redemption date, all shares so called for redemption shall no longer be deemed outstanding and all rights with respect to such shares shall forthwith on such redemption date cease and terminate, except only the right of the holders thereof to receive the amount payable on redemption thereof, without interest. Any funds so deposited and unclaimed at the end of two years from such redemption date shall, to the extent permitted by law, be released or repaid to the Corporation, after which time the holders of the shares so called for redemption shall look only to the Corporation for payment thereof. A holder of shares of Series B Preferred Stock called for redemption shall be entitled to convert such shares in accordance with the provisions of Section 6 up until the close of business on the redemption date. Any funds so deposited or set aside by the Corporation which shall not be required for such redemption because of the exercise of any right of conversion set forth in Section 6 below subsequent to the date of such deposit shall be released or repaid to the Corporation forthwith. 6. CONVERSION. The holders of the Series B Preferred Stock shall have conversion rights as follows: (a) RIGHT TO CONVERT. On the terms and subject to the conditions of this Section 6, the holder of a share of Series B Preferred Stock shall have the right, at its option, at any time to convert such share into that number of shares of fully paid and non-assessable Common Stock (calculated as to each conversion to the nearest 1/100th of a share) obtained by dividing the Liquidation Amount, by the Conversion Price (as defined in Section 6(d)) and by surrender of such share pursuant to Section 6(b). The shares of Common Stock issuable upon such conversion are hereinafter referred to as the "CONVERSION SHARES". No payment or adjustment shall be made upon any conversion on account of any dividends accrued on the shares of Series B Preferred Stock surrendered for conversion or on account of any dividends on the Common Stock issued upon conversion for which the record date is on or prior to the conversion date. Holders of shares of Series B Preferred Stock at the close of business on a record date for any payment of declared dividends shall be entitled to receive the dividend payable on such shares on the corresponding dividend payment date notwithstanding the optional conversion of such shares following such record date and prior to the corresponding dividend payment date. However, shares of Series B Preferred Stock surrendered for conversion after the close of business on a record date for any payment of dividends and before the opening of business on the next succeeding dividend payment date must be accompanied by payment in cash of an amount equal to the dividend thereon which is to be paid on such dividend payment date (unless such shares have been called for redemption on a redemption date between such record date and such dividend payment date). (b) CONVERSION PROCEDURES. In order to exercise the conversion privilege, the holder of any shares of the Series B Preferred Stock shall surrender the certificate representing such shares at the principal office of the Corporation, with a written notice stating that such holder elects to convert all or a specified whole number of such shares pursuant to this Section 6 and specifying the name or names in which such holder wishes the certificate or certificates for Conversion Shares to be issued. Unless the Conversion Shares are to be issued in the same name as the name in which such shares of Series B Preferred Stock are registered, the certificate representing the shares surrendered for conversion shall be accompanied by instruments of transfer, in form satisfactory to the Corporation, duly executed by the holder or its duly authorized attorney. As promptly as practicable after such surrender of a certificate for shares of the Series B Preferred Stock to be converted, and in any event within five business days thereafter, the Corporation shall issue and deliver at such office to such holder, or on such holder's written order, (i) a certificate or certificates for the applicable number of full Conversion Shares, (ii) if less than the full number of shares of Series B Preferred Stock evidenced by the surrendered certificate is being converted, a new certificate, of like tenor, for the number of shares of Series B Preferred Stock evidenced by such surrendered certificate less the number of shares being converted and (iii) the cash payment in settlement of any fractional Conversion Share as provided in Section 6(c). Upon conversion of any shares of Series B Preferred Stock, the holder thereof shall be entitled to receive an amount equal to all declared and unpaid dividends on such shares. In the case of the exercise of the conversion privilege under Section 6(a), each conversion shall be deemed to have been effected immediately after the close of business on the date on which the certificate for shares of Series B Preferred Stock to be converted is surrendered and such notice is received by the Corporation as aforesaid, and the person or persons in whose name or names any certificate or certificates for Conversion Shares are issuable shall be deemed to have become the holder or holders of record of such Conversion Shares at such time on such date and such conversion shall be at the applicable Conversion Price in effect at such time on such date, unless the stock transfer books of the Corporation are closed on that date, in which event such person or persons shall be deemed to have become such holder or holders of record at the close of business on the next day on which such stock transfer books are open (provided that if such books shall remain closed for five days, such fifth day shall be the date any such person shall become such a holder), but such conversion shall be at the Conversion Price in effect on the date on which such certificate was surrendered and such notice was received. Upon delivery, all Conversion Shares shall be duly authorized, validly issued, fully paid, non-assessable, free of all liens and charges and not subject to any preemptive or subscription rights. (c) SETTLEMENT OF FRACTIONAL CONVERSION SHARES. No fractional Conversion Shares or scrip representing fractions of Conversion Shares shall be issued upon conversion of shares of the Series B Preferred Stock. Instead of any fractional Conversion Share otherwise deliverable, the Corporation shall pay to the holder of the converted shares an amount in cash equal to the Current Market Price (as defined below) of such fractional Conversion Share on the date of conversion. If more than one share is surrendered for conversion at one time by the same holder, the number of full Conversion Shares shall be computed on the basis of the aggregate number of shares so surrendered. The "CURRENT MARKET PRICE" per share of Common Stock on any day is the average of the high and low sales prices of the Corporation's Common Stock on the NASDAQ National Market System ("NASDAQ") for the 10 consecutive trading days preceding such day rounded up to the nearest whole cent. A "TRADING DAY" is a day on which the principal national securities exchange on which the Common Stock is listed or admitted to trading is open for the transaction of business or, if the Common Stock is not then listed or admitted to trading on any national securities exchange, any day other than Saturday, Sunday or a federal holiday. (d) The "CONVERSION PRICE" shall be $15.67 and may be adjusted from time to time pursuant to this Section 6(d). The Conversion Price shall be adjusted from time to time as follows: (i) If, after the date of initial issuance of the Series B Preferred Stock, the Corporation (A) pays a dividend or makes a distribution on the Common Stock in shares of Common Stock,(B) subdivides or combines its outstanding shares of Common Stock into a greater or smaller number of shares or (C) issues by reclassification of the Common Stock any shares of capital stock of the Corporation, each Conversion Price in effect immediately prior to such action shall be adjusted so that the holder of any share of Series B Preferred Stock thereafter surrendered for conversion shall be entitled to receive, at the time of such conversion, the number of shares of Common Stock or other capital stock of the Corporation that it would have owned or been entitled to receive immediately following such action had such share been converted immediately prior to such action or the record date therefor, whichever is earlier. Such adjustment shall become effective immediately after the record date, in the case of a dividend or distribution, or immediately after the effective date, in the case of a subdivision, combination or reclassification. (ii) If, after the date of initial issuance of the Series B Preferred Stock, the Corporation issues any Additional Shares (as defined below) for a consideration per share below the closing price as of 4:30 pm on the principal market on which the Common Stock is traded (the "CLOSING PRICE") on the trading day immediately prior to the date on which the Corporation shall have agreed to such issuance, then in each case the Conversion Price shall be adjusted by multiplying the Conversion Price in effect immediately prior to such issuance by a fraction, (A) the numerator of which shall be the number of shares of Common Stock and Share Equivalents (as defined below) outstanding immediately prior to the issuance of such Additional Shares plus the number of shares of Common Stock that the aggregate consideration for such Additional Shares would purchase at a consideration per share equal to such Closing Price, and (B) the denominator of which shall be the number of shares of Common Stock and Share Equivalents outstanding immediately prior to the issuance of such Additional Shares plus the number of Additional Shares so issued. Such adjustment for the Series B Preferred Stock shall become effective immediately after the issuance of such Additional Shares. "ADDITIONAL SHARES" shall mean any shares of Common Stock of the Corporation issued by the Corporation after the date of issuance of the Series B Preferred Stock excluding Permitted Issuances. "SHARE EQUIVALENTS" shall mean the Common Stock deliverable upon conversion or exercise of all outstanding Series B Preferred Stock, convertible securities, options, warrants and rights of the Corporation as of the date such computation is made and as of the time such computation is effective as specified herein. "PERMITTED ISSUANCES" shall mean: (A) any stock options which have been granted and remain unexercised as of the date of issuance of the Series B Preferred Stock; (B) stock options granted and shares issued to employees, directors and consultants after the issuance of the Series B Preferred Stock in the aggregate amount of 500,000 shares of Common Stock per annum (commencing with the year 2000) pursuant to the Corporation's stock plans, PROVIDED that if the aggregate number of stock options granted per annum pursuant to the Corporation's stock plans is less than 500,000, "Permitted Issuances" shall include that number of stock options equal to the difference between 500,000 and the actual number of stock options granted per annum pursuant to the Corporation's stock plans, which stock options of Common Stock may be granted in subsequent years; (C) additional options granted and shares issued in an amount equal to options granted and shares issued pursuant to the foregoing clauses (A) and (B) to the extent such shares are returned to the Corporation's stock plans upon the lapse of unexercised stock options or the repurchase (at original purchase price) of unvested shares; (D) any shares issued upon exercise of options granted pursuant to the foregoing clauses (A)-(C) including as a result of the operation of anti dilution adjustments provided for therein; (E) any shares issued pursuant to employee stock purchase, savings or ownership plans, including all shares issued to a trust formed in respect thereof; (F) any shares issued upon conversion of the Series B Preferred Stock (including adjustments to the conversion ratio), any stock options granted and shares issued upon the exercise thereof approved by the holders of a majority of the Series B Preferred Stock, and any shares issued to the holders of the Series B Preferred Stock in connection with any contractual rights related to such approved shares or options; and (G) any shares issued pursuant to the exercise, conversion or exchange of other securities. (iii) If after the date of initial issuance of the Series B Preferred Stock the Corporation issues any warrants, options or other rights entitling the holders thereof to subscribe for or purchase either any Additional Shares or evidences of debt, shares of capital stock or other securities that are convertible into or exchangeable for, with or without payment of additional consideration, Additional Shares (such warrants, options or other rights being called "RIGHTS" and such convertible or exchangeable evidences of debt, shares of capital stock or other securities being called "CONVERTIBLE SECURITIES"), and the consideration per share for which Additional Shares may at any time thereafter be issuable pursuant to such Rights or Convertible Securities (when added to the consideration per share of Common Stock, if any, received for such Rights or Convertible Securities) is less than the Conversion Price then in effect, the Conversion Price shall be adjusted as provided in Section 6(d)(ii) on the basis that, (A) the maximum number of Additional Shares issuable pursuant to all such Rights or necessary to effect the conversion or exchange of all such Convertible Securities shall be deemed to have been issued, and (B) the aggregate consideration (plus the consideration, if any, received for such Rights and Convertible Securities) for such maximum number of Additional Shares shall be deemed to be the consideration received and receivable by the Corporation for the issuance of such Additional Shares pursuant to such Rights or Convertible Securities. No adjustment of the Conversion Price shall be made under this Section 6(d)(iii) upon (x) the issuance of any Convertible Securities issued pursuant to the exercise of any Rights, to the extent that such adjustment was previously made upon the issuance of such Rights pursuant to Section 6(d)(iii) or (y) the granting of any stock options that qualify as Permitted Issuances under clause (B) or (C) of the definition thereof. (iv) For purposes of Section 6(d)(iii), the relevant Conversion Price shall be the Conversion Price in effect immediately prior to the earlier of (A) the record date for the holders of Common Stock entitled to receive the Rights or Convertible Securities and (B) the initial issuance of the Rights or Convertible Securities, and the adjustment provided for in either such Section shall become effective immediately after the earlier of the times specified in clauses (A) and (B). (v) No adjustment of the Conversion Price shall be made under Section 6(d)(ii) upon the issuance of any Additional Shares pursuant to the exercise of any Rights or any conversion or exchange rights pursuant to any Convertible Securities, if such adjustment was previously made in connection with the issuance of such Rights or Convertible Securities (or in connection with the issuance of any Rights therefor) pursuant to Section 6(d)(iii). (vi) If any Rights or Convertible Securities (or any portions thereof) that gave rise to an adjustment pursuant to Section 6(d)(iii) expire or terminate without the exercise thereof and/or if by reason of the provisions of such Rights or Convertible Securities there has been any increase, with the passage of time or otherwise, in the consideration payable upon the exercise thereof, the Conversion Price shall be readjusted (but to no greater extent than originally adjusted) on the basis of, (A) eliminating from the computation Additional Shares corresponding to such expired or terminated Rights or conversion or exchange rights, (B) treating the Additional Shares, if any, actually issued or issuable pursuant to the previous exercise of such Rights or conversion or exchange rights as having been issued for the consideration actually received and receivable therefor, and (C) treating any such Rights or conversion or exchange rights that remain outstanding as being subject to exercise on the basis of the consideration payable upon the exercise or conversion thereof as is in effect at such time, PROVIDED, HOWEVER, that any consideration actually received by the Corporation in connection with the issuance of such Rights shall form part of the readjustment computation even though such Rights expired without being exercised. The Conversion Price shall be adjusted as provided in Section 6(d)(ii) and any applicable provisions of Section 6(d)(iii) as a result of any increase in the number of Additional Shares issuable, or any decrease in the consideration payable upon any issuance of Additional Shares, pursuant to any anti dilution provisions of any Rights or Convertible Securities. (vii) (A) If any Additional Shares, Convertible Securities or Rights are issued for cash, the consideration received therefor shall be deemed to be the amount of cash received. (B) If any Additional Shares, Convertible Securities or Rights are offered by the Corporation for subscription, the consideration received therefor shall be deemed to be the subscription price. (C) If any Additional Shares, Convertible Securities or Rights are sold to underwriters or dealers for public offering without a subscription offering, the consideration received therefor shall be deemed to be the public offering price. (D) In any case covered by Section 6(d)(vii) (A), (B) or (C), in determining the amount of any consideration received by the Corporation in whole or in part other than in cash, the amount of such consideration shall be deemed to be the fair market value of such consideration as determined in good faith by the Board of Directors, and evidence of such determination shall be filed with the minutes of the Corporation. If Additional Shares are issued as part of a unit with Rights, the consideration received for the Rights shall be deemed to be the portion of the consideration received for such unit determined in good faith at the time of issuance by the Board of Directors, and evidence of such determination shall be filed with the minutes of the Corporation. If the Board of Directors does not make any such determination, the consideration received for the Rights shall be deemed to be zero. In either event, the consideration received for the Additional Shares shall be deemed to be the consideration received for such unit less the consideration deemed to have been received for the Rights. (E) In any case covered by Section 6(d)(vii) (A), (B), (C) or (D), in determining the amount of consideration received by the Corporation, (I) any amounts received or receivable for accrued interest or accrued dividends shall be excluded and (II) any compensation, underwriting commissions or concessions or expenses paid or incurred in connection therewith shall not be deducted. (F) In any case covered by Section 6(d)(vii) (A), (B), (C) or (D), there shall be added to the consideration received by the Corporation at the time of issuance or sale (I) the minimum aggregate amount of additional consideration payable to the Corporation upon the exercise of Rights that relate to Convertible Securities and (II) the minimum aggregate amount of consideration payable upon the conversion or exchange thereof. (G) If any Additional Shares, Convertible Securities or Rights are issued in connection with any merger, consolidation or other reorganization in which the Corporation is the surviving corporation, the amount of consideration received therefor shall be deemed to be the fair market value, as determined in good faith by the Board, of such portion of the assets and business of the non-surviving person or persons as the Board of Directors determines in good faith to be attributable to such Additional Shares, Convertible securities or Rights, and evidence of such determination shall be filed with the minutes of the Corporation. (viii) If the Corporation effects any merger, consolidation or other reorganization to which the Corporation is a party (other than a merger or consolidation in which the Company is the surviving or continuing corporation and in which each share of Common Stock outstanding immediately prior to the merger or consolidation remains unchanged in all material respects), any sale or conveyance to another person of all or substantially all the assets of the Corporation or any statutory exchange of securities with another person (including any exchange effected in connection with a merger of a third person into the Corporation), then effective provision shall be made in such transaction so that the holder of each share of Series B Preferred Stock then outstanding shall have the right thereafter to convert such share into the kind and amount of consideration receivable pursuant to such transaction by a holder of the number of shares of Common Stock into which such share of Series B Preferred Stock might have been converted immediately prior to such transaction, assuming such holder of Common Stock failed to exercise its rights of election, if any, as to the kind or amount of consideration receivable upon such transaction (provided that if the kind or amount of consideration receivable pursuant to such transaction is not the same for each share of Common Stock in respect of which such rights of election shall not have been exercised ("NON-ELECTING SHARE"), then, for purposes of this Section 6(d)(viii), the kind and amount of consideration receivable pursuant to such transaction for each non-electing share shall be deemed to be the kind and amount so receivable per share by a plurality of the non-electing shares). Thereafter, the holders of shares of Series B Preferred Stock shall be entitled to appropriate adjustments with respect to their conversion rights to the end that the provisions set forth in this Section 6 shall correspondingly be made applicable, as nearly as may reasonably be, to any consideration thereafter deliverable on conversion of shares of the Series B Preferred Stock. Notwithstanding the foregoing, this Section 6(d)(viii) shall not apply with regard to the Series B Preferred Stock to an event which is treated as a liquidation, dissolution or winding-up of the Corporation with respect to such series pursuant to Section 4. (ix) If the Corporation distributes generally to holders of its outstanding shares of Common Stock, evidences of its debt, securities or other assets (excluding any cash dividends if the annualized per share amount thereof does not exceed 9.0% of the Current Market Price of the Common Stock as of the trading day immediately preceding the date of declaration of such dividend and excluding any dividends or distributions payable in Rights or Convertible Securities for which adjustment is otherwise made pursuant to this Section 6(d)), the Conversion Price shall be adjusted by multiplying such Conversion Price in effect immediately prior to the record date for the dividend or distribution by a fraction of which (x) the numerator shall be the Current Market Price per share of the Common Stock on such record date less the then fair market value, as determined in good faith by the Board, of the portion of the evidences of debt, securities or other assets so distributed or applicable to the holder of one share of Common Stock and (y) the denominator shall be the Current Market Price per share of the Common Stock on such record date. Such adjustment shall become effective immediately after the record date for such dividend or distribution. (x) No adjustment in the Conversion Price shall be required to be made unless it would require an increase or decrease of at least one cent, but any adjustments not made because of this Section 6(d)(x) shall be carried forward and taken into account in any subsequent adjustment otherwise required. All calculations under this Section 6(d) shall be made to the nearest cent or to the nearest 1/100th of a share, as the case may be. All adjustments with respect to a transaction or event shall apply to subsequent such transactions and events. Anything in this Section 6(d) to the contrary notwithstanding, the Board of Directors shall be entitled (but shall not be obligated) to make such irrevocable reduction in the Conversion Price, in addition to the adjustments required by this Section 6(d), as in its discretion it shall determine to be advisable in order to avoid or diminish any income deemed to be received for United States Federal income tax purposes by any holder of shares of Common Stock or Series B Preferred Stock resulting from any event or occurrence giving rise to an adjustment pursuant to this Section 6(d) or from any similar event or occurrence, and evidence of the Board of Director's determination of such adjustment shall be filed with the minutes of the Corporation. (xi) Whenever the Conversion Price is adjusted pursuant to this Section 6(d), (A) the Corporation shall promptly file with the minutes of the Corporation a certificate of the Corporation's chief accounting officer setting forth such Conversion Price (and any change in the kind or amount of consideration to be received by the holders of shares of the Series B Preferred Stock upon conversion) after such adjustment and setting forth a brief statement of the facts requiring such adjustment and the manner of computing the same, and (B) a notice stating that such Conversion Price has been adjusted, stating the effective date of such adjustment and enclosing such certificate shall forthwith be mailed by the Corporation to the holders of shares of the Series B Preferred Stock at their addresses as shown on the stock books of the corporation. (xii) If as a result of any adjustment pursuant to this Section 6(d), the holder of any share of Series B Preferred Stock surrendered for conversion becomes entitled to receive any consideration other than Common Stock, (A) the Conversion Price with respect to such other consideration shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to Common Stock contained in this Section 6(d), and (B) in the case such consideration shall consist of shares of Common Stock and some other kind of consideration or of two or more kinds of consideration, the Board shall determine in good faith the fair allocation of the adjusted Conversion Price between or among such types of consideration, and evidence of such determination shall be filed with the minutes of the corporation. (e) ALTERNATE SOURCES FOR COMMON STOCK SHARE PRICES. If for any reason the Common Stock is no longer reported on NASDAQ or a national securities exchange then the high and low price of a share of Common Stock on the relevant day for purposes of calculating the Current Market Price shall be determined on the basis of the last reported sale price, regular way, of the Common Stock as reported on the composite tape, or similar reporting system, for issues listed or admitted to trading on the principal national securities exchange on which the Common Stock is then listed or admitted to trading or, if there is no such reported sale on the day in question, on the basis of the average of the high and low bid and asked quotations as so reported or, if the Common Stock is not then listed or admitted to trading on any national securities exchange or on NASDAQ, on the basis of the average of the high bid and low asked quotations on the day in question in the over-the-counter market as reported by the National Association of Securities Dealers Automated Quotation System, or, if not so quoted, as reported by National Quotation Bureau, Incorporated, or a similar organization. If the Current Market Price is not determinable as aforesaid, they shall be determined in good faith by the Board of Directors of the Corporation and evidence of such determination shall be filed with the minutes of the Corporation. (f) SPECIFIED EVENTS. For purposes of this Section 6(f), a "SPECIFIED EVENT" shall occur if (i) the Corporation authorizes the granting to the holders of the Common Stock of any Rights or of any other rights, (ii) there is any capital stock reorganization or reclassification of the Common Stock (other than a subdivision or combination of the outstanding Common Stock and other than a change in the par value of the Common Stock), or any merger, consolidation or other reorganization to which the Corporation is a party, or any statutory exchange of securities with another person and for which approval of any stockholders of the Corporation is required, or any sale or transfer of all or substantially all the assets of the Corporation or (iii) there is a voluntary liquidation, dissolution or winding up of the Corporation. If a Specified Event occurs, the Corporation shall cause to be filed with the minutes of the Corporation, and shall cause to be mailed to the holders of shares of the Series B Preferred Stock at their addresses as shown on the stock books of the Corporation, at least 10 days prior to the applicable date specified below, a notice stating, (A) the date on which a record is to be taken for the purpose of any distribution or Rights relating to such Specified Event or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such distribution or Rights are to be determined, or (B) the date on which the reorganization, reclassification, consolidation, merger, statutory exchange, sale, transfer, dissolution, liquidation or winding-up relating to such Specified Event is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such Specified Event. (g) RESERVATION OF COMMON STOCK. The Corporation shall at all times reserve and keep available, free from preemptive and subscription rights, out of its authorized but unissued shares of Common Stock, for the purpose of effecting conversions of the Series B Preferred Stock, the full number of shares of Common Stock deliverable upon the conversion of all outstanding shares of Series B Preferred Stock not theretofore converted. For this purpose, the number of shares of Common Stock deliverable upon the conversion of all outstanding shares of Series B Preferred Stock shall be computed as if at the time of computation all such outstanding shares were held by a single holder. (h) LISTING. With respect to any securities required to be delivered upon conversion of the Series B Preferred Stock, the Corporation shall use all commercially reasonable efforts to list or have approved for quotation such securities prior to such delivery upon each securities exchange or automated quotation system, if any, on which any securities of such class are already listed or approved for quotation. (i) TAXES. The Corporation shall pay all documentary stamp or similar issue or transfer taxes payable in respect of the issue or delivery of securities on conversion of the Series B Preferred Stock; PROVIDED, HOWEVER, that (i) the Corporation shall not be required to pay any tax payable in respect of any transfer involved in the issue or delivery of securities in a name other than that of the holder of the shares of Series B Preferred Stock, to be converted and (ii) no such issue or delivery shall be made unless and until such holder has paid to the Corporation the amount of any such tax or has established, to the satisfaction of the Corporation, that such tax has been paid or provided for. (j) TERMINATION OF CONVERSION RIGHTS. (i) If within any period of 30 consecutive trading days for a period of at least 20 trading days (which 20 days must include the last day of the 30 consecutive trading day period), the average of the high and low sales prices of the Corporation's Common Stock on the NASDAQ for such 20 trading days rounded up to the nearest whole cent (the "Average Daily Trading Price") exceeds 120% of the Conversion Price then in effect, at its option and in its sole discretion upon notice given as set forth below, the Corporation may terminate the conversion rights set forth in this Section 6. Beginning on the 10th day following receipt from the Corporation of the notice setting forth its intention to terminate the conversion rights and ending on the 45th day after receipt thereof, the Corporation shall be required to redeem any shares of Series B Preferred Stock (i) at a redemption price equal to the Liquidation Amount plus all accrued and unpaid dividends (including any interest thereon) if redeemed prior to the third anniversary of the issuance of the Series B Preferred Stock, and (ii) at the redemption prices then in effect as set forth in Section 5(b) if redeemed on or after the third anniversary of the issuance of the Series B Preferred Stock, of any holder that so requests, which request must be received by the Corporation on or prior to the 45th day after such holder receives the notice of the conversion termination. In order to exercise this right, such holder must submit its request to the Corporation in the manner set forth in the notice of conversion termination, the certificates for the shares to be so redeemed and the number of shares to be redeemed if less than the number represented by the certificate and the name in which to issue any such shares not so redeemed, if different from the holder. Following the 45th day after the holders receive the conversion termination notice, the conversion rights for all outstanding shares of Series B Preferred Stock shall terminate with no further action by the Corporation. For purposes of this paragraph, a holder shall be deemed to have received notice, if such notice is sent by facsimile to a facsimile number provided by such party for such purpose, on the day it is so sent. If sent by first class mail, postage prepaid, addressed to such holder at the last address for such holder that appears on the books of the Corporation, notice shall be deemed to have been received on the third business day after such notice has been mailed. If notice is also required to be published as set forth in paragraph (ii) below, notice shall be deemed to have been received on the day that it is so published. (ii) So long as the Series B Preferred Stock is not registered under the Securities Act, notice of the termination of conversion rights shall be mailed by first class mail, postage prepaid, addressed to the holders of record of the Series B Preferred Stock at their respective last addresses as they appear of the books of the Corporation and may be provided by facsimile to any number provided by the holder for that purpose. If the Corporation registers the outstanding shares of Series B Preferred Stock under the Securities Act, then such notice shall be given by mail as described in the preceding sentence and the Corporation shall also publish any such notice as set forth in Section 5(c) hereof. The notice shall set forth: (A) the Average Daily Trading Price for the 20 trading days in question, the dates for which such amounts are presented, the Conversion Price then in effect for each such day and the percentage by which the Current Market Price exceeds such Conversion Price; (B) the redemption price then in effect; (C) the place or places where certificates for the shares are to be surrendered for redemption; and (D) that dividends on the shares to be redeemed will cease to accrue on the date the holder delivers any shares to the Corporation for redemption (unless the Corporation shall default in redeeming the shares on the redemption date). 7. STATUS OF SHARES. Upon any redemption, repurchase, conversion, exchange or other acquisition by the Corporation of shares of Series B Preferred Stock, the shares of Series B Preferred Stock, so redeemed, repurchased, converted, exchanged or acquired shall be retired and canceled and shall not be available for reissuance. 8. VOTING RIGHTS. (a) The holders of shares of the Series B Preferred Stock shall not have the right to vote on or consent to any matter as shareholders of the Corporation, except as required by applicable law or as otherwise provided below. All matters on which the holders of the Series B Preferred Stock have the right to vote may be approved at an annual or special meeting by holders of the minimum number of shares of Series B Preferred Stock that would be required to approve a matter if all shares were present and voting at a meeting called to consider such matter or may be approved by one or more written consents signed by all of the holders of shares of Series B Preferred Stock. (b) The consent of holders of at least a majority of the outstanding shares of Series B Preferred Stock (voting separately as a class but excluding from any calculation any shares of Series B Preferred Stock held by the Corporation or any subsidiary thereof) shall be necessary to amend, alter or repeal any of the provisions of this Article XII of the Articles of Incorporation of the Corporation which would adversely affect the powers, preferences or rights of the holders of shares of Series B Preferred Stock then outstanding. (c) If at any time the equivalent of six quarterly dividends payable on the outstanding shares of Series B Preferred Stock are accrued and unpaid, whether or not consecutive and whether or not declared, the holders of all outstanding shares of Series B Preferred Stock, voting as a single class, together with the holders entitled to vote of each series of Series A Preferred Stock and the holders entitled to vote of all other series of Preferred Stock of the Corporation that rank PARI PASSU with or senior to the Series B Preferred Stock and have similar voting rights, shall be entitled to elect at the next annual meeting of shareholders of the Corporation 25% of the directors to the Corporation's Board of Directors, but no less than two directors (or such greater number as shall be provided in any other series of Preferred Stock that shall at the time be entitled to vote with the Series B Preferred Stock to elect directors). The proportion of the total vote of all holders of Preferred Stock entitled to vote for such directors attributable to the holders of the Series B Preferred Stock shall be based on the percentage the aggregate Liquidation Amount for all outstanding shares of Series B Preferred Stock bears to the aggregate liquidation amounts of all other shares of Preferred Stock entitled to vote. Such directors shall serve until all accumulated and unpaid dividends have been paid or declared and funds sufficient for their payment have been set aside therefor. (d) For the avoidance of doubt, except as otherwise set forth in this Section 8 or as required by law, the holders of the Series B Preferred Stock shall not have the right to vote or consent with respect to (i) the increase or decrease in the amount of authorized capital stock of any class or series, other than increases or decreases in Series B Preferred Stock (to the extent specified elsewhere herein), (ii) the authorization, creation (by way of reclassification or otherwise) or issuance by the Board of Directors of any series of Preferred Stock, other than any series that will rank senior to the Series B Preferred Stock as to dividend distributions and distributions upon the liquidation, winding up or dissolution of the Corporation or any obligation or security convertible into or exercisable for or exchangeable into or evidencing a right to purchase, shares of any series of Preferred Stock or the issuance by the Board of Directors of any previously authorized class of capital stock of the Corporation, or (iii) any merger, acquisition, disposition or share exchange involving the Corporation where no shareholder vote is otherwise required or pursuant to which the holders of the Series B Preferred Stock receive cash at least equal to the Liquidation Amount. (e) The consent of the holders of at least a majority of the outstanding shares of Series B Preferred Stock (voting separately as a class, but excluding from any calculation any shares of Series B Preferred Stock held by the Corporation or any subsidiary thereof) shall be necessary to increase the authorized number of shares of Series B Preferred Stock and to authorize, create or issue any series of Preferred Stock that will rank senior to the Series B Preferred Stock as to dividend distributions, and distributions upon the liquidation, winding up or dissolution of the Corporation. ARTICLE II The foregoing amendment was adopted on September 19, 2000. ARTICLE III MANNER OF ADOPTION AND VOTE Section 1. ACTION BY DIRECTORS. The amendment set forth above was adopted by the Board of Directors of the Corporation and shareholder action was not required. ARTICLE IV COMPLIANCE WITH LEGAL REQUIREMENTS The manner of the adoption of the Articles of Amendment and the vote by which they were adopted constitute full legal compliance with the provisions of the Act, the Articles of Incorporation, and the Bylaws of the Corporation. IN WITNESS WHEREOF, the undersigned Corporation has caused these Articles of Amendment to be signed and verified by a duly authorized officer, acting for and on behalf of such Corporation; and the undersigned verifies subject to the penalties of perjury that the facts contained herein are true this 19th day of September, 2000. AMTRAN, INC. by /s/ Brian T. Hunt ----------------------------- Name: Brian T. Hunt Title: Vice President & General EX-4.9 4 file004.txt AMTRAN, INC., 2000 10-K, EXHIBIT 4.9 EXECUTION COPY PURCHASE AND INVESTOR RIGHTS AGREEMENT dated as of December 13, 2000, between AMTRAN, INC., an Indiana corporation ("Amtran") and BOEING CAPITAL CORPORATION ("BCC"), a Delaware corporation. WHEREAS, on May 4, 2000, Amtran's wholly owned subsidiary, American Trans Air, Inc. ("ATA"), and BCC entered into a binding commitment letter (the "Commitment Letter") whereby BCC agreed to provide certain financing to ATA (the "Financing Arrangements") in connection with the sale of aircraft by The Boeing Company to ATA; WHEREAS, pursuant to the Commitment Letter, BCC and ATA agreed, among other things, that in connection with the Financing Arrangements, Amtran may, at its option, issue shares of Preferred Stock to BCC, the terms of which are set forth in Annex A hereto (the "Preferred Stock"); and WHEREAS, the shares of Preferred Stock to be issued to BCC will be issued in series and may be issued in multiple series each of which will have identical terms other than the Dividend Rate (as defined in Annex A), redemption dates and related matters. NOW THEREFORE, pursuant to the mutual agreements and premises set forth herein, the parties agree as follows: 1. Issuance and Sale of Preferred Stock. Amtran agrees to issue and sell to BCC up to an aggregate of 500 shares of Preferred Stock having an aggregate amount payable upon liquidation (the "Liquidation Amount") of up to $50 million. The Preferred Stock will have a per share Liquidation Amount of $100,000 and will be issued in increments of $2 million in Liquidation Amount at each time of delivery of the aircraft as set forth in Schedule I hereto; provided, however, that in accordance with the terms of the Financing Arrangements, Amtran, ATA and BCC have agreed that if prior to the delivery of the first aircraft, ATA pre-pays the deferred portion of the pre-delivery payment with respect to the aircraft equivalent to up to $50 million, then BCC shall purchase the number of shares of Preferred Stock having an aggregate Liquidation Amount equal to the amount of such pre-payment. The aggregate Liquidation Amount of the shares of Preferred Stock that BCC shall be obligated to purchase hereunder in connection with the delivery of aircraft and any pre-payments of the deferred purchase price for such aircraft shall not exceed $50 million. Each delivery date of shares of Preferred Stock in accordance with the terms of this Agreement is referred to herein as a "Closing Date". If Amtran elects to deliver Preferred Stock at the time of delivery of any aircraft, Amtran shall provide BCC with written notice of its intention to do no later than three business days prior to the date of such delivery. Payment of the purchase price for the series of Preferred Stock to be issued on each Closing Date shall be made by wire transfer to the account specified by Amtran in immediately available funds. Delivery of the certificates for the shares against such payment shall be made at the office of Cravath, Swaine & Moore at 10:00 a.m. (New York time) (each a "Closing"). 2. Representations and Warranties of Amtran. At each Closing Amtran represents and warrants to, and agrees with BCC that: (a) Corporate Organization. Amtran has been duly incorporated and is an existing corporation in good standing under the laws of the State of Indiana, with power and authority (corporate and other) to own its properties and conduct its business as presently conducted. Each of Amtran's subsidiaries listed on Schedule II hereto (each a "Material Subsidiary" and together, the "Material Subsidiaries") has been duly incorporated and is an existing corporation in good standing under the laws of its jurisdiction of incorporation, with power and authority (corporate and other) to own its properties and conduct its business as presently conducted. Amtran and each of its Material Subsidiaries is duly qualified to do business as a foreign corporation in good standing in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification except where the failure to be so qualified would not have a material adverse effect on its business and properties. (b) Corporate Power. Amtran has all requisite corporate power and authority to execute and deliver this Agreement and the Exchange Notes, to adopt the Articles of Amendment to the Articles of Incorporation substantially in the form attached hereto in Annex A (the "Series A Designation") in respect of each series of Preferred Stock, to issue and sell the Preferred Stock issuable hereunder, to issue the Exchange Notes issuable upon exchange of the Preferred Stock, and to carry out and perform Amtran's obligations under the terms of this Agreement. (c) Authorization of Preferred Stock. At each Closing, the series of Preferred Stock to be issued at such Closing will be duly authorized by Amtran and when issued and delivered by Amtran in accordance with the terms hereof and paid for pursuant to this Agreement on the applicable Closing Date, will be validly issued, fully paid and non-assessable shares of Preferred Stock with no personal liability attaching to the ownership thereof and will be free and clear of all liens, charges, restrictions, claims and encumbrances imposed by or through Amtran except as set forth in the Articles of Incorporation, as amended, the Bylaws and this Agreement. The issuance, sale or delivery of the Preferred Stock is not subject to any preemptive right of stockholders of Amtran or to any right of first refusal or other right in favor of any person. (d) Authorization of Exchange Notes. The subordinated notes of Amtran, the terms of which are set forth in Annex B hereto, which may be issued in exchange for the Preferred Stock in accordance with the terms of the Preferred Stock (the "Exchange Notes"), have been duly authorized by Amtran and when and if issued, executed, authenticated and delivered, will constitute legal, valid and binding unsecured and subordinated obligations of Amtran enforceable in accordance with their terms (subject to applicable bankruptcy, receivership, insolvency, fraudulent transfer, reorganization, moratorium or other laws affecting creditors' rights generally from time to time in effect). (e) This Agreement. The execution and delivery of this Agreement and the performance of the transactions contemplated hereby have been duly authorized and this Agreement has been duly executed and delivered by Amtran and is enforceable in accordance with its terms (subject to applicable bankruptcy, receivership, insolvency, fraudulent transfer, reorganization, moratorium or other laws affecting creditors' rights generally from time to time in effect). (f) Exempt Securities. Assuming the representations and warranties of BCC are true and correct, the offer and sale of the Preferred Stock in the manner contemplated by this Agreement will be exempt from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act") by reason of Section 4(2) thereof. (g) Subsidiaries. Except as set forth in the Schedule of Exceptions, Amtran owns, either directly or indirectly, all of the outstanding shares of capital stock of the Material Subsidiaries free and clear of any claim, lien or encumbrance. All of the issued and outstanding shares of capital stock of the Material Subsidiaries are validly issued, fully paid and non-assessable. Except as set forth in the Schedule of Exceptions, there are outstanding no securities convertible into, exchangeable for, or carrying the right to acquire, equity securities of any of the Material Subsidiaries, or subscriptions, warrants, options, rights or other arrangements or commitments obligating any Material Subsidiary to issue or acquire any of its equity securities or any ownership interest therein. (h) Capitalization. The authorized capital stock of Amtran consists of the following: (i) 30,000,000 shares of Common Stock without par value (the "Common Stock"), 13,076,674 of which are issued and outstanding as of the date hereof. (ii) 10,000,000 shares of preferred stock, without par value, 300 of which are outstanding as of the date hereof (other than the 500 shares of Preferred Stock to be issued hereunder). (iii) Except for the rights granted in this Agreement, as of the date hereof there are outstanding no subscriptions, options, calls, warrants, conversion privileges, preemptive rights, rights of first refusal or other similar commitments or rights to which Amtran is a party or by which Amtran is bound, with respect to the purchase or other acquisition of any of the authorized but unissued capital stock of Amtran other than the 1993, 1996 and 2000 Incentive Stock Plans for Key Employees and the 300 shares of previously issued preferred stock referenced in Section 2(h)(ii) above. (i) No Breach. The execution and delivery by Amtran of this Agreement and when and if issued, the Exchange Notes, and the consummation by Amtran of the transactions contemplated hereby and thereby, including but not limited to the offering, issuance and sale of the Preferred Stock pursuant to this Agreement, do not and will not (with or without due notice, lapse of time, or both) (i) conflict with or result in a breach of any of the terms, conditions or provisions of, (ii) constitute a default under, (iii) result in the creation of any lien, security interest, charge or encumbrance upon the capital stock or assets of Amtran or any of its Material Subsidiaries pursuant to, (iv) give any third party the right to accelerate any obligation under, or terminate any right of Amtran or any of its Material Subsidiaries under, (v) result in a violation of, or (vi) require any authorization, consent, qualification, approval, exemption, filing or other action by or notice to any court or administrative or governmental body or any other person or entity (other than (A) the filing of the Series A Designation with the Secretary of State of the State of Indiana in respect of each series of Preferred Stock to be issued and (B) filings pursuant to applicable state securities laws and Regulation D of the Securities Act) pursuant to, any of (x) the Articles of Incorporation, as amended, or Bylaws of Amtran, (y) any law, statute, rule, regulation, instrument, order, judgment or decree to which Amtran or any of its Material Subsidiaries, or any of their properties is subject, or (z) any contract, evidence of indebtedness, permit, license, agreement or instrument to which Amtran or any of its Material Subsidiaries is a party or to which any of their properties is subject. (j) Financial Information. Amtran's audited consolidated balance sheet for its most-recent fiscal year, included in Amtran's most-recent Annual Report on Form 10-K filed by Amtran with the Securities and Exchange Commission (the "Commission"), and the related consolidated statements of operations and cash flows for the period then ended, have been prepared in accordance with GAAP and fairly present in all material respects the financial condition of Amtran and its consolidated subsidiaries as of such date and the results of its operations and cash flows for such period. (k) Absence of Certain Changes. Since December 31, 1999, except as disclosed in the Schedule of Exceptions and in Amtran's Quarterly Report on Form 10-Q for the three months ended September 30, 2000 or any Current Report on Form 8-K filed with the Commission subsequent to March 30, 2000 and prior to the date of this Agreement, there has not been any event or condition of any character that has had, or is likely to have, individually or together with any other such events or conditions, a material adverse effect on the business, operations, prospects, liabilities, capitalization or financial condition of Amtran and its subsidiaries taken as a whole or Amtran's ability to perform its obligations under this Agreement or, if and when issued, the Exchange Notes (a "Material Adverse Effect"). (l) Disclosure. As of their respective filing dates, all reports filed by Amtran (the "Amtran SEC Documents") pursuant to Section 13 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), complied in all material respects with the requirements of the Exchange Act and did not at the time they were filed contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. (m) Certified Air Carrier. ATA is an "air carrier" within the meaning of the Transportation Code that is a "citizen of the United States" within the meaning of the Transportation Code and holds both a certificate under Section 41102(a)(1) of the Transportation Code and an air carrier operating certificate issued pursuant to Chapter 447 under the Transportation Code for aircraft capable of carrying ten or more individuals or 6,000 pounds or more of cargo. "Transportation Code" means Subtitle VII of Title 49 of the United States Code, as in effect on the date hereof and as modified or amended thereafter, or any successor or substituted legislation at the titre in effect and applicable. (n) Compliance with Law. Amtran is not in violation of any term of its Articles of Incorporation, as amended, or Bylaws or of the provisions of any mortgage, indenture, contract, agreement, instrument, certificate, permit, judgment, decree, order, statute, rule or regulation to which it is subject and a violation of which could create a Material Adverse Effect. Amtran has all material certificates, permits, licenses and approvals, necessary to conduct its business as currently conducted. 3. Representations and Warranties of BCC. At each Closing BCC represents and warrants to and agrees with Amtran that: (a) Corporate Organization. BCC has been duly incorporated and is an existing corporation in good standing under the laws of the State of Delaware, with power and authority (corporate and other) to own its properties and conduct its business as presently conducted. (b) This Agreement. This Agreement has been duly authorized, executed and delivered by BCC and is enforceable in accordance with its terms (subject to applicable bankruptcy, receivership, insolvency, fraudulent transfer, reorganization, moratorium or other laws affecting creditors' rights generally from time to time in effect). (c) No Breach. The execution and delivery by BCC of this Agreement, the purchase of the Exchange Notes, if issued, and the consummation by BCC of the transactions contemplated hereby and thereby, including but not limited to the purchase of the Preferred Stock pursuant to this Agreement, do not and will not (with or without due notice, lapse of time, or both) (i) conflict with or result in a breach of any of the terms, conditions or provisions of, (ii) constitute a default under, (iii) give any third party the right to accelerate any obligation under, or terminate any right of BCC or any of its subsidiaries under, (iv) result in a violation of, or (v) require any authorization, consent, qualification, approval, exemption, filing or other action by or notice to any court or administrative or governmental body or any other person or entity (other than filings pursuant to applicable state securities laws and Regulation D of the Securities Act) pursuant to, any of (x) the Certificate of Incorporation of BCC, as amended, or its Bylaws or (y) any law, statute, rule, regulation, instrument, order, judgment or decree to which BCC or any of its subsidiaries, or any of their properties is subject. (d) Exempt Securities. BCC understands that neither the Preferred Stock nor the Exchange Notes has been registered under the Securities Act. BCC also understands that the Preferred Stock is being offered and sold pursuant to an exemption from registration contained in the Securities Act based in part upon BCC's representations contained in this Agreement and that the Exchange Notes, if issued, may be issued in reliance upon the same exemption. (e) Accredited Investor. BCC represents that it is an accredited investor within the meaning of Regulation D under the Securities Act. (f) No Distribution. BCC is acquiring the shares of Preferred Stock for its own account for investment only, and not with a view towards their distribution. (g) Investment Experience. BCC represents that it has substantial experience in evaluating and investing in private placement transactions of securities in companies similar to Amtran so that it is capable of evaluating the merits and risks of its investment in Amtran and by reason of its management's business and financial experience, it has the capacity to protect its own interests in connection with the transactions contemplated in this Agreement. BCC understands that it must bear the economic risk of this investment indefinitely unless the Preferred Stock or any Exchange Notes issued in exchange therefor are registered pursuant to the Securities Act, or an exemption from registration is available. BCC also understands that Amtran has no present intention of registering the Preferred Stock or any Exchange Notes issued in exchange therefor. BCC also understands that there is no assurance that any exemption from registration under the Securities Act will be available and that, even if available, such exemption may not allow BCC to transfer all or any portion of the Preferred Stock or any Exchange Notes issued in exchange therefor under the circumstances, in the amounts or at the times BCC might propose. (h) Information Provided. BCC acknowledges that Amtran has provided to it, or made available for its inspection, all information requested by it. BCC has had an opportunity to discuss Amtran's business, management and financial affairs with directors, officers and management of Amtran and has had the opportunity to review Amtran's operations and facilities. BCC has also had the opportunity to ask questions of and receive answers from, Amtran and its management regarding the terms and conditions of this investment. (i) Securities Act Legend. BCC acknowledges and agrees that the Preferred Stock will, and the Exchange Notes may, contain a restrictive legend substantially to the following effect: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED BY THE HOLDER SOLELY FOR ITS OWN ACCOUNT FOR THE PURPOSE OF INVESTMENT AND NOT WITH A VIEW TO OR FOR SALE IN CONNECTION WITH ANY DISTRIBUTION THEREOF IN VIOLATION OF THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND APPLICABLE STATE SECURITIES LAWS. THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE ACT OR APPLICABLE STATE SECURITIES LAWS AND, UNLESS REGISTERED, MAY NOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION THEREFROM." (j) Additional Legend. BCC acknowledges and agrees that the Preferred Stock and the Exchange Notes will also contain a restrictive legend substantially to the following effect: "These securities are subject to a Purchase and Investor Rights Agreement dated as of December 13, 2000, between Amtran, Inc. and Boeing Capital Corporation and may not be transferred except in accordance with the terms of such Agreement." 4. (A) Conditions to Closing. The obligations of BCC to purchase the Preferred Stock at each Closing are subject to the fulfillment on or prior to such Closing Date of the following conditions: (a) Representations and Warranties Correct. The representations and warranties made by Amtran in Section 3 hereof shall be true and correct as of such Closing Date with the same force and effect as if made on such date. (b) Covenants. All covenants and agreements contained in this Agreement to be performed or complied with by Amtran on or prior to such Closing Date shall have been performed or complied with. (c) Governmental Authorizations, etc. All material governmental authorizations, consents or approvals required to be obtained, and all governmental filings to be made by Amtran and its Material Subsidiaries in connection with the issuance and sale of the series of Preferred Stock to be issued on such Closing Date pursuant to this Agreement (other than any such filings as shall be permitted by applicable law to be made post-Closing) shall have been obtained or made and shall be in full force and effect. (d) Series A Designation. Amtran shall have filed with the Secretary of State of the State of Indiana Articles of Amendment to the Articles of Incorporation in respect of the series of Preferred Stock to be issued on such Closing Date substantially in the form of the Series A Designation and the same shall be effective. The initial Articles of Amendment to the Articles of Incorporation filed pursuant to this Agreement shall create Series A1 Preferred Stock. Each subsequent filing of Articles of Amendment to the Articles of Incorporation filed pursuant to this Agreement shall create a separate series of Preferred Stock which shall be numbered successively as Series A2 Preferred Stock, Series A3 Preferred Stock and so on. (e) Good Standing Certificates. Each of Amtran and ATA shall have delivered to BCC certificates dated as of the most recent practicable date prior to such Closing Date issued by the Secretaries of State of their respective States of incorporation to the effect that Amtran and ATA is legally existing and in good standing in such State and each other state in which Amtran or ATA is qualified or required to be qualified to do business. (f) Secretary's Certificate. Amtran shall have delivered to BCC a certificate executed by the Secretary of Amtran dated as of such Closing Date, certifying as to the following matters: (a) resolutions adopted by the Board of Directors of Amtran approving the transactions contemplated by this Agreement and the Exchange Notes, (b) the Series A Designation in respect of the series of Preferred Stock to be issued on such Closing Date and (c) the Bylaws. (g) Opinion of Counsel. Amtran shall have delivered to BCC opinions of Cravath, Swaine & Moore, counsel to Amtran and Brian Hunt, Esq., General Counsel of Amtran, in form reasonable satisfactory to BCC and its counsel to the substantive effect as set forth in Exhibit A hereto. (h) Compliance Certificate. Amtran shall have delivered to BCC a certificate of Amtran executed by the President or a Vice President of Amtran, dated such Closing Date, and certifying as to the fulfillment of the conditions specified in paragraphs (a), (b) and (c) of this Section 4(A). (B) Covenant Regarding Series A Designation. Amtran hereby covenants and agrees to file with the Secretary of State of the State of Indiana prior to each Closing Date Articles of Amendment to the Articles of Incorporation in respect of the series of Preferred Stock to be issued on the Closing Date substantially in the form of the Series A Designation. 5. Other Agreements of the Parties. Amtran and BCC agree that the Preferred Stock will rank with respect to the payment of dividends and distributions upon any liquidation of Amtran, equally with any other series of preferred stock that have been issued to an equipment lessor, including any shares that may be issued to International Lease Finance Corporation or any affiliate thereof. Amtran agrees that the Preferred Stock as an equity security will rank junior to all indebtedness and other liabilities due to Amtran's general creditors. 6. Prohibitions on Transfer; Amtran's Right of First Refusal. (a) BCC shall not be permitted to transfer any shares of Preferred Stock or any Exchange Notes except in accordance with the provisions of this Section 6. Notwithstanding the foregoing, at any time, BCC may transfer the shares of Preferred Stock or any Exchange Notes held by it to an affiliate thereof that expressly agrees in writing to be bound by the terms of this Agreement; provided that BCC shall not be released from its obligations under the Financing Arrangements or any other obligations set forth in this Agreement. For purposes of this Section "affiliate" means any person controlling, controlled by or under common control with BCC. (b) If BCC receives from any party other than an affiliate of, or person acting in concert with, BCC (a "Third Party Offeror"), an offer to purchase any shares of Preferred Stock or Exchange Notes held by it (a "Third Party Offer"), prior to transferring any such shares of Preferred Stock or Exchange Notes to such Third Party Offeror, BCC must first provide notice to Amtran (the "Offer Notice") of such Third Party Offer setting forth in reasonable detail: (A) the name and business background of the Third Party Offeror; (B) the number of shares of Preferred Stock or Exchange Notes subject to the Third Party Offer and the prospective purchase price for such shares of Preferred Stock or Exchange Notes; (C) the type of consideration offered, if all or a portion of the consideration will be paid other than in cash and the relative proportions of such consideration; and (D) all other material terms and conditions of the Third Party Offer; (c) The delivery of the Offer Notice to Amtran shall constitute BCC's offer to sell to Amtran all, but not less than all of the number of shares of Preferred Stock set forth in the Offer Notice upon the terms set forth therein. Amtran shall have ten business days after delivery of the Offer Notice (the "Offer Period") to accept the offer set forth therein on such terms and conditions no less favorable to Amtran than those offered to the Third Party Offeror (the "Right of First Refusal"). For purposes of this Agreement "business day" shall mean any day that is not a Saturday or Sunday or other day on which banking institutions in the city of New York or the city of Indianapolis are authorized or required by law or executive order to be closed. If the Offer Notice provides that all or a portion of the consideration shall consist of any debt obligation of the Third Party Offeror or any affiliate thereof, Amtran shall be entitled to provide a note for the equivalent portion of the non-cash consideration on the same terms as the debt obligation included in the non-cash consideration described in the Third Party Offer. If the Offer Notice provides that all or a portion of the consideration shall be in the form of non-cash consideration other than a debt obligation of the Third Party Offeror or an affiliate thereof (in which case the provisions of the previous sentence shall apply to such portion of the non-cash consideration consisting of a debt obligation), Amtran shall pay cash for such non-cash portion of the consideration (the "Cash Equivalent Amount"). The Cash Equivalent Amount shall equal the fair market value of such non-cash consideration as determined by an independent third party mutually selected by Amtran and BCC. The determination of the fair market value of the Cash Equivalent Amount by the independent third party shall be conclusive for all purposes under this Section 6. Any delay in (i) the selection of a mutually acceptable independent third party or (ii) the delivery of the determination of the fair market value of the Cash Equivalent Amount by such independent third party shall not result in or be the basis for an extension of the Offer Period. (d) To accept the offer, Amtran shall deliver to BCC, prior to the expiration of the Offer Period, a written notice indicating its agreement to the terms set forth in the Offer Notice. Upon delivery, such acceptance shall constitute a binding commitment of Amtran to purchase all the shares of Preferred Stock that were the subject of the Offer Notice. If Amtran accepts the offer and elects to exercise its Right of First Refusal, the closing for the purchase of the shares shall occur not less than ten nor more than 30 days following the date on which Amtran accepts the offer pursuant to the provisions of this Section 6; provided that, notwithstanding anything to the contrary, if the determination of the fair market value of the Cash Equivalent Amount by the independent third party has not been received by the parties by such closing date, the closing for the purchase of the shares of Preferred Stock shall be postponed until five days following the receipt by Amtran of such determination of the Cash Equivalent Amount by such independent third party. (e) If no acceptance is given by Amtran prior to the expiration of the Offer Period, then BCC may sell the number of shares of Preferred Stock set forth in the Offer Notice to the Third Party Offeror identified in the Offer Notice upon terms and conditions no more favorable to the Third Party Offeror than those set forth in such Offer Notice, within 30 days from the expiration of the Offer Period (in the case no acceptance was given). If at the end of such 30-day period, BCC shall not have completed the transfer to the Third Party Offeror, BCC shall no longer be permitted to sell the shares of Preferred Stock that were the subject of the Offer Notice without again fully complying with the provisions of this Section 6. 7. Removal of Restrictive Legends. All shares of Preferred Stock shall be issued with the restrictive legends set forth in Section 3(i) and 3(j) unless and until such legends are removed in accordance with the provisions of this Section 7. Amtran shall not be required to issue, nor shall it be required to instruct any transfer agent for the Preferred Stock to authenticate, any shares of Preferred Stock without the legend set forth in Section 3(i) unless it shall have received an opinion of its counsel reasonably satisfactory to it that such legend is no longer required by the applicable provisions of the Securities Act. Amtran shall not be required to issue, nor shall it be required to instruct any transfer agent for the Preferred Stock to authenticate, any shares of Preferred Stock without the legend set forth in Section 3(j) unless the shares of Preferred Stock shall no longer be subject to the terms of this Agreement. 8. Notices. All communications hereunder will be in writing and, if sent to Amtran will be mailed, delivered or sent via facsimile and confirmed to American Trans Air, Inc., 7337 West Washington Street, Indianapolis International Airport, Indianapolis, Indiana, Facsimile: (317) 240-7091, Attention: General Counsel, or, if sent to BCC, will be mailed, delivered or sent via facsimile and confirmed to it at Boeing Capital Corporation, 3780 Kilroy Airport Way, Suite 750, Long Beach, CA 90806, Facsimile: (562) 997-3335, Attention: Vice President-Tax and Legal. 9. Successors. This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns, and no other person will have any right or obligation hereunder. 10. Severability. If any provision of this Agreement is held illegal, invalid or unenforceable, such illegality, invalidity or unenforceability shall attach only to such provision and shall not in any manner affect or render illegal, invalid or unenforceable any other provision of this Agreement, and this Agreement shall be carried out as if any such illegal, invalid or unenforceable provision were not contained herein. 11. Counterparts. This Agreement may be executed in any number of counterparts,each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same Agreement. 12. Applicable Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York without regard to principles of conflicts of laws. 13. Termination. This Agreement shall terminate on June 30, 2001. The parties hereby submit to the nonexclusive jurisdiction of the Federal and state courts in the Borough of Manhattan in The City of New York in any suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If the foregoing is in accordance with your understanding of our agreement, kindly sign and return to us one of the counterparts hereof, whereupon it will become a binding agreement in accordance with its terms. AMTRAN, INC. by /s/ Kenneth K. Wolff -------------------------------------- Name: Kenneth K. Wolff Title: Executive Vice President & CFO BOEING CAPITAL CORPORATION by /s/ Douglas S. Hadley -------------------------------------- Name: Douglas S. Hadley Title: Authorized Signatory SCHEDULE I SCHEDULE II SCHEDULE III SCHEDULE OF EXCEPTIONS ANNEX A Certificate of Amendment to Amtran's Certificate of Incorporation Setting Forth the Terms of the Preferred Stock ANNEX B Form of Exchange Note EXHIBIT A FORM OF OPINIONS EX-4.10 5 file005.txt AMTRAN, INC. 2000 10-K, EXHIBIT 4.10 PURCHASE AND INVESTOR RIGHTS AGREEMENT dated as of September 19, 2000, between AMTRAN, INC., an Indiana corporation ("AMTRAN") and INTERNATIONAL LEASE FINANCE CORPORATION ("ILFC"), a California corporation. WHEREAS, on May 4, 2000, Amtran's wholly owned subsidiary, American Trans Air, Inc. ("ATA"), and ILFC entered into a binding commitment letter (the "COMMITMENT LETTER") whereby ILFC agreed to lease certain aircraft to ATA (the "LEASES"); WHEREAS, pursuant to the Commitment Letter, ILFC and ATA agreed, among other things, that in connection with the Leases, ILFC shall purchase from Amtran shares of preferred stock, the terms of which are set forth in Annex A hereto (the "PREFERRED STOCK"). NOW THEREFORE, pursuant to the mutual agreements and premises set forth herein, the parties agree as follows: 1. ISSUANCE AND SALE OF PREFERRED STOCK. Amtran agrees to issue and sell to ILFC up to an aggregate of 300 shares of Preferred Stock having an aggregate amount payable upon liquidation (the "Liquidation Amount") of up to $30 million. The Preferred Stock will be issued in increments of approximately $2.1 million in Liquidation Amount in amounts per share of $100,000 in Liquidation Amount in connection with the execution by ATA of 14 binding leases for 14 aircraft. The delivery date of shares of Preferred Stock in accordance with the terms of this Agreement is referred to as the "Closing Date." Payment of the purchase price for the Preferred Stock shall be made by wire transfer to the account specified by Amtran in immediately available funds. Delivery of the certificates for the shares against such payment shall be made at the office of Cravath, Swaine & Moore at 10:00 a.m. (New York City time) (the "CLOSING") on the Closing Date. 2. REPRESENTATIONS AND WARRANTIES OF AMTRAN. Amtran represents and warrants to, and agrees with ILFC that: (a) Amtran has been duly incorporated and is an existing corporation in good standing under the laws of the State of Indiana, with power and authority (corporate and other) to own its properties and conduct its business as presently conducted. (b) The Preferred Stock has been duly authorized by Amtran and when the shares of Preferred Stock have been issued and delivered by Amtran, and paid for pursuant to this Agreement, such Preferred Stock will be validly issued, fully paid and non-assessable. (c) The common stock without par value of Amtran (the "COMMON STOCK") issuable upon conversion of the Preferred Stock has been duly and validly authorized and reserved for issuance and, when issued and delivered in accordance with the provisions of the Preferred Stock, will be duly and validly authorized and issued, and will be fully paid and non-assessable. (d) This Agreement has been duly authorized, executed and delivered by Amtran and is enforceable in accordance with its terms (subject to applicable bankruptcy, receivership, insolvency, fraudulent transfer, reorganization, moratorium or other laws affecting creditors' rights generally from time to time in effect). (e) Assuming the representations and warranties of ILFC are true and correct, the offer and sale of the Preferred Stock in the manner contemplated by this Agreement will be exempt from the registration requirements of the Securities Act of 1933, as amended (the "SECURITIES ACT") by reason of Section 4(2) thereof. (f) Amtran has made available to ILFC correct and complete copies of each report, registration and definitive proxy statement filed by Amtran pursuant to Rules 13(a) or 15(d) or Section 14(a), as applicable, of the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT") with the Securities and Exchange Commission since January 1, 1999, (collectively, the "SEC REPORTS"). The SEC Reports did not, at the time they were filed, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. (g) Each of the financial statements (including the notes thereto) contained in the SEC Reports were prepared in accordance with generally accepted accounting principles applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto) and fairly present the consolidated financial position of Amtran at the respective dates thereof and the consolidated results of its operations and cash flows for the periods indicated, except that the unaudited interim financial statements were subject to normal year-end adjustments which were not and are not expected to be material in amount. (h) Amtran owns beneficially and of record all of the capital stock of ATA. 3. REPRESENTATIONS AND WARRANTIES OF ILFC. ILFC represents and warrants to, and agrees with Amtran that as of the date hereof: (a) ILFC has been duly incorporated and is an existing corporation in good standing under the laws of the State of California, with power and authority (corporate and other) to own its properties and conduct its business as presently conducted. (b) This Agreement has been duly authorized, executed and delivered by ILFC and is enforceable in accordance with its terms (subject to applicable bankruptcy, receivership, insolvency, fraudulent transfer, reorganization, moratorium or other laws affecting creditors' rights generally from time to time in effect). (c) ILFC understands that neither the Preferred Stock nor the Common Stock issuable upon conversion thereof has been registered under the Securities Act. ILFC also understands that the Preferred Stock is being offered and sold pursuant to an exemption from registration contained in the Securities Act based in part upon ILFC's representations contained in this Agreement. (d) ILFC represents that it is an accredited investor within the meaning of Regulation D under the Securities Act. (e) ILFC is acquiring the shares of Preferred Stock for its own account for investment only, and not with a view towards any distribution thereof that would require registration under the Securities Act, subject to Section 7 hereof. (f) ILFC represents that it has substantial experience in evaluating and investing in private placement transactions of securities in companies similar to Amtran so that it is capable of evaluating the merits and risks of its investment in Amtran and by reason of its management's business and financial experience, it has the capacity to protect its own interests in connection with the transactions contemplated in this Agreement. ILFC understands that it must bear the economic risk of this investment indefinitely unless the Preferred Stock or any underlying Common Stock issued upon conversion thereof are registered pursuant to the Securities Act, or an exemption from registration is available. ILFC also understands that Amtran has no present intention of registering the Preferred Stock or the underlying Common Stock except as it may be required to do so in accordance with Section 7. ILFC also understands that there is no assurance that any exemption from registration under the Securities Act will be available and that, even if available, such exemption may not allow ILFC to transfer all or any portion of the Preferred Stock or any Common Stock issued upon conversion thereof under the circumstances, in the amounts or at the times ILFC might propose. ILFC agrees it will make no transfer of the Preferred Stock or any Common Stock issued upon conversion thereof that is in violation of the Securities Act or any state securities law or regulation. (g) ILFC acknowledges that Amtran has provided to it, or made available for its inspection, all information requested by it. ILFC has had an opportunity to discuss Amtran's business, management and financial affairs with directors, officers and management of Amtran and has had the opportunity to review Amtran's operations and facilities. ILFC has also had the opportunity to ask questions of and receive answers from, Amtran and its management regarding the terms and conditions of this investment. (h) ILFC acknowledges and agrees that the Preferred Stock and the Common Stock will contain a restrictive legend substantially to the following effect: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED BY THE HOLDER SOLELY FOR ITS OWN ACCOUNT FOR THE PURPOSE OF INVESTMENT AND NOT WITH A VIEW TO OR FOR SALE IN CONNECTION WITH ANY DISTRIBUTION THEREOF IN VIOLATION OF THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND APPLICABLE STATE SECURITIES LAWS. THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE ACT OR APPLICABLE STATE SECURITIES LAWS AND, UNLESS REGISTERED, MAY NOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION THEREFROM." (i) ILFC acknowledges and agrees that the Preferred Stock and the Common Stock will also contain a restrictive legend substantially to the following effect: "These securities are subject to a Purchase and Investor Rights Agreement dated as of September 19, 2000, between Amtran, Inc. and International Lease Finance Corporation and may not be transferred except in accordance with the terms of such Agreement." 4. OTHER AGREEMENTS OF THE PARTIES. Amtran and ILFC agree that the Preferred Stock will rank with respect to the payment of dividends and distributions upon any liquidation of Amtran, equally with any series of Series A Preferred Stock (as defined in Annex A). ILFC agrees that the Preferred Stock as an equity security will rank junior to all indebtedness and other liabilities due to Amtran's general creditors. ILFC acknowledges that Amtran's Common Stock trades on the NASDAQ National Market ("NASDAQ") under the symbol "AMTR" and that Amtran does not intend to apply for the listing of the Preferred Stock on any securities exchange. 5. PROHIBITIONS ON TRANSFER; AMTRAN'S RIGHT OF FIRST REFUSAL. (a) ILFC shall not be permitted to transfer any shares of Preferred Stock except in accordance with the provisions of this Section 5. Notwithstanding the foregoing, at any time, ILFC may transfer the shares of Preferred Stock held by it to an affiliate thereof that expressly agrees in writing to be bound by the terms of this Agreement; PROVIDED, that ILFC shall not be released from its obligations under the Leases or any other obligations set forth in this Agreement. For purposes of this Section "affiliate" means any person controlling, controlled by or under common control with ILFC. (b) If ILFC receives from any party other than an affiliate of, or person acting in concert with, ILFC (a "THIRD PARTY OFFEROR"), an offer to purchase any shares of Preferred Stock held by it (a "THIRD PARTY OFFER"), prior to transferring any such shares of Preferred Stock to such Third Party Offeror, ILFC must first provide notice to Amtran (the "OFFER NOTICE") of such Third Party Offer setting forth in reasonable detail: (A) the name of the Third Party Offeror; (B) the number of shares of Preferred Stock subject to the Third Party Offer and the prospective purchase price for such shares of Preferred Stock; (C) the type of consideration offered, if all or a portion of the consideration will be paid other than in cash and the relative proportions of such consideration; and (D) all other material terms and conditions of the Third Party Offer. (c) The delivery of the Offer Notice to Amtran shall constitute ILFC's offer to sell to Amtran the number of shares of Preferred Stock set forth in the Offer Notice upon the terms set forth therein. Amtran shall have 20 days after delivery of the Offer Notice (the "OFFER PERIOD") to accept the offer set forth therein on the terms and conditions set forth in the Offer Notice (the "RIGHT OF FIRST Refusal"). If the Offer Notice provides that all or a portion of the consideration shall consist of any debt obligation of the Third Party Offeror or any affiliate thereof, Amtran shall be entitled to provide a note for the equivalent portion of the non-cash consideration on the same terms as the debt obligation included in the non-cash consideration described in the Third Party Offer. If the Offer Notice provides that all or a portion of the consideration shall be in the form of non-cash consideration other than a debt obligation of the Third Party Offeror or an affiliate thereof (in which case the provisions of the previous sentence shall apply to such portion of the non-cash consideration consisting of a debt obligation), Amtran shall pay cash for such non-cash portion of the consideration (the "CASH EQUIVALENT AMOUNT"). The Cash Equivalent Amount shall equal the fair market value of such non-cash consideration as determined by an independent third party mutually selected by Amtran and ILFC. The determination of the fair market value of the Cash Equivalent Amount by the independent third party shall be conclusive for all purposes under this Section 5. (d) To accept the offer, Amtran shall deliver to ILFC within the Offer Period a notice indicating its agreement to the terms set forth in the Offer Notice. Upon delivery, such acceptance shall constitute a binding commitment of Amtran to purchase all the shares of Preferred Stock that were the subject of the Offer Notice. If Amtran accepts the offer and elects to exercise its Right of First Refusal, the closing for the purchase of the shares shall occur not less than five nor more than 15 business days following the date on which Amtran accepts the offer pursuant to the provisions of this Section 5. For purposes of this Agreement "business day" shall mean any day that is not a Saturday or Sunday or other day on which banking institutions in the city of New York or the city of Indianapolis are authorized or required by law or executive order to close. (e) If no acceptance is given by Amtran or Amtran gives the acceptance and fails to purchase the Preferred Stock covered by the Offer Notice, then ILFC may sell such shares to the Third Party Offeror identified in the Offer Notice upon terms and conditions no more favorable to the Third Party Offeror than those set forth in such Offer Notice. Such sale to the Third Party Offeror shall be consummated within 180 days from: (A) the expiration of the Offer Period (in the case no acceptance was given), or (B) the scheduled closing date for the exercise of the Right of First Refusal (in the case that acceptance of such offer was given, but the closing did not occur or Amtran failed to purchase all the shares subject to the Offer Notice). If at the end of such 180-day period, ILFC shall not have completed the transfer to the Third Party Offeror, ILFC shall no longer be permitted to sell the shares of Preferred Stock that were the subject of the Offer Notice without again fully complying with the provisions of this Section 5. 6. REMOVAL OF RESTRICTIVE LEGENDS. All shares of Preferred Stock and Common Stock shall be issued with the restrictive legends set forth in Section 3(h) and 3(i) unless and until such legends are removed in accordance with the provisions of this Section 6. Amtran shall not be required to issue, nor shall it be required to instruct any transfer agent for the Preferred Stock to authenticate, any shares of Preferred Stock or Common Stock without the legend set forth in Section 3(h) unless it shall have received an opinion of its counsel reasonably satisfactory to it that such legend is no longer required by the applicable provisions of the Securities Act. Amtran shall not be required to issue, nor shall it be required to instruct any transfer agent for the Preferred Stock or Common Stock to authenticate, any shares of Preferred Stock or Common Stock without the legend set forth in Section 3(i) unless the shares of Preferred Stock or Common Stock shall no longer be subject to the terms of this Agreement. 7. PIGGYBACK REGISTRATION RIGHTS. ------------------------------ (a) If Amtran at any time proposes to register any of its equity securities under the Securities Act for purposes of conducting an underwritten public offering for cash (other than a registration (i) on Form S-8 or S-4 or any successor or similar forms, (ii) relating to equity securities issuable upon exercise of employee stock options or in connection with any employee benefit or similar plan of Amtran, or (iii) in connection with an acquisition by Amtran of another company), in a manner which would permit registration of Registrable Securities (as defined below) for sale to the public under the Securities Act, it shall each such time give written notice to ILFC of its intention to do so and of ILFC's rights under this Section 7 at least 30 days prior to the anticipated filing date of the registration statement relating to such registration. Such notice shall offer ILFC the opportunity to include in such registration statement such number of Registrable Securities as ILFC may request, subject to the provisions of Section 7(b). Upon the written request of ILFC made within ten days after the receipt of Amtran's notice (which request shall specify the number of Registrable Securities ILFC intends to include in the registration statement), Amtran shall use its best efforts to effect the registration under the Securities Act of all such Registrable Securities, to the extent required to permit the disposition (in accordance with such intended methods thereof) of the Registrable Securities so to be registered; PROVIDED ILFC must sell its Registrable Securities to the underwriters selected by Amtran on the same terms and conditions as apply to Amtran. Amtran shall pay all Registration Expenses (as defined below) in connection with each registration of Registrable Securities requested pursuant to this Section 7. If Amtran determines not to file such registration statement or to withdraw it or not to consummate such offering for any reason, Amtran may do so in its own discretion without any liability hereunder. (b) PRIORITY IN PIGGYBACK REGISTRATIONS. If the managing underwriter of the offering advises Amtran that, in its good faith view (based primarily upon prevailing market conditions), the number of shares of Common Stock (including all Registrable Securities) which Amtran, ILFC and any other persons intend to include in such registration exceeds the largest number of securities which can be sold without having an adverse effect on such offering, including the price at which such securities can be sold, Amtran will include securities in such registration in the following order: (i) first, all Common Stock to be sold for Amtran's own account, (ii) second, all Common Stock requested to be included in such registration by J. George Mikelsons (other than pursuant to a demand registration right held by him), (iii) third, all Registrable Securities requested to be included in such registration by ILFC pursuant to Section 7(a) and (iv) fourth, any other securities. (c) REGISTRATION PROCEDURES. If and whenever Amtran is required to use its best efforts to effect or cause the registration of any Registrable Securities under the Securities Act as provided in this Section, Amtran shall, as expeditiously as possible: (A) prepare and file with the United States Securities and Exchange Commission (the "COMMISSION") a registration statement on any form for which Amtran then qualifies or which counsel for Amtran shall deem appropriate, and which form shall be available for the sale of the Registrable Securities in accordance with the intended methods of distribution thereof, and use its best efforts to cause such registration statement to become and remain effective; PROVIDED that Amtran may discontinue any registration as provided in Section 7(a); (B) prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement during such period in accordance with the intended methods of disposition by the sellers thereof set forth in such registration statement; PROVIDED that before filing with the Commission a registration statement or prospectus or any amendments or supplements thereto, including documents incorporated by reference after the initial filing of any registration statement, Amtran shall (i) furnish to the underwriters and to one counsel selected by ILFC copies of all such documents proposed to be filed, which documents shall be subject to the review of the underwriters and such counsel, and (ii) notify ILFC of any stop order issued or threatened by the Commission and take all reasonable actions required to prevent the entry of such stop order or to remove it if entered; (C) furnish, without charge, to ILFC and each underwriter such number of copies of the registration statement, each amendment and supplement thereto (including all exhibits thereto), and the prospectus included in such registration statement (including each preliminary prospectus), in conformity with the requirements of the Securities Act, and such other documents as ILFC may reasonably request in order to facilitate the disposition of the Registrable Securities owned by ILFC; (D) use its best efforts to register or qualify such Registrable Securities under such other securities or blue sky laws of such jurisdictions as ILFC, and the underwriters reasonably requests and do any and all other acts and things which may be reasonably necessary or, advisable to enable ILFC and each underwriter to consummate the disposition in such jurisdictions of the Registrable Securities; PROVIDED that Amtran shall not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this paragraph (D), (ii) subject itself to taxation in any such jurisdiction or (iii) consent to general service of process in any such jurisdiction; (E) use its reasonable best efforts to cause the Registrable Securities covered by such registration statement to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of Amtran to enable ILFC to consummate the disposition of such Registrable Securities; (F) immediately notify the managing underwriter and ILFC at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event which comes to Amtran's attention if as a result of such event the prospectus included in such registration statement contains an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading and Amtran shall promptly prepare and furnish to ILFC a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; (G) use its best efforts to cause all such Registrable Securities to be listed on a national securities exchange and on each securities exchange on which similar securities issued by Amtran are then listed, and enter into such customary agreements including a listing application and indemnification agreement in customary form (PROVIDED that the applicable listing requirements are satisfied), and to provide a transfer agent and registrar for such Registrable Securities covered by such registration statement no later than the effective date of such registration statement; (H) enter into such customary agreements (including an underwriting agreement in customary form) and take all such other actions as ILFC or the underwriters reasonably request in order to expedite or facilitate the disposition of such Registrable Securities, including customary indemnification; (I) make available for inspection by ILFC, any underwriter participating in any disposition pursuant to such registration statement, and any attorney, accountant or other agent retained by ILFC or underwriter (collectively, the "INSPECTORS"), all financial and other records, pertinent corporate documents and properties of Amtran and its subsidiaries (collectively, "RECORDS"), if any, as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and cause Amtran's and its subsidiaries' officers, directors and employees to supply all information and respond to all inquiries reasonably requested by any such Inspector in connection with such registration statement. Notwithstanding the foregoing, Amtran shall have no obligation to disclose any Records to the Inspectors in the event Amtran determines that such disclosure is reasonably likely to have an adverse effect on Amtran's ability to assert the existence of an attorney-client privilege with respect thereto; (J) use its best efforts to obtain a "cold comfort" letter from Amtran's independent public accountants in customary form and covering such matters of the type customarily covered by "cold comfort" letters; and (K) use its reasonable best efforts to obtain an opinion of counsel from Amtran's counsel in customary form and covering such matters of the type customarily covered in opinions of counsel in connection with such transactions. (d) INDEMNIFICATION BY AMTRAN IN CONNECTION WITH REGISTRATION RIGHTS. In the event of any registration of any Registrable Securities pursuant to this Section, Amtran shall, and it hereby does, indemnify and hold harmless, to the fullest extent permitted by law, ILFC, its directors and officers, general partners, limited partners and managing directors, each other person who participates as an underwriter in the offering or sale of such securities and each other person, if any, who controls, is controlled by or is under common control with ILFC or any such underwriter within the meaning of the Securities Act (and directors, officers, controlling persons, partners and managing directors of any of the foregoing), against any and all losses, claims, damages or liabilities, joint or several, and expenses (including any amounts paid in any settlement effected with Amtran's consent, which consent shall not be unreasonably withheld) to which ILFC, any such director or officer or general or limited partner or managing director or any such underwriter or controlling person may become subject under the Securities Act, state securities or blue sky laws, common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) or expenses arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which such securities were registered under the Securities Act, on the effective date thereof, any preliminary, final or summary prospectus contained, therein, or any amendment or supplement thereto, (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or (iii) any violation by Amtran of any federal, state or common law rule or regulation applicable to Amtran and relating to action required of or inaction by Amtran in connection with any such registration, and Amtran shall reimburse ILFC and each such director, officer, general partner, limited partner, managing director or underwriter and controlling person for any legal or any other expenses reasonably incurred by them in connection with investigating or defending such loss, claim, liability, action or proceeding as such expenses are incurred; PROVIDED that Amtran shall not be liable in any such case to ILFC to the extent that any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense arises out of or is based solely upon any untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement or amendment or supplement thereto or in any such preliminary, final or summary prospectus in each case in reliance upon and in conformity with written information furnished to Amtran through an instrument duly executed by ILFC or any such director, officer, general or limited partner, managing director or underwriter specifically stating that it is for use in the preparation thereof. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of ILFC, the underwriters or any of their respective directors, officers, general or limited partners, managing directors or controlling persons and shall survive the transfer of such securities by ILFC. Notwithstanding the foregoing provisions of this Section 7, Amtran shall not be liable to ILFC, any person who participates as an underwriter in the offering or sale of such Registrable Securities or any other person, if any, who controls ILFC or any underwriter (within the meaning of the Securities Act), under the indemnity agreement in this Section 7 for any such losses, claims, damages, liabilities or expenses that arise out of ILFC or other person's failure to send or give a copy of the final prospectus to the person asserting an untrue statement or alleged untrue statement or omission or alleged omission at or prior to the written confirmation of the sale or the Securities to such person if such statement or omission was corrected in such final prospectus and Amtran has previously furnished copies thereof in accordance with this Agreement. (e) INDEMNIFICATION BY ILFC AND UNDERWRITERS. Amtran may require, as a condition to including any Registrable Securities in any registration statement filed in accordance with this Section, that Amtran shall have received an undertaking reasonably satisfactory to it from ILFC or any underwriter, to indemnify and hold harmless (in the same manner and to the same extent as set forth in Section 7(d)) Amtran and its directors, officers, controlling persons and all other prospective sellers and their respective directors, officers, general and limited partners, managing directors, and their respective controlling persons with respect to any statement or alleged statement in or omission or alleged omission from such registration statement, any preliminary, final or summary prospectus contained therein, or any amendment or supplement, if in each case such statement or alleged statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to Amtran or its representatives through an instrument duly executed by or on behalf of ILFC or underwriter, as the case may be, specifically stating that it is for use in the preparation of such registration statement, preliminary, final or summary prospectus or amendment or supplement, or a document incorporated by reference into any of the foregoing. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of Amtran, underwriters or any of their respective directors, officers, general or limited partners, managing directors or controlling persons and shall survive the transfer of such securities by ILFC; PROVIDED that ILFC shall not be liable hereunder for any amounts exceeding the product of the purchase price per Registrable Security and the number of Registrable Securities being sold pursuant to such registration statement or prospectus by ILFC. (f) NOTICES OF CLAIMS, ETC. Promptly after receipt by an indemnified party hereunder of written notice of the commencement of any action or proceeding with respect to which a claim for indemnification may be made pursuant to paragraphs (d) and (e) of this Section 7, such indemnified party shall, if a claim in respect thereof is to be made against an indemnifying party, promptly give written notice to the indemnifying party of the commencement of such action; PROVIDED that the failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations under the preceding paragraphs (d) and (e), except to the extent that the indemnifying party is actually materially prejudiced by such failure to give notice. In case any such action is brought against an indemnified party, unless in such indemnified party's reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist in respect of such claim, the indemnifying party shall be entitled to participate in and, jointly with any other indemnifying party similarly notified, to assume the defense thereof, to the extent that it may wish, with counsel reasonably satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party for any legal or other expenses subsequently incurred by the latter in connection with the defense thereof, unless in such indemnified party's reasonable judgment a conflict of interest between such indemnified and indemnifying parties arises in respect of such claim after the assumption of the defense thereof, and the indemnifying party shall not be subject to any liability for any settlement made without its consent (which consent shall not be unreasonably withhold). No indemnifying party shall consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation. An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel in any single jurisdiction for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim, in which event the indemnifying party shall be obligated to pay the fees and expenses of such additional counsel or counsels as may be reasonably necessary. Notwithstanding anything to the contrary set forth herein, and without limiting any of the rights set forth above, in any event any party shall have the right to retain, at its own expense, counsel with respect to the defense of a claim. (g) OTHER INDEMNIFICATION. Indemnification similar to that specified in the preceding paragraphs (d), (e) and (f) (with appropriate modifications) shall be given by Amtran and ILFC with respect to any required registration or other qualification of securities under any Federal or state law or regulation or governmental authority other than the Securities Act. (h) TRANSFER OF REGISTRABLE SECURITIES. Upon the transfer of any Registrable Securities by ILFC, any transferee thereof that holds at least 30% of the number of shares of Preferred Stock (as may be adjusted for stock splits, consolidations or similar transactions) originally issued to ILFC pursuant to the terms of this Agreement shall have all the same rights as ILFC under this Section 7 and all references in this Section 7 to ILFC shall be deemed to also refer to such transferee of Registrable Securities. For purposes of this Section 7(h), Registrable Securities held by affiliates of ILFC may be aggregated in determining whether any transferee holds at least 30% of the number of shares of Preferred Stock originally issued to ILFC. (i) DEFINITIONS. For purposes of this Section 7 the following terms shall have the following meanings: "REGISTRABLE SECURITIES" means shares of Common Stock underlying the Preferred Stock beneficially owned by ILFC; PROVIDED that a security shall cease to be a Registrable Security if and when (i) a registration statement with respect to such security becomes effective under the Securities Act and such security is transferred pursuant to such effective registration statement, (ii) such security is distributed to the public pursuant to Rule 144 (or any similar provision then in force) under the Securities Act, (iii) such security is otherwise transferred, if a new certificate or other evidence of ownership for such security not bearing a legend restricting further transfer and not subject to any stop transfer order or other restrictions on transfer is delivered by the Company and subsequent disposition of such security does not require registration or qualification of such security under the Securities Act or (iv) such security ceases to be outstanding. "REGISTRATION EXPENSES" means all expenses incident to Amtran's performance of or compliance with paragraph (a) of this Section 7, including, without limitation, all Commission, stock exchange, NASD and other registration and filing fees and expenses, fees and expenses of compliance with securities or blue sky laws (including, without limitation, reasonable fees and disbursements of counsel for the underwriters and ILFC in connection with blue sky qualifications of the Registrable Securities and determination of the eligibility of the Registrable Securities for investment under the laws of such jurisdictions as the underwriters or ILFC may designate), printing expenses, messenger and delivery expenses, the fees and expenses incurred in connection with the listing of the securities to be registered on each securities exchange or national market system on which such securities are to be so listed, fees and disbursements of counsel for the Company and one counsel retained in connection with each such registration by ILFC and all independent certified public accountants (including any expenses of any special audit and "cold comfort" letters required by or incident to such performance), securities laws liability insurance (if the Company so desires) and the fees and disbursements of other persons retained by Amtran (but excluding discounts, commissions or fees of underwriters, selling brokers or similar securities industries professionals relating to the distribution of Registrable Securities or legal expenses (except as otherwise provided above) of any person). 8. STANDSTILL AGREEMENT. ILFC covenants and agrees that, from the date hereof through the earlier of the fifteenth anniversary of the initial issuance of the Preferred Stock and the date on which ILFC no longer is a holder of any Preferred Stock, it will not, and it will cause each of its affiliates which it controls not to, singly or as part of a partnership, limited partnership, syndicate or other group (as those terms are defined in Section 13(d)(3) of the Exchange Act, directly or indirectly (and for greater certainty, including any circumstances whereby ILFC or any of its affiliates which it controls acts in concert with any other person): (a) acquire, offer to acquire, or agree to acquire, by purchase, gift or otherwise, any equity securities of Amtran, except pursuant to a stock split, stock dividend, rights offering, recapitalization, reclassification or similar transaction or pursuant to the terms of the Preferred Stock; (b) make, or in any way participate in any "solicitation" of "proxies" to vote (as such terms are defined in Rule 14a-1 under the Exchange Act), solicit any consent or communicate with or seek to advise or influence any person or entity with respect to the voting of any equity securities of Amtran or become a "participant" in any "election contest" (as such terms are defined or used in Rule 14a-11 under the Exchange Act) with respect to Amtran, except in the capacity as a director of Amtran, PROVIDED that the director does not directly or indirectly propose the matter or solicit other directors to propose or vote in favor of the matter; (c) form, join, encourage or in any way participate in the formation of, any "person" within the meaning of Section 13(d)(3) of the Exchange Act with respect to any equity securities of Amtran; (d) deposit any equity securities of Amtran into a voting trust or subject any such equity securities of Amtran to any arrangement or agreement with respect to the voting thereof; (e) initiate, propose or otherwise solicit stockholders for the approval of one or more stockholder proposals with respect to Amtran as described in Rule 14a-8 under the Exchange Act, or induce or attempt to induce any other person to initiate any stockholder proposal; (f) seek election to or seek to place a representative on the Board of Directors of Amtran or, except with the approval of the management of Amtran, seek the removal of any member of the Board of Directors of Amtran, except as provided pursuant to the terms of the Preferred Stock; (g) except with the approval of management of Amtran, call or seek to have called any meeting of the stockholders of Amtran; (h) otherwise act to seek to control, disrupt or influence the management, business, operations, policies or affairs of Amtran; (i)(A) solicit, seek to effect, negotiate with or provide any information to any other person with respect to, (B) make any statement or proposal, whether written or oral, to the Board of Directors of Amtran or any director or officer of Amtran with respect to, or (C) otherwise make any public announcement or proposal whatsoever with respect to, any form of business combination transaction involving Amtran, including, without limitation, a merger, exchange offer, or liquidation of Amtran's assets, or any restructuring, recapitalization or similar transaction with respect to Amtran; (j) seek to have Amtran waive, amend or modify any of the provisions contained in this Section 8; (k) disclose or announce any intention, plan or arrangement inconsistent with the foregoing; or (l) advise, assist, instigate or encourage any third party to do any of the foregoing. The parties hereto hereby confirm that nothing in this Section 8 will prohibit a director from discharging any fiduciary obligation he or she may have under Indiana law. If ILFC or any of its affiliates which it controls owns or acquires any equity securities of Amtran in violation of this Section 8, such equity securities of Amtran shall immediately be disposed of to persons who are not affiliates of ILFC and only in compliance with the provisions of this Agreement; PROVIDED that Amtran may also pursue any other available remedy to which it may be entitled as a result of such violation. 9. NOTICES. All communications hereunder will be in writing and, if sent to Amtran will be mailed, delivered or sent via facsimile and confirmed to American Trans Air, Inc., 7337 West Washington Street, Indianapolis International Airport, Indianapolis, Indiana 46231, Facsimile: (317) 240-7091, Attention: General Counsel, or, if sent to ILFC, will be mailed, delivered or sent via facsimile and confirmed to it at International Lease Finance Corporation, 1999 Avenue of the Stars, 39th Floor, Los Angeles, California 90067, Facsimile: (310) 788-1990, Attention: Legal Department. 10. SUCCESSORS. This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns, and no other person will have any right or obligation hereunder. 11. SEVERABILITY. If any provision of this Agreement is held illegal, invalid or unenforceable, such illegality, invalidity or unenforceability shall attach only to such provision and shall not in any manner affect or render illegal, invalid or unenforceable any other provision of this Agreement, and this Agreement shall be carried out as if any such illegal, invalid or unenforceable provision were not contained herein. 12. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same Agreement. 13. APPLICABLE LAW. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York without regard to principles of conflicts of laws. Amtran hereby submits to the nonexclusive jurisdiction of the Federal and state courts in the Borough of Manhattan in The City of New York in any suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If the foregoing is in accordance with your understanding of our agreement, kindly sign and return to us one of the counterparts hereof, whereupon it will become a binding agreement in accordance with its terms. AMTRAN, INC. by /s/ Kenneth K. Wolff ---------------------------------------- Name: Kenneth K. Wolff Title: Executive Vice President & CFO INTERNATIONAL LEASE FINANCE CORPORATION by /s/ Grant Levy ---------------------------------------- Name: Grant Levy Title: Vice President ANNEX A Certificate of Amendment to Amtran's Certificate of Incorporation Setting Forth the Terms of the Preferred Stock EX-4.11 6 file006.txt AMTRAN, INC., 2000 10K, EXHIBIT 4.11 This PASS THROUGH TRUST AGREEMENT, dated as of December 16, 1996, among AMTRAN, INC., an Indiana corporation (the "Guarantor"), AMERICAN TRANS AIR, INC., an Indiana corporation (the "Company"), and WILMINGTON TRUST COMPANY, a Delaware banking corporation, as Trustee, is made with respect to the formation of the American Trans Air 1996-1A Pass Through Trust, and the issuance of 7.37% American Trans Air 1996-1A Pass Through Certificates representing fractional undivided interests in the Trust. WITNESSETH: WHEREAS, the Company, each Owner Trustee and the corresponding Owner Participant (as such terms and certain other capitalized terms used herein are defined below) are concurrently herewith entering into a separate leveraged lease transaction in connection with the sale and leaseback of one Boeing 757-23N aircraft (one such aircraft bearing manufacturer's Serial No. 27973 and U.S. Registration Mark N517AT and one such aircraft bearing manufacturer's Serial No. 27974 and U.S. Registration Mark N518AT) (collectively, the "Aircraft"); WHEREAS, each Owner Trustee, acting on behalf of the corresponding Owner Participant, will issue pursuant to an Indenture, on a non-recourse basis, three series of Equipment Notes, among other things, to provide the debt portion of the purchase price of the related aircraft; WHEREAS, the Trustee, upon execution and delivery of this Agreement, hereby declares the creation of this Trust (the "1996-1A Trust") for the benefit of the Certificateholders, and the initial Certificateholders, as the grantors of the 1996-1A Trust, by their respective acceptances of the Certificates, join in the creation of this 1996-1A Trust with the Trustee; WHEREAS, all Certificates to be issued by the Trust will evidence fractional undivided interests in the Trust and will convey no rights, benefits or interests in respect of any property other than the Trust Property; WHEREAS, all of the conditions and requirements necessary to make this Agreement, when duly executed and delivered, a valid, binding and legal instrument, enforceable in accordance with its terms and for the purposes herein expressed, have been done, performed and fulfilled, and the execution and delivery of this Agreement in the form and with the terms hereof have been in all respects duly authorized; and WHEREAS, to facilitate the sale of Equipment Notes to, and the purchase of Equipment Notes by, the Trustee on behalf of the 1996-1A Trust, (i) the Company as the "issuer", as such term is defined in and solely for purposes of the Securities Act of 1933, as amended, of the Certificates to be issued pursuant hereto, and as the "obligor", as such term is defined in and solely for purposes of the Trust Indenture Act of 1939, as amended, and (ii) the Guarantor have each duly authorized the execution and delivery of this Agreement with respect to all such Certificates and are undertaking to perform certain administrative and ministerial duties hereunder and are also undertaking to pay the fees and expenses of the Trustee; NOW, THEREFORE, in consideration of the mutual agreements herein contained, and of other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I ARTICLE I DEFINITIONS Section 1.01. DEFINITIONSSection 1.01. DEFINITIONS. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: (1) the terms used herein that are defined in this Article have the meanings assigned to them in this Article, and include the plural as well as the singular; (2) all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference herein, have the meanings assigned to them therein; (3) all references in this Agreement to designated "Articles", "Sections" and other subdivisions are to the designated Articles, Sections and other subdivisions of this Agreement; (4) the words "herein", "hereof' and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision; and (5) unless the context otherwise requires, whenever the words "including", "include" or "includes" are used herein, it shall be deemed to be followed by the phrase "without limitation". ACT: With respect to any Certificateholder has the meaning specified in Section 1.04. AFFILIATE: With respect to any specified Person, means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such Person. For the purposes of this definition, "control", when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms "controlling" and "controlled" have meanings correlative to the foregoing. AGENT MEMBERS: Has the meaning specified in Section 3.05(a). AIRCRAFT: Has the meaning specified in the first recital to this Agreement. AUTHORIZED AGENT: Means any Paying Agent or Registrar for the Certificates. AVOIDABLE TAX: Has the meaning specified in Section 7.08(e) hereof. BOOK-ENTRY CERTIFICATES: With respect to the Certificates, means a beneficial interest in the Certificates, ownership and transfers of which shall be made through book entries as described in Section 3.04. BUSINESS DAY: Means any day other than a Saturday, a Sunday or a day on which commercial banks are required or authorized to close in Indianapolis, Indiana; New York, New York; or Phoenix, Arizona; and, so long as any such Certificate is outstanding, a city and state in which the Trustee or any related Loan Trustee maintains its Corporate Trust Office or receives and disburses funds. CEDEL: Means Cedel Bank societe anonyme. CERTIFICATE: Means any one of the certificates executed and authenticated by the Trustee, substantially in the form of Exhibit A hereto. CERTIFICATE ACCOUNT: Means the account or accounts created and maintained pursuant to Section 4.01(a). CERTIFICATEHOLDER OR HOLDER: Means the Person in whose name a Certificate is registered in the Register. CLEARING AGENCY: Means an organization registered as a "clearing agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as amended. CLEARING AGENCY PARTICIPANT: Means a broker, dealer, bank, other financial institution or other Person for whom from time to time a Clearing Agency effects, directly or indirectly, book-entry transfers and pledges of securities deposited with the Clearing Agency. COMPANY: Means American Trans Air, Inc., an Indiana corporation, or its successor in interest pursuant to Section 5.02. CONTROLLING PARTY: Means the Person entitled to act as such pursuant to the terms of the Intercreditor Agreement. CORPORATE TRUST OFFICE: With respect to the Trustee or any Loan Trustee, means the office of such trustee in the city at which at any particular time its corporate trust business administered. CUT-OFF DATE: Means March 27, 1997. DEPOSITARY: Means The Depository Trust Company, its nominees and their respective successors. DIRECTION: Has the meaning specified in Section 1.04(c). DISTRIBUTION DATE: Means each Regular Distribution Date and each Special Distribution Date. EQUIPMENT NOTE: Means the "secured certificates" as defined in the Indentures. ERISA: Means the Employee Retirement Income Security Act of 1974, as amended from time to time, or any successor federal statute. ----- ESCROW ACCOUNT: Has the meaning specified in Section 2.02(b). ESCROWED FUNDS: Has the meaning specified in Section 2.02(b). EUROCLEAR: Means the Euroclear System. EVENT OF DEFAULT: Means the occurrence of an Indenture Default under any Indenture pursuant to which Equipment Notes held by the Trust were issued. FRACTIONAL UNDIVIDED INTEREST: Means the fractional undivided interest in the Trust that is evidenced by a Certificate. GLOBAL CERTIFICATES: Has the meaning assigned to such term in Section 3.01. GUARANTOR: Means Amtran, Inc., an Indiana corporation, or its successor in interest. INDENTURE: Means each of the two separate trust indenture and security agreements described in Schedule 1 to this Agreement, as each such agreement may be amended or supplemented in accordance with its respective terms; and Indentures means all of such agreements. INDENTURE DEFAULT: With respect to any Indenture, means any Event of Default (as such term is defined in such Indenture). INITIAL PURCHASERS: Means Morgan Stanley & Co. Incorporated and Salomon Brothers Inc. INITIAL REGULAR DISTRIBUTION DATE: Means the first Regular Distribution Date on which a Scheduled Payment is to be made. INSTITUTIONAL ACCREDITED INVESTOR: Means an institutional investor that is an "accredited investor" within the meaning set forth in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act. INTERCREDITOR AGREEMENT: Means the Intercreditor Agreement dated December 27, 1996 among the Trustee, the Other Trustees, the Liquidity Provider, the liquidity providers, if any, relating to the Certificates issued under (and as defined in) the Other Pass Through Trust Agreements, and Wilmington Trust Company, as Subordination Agent thereunder, as amended, supplemented or otherwise modified from time to time in accordance with its terms. ISSUANCE DATE: Means the date of the issuance of the Certificates. LEASE: Means any lease between an Owner Trustee, as the lessor, and the Company, as the lessee, referred to in the related Indenture, as each such lease may be amended or supplemented in accordance with its respective terms; and Leases means all such leases. LETTER OF REPRESENTATIONS: Means the agreement dated the Issuance Date among the Company, the Trustee and the initial Clearing Agency. LIQUIDITY FACILITY: Means the Irrevocable Revolving Credit Agreement Class A Certificates dated December 27, 1996 relating to the Certificates between the Liquidity Provider and the Subordination Agent, as amended, replaced, supplemented or otherwise modified from time to time in accordance with its terms and the terms of the Intercreditor Agreement. LIQUIDITY PROVIDER: Means, initially, Kredietbank N.V., New York Branch, and any replacement or successor therefor appointed in accordance with the Liquidity Facility and the Intercreditor Agreement. LOAN TRUSTEE: With respect to any Equipment Note or the Indenture applicable thereto, means the bank or trust company designated as loan or indenture trustee under such Indenture; and any successor to such Loan Trustee as such trustee; and Loan Trustees means all of the Loan Trustees under the Indentures. NON-U.S. PERSON: Means a Person that is not a U.S. Person as defined in Regulation S. NOTE DOCUMENTS: With respect to any Equipment Note, means the related Indenture, Lease and Participation Agreement. OFFICER'S CERTIFICATE: Means a certificate signed (a) in the case of the Guarantor or the Company, by (i) the President or any Executive Vice President or Senior Vice President of the Guarantor or the Company, respectively, signing alone or (ii) any Vice President of the Guarantor or the Company signing together with the Secretary, the Assistant Secretary, the Treasurer or any Assistant Treasurer of the Guarantor or the Company, respectively, or (b) in the case of the Trustee or an Owner Trustee or a Loan Trustee, a Responsible Officer of the Trustee or such Owner Trustee or such Loan Trustee, as the case may be. OFFSHORE CERTIFICATES EXCHANGE DATE: Has the meaning specified in Section 3.01. OFFSHORE GLOBAL CERTIFICATES: Has the meaning assigned to such term in Section 3.01. OFFSHORE PHYSICAL CERTIFICATES: Has the meaning assigned to such term in Section 3.01. OPINION OF COUNSEL: Means a written opinion of legal counsel who (a) in the case of counsel for the Guarantor or the Company, may be (i) a senior attorney in rank of the officers of the Guarantor or the Company a principal duty of which is furnishing advice as to legal matters or (ii) such other counsel designated by the Guarantor or the Company and reasonably acceptable to the Trustee and (b) in the case of any Owner Trustee or any Loan Trustee, may be such counsel as may be designated by any of them whether or not such counsel is an employee of any of them, and who shall be reasonably acceptable to the Trustee. OTHER PASS THROUGH TRUST AGREEMENT: Means (i) the American Trans Air 1996-1B Pass Through Trust Agreement relating to the American Trans Air 1996-1B Pass Through Trust and (ii) the American Trans Air 1996-1C Pass Through Trust Agreement relating to the American Trans Air 1996-1C Pass Through Trust, each dated the date hereof; and Other Pass Through Trust Agreements means both such agreements. OTHER TRUSTEE: Means the trustee under each of the Other Pass Through Trust Agreements, and any successor or other trustee appointed as provided therein and Other Pass Through Trustees means both such trustees. OUTSTANDING: With respect to Certificates, means, as of the date of determination, all Certificates theretofore authenticated and delivered under this Agreement, except: (i) Certificates theretofore canceled by the Registrar or delivered to the Trustee or the Registrar for cancellation; (ii) All of the Certificates if money in the full amount required to make the final distribution with respect thereto pursuant to Section 11.01 hereof has been theretofore deposited with the Trustee in trust for the Holders of such Certificates as provided in Section 4.01 pending distribution of such money to such Certificateholders pursuant to such final distribution payment; and (iii) Certificates in exchange for or in lieu of which other Certificates have been authenticated and delivered pursuant to this Agreement. OWNER PARTICIPANT: With respect to any Equipment Note, means the "Owner Participant" as referred to in the Indenture pursuant to which such Equipment Note is issued and any permitted successor or assign of such Owner Participant; and Owner Participants at any time of determination means all of the Owner Participants thus referred to in the Indentures. OWNER TRUSTEE: With respect to any Equipment Note, means the "Owner Trustee", as referred to in the Indenture pursuant to which such Equipment Note is issued, not in its individual capacity but solely as trustee; and Owner Trustees means all of the Owner Trustees party to any of the respective Indentures. PARTICIPATION AGREEMENT: Means each of the Participation Agreements, dated as of December 16, 1996, listed on Schedule 2 hereto, providing for, among other things, the purchase of Equipment Notes by the Trustee on behalf of the Trust, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms; and Participation Agreements means all such agreements. PAYING AGENT: Means the paying agent maintained and appointed for the Certificates pursuant to Section 7.11. PERMANENT OFFSHORE GLOBAL CERTIFICATES: Has the meaning specified in Section 3.01. - PERMANENT OFFSHORE PHYSICAL CERTIFICATES: Has the meaning specified in Section 3.01. PERMITTED INVESTMENTS: Means obligations of the United States of America or agencies or instrumentalities thereof for the payment of which the full faith and credit of the United States of America is pledged, maturing in not more than 60 days or such lesser time as is necessary for payment of any Special Payments on a Special Distribution Date. PERSON: Means any person, including any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization, or government or any agency or political subdivision thereof. PHYSICAL CERTIFICATES: Has the meaning specified in Section 3.01. POOL BALANCE: Means, as of any date, (i) the original aggregate face amount of the Certificates less (ii) the aggregate amount of all payments made in respect of such Certificates other than payments made in respect of interest or premium thereon or reimbursement of any costs or expenses incurred in connection therewith. The Pool Balance as of any Distribution Date shall be computed after giving effect to the payment of principal, if any, on the Equipment Notes or other Trust Property held in the Trust and the distribution thereof to be made on such Distribution Date. POOL FACTOR: Means, as of any date, the quotient (rounded to the seventh decimal place) computed by dividing (i) the Pool Balance as at such date by (ii) the original aggregate face amount of the Certificates. The Pool Factor as of any Distribution Date shall be computed after giving effect to the payment of principal, if any, on the Equipment Notes or other Trust Property and the distribution thereof to be made on such Distribution Date. POSTPONED NOTES: Means the Equipment Notes to be held in such Trust as to which a Postponement Notice shall have been delivered pursuant to Section 2.02(b). POSTPONEMENT NOTICE: Means an Officer's Certificate of the Company (1) requesting that the Trustee temporarily postpone purchase pursuant to a Note Purchase Agreement of certain of the Equipment Notes to a date later than the Issuance Date, (2) identifying the amount of the purchase price of each such Equipment Note and the aggregate purchase price for all such Equipment Notes, (3) setting forth the reasons for such postponement and (4) with respect to each such Equipment Note, either (a) setting or resetting a new Transfer Date (which shall be on or prior to the applicable Cut-off Date) for payment by the Trustee of such purchase price and issuance of the related Equipment Note, or (b) indicating that such new Transfer Date (which shall be on or prior to the applicable Cut-off Date) will be set by subsequent written notice not less than one Business Day prior to such new Transfer Date. PRIVATE PLACEMENT LEGEND: Has the meaning specified in Section 3.02. PTC EVENT OF DEFAULT: Means any failure to pay within 10 Business Days of the due date thereof: (i) the outstanding Pool Balance on June 26, 2014 or (ii) interest due on the Certificates on any Distribution Date (unless the Subordination Agent shall have made an Interest Drawing (as defined in the Intercreditor Agreement) with respect thereto in an amount sufficient to pay such interest and shall have distributed such amount to the Certificateholders). QIB: Means a qualified institutional buyer as defined in Rule 144A. RECORD DATE: Means (i) for Scheduled Payments to be distributed on any Regular Distribution Date, other than the final distribution, the 15th day (whether or not a Business Day) preceding such Regular Distribution Date, and (ii) for Special Payments to be distributed on any Special Distribution Date, other than the final distribution, the 15th day (whether or not a Business Day) preceding such Special Distribution Date. REGISTER and REGISTRAR: Mean the register maintained and the registrar appointed pursuant to Sections 3.04 and 7.11. REGULAR DISTRIBUTION DATE: With respect to distributions of Scheduled Payments in respect of the Certificates, means each date designated as such in this Agreement, until payment of all the Scheduled Payments to be made under the Equipment Notes held in the Trust has been made; PROVIDED, HOWEVER, that, if any such day shall not be a Business Day, the related distribution shall be made on the next succeeding Business Day without additional interest. REQUEST: Means a request by the Company setting forth the subject matter of the request accompanied by an Officer's Certificate and an Opinion of Counsel as provided in Section 1.02 of this Agreement. RESPONSIBLE OFFICER: With respect to the Trustee, any Loan Trustee and any Owner Trustee, means any officer in the Corporate Trust Division of the Trustee, Loan Trustee or Owner Trustee or any other officer customarily performing functions similar to those performed by the persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of his knowledge of and familiarity with a particular subject. RULE 144A: Means Rule 144A under the Securities Act and any successor regulation thereto. SCHEDULED PAYMENT: With respect to any Equipment Note, means any payment of principal and interest on such Equipment Note or any payment of interest on the Certificates with funds drawn under the Liquidity Facility (other than any such payment which is not in fact received by the Trustee or any Subordination Agent within five days of the date on which such payment is scheduled to be made) due from the obligor thereon which payment represents the installment of principal at the stated maturity of such instrument of principal on such Equipment Note, the payment of regularly scheduled interest accrued on the unpaid principal amount of such Equipment Note, or both; PROVIDED that any payment of principal, premium, if any, or interest resulting from the redemption or purchase of any Equipment Note shall not constitute a Scheduled Payment. SEC: Means the Securities and Exchange Commission as from time to time constituted or created under the Securities Exchange Act of 1934, or, if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date. SECURITIES ACT: Means the United States Securities Act of 1933, as amended from time to time, or any successor thereto. SPECIAL DISTRIBUTION DATE: Means each date on which a Special Payment is to be distributed as specified in this Agreement; provided, HOWEVER, that, if any such day shall not be a Business Day, the related distribution shall be made on the next succeeding Business Day without additional interest. SPECIAL PAYMENT: Means (i) any payment (other than a Scheduled Payment) in respect of, or any proceeds of, any Equipment Note or Trust Indenture Estate (as defined in each Indenture) or (ii) the amounts required to be distributed pursuant to the last paragraph of Section 2.02(b) or (iii) the amounts required to be distributed pursuant to the penultimate paragraph of Section 2.02(b). SPECIAL PAYMENTS ACCOUNT: Means the account or accounts created and maintained pursuant to Section 4.01(b). SPECIFIED INVESTMENTS: Means (i) obligations of, or guaranteed by, the United States Government or agencies thereof, (ii) open - market commercial paper of any corporation incorporated under the laws of the United States of America or any State thereof rated at least P-2 or its equivalent by Moody's Investors Service, Inc. or at least A-2 or its equivalent by Standard & Poor's Rating Group, (iii) certificates of deposit issued by commercial banks organized under the laws of the United States or of any political subdivision thereof having a combined capital and surplus in excess of $500,000,000 which banks or their holding companies have a rating of A or its equivalent by Moody's Investors Service, Inc. or Standard & Poor's Rating Group; PROVIDED, HOWEVER, that the aggregate amount at any one time so invested in certificates of deposit issued by any one bank shall not exceed 5% of such bank's capital and surplus, (iv) U.S. dollar denominated offshore certificates of deposit issued by, or offshore time deposits with, any commercial bank described in (iii) or any subsidiary thereof and (v) repurchase agreements with any financial institution having combined capital and surplus of at least $500,000,000 with any of the obligations described in clauses (i) through (iv) as collateral; PROVIDED FURTHER that if all of the above investments are unavailable, the entire amounts to be invested may be used to purchase Federal Funds from an entity described in clause (iii) above; and PROVIDED FURTHER that no investment shall be eligible as a "Specified Investment" unless the final maturity or date of return of such investment is on or before the Special Distribution Date next following the Cut-off Date, if any, for the Trust by more than 20 days. SUBORDINATION AGENT: Shall have the meaning specified therefor in the Intercreditor Agreement. TEMPORARY OFFSHORE GLOBAL CERTIFICATES: Has the meaning specified in Section 3.01. TRANSFER DATE: Has the meaning assigned to that term or the term "Delivery Date" in a Participation Agreement. TRIGGERING EVENT: Shall have the meaning specified therefor in the Intercreditor Agreement. TRUST: Means the trust created by this Agreement, the estate of which consists of Trust Property. TRUST INDENTURE ACT: Except as otherwise provided in Section 9.06, means the Trust Indenture Act of 1939 as in force at the date as of which this Agreement was executed. TRUST PROPERTY: Means (i) the Equipment Notes held as the property of the Trust, all monies at any time paid thereon and all monies due and to become due thereunder, (ii) the rights of the Trust under any Intercreditor Agreement, including all monies receivable in respect of such rights, (iii) all monies receivable under the Liquidity Facility and (iv) funds from time to time deposited in the Escrow Account, the Certificate Account and the Special Payments Account and any proceeds from the sale by the Trustee pursuant to Article VI hereof of any such Equipment Note. TRUSTEE: Means Wilmington Trust Company, or its successor in interest, and any successor trustee appointed as provided herein. U.S. GLOBAL CERTIFICATE: Has the meaning specified in Section 3.01. U.S. PHYSICAL CERTIFICATES: Has the meaning specified in Section 3.01. Section 1.02. COMPLIANCE CERTIFICATES AND OPINIONSSection 1.02. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any application or request by the Company, any Owner Trustee or any Loan Trustee to the Trustee to take any action under any provision of this Agreement, the Company, such Owner Trustee or such Lon Trustee, as the case may be, shall furnish to the Trustee an Officers' Certificate stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Agreement relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Agreement relating to such particular application or request, no additional certificate or opinion need be furnished. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Agreement (other than a certificate provided pursuant to Section 8.04(d)) shall include: (1) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions in this Agreement relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. Section 1.03. FORM OF DOCUMENTS DELIVERED TO TRUSTEESection 1.03. FORM OF DOCUMENTS DELIVERED TO TRUSTEE. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters and any such Person may certify or give an opinion as to such matters in one or several documents. Any Opinion of Counsel stated to be based on the opinion of other counsel shall be accompanied by a copy of such other opinion. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Agreement, they may, but need not, be consolidated and form one instrument. Section 1.04. ACTS OF CERTIFICATEHOLDERSSection 1.04. ACTS OF CERTIFICATEHOLDERS. (a) Any direction, consent, waiver or other action provided by this Agreement to be given or taken by Certificateholders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Certificateholders in person or by an agent or proxy duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required pursuant to this Agreement, to the Company or any Loan Trustee. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Certificateholders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Agreement and conclusive in favor of the Trustee, the Company and any Loan Trustee, if made in the manner provided in this Section. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the certificate of any notary public or other officer of any jurisdiction authorized to take acknowledgments of deeds or administer oaths that the Person executing such instrument acknowledged to him the execution thereof, or by an affidavit of a witness to such execution sworn to before any such notary or such other officer and where such execution is by an officer of a corporation or association or a member of a partnership, on behalf of such corporation, association or partnership, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other reasonable manner which the Trustee deems sufficient. (c) In determining whether the Certificateholders of the requisite Fractional Undivided Interests of Certificates Outstanding have given any direction, consent or waiver (a "Direction"), under this Agreement, Certificates owned by the Company, the Guarantor, any Owner Trustee, any Owner Participant or any Affiliate of any such Person shall be disregarded and deemed not to be Outstanding for purposes of any such determination. In determining whether the Trustee shall be protected in relying upon any such Direction, only Certificates which the Trustee knows to be so owned shall be so disregarded. Notwithstanding the foregoing, (i) if any such Person owns 100% of the Certificates Outstanding, such Certificates shall not be so disregarded as aforesaid, and (ii) if any amount of Certificates so owned by any such Person have been pledged in good faith, such Certificates shall not be disregarded as aforesaid if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Certificates and that the pledgee is not the Company, the Guarantor, any Owner Trustee, any Owner Participant or any Affiliate of any such Person. (d) The Company may, at its option by delivery of an Officer's Certificate to the Trustee, set a record date to determine the Certificateholders entitled to give any consent, request, demand, authorization, direction, notice, waiver or other Act. Notwithstanding Section 316(c) of the Trust Indenture Act, such record date shall be the record date specified in such Officer's Certificate which shall be a date not more than 30 days prior to the first solicitation of Certificateholders in connection therewith. If such a record date is fixed, such consent request, demand, authorization, direction, notice, waiver or other Act may be given before or after such record date, but only the Certificateholders of record at the close of business on such record date shall be deemed to be Certificateholders for the purposes of determining whether Certificateholders of the requisite proportion of Outstanding Certificates have authorized or agreed or consented to such consent, request, demand, authorization, direction, notice, waiver or other Act, and for that purpose the Outstanding Certificates shall be computed as of such record date; PROVIDED that no such consent, request, demand, authorization, direction, notice, waiver or other Act by the Certificateholders on such record date shall be deemed effective unless it shall become effective pursuant to the provisions of this Agreement not later than one year after the record date. (e) Any direction, consent, waiver or other action by the Certificateholder of any Certificate shall bind the Certificateholder of every Certificate issued upon the transfer thereof or in exchange therefor or in lieu thereof, whether or not notation of such action is made upon such Certificate. (f) Except as otherwise provided in Section 1.04(c), Certificates owned by or pledged to any Person shall have an equal and proportionate benefit under the provisions of this Agreement, without preference, priority, or distinction as among all of the Certificates. ARTICLE II ARTICLE II ORIGINAL ISSUANCE OF CERTIFICATES; ACQUISITION OF EQUIPMENT NOTES Section 2.01. [Intentionally omitted].Section 2.01. [Intentionally omitted]. Section 2.02. ISSUANCE OF CERTIFICATES; ACQUISITION OF EQUIPMENT NOTESSection 2.02. ISSUANCE OF CERTIFICATES; ACQUISITION OF EQUIPMENT NOTES. (a) On or prior to the Issuance Date of the Certificates, the Trustee shall execute and deliver the Intercreditor Agreement and each of the Participation Agreements in the form delivered to the Trustee by the Company. Upon the oral or written request of the Company or the Company's counsel acting on behalf of the Company and the satisfaction of the closing conditions specified in each of the Participation Agreements, the Trustee shall, execute, deliver and authenticate Certificates equalling in the aggregate the aggregate principal amount of the Equipment Notes to be purchased by the Trustee pursuant to each of the Participation Agreements on the Transfer Date, and evidencing the entire ownership interest in the Trust. The Trustee shall issue and sell such Certificates, in authorized denominations and in such Fractional Undivided Interests, so as to result in the receipt of consideration in an amount equal to the aggregate purchase price of such Equipment Notes and, concurrently therewith, the Trustee shall purchase, pursuant to the terms and conditions of the Participation Agreements, the Equipment Notes at a purchase price equal to the amount of such consideration so received. Except as provided in Sections 3.03, 3.04 and 3.05 hereof, the Trustee shall not execute, authenticate or deliver Certificates in excess of the aggregate amount specified in this paragraph. The provisions of this Subsection 2.02(a) are subject to the provisions of Subsection 2.02(b) below. (b) If on or prior to the Issuance Date the Company shall deliver to the Trustee a Postponement Notice relating to one or more Postponed Notes, the Trustee shall postpone the purchase of such Postponed Notes and shall deposit into an escrow account (the "Escrow Account") to be maintained as a part of the Trust an amount equal to the purchase price of such Postponed Notes (the "Escrowed Funds"). The Escrowed Funds so deposited shall be invested by the Trustee at the written direction of the Company in Specified Investments (i) maturing no later than any scheduled Transfer Date relating to the Postponed Notes or (ii) if no such Transfer Date has been scheduled, maturing on the next Business Day, or (iii) if the Company has given notice to the Trustee that any Postponed Notes will not be issued, with respect to the portion of the Escrowed Funds relating to such Postponed Notes, maturing on the next applicable Special Distribution Date, if such investments are reasonably available for purchase. The Trustee shall make withdrawals from the Escrow Account only as provided in this Agreement. Upon request of the Company on one or more occasions and the satisfaction of the closing conditions specified in the applicable Participation Agreements on or prior to the related Cut-off Date, the Trustee shall purchase the applicable Postponed Notes with the Escrowed Funds withdrawn from the Escrow Account. The purchase price shall equal the principal amount of such Postponed Notes. The Trustee shall hold all Specified Investments until the maturity thereof and will not sell or otherwise transfer Specified Investments. If Specified Investments held in an Escrow Account mature prior to any applicable Transfer Date, any proceeds received on the maturity of such Specified Investments (other than any earnings thereon) shall be reinvested by the Trustee at the written direction of the Company in Specified Investments maturing as provided in the preceding paragraph. Any earnings on Specified Investments received from time to time by the Trustee shall be promptly distributed to the Company. The Company shall pay to the Trustee for deposit to the Escrow Account an amount equal to any losses on such Specified Investments as incurred. On the Initial Regular Distribution Date, the Company will pay (in immediately available funds) to the Trustee an amount equal to the interest that would have accrued on any Postponed Notes, if any, purchased after the Issuance Date if such Postponed Notes had been purchased on the Issuance Date, from the Issuance Date to, but not including, the date of the purchase of such Postponed Notes by the Trustee. If the Company notifies the Trustee prior to the Cut-off Date that any Postponed Notes will not be issued on or prior to the Cut-off Date for any reason, on the next Special Distribution Date occurring more than 20 days following the date of such notice (i) the Company shall pay to the Trustee for deposit in the Special Payments Account, in immediately available funds, an amount equal to the interest that would have accrued on the Postponed Notes designated in such notice at a rate equal to the interest rate applicable to the Certificates from the Issuance Date to, but not including, such Special Distribution Date and (ii) the Trustee shall transfer an amount equal to that amount of Escrowed Funds that would have been used to purchase the Postponed Notes designated in such notice and the amount paid by the Company pursuant to the immediately preceding clause (i) to the related Special Payments Account for distribution as a Special Payment in accordance with the provisions hereof. Wilmington Trust Company, in its individual capacity, in the absence of negligence or willful misconduct by any representative thereof, will have no liability with respect to Escrowed Funds. If, on the Cut-off Date, an amount equal to less than all of the Escrowed Funds (other than Escrowed Funds referred to in the immediately preceding paragraph) has been used to purchase Postponed Notes, on the next Special Distribution Date occurring more than 20 days following the Cut-off Date (i) the Company shall pay to the Trustee for deposit in the Special Payments Account, in immediately available funds, an amount equal to the interest that would have accrued on such Postponed Notes contemplated to be purchased with such unused Escrowed Funds (other than Escrowed Funds referred to in the immediately preceding paragraph) but not so purchased at a rate equal to the interest rate applicable to the Certificates from the Issuance Date to, but not including, such Special Distribution Date and (ii) the Trustee shall transfer such unused Escrowed Funds and the amount paid by the Company pursuant to the immediately preceding clause (i) to such Special Payments Account for distribution as a Special Payment in accordance with the provisions hereof. Section 2.03. ACCEPTANCE BY TRUSTEESection 2.03. ACCEPTANCE BY TRUSTEE. The Trustee, upon the execution and delivery of this Agreement, acknowledges its acceptance of all right, title, and interest in and to the Equipment Notes acquired pursuant to Section 2.02 hereof and the Participation Agreements and declares that the Trustee holds and will hold such right, title, and interest, together with all other property constituting the Trust Property, for the benefit of all then present and future Certificateholders, upon the trusts herein set forth. By its payment for and acceptance of each Certificate issued to it under this Agreement, each initial Certificateholder as grantor of the Trust thereby joins in the creation and declaration of the Trust. Section 2.04. LIMITATION OF POWERSSection 2.04. LIMITATION OF POWERS. The Trust is constituted solely for the purpose of making the investment in the Equipment Notes, and, except as set forth herein, the Trustee shall not be authorized or empowered to acquire any other investments or engage in any other activities and, in particular, the Trustee shall not be authorized or empowered to do anything that would cause such Trust to fail to qualify as a "grantor trust" for federal income tax purposes (including as subject to this restrictions acquiring the Aircraft (as defined in the respective related Indentures) by bidding such Equipment Notes or otherwise, or taking any action with respect to any such Aircraft once acquired). ARTICLE III ARTICLE III THE CERTIFICATES Section 3.01. TITLE, FORM, DENOMINATION AND EXECUTION OF CERTIFICATESSection 3.01. TITLE, FORM, DENOMINATION AND EXECUTION OF CERTIFICATES. (a) The Certificates shall be known as the "7.37% 1996-1A Pass Through Certificates" of the Trust. Each Certificate will represent a fractional undivided interest in the Trust and shall be substantially in the form set forth as Exhibit A hereto, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Agreement and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such Certificates, as evidenced by their execution of the Certificates. Any portion of the text of any Certificate may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Certificate. (b) The Certificates shall be issued only in fully registered form without coupons and only in denominations of $100,000 or integral multiples of $1,000 in excess thereof, except that one Certificate may be issued in a denomination of less than $100,000. Each Certificate shall be dated the date of its authentication. The aggregate Fractional Undivided Interest of Certificates shall not at any time exceed $41,258,000. (c) Certificates offered and sold in reliance on Rule 144A shall be issued initially in the form of a single permanent global Certificate in registered form, substantially in the form set forth as Exhibit A hereto (the "U.S. Global Certificate"), duly executed and authenticated by the Trustee as hereinafter provided. The U.S. Global Certificate will be registered in the name of a nominee for the Depositary and deposited with the Trustee, as custodian for the Depositary. The aggregate principal amount of the U.S. Global Certificate may from time to time be increased or decreased by adjustments made on the records of the Depositary or its nominee, or of the Trustee, as custodian for the Depositary or its nominee, as hereinafter provided. (d) Certificates offered and sold in offshore transactions in reliance on Regulation S shall be issued initially in the form of a single temporary global Certificate in registered form, substantially in the form set forth as Exhibit A hereto (the "Temporary Offshore Global Certificate") duly executed and authenticated by the Trustee as hereinafter provided. The Temporary Offshore Global Certificate will be registered in the name of a nominee of the Depositary for credit to the account of the Agent Members acting as depositaries for Euroclear and Cedel and deposited with the Trustee as custodian for the Depositary. At any time following February 5, 1997 (the "Offshore Certificates Exchange Date"), upon receipt by the Trustee of a certificate substantially in the form of Exhibit B hereto, a single permanent global Certificate in registered form substantially in the form set forth in Exhibit A (the "Permanent Offshore Global Certificate"; and together with the Temporary Offshore Global Certificate, the "Offshore Global Certificates"), duly executed and authenticated by the Trustee as hereinafter provided, shall be registered in the name of a nominee for the Depositary and deposited with the Trustee, as custodian for the Depositary, and the Registrar shall reflect on its books and records the date of such transfer and a decrease in the principal amount of any Temporary Offshore Global Certificate in an amount equal to the principal amount of the beneficial interest in such Temporary Offshore Global Certificate transferred. The U.S. Global Certificate and the Offshore Global Certificates are sometimes referred to as the "Global Certificates". (e) Certificates offered and sold to Institutional Accredited Investors shall be issued in the form of permanent certificated Certificates in registered form in substantially the form set forth as Exhibit A hereto (the "U.S. Physical Certificates"). Certificates issued pursuant to Section 3.05(b) in exchange for interests in any Offshore Global Certificate shall be in the form of permanent certificated Certificates in registered form substantially in the form set forth in Exhibit A (the "Offshore Physical Certificates"). The Offshore Physical Certificates and U.S. Physical Certificates are sometimes collectively herein referred to as the "Physical Certificates". (f) The definitive Certificates shall be in registered form and shall be typed, printed, lithographed or engraved or produced by any combination of these methods or may be produced in any other manner, all as determined by the officers executing such Certificates, as evidenced by their execution of such Certificates. Section 3.02. RESTRICTIVE LEGENDSSection 3.02. RESTRICTIVE LEGENDS. (a) Subject to Section 3.06, each Global Certificate (other than the Permanent Offshore Global Certificate) and each U.S. Physical Certificate shall bear the following legend (the "Private Placement Legend") on the face thereof: THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS CERTIFICATE IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT, WITHIN THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY AMERICAN TRANS AIR, INC. ("ATA") OR AN AFFILIATE OF ATA, RESELL OR OTHERWISE TRANSFER THIS CERTIFICATE EXCEPT (A) TO ATA OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING $100,000 OR MORE AGGREGATE PRINCIPAL AMOUNT OF SUCH CERTIFICATES THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS CERTIFICATE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS CERTIFICATE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS CERTIFICATE WITHIN THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THE CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY ATA OR AN AFFILIATE OF ATA, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND ATA SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE PASS THROUGH TRUST AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS. (b) Each Global Certificate shall also bear the following legend on the face thereof: UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND 3.06 OF THE PASS THROUGH TRUST AGREEMENT REFERRED TO HEREIN. Section 3.03. AUTHENTICATION OF CERTIFICATESSection 3.03. AUTHENTICATION OF CERTIFICATES. ------------------------------ ------------------------------ (a) The Trustee shall duly execute, authenticate and deliver Certificates in authorized denominations equalling in the aggregate the aggregate principal amount of the Equipment Notes to be purchased by the Trustee pursuant to the Participation Agreements and evidencing the entire ownership of the Trust. (b) No Certificate shall be entitled to any benefit under this Agreement or be valid or obligatory for any purpose, unless there appears on such Certificate a certificate of authentication substantially in the form provided for herein executed by the Trustee by the manual signature of one of its authorized signatories, and such certificate upon any Certificate shall be conclusive evidence, and the only evidence, that such Certificate has been duly authenticated and delivered hereunder. Section 3.04. TRANSFER AND EXCHANGESection 3.04. TRANSFER AND EXCHANGE. (a) The Trustee shall cause to be kept at the office or agency to be maintained by it in accordance with the provisions of Section 7.11 of this Agreement a register (the "Register") for the Certificates in which, subject to such reasonable regulations as it may prescribe, the Trustee shall provide for the registration of the Certificates and of transfers and exchanges of the Certificates as herein provided. The Trustee shall initially be the registrar (the "Registrar") for the purpose of registering the Certificates and transfers and exchanges of the Certificates as herein provided. A Certificateholder may transfer a Certificate by written application to the Registrar stating the name of the proposed transferee and otherwise complying with the terms of this Agreement, including providing a written certificate or other evidence of compliance with any restrictions on transfer. No such transfer shall be effected until, and such transferee shall succeed to the rights of a Certificateholder only upon, final acceptance and registration of the transfer by the Registrar in the Register. Prior to the registration of any transfer by a Certificateholder as provided herein, the Trustee shall treat the person in whose name the Certificate is registered as the owner thereof for all purposes, and the Trustee shall not be affected by notice to the contrary. Furthermore, the Depositary shall, by acceptance of a Global Certificate, agree that transfers of beneficial interests in such Global Certificate may be effected only through a book-entry system maintained by the Depositary (or its agent), and that ownership of a beneficial interest in the Certificate shall be required to be reflected in a book entry. When Certificates are presented to the Registrar with a request to register the transfer or to exchange them for an equal face amount of Certificates of other authorized denominations, the Registrar shall register the transfer or make the exchange as requested if its requirements for such transactions are met. To permit registrations of transfers and exchanges in accordance with the terms, conditions and restrictions hereof, the Trustee shall execute and authenticate Certificates at the Registrar's request. No service charge shall be made for any registration of transfer or exchange of the Certificates, but the Trustee may require payment by the transferor of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or other similar governmental charges payable upon exchanges pursuant to Section 3.11 or 9.07). Section 3.05. BOOK-ENTRY PROVISIONS FOR U.S. GLOBAL CERTIFICATE AND OFFSHORE GLOBAL CERTIFICATESSection 3.05. BOOK-ENTRY PROVISIONS FOR U.S. GLOBAL CERTIFICATE AND OFFSHORE GLOBAL CERTIFICATES. (a) Members of, or participants in, the Depositary ("Agent Members") shall have no rights under this Agreement with respect to any Global Certificate held on their behalf by the Depositary, or the Trustee as its custodian, and the Depositary may be treated by the Trustee and any agent of the Trustee as the absolute owner of such Global Certificate for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Trustee or any agent of the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or shall impair, as between the Depositary and its Agent Members, the operation of customary practices governing the exercise of the rights of a holder of any Certificate. Upon the issuance of any Global Certificate, the Registrar or its duly appointed agent shall record a nominee of the Depositary as the registered holder of such Global Certificate. (b) Transfers of any Global Certificate shall be limited to transfers of such Global Certificate in whole, but not in part, to nominees of the Depositary, its successor or such successor's nominees. Beneficial interests in the U.S. Global Certificate and any Offshore Global Certificate may be transferred in accordance with the rules and procedures of the Depositary and the provisions of Section 3.06. Beneficial interests in the U.S. Global Certificate or an Offshore Global Certificate shall be delivered to all beneficial owners in the form of U.S. Physical Certificates or Offshore Physical Certificates, as the case may be, if (i) the Company notifies the Trustee in writing that the Depositary is unwilling or unable to discharge properly its responsibilities as Depositary for the U.S. Global Certificate or such Offshore Global Certificate, as the case may be, and the Company is unable to locate a qualified successor depositary within 90 days of such notice or (ii) after the occurrence of an Event of Default, beneficial owners of the U.S. Global Certificate or Offshore Global Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust, by Act of such Certificateholders delivered to the Company and the Trustee, advise the Company, the Trustee and the Depositary through its Clearing Agency Participants in writing that the continuation of a book-entry system through the Depositary is no longer in the best interests of the Certificateholders, then the Trustee shall notify all owners of beneficial interests in the U.S. Global Certificate or an Offshore Global Certificate, through the Depositary, of the occurrence of any such event and the availability of definitive Certificates. (c) Any beneficial interest in one of the Global Certificates that is transferred to a Person who takes delivery in the form of an interest in the other Global Certificate will, upon such transfer, cease to be an interest in such Global Certificate and become an interestin the other Global Certificate and, accordingly, will thereafter be subject to alltransfer restrictions, if any, and other procedures applicable to beneficial interests in such other Global Certificate for as long as it remains such an interest. (d) [Intentionally omitted]. (e) In connection with the transfer of the entire U.S. Global Certificate or an entire Offshore Global Certificate to the beneficial owners thereof pursuant to paragraph (b) of this Section 3.05, such U.S. Global Certificate or Offshore Global Certificate, as the case may be, shall be deemed to be surrendered to the Trustee for cancellation, and the Trustee shall execute, authenticate and deliver, to each beneficial owner identified by the Depositary in exchange for its beneficial interest in such U.S. Global Certificate or Offshore Global Certificate, as the case may be, an equal aggregate principal amount of U.S. Physical Certificates or Offshore Physical Certificates, as the case may be, of authorized denominations. (f) Any U.S. Physical Certificate delivered in exchange for an interest in the U.S. Global Certificate pursuant to paragraph (b) of this Section 3.05 shall, except as otherwise provided by paragraph (f) of Section 3.06, bear the Private Placement Legend. (g) Any Offshore Physical Certificate delivered in exchange for an interest in an Offshore Global Certificate pursuant to paragraph (b) of this Section shall, except as otherwise provided by paragraph (f) of Section 3.06, bear the applicable legend regarding transfer restrictions set forth in Section 3.02(a). (h) The registered holder of the U.S. Global Certificate or any Offshore Global Certificate may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Agreement or the Certificates. Section 3.06. SPECIAL TRANSFER PROVISIONSSection 3.06. SPECIAL TRANSFER PROVISIONS. The following provisions shall apply to the Certificates: (a) TRANSFERS TO NON-QIB INSTITUTIONAL ACCREDITED INVESTORS. The following provisions shall apply with respect to the registration of any proposed transfer of a Certificate to any Institutional Accredited Investor which is not a QIB (excluding transfers to or by Non-U.S. Persons): (i) The Registrar shall register the transfer of any Certificate, whether or not such Certificate bears the Private Placement Legend, if (x) the requested transfer is at least three years after the later of the original issue date of the Certificates and the last date on which such Certificate was held by the Company or any affiliate thereof or (y) the proposed transferee has delivered to the Registrar a letter substantially in the form of Exhibit D hereto and the aggregate principal amount of the Certificates being transferred is at least $100,000. (ii) If the proposed transferor is an Agent Member holding a beneficial interest in the U.S. Global Certificate, upon receipt by the Registrar of (x) the documents, if any, required by paragraph (i) and (y) instructions given in accordance with the Depositary's and the Registrar's procedures, the Registrar shall reflect on its books and records the date of the transfer and a decrease in the principal amount of such U.S. Global Certificate in an amount equal to the principal amount of the beneficial interest in such U.S. Global Certificate to be transferred, and the Company shall execute, and the Trustee shall authenticate and deliver to the transferor or at its direction, one or more U.S. Physical Certificates of like tenor and amount. (b) TRANSFERS TO QIBS. The following provisions shall apply with respect to the registration of any proposed transfer of a Certificate to a QIB (excluding Non-U.S. Persons): (i) If the Certificate to be transferred consists of U.S. Physical Certificates or an interest in any Temporary Offshore Global Certificate, the Registrar shall register the transfer if such transfer is being made by a proposed transferor who has checked the box provided for on the form of Certificate stating, or has otherwise advised the Trustee and the Registrar in writing, that the sale has been made in compliance with the provisions of Rule 144A to a transferee who has signed the certification provided for on the form of Certificate stating, or has otherwise advised the Trustee and the Registrar in writing, that it is purchasing the Certificate for its own account or an account with respect to which it exercises sole investment discretion and that it, or the Person on whose behalf it is acting with respect to any such account, is a QIB within the meaning of Rule 144A, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Trust and/or the Company as it has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon its foregoing representations in order to claim the exemption from registration provided by Rule 144A. (ii) Upon receipt by the Registrar of the documents referred to in clause (i) above and instructions given in accordance with the Depositary's and the Registrar's procedures therefor, the Registrar shall reflect on its books and records the date of such transfer and an increase in the principal amount of the U.S. Global Certificate in an amount equal to the principal amount of the U.S. Physical Certificates or interests in the Temporary Offshore Global Certificate, as the case may be, being transferred, and the Trustee shall cancel such Physical Certificates or decrease the amount of such Temporary Offshore Global Certificate so transferred. (c) [Intentionally omitted]. (d) TRANSFERS OF INTERESTS IN THE PERMANENT OFFSHORE GLOBAL CERTIFICATE OR OFFSHORE PHYSICAL CERTIFICATES. The Registrar shall register any transfer of interests in the Permanent Offshore Global Certificate or Offshore Physical Certificates without requiring any additional certification. (e) TRANSFERS TO NON-U.S. PERSONS AT ANY TIME. The following provisions shall apply with respect to any registration of any transfer of a Certificate to a Non-U.S. Person: (i) Prior to the Offshore Certificates Exchange Date, the Registrar shall register any proposed transfer of a Certificate to a Non-U.S. Person upon receipt of a certificate substantially in the form set forth as Exhibit C hereto from the proposed transferor. (ii) On and after the Offshore Certificates Exchange Date, the Registrar shall register any proposed transfer to any Non-U.S. Person if the Certificate to be transferred is a U.S. Physical Certificate or an interest in the U.S. Global Certificate, upon receipt of a certificate substantially in the form of Exhibit C from the proposed transferor. The Registrar shall promptly send a copy of such certificate to the Company. (iii) Upon receipt by the Registrar of (x) the documents, if any, required by paragraph (ii) and (y) instructions in accordance with the Depositary's and the Registrar's procedures, the Registrar shall reflect on its books and records the date of such transfer and a decrease in the principal amount of such U.S. Global Certificate in an amount equal to the principal amount of the beneficial interest in such U.S. Global Certificate to be transferred, and (B) upon receipt by the Registrar of instructions given in accordance with the Depositary's and the Registrar's procedures, the Registrar shall reflect on its books and records the date and an increase in the principal amount of the Offshore Global Certificate in an amount equal to the principal amount of the U.S. Physical Certificate or the U.S. Global Certificate, as the case may be, to be transferred, and the Trustee shall cancel the Physical Certificate, if any, so transferred or decrease the amount of such U.S. Global Certificate. (f) PRIVATE PLACEMENT LEGEND. Upon the transfer, exchange or replacement of Certificates not bearing the Private Placement Legend, the Registrar shall deliver Certificates that do not bear the Private Placement Legend. Upon the transfer, exchange or replacement of Certificates bearing the Private Placement Legend, the Registrar shall deliver only Certificates that bear the Private Placement Legend unless either (i) the circumstances contemplated by paragraph (a)(i)(x) or (e)(ii) of this Section 3.06 exist or (ii) there is delivered to the Registrar an Opinion of Counsel to the effect that neither such legend nor the related restrictions on transfer are required in order to maintain compliance with the provisions of the Securities Act. (g) GENERAL. By its acceptance of any Certificate bearing the Private Placement Legend, each Holder of such a Certificate acknowledges the restrictions on transfer of such Certificate set forth in this Agreement and agrees that it will transfer such Certificate only as provided in this Agreement. The Registrar shall not register a transfer of any Certificate unless such transfer complies with the restrictions on transfer of such Certificate set forth in this Agreement. In connection with any transfer of Certificates, each Certificateholder agrees by its acceptance of the Certificates to furnish the Registrar or the Trustee such certifications, legal opinions or other information as either of them may reasonably require to confirm that such transfer is being made pursuant to an exemption from, or a transaction not subject to, the registration requirements of the Securities Act; PROVIDED that the Registrar shall not be required to determine the sufficiency of any such certifications, legal opinions or other information. Until such time as no Certificates remain Outstanding, the Registrar shall retain copies of all letters, notices and other written communications received pursuant to Section 3.05 or this Section 3.06. The Trustee, if not the Registrar at such time, shall have the right to inspect and make copies of all such letters, notices or other written communications at any reasonable time upon the giving of reasonable written notice to the Registrar. Section 3.07. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATESSection 3.07. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES. If (a) any mutilatedCertificate is surrendered to the Registrar, or the Registrar receives evidence to its satisfaction of the destruction, loss or theft of any Certificate, and (b) there is delivered to the Registrar and the Trustee such security, indemnity or bond, as may be required by them to save each of them harmless, then, in the absence of notice to the Registrar or the Trustee that such Certificate has been acquired by a bona fide purchaser, the Trustee shall execute, authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate or Certificates, in authorized denominations and of like Fractional Undivided Interest. In connection with the issuance of any new Certificate under this Section 3.07, the Trustee shall require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee and the Registrar) connected therewith. Any duplicate Certificate issued pursuant to this Section 3.07 shall constitute conclusive evidence of the appropriate Fractional Undivided Interest in the related Trust, as if originally issued, whether or not the lost stolen or destroyed Certificate shall be found at any time. Section 3.08. PERSONS DEEMED OWNERSSection 3.08. PERSONS DEEMED OWNERS. Prior to due presentation of a Certificate for registration of transfer, the Trustee, the Registrar, and any Paying Agent of the Trustee may treat the person in whose name any Certificate is registered as the owner of such Certificate for the purpose of receiving distributions pursuant to Section 4.02 and for all other purposes whatsoever, and neither the Trustee, the Registrar, nor any Paying Agent of the Trustee shall be affected by any notice to the contrary. Section 3.09. CANCELLATIONSection 3.09. CANCELLATION. All Certificates surrendered for payment or transfer or exchange shall, if surrendered to any Person party hereto other than the Registrar, be delivered to the Registrar for cancellation. No Certificates shall be authenticated in lieu of or in exchange for any Certificates cancelled as provided in this Section, except as expressly permitted by this Agreement. All cancelled Certificates held by the Registrar shall be destroyed and a certification of their destruction delivered to the Trustee. Section 3.10. LIMITATION OF LIABILITY FOR PAYMENTSSection 3.10. LIMITATION OF LIABILITY FOR PAYMENTS. All payments or distributions made to Certificateholders shall be made only from the Trust Property and only to the extent that the Trustee shall have sufficient income or proceeds from the Trust Property to make such payments in accordance with the terms of Article IV of this Agreement. Each Certificateholder, by its acceptance of a Certificate, agrees that it will look solely to the income and proceeds from the Trust Property to the extent available for distribution to such Certificateholder as provided in this Agreement. Section 3.11. TEMPORARY CERTIFICATESSection 3.11. TEMPORARY CERTIFICATES. Until definitive Certificates are ready for delivery, the Trustee shall authenticate temporary Certificates. Temporary Certificates shall be substantially in the form of definitive Certificates but may have insertions, substitutions, omissions and other variations determined to be appropriate by the officers executing the temporary Certificates, as evidenced by their execution of such temporary Certificates. If temporary Certificates are issued, the Trustee will cause definitive Certificates to be prepared without unreasonable delay. After the preparation of definitive Certificates, the temporary Certificates shall be exchangeable for definitive Certificates upon surrender of the temporary Certificates at the office or agency of the Trustee designated for such purpose pursuant to Section 7.11, without charge to the Certificateholder. Upon surrender for cancellation of any one or more temporary Certificates, the Trustee shall execute, authenticate and deliver in exchange therefor a like face amount of definitive Certificates of authorized denominations. Until so exchanged, the temporary Certificates shall be entitled to the same benefits under this Agreement as definitive Certificates. ARTICLE IV ARTICLE IV DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS Section 4.01. CERTIFICATE ACCOUNT AND SPECIAL PAYMENTS ACCOUNTSection 4.01. CERTIFICATE ACCOUNT AND SPECIAL PAYMENTS ACCOUNT. (a) The Trustee shall establish and maintain on behalf of the Certificateholders a Certificate Account as one or more non-interest-bearing accounts. The Trustee shall hold the Certificate Account in trust for the benefit of the Certificateholders, and shall make or permit withdrawals therefrom only as provided in this Agreement. On each day when a Scheduled Payment is made to the Trustee, the Trustee, upon receipt thereof, shall immediately deposit the aggregate amount of such Scheduled Payment into the Certificate Account. (b) The Trustee shall establish and maintain on behalf of the Certificateholders a Special Payments Account as one or more accounts, which shall be non-interest bearing except as provided in Section 4.04. The Trustee shall hold the Special Payments Account in trust for the benefit of the Certificateholders, and shall make or permit withdrawals therefrom only as provided in this Agreement. On each day when one or more Special Payments are made to the Trustee, the Trustee, upon receipt thereof, shall immediately deposit the aggregate amount of such Special Payments into the Special Payments Account. (c) The Trustee shall present to the Loan Trustee to which an Equipment Note relates such Equipment Note on the date of its stated final maturity or, in the case of any Equipment Note which is to be redeemed in whole pursuant to the relevant Indenture, on the applicable redemption date under such Indenture. Section 4.02. DISTRIBUTIONS FROM CERTIFICATE ACCOUNT AND SPECIAL PAYMENTS ACCOUNTSection 4.02. DISTRIBUTIONS FROM CERTIFICATE ACCOUNT AND SPECIAL PAYMENTS ACCOUNT. (a) On each Regular Distribution Date or as soon thereafter as the Trustee has confirmed receipt of the payment of the Scheduled Payments due on such date, the Trustee shall distribute out of the Certificate Account the entire amount deposited therein pursuant to Section 4.01(a). There shall be so distributed to each Certificateholder of record on the Record Date with respect to such Regular Distribution Date (other than as provided in Section 11.01 concerning the final distribution), by check mailed to such Certificateholder at the address appearing in the Register, such Certificateholder's pro rata share (based on the aggregate Fractional Undivided Interest in the Trust held by such Certificateholder) of the aggregate amount in the Certificate Account, except that, with respect to Certificates registered on the Record Date in the name of the nominee of the Depositary (initially, such nominee to be Cede & Co.), such distribution shall be made by wire transfer in immediately available funds to the account designated by such nominee. (b) On each Special Distribution Date with respect to any Special Payment or as soon thereafter as the Trustee has confirmed receipt of any Special Payments due on the Equipment Notes or realized upon the sale of such Equipment Note, the Trustee shall distribute out of the Special Payments Account the entire amount deposited therein pursuant to Section 4.01(b) of such Special Payment. There shall be so distributed to each Certificateholder of record on the Record Date with respect to such Special Distribution Date (other than as provided in Section 11.01 concerning the final distribution), by check mailed to such Certificateholder at the address appearing in the Register, such Certificateholder's pro rata share (based on the aggregate Fractional Undivided Interest in the Trust held by such Certificateholder) of the aggregate amount in the Special Payments Account on account of such Special Payment, except that, with respect to Certificates registered on the Record Date in the name of the nominee of the Depositary (initially, such nominee to be Cede & Co.), such distribution shall be made by wire transfer in immediately available funds to the account designated by such nominee. (c) The Trustee shall, at the expense of the Company, cause notice of each Special Payment to be mailed to each Certificateholder at his address as it appears in the Register. In the event of redemption or purchase of Equipment Notes held in the Trust, such notice shall be mailed not less than 20 days prior to the date any such Special Payment is scheduled to be distributed. In the case of any other Special Payments, such notice shall be mailed as soon as practicable after the Trustee has confirmed that it has received funds for such Special Payment, stating the Special Distribution Date for such Special Payment which shall occur not less than 20 days after the date of such notice and as soon as practicable thereafter. Notices mailed by the Trustee shall set forth: (i) the Special Distribution Date and the Record Date therefor (except as otherwise provided in Section 11.01), (ii) the amount of the Special Payment for each $1,000 face amount Certificate (taking into account any payment to be made by the Company pursuant to Section 2.02(b)) and the amount thereof constituting principal, premium, if any, and interest, (iii) the reason for the Special Payment, and (iv) if the Special Distribution Date is the same date as a Regular Distribution Date for the Certificates, the total amount to be received on such date for each $1,000 face amount Certificate. If the amount of premium, if any, payable upon the redemption or purchase of an Equipment Note has not been calculated at the time that the Trustee mails notice of a Special Payment, it shall be sufficient if the notice sets forth the other amounts to be distributed and states that any premium received will also be distributed. If any redemption of the Equipment Notes held in the Trust is cancelled, the Trustee, as soon as possible after learning thereof, shall cause notice thereof to be mailed to each Certificateholder at its address as it appears on the Register. Section 4.03. STATEMENTS TO CERTIFICATEHOLDERSSection 4.03. STATEMENTS TO CERTIFICATEHOLDERS. (a) On each Regular Distribution Date and Special Distribution Date, the Trustee will include with each distribution to Certificateholders a statement, giving effect to such distribution to be made on such Regular Distribution Date or Special Distribution Date, as the case may be, setting forth the following information (per a $1,000 face amount Certificate as to (i) and (ii) below): (i) the amount of such distribution allocable to principal and the amount allocable to premium, if any; (ii) the amount of such distribution allocable to interest; and (iii) the Pool Balance and the Pool Factor. With respect to the Certificates registered in the name of a Clearing Agency or its nominee, on the record date prior to each Distribution Date, the Trustee will request from the Clearing Agency a securities position listing setting forth the names of all the Clearing Agency Participants reflected on the Clearing Agency's books as holding interests in the Certificates on such record date. On each Distribution Date, the Trustee will mail to each such Clearing Agency Participant the statement described above and will make available additional copies as requested by such Clearing Agency Participant for forwarding to holders of Certificates. (b) Within a reasonable period of time after the end of each calendar year but not later than the latest date permitted by law, the Trustee shall furnish to each Person who at any time during such calendar year was a Certificateholder of record a statement containing the sum of the amounts determined pursuant to clauses (a)(i) and (a)(ii) with respect to the Trust for such calendar year or, in the event such Person was a Certificateholder of record during a portion of such calendar year, for the applicable portion of such year, and such other items as are readily available to the Trustee and which a Certificateholder shall reasonably request as necessary for the purpose of such Certificateholder's preparation of its federal income tax returns. With respect to Certificates registered in the name of a Clearing Agency or its nominee, such report and such other items shall be prepared on the basis of information supplied to the Trustee by the Clearing Agency Participants and shall be delivered by the Trustee to such Clearing Agency Participants to be available for forwarding by such Clearing Agency Participants. Section 4.04. INVESTMENT OF SPECIAL PAYMENT MONEYSSection 4.04. INVESTMENT OF SPECIAL PAYMENT MONEYS. Any money received by the Trustee pursuant to Section 4.01(b) representing a Special Payment which is not to be promptly distributed shall, to the extent practicable, be invested in Permitted Investments by the Trustee as directed in writing by the Company pending distribution of such Special Payment pursuant to Section 4.02. Any investment made pursuant to this Section 4.04 shall be in such Permitted Investments having maturities not later than the date that such moneys are required to be used to make the payment required under Section 4.02 on the applicable Special Distribution Date and the Trustee shall hold any such Permitted Investments until maturity. The Trustee shall have no liability with respect to any investment made pursuant to this Section 4.04, other than by reason of the willful misconduct or negligence of the Trustee. All income and earnings from such investments shall be distributed on such Special Distribution Date as part of such Special Payment. ARTICLE V ARTICLE V THE COMPANY Section 5.01. MAINTENANCE OF CORPORATE EXISTENCESection 5.01. MAINTENANCE OF CORPORATE EXISTENCE. The Company, at its own cost and expense, will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence, rights and franchises, except as otherwise specifically permitted in Section 5.02; PROVIDED, HOWEVER, that the Company shall not be required to preserve any right or franchise if the Company shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company. Section 5.02. CONSOLIDATION, MERGER, ETCSection 5.02. CONSOLIDATION, MERGER, ETC. The Company shall not consolidate with or merge into any other corporation or convey, transfer or lease substantially all of its assets as an entirety to any Person unless: (a) the corporation formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance, transfer or lease substantially all of the assets of the Company as an entirety shall be organized and validly existing under the laws of the United States of America or any state thereof or the District of Columbia and a "citizen of the United States" (as defined in Section 40102(a)(15) of Title 49 of the United States Code) holding an air carrier operating certificate issued by the Federal Aviation Administration, or any successor agency thereto (the "FAA"), pursuant to Chapter 447 of Title 49, United States Code, authorizing the operation in air transportation of aircraft capable of carrying 10 or more individuals or 6,000 pounds or more of cargo pursuant to Part 121 of the FAA's regulations (14 CFR Part 121); (b) the corporation formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance, transfer or lease substantially all of the assets of the Company as an entirety shall execute and deliver to the Trustee a duly authorized, valid, binding and enforceable agreement in form and substance reasonably satisfactory to the Trustee containing an assumption by such successor corporation or Person of the due and punctual performance and observance of each covenant and condition of the Note Documents and of this Agreement to be performed or observed by the Company; (c) immediately after giving effect to such transaction, no Event of Default applicable to the Certificates or event which is, or after notice or passage of time, or both, would be, such an Event of Default shall have occurred and be continuing; and (d) the Company shall have delivered to the Trustee an Officers' Certificate of the Company and an Opinion of Counsel of the Company (which may be the Company's General Counsel) reasonably satisfactory to the Trustee, each stating that such consolidation, merger, conveyance, transfer or lease and the assumption agreement mentioned in clause (b) above comply with this Section 5.02 and that all conditions precedent herein provided for relating to such transaction have been complied with. Upon any consolidation or merger, or any conveyance, transfer or lease of substantially all of the assets of the Company as an entirety in accordance with this Section 5.02, the successor corporation or Person formed by such consolidation or into which the Company is merged or to which such conveyance, offer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Agreement with the same effect as if such successor corporation or Person had been named as the Company herein. No such conveyance, transfer or lease of substantially all of the assets of the Company as an entirety shall have the effect of releasing the Company or any successor corporation or Person which shall theretofore have become such in the manner prescribed in this Section 5.02 from its liability in respect of this Agreement or any Note Document to which it is a party. ARTICLE VI ARTICLE VI DEFAULT Section 6.01. EVENTS OF DEFAULTSection 6.01. EVENTS OF DEFAULT. (a) EXERCISE OF REMEDIES: Upon the occurrence and during the continuation of any Indenture Default under any Indenture, the Trustee may, to the extent it is the Controlling Party at such time, direct the exercise of remedies as provided in the Intercreditor Agreement. (b) PURCHASE RIGHTS OF CERTIFICATEHOLDERS: By acceptance of its Certificate, each Certificateholder agrees that at any time after the occurrence and during the continuation of a Triggering Event: (i) each Class B Certificateholder shall have the right to purchase all, but not less than all, of the Certificates upon ten days' written notice to the Trustee and each other Class B Certificateholder, PROVIDED that (A) if prior to the end of such ten-day period any other Class B Certificateholder notifies such purchasing Class B Certificateholder that such other Class B Certificateholder wants to participate in such purchase, then such other Class B Certificateholder may join with the purchasing Class B Certificateholder to purchase all, but not less than all, of the Certificates pro rata based on the Fractional Undivided Interest in the Class B Trust held by each such Class B Certificateholder and (B) if prior to the end of such ten-day period any other Class B Certificateholder fails to notify the purchasing Class B Certificateholder of such other Class B Certificateholder's desire to participate in such a purchase, then such other Class B Certificateholder shall lose its right to purchase the Certificates pursuant to this Section 6.01(b); and (ii) each Class C Certificateholder shall have the right (which shall not expire upon any purchase of the Certificates pursuant to clause (i) above) to purchase all, but not less than all, of the Certificates and the Class B Certificates upon ten days' written notice to the Trustee, the Class B Trustee and each other Class C Certificateholder, PROVIDED that (A) if prior to the end of such ten-day period any other Class C Certificateholder notifies such purchasing Class C Certificateholder that such other Class C Certificateholder wants to participate in such purchase, then such other Class C Certificateholder may join with the purchasing Class C Certificateholder to purchase all, but not less than all, of the Certificates and the Class B Certificates pro rata based on the Fractional Undivided Interest in the Class C Trust held by each such Class C Certificateholder and (B) if prior to the end of such ten-day period any other Class C Certificateholder fails to notify the purchasing Class C Certificateholder of such other Class C Certificateholder's desire to participate in such a purchase, then such other Class C Certificateholder shall lose its right to purchase the Certificates pursuant to this Section 6.01(b). The purchase price with respect to the Certificates shall be equal to the Pool Balance of the Certificates, together with accrued and unpaid interest thereon to the date of such purchase, without premium, but including any other amounts then due and payable to the Certificateholders under this Agreement, the Intercreditor Agreement or any other Note Document or on or in respect of the Certificates; PROVIDED, HOWEVER, that no such purchase of Certificates shall be effective unless the purchaser shall certify to the Trustee that contemporaneously with such purchase, such purchaser is purchasing, pursuant to the terms of this Agreement and the Other Pass Through Trust Agreements, the Certificates, the Class B Certificates and the Class C Certificates which are senior to the Certificates held by such purchaser. Each payment of the purchase price of the Certificates shall be made to an account or accounts designated by the Trustee and each such purchase shall be subject to the terms of this Section. Each Certificateholder agrees by its acceptance of its Certificates that it will, subject to Section 3.04 hereof, upon payment from such Class B Certificateholder(s) or Class C Certificateholder(s), as the case may be, of the purchase price set forth in the first sentence of this paragraph, forthwith sell, assign, transfer and convey to the purchaser thereof (without recourse, representation or warranty of any kind except for its own acts), all of the right, title, interest and obligation of such Certificateholder in, this Agreement, the Intercreditor Agreement, the Liquidity Facility, the Note Documents and all Certificates held by such Certificateholder (excluding all right, title and interest under any of the foregoing to the extent such right, title or interest is with respect to an obligation not then due and payable as respects any action or inaction or state of affairs occurring prior to such sale) and the purchaser shall assume all of such Certificateholder's obligations under this Agreement, the Intercreditor Agreement, the Liquidity Facility and the Note Documents. The Certificates will be deemed to be purchased on the date payment of the purchase price is made notwithstanding the failure of the Certificateholders to deliver any Certificates (whether in the form of Physical Certificates or beneficial interests in Global Certificates) and, upon such a purchase, (i) the only rights of the Certificateholders will be to deliver the Certificates to the purchaser and receive the purchase price for the Certificates and (ii) if the purchaser shall so request such Certificateholder will comply with all of the provisions of Section 3.04 hereof to enable new Certificates to be issued to the purchaser in such denominations as it shall request. All charges and expenses in connection with the issuance of any such new Certificates shall be borne by the purchaser thereof. As used in this Section 6.01(b), the terms "Certificateholder", "Class", "Class B Certificate", "Class B Certificateholder", "Class B Trust", "Class B Trustee", "Class C Certificate", "Class C Certificateholder", "Class C Trust" and "Class C Trustee" shall have the respective meanings assigned to such terms in the Intercreditor Agreement. Section 6.02. INCIDENTS OF SALE OF EQUIPMENT NOTESSection 6.02. INCIDENTS OF SALE OF EQUIPMENT NOTES. Upon any Notes made either under the power of sale given under this Agreement or otherwise for the enforcement of this Agreement, the following shall be applicable: (1) CERTIFICATEHOLDERS AND TRUSTEE MAY PURCHASE EQUIPMENT NOTES. Any Certificateholder, the Trustee in its individual or any other capacity or any other Person may bid for and purchase any of the Equipment Notes, and upon compliance with the terms of sale, may hold, retain, possess and dispose of such Equipment Notes in their own absolute right without further accountability. (2) RECEIPT OF TRUSTEE SHALL DISCHARGE PURCHASER. The receipt of the Trustee or of the officer making such sale shall be a sufficient discharge to any purchaser for his purchase money, and, after paying such purchase money and receiving such receipt, such purchaser or its personal representative or assigns shall not be obliged to see to the application of such purchase money, or be in any way answerable for any loss, misapplication or non-application thereof. (3) APPLICATION OF MONEYS RECEIVED UPON SALE. Any moneys collected by the Trustee upon any sale made either under the power of sale given by this Agreement or otherwise for the enforcement of this Agreement shall be applied as provided in Section 4.02. Section 6.03. JUDICIAL PROCEEDINGS INSTITUTED BY TRUSTEE; TRUSTEE MAY BRING SUITSection 6.03. JUDICIAL PROCEEDINGS INSTITUTED BY TRUSTEE; TRUSTEE MAY BRING SUIT. If there shall be a failure to make payment of the principal of, premium, if any, or interest on any Equipment Note, or if there shall be any failure to pay Rent (as defined in the relevant Lease) under any Lease when due and payable, then the Trustee, in its own name, and as trustee of an express trust, as holder of such Equipment Notes, to the extent permitted by and in accordance with the terms of the Intercreditor Agreement and the Note Documents (subject to the rights of the applicable Owner Trustee or Owner Participant to cure any such failure in accordance with Section 4.03 of the applicable Indenture), shall be entitled and empowered to institute any suits, actions or proceedings at law, in equity or otherwise, for the collection of the sums so due and unpaid on such Equipment Notes or under such Lease and may prosecute any such claim or proceeding to judgment or final decree with respect to the whole amount of any such sums so due and unpaid. Section 6.04. CONTROL BY CERTIFICATEHOLDERSSection 6.04. CONTROL BY CERTIFICATEHOLDERS. Subject to Section 6.03 and the Intercreditor Agreement, the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee with respect to the Trust or pursuant to the terms of the Intercreditor Agreement, or exercising any trust or power conferred on the Trustee under this Agreement or the Intercreditor Agreement, including any right of the Trustee as Controlling Party under the Intercreditor Agreement or as holder of the Equipment Notes, PROVIDED that: (1) such Direction shall not be in conflict with any rule of law or with this Agreement and would not involve the Trustee in personal liability or expense, (2) the Trustee shall not determine that the action so directed would be unjustly prejudicial to the Certificateholders not taking part in such Direction, and (3) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such Direction. Section 6.05. WAIVER OF PAST DEFAULTSSection 6.05. WAIVER OF PAST DEFAULTS. Subject to the Intercreditor Agreement, the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust (i) may on behalf of all of the Certificateholders waive any past Event of Default hereunder and its consequences or (ii) if the Trustee is the Controlling Party, may direct the Trustee to instruct the applicable Loan Trustee to waive any past Indenture Default under any Indenture and its consequences, and thereby annul any Direction given by such Certificateholders or the Trustee to such Loan Trustee with respect thereto, except a default: (1) in the deposit of any Scheduled Payment or Special Payment under Section 4.01 or in the distribution of any payment under Section 4.02 on the Certificates, or (2) in the payment of the principal of (premium, if any) or interest on the Equipment Notes, or (3) in respect of a covenant or provision hereof which under Article IX hereof cannot be modified or amended without the consent of each Certificateholder holding an Outstanding Certificate affected thereby. Upon any such waiver, such default shall cease to exist with respect to the Certificates and any Event of Default arising therefrom shall be deemed to have been cured for every purpose and any direction given by the Trustee on behalf of the Certificateholders to the relevant Loan Trustee shall be annulled with respect thereto; but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. Upon any such waiver, the Trustee shall vote the Equipment Notes issued under the relevant Indenture to waive the corresponding Indenture Default. Section 6.06. RIGHT OF CERTIFICATEHOLDERS TO RECEIVE PAYMENTS NOT TO BE IMPAIREDSection 6.06. RIGHT OF CERTIFICATEHOLDERS TO RECEIVE PAYMENTS NOT TO BE IMPAIRED. Anything in this Agreement to the contrary notwithstanding, including, without limitation, Section 6.07 hereof, but subject to the Intercreditor Agreement, the right of any Certificateholder to receive distributions of payments required pursuant to Section 4.02 hereof on the Certificates when due, or to institute suit for the enforcement of any such payment on or after the applicable Regular Distribution Date or Special Distribution Date, shall not be impaired or affected without the consent of such Certificateholder. Section 6.07. CERTIFICATEHOLDERS MAY NOT BRING SUIT EXCEPT UNDER CERTAIN CONDITIONSSection 6.07. CERTIFICATEHOLDERS MAY NOT BRING SUIT EXCEPT UNDER CERTAIN CONDITIONS. A Certificateholder shall not have the right to institute any suit, action or proceeding at law or in equity or otherwise with respect to this Agreement, for the appointment of a receiver or for the enforcement of any other remedy under this Agreement, unless: (1) such Certificateholder previously shall have given written notice to the Trustee of a continuing Event of Default; (2) Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than 25% of the Trust shall have requested the Trustee in writing to institute such action, suit or proceeding and shall have offered to the Trustee indemnity as provided in Section 7.02(e); (3) the Trustee shall have refused or neglected to institute any such action, suit or proceeding for 60 days after receipt of such notice, request and offer of indemnity; and (4) no Direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust. It is understood and intended that no one or more of the Certificateholders shall have any right in any manner whatever hereunder or under the Certificates to (i) surrender, impair, waive, affect, disturb or prejudice any property in the Trust Property or the lien of any Indenture on any property subject thereto, or the rights of the Certificateholders or the holders of the related Equipment Notes, (ii) obtain or seek to obtain priority over or preference to any other such Certificateholder or (iii) enforce any right under this Agreement, except in the manner herein provided and for the equal, ratable and common benefit of all the Certificateholders subject to the provisions of this Agreement. Section 6.08. REMEDIES CUMULATIVESection 6.08. REMEDIES CUMULATIVE. Every remedy given hereunder to the Trustee or to any of the Certificateholders shall not be exclusive of any other remedy or remedies, and every such remedy shall be cumulative and in addition to every other remedy given hereunder or now or hereafter given by statute, law, equity or otherwise. Section 6.09. UNDERTAKING FOR COSTSSection 6.09. UNDERTAKING FOR COSTS. In any suit for the enforcement of any right or remedy under this Agreement, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, a court may require any party litigant in such suit to file an undertaking to pay the costs of such suit, and may assess costs against any such party litigant, in the manner and to the extent provided in the Trust Indenture Act; PROVIDED that neither this Section nor the Trust Indenture Act shall be deemed to authorize any court to require such an undertaking or to make such an assessment in any suit instituted by the Company or the Guarantor. ARTICLE VII ARTICLE VII THE TRUSTEE Section 7.01. NOTICE OF DEFAULTSSection 7.01. NOTICE OF DEFAULTS. As promptly as practicable after, and in any event within 90 days after the occurrence of any default (as such term is defined below) hereunder actually known to the Trustee, the Trustee shall transmit by mail to the Company, the related Owner Trustees, the related Loan Trustees and the Certificateholders in accordance with Section 313(c) of the Trust Indenture Act, notice of such default hereunder actually known to the Trustee, unless such default shall have been cured or waived; PROVIDED, HOWEVER, that, except in the case of a default in the payment of the principal of (premium, if any) or interest on any Equipment Note, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Trustee in good faith determine that the withholding of such notice is in the interests of the Certificateholders. For the purpose of this Section, the term "default" means any event that is, or after notice or lapse of time or both would become, an Event of Default. Section 7.02. CERTAIN RIGHTS OF TRUSTEESection 7.02. CERTAIN RIGHTS OF TRUSTEE. Subject to the provisions of Section 315 of the Trust Indenture Act: (a) the Trustee may rely and shall be protected in acting or refraining from acting in reliance upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Request; (c) whenever in the administration of this Agreement or the Intercreditor Agreement the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate of the Company, any Owner Trustee or any Loan Trustee; (d) the Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Agreement or the Intercreditor Agreement at the request or direction of any of the Certificateholders pursuant to this Agreement or the Intercreditor Agreement unless such Certificateholders shall have offered to the Trustee reasonable security or indemnity against the cost, expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, or report, notice, request, direction, consent, order, bond, debenture or other paper or document; (g) the Trustee may execute any of the trusts or powers under this Agreement or the Intercreditor Agreement or perform any duties under this Agreement or the Intercreditor Agreement either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it under this Agreement or the Intercreditor Agreement; (h) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Agreement or the Intercreditor Agreement; (i) the Trustee shall not be required to expend or risk its own funds in the performance of any of its duties under this Agreement, or in the exercise of any of its rights or powers, if it shall have reason to believe that repayment of such funds or adequate indemnity against such risk is not reasonably assured to it; and (j) except during the continuance of an Event of Default, the Trustee undertakes and shall be responsible to perform only such duties as are specifically set forth herein and no implied covenants or obligations shall be read into this Agreement or be enforceable against Trustee. Section 7.03. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF CERTIFICATESSection 7.03. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF CERTIFICATES. The recitals contained herein and in the Certificates, except the certificates of authentication, shall not be taken as the statements of the Trustee, and the Trustee assumes no responsibility for their correctness. Subject to Section 7.14, the Trustee makes no representations as to the validity or sufficiency of this Agreement, any Note Documents, any Participation Agreement or any Intercreditor Agreement, and Equipment Notes or the Certificates, except that the Trustee hereby represents and warrants that this Agreement has been, and each Certificate, the Intercreditor Agreement and each Participation Agreement will be, executed and delivered by one of its officers who is duly authorized to execute and deliver such document on its behalf. Section 7.04. MAY HOLD CERTIFICATESSection 7.04. MAY HOLD CERTIFICATES. The Trustee, any Paying Agent, Registrar or any of their Affiliates or any other agent, in their respective individual or any other capacity, may become the owner or pledgee of Certificates and subject to Sections 310(b) and 311 of the Trust Indenture Act, if applicable, may otherwise deal with the Company, the Guarantor, the Owner Trustees or the Loan Trustees with the same rights it would have if it were not Trustee, Paying Agent, Registrar or such other agent. Section 7.05. MONEY HELD IN TRUSTSection 7.05. MONEY HELD IN TRUST. Money held by the Trustee or the Paying Agent in trust hereunder need not be segregated from other funds except to the extent required herein or by law and neither the Trustee nor the Paying Agent shall have any liability for interest upon any such moneys except as provided for herein. Section 7.06. COMPENSATION AND REIMBURSEMENTSection 7.06. COMPENSATION AND REIMBURSEMENT. The Company agrees: (1) to pay, or cause to be paid, to the Trustee compensation (as set out in a separate fee agreement between the Trustee and the Company) for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (2) except as otherwise expressly provided herein to reimburse, or cause to be reimbursed, the Trustee upon its request for all reasonable out-of-pocket expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Agreement or the Intercreditor Agreement (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence, willful misconduct or bad faith or as may be incurred due to the Trustee's breach of its representations and warranties set forth in Section 7.14; (3) to indemnify, or cause to be indemnified, the Trustee for, and to hold it harmless against, any loss, liability or expense (other than for or with respect to any tax) incurred without negligence, willful misconduct or bad faith, on its part, arising out of or in connection with the acceptance or administration of this Trust, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder, except for any such loss, liability or expense incurred by reason of the Trustee's breach of its representations and warranties set forth in Section 7.14. The Trustee shall notify the Company and the Guarantor promptly of any claim for which it may seek indemnity. The Company and the Guarantor shall defend the claim and the Trustee shall cooperate in the defense. The Trustee may have separate counsel with the consent of the Company and the Guarantor and the Company and the Guarantor will pay the reasonable fees and expenses of such counsel. Neither the Company nor the Guarantor need pay for any settlement made without its consent; and (4) to indemnify, or cause to be indemnified, the Trustee, solely in its individual capacity, for, and to hold it harmless against, any tax (except to the extent the Trustee is reimbursed therefor pursuant to the next paragraph, provided that no indemnification shall be available with respect to any tax attributable to the Trustee's compensation for serving as such) incurred without negligence, willful misconduct or bad faith, on its part, arising out of or in connection with the acceptance or administration of this Trust, including any costs and expenses incurred in contesting the imposition of any such tax. The Trustee, in its individual capacity, shall notify the Company and the Guarantor promptly of any claim for any tax for which it may seek indemnity. The Trustee shall permit the Company and the Guarantor to contest the imposition of such tax and the Trustee, in its individual capacity, shall cooperate in the defense. The Trustee, in its individual capacity, may have separate counsel with the consent of the Company and the Guarantor and the Company and the Guarantor will pay the reasonable fees and expenses of such counsel. Neither the Company nor the Guarantor need pay for any taxes paid, in settlement or otherwise, without its consent. The Trustee shall be entitled to reimbursement from, and shall have a lien prior to the Certificates upon, the Trust Property for any tax incurred without negligence, bad faith or willful misconduct on its part, arising out of or in connection with the acceptance or administration of such Trust (other than any tax attributable to the Trustee's compensation for serving as such), including any costs and expenses incurred in contesting the imposition of any such tax. The Trustee shall notify the Company of any claim for any tax for which it may seek reimbursement. The Trustee shall cooperate in the contest by the Company of any such claim. If the Trustee reimburses itself from the Trust Property for any such tax it will within 30 days mail a brief report setting forth the amount of such tax and the circumstances thereof to all Certificateholders as their names and addresses appear in the Register. As security for the performance of the obligations of the Company under this Section the Trustee shall have a lien prior to the Certificates upon the Trust Property. Section 7.07. CORPORATE TRUSTEE REQUIRED; ELIGIBILITYSection 7.07. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY. There shall at all times be a Trustee hereunder which shall be eligible to act as a trustee under Section 310(a) of the Trust Indenture Act and shall have a combined capital and surplus of at least $75,000,000 (or a combined capital and surplus in excess of $5,000,000 and the obligations of which, whether now in existence or hereafter incurred, are fully and unconditionally guaranteed by a corporation organized and doing business under the laws of the United States, any State or Territory thereof or of the District of Columbia that has a combined capital and surplus of at least $75,000,000). If such corporation publishes reports of conditions at least annually, pursuant to law or to the requirements of federal, state, territorial or District of Columbia supervising or examining authority, then for the purposes of this Section 7.07, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of conditions so published. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 7.07 to act as Trustee, the Trustee shall resign immediately as Trustee in the manner and with the effect specified in Section 7.08. Section 7.08. RESIGNATION AND REMOVAL: APPOINTMENT OF SUCCESSORSection 7.08. RESIGNATION AND REMOVAL: APPOINTMENT OF SUCCESSOR. (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee under Section 7.09. (b) The Trustee may resign at any time as trustee by giving written notice thereof to the Company, the Authorized Agents, the Owner Trustees and the Loan Trustees. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Company, the Authorized Agents, the Owner Trustees, the Loan Trustees and the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee. (c) The Trustee may be removed at any time by Act of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust delivered to the Trustee, the Company, the Owner Trustees and the Loan Trustees. (d) If at any time: (1) the Trustee shall fail to comply with Section 310 of the Trust Indenture Act after written request therefor by the Company or by any Certificateholder who has been a bona fide certificateholder for at least six months; or (2) the Trustee shall cease to be eligible under Section 7.07 and shall fail to resign after written request therefor by the Company or by any such Certificateholder; or (3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation; then, in any case, (i) the Company may remove the Trustee or (ii) any Certificateholder who has been a bona fide Certificateholder for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. (e) If a Responsible Officer of the Trustee shall obtain actual knowledge of an Avoidable Tax (as hereinafter defined) which has been or is likely to be asserted, the Trustee shall promptly notify the Company and shall, within 30 days of such notification, resign as Trustee hereunder unless within such 30-day period the Trustee shall have received notice that the Company has agreed to pay such tax. The Company shall promptly appoint a successor Trustee in a jurisdiction where there are no Avoidable Taxes. As used herein, an "Avoidable Tax" means a state or local tax: (i) upon (w) the Trust, (x) the Trust Property, (y) Certificateholders or (z) the Trustee for which the Trustee is entitled to seek reimbursement from the Trust Property, and (ii) which would be avoided if the Trustee were located in another state, or jurisdiction within a state, within the United States. A tax shall not be an Avoidable Tax if the Company or any Owner Trustee shall agree to pay, and shall pay, such tax. (f) If the Trustee shall resign, be removed or become incapable of acting as trustee or if a vacancy shall occur in the office of the Trustee for any cause, the Company shall promptly appoint a successor Trustee. If, within 90 days after such resignation, removal or incapability, or other occurrence of such vacancy, a successor Trustee shall be appointed by Act of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust delivered to the Company, the Owner Trustees, the Loan Trustee and the retiring Trustee, the successor Trustees so appointed shall, with the approval of the Company, which approval shall not be unreasonably withheld, forthwith upon its acceptance of such appointment, become the successor Trustee and supersede the successor Trustee appointed as provided above. If no successor Trustee shall have been so appointed as provided above and accepted appointment in the manner hereinafter provided, the resigning Trustee or any Certificateholder who has been a bona fide Certificateholder for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee. (g) The successor Trustee of a Trust shall give notice of the resignation and removal of the Trustee and appointment of the successor Trustee by mailing written notice of such event by first-class mail, postage prepaid, to the Certificateholders as their names and addresses appear in the Register. Each notice shall include the name of such successor Trustee and the address of its Corporate Trust Office. Section 7.09. ACCEPTANCE OF APPOINTMENT BY SUCCESSORSection 7.09. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on request of the Company or the successor Trustee, such retiring Trustee shall execute and deliver an instrument transferring to such successor Trustee all such rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee, subject nevertheless to its lien, if any, provided for in Section 7.06. Upon request of any such successor Trustee, the Company, the retiring Trustee and such successor Trustee shall execute and deliver any and all instruments containing such provisions as shall be necessary or desirable to transfer and confirm to, and for more fully and certainly vesting in, such successor Trustee all such rights, powers and trusts. No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article. Section 7.10. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESSSection 7.10. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, PROVIDED such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Certificates shall have been executed or authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such execution or authentication and deliver the Certificates so executed or authenticated with the same effect as if such successor Trustee had itself executed or authenticated such Certificates. Section 7.11. MAINTENANCE OF AGENCIESSection 7.11. MAINTENANCE OF AGENCIES. (a) There shall at all times be maintained an office or agency where Certificates may be presented or surrendered for registration of transfer or for exchange, and for payment thereof and where notices and demands to or upon the Trustee in respect of such Certificates may be served. Presentations and demands may be made and notices may be served at the Corporate Trust Office of the Trustee. (b) There shall at all times be a Registrar and a Paying Agent hereunder with respect to the Certificates. Each such Authorized Agent shall be a bank or trust company, shall be a corporation organized and doing business under the laws of the United States or any state, with a combined capital and surplus of at least $75,000,000, or a corporation having a combined capital and surplus in excess of $5,000,000 the obligations of which are guaranteed by a corporation organized and doing business under the laws of the United States or any state, with a combined capital and surplus of at least $75,000,000, and shall be authorized under such laws to exercise corporate trust powers, subject to supervision by federal or state authorities. The Trustee shall initially be the Paying Agent and, as provided in Section 3.04, Registrar hereunder with respect to the Certificates. Each Registrar shall furnish to the Trustee, at stated intervals of not more than six months, and at such other times as the Trustee may request in writing, a copy of the Register maintained by such Registrar. (c) Any corporation into which any Authorized Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, consolidation or conversion to which any Authorized Agent, shall be a party, or any corporation succeeding to the corporate trust business of any Authorized Agent, shall be the successor of such Authorized Agent hereunder, if such successor corporation is otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the parties hereto or such Authorized Agent or such successor corporation. (d) Any Authorized Agent may at any time resign by giving written notice of resignation to the Trustee, the Company, the Owner Trustees and the Loan Trustees. The Company may, and at the request of the Trustee shall, at any time terminate the agency of any Authorized Agent by giving written notice of termination to such Authorized Agent and to the Trustee. Upon the resignation or termination of an Authorized Agent or in case at any time any such Authorized Agent shall cease to be eligible under this Section (when in either case, no other Authorized Agent performing the functions of such Authorized Agent shall have been appointed), the Company shall promptly appoint one or more qualified successor Authorized Agents, reasonably satisfactory to the Trustee, to perform the functions of the Authorized Agent which has resigned or whose agency has been terminated or who shall have ceased to be eligible under this Section. The Company shall give written notice of any such appointment made by it to the Trustee, the Owner Trustees and the Loan Trustees; and in each case the Trustee shall mail notice of such appointment to all Certificateholders as their names and addresses appear on the Register. (e) The Company agrees to pay, or cause to be paid, from time to time to each Authorized Agent reasonable compensation for its services and to reimburse it for its reasonable expenses. Section 7.12. MONEY FOR CERTIFICATE PAYMENTS TO BE HELD IN TRUSTSection 7.12. MONEY FOR CERTIFICATE PAYMENTS TO BE HELD IN TRUST. All moneys deposited with any Paying Agent for the purpose of any payment on Certificates shall be deposited and held in trust for the benefit of the Certificateholders entitled to such payment, subject to the provisions of this Section. Moneys so deposited and held in trust shall constitute a separate trust fund for the benefit of the Certificateholders with respect to which such money was deposited. The Trustee may at any time, for the purpose of obtaining the satisfaction and discharge of this Agreement or for any other purpose, direct any Paying Agent to pay to the Trustee all sums held in trust by such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by such Paying Agent and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. Section 7.13. REGISTRATION OF EQUIPMENT NOTES IN NAME OF SUBORDINATION AGENTSection 7.13. REGISTRATION OF EQUIPMENT NOTES IN NAME OF SUBORDINATION AGENT. The Trustee agrees that all Equipment Notes to be purchased by the Trust shall be issued in the name of the Subordination Agent or its nominee and held by the Subordination Agent in trust for the benefit of the Certificateholders, or, if not so held, the Subordination Agent or its nominee shall be reflected as the owner of such Equipment Notes in the register of the issuer of such Equipment Notes. Section 7.14. REPRESENTATIONS AND WARRANTIES OF TRUSTEESection 7.14. REPRESENTATIONS AND WARRANTIES OF TRUSTEE. The Trustee hereby represents and warrants that: (a) the Trustee is a Delaware banking corporation organized and validly existing, and in good standing under the laws of the State of Delaware; (b) the Trustee has full power, authority and legal right to execute, deliver and perform this Agreement, the Intercreditor Agreement and the Participation Agreements and has taken all necessary action to authorize the execution, delivery and performance by it of this Agreement, the Intercreditor Agreement and the Participation Agreements; (c) the execution, delivery and performance by the Trustee of this Agreement, the Intercreditor Agreement and the Participation Agreements (i) will not violate any provision of any United States federal law or the law of the State of Delaware governing the banking and trust powers of the Trustee or any order, writ, judgment, or decree of any court, arbitrator,or governmental authority applicable to the Trustee or any of its assets, (ii) will not violate any provision of the articles of association or by-laws of the Trustee, and (iii) will not violate any provision of, or constitute, with or without notice or lapse of time, a default under, or result in the creation or imposition of any lien on any properties included in the Trust Property pursuant to the provisions of, any mortgage, indenture, contract, agreement or other undertaking to which it is a party, which violation, default or lien could reasonably be expected to have an adverse effect on the Trustee's performance or ability to perform its duties hereunder or thereunder or on the transactions contemplated herein or therein; (d) the execution, delivery and performance by the Trustee of this Agreement the Intercreditor Agreement and the Participation Agreements will not require the authorization, consent, or approval of, the giving of notice to, the filing or registration with, or the taking of any other action in respect of, any governmental authority or agency of the United States or the State of Delaware regulating the banking and corporate trust activities of the Trustee: and (e) this Agreement, the Participation Agreement, and the Intercreditor Agreement have been duly executed and delivered by the Trustee and constitute the legal, valid, and binding agreements of the Trustee, enforceable against it in accordance with their respective terms, provided that enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and (ii) general principles of equity. Section 7.15. WITHHOLDING TAXES; INFORMATION REPORTINGSection 7.15. WITHHOLDING TAXES; INFORMATION REPORTING. (a) The Trustee, as trustee of the grantor trust created by this Agreement, shall exclude and withhold from each distribution of principal, premium, if any, and interest and other amounts due under this Agreement or under the Certificates any and all withholding taxes applicable thereto as required by law. The Trustee agrees to act as such withholding agent and, in connection therewith, whenever any taxes or similar charges are required to be withheld with respect to any amounts paid by or on behalf of the Trustee in respect of the Certificates, to withhold such amounts and timely pay the same to the authority in the name of and on behalf of the Certificateholders, that it will file any necessary withholding tax returns or statements when due, and that, as promptly as possible after the payment thereof, it will deliver to each such Certificateholder necessary documentation showing the payment thereof, together with such additional documentary evidence as such Certificateholders may reasonably request from time to time. The Trustee agrees to file any other information reports as it may be required to file under United States law. (b) The Trustee may satisfy certain of its obligations with respect to this Agreement by retaining, at the expense of the Company, a firm of independent public accountants (the "Accountants") which shall (i) be responsible for all tax filing requirements and (ii) perform the obligations of the Trustee in respect of tax filing requirements. The Trustee shall be deemed to have discharged its tax filing obligations under this Agreement upon its retention of the Accountants, and, if the Trustee shall have selected in the Accountants in good faith and without gross negligence, the Trustee shall not have any liability with respect to the default or misconduct of the Accountants. (c) The Trustee, at the request of the Company, will make such United States federal income tax elections as may be necessary to prevent the Trust from being classified for federal income tax purposes as an association taxable as a corporation. Section 7.16. TRUSTEE'S LIENSSection 7.16. TRUSTEE'S LIENS. The Trustee in its individual capacity agrees that it will at its own cost and expense promptly take any action as may be necessary to duly discharge and satisfy in full any mortgage, pledge, lien, charge, encumbrance, security interest or claim ("Trustee's Liens") on or with respect to the Trust Property which is attributable to the Trustee either (i) in its individual capacity and which is unrelated to the transactions contemplated by this Agreement, the Intercreditor Agreement, the Participation Agreements or the Note Documents, or (ii) as Trustee hereunder or in its individual capacity and which arises out of acts or omissions which are not contemplated by this Agreement. Section 7.17. PREFERENTIAL COLLECTION OF CLAIMSSection 7.17. PREFERENTIAL COLLECTION OF CLAIMS. The Trustee shall comply with Section 311(a) of the Trust Indenture Act, excluding any creditor relationship listed in Section 31l(b) of the Trust Indenture Act. If the Trustee shall resign or be removed as Trustee, it shall be subject to Section 311(a) of the Trust Indenture Act to the extent provided therein. ARTICLE VIII ARTICLE VIII CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE Section 8.01. THE COMPANY TO FURNISH TRUSTEE WITH NAMES AND ADDRESSES OF CERTIFICATEHOLDERSSection 8.01. THE COMPANY TO FURNISH TRUSTEE WITH NAMES AND ADDRESSES OF CERTIFICATEHOLDERS. The Company will furnish or cause to be furnished to the Trustee within 15 days after each Record Date with respect to a Scheduled Payment, and at such other times as the Trustee may request in writing, within 30 days after receipt by the Company of any such request, a list, in such form as the Trustee may reasonably require, of all information in the possession or control of the Company as to the names and addresses of the Certificateholders, in each case as of a date not more than 15 days prior to the time such list is furnished; PROVIDED, HOWEVER, that so long as the Trustee is the sole Registrar, no such list need be furnished; and PROVIDED FURTHER, HOWEVER, that no such list need be furnished for so long as a copy of the Register is being furnished to the Trustee pursuant to Section 7.11. Section 8.02. PRESERVATION OF INFORMATION; COMMUNICATIONS TO CERTIFICATEHOLDERSSection 8.02. PRESERVATION OF INFORMATION; COMMUNICATIONS TO CERTIFICATEHOLDERS. The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Certificateholders contained in the most recent list furnished to the Trustee as provided in Section 7.11 or Section 8.01, as the case may be, and the names and addresses of Certificateholders received by the Trustee in its capacity as Registrar, if so acting. The Trustee may destroy any list furnished to it as provided in Section 7.11 or Section 8.01, as the case may be, upon receipt of a new list so furnished. Section 8.03. REPORTS BY TRUSTEESection 8.03. REPORTS BY TRUSTEE. Within 60 days after May 15 of each year commencing with the first full year following the issuance of the Certificates, the Trustee shall transmit to the Certificateholders, as provided in Section 313(c) of the Trust Indenture Act, a brief report dated as of such May 15, if required by Section 313(a) of the Trust Indenture Act. Section 8.04. REPORTS BY THE GUARANTOR AND COMPANYSection 8.04. REPORTS BY THE GUARANTOR AND COMPANY. The Guarantor and the Company each shall: (a) file with the Trustee, within 30 days after the Guarantor or the Company is required to file the same with the SEC, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may from time to time by rules and regulations prescribe) which the Guarantor or the Company is required to file with the SEC pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934, as amended; or, if the Guarantor or the Company is not required to file information, documents or reports pursuant to either of such sections, then to file with the Trustee and the SEC, in accordance with rules and regulations prescribed by the SEC, such of the supplementary and periodic information, documents and reports which may be required pursuant to section 13 of the Securities Exchange Act of 1934, as amended, in respect of a security listed and registered on a national securities exchange as may be prescribed in such rules and regulations; (b) file with the Trustee and the SEC, in accordance with the rules and regulations prescribed by the SEC, such additional information, documents and reports with respect to compliance by the Guarantor and the Company with the conditions and covenants of the Guarantor and the Company provided for in this Agreement, as may be required by such rules and regulations, including, in the case of annual reports, if required by such rules and regulations, certificates or opinions of independent public accountants, conforming to the requirements of Section 1.02; (c) transmit to all Certificateholders, in the manner and to the extent provided in Section 313(c) of the Trust Indenture Act, such summaries of any information, documents and reports required to be filed by the Guarantor and the Company pursuant to subsections (a) and (b) of this Section 8.04 as may be required by rules and regulations prescribed by the SEC; (d) furnish to the Trustee, not less often than annually, a brief certificate from the principal executive officer, principal financial officer or principal accounting officer as to his or her knowledge of the Guarantor's and the Company's compliance with all conditions and covenants under this Agreement (it being understood that for purposes of this paragraph (d), such compliance shall be determined without regard to any period of grace or requirement of notice provided under this Agreement); and (e) make available to any Certificateholder, upon request, the annual audited and quarterly unaudited financial statements of the Guarantor which are provided to the Trustee. ARTICLE IX ARTICLE IX SUPPLEMENTAL AGREEMENTS Section 9.01. SUPPLEMENTAL AGREEMENTS WITHOUT CONSENT OF CERTIFICATEHOLDERSSection 9.01. SUPPLEMENTAL AGREEMENTS WITHOUT CONSENT OF CERTIFICATEHOLDERS. Without the consent of the Certificateholders, the Guarantor and the Company may, and the Trustee (subject to Section 9.03) shall, at any time and from time to time, enter into one or more agreements supplemental hereto or, if applicable, to the Intercreditor Agreement or the Liquidity Facility in form satisfactory to the Trustee, for any of the following purposes: (1) to evidence the succession of another corporation to the Company or the Guarantor and the assumption by any such successor of the covenants of the Company or the Guarantor herein contained; or (2) to add to the covenants of the Guarantor or the Company for the benefit of the Certificateholders, or to surrender any right or power in this Agreement conferred upon the Guarantor or the Company; or (3) to correct or supplement any provision in this Agreement, the Intercreditor Agreement or the Liquidity Facility which may be defective or inconsistent with any other provision herein or to make any other provisions with respect to matters or questions arising under this Agreement, the Intercreditor Agreement or the Liquidity Facility, provided that any such action shall not adversely affect the interests of the Certificateholders; or to cure any ambiguity or correct any mistake; or (4) to modify, eliminate or add to the provisions of this Agreement to such extent as shall be necessary to continue the qualification of this Agreement (including any supplemental agreement) under the Trust Indenture Act, or under any similar Federal statute hereafter enacted, and to add to this Agreement such other provisions as may be expressly permitted by the Trust Indenture Act, excluding, however, the provisions referred to in Section 316(a)(2) of the Trust Indenture Act as in effect at the date as of which this instrument was executed or any corresponding provision in any similar Federal statute hereafter enacted; or (5) to evidence and provide for the acceptance of appointment under this Agreement by the Trustee of a successor Trustee and to add to or change any of the provisions of this Agreement as shall be necessary to provide for or facilitate the administration of the Trust, pursuant to the requirements of Section 7.09; PROVIDED that no such action described in this Section 9.01 shall materially adversely affect the interests of the Certificateholders. Section 9.02. SUPPLEMENTAL AGREEMENTS WITH CONSENT OF CERTIFICATEHOLDERSSection 9.02. SUPPLEMENTAL AGREEMENTS WITH CONSENT OF CERTIFICATEHOLDERS. With the consent of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest the Trust, by Act of said Certificateholders delivered to the Guarantor, the Company and the Trustee, the Guarantor and the Company may (with the consent of the Owner Trustees, if any, which consent shall not be unreasonably withheld), and the Trustee (subject to Section 9.03) shall, enter into an agreement or agreements supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement, the Intercreditor Agreement or the Liquidity Facility to the extent applicable to such Certificateholders or of modifying in any manner the rights and obligations of such Certificateholders under this Agreement; PROVIDED, HOWEVER, that no such supplemental agreement shall, without the consent of the Certificateholder of each Outstanding Certificate affected thereby: (1) reduce in any manner the amount of, or delay the timing of, any receipt by the Trustee of payments on the Equipment Notes held in the Trust or distributions that are required to be made herein on any Certificate, or change any date of payment of any Certificate or change the place of payment where, or the coin or currency in which, any Certificate is payable, or impair the right to institute suit for the enforcement of any such payment or distribution on or after the Regular Distribution Date or Special Distribution Date applicable thereto; or (2) permit the disposition of any Equipment Note included in the Trust Property except as permitted by this Agreement, or otherwise deprive such Certificateholder of the benefit of the ownership of the Equipment Notes in the Trust; or (3) alter the priority of distributions specified in the Intercreditor Agreement; or (4) modify any of the provisions of this Section or Section 6.05, except to increase any such percentage or to provide that certain other provisions of this Agreement cannot be modified or waived without the consent of the Certificateholder of each Certificate affected thereby. It shall not be necessary for any Act of Certificateholders under this Section to approve the particular form of any proposed supplemental agreement but it shall be sufficient if such Act shall approve the substance thereof. Section 9.03. DOCUMENTS AFFECTING IMMUNITY OR INDEMNITYSection 9.03. DOCUMENTS AFFECTING IMMUNITY OR INDEMNITY. If in the opinion of the Trustee any document required to be executed by it pursuant to the terms of Section 9.01 or 9.02 affects any interest, right, duty, immunity or indemnity in favor of the Trustee under this Agreement, the Trustee may in its discretion decline to execute such document. Section 9.04. EXECUTION OF SUPPLEMENTAL AGREEMENTSSection 9.04. EXECUTION OF SUPPLEMENTAL AGREEMENTS. In executing, or accepting the additional trusts created by, any supplemental agreement permitted by this Article or the modifications thereby of the trust created by this Agreement, the Trustee shall be entitled to receive, and shall be fully protected in relying upon, written advice of counsel or an Opinion of Counsel stating that the execution of such supplemental agreement is authorized or permitted by this Agreement. Section 9.05. EFFECT OF SUPPLEMENTAL AGREEMENTSSection 9.05. EFFECT OF SUPPLEMENTAL AGREEMENTS. Upon the execution of any supplemental agreement under this Article, this Agreement shall be modified in accordance therewith, and such supplemental agreement shall form a part of this Agreement for all purposes; and every Certificateholder theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. Section 9.06. CONFORMITY WITH TRUST INDENTURE ACTSection 9.06. CONFORMITY WITH TRUST INDENTURE ACT. Every supplemental agreement executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act as then in effect. Section 9.07. REFERENCE IN CERTIFICATES TO SUPPLEMENTAL AGREEMENTSSection 9.07. REFERENCE IN CERTIFICATES TO SUPPLEMENTAL AGREEMENTS. Certificates authenticated and delivered after the execution of any supplemental agreement pursuant to this Article may bear a notation in form approved by the Trustee as to any matter provided for in such supplemental agreement; and, in such case, suitable notation may be made upon Outstanding Certificates after proper presentation and demand. ARTICLE X ARTICLE X AMENDMENTS TO INDENTURES AND NOTE DOCUMENTS Section 10.01. AMENDMENTS AND SUPPLEMENTS TO INDENTURES AND OTHER NOTE DOCUMENTSSection 10.01. AMENDMENTS AND SUPPLEMENTS TO INDENTURES AND OTHER NOTE DOCUMENTS. In the event that the Trustee, as holder of any Equipment Notes in trust for the benefit of the Certificateholders or as Controlling Party, receives a request for a consent to any amendment, modification, waiver or supplement under any Indenture or other Note Document, the Trustee shall forthwith send a notice of such proposed amendment, modification, waiver or supplement to each Certificateholder registered on the Register as of the date of such notice. The Trustee shall request from the Certificateholders a Direction as to (a) whether or not to take or refrain from taking any action which a holder of such Equipment Note has the option to direct, (b) whether or not to give or execute any waivers, consents, amendments, modifications or supplements as a holder of such Equipment Note and (c) how to vote any Equipment Note if a vote has been called for with respect thereto. Provided such a request for Certificateholder Direction shall have been made, in directing any action or casting any vote or giving any consent as the holder of any Equipment Note, the Trustee shall vote for or give consent to any such action with respect to such Equipment Note in the same proportion as that of (i) the aggregate face amounts of all Certificates actually voted in favor of or for giving consent to such action by Acts of Certificateholders to (ii) the aggregate face amount of all Outstanding Certificates. For purposes of the immediately preceding sentence, a Certificate shall have been "actually voted" if the Holder of such Certificate has delivered to the Trustee an instrument evidencing such Holder's consent to such Direction on or prior to the Business Day before the Trustee directs such action or casts such vote or gives such consent. Notwithstanding the foregoing, but subject to Section 6.04 and any Intercreditor Agreement, the Trustee may, in its own discretion and at its own direction, consent and notify the relevant Loan Trustee of such consent to any amendment, modification, waiver or supplement under the relevant Indenture, the Liquidity Facility, or any Note Document, if an Event of Default hereunder shall have occurred and be continuing, or if such amendment, modification or waiver will not adversely affect the interests of the Certificateholders. ARTICLE XI ARTICLE XI TERMINATION OF TRUSTS Section 11.01. TERMINATION OF THE TRUSTSection 11.01. TERMINATION OF THE TRUST. The respective obligations and responsibilities of the Company, the Guarantor and the Trustee with respect to the Trust shall terminate upon distribution to all Holders of the Certificates and the Trustee of all amounts required to be distributed to them pursuant to this Agreement and the disposition of all property held as part of the Trust Property; PROVIDED, HOWEVER, that in no event shall the Trust continue beyond one hundred ten (110) years following the date of the earliest execution of this Agreement. Notice of any termination, specifying the Regular Distribution Date (or Special Distribution Date, as the case may be) upon which the Certificateholders may surrender their Certificates to the Trustee for payment of the final distribution and cancellation, shall be mailed promptly, upon notice to the Trustee, by the Trustee to Certificateholders not earlier than the 60th day and not later than the 20th day next preceding such final distribution specifying (A) the Regular Distribution Date (or Special Distribution Date, as the case may be) upon which the proposed final payment of the Certificates will be made upon presentation and surrender of Certificates at the office or agency of the Trustee therein specified, (B) the amount of any such proposed final payment, and (C) that the Record Date otherwise applicable to such Regular Distribution Date (or Special Distribution Date, as the case may be) is not applicable, payments being made only upon presentation and surrender of the Certificates at the office or agency of the Trustee therein specified. The Trustee shall give such notice to the Registrar at the time such notice is given to Certificateholders. Upon presentation and surrender of the Certificates, the Trustee shall cause to be distributed to Certificateholders amounts distributable on such Regular Distribution Date (or Special Distribution Date, as the case may be) pursuant to Section 4.02. In the event that all of the Certificateholders shall not surrender their Certificates for cancellation within six months after the date specified in the above-mentioned written notice, the Trustee shall give a second written notice to the remaining Certificateholders to surrender their Certificates for cancellation and receive the final distribution with respect thereto. No additional interest shall accrue on the Certificates after the Regular Distribution Date (or Special Distribution Date, as the case may be). In the event that any money held by the Trustee for the payment of distributions on the Certificates shall remain unclaimed for two years (or such lesser time as the Trustee shall be satisfied, after sixty days' notice from the Company, is one month prior to the escheat period provided under applicable law) after the final distribution date with respect thereto, the Trustee shall pay to each Loan Trustee the appropriate amount of money relating to such Loan Trustee and shall give written notice thereof to the related Owner Trustees and the Company. ARTICLE XII ARTICLE XII MISCELLANEOUS PROVISIONS Section 12.01. LIMITATION ON RIGHTS OF CERTIFICATEHOLDERSSection 12.01. LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS. The death or incapacity of any Certificateholder shall not operate to terminate this Agreement, or the Trust, nor entitle such Certificateholder's legal representatives or heirs to claim an accounting or to take any action or commence any proceeding in any court for a partition or winding up of the Trust, nor otherwise affect the rights, obligations, and liabilities of the parties hereto or any of them. Section 12.02. LIABILITIES OF CERTIFICATEHOLDERSSection 12.02. LIABILITIES OF CERTIFICATEHOLDERS. Neither the existence of the Trust nor any provision in this Agreement is intended to or shall limit the liability the Certificateholders would otherwise incur if the Certificateholders owned Trust Property as co-owners, or incurred any obligations of the Trust, directly rather than through the Trust. Section 12.03. CERTIFICATES NONASSESSABLE AND FULLY PAIDSection 12.03. CERTIFICATES NONASSESSABLE AND FULLY PAID. Subject to Section 12.02, Certificateholders shall not be personally liable for obligations of the Trust, the Fractional Undivided Interests represented by the Certificates shall be nonassessable for any losses or expenses of the Trust or for any reason whatsoever, and Certificates upon authentication thereof by the Trustee pursuant to Section 3.03 are and shall be deemed fully paid. No Certificateholder shall have any right (except as expressly provided herein) to vote or in any manner otherwise control the operation and management of the Trust Property, the Trust, or the obligations of the parties hereto, nor shall anything set forth herein, or contained in the terms of the Certificates, be construed so as to constitute the Certificateholders from time to time as partners or members of an association. Section 12.04. [Intentionally omitted]Section 12.04. [Intentionally omitted]. Section 12.05. NOTICESSection 12.05. NOTICES. ------- ------- (a) Unless otherwise specifically provided herein, all notices required under the terms and provisions of this Agreement shall be in English and in writing, and any such notice may be given by United States mail, courier service, telegram, telemessage, telecopy, telefax, cable or facsimile (confirmed by telephone or in writing in the case of notice by telegram, telemessage, telecopy, telefax, cable or facsimile) or any other customary means of communication, and any such notice shall be effective when delivered, or if mailed, three days after deposit in the United States mail with proper postage for ordinary mail prepaid, if to the Company or the Guarantor, to: American Trans Air, Inc. 7337 West Washington Street Indianapolis International Airport Indianapolis, Indiana 06927 ATTENTION: Executive Vice President and Chief Financial Officer FACSIMILE: (317) 240-7087 if to the Trustee, to: Wilmington Trust Company Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 ATTENTION: Corporate Trust Department FACSIMILE: (302) 651-8882 (b) The Company, the Guarantor or the Trustee, by notice to the other, may designate additional or different addresses for subsequent notices or communications. (c) Any notice or communication to Certificateholders shall be mailed by first-class mail to the addresses for Certificateholders shown on the Register kept by the Registrar and to addresses filed with the Trustee. Failure so to mail a notice or communication or any defect in such notice or communication shall not affect its sufficiency with respect to other Certificateholders. (d) If a notice or communication is mailed in the manner provided above within the time prescribed, it is conclusively presumed to have been duly given, whether or not the addressee receives it. (e) If the Company mails a notice or communication to the Certificateholders, it shall mail a copy to the Trustee and to each Paying Agent at the same time. (f) Notwithstanding the foregoing, all communications or notices to the Trustee shall be deemed to be given only when received by a Responsible Officer of the Trustee. (g) The Trustee shall promptly furnish the Company with a copy of any demand, notice or written communication received by the Trustee hereunder from any Certificateholder, Owner Trustee or Loan Trustee. Section 12.06. GOVERNING LAWSection 12.06. GOVERNING LAW. THIS AGREEMENT HAS BEEN DELIVERED IN THE STATE OF NEW YORK AND THIS AGREEMENT AND THE CERTIFICATES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT-OF-LAW PRINCIPLES. Section 12.07. SEVERABILITY OF PROVISIONSSection 12.07. SEVERABILITY OF PROVISIONS. If any one or more of the covenants, agreements, provisions, or terms of this Agreement shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions, or terms shall be deemed severable from the remaining covenants, agreements, provisions, or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement or the Trust or of the Certificates or the rights of the Certificateholders thereof. Section 12.08. [Intentionally omitted].Section 12.08. [Intentionally omitted]. Section 12.09. EFFECT OF HEADINGS AND TABLE OF CONTENTSSection 12.09. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. Section 12.10. SUCCESSORS AND ASSIGNSSection 12.10. SUCCESSORS AND ASSIGNS. All covenants, agreements, representations and warranties in this Agreement by the Trustee, the Guarantor and the Company shall bind and, to the extent permitted hereby, shall inure to the benefit of and be enforceable by their respective successors and assigns, whether so expressed or not. Section 12.11. BENEFITS OF AGREEMENTSection 12.11. BENEFITS OF AGREEMENT. Nothing in this Agreement or in the Certificates, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, and the Certificateholders, any benefit or any legal or equitable right, remedy or claim under this Agreement. Section 12.12. LEGAL HOLIDAYSSection 12.12. LEGAL HOLIDAYS. In any case where any Regular Distribution Date or Special Distribution Date relating to any Certificate shall not be a Business Day, then (notwithstanding any other provision of this Agreement) payment need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on such Regular Distribution Date or Special Distribution Date, and no interest shall accrue during the intervening period. Section 12.13. COUNTERPARTSSection 12.13. COUNTERPARTS. For the purpose of facilitating the execution of this Agreement and for other purposes, this Agreement may be executed simultaneously in any number of counterparts, each of which counterparts shall be deemed to be an original, and all of which counterparts shall constitute but one and the same instrument. Section 12.14. COMMUNICATION BY CERTIFICATEHOLDERS WITH OTHER CERTIFICATEHOLDERSSection 12.14. COMMUNICATION BY CERTIFICATEHOLDERS WITH OTHER CERTIFICATEHOLDERS. Certificateholders may communicate with other Certificateholders with respect to their rights under this Agreement or the Certificates pursuant to Section 3.12(b) of the Trust Indenture Act. The Company, the Guarantor, the Trustee and any and all other persons benefitted by this Agreement shall have the protection afforded by Section 312(c) of the Trust Indenture Act. IN WITNESS WHEREOF, the Guarantor, the Company and the Trustee have caused this Agreement to be duly executed by their respective officers, all as of the day and year first above written. AMTRAN, INC. By /s/ Kenneth K. Wolff ----------------------------- Title: Executive Vice President and Chief Financial Officer AMERICAN TRANS AIR, INC. / By /s/ Kenneth K. Wolff ----------------------------- Title: Executive Vice President and Chief Financial Officer WILMINGTON TRUST COMPANY, as Trustee By /s/ Donald McKelcan ----------------------------- Title: Vice President SCHEDULE 1 TRUST INDENTURE AND SECURITY AGREEMENTS 1) Trust Indenture and Security Agreement [ATA 1996 A], dated as of December 16, 1996 between Wilmington Trust Company, as Indenture Trustee, and First Security Bank, National Association, as Owner Trustee 2) Trust Indenture and Security Agreement [ATA 1996 B], dated as of December 16, 1996 between Wilmington Trust Company, as Indenture Trustee, and First Security Bank, National Association, as Owner Trustee SCHEDULE 2 PARTICIPATION AGREEMENTS 1) Participation Agreement [ATA 1996 A], dated as of December 16, 1996 among the Company, as Lessee, Finova Capital Corporation, as Owner Participant, First Security Bank, National Association, as Owner Trustee, Wilmington Trust Company, as Indenture Trustee, the Trustee, the Other Trustees, and the Subordination Agent 2) Participation Agreement [ATA 1996 B], dated as of December 16, 1996 among the Company, as Lessee, General Electric Capital Corporation, as Owner Participant, First Security Bank, National Association, as Owner Trustee, Wilmington Trust Company, as Indenture Trustee, the Trustee, the Other Trustees, and the Subordination Agent EXHIBIT A FORM OF CERTIFICATE [THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS CERTIFICATE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT IT WILL NOT WITHIN THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY AMERICAN TRANS AIR, INC., THE TRUSTEE OR ANY AFFILIATE OF ANY OF SUCH PERSONS RESELL OR OTHERWISE TRANSFER THIS CERTIFICATE EXCEPT (A) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (B) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING $100,000 OR MORE AGGREGATE PRINCIPAL AMOUNT OF SUCH CERTIFICATE THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS CERTIFICATE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE), (C) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (E) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT; AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS CERTIFICATE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS CERTIFICATE WITHIN THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY AMERICAN TRANS AIR, INC., THE TRUSTEE OR ANY AFFILIATE OF ANY OF SUCH PERSONS THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE PASS THROUGH TRUST AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS.]1 [UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND 3.06 OF THE PASS THROUGH TRUST AGREEMENT REFERRED TO HEREIN.]2 AMERICAN TRANS AIR, INC. 1996-1A PASS THROUGH TRUST Pass Through Certificate, Series 1996-1A Issuance Date: ______________________________ Final Legal Distribution Date: ______________________________ Evidencing a Fractional Undivided Interest in The 1996-1A Trust, the Property of Which Includes Certain Equipment Notes each secured by Aircraft leased to American Trans Air, Inc. Certificate No. $ Fractional Undivided Interest representing ___________% of the Trust per $1,000 of Reference Principal Amount THIS CERTIFIES THAT ____________________________, for value received, is the registered owner of a Fractional Undivided Interest in the amount of __________ Dollars ($___________) (the "Reference Principal Amount") in the American Trans Air 1996-1A Pass Through Trust (the "Trust") created by Wilmington Trust Company, not in its individual capacity but solely as trustee (the "Trustee"), pursuant to a Pass Through Trust Agreement dated as of December __, 1996 (the "Agreement"), among the Trustee, Amtran, Inc., a corporation incorporated under Indiana law (the "Guarantor"), and American Trans Air, Inc., a corporation incorporated under Indiana law (the "Company"), a summary of certain of the pertinent provisions of which is set forth below. To the extent not otherwise defined herein, the capitalized terms used herein have the meanings assigned to them in the Agreement. This Certificate is one of the duly authorized Certificates designated as "Pass Through Certificates, Series 1996-1A" (herein called the "Certificates"). This Certificate is issued under and is subject to the terms, provisions, and conditions of the Agreement and the Intercreditor Agreement, to which agreements the Certificateholder of this Certificate by virtue of the acceptance hereof assents and by which such Certificateholder is bound. The property of the Trust includes certain Equipment Notes and all rights of the Trust to receive any payments under the Intercreditor Agreement and the Liquidity Facility (the "Trust Property"). Each issue of the Equipment Notes is secured by a security interest in The Aircraft leased to the Company. Each of the Certificates represents a fractional undivided interest in the Trust and the Trust Property, and has no rights, benefits or interest in respect of any assets or property other than the Trust Property. The undivided percentage interest in the Trust represented by each of this Certificate (as specified above) and the other Pass Through Certificates, Series 1996-1A, was determined on the basis of (x) the aggregate of the Reference Principal Amount of this Certificate (as specified above) and of the other Pass Through Certificates, Series 1996-1A and (y) the aggregate original principal amounts of the Equipment Notes constituting the Trust Property. Subject to and in accordance with the terms of the Agreement and the Intercreditor Agreement, from funds then available to the Trustee, there will be distributed on each March 26, June 26, September 26 and December 26 (a "Regular Distribution Date"), commencing March 26, 1997, to the Person in whose name this Certificate is registered at the close of business on the 15th day preceding the Regular Distribution Date, an amount in respect of the Scheduled Payments on the Equipment Notes due on such Regular Distribution Date, the receipt of which has been confirmed by the Trustee, equal to the product of the percentage interest in the Trust evidenced by this Certificate and an amount equal to the sum of such Scheduled Payments. Subject to and in accordance with the terms of the Agreement and the Intercreditor Agreement, in the event that Special Payments on the Equipment Notes are received by the Trustee, from funds then available to the Trustee, there shall be distributed on the applicable Special Distribution Date, to the Person in whose name this Certificate is registered at the close of business on the 15th day preceding the Special Distribution Date, an amount in respect of such Special Payments on the Equipment Notes, the receipt of which has been confirmed by the Trustee, equal to the product of the percentage interest in the Trust evidenced by this Certificate and an amount equal to the sum of such Special Payments so received. If a Regular Distribution Date or Special Distribution Date is not a Business Day, distribution shall be made on the immediately following Business Day with the same force and effect as if made on such Regular Distribution Date or Special Distribution Date and no interest shall accrue during the intervening period. The Trustee shall mail notice of each Special Payment and the Special Distribution Date therefor to the Certificateholder of this Certificate. Distributions on this Certificate will be made by the Trustee by check mailed to the Person entitled thereto, without the presentation or surrender of this Certificate or the making of any notation hereon. Except as otherwise provided in the Agreement and notwithstanding the above, the final distribution on this Certificate will be made after notice mailed by the Trustee of the pendency of such distribution and only upon presentation and surrender of this Certificate at the office or agency of the Trustee specified in such notice. The Certificates do not represent a direct obligation of, or an obligation guaranteed by, or an interest in, the Guarantor, the Company or the Trustee or any affiliate thereof. The Certificates are limited in right of payment, all as more specifically set forth on the face hereof and in the Agreement. All payments or distributions made to Certificateholders under the Agreement shall be made only from the Trust Property and only to the extent that the Trustee shall have sufficient income or proceeds from the Trust Property to make such payments in accordance with the terms of the Agreement. Each Certificateholder of this Certificate, by its acceptance hereof, agrees that it will look solely to the income and proceeds from the Trust Property to the extent available for distribution to such Certificateholder as provided in the Agreement. This Certificate does not purport to summarize the Agreement and reference is made to the Agreement for information with respect to the interests, rights, benefits, obligations, proceeds, and duties evidenced hereby. A copy of the Agreement may be examined during normal business hours at the principal office of the Trustee, and at such other places, if any, designated by the Trustee, by any Certificateholder upon request. The Agreement permits, with certain exceptions therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Certificateholders under the Agreement at any time by the Guarantor, the Company and the Trustee with the consent of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust. Any such consent by the Certificateholder of this Certificate shall be conclusive and binding on such Certificateholder and upon all future Certificateholders of this Certificate and of any Certificate issued upon the transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent is made upon this Certificate. The Agreement also permits the amendment thereof, in certain limited circumstances, without the consent of the Certificateholders of any of the Certificates. As provided in the Agreement and subject to certain limitations set forth, the transfer of this Certificate is registrable in the Register upon surrender of this Certificate for registration of transfer at the offices or agencies maintained by the Trustee in its capacity as Registrar, or by any successor Registrar duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Trustee and the Registrar, duly executed by the Certificateholder hereof or such Certificateholder's attorney duly authorized in writing, and thereupon one or more new Certificates of authorized denominations evidencing the same aggregate Fractional Undivided Interest in the Trust will be issued to the designated transferee or transferees. The Certificates are issuable only as registered Certificates without coupons in minimum denominations of $100,000 Fractional Undivided Interest and integral multiples of $1,000 in excess thereof except that one Certificate may be in a denomination of less than $100,000 that is not a multiple of $1,000. As provided in the Agreement and subject to certain limitations therein set forth, the Certificates are exchangeable for new Certificates of authorized denominations evidencing the same aggregate Fractional Undivided Interest in the Trust, as requested by the Certificateholder surrendering the same. No service charge will be made for any such registration of transfer or exchange, but the Trustee shall require payment of a sum sufficient to cover any tax or governmental charge payable in connection therewith. The Trustee, the Registrar, and any agent of the Trustee or the Registrar may treat the person in whose name this Certificate is registered as the owner hereof for all purposes, and neither the Trustee, the Registrar, nor any such agent shall be affected by any notice to the contrary. The obligations and responsibilities created by the Agreement and the Trust created thereby shall terminate upon the distribution to Certificateholders of all amounts required to be distributed to them pursuant to the Agreement and the disposition of all property held as part of the Trust Property. THE AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES. Unless the certificate of authentication hereon has been executed by the Trustee, by manual signature, this Certificate shall not be entitled to any benefit under the Agreement or be valid for any purpose. IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed. AMERICAN TRANS AIR, INC. By: WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Trustee By ---------------------------------------------------------------------------- Title: ------------------------------------------------------------------------ Dated: ---------------------------------------- [FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION] This is one of the Certificates referred to in the within-mentioned Agreement. WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Trustee By: ---------------------------------------------------------- Authorized Officer FORM OF TRANSFER NOTICE FOR VALUE RECEIVED the undersigned registered holder hereby sell(s), assign(s) and transfer(s) unto INSERT TAXPAYER IDENTIFICATION NO. please print or typewrite name and address including zip code of assignee the within Certificate and all rights thereunder, hereby irrevocably constituting and appointing attorney to transfer said Certificate on the books of the Trustee with full power of substitution in the premises. [THE FOLLOWING PROVISION TO BE INCLUDED ON ALL CERTIFICATES EXCEPT PERMANENT OFFSHORE GLOBAL AND OFFSHORE PHYSICAL CERTIFICATES] In connection with any transfer of this Certificate occurring prior to the date that is the earlier of the date of an effective Registration Statement or December 27, 1999, the undersigned confirms that without utilizing any general solicitation or general advertising that: [CHECK ONE] [ ] (a) this Certificate is being transferred in compliance with the exemption from registration under the Securities Act of 1933, as amended, provided by Rule 144A thereunder. OR [ ] (b) this Certificate is being transferred other than in accordance with (a) above and documents are being furnished that comply with the conditions of transfer set forth in this Certificate and the Agreement. If neither of the foregoing boxes is checked, the Trustee or other Registrar shall not be obligated to register this Certificate in the name of any Person other than the Holder hereof unless and until the conditions to any such transfer of registration set forth herein and in Section 3.06 of the Agreement shall have been satisfied. Date: [NAME OF TRANSFEROR] ------------------------------- --------------------------------- NOTE: The signature must correspond with the name as written upon the face of the within-mentioned instrument in every particular, without alteration or any change whatsoever. Signature Guarantee: ---------------------------------------------------------- TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED. The undersigned represents and warrants that it is purchasing this Certificate for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933, as amended, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Dated: ----------------------------- NOTE: To be executed by an executive officer. EXHIBIT B FORM OF CERTIFICATE FOR UNLEGENDED CERTIFICATES [Date] Wilmington Trust Company, not in its individual capacity but solely as Trustee Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 Attention: Corporate Trust Trustee Administration Re: American Trans Air 1996-1A Pass Through Trust, Pass THROUGH TRUST CERTIFICATES (THE "CERTIFICATES") Dear Sirs: This letter relates to U.S. $__________ Fractional Undivided Interest of Certificates represented by a Certificate (the "Legended Certificate") which bears a legend outlining restrictions upon transfer of such Legended Certificate. Pursuant to Section 3.06 of the Pass Through Trust Agreement relating to the Certificates dated as of December 16, 1996 (the "Trust Agreement"), between American Trans Air, Inc. ("ATA") and you, we hereby certify that we are (or we will hold such securities on behalf of) a person outside the United States to whom the Certificates could be transferred in accordance with Rule 904 of Regulation S promulgated under the U.S. Securities Act of 1933, as amended. Accordingly, you are hereby requested to exchange the legended certificate for an unlegended certificate representing an identical principal amount of Certificates, all in the manner provided for in the Trust Agreement. You and ATA are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Terms used in this certificate have the meanings set forth in Regulation S. Very truly yours, [Name of Certificateholder] By: --------------------------------------------------------- Authorized Signature EXHIBIT C FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH TRANSFERS PURSUANT TO REGULATION S [date] Wilmington Trust Company, not in its individual capacity but solely as Trustee Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 Attention: Corporate Trust Trustee Administration Re: American Trans Air 1996-1A Pass Through Trust (the "Trust"), 7.37% American Trans Air Pass Through Certificates SERIES 1996-1A (THE "CERTIFICATES") Sirs: In connection with our proposed sale of $_______ Fractional Undivided Interest of the Certificates, we confirm that such sale has been effected pursuant to and in accordance with Regulation S under the Securities Act of 1933, as amended, and, accordingly, we represent that: (1) the offer of the Certificates was not made to a person in the United States; (2) either (a) at the time the buy order was originated, the transferee was outside the United States or we and any person acting on our behalf reasonably believed that the transferee was outside the United States or (b) the transaction was executed in, on or through the facilities of a designated off-shore securities market and neither we nor any person acting on our behalf knows that the transaction has been pre-arranged with a buyer in the United States; (3) no directed selling efforts have been made in the United States in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S, as applicable; and (4) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act. In addition, if the sale is made during a restricted period and the provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are applicable thereto, we confirm that such sale has been made in accordance with the applicable provisions of Rule 903(c)(3) or Rule 904(c)(1), as the case may be. You and American Trans Air, Inc. are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Terms used in this certificate have the meanings set forth in Regulation S. Very truly yours, [Name of Transferor] By:_______________________ Authorized Signature EXHIBIT D FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH TRANSFERS TO NON-QIB ACCREDITED INVESTORS [date] Wilmington Trust Company, not in its individual capacity but solely as Trustee Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 Attention: Corporate Trust Trustee Administration Re: American Trans Air 1996-1A Pass-Through Trust (the "Trust"), 7.37% American Trans Air Pass Through Certificates Series 1996-1A (THE "CERTIFICATES") Dear Sirs: In connection with our proposed purchase of $_______________ aggregate principal amount of the Certificates, we confirm that: 1. We understand that any subsequent transfer of the Certificates is subject to certain restrictions and conditions set forth in the Pass Through Trust Agreement dated as of December 16, 1996 relating to the Certificates (the "Pass Through Trust Agreement") and the undersigned agrees to be bound by, and not to resell, pledge or otherwise transfer the Certificates except in compliance with, such restrictions and conditions and the Securities Act of 1933, as amended (the "Securities Act"). 2. We are purchasing Certificates having an aggregate principal amount of not less than $100,000 and each account (if any) for which we are purchasing Certificates is purchasing Certificates having an aggregate principal amount of not less than $100,000. 3. We understand that the Certificates have not been registered under the Securities Act, and that the Certificates may not be offered or sold except as permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for which we are acting as hereinafter stated, that if we should sell any Certificate, we will do so only (A) in accordance with Rule 144A under the Securities Act to a "qualified institutional buyer" (as defined therein), (B) to an institutional "accredited investor" (as defined below) that, prior to such transfer, furnishes to you and American Trans Air, Inc., a signed letter substantially in the form of this letter, (C) outside the United States in accordance with Rule 904 of Regulation S under the Securities Act, (D) pursuant to the exemption from registration provided by Rule 144 under the Securities Act, or (E) pursuant to an effective registration statement under the Securities Act, and we further agree to provide to any person purchasing any of the Certificates from us a notice advising such purchaser that resales of the Notes are restricted as stated herein. We further understand that the Certificates purchased by us will bear a legend to the foregoing effect. 4. We understand that, on any proposed resale of any Certificates, we will be required to furnish to you and American Trans Air, Inc. such certifications, legal opinions and other information as you and American Trans Air, Inc. may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. We further understand that the Certificates purchased by us will bear a legend to the foregoing effect. 5. We are an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Certificates and we and any accounts for which we are acting are each able to bear the economic risk of our or its investment. 6. We are acquiring the Certificates purchased by us for our own account or for one or more accounts (each of which is an institutional "accredited investor") as to each of which we exercise sole investment discretion. You and American Trans Air, Inc. are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Very truly yours, [Name of Transferor] By: -------------------------------------------------- Authorized Signature AMTRAN, INC. AMERICAN TRANS AIR, INC. and WILMINGTON TRUST COMPANY as Trustee PASS THROUGH TRUST AGREEMENT Dated as of December 16, 1996 American Trans Air 1996-1A Pass Through Trust 7.37% American Trans Air 1996-1A Pass Through Certificates PAGE TABLE OF CONTENTS Page ARTICLE I DEFINITIONS Section 1.01. Definitions....................................................2 Section 1.02. Compliance Certificates and Opinions..........................12 Section 1.03. Form of Documents Delivered to Trustee........................13 Section 1.04. Acts of Certificateholders....................................13 ARTICLE II ORIGINAL ISSUANCE OF CERTIFICATES; ACQUISITION OF EQUIPMENT NOTES Section 2.01. [Intentionally omitted]........................................15 Section 2.02. Issuance of Certificates; Acquisition of Equipment Notes.......15 Section 2.03. Acceptance by Trustee..........................................17 Section 2.04. Limitation of Powers...........................................17 ARTICLE III THE CERTIFICATES Section 3.01 Title, Form, Denomination and Execution of Certificates........17 Section 3.02 Restrictive Legends............................................19 Section 3.03 Authentication of Certificates.................................21 Section 3.04 Transfer and Exchange..........................................21 Section 3.05 Book-Entry Provisions for U.S. Global Certificate and Offshore . .Global Certificates...........................................22 Section 3.06 Special Transfer Provisions....................................23 Section 3.07 Mutilated, Destroyed, Lost or Stolen Certificates..............26 Section 3.08 Persons Deemed Owners..........................................27 Section 3.09 Cancellation...................................................27 Section 3.10 Limitation of Liability for Payments...........................27 Section 3.11 Temporary Certificates.........................................27 ARTICLE IV DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS Section 4.01. Certificate Account and Special Payments Account.............. 28 Section 4.02. Distributions from Certificate Account and Special Payments Account........................................................28 Section 4.03. Statements to Certificateholders...............................30 Section 4.04. Investment of Special Payment Moneys...........................31 ARTICLE V THE COMPANY Section 5.01. Maintenance of Corporate Existence.............................31 Section 5.02. Consolidation, Merger, Etc.....................................31 ARTICLE VI DEFAULT Section 6.01. Events of Default..............................................33 Section 6.02. Incidents of Sale of Equipment Notes...........................35 Section 6.03. Judicial Proceedings Instituted by Trustee; Trustee May Bring Suit...........................................................35 Section 6.04. Control by Certificateholders................................. 35 Section 6.05. Waiver of Past Defaults....................................... 36 Section 6.06. Right of Certificateholders to Receive Payments Not to Be Impaired.......................................................36 Section 6.07. Certificateholders May Not Bring Suit Except Under Certain s Conditions.....................................................37 Section 6.08. Remedies Cumulative............................................37 Section 6.09. Undertaking for Costs..........................................38 ARTICLE VII THE TRUSTEE Section 7.01. Notice of Defaults.............................................38 Section 7.02. Certain Rights of Trustee......................................38 Section 7.03. Not Responsible for Recitals or Issuance of Certificates.......40 Section 7.04. May Hold Certificates..........................................40 Section 7.05. Money Held in Trust............................................40 Section 7.06. Compensation and Reimbursement.................................40 Section 7.07. Corporate Trustee Required; Eligibility........................42 Section 7.08. Resignation and Removal: Appointment of Successor..............42 Section 7.09. Acceptance of Appointment by Successor.........................44 Section 7.10. Merger, Conversion, Consolidation or Succession to Business....44 Section 7.11. Maintenance of Agencies........................................45 Section 7.12. Money for Certificate Payments to Be Held in Trust.............46 Section 7.13. Registration of Equipment Notes in Name of Subordination Agent.46 Section 7.14. Representations and Warranties of Trustee......................47 Section 7.15. Withholding Taxes; Information Reporting.......................48 Section 7.16. Trustee's Liens................................................48 Section 7.17. Preferential Collection of Claims..............................48 ARTICLE VIII CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE Section 8.01. The Company to Furnish Trustee with Names and Addresses of Certificateholders.............................................48 Section 8.02. Preservation of Information; Communications to Certificateholders ...............................................................49 Section 8.03. Reports by Trustee.............................................49 Section 8.04. Reports by the Guarantor and Company...........................49 ARTICLE IX SUPPLEMENTAL AGREEMENTS Section 9.01. Supplemental Agreements Without Consent of Certificateholders..50 Section 9.02. Supplemental Agreements with Consent of Certificateholders.....51 Section 9.03. Documents Affecting Immunity or Indemnity......................52 Section 9.04. Execution of Supplemental Agreements...........................52 Section 9.05. Effect of Supplemental Agreements..............................52 Section 9.06. Conformity with Trust Indenture Act............................53 Section 9.07. Reference in Certificates to Supplemental Agreements...........53 ARTICLE X AMENDMENTS TO INDENTURES AND NOTE DOCUMENTS Section 10.01. Amendments and Supplements to Indentures and Other Note Documents.................................................... 53 ARTICLE XI TERMINATION OF TRUSTS Section 11.01. Termination of the Trust.....................................54 ARTICLE XII MISCELLANEOUS PROVISIONS Section 12.01. Limitation on Rights of Certificateholders..................55 Section 12.02. Liabilities of Certificateholders...........................55 Section 12.03. Certificates Nonassessable and Fully Paid...................55 Section 12.04.[Intentionally omitted]........................................55 Section 12.05. Notices.....................................................55 Section 12.06. Governing Law...............................................57 Section 12.07.Severability of Provisions.....................................57 Section 12.08. [Intentionally omitted].....................................57 Section 12.09. Effect of Headings and Table of Contents....................57 Section 12.10.Successors and Assigns.........................................57 Section 12.11. Benefits of Agreement.......................................57 Section 12.12. Legal Holidays..............................................57 Section 12.13.Counterparts...................................................58 Section 12.14. Communication by Certificateholders with Other ............... Certificateholders.............................................58 Schedule 1 - Trust Indenture and Security Agreements Schedule 2 - Participation Agreements Exhibit A - Form of Certificate Exhibit B - Form of Certificate for Unlegended Certificates Exhibit C - Form of Certificate to be Delivered in connection with Transfer/Pursuant to Regulation S Exhibit D - Form of Certificate to be Delivered in Connection with Transfers to Non-QIB Accredited Investors 1 Not to be included on the face of the Permanent Offshore Global Certificate. 2 To be included on the face of each Global Certificate. EX-4.12 7 file007.txt AMTRAN, INC., 2000 10K, EXHIBIT 4.12 This PASS THROUGH TRUST AGREEMENT, dated as of December 16, 1996, among AMTRAN, INC., an Indiana corporation (the "Guarantor"), AMERICAN TRANS AIR, INC., an Indiana corporation (the "Company"), and WILMINGTON TRUST COMPANY, a Delaware banking corporation, as Trustee, is made with respect to the formation of the American Trans Air 1996-1B Pass Through Trust, and the issuance of 7.64% American Trans Air 1996-1B Pass Through Certificates representing fractional undivided interests in the Trust. WITNESSETH: WHEREAS, the Company, each Owner Trustee and the corresponding Owner Participant (as such terms and certain other capitalized terms used herein are defined below) are concurrently herewith entering into a separate leveraged lease transaction in connection with the sale and leaseback of one Boeing 757-23N aircraft (one such aircraft bearing manufacturer's Serial No. 27973 and U.S. Registration Mark N517AT and one such aircraft bearing manufacturer's Serial No. 27974 and U.S. Registration Mark N518AT) (collectively, the "Aircraft"); WHEREAS, each Owner Trustee, acting on behalf of the corresponding Owner Participant, will issue pursuant to an Indenture, on a non-recourse basis, three series of Equipment Notes, among other things, to provide the debt portion of the purchase price of the related aircraft; WHEREAS, the Trustee, upon execution and delivery of this Agreement, hereby declares the creation of this Trust (the "1996-1B Trust") for the benefit of the Certificateholders, and the initial Certificateholders, as the grantors of the 1996-1B Trust, by their respective acceptances of the Certificates, join in the creation of this 1996-1B Trust with the Trustee; WHEREAS, all Certificates to be issued by the Trust will evidence fractional undivided interests in the Trust and will convey no rights, benefits or interests in respect of any property other than the Trust Property; WHEREAS, all of the conditions and requirements necessary to make this Agreement, when duly executed and delivered, a valid, binding and legal instrument, enforceable in accordance with its terms and for the purposes herein expressed, have been done, performed and fulfilled, and the execution and delivery of this Agreement in the form and with the terms hereof have been in all respects duly authorized; and WHEREAS, to facilitate the sale of Equipment Notes to, and the purchase of Equipment Notes by, the Trustee on behalf of the 1996-1B Trust, (i) the Company as the "issuer", as such term is defined in and solely for purposes of the Securities Act of 1933, as amended, of the Certificates to be issued pursuant hereto, and as the "obligor", as such term is defined in and solely for purposes of the Trust Indenture Act of 1939, as amended, and (ii) the Guarantor have each duly authorized the execution and delivery of this Agreement with respect to all such Certificates and are undertaking to perform certain administrative and ministerial duties hereunder and are also undertaking to pay the fees and expenses of the Trustee; NOW, THEREFORE, in consideration of the mutual agreements herein contained, and of other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I ARTICLE I ARTICLE I ARTICLE I DEFINITIONS Section 1.01. DefinitionsSection 1.01. DefinitionsSection 1.01. DefinitionsSection 1.01. Definitions. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: (1) the terms used herein that are defined in this Article have the meanings assigned to them in this Article, and include the plural as well as the singular; (2) all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference herein, have the meanings assigned to them therein; (3) all references in this Agreement to designated "Articles", "Sections" and other subdivisions are to the designated Articles, Sections and other subdivisions of this Agreement; (4) the words "herein", "hereof' and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision; and (5) unless the context otherwise requires, whenever the words "including", "include" or "includes" are used herein, it shall be deemed to be followed by the phrase "without limitation". Act: With respect to any Certificateholder has the meaning specified in Section 1.04. Affiliate: With respect to any specified Person, means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such Person. For the purposes of this definition, "control", when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms "controlling" and "controlled" have meanings correlative to the foregoing. Agent Members: Has the meaning specified in Section 3.05(a). Aircraft: Has the meaning specified in the first recital to this Agreement. Authorized Agent: Means any Paying Agent or Registrar for the Certificates. Avoidable Tax: Has the meaning specified in Section 7.08(e) hereof. Book-Entry Certificates: With respect to the Certificates, means a beneficial interest in the Certificates, ownership and transfers of which shall be made through book entries as described in Section 3.04. Business Day: Means any day other than a Saturday, a Sunday or a day on which commercial banks are required or authorized to close in Indianapolis, Indiana; New York, New York; or Phoenix, Arizona; and, so long as any such Certificate is outstanding, a city and state in which the Trustee or any related Loan Trustee maintains its Corporate Trust Office or receives and disburses funds. Cedel: Means Cedel Bank societe anonyme. Certificate: Means any one of the certificates executed and authenticated by the Trustee, substantially in the form of Exhibit A hereto. Certificate Account: Means the account or accounts created and maintained pursuant to Section 4.01(a). Certificateholder or Holder: Means the Person in whose name a Certificate is registered in the Register. Clearing Agency: Means an organization registered as a "clearing agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as amended. Clearing Agency Participant: Means a broker, dealer, bank, other financial institution or other Person for whom from time to time a Clearing Agency effects, directly or indirectly, book-entry transfers and pledges of securities deposited with the Clearing Agency. Company: Means American Trans Air, Inc., an Indiana corporation, or its successor in interest pursuant to Section 5.02. Controlling Party: Means the Person entitled to act as such pursuant to the terms of the Intercreditor Agreement. Corporate Trust Office: With respect to the Trustee or any Loan Trustee, means the office of such trustee in the city at which at any particular time its corporate trust business shall be principally administered. Cut-off Date: Means March 27, 1997. Depositary: Means The Depository Trust Company, its nominees and their respective successors. Direction: Has the meaning specified in Section 1.04(c). Distribution Date: Means each Regular Distribution Date and each Special Distribution Date. Equipment Note: Means the "secured certificates" as defined in the Indentures. ERISA: Means the Employee Retirement Income Security Act of 1974, as amended from time to time, or any successor federal statute. Escrow Account: Has the meaning specified in Section 2.02(b). Escrowed Funds: Has the meaning specified in Section 2.02(b). Euroclear: Means the Euroclear System. Event of Default: Means the occurrence of an Indenture Default under any Indenture pursuant to which Equipment Notes held by the Trust were issued. Fractional Undivided Interest: Means the fractional undivided interest in the Trust that is evidenced by a Certificate. Global Certificates: Has the meaning assigned to such term in Section 3.01. Guarantor: Means Amtran, Inc., an Indiana corporation, or its successor in interest. Indenture: Means each of the two separate trust indenture and security agreements described in Schedule 1 to this Agreement, as each such agreement may be amended or supplemented in accordance with its respective terms; and Indentures means all of such agreements. Indenture Default: With respect to any Indenture, means any Event of Default (as such term is defined in such Indenture). Initial Purchasers: Means Morgan Stanley & Co. Incorporated and Salomon Brothers Inc. Initial Regular Distribution Date: Means the first Regular Distribution Date on which a Scheduled Payment is to be made. Institutional Accredited Investor: Means an institutional investor that is an "accredited investor" within the meaning set forth in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act. Intercreditor Agreement: Means the Intercreditor Agreement dated December 27, 1996 among the Trustee, the Other Trustees, the Liquidity Provider, the liquidity providers, if any, relating to the Certificates issued under (and as defined in) the Other Pass Through Trust Agreements, and Wilmington Trust Company, as Subordination Agent thereunder, as amended, supplemented or otherwise modified from time to time in accordance with its terms. Issuance Date: Means the date of the issuance of the Certificates. Lease: Means any lease between an Owner Trustee, as the lessor, and the Company, as the lessee, referred to in the related Indenture, as each such lease may be amended or supplemented in accordance with its respective terms; and Leases means all such leases. Letter of Representations: Means the agreement dated the Issuance Date among the Company, the Trustee and the initial Clearing Agency. Liquidity Facility: Means the Irrevocable Revolving Credit Agreement Class B Certificates dated December 27, 1996 relating to the Certificates between the Liquidity Provider and the Subordination Agent, as amended, replaced, supplemented or otherwise modified from time to time in accordance with its terms and the terms of the Intercreditor Agreement. Liquidity Provider: Means, initially, Kredietbank N.V., New York Branch, and any replacement or successor therefor appointed in accordance with the Liquidity Facility and the Intercreditor Agreement. Loan Trustee: With respect to any Equipment Note or the Indenture applicable thereto, means the bank or trust company designated as loan or indenture trustee under such Indenture; and any successor to such Loan Trustee as such trustee; and Loan Trustees means all of the Loan Trustees under the Indentures. Non-U.S. Person: Means a Person that is not a U.S. Person as defined in Regulation S. Note Documents: With respect to any Equipment Note, means the related Indenture, Lease and Participation Agreement. Officer's Certificate: Means a certificate signed (a) in the case of the Guarantor or the Company, by (i) the President or any Executive Vice President or Senior Vice President of the Guarantor or the Company, respectively, signing alone or (ii) any Vice President of the Guarantor or the Company signing together with the Secretary, the Assistant Secretary, the Treasurer or any Assistant Treasurer of the Guarantor or the Company, respectively, or (b) in the case of the Trustee or an Owner Trustee or a Loan Trustee, a Responsible Officer of the Trustee or such Owner Trustee or such Loan Trustee, as the case may be. Offshore Certificates Exchange Date: Has the meaning specified in Section 3.01. Offshore Global Certificates: Has the meaning assigned to such term in Section 3.01. Offshore Physical Certificates: Has the meaning assigned to such term in Section 3.01. Opinion of Counsel: Means a written opinion of legal counsel who (a) in the case of counsel for the Guarantor or the Company, may be (i) a senior attorney in rank of the officers of the Guarantor or the Company a principal duty of which is furnishing advice as to legal matters or (ii) such other counsel designated by the Guarantor or the Company and reasonably acceptable to the Trustee and (b) in the case of any Owner Trustee or any Loan Trustee, may be such counsel as may be designated by any of them whether or not such counsel is an employee of any of them, and who shall be reasonably acceptable to the Trustee. Other Pass Through Trust Agreement: Means (i) the American Trans Air 1996-1A Pass Through Trust Agreement relating to the American Trans Air 1996-1A Pass Through Trust and (ii) the American Trans Air 1996-1C Pass Through Trust Agreement relating to the American Trans Air 1996-1C Pass Through Trust, each dated the date hereof; and Other Pass Through Trust Agreements means both such agreements. Other Trustee: Means the trustee under each of the Other Pass Through Trust Agreements, and any successor or other trustee appointed as provided therein and Other Pass Through Trustees means both such trustees. Outstanding: With respect to Certificates, means, as of the date of determination, all Certificates theretofore authenticated and delivered under this Agreement, except: (i) Certificates theretofore canceled by the Registrar or delivered to the Trustee or the Registrar for cancellation; (ii) All of the Certificates if money in the full amount required to make the final distribution with respect thereto pursuant to Section 11.01 hereof has been theretofore deposited with the Trustee in trust for the Holders of such Certificates as provided in Section 4.01 pending distribution of such money to such Certificateholders pursuant to such final distribution payment; and (iii) Certificates in exchange for or in lieu of which other Certificates have been authenticated and delivered pursuant to this Agreement. Owner Participant: With respect to any Equipment Note, means the "Owner Participant" as referred to in the Indenture pursuant to which such Equipment Note is issued and any permitted successor or assign of such Owner Participant; and Owner Participants at any time of determination means all of the Owner Participants thus referred to in the Indentures. Owner Trustee: With respect to any Equipment Note, means the "Owner Trustee", as referred to in the Indenture pursuant to which such Equipment Note is issued, not in its individual capacity but solely as trustee; and Owner Trustees means all of the Owner Trustees party to any of the respective Indentures. Participation Agreement: Means each of the Participation Agreements, dated as of December 16, 1996, listed on Schedule 2 hereto, providing for, among other things, the purchase of Equipment Notes by the Trustee on behalf of the Trust, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms; and Participation Agreements means all such agreements. Paying Agent: Means the paying agent maintained and appointed for the Certificates pursuant to Section 7.11. Permanent Offshore Global Certificates: Has the meaning specified in Section 3.01. Permanent Offshore Physical Certificates: Has the meaning specified in Section 3.01. Permitted Investments: Means obligations of the United States of America or agencies or instrumentalities thereof for the payment of which the full faith and credit of the United States of America is pledged, maturing in not more than 60 days or such lesser time as is necessary for payment of any Special Payments on a Special Distribution Date. Person: Means any person, including any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization, or government or any agency or political subdivision thereof. Physical Certificates: Has the meaning specified in Section 3.01. Pool Balance: Means, as of any date, (i) the original aggregate face amount of the Certificates less (ii) the aggregate amount of all payments made in respect of such Certificates other than payments made in respect of interest or premium thereon or reimbursement of any costs or expenses incurred in connection therewith. The Pool Balance as of any Distribution Date shall be computed after giving effect to the payment of principal, if any, on the Equipment Notes or other Trust Property held in the Trust and the distribution thereof to be made on such Distribution Date. Pool Factor: Means, as of any date, the quotient (rounded to the seventh decimal place) computed by dividing (i) the Pool Balance as at such date by (ii) the original aggregate face amount of the Certificates. The Pool Factor as of any Distribution Date shall be computed after giving effect to the payment of principal, if any, on the Equipment Notes or other Trust Property and the distribution thereof to be made on such Distribution Date. Postponed Notes: Means the Equipment Notes to be held in such Trust as to which a Postponement Notice shall have been delivered pursuant to Section 2.02(b). Postponement Notice: Means an Officer's Certificate of the Company (1) requesting that the Trustee temporarily postpone purchase pursuant to a Note Purchase Agreement of certain of the Equipment Notes to a date later than the Issuance Date, (2) identifying the amount of the purchase price of each such Equipment Note and the aggregate purchase price for all such Equipment Notes, (3) setting forth the reasons for such postponement and (4) with respect to each such Equipment Note, either (a) setting or resetting a new Transfer Date (which shall be on or prior to the applicable Cut-off Date) for payment by the Trustee of such purchase price and issuance of the related Equipment Note, or (b) indicating that such new Transfer Date (which shall be on or prior to the applicable Cut-off Date) will be set by subsequent written notice not less than one Business Day prior to such new Transfer Date. Private Placement Legend: Has the meaning specified in Section 3.02. PTC Event of Default: Means any failure to pay within 10 Business Days of the due date thereof: (i) the outstanding Pool Balance on September 26, 2011 or (ii) interest due on the Certificates on any Distribution Date (unless the Subordination Agent shall have made an Interest Drawing (as defined in the Intercreditor Agreement) with respect thereto in an amount sufficient to pay such interest and shall have distributed such amount to the Certificateholders). QIB: Means a qualified institutional buyer as defined in Rule 144A. Record Date: Means (i) for Scheduled Payments to be distributed on any Regular Distribution Date, other than the final distribution, the 15th day (whether or not a Business Day) preceding such Regular Distribution Date, and (ii) for Special Payments to be distributed on any Special Distribution Date, other than the final distribution, the 15th day (whether or not a Business Day) preceding such Special Distribution Date. Register and Registrar: Mean the register maintained and the registrar appointed pursuant to Sections 3.04 and 7.11. Regular Distribution Date: With respect to distributions of Scheduled Payments in respect of the Certificates, means each date designated as such in this Agreement, until payment of all the Scheduled Payments to be made under the Equipment Notes held in the Trust has been made; provided, however, that, if any such day shall not be a Business Day, the related distribution shall be made on the next succeeding Business Day without additional interest. Request: Means a request by the Company setting forth the subject matter of the request accompanied by an Officer's Certificate and an Opinion of Counsel as provided in Section 1.02 of this Agreement. Responsible Officer: With respect to the Trustee, any Loan Trustee and any Owner Trustee, means any officer in the Corporate Trust Division of the Trustee, Loan Trustee or Owner Trustee or any other officer customarily performing functions similar to those performed by the persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of his knowledge of and familiarity with a particular subject. Rule 144A: Means Rule 144A under the Securities Act and any successor regulation thereto. Scheduled Payment: With respect to any Equipment Note, means any payment of principal and interest on such Equipment Note or any payment of interest on the Certificates with funds drawn under the Liquidity Facility (other than any such payment which is not in fact received by the Trustee or any Subordination Agent within five days of the date on which such payment is scheduled to be made) due from the obligor thereon which payment represents the installment of principal at the stated maturity of such instrument of principal on such Equipment Note, the payment of regularly scheduled interest accrued on the unpaid principal amount of such Equipment Note, or both; provided that any payment of principal, premium, if any, or interest resulting from the redemption or purchase of any Equipment Note shall not constitute a Scheduled Payment. SEC: Means the Securities and Exchange Commission as from time to time constituted or created under the Securities Exchange Act of 1934, or, if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date. Securities Act: Means the United States Securities Act of 1933, as amended from time to time, or any successor thereto. Special Distribution Date: Means each date on which a Special Payment is to be distributed as specified in this Agreement; provided, however, that, if any such day shall not be a Business Day, the related distribution shall be made on the next succeeding Business Day without additional interest. Special Payment: Means (i) any payment (other than a Scheduled Payment) in respect of, or any proceeds of, any Equipment Note or Trust Indenture Estate (as defined in each Indenture) or (ii) the amounts required to be distributed pursuant to the last paragraph of Section 2.02(b) or (iii) the amounts required to be distributed pursuant to the penultimate paragraph of Section 2.02(b). Special Payments Account: Means the account or accounts created and maintained pursuant to Section 4.01(b). Specified Investments: Means (i) obligations of, or guaranteed by, the United States Government or agencies thereof, (ii) open market commercial paper of any corporation incorporated under the laws of the United States of America or any State thereof rated at least P-2 or its equivalent by Moody's Investors Service, Inc. or at least A-2 or its equivalent by Standard & Poor's Rating Group, (iii) certificates of deposit issued by commercial banks organized under the laws of the United States or of any political subdivision thereof having a combined capital and surplus in excess of $500,000,000 which banks or their holding companies have a rating of A or its equivalent by Moody's Investors Service, Inc. or Standard & Poor's Rating Group; provided, however, that the aggregate amount at any one time so invested in certificates of deposit issued by any one bank shall not exceed 5% of such bank's capital and surplus, (iv) U.S. dollar denominated offshore certificates of deposit issued by, or offshore time deposits with, any commercial bank described in (iii) or any subsidiary thereof and (v) repurchase agreements with any financial institution having combined capital and surplus of at least $500,000,000 with any of the obligations described in clauses (i) through (iv) as collateral; provided further that if all of the above investments are unavailable, the entire amounts to be invested may be used to purchase Federal Funds from an entity described in clause (iii) above; and provided further that no investment shall be eligible as a "Specified Investment" unless the final maturity or date of return of such investment is on or before the Special Distribution Date next following the Cut-off Date, if any, for the Trust by more than 20 days. Subordination Agent: Shall have the meaning specified therefor in the Intercreditor Agreement. Temporary Offshore Global Certificates: Has the meaning specified in Section 3.01. Transfer Date: Has the meaning assigned to that term or the term "Delivery Date" in a Participation Agreement. Triggering Event: Shall have the meaning specified therefor in the Intercreditor Agreement. Trust: Means the trust created by this Agreement, the estate of which consists of Trust Property. Trust Indenture Act: Except as otherwise provided in Section 9.06, means the Trust Indenture Act of 1939 as in force at the date as of which this Agreement was executed. Trust Property: Means (i) the Equipment Notes held as the property of the Trust, all monies at any time paid thereon and all monies due and to become due thereunder, (ii) the rights of the Trust under any Intercreditor Agreement, including all monies receivable in respect of such rights, (iii) all monies receivable under the Liquidity Facility and (iv) funds from time to time deposited in the Escrow Account, the Certificate Account and the Special Payments Account and any proceeds from the sale by the Trustee pursuant to Article VI hereof of any such Equipment Note. Trustee: Means Wilmington Trust Company, or its successor in interest, and any successor trustee appointed as provided herein. U.S. Global Certificate: Has the meaning specified in Section 3.01. U.S. Physical Certificates: Has the meaning specified in Section 3.01. Section 1.02. Compliance Certificates and OpinionsSection 1.02. Compliance Certificates and OpinionsSection 1.02. Compliance Certificates and OpinionsSection 1.02. Compliance Certificates and Opinions. Upon any application or request by the Company, any Owner Trustee or any Loan Trustee to the Trustee to take any action under any provision of this Agreement, the Company, such Owner Trustee or such Loan Trustee, as the case may be, shall furnish to the Trustee an Officers' Certificate stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Agreement relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Agreement relating to such particular application or request, no additional certificate or opinion need be furnished. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Agreement other than a certificate provided pursuant to Section 8.04(d)) shall include: (1) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions in this Agreement relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. Section 1.03. Form of Documents Delivered to TrusteeSection 1.03. Form of Documents Delivered to TrusteeSection 1.03. Form of Documents Delivered to TrusteeSection 1.03. Form of Documents Delivered to Trustee. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters and any such Person may certify or give an opinion as to such matters in one or several documents. Any Opinion of Counsel stated to be based on the opinion of other counsel shall be accompanied by a copy of such other opinion. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Agreement, they may, but need not, be consolidated and form one instrument. Section 1.04. Acts of CertificateholdersSection 1.04. Acts of CertificateholdersSection 1.04. Acts of CertificateholdersSection 1.04. Acts of Certificateholders. (a) Any direction, consent, waiver or other action provided by this Agreement to be given or taken by Certificateholders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Certificateholders in person or by an agent or proxy duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required pursuant to this Agreement, to the Company or any Loan Trustee. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Certificateholders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Agreement and conclusive in favor of the Trustee, the Company and any Loan Trustee, if made in the manner provided in this Section. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the certificate of any notary public or other officer of any jurisdiction authorized to take acknowledgments of deeds or administer oaths that the Person executing such instrument acknowledged to him the execution thereof, or by an affidavit of a witness to such execution sworn to before any such notary or such other officer and where such execution is by an officer of a corporation or association or a member of a partnership, on behalf of such corporation, association or partnership, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other reasonable manner which the Trustee deems sufficient. (c) In determining whether the Certificateholders of the requisite Fractional Undivided Interests of Certificates Outstanding have given any direction, consent or waiver (a "Direction"), under this Agreement, Certificates owned by the Company, the Guarantor, any Owner Trustee, any Owner Participant or any Affiliate of any such Person shall be disregarded and deemed not to be Outstanding for purposes of any such determination. In determining whether the Trustee shall be protected in relying upon any such Direction, only Certificates which the Trustee knows to be so owned shall be so disregarded. Notwithstanding the foregoing, (i) if any such Person owns 100% of the Certificates Outstanding, such Certificates shall not be so disregarded as aforesaid, and (ii) if any amount of Certificates so owned by any such Person have been pledged in good faith, such Certificates shall not be disregarded as aforesaid if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Certificates and that the pledgee is not the Company, the Guarantor, any Owner Trustee, any Owner Participant or any Affiliate of any such Person. (d) The Company may, at its option by delivery of an Officer's Certificate to the Trustee, set a record date to determine the Certificateholders entitled to give any consent, request, demand, authorization, direction, notice, waiver or other Act. Notwithstanding Section 316(c) of the Trust Indenture Act, such record date shall be the record date specified in such Officer's Certificate which shall be a date not more than 30 days prior to the first solicitation of Certificateholders in connection therewith. If such a record date is fixed, such consent request, demand, authorization, direction, notice, waiver or other Act may be given before or after such record date, but only the Certificateholders of record at the close of business on such record date shall be deemed to be Certificateholders for the purposes of determining whether Certificateholders of the requisite proportion of Outstanding Certificates have authorized or agreed or consented to such consent, request, demand, authorization, direction, notice, waiver or other Act, and for that purpose the Outstanding Certificates shall be computed as of such record date; provided that no such consent, request, demand, authorization, direction, notice, waiver or other Act by the Certificateholders on such record date shall be deemed effective unless it shall become effective pursuant to the provisions of this Agreement not later than one year after the record date. (e) Any direction, consent, waiver or other action by the Certificateholder of any Certificate shall bind the Certificateholder of every Certificate issued upon the transfer thereof or in exchange therefor or in lieu thereof, whether or not notation of such action is made upon such Certificate. (f) Except as otherwise provided in Section 1.04(c), Certificates owned by or pledged to any Person shall have an equal and proportionate benefit under the provisions of this Agreement, without preference, priority, or distinction as among all of the Certificates. ARTICLE II ARTICLE II ARTICLE II ARTICLE II ORIGINAL ISSUANCE OF CERTIFICATES; ACQUISITION OF EQUIPMENT NOTES Section 2.01. [Intentionally omitted].Section 2.01. [Intentionally omitted].Section 2.01. [Intentionally omitted].Section 2.01. [Intentionally omitted]. Section 2.02. Issuance of Certificates; Acquisition of Equipment NotesSection 2.02. Issuance of Certificates; Acquisition of Equipment NotesSection 2.02. Issuance of Certificates; Acquisition of Equipment NotesSection 2.02. Issuance of Certificates; Acquisition of Equipment Notes. (a) On or prior to the Issuance Date of the Certificates, the Trustee shall execute and deliver the Intercreditor Agreement and each of the Participation Agreements in the form delivered to the Trustee by the Company. Upon the oral or written request of the Company or the Company's counsel acting on behalf of the Company and the satisfaction of the closing conditions specified in each of the Participation Agreements, the Trustee shall, execute, deliver and authenticate Certificates equalling in the aggregate the aggregate principal amount of the Equipment Notes to be purchased by the Trustee pursuant to each of the Participation Agreements on the Transfer Date, and evidencing the entire ownership interest in the Trust. The Trustee shall issue and sell such Certificates, in authorized denominations and in such Fractional Undivided Interests, so as to result in the receipt of consideration in an amount equal to the aggregate purchase price of such Equipment Notes and, concurrently therewith, the Trustee shall purchase, pursuant to the terms and conditions of the Participation Agreements, the Equipment Notes at a purchase price equal to the amount of such consideration so received. Except as provided in Sections 3.03, 3.04 and 3.05 hereof, the Trustee shall not execute, authenticate or deliver Certificates in excess of the aggregate amount specified in this paragraph. The provisions of this Subsection 2.02(a) are subject to the provisions of Subsection 2.02(b) below. (b) If on or prior to the Issuance Date the Company shall deliver to the Trustee a Postponement Notice relating to one or more Postponed Notes, the Trustee shall postpone the purchase of such Postponed Notes and shall deposit into an escrow account (the "Escrow Account") to be maintained as a part of the Trust an amount equal to the purchase price of such Postponed Notes (the "Escrowed Funds"). The Escrowed Funds so deposited shall be invested by the Trustee at the written direction of the Company in Specified Investments (i) maturing no later than any scheduled Transfer Date relating to the Postponed Notes or (ii) if no such Transfer Date has been scheduled, maturing on the next Business Day, or (iii) if the Company has given notice to the Trustee that any Postponed Notes will not be issued, with respect to the portion of the Escrowed Funds relating to such Postponed Notes, maturing on the next applicable Special Distribution Date, if such investments are reasonably available for purchase. The Trustee shall make withdrawals from the Escrow Account only as provided in this Agreement. Upon request of the Company on one or more occasions and the satisfaction of the closing conditions specified in the applicable Participation Agreements on or prior to the related Cut-off Date, the Trustee shall purchase the applicable Postponed Notes with the Escrowed Funds withdrawn from the Escrow Account. The purchase price shall equal the principal amount of such Postponed Notes. The Trustee shall hold all Specified Investments until the maturity thereof and will not sell or otherwise transfer Specified Investments. If Specified Investments held in an Escrow Account mature prior to any applicable Transfer Date, any proceeds received on the maturity of such Specified Investments (other than any earnings thereon) shall be reinvested by the Trustee at the written direction of the Company in Specified Investments maturing as provided in the preceding paragraph. Any earnings on Specified Investments received from time to time by the Trustee shall be promptly distributed to the Company. The Company shall pay to the Trustee for deposit to the Escrow Account an amount equal to any losses on such Specified Investments as incurred. On the Initial Regular Distribution Date, the Company will pay (in immediately available funds) to the Trustee an amount equal to the interest that would have accrued on any Postponed Notes, if any, purchased after the Issuance Date if such Postponed Notes had been purchased on the Issuance Date, from the Issuance Date to, but not including, the date of the purchase of such Postponed Notes by the Trustee. If the Company notifies the Trustee prior to the Cut-off Date that any Postponed Notes will not be issued on or prior to the Cut-off Date for any reason, on the next Special Distribution Date occurring more than 20 days following the date of such notice (i) the Company shall pay to the Trustee for deposit in the Special Payments Account, in immediately available funds, an amount equal to the interest that would have accrued on the Postponed Notes designated in such notice at a rate equal to the interest rate applicable to the Certificates from the Issuance Date to, but not including, such Special Distribution Date and (ii) the Trustee shall transfer an amount equal to that amount of Escrowed Funds that would have been used to purchase the Postponed Notes designated in such notice and the amount paid by the Company pursuant to the immediately preceding clause (i) to the related Special Payments Account for distribution as a Special Payment in accordance with the provisions hereof. Wilmington Trust Company, in its individual capacity, in the absence of negligence or willful misconduct by any representative thereof, will have no liability with respect to Escrowed Funds. If, on the Cut-off Date, an amount equal to less than all of the Escrowed Funds (other than Escrowed Funds referred to in the immediately preceding paragraph) has been used to purchase Postponed Notes, on the next Special Distribution Date occurring more than 20 days following the Cut-off Date (i) the Company shall pay to the Trustee for deposit in the Special Payments Account, in immediately available funds, an amount equal to the interest that would have accrued on such Postponed Notes contemplated to be purchased with such unused Escrowed Funds (other than Escrowed Funds referred to in the immediately preceding paragraph) but not so purchased at a rate equal to the interest rate applicable to the Certificates from the Issuance Date to, but not including, such Special Distribution Date and (ii) the Trustee shall transfer such unused Escrowed Funds and the amount paid by the Company pursuant to the immediately preceding clause (i) to such Special Payments Account for distribution as a Special Payment in accordance with the provisions hereof. Section 2.03. Acceptance by TrusteeSection 2.03. Acceptance by TrusteeSection 2.03. Acceptance by TrusteeSection 2.03. Acceptance by Trustee. The Trustee, upon the execution and delivery of this Agreement, acknowledges its acceptance of all right, title, and interest in and to the Equipment Notes acquired pursuant to Section 2.02 hereof and the Participation Agreements and declares that the Trustee holds and will hold such right, title, and interest, together with all other property constituting the Trust Property, for the benefit of all then present and future Certificateholders, upon the trusts herein set forth. By its payment for and acceptance of each Certificate issued to it under this Agreement, each initial Certificateholder as grantor of the Trust thereby joins in the creation and declaration of the Trust. Section 2.04. Limitation of PowersSection 2.04. Limitation of PowersSection 2.04. Limitation of PowersSection 2.04. Limitation of Powers. The Trust is constituted solely for the purpose of making the investment in the Equipment Notes, and, except as set forth herein, the Trustee shall not be authorized or empowered to acquire any other investments or engage in any other activities and, in particular, the Trustee shall not be authorized or empowered to do anything that would cause such Trust to fail to qualify as a "grantor trust" for federal income tax purposes (including as subject to this restrictions acquiring the Aircraft (as defined in the respective related Indentures) by bidding such Equipment Notes or otherwise, or taking any action with respect to any such Aircraft once acquired). ARTICLE III ARTICLE III ARTICLE III ARTICLE III THE CERTIFICATES Section 3.01. Title, Form, Denomination and Execution of CertificatesSection 3.01. Title, Form, Denomination and Execution of CertificatesSection 3.01. Title, Form, Denomination and Execution of CertificatesSection 3.01. Title, Form, Denomination and Execution of Certificates. (a) The Certificates shall be known as the "7.64% 1996-1B Pass Through Certificates" of the Trust. Each Certificate will represent a fractional undivided interest in the Trust and shall be substantially in the form set forth as Exhibit A hereto, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Agreement and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such Certificates, as evidenced by their execution of the Certificates. Any portion of the text of any Certificate may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Certificate. (b) The Certificates shall be issued only in fully registered form without coupons and only in denominations of $100,000 or integral multiples of $1,000 in excess thereof, except that one Certificate may be issued in a denomination of less than $100,000. Each Certificate shall be dated the date of its authentication. The aggregate Fractional Undivided Interest of Certificates shall not at any time exceed $41,258,000. (c) Certificates offered and sold in reliance on Rule 144A shall be issued initially in the form of a single permanent global Certificate in registered form, substantially in the form set forth as Exhibit A hereto (the "U.S. Global Certificate"), duly executed and authenticated by the Trustee as hereinafter provided. The U.S. Global Certificate will be registered in the name of a nominee for the Depositary and deposited with the Trustee, as custodian for the Depositary. The aggregate principal amount of the U.S. Global Certificate may from time to time be increased or decreased by adjustments made on the records of the Depositary or its nominee, or of the Trustee, as custodian for the Depositary or its nominee, as hereinafter provided. (d) Certificates offered and sold in offshore transactions in reliance on Regulation S shall be issued initially in the form of a single temporary global Certificate in registered form, substantially in the form set forth as Exhibit A hereto (the "Temporary Offshore Global Certificate") duly executed and authenticated by the Trustee as hereinafter provided. The Temporary Offshore Global Certificate will be registered in the name of a nominee of the Depositary for credit to the account of the Agent Members acting as depositaries for Euroclear and Cedel and deposited with the Trustee as custodian for the Depositary. At any time following February 5, 1997 (the "Offshore Certificates Exchange Date"), upon receipt by the Trustee of a certificate substantially in the form of Exhibit B hereto, a single permanent global Certificate in registered form substantially in the form set forth in Exhibit A (the "Permanent Offshore Global Certificate"; and together with the Temporary Offshore Global Certificate, the "Offshore Global Certificates"), duly executed and authenticated by the Trustee as hereinafter provided, shall be registered in the name of a nominee for the Depositary and deposited with the Trustee, as custodian for the Depositary, and the Registrar shall reflect on its books and records the date of such transfer and a decrease in the principal amount of any Temporary Offshore Global Certificate in an amount equal to the principal amount of the beneficial interest in such Temporary Offshore Global Certificate transferred. The U.S. Global Certificate and the Offshore Global Certificates are sometimes referred to as the "Global Certificates". (e) Certificates offered and sold to Institutional Accredited Investors shall be issued in the form of permanent certificated Certificates in registered form in substantially the form set forth as Exhibit A hereto (the "U.S. Physical Certificates"). Certificates issued pursuant to Section 3.05(b) in exchange for interests in any Offshore Global Certificate shall be in the form of permanent certificated Certificates in registered form substantially in the form set forth in Exhibit A (the "Offshore Physical Certificates"). The Offshore Physical Certificates and U.S. Physical Certificates are sometimes collectively herein referred to as the "Physical Certificates". (f) The definitive Certificates shall be in registered form and shall be typed, printed, lithographed or engraved or produced by any combination of these methods or may be produced in any other manner, all as determined by the officers executing such Certificates, as evidenced by their execution of such Certificates. Section 3.02. Restrictive LegendsSection 3.02. Restrictive LegendsSection 3.02. Restrictive LegendsSection 3.02. Restrictive Legends. (a) Subject to Section 3.06, each Global Certificate (other than the Permanent Offshore Global Certificate) and each U.S. Physical Certificate shall bear the following legend (the "Private Placement Legend") on the face thereof: THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS CERTIFICATE IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT, WITHIN THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY AMERICAN TRANS AIR, INC. ("ATA") OR AN AFFILIATE OF ATA, RESELL OR OTHERWISE TRANSFER THIS CERTIFICATE EXCEPT (A) TO ATA OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING $100,000 OR MORE AGGREGATE PRINCIPAL AMOUNT OF SUCH CERTIFICATES THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS CERTIFICATE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS CERTIFICATE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS CERTIFICATE WITHIN THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THE CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY ATA OR AN AFFILIATE OF ATA, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND ATA SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE PASS THROUGH TRUST AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS. (b) Each Global Certificate shall also bear the following legend on the face thereof: UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND 3.06 OF THE PASS THROUGH TRUST AGREEMENT REFERRED TO HEREIN. Section 3.03. Authentication of CertificatesSection 3.03. Authentication of CertificatesSection 3.03. Authentication of CertificatesSection 3.03. Authentication of Certificates. (a) The Trustee shall duly execute, authenticate and deliver Certificates in authorized denominations equalling in the aggregate the aggregate principal amount of the Equipment Notes to be purchased by the Trustee pursuant to the Participation Agreements and evidencing the entire ownership of the Trust. (b) No Certificate shall be entitled to any benefit under this Agreement or be valid or obligatory for any purpose, unless there appears on such Certificate a certificate of authentication substantially in the form provided for herein executed by the Trustee by the manual signature of one of its authorized signatories, and such certificate upon any Certificate shall be conclusive evidence, and the only evidence, that such Certificate has been duly authenticated and delivered hereunder. Section 3.04. Transfer and ExchangeSection 3.04. Transfer and ExchangeSection 3.04. Transfer and ExchangeSection 3.04. Transfer and Exchange. (a) The Trustee shall cause to be kept at the office or agency to be maintained by it in accordance with the provisions of Section 7.11 of this Agreement a register (the "Register") for the Certificates in which, subject to such reasonable regulations as it may prescribe, the Trustee shall provide for the registration of the Certificates and of transfers and exchanges of the Certificates as herein provided. The Trustee shall initially be the registrar (the "Registrar") for the purpose of registering the Certificates and transfers and exchanges of the Certificates as herein provided. A Certificateholder may transfer a Certificate by written application to the Registrar stating the name of the proposed transferee and otherwise complying with the terms of this Agreement, including providing a written certificate or other evidence of compliance with any restrictions on transfer. No such transfer shall be effected until, and such transferee shall succeed to the rights of a Certificateholder only upon, final acceptance and registration of the transfer by the Registrar in the Register. Prior to the registration of any transfer by a Certificateholder as provided herein, the Trustee shall treat the person in whose name the Certificate is registered as the owner thereof for all purposes, and the Trustee shall not be affected by notice to the contrary. Furthermore, the Depositary shall, by acceptance of a Global Certificate, agree that transfers of beneficial interests in such Global Certificate may be effected only through a book-entry system maintained by the Depositary (or its agent), and that ownership of a beneficial interest in the Certificate shall be required to be reflected in a book entry. When Certificates are presented to the Registrar with a request to register the transfer or to exchange them for an equal face amount of Certificates of other authorized denominations, the Registrar shall register the transfer or make the exchange as requested if its requirements for such transactions are met. To permit registrations of transfers and exchanges in accordance with the terms, conditions and restrictions hereof, the Trustee shall execute and authenticate Certificates at the Registrar's request. No service charge shall be made for any registration of transfer or exchange of the Certificates, but the Trustee may require payment by the transferor of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or other similar governmental charges payable upon exchanges pursuant to Section 3.11 or 9.07). Section 3.05. Book-Entry Provisions for U.S. Global Certificate and Offshore Global CertificatesSection 3.05. Book-Entry Provisions for U.S. Global Certificate and Offshore Global CertificatesSection 3.05. Book-Entry Provisions for U.S. Global Certificate and Offshore Global CertificatesSection 3.05. Book-Entry Provisions for U.S. Global Certificate and Offshore Global Certificates. (a) Members of, or participants in, the Depositary ("Agent Members") shall have no rights under this Agreement with respect to any Global Certificate held on their behalf by the Depositary, or the Trustee as its custodian, and the Depositary may be treated by the Trustee and any agent of the Trustee as the absolute owner of such Global Certificate for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Trustee or any agent of the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or shall impair, as between the Depositary and its Agent Members, the operation of customary practices governing the exercise of the rights of a holder of any Certificate. Upon the issuance of any Global Certificate, the Registrar or its duly appointed agent shall record a nominee of the Depositary as the registered holder of such Global Certificate. (b) Transfers of any Global Certificate shall be limited to transfers of such Global Certificate in whole, but not in part, to nominees of the Depositary, its successor or such successor's nominees. Beneficial interests in the U.S. Global Certificate and any Offshore Global Certificate may be transferred in accordance with the rules and procedures of the Depositary and the provisions of Section 3.06. Beneficial interests in the U.S. Global Certificate or an Offshore Global Certificate shall be delivered to all beneficial owners in the form of U.S. Physical Certificates or Offshore Physical Certificates, as the case may be, if (i) the Company notifies the Trustee in writing that the Depositary is unwilling or unable to discharge properly its responsibilities as Depositary for the U.S. Global Certificate or such Offshore Global Certificate, as the case may be, and the Company is unable to locate a qualified successor depositary within 90 days of such notice or (ii) after the occurrence of an Event of Default, beneficial owners of the U.S. Global Certificate or Offshore Global Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust, by Act of such Certificateholders delivered to the Company and the Trustee, advise the Company, the Trustee and the Depositary through its Clearing Agency Participants in writing that the continuation of a book-entry system through the Depositary is no longer in the best interests of the Certificateholders, then the Trustee shall notify all owners of beneficial interests in the U.S. Global Certificate or an Offshore Global Certificate, through the Depositary, of the occurrence of any such event and the availability of definitive Certificates. (c) Any beneficial interest in one of the Global Certificates that is transferred to a Person who takes delivery in the form of an interest in the other Global Certificate will, upon such transfer, cease to be an interest in such Global Certificate and become an interest in the other Global Certificate and, accordingly, will thereafter be subject to all transfer restrictions, if any, and other procedures applicable to beneficial interests in such other Global Certificate for as long as it remains such an interest. (d) [Intentionally omitted]. (e) In connection with the transfer of the entire U.S. Global Certificate or an entire Offshore Global Certificate to the beneficial owners thereof pursuant to paragraph (b) of this Section 3.05, such U.S. Global Certificate or Offshore Global Certificate, as the case may be, shall be deemed to be surrendered to the Trustee for cancellation, and the Trustee shall execute, authenticate and deliver, to each beneficial owner identified by the Depositary in exchange for its beneficial interest in such U.S. Global Certificate or Offshore Global Certificate, as the case may be, an equal aggregate principal amount of U.S. Physical Certificates or Offshore Physical Certificates, as the case may be, of authorized denominations. (f) Any U.S. Physical Certificate delivered in exchange for an interest in the U.S. Global Certificate pursuant to paragraph (b) of this Section 3.05 shall, except as otherwise provided by paragraph (f) of Section 3.06, bear the Private Placement Legend. (g) Any Offshore Physical Certificate delivered in exchange for an interest in an Offshore Global Certificate pursuant to paragraph (b) of this Section shall, except as otherwise provided by paragraph (f) of Section 3.06, bear the applicable legend regarding transfer restrictions set forth in Section 3.02(a). (h) The registered holder of the U.S. Global Certificate or any Offshore Global Certificate may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Agreement or the Certificates. Section 3.06. Special Transfer ProvisionsSection 3.06. Special Transfer ProvisionsSection 3.06. Special Transfer ProvisionsSection 3.06. Special Transfer Provisions. The following provisions shall apply to the Certificates: (a) Transfers to Non-QIB Institutional Accredited Investors. The following provisions shall apply with respect to the registration of any proposed transfer of a Certificate to any Institutional Accredited Investor which is not a QIB (excluding transfers to or by Non-U.S. Persons): (i) The Registrar shall register the transfer of any Certificate, whether or not such Certificate bears the Private Placement Legend, if (x) the requested transfer is at least three years after the later of the original issue date of the Certificates and the last date on which such Certificate was held by the Company or any affiliate thereof or (y) the proposed transferee has delivered to the Registrar a letter substantially in the form of Exhibit D hereto and the aggregate principal amount of the Certificates being transferred is at least $100,000. (ii) If the proposed transferor is an Agent Member holding a beneficial interest in the U.S. Global Certificate, upon receipt by the Registrar of (x) the documents, if any, required by paragraph (i) and (y) instructions given in accordance with the Depositary's and the Registrar's procedures, the Registrar shall reflect on its books and records the date of the transfer and a decrease in the principal amount of such U.S. Global Certificate in an amount equal to the principal amount of the beneficial interest in such U.S. Global Certificate to be transferred, and the Company shall execute, and the Trustee shall authenticate and deliver to the transferor or at its direction, one or more U.S. Physical Certificates of like tenor and amount. (b) Transfers to QIBs. The following provisions shall apply with respect to the registration of any proposed transfer of a Certificate to a QIB (excluding Non-U.S. Persons): (i) If the Certificate to be transferred consists of U.S. Physical Certificates or an interest in any Temporary Offshore Global Certificate, the Registrar shall register the transfer if such transfer is being made by a proposed transferor who has checked the box provided for on the form of Certificate stating, or has otherwise advised the Trustee and the Registrar in writing, that the sale has been made in compliance with the provisions of Rule 144A to a transferee who has signed the certification provided for on the form of Certificate stating, or has otherwise advised the Trustee and the Registrar in writing, that it is purchasing the Certificate for its own account or an account with respect to which it exercises sole investment discretion and that it, or the Person on whose behalf it is acting with respect to any such account, is a QIB within the meaning of Rule 144A, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Trust and/or the Company as it has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon its foregoing representations in order to claim the exemption from registration provided by Rule 144A. (ii) Upon receipt by the Registrar of the documents referred to in clause (i) above and instructions given in accordance with the Depositary's and the Registrar's procedures therefor, the Registrar shall reflect on its books and records the date of such transfer and an increase in the principal amount of the U.S. Global Certificate in an amount equal to the principal amount of the U.S. Physical Certificates or interests in the Temporary Offshore Global Certificate, as the case may be, being transferred, and the Trustee shall cancel such Physical Certificates or decrease the amount of such Temporary Offshore Global Certificate so transferred. (c) [Intentionally omitted]. (d) Transfers of Interests in the Permanent Offshore Global Certificate or Offshore Physical Certificates. The Registrar shall register any transfer of interests in the Permanent Offshore Global Certificate or Offshore Physical Certificates without requiring any additional certification. (e) Transfers to Non-U.S. Persons at Any Time. The following provisions shall apply with respect to any registration of any transfer of a Certificate to a Non-U.S. Person: (i) Prior to the Offshore Certificates Exchange Date, the Registrar shall register any proposed transfer of a Certificate to a Non-U.S. Person upon receipt of a certificate substantially in the form set forth as Exhibit C hereto from the proposed transferor. (ii) On and after the Offshore Certificates Exchange Date, the Registrar shall register any proposed transfer to any Non-U.S. Person if the Certificate to be transferred is a U.S. Physical Certificate or an interest in the U.S. Global Certificate, upon receipt of a certificate substantially in the form of Exhibit C from the proposed transferor. The Registrar shall promptly send a copy of such certificate to the Company. (iii) Upon receipt by the Registrar of (x) the documents, if any, required by paragraph (ii) and (y) instructions in accordance with the Depositary's and the Registrar's procedures, the Registrar shall reflect on its books and records the date of such transfer and a decrease in the principal amount of such U.S. Global Certificate in an amount equal to the principal amount of the beneficial interest in such U.S. Global Certificate to be transferred, and (B) upon receipt by the Registrar of instructions given in accordance with the Depositary's and the Registrar's procedures, the Registrar shall reflect on its books and records the date and an increase in the principal amount of the Offshore Global Certificate in an amount equal to the principal amount of the U.S. Physical Certificate or the U.S. Global Certificate, as the case may be, to be transferred, and the Trustee shall cancel the Physical Certificate, if any, so transferred or decrease the amount of such U.S. Global Certificate. (f) Private Placement Legend. Upon the transfer, exchange or replacement of Certificates not bearing the Private Placement Legend, the Registrar shall deliver Certificates that do not bear the Private Placement Legend. Upon the transfer, exchange or replacement of Certificates bearing the Private Placement Legend, the Registrar shall deliver only Certificates that bear the Private Placement Legend unless either (i) the circumstances contemplated by paragraph (a)(i)(x) or (e)(ii) of this Section 3.06 exist or (ii) there is delivered to the Registrar an Opinion of Counsel to the effect that neither such legend nor the related restrictions on transfer are required in order to maintain compliance with the provisions of the Securities Act. (g) General. By its acceptance of any Certificate bearing the Private Placement Legend, each Holder of such a Certificate acknowledges the restrictions on transfer of such Certificate set forth in this Agreement and agrees that it will transfer such Certificate only as provided in this Agreement. The Registrar shall not register a transfer of any Certificate unless such transfer complies with the restrictions on transfer of such Certificate set forth in this Agreement. In connection with any transfer of Certificates, each Certificateholder agrees by its acceptance of the Certificates to furnish the Registrar or the Trustee such certifications, legal opinions or other information as either of them may reasonably require to confirm that such transfer is being made pursuant to an exemption from, or a transaction not subject to, the registration requirements of the Securities Act; provided that the Registrar shall not be required to determine the sufficiency of any such certifications, legal opinions or other information. Until such time as no Certificates remain Outstanding, the Registrar shall retain copies of all letters, notices and other written communications received pursuant to Section 3.05 or this Section 3.06. The Trustee, if not the Registrar at such time, shall have the right to inspect and make copies of all such letters, notices or other written communications at any reasonable time upon the giving of reasonable written notice to the Registrar. Section 3.07. Mutilated, Destroyed, Lost or Stolen CertificatesSection 3.07. Mutilated, Destroyed, Lost or Stolen CertificatesSection 3.07. Mutilated, Destroyed, Lost or Stolen CertificatesSection 3.07. Mutilated, Destroyed, Lost or Stolen Certificates. If (a) any mutilated Certificate is surrendered to the Registrar, or the Registrar receives evidence to its satisfaction of the destruction, loss or theft of any Certificate, and (b) there is delivered to the Registrar and the Trustee such security, indemnity or bond, as may be required by them to save each of them harmless, then, in the absence of notice to the Registrar or the Trustee that such Certificate has been acquired by a bona fide purchaser, the Trustee shall execute, authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate or Certificates, in authorized denominations and of like Fractional Undivided Interest. In connection with the issuance of any new Certificate under this Section 3.07, the Trustee shall require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee and the Registrar) connected therewith. Any duplicate Certificate issued pursuant to this Section 3.07 shall constitute conclusive evidence of the appropriate Fractional Undivided Interest in the related Trust, as if originally issued, whether or not the lost stolen or destroyed Certificate shall be found at any time. Section 3.08. Persons Deemed OwnersSection 3.08. Persons Deemed OwnersSection 3.08. Persons Deemed OwnersSection 3.08. Persons Deemed Owners. Prior to due presentation of a Certificate for registration of transfer, the Trustee, the Registrar, and any Paying Agent of the Trustee may treat the person in whose name any Certificate is registered as the owner of such Certificate for the purpose of receiving distributions pursuant to Section 4.02 and for all other purposes whatsoever, and neither the Trustee, the Registrar, nor any Paying Agent of the Trustee shall be affected by any notice to the contrary. Section 3.09. CancellationSection 3.09. CancellationSection 3.09. CancellationSection 3.09. Cancellation. All Certificates surrendered for payment or transfer or exchange shall, if surrendered to any Person party hereto other than the Registrar, be delivered to the Registrar for cancellation. No Certificates shall be authenticated in lieu of or in exchange for any Certificates cancelled as provided in this Section, except as expressly permitted by this Agreement. All cancelled Certificates held by the Registrar shall be destroyed and a certification of their destruction delivered to the Trustee. Section 3.10. Limitation of Liability for PaymentsSection 3.10. Limitation of Liability for PaymentsSection 3.10. Limitation of Liability for PaymentsSection 3.10. Limitation of Liability for Payments. All payments or distributions made to Certificateholders shall be made only from the Trust Property and only to the extent that the Trustee shall have sufficient income or proceeds from the Trust Property to make such payments in accordance with the terms of Article IV of this Agreement. Each Certificateholder, by its acceptance of a Certificate, agrees that it will look solely to the income and proceeds from the Trust Property to the extent available for distribution to such Certificateholder as provided in this Agreement. Section 3.11. Temporary CertificatesSection 3.11.Temporary CertificatesSection 3.11.Temporary CertificatesSection 3Temporary Certificates. Until definitive Certificates are ready for delivery, the Trustee shall authenticate temporary Certificates. Temporary Certificates shall be substantially in the form of definitive Certificates but may have insertions, substitutions, omissions and other variations determined to be appropriate by the officers executing the temporary Certificates, as evidenced by their execution of such temporary Certificates. If temporary Certificates are issued, the Trustee will cause definitive Certificates to be prepared without unreasonable delay. After the preparation of definitive Certificates, the temporary Certificates shall be exchangeable for definitive Certificates upon surrender of the temporary Certificates at the office or agency of the Trustee designated for such purpose pursuant to Section 7.11, without charge to the Certificateholder. Upon surrender for cancellation of any one or more temporary Certificates, the Trustee shall execute, authenticate and deliver in exchange therefor a like face amount of definitive Certificates of authorized denominations. Until so exchanged, the temporary Certificates shall be entitled to the same benefits under this Agreement as definitive Certificates. ARTICLE IV ARTICLE IV ARTICLE IV ARTICLE IV DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS Section 4.01. Certificate Account and Special Payments AccountSection 4.01.Certificate Account and Special Payments AccountSection 4.01. Certificate Account and Special Payments AccountSection 4.01. Certificate Account and Special Payments Account. (a) The Trustee shall establish and maintain on behalf of the Certificateholders a Certificate Account as one or more non-interest-bearing accounts. The Trustee shall hold the Certificate Account in trust for the benefit of the Certificateholders, and shall make or permit withdrawals therefrom only as provided in this Agreement. On each day when a Scheduled Payment is made to the Trustee, the Trustee, upon receipt thereof, shall immediately deposit the aggregate amount of such Scheduled Payment into the Certificate Account. (b) The Trustee shall establish and maintain on behalf of the Certificateholders a Special Payments Account as one or more accounts, which shall be non-interest bearing except as provided in Section 4.04. The Trustee shall hold the Special Payments Account in trust for the benefit of the Certificateholders, and shall make or permit withdrawals therefrom only as provided in this Agreement. On each day when one or more Special Payments are made to the Trustee, the Trustee, upon receipt thereof, shall immediately deposit the aggregate amount of such Special Payments into the Special Payments Account. (c) The Trustee shall present to the Loan Trustee to which an Equipment Note relates such Equipment Note on the date of its stated final maturity or, in the case of any Equipment Note which is to be redeemed in whole pursuant to the relevant Indenture, on the applicable redemption date under such Indenture. Section 4.02. Distributions from Certificate Account and Special Payments AccountSection 4.02. Distributions from Certificate Account and Special Payments AccountSection 4.02. Distributions from Certificate Account and Special Payments AccountSection 4.02. Distributions from Certificate Account and Special Payments Account. (a) On each Regular Distribution Date or as soon thereafter as the Trustee has confirmed receipt of the payment of the Scheduled Payments due on such date, the Trustee shall distribute out of the Certificate Account the entire amount deposited therein pursuant to Section 4.01(a). There shall be so distributed to each Certificateholder of record on the Record Date with respect to such Regular Distribution Date (other than as provided in Section 11.01 concerning the final distribution), by check mailed to such Certificateholder at the address appearing in the Register, such Certificateholder's pro rata share (based on the aggregate Fractional Undivided Interest in the Trust held by such Certificateholder) of the aggregate amount in the Certificate Account, except that, with respect to Certificates registered on the Record Date in the name of the nominee of the Depositary (initially, such nominee to be Cede & Co.), such distribution shall be made by wire transfer in immediately available funds to the account designated by such nominee. (b) On each Special Distribution Date with respect to any Special Payment or as soon thereafter as the Trustee has confirmed receipt of any Special Payments due on the Equipment Notes or realized upon the sale of such Equipment Note, the Trustee shall distribute out of the Special Payments Account the entire amount deposited therein pursuant to Section 4.01(b) of such Special Payment. There shall be so distributed to each Certificateholder of record on the Record Date with respect to such Special Distribution Date (other than as provided in Section 11.01 concerning the final distribution), by check mailed to such Certificateholder at the address appearing in the Register, such Certificateholder's pro rata share (based on the aggregate Fractional Undivided Interest in the Trust held by such Certificateholder) of the aggregate amount in the Special Payments Account on account of such Special Payment, except that, with respect to Certificates registered on the Record Date in the name of the nominee of the Depositary (initially, such nominee to be Cede & Co.), such distribution shall be made by wire transfer in immediately available funds to the account designated by such nominee. (c) The Trustee shall, at the expense of the Company, cause notice of each Special Payment to be mailed to each Certificateholder at his address as it appears in the Register. In the event of redemption or purchase of Equipment Notes held in the Trust, such notice shall be mailed not less than 20 days prior to the date any such Special Payment is scheduled to be distributed. In the case of any other Special Payments, such notice shall be mailed as soon as practicable after the Trustee has confirmed that it has received funds for such Special Payment, stating the Special Distribution Date for such Special Payment which shall occur not less than 20 days after the date of such notice and as soon as practicable thereafter. Notices mailed by the Trustee shall set forth: (i) the Special Distribution Date and the Record Date therefor (except as otherwise provided in Section 11.01), (ii) the amount of the Special Payment for each $1,000 face amount Certificate (taking into account any payment to be made by the Company pursuant to Section 2.02(b)) and the amount thereof constituting principal, premium, if any, and interest, (iii) the reason for the Special Payment, and (iv) if the Special Distribution Date is the same date as a Regular Distribution Date for the Certificates, the total amount to be received on such date for each $1,000 face amount Certificate. If the amount of premium, if any, payable upon the redemption or purchase of an Equipment Note has not been calculated at the time that the Trustee mails notice of a Special Payment, it shall be sufficient if the notice sets forth the other amounts to be distributed and states that any premium received will also be distributed. If any redemption of the Equipment Notes held in the Trust is cancelled, the Trustee, as soon as possible after learning thereof, shall cause notice thereof to be mailed to each Certificateholder at its address as it appears on the Register. Section 4.03. Statements to CertificateholdersSection 4.03. Statements to CertificateholdersSection 4.03. Statements to CertificateholdersSection 4.03. Statements to Certificateholders. (a) On each Regular Distribution Date and Special Distribution Date, the Trustee will include with each distribution to Certificateholders a statement, giving effect to such distribution to be made on such Regular Distribution Date or Special Distribution Date, as the case may be, setting forth the following information (per a $1,000 face amount Certificate as to (i) and (ii) below): (i) the amount of such distribution allocable to principal and the amount allocable to premium, if any; (ii) the amount of such distribution allocable to interest; and (iii) the Pool Balance and the Pool Factor. With respect to the Certificates registered in the name of a Clearing Agency or its nominee, on the record date prior to each Distribution Date, the Trustee will request from the Clearing Agency a securities position listing setting forth the names of all the Clearing Agency Participants reflected on the Clearing Agency's books as holding interests in the Certificates on such record date. On each Distribution Date, the Trustee will mail to each such Clearing Agency Participant the statement described above and will make available additional copies as requested by such Clearing Agency Participant for forwarding to holders of Certificates. (b) Within a reasonable period of time after the end of each calendar year but not later than the latest date permitted by law, the Trustee shall furnish to each Person who at any time during such calendar year was a Certificateholder of record a statement containing the sum of the amounts determined pursuant to clauses (a)(i) and (a)(ii) with respect to the Trust for such calendar year or, in the event such Person was a Certificateholder of record during a portion of such calendar year, for the applicable portion of such year, and such other items as are readily available to the Trustee and which a Certificateholder shall reasonably request as necessary for the purpose of such Certificateholder's preparation of its federal income tax returns. With respect to Certificates registered in the name of a Clearing Agency or its nominee, such report and such other items shall be prepared on the basis of information supplied to the Trustee by the Clearing Agency Participants and shall be delivered by the Trustee to such Clearing Agency Participants to be available for forwarding by such Clearing Agency Participants. Section 4.04. Investment of Special Payment MoneysSection 4.04. Investment of Special Payment MoneysSection 4.04. Investment of Special Payment MoneysSection 4.04. Investment of Special Payment Moneys. Any money received by the Trustee pursuant to Section 4.01(b) representing a Special Payment which is not to be promptly distributed shall, to the extent practicable, be invested in Permitted Investments by the Trustee as directed in writing by the Company pending distribution of such Special Payment pursuant to Section 4.02. Any investment made pursuant to this Section 4.04 shall be in such Permitted Investments having maturities not later than the date that such moneys are required to be used to make the payment required under Section 4.02 on the applicable Special Distribution Date and the Trustee shall hold any such Permitted Investments until maturity. The Trustee shall have no liability with respect to any investment made pursuant to this Section 4.04, other than by reason of the willful misconduct or negligence of the Trustee. All income and earnings from such investments shall be distributed on such Special Distribution Date as part of such Special Payment. ARTICLE V ARTICLE V ARTICLE V ARTICLE V THE COMPANY Section 5.01. Maintenance of Corporate ExistenceSection 5.01. Maintenance of Corporate ExistenceSection 5.01. Maintenance of Corporate ExistenceSection 5.01. Maintenance of Corporate Existence. The Company, at its own cost and expense, will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence, rights and franchises, except as otherwise specifically permitted in Section 5.02; provided, however, that the Company shall not be required to preserve any right or franchise if the Company shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company. Section 5.02. Consolidation, Merger, EtcSection 5.02. Consolidation, Merger, EtcSection 5.02. Consolidation, Merger, EtcSection 5.02. Consolidation, Merger, Etc. The Company shall not consolidate with or merge into any other corporation or convey, transfer or lease substantially all of its assets as an entirety to any Person unless: (a) the corporation formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance, transfer or lease substantially all of the assets of the Company as an entirety shall be organized and validly existing under the laws of the United States of America or any state thereof or the District of Columbia and a "citizen of the United States" (as defined in Section 40102(a)(15) of Title 49 of the United States Code) holding an air carrier operating certificate issued by the Federal Aviation Administration, or any successor agency thereto (the "FAA"), pursuant to Chapter 447 of Title 49, United States Code, authorizing the operation in air transportation of aircraft capable of carrying 10 or more individuals or 6,000 pounds or more of cargo pursuant to Part 121 of the FAA's regulations (14 CFR Part 121); (b) the corporation formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance, transfer or lease substantially all of the assets of the Company as an entirety shall execute and deliver to the Trustee a duly authorized, valid, binding and enforceable agreement in form and substance reasonably satisfactory to the Trustee containing an assumption by such successor corporation or Person of the due and punctual performance and observance of each covenant and condition of the Note Documents and of this Agreement to be performed or observed by the Company; (c) immediately after giving effect to such transaction, no Event of Default applicable to the Certificates or event which is, or after notice or passage of time, or both, would be, such an Event of Default shall have occurred and be continuing; and (d) the Company shall have delivered to the Trustee an Officers' Certificate of the Company and an Opinion of Counsel of the Company (which may be the Company's General Counsel) reasonably satisfactory to the Trustee, each stating that such consolidation, merger, conveyance, transfer or lease and the assumption agreement mentioned in clause (b) above comply with this Section 5.02 and that all conditions precedent herein provided for relating to such transaction have been complied with. Upon any consolidation or merger, or any conveyance, transfer or lease of substantially all of the assets of the Company as an entirety in accordance with this Section 5.02, the successor corporation or Person formed by such consolidation or into which the Company is merged or to which such conveyance, offer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Agreement with the same effect as if such successor corporation or Person had been named as the Company herein. No such conveyance, transfer or lease of substantially all of the assets of the Company as an entirety shall have the effect of releasing the Company or any successor corporation or Person which shall theretofore have become such in the manner prescribed in this Section 5.02 from its liability in respect of this Agreement or any Note Document to which it is a party. ARTICLE VI ARTICLE VI ARTICLE VI ARTICLE VI DEFAULT Section 6.01. Events of DefaultSection 6.01. Events of DefaultSection 6.01. Events Events of DefaultSection 6.01. Events of Default. (a) Exercise of Remedies: Upon the occurrence and during the continuation of any Indenture Default under any Indenture, the Trustee may, to the extent it is the Controlling Party at such time, direct the exercise of remedies as provided in the Intercreditor Agreement. (b) Purchase Rights of Certificateholders: (i) At any time after the occurrence and during the continuation of a Triggering Event, each Certificateholder shall have the right to purchase all, but not less than all, of the Class A Certificates upon ten days' written notice to the Class A Trustee and each other Certificateholder, provided that (A) if prior to the end of such ten-day period any other Certificateholder notifies such purchasing Certificateholder that such other Certificateholder wants to participate in such purchase, then such other Certificateholder may join with the purchasing Certificateholder to purchase all, but not less than all, of the Class A Certificates pro rata based on the Fractional Undivided Interest in the Trust held by each such Certificateholder and (B) if prior to the end of such ten-day period any other Certificateholder fails to notify the purchasing Certificateholder of such other Certificateholder's desire to participate in such a purchase, then such other Certificateholder shall lose its right to purchase the Class A Certificates pursuant to this Section 6.01(b)(i). (ii) By acceptance of its Certificate, each Certificateholder agrees that at any time after the occurrence and during the continuation of a Triggering Event: each Class C Certificateholder shall have the right (which shall not expire upon any purchase of the Certificates pursuant to clause (i) above) to purchase all, but not less than all, of the Certificates upon ten days' written notice to the Trustee and each other Class C Certificateholder, provided that (A) if prior to the end of such ten-day period any other Class C Certificateholder notifies such purchasing Class C Certificateholder that such other Class C Certificateholder wants to participate in such purchase, then such other Class C Certificateholder may join with the purchasing Class C Certificateholder to purchase all, but not less than all, of the Certificates pro rata based on the Fractional Undivided Interest in the Class C Trust held by each such Class C Certificateholder and (B) if prior to the end of such ten-day period any other Class C Certificateholder fails to notify the purchasing Class C Certificateholder of such other Class C Certificateholder's desire to participate in such a purchase, then such other Class C Certificateholder shall lose its right to purchase the Certificates pursuant to this Section 6.01(b). The purchase price with respect to the Certificates shall be equal to the Pool Balance of the Certificates, together with accrued and unpaid interest thereon to the date of such purchase, without premium, but including any other amounts then due and payable to the Certificateholders under this Agreement, the Intercreditor Agreement or any other Note Document or on or in respect of the Certificates; provided, however, that no such purchase of Certificates shall be effective unless the purchaser shall certify to the Trustee that contemporaneously with such purchase, such purchaser is purchasing, pursuant to the terms of this Agreement and the Other Pass Through Trust Agreements, the Class A Certificates and the Certificates which are senior to the Certificates held by such purchaser. Each payment of the purchase price of the Certificates shall be made to an account or accounts designated by the Trustee and each such purchase shall be subject to the terms of this Section. Each Certificateholder agrees by its acceptance of its Certificates that it will, subject to Section 3.04 hereof, upon payment from such Class C Certificateholder(s) of the purchase price set forth in the first sentence of this paragraph, forthwith sell, assign, transfer and convey to the purchaser thereof (without recourse, representation or warranty of any kind except for its own acts), all of the right, title, interest and obligation of such Certificateholder in, this Agreement, the Intercreditor Agreement, the Liquidity Facility, the Note Documents and all Certificates held by such Certificateholder (excluding all right, title and interest under any of the foregoing to the extent such right, title or interest is with respect to an obligation not then due and payable as respects any action or inaction or state of affairs occurring prior to such sale) and the purchaser shall assume all of such Certificateholder's obligations under this Agreement, the Intercreditor Agreement, the Liquidity Facility and the Note Documents. The Certificates will be deemed to be purchased on the date payment of the purchase price is made notwithstanding the failure of the Certificateholders to deliver any Certificates (whether in the form of Physical Certificates or beneficial interests in Global Certificates) and, upon such a purchase, (i) the only rights of the Certificateholders will be to deliver the Certificates to the purchaser and receive the purchase price for the Certificates and (ii) if the purchaser shall so request such Certificateholder will comply with all of the provisions of Section 3.04 hereof to enable new Certificates to be issued to the purchaser in such denominations as it shall request. All charges and expenses in connection with the issuance of any such new Certificates shall be borne by the purchaser thereof. As used in this Section 6.01(b), the terms "Certificateholder", "Class", "Class A Certificate", "Class A Certificateholder", "Class A Trust", "Class A Trustee", "Class C Certificate", "Class C Certificateholder", "Class C Trust" and "Class C Trustee" shall have the respective meanings assigned to such terms in the Intercreditor Agreement. Section 6.02. Incidents of Sale of Equipment NotesSection 6.02. Incidents of Sale of Equipment NotesSection 6.02. Incidents of Sale of Equipment NotesSection 6.02. Incidents of Sale of Equipment Notes. Upon any sale of all or any part of the Equipment Notes made either under the power of sale given under this Agreement or otherwise for the enforcement of this Agreement, the following shall be applicable: (1) Certificateholders and Trustee May Purchase Equipment Notes. Any Certificateholder, the Trustee in its individual or any other capacity or any other Person may bid for and purchase any of the Equipment Notes, and upon compliance with the terms of sale, may hold, retain, possess and dispose of such Equipment Notes in their own absolute right without further accountability. (2) Receipt of Trustee Shall Discharge Purchaser. The receipt of the Trustee or of the officer making such sale shall be a sufficient discharge to any purchaser for his purchase money, and, after paying such purchase money and receiving such receipt, such purchaser or its personal representative or assigns shall not be obliged to see to the application of such purchase money, or be in any way answerable for any loss, misapplication or non-application thereof. (3) Application of Moneys Received upon Sale. Any moneys collected by the Trustee upon any sale made either under the power of sale given by this Agreement or otherwise for the enforcement of this Agreement shall be applied as provided in Section 4.02. Section 6.03. Judicial Proceedings Instituted by Trustee; Trustee May Bring SuitSection 6.03.Judicial Proceedings Instituted by Trustee; Trustee May Bring SuitSection 6Judicial Proceedings Instituted by Trustee; Trustee May Bring SuitSection 6.03. Judicial Proceedings Instituted by Trustee; Trustee May Bring Suit. If there shall be a failure to make payment of the principal of, premium, if any, or interest on any Equipment Note, or if there shall be any failure to pay Rent (as defined in the relevant Lease) under any Lease when due and payable, then the Trustee, in its own name, and as trustee of an express trust, as holder of such Equipment Notes, to the extent permitted by and in accordance with the terms of the Intercreditor Agreement and the Note Documents (subject to the rights of the applicable Owner Trustee or Owner Participant to cure any such failure in accordance with Section 4.03 of the applicable Indenture), shall be entitled and empowered to institute any suits, actions or proceedings at law, in equity or otherwise, for the collection of the sums so due and unpaid on such Equipment Notes or under such Lease and may prosecute any such claim or proceeding to judgment or final decree with respect to the whole amount of any such sums so due and unpaid. Section 6.04. Control by CertificateholdersSection 6.04. Control by CertificateholdersSection 6.04. Control by CertificateholdersSection 6.04. Control by Certificateholders. Subject to Section 6.03 and the Intercreditor Agreement, the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee with respect to the Trust or pursuant to the terms of the Intercreditor Agreement, or exercising any trust or power conferred on the Trustee under this Agreement or the Intercreditor Agreement, including any right of the Trustee as Controlling Party under the Intercreditor Agreement or as holder of the Equipment Notes, provided that: (1) such Direction shall not be in conflict with any rule of law or with this Agreement and would not involve the Trustee in personal liability or expense, (2) the Trustee shall not determine that the action so directed would be unjustly prejudicial to the Certificateholders not taking part in such Direction, and (3) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such Direction. Section 6.05. Waiver of Past DefaultsSection 6.05. Waiver of Past DefaultsSection 6.05. Waiver of Past DefaultsSection 6.05. Waiver of Past Defaults. Subject to the Intercreditor Agreement, the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust (i) may on behalf of all of the Certificateholders waive any past Event of Default hereunder and its consequences or (ii) if the Trustee is the Controlling Party, may direct the Trustee to instruct the applicable Loan Trustee to waive any past Indenture Default under any Indenture and its consequences, and thereby annul any Direction given by such Certificateholders or the Trustee to such Loan Trustee with respect thereto, except a default: (1) in the deposit of any Scheduled Payment or Special Payment under Section 4.01 or in the distribution of any payment under Section 4.02 on the Certificates, or (2) in the payment of the principal of (premium, if any) or interest on the Equipment Notes, or (3) in respect of a covenant or provision hereof which under Article IX hereof cannot be modified or amended without the consent of each Certificateholder holding an Outstanding Certificate affected thereby. Upon any such waiver, such default shall cease to exist with respect to the Certificates and any Event of Default arising therefrom shall be deemed to have been cured for every purpose and any direction given by the Trustee on behalf of the Certificateholders to the relevant Loan Trustee shall be annulled with respect thereto; but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. Upon any such waiver, the Trustee shall vote the Equipment Notes issued under the relevant Indenture to waive the corresponding Indenture Default. Section 6.06. Right of Certificateholders to Receive Payments Not to Be ImpairedSection 6.06.Right of Certificateholders to Receive Payments Not to Be ImpairedSection 6Right of Certificateholders to Receive Payments Not to Be ImpairedSection 6.06. Right of Certificateholders to Receive Payments Not to Be Impaired. Anything in this Agreement to the contrary notwithstanding, including, without limitation, Section 6.07 hereof, but subject to the Intercreditor Agreement, the right of any Certificateholder to receive distributions of payments required pursuant to Section 4.02 hereof on the Certificates when due, or to institute suit for the enforcement of any such payment on or after the applicable Regular Distribution Date or Special Distribution Date, shall not be impaired or affected without the consent of such Certificateholder. Section 6.07. Certificateholders May Not Bring Suit Except Under Certain ConditionsSection 6.07. Certificateholders May Not Bring Suit Except Under Certain ConditionsSection 6.07. Certificateholders May Not Bring Suit Except Under Certain ConditionsSection 6.07. Certificateholders May Not Bring Suit Except Under Certain Conditions. A Certificateholder shall not have the right to institute any suit, action or proceeding at law or in equity or otherwise with respect to this Agreement, for the appointment of a receiver or for the enforcement of any other remedy under this Agreement, unless: (1) such Certificateholder previously shall have given written notice to the Trustee of a continuing Event of Default; (2) Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than 25% of the Trust shall have requested the Trustee in writing to institute such action, suit or proceeding and shall have offered to the Trustee indemnity as provided in Section 7.02(e); (3) the Trustee shall have refused or neglected to institute any such action, suit or proceeding for 60 days after receipt of such notice, request and offer of indemnity; and (4) no Direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust. It is understood and intended that no one or more of the Certificateholders shall have any right in any manner whatever hereunder or under the Certificates to (i) surrender, impair, waive, affect, disturb or prejudice any property in the Trust Property or the lien of any Indenture on any property subject thereto, or the rights of the Certificateholders or the holders of the related Equipment Notes, (ii) obtain or seek to obtain priority over or preference to any other such Certificateholder or (iii) enforce any right under this Agreement, except in the manner herein provided and for the equal, ratable and common benefit of all the Certificateholders subject to the provisions of this Agreement. Section 6.08. Remedies CumulativeSection 6.08. Remedies CumulativeSection 6.08. Remedies CumulativeSection 6.08. Remedies Cumulative. Every remedy given hereunder to the Trustee or to any of the Certificateholders shall not be exclusive of any other remedy or remedies, and every such remedy shall be cumulative and in addition to every other remedy given hereunder or now or hereafter given by statute, law, equity or otherwise. Section 6.09. Undertaking for CostsSection 6.09. Undertaking for CostsSection 6.09. Undertaking for CostsSection 6.09. Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Agreement, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, a court may require any party litigant in such suit to file an undertaking to pay the costs of such suit, and may assess costs against any such party litigant, in the manner and to the extent provided in the Trust Indenture Act; provided that neither this Section nor the Trust Indenture Act shall be deemed to authorize any court to require such an undertaking or to make such an assessment in any suit instituted by the Company or the Guarantor. ARTICLE VII ARTICLE VII ARTICLE VII ARTICLE VII THE TRUSTEE Section 7.01. Notice of DefaultsSection 7.01. Notice of DefaultsSection 7.01. Notice of DefaultsSection 7.01. Notice of Defaults. As promptly as practicable after, and in any event within 90 days after the occurrence of any default (as such term is defined below) hereunder actually known to the Trustee, the Trustee shall transmit by mail to the Company, the related Owner Trustees, the related Loan Trustees and the Certificateholders in accordance with Section 313(c) of the Trust Indenture Act, notice of such default hereunder actually known to the Trustee, unless such default shall have been cured or waived; provided, however, that, except in the case of a default in the payment of the principal of (premium, if any) or interest on any Equipment Note, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Trustee in good faith determine that the withholding of such notice is in the interests of the Certificateholders. For the purpose of this Section, the term "default" means any event that is, or after notice or lapse of time or both would become, an Event of Default. Section 7.02. Certain Rights of TrusteeSection 7.02. Certain Rights of TrusteeSection 7.02. Certain Rights of TrusteeSection 7.02. Certain Rights of Trustee. Subject to the provisions of Section 315 of the Trust Indenture Act: (a) the Trustee may rely and shall be protected in acting or refraining from acting in reliance upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Request; (c) whenever in the administration of this Agreement or the Intercreditor Agreement the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate of the Company, any Owner Trustee or any Loan Trustee; (d) the Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Agreement or the Intercreditor Agreement at the request or direction of any of the Certificateholders pursuant to this Agreement or the Intercreditor Agreement unless such Certificateholders shall have offered to the Trustee reasonable security or indemnity against the cost, expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, or report, notice, request, direction, consent, order, bond, debenture or other paper or document; (g) the Trustee may execute any of the trusts or powers under this Agreement or the Intercreditor Agreement or perform any duties under this Agreement or the Intercreditor Agreement either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it under this Agreement or the Intercreditor Agreement; (h) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Agreement or the Intercreditor Agreement; (i) the Trustee shall not be required to expend or risk its own funds in the performance of any of its duties under this Agreement, or in the exercise of any of its rights or powers, if it shall have reason to believe that repayment of such funds or adequate indemnity against such risk is not reasonably assured to it; and (j) except during the continuance of an Event of Default, the Trustee undertakes and shall be responsible to perform only such duties as are specifically set forth herein and no implied covenants or obligations shall be read into this Agreement or be enforceable against Trustee. Section 7.03. Not Responsible for Recitals or Issuance of CertificatesSection 7.03. Not Responsible for Recitals or Issuance of CertificatesSection 7.03. Not Responsible for Recitals or Issuance of CertificatesSection 7.03. Not Responsible for Recitals or Issuance of Certificates. The recitals contained herein and in the Certificates, except the certificates of authentication, shall not be taken as the statements of the Trustee, and the Trustee assumes no responsibility for their correctness. Subject to Section 7.14, the Trustee makes no representations as to the validity or sufficiency of this Agreement, any Note Documents, any Participation Agreement or any Intercreditor Agreement, and Equipment Notes or the Certificates, except that the Trustee hereby represents and warrants that this Agreement has been, and each Certificate, the Intercreditor Agreement and each Participation Agreement will be, executed and delivered by one of its officers who is duly authorized to execute and deliver such document on its behalf. Section 7.04. May Hold CertificatesSection 7.04. May Hold CertificatesSection 7.04. May Hold CertificatesSection 7.04. May Hold Certificates. The Trustee, any Paying Agent, Registrar or any of their Affiliates or any other agent, in their respective individual or any other capacity, may become the owner or pledgee of Certificates and subject to Sections 310(b) and 311 of the Trust Indenture Act, if applicable, may otherwise deal with the Company, the Guarantor, the Owner Trustees or the Loan Trustees with the same rights it would have if it were not Trustee, Paying Agent, Registrar or such other agent. Section 7.05. Money Held in TrustSection 7.05. Money Held in TrustSection 7.05. Money Held in TrustSection 7.05. Money Held in Trust. Money held by the Trustee or the Paying Agent in trust hereunder need not be segregated from other funds except to the extent required herein or by law and neither the Trustee nor the Paying Agent shall have any liability for interest upon any such moneys except as provided for herein. Section 7.06. Compensation and ReimbursementSection 7.06. Compensation and ReimbursementSection 7.06. Compensation and ReimbursementSection 7.06. Compensation and Reimbursement. The Company agrees: (1) to pay, or cause to be paid, to the Trustee compensation (as set out in a separate fee agreement between the Trustee and the Company) for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (2) except as otherwise expressly provided herein to reimburse, or cause to be reimbursed, the Trustee upon its request for all reasonable out-of-pocket expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Agreement or the Intercreditor Agreement (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence, willful misconduct or bad faith or as may be incurred due to the Trustee's breach of its representations and warranties set forth in Section 7.14; (3) to indemnify, or cause to be indemnified, the Trustee for, and to hold it harmless against, any loss, liability or expense (other than for or with respect to any tax) incurred without negligence, willful misconduct or bad faith, on its part, arising out of or in connection with the acceptance or administration of this Trust, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder, except for any such loss, liability or expense incurred by reason of the Trustee's breach of its representations and warranties set forth in Section 7.14. The Trustee shall notify the Company and the Guarantor promptly of any claim for which it may seek indemnity. The Company and the Guarantor shall defend the claim and the Trustee shall cooperate in the defense. The Trustee may have separate counsel with the consent of the Company and the Guarantor and the Company and the Guarantor will pay the reasonable fees and expenses of such counsel. Neither the Company nor the Guarantor need pay for any settlement made without its consent; and (4) to indemnify, or cause to be indemnified, the Trustee, solely in its individual capacity, for, and to hold it harmless against, any tax (except to the extent the Trustee is reimbursed therefor pursuant to the next paragraph, provided that no indemnification shall be available with respect to any tax attributable to the Trustee's compensation for serving as such) incurred without negligence, willful misconduct or bad faith, on its part, arising out of or in connection with the acceptance or administration of this Trust, including any costs and expenses incurred in contesting the imposition of any such tax. The Trustee, in its individual capacity, shall notify the Company and the Guarantor promptly of any claim for any tax for which it may seek indemnity. The Trustee shall permit the Company and the Guarantor to contest the imposition of such tax and the Trustee, in its individual capacity, shall cooperate in the defense. The Trustee, in its individual capacity, may have separate counsel with the consent of the Company and the Guarantor and the Company and the Guarantor will pay the reasonable fees and expenses of such counsel. Neither the Company nor the Guarantor need pay for any taxes paid, in settlement or otherwise, without its consent. The Trustee shall be entitled to reimbursement from, and shall have a lien prior to the Certificates upon, the Trust Property for any tax incurred without negligence, bad faith or willful misconduct on its part, arising out of or in connection with the acceptance or administration of such Trust (other than any tax attributable to the Trustee's compensation for serving as such), including any costs and expenses incurred in contesting the imposition of any such tax. The Trustee shall notify the Company of any claim for any tax for which it may seek reimbursement. The Trustee shall cooperate in the contest by the Company of any such claim. If the Trustee reimburses itself from the Trust Property for any such tax it will within 30 days mail a brief report setting forth the amount of such tax and the circumstances thereof to all Certificateholders as their names and addresses appear in the Register. As security for the performance of the obligations of the Company under this Section the Trustee shall have a lien prior to the Certificates upon the Trust Property. Section 7.07. Corporate Trustee Required; EligibilitySection 7.07.Corporate Trustee Required; EligibilitySection 7.07. Corporate Trustee Required; EligibilitySection 7.07.Corporate Trustee Required; Eligibility. There shall at all times be a Trustee hereunder which shall be eligible to act as a trustee under Section 310(a) of the Trust Indenture Act and shall have a combined capital and surplus of at least $75,000,000 (or a combined capital and surplus in excess of $5,000,000 and the obligations of which, whether now in existence or hereafter incurred, are fully and unconditionally guaranteed by a corporation organized and doing business under the laws of the United States, any State or Territory thereof or of the District of Columbia that has a combined capital and surplus of at least $75,000,000). If such corporation publishes reports of conditions at least annually, pursuant to law or to the requirements of federal, state, territorial or District of Columbia supervising or examining authority, then for the purposes of this Section 7.07, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of conditions so published. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 7.07 to act as Trustee, the Trustee shall resign immediately as Trustee in the manner and with the effect specified in Section 7.08. Section 7.08. Resignation and Removal: Appointment of SuccessorSection 7.08. Resignation and Removal: Appointment of SuccessorSection 7.08. Resignation and Removal: Appointment of SuccessorSection 7.08. Resignation and Removal: Appointment of Successor. (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee under Section 7.09. (b) The Trustee may resign at any time as trustee by giving written notice thereof to the Company, the Authorized Agents, the Owner Trustees and the Loan Trustees. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Company, the Authorized Agents, the Owner Trustees, the Loan Trustees and the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee. (c) The Trustee may be removed at any time by Act of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust delivered to the Trustee, the Company, the Owner Trustees and the Loan Trustees. (d) If at any time: (1) the Trustee shall fail to comply with Section 310 of the Trust Indenture Act after written request therefor by the Company or by any Certificateholder who has been a bona fide certificateholder for at least six months; or (2) the Trustee shall cease to be eligible under Section 7.07 and shall fail to resign after written request therefor by the Company or by any such Certificateholder; or (3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation; then, in any case, (i) the Company may remove the Trustee or (ii) any Certificateholder who has been a bona fide Certificateholder for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. (e) If a Responsible Officer of the Trustee shall obtain actual knowledge of an Avoidable Tax (as hereinafter defined) which has been or is likely to be asserted, the Trustee shall promptly notify the Company and shall, within 30 days of such notification, resign as Trustee hereunder unless within such 30-day period the Trustee shall have received notice that the Company has agreed to pay such tax. The Company shall promptly appoint a successor Trustee in a jurisdiction where there are no Avoidable Taxes. As used herein, an "Avoidable Tax" means a state or local tax: (i) upon (w) the Trust, (x) the Trust Property, (y) Certificateholders or (z) the Trustee for which the Trustee is entitled to seek reimbursement from the Trust Property, and (ii) which would be avoided if the Trustee were located in another state, or jurisdiction within a state, within the United States. A tax shall not be an Avoidable Tax if the Company or any Owner Trustee shall agree to pay, and shall pay, such tax. (f) If the Trustee shall resign, be removed or become incapable of acting as trustee or if a vacancy shall occur in the office of the Trustee for any cause, the Company shall promptly appoint a successor Trustee. If, within 90 days after such resignation, removal or incapability, or other occurrence of such vacancy, a successor Trustee shall be appointed by Act of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust delivered to the Company, the Owner Trustees, the Loan Trustee and the retiring Trustee, the successor Trustees so appointed shall, with the approval of the Company, which approval shall not be unreasonably withheld, forthwith upon its acceptance of such appointment, become the successor Trustee and supersede the successor Trustee appointed as provided above. If no successor Trustee shall have been so appointed as provided above and accepted appointment in the manner hereinafter provided, the resigning Trustee or any Certificateholder who has been a bona fide Certificateholder for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee. (g) The successor Trustee of a Trust shall give notice of the resignation and removal of the Trustee and appointment of the successor Trustee by mailing written notice of such event by first-class mail, postage prepaid, to the Certificateholders as their names and addresses appear in the Register. Each notice shall include the name of such successor Trustee and the address of its Corporate Trust Office. Section 7.09. Acceptance of Appointment by SuccessorSection 7.09. Acceptance of Appointment by SuccessorSection 7.09. Acceptance of Appointment by SuccessorSection 7.09. Acceptance of Appointment by Successor. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on request of the Company or the successor Trustee, such retiring Trustee shall execute and deliver an instrument transferring to such successor Trustee all such rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee, subject nevertheless to its lien, if any, provided for in Section 7.06. Upon request of any such successor Trustee, the Company, the retiring Trustee and such successor Trustee shall execute and deliver any and all instruments containing such provisions as shall be necessary or desirable to transfer and confirm to, and for more fully and certainly vesting in, such successor Trustee all such rights, powers and trusts. No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article. Section 7.10. Merger, Conversion, Consolidation or Succession to BusinessSection 7.10. Merger, Conversion, Consolidation or Succession to BusinessSection 7.10. Merger, Conversion, Consolidation or Succession to BusinessSection 7.10. Merger, Conversion, Consolidation or Succession to Business. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Certificates shall have been executed or authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such execution or authentication and deliver the Certificates so executed or authenticated with the same effect as if such successor Trustee had itself executed or authenticated such Certificates. Section 7.11. Maintenance of AgenciesSection 7.11. Maintenance of AgenciesSection 7.11. Maintenance of AgenciesSection 7.11. Maintenance of Agencies. (a) There shall at all times be maintained an office or agency where Certificates may be presented or surrendered for registration of transfer or for exchange, and for payment thereof and where notices and demands to or upon the Trustee in respect of such Certificates may be served. Presentations and demands may be made and notices may be served at the Corporate Trust Office of the Trustee. (b) There shall at all times be a Registrar and a Paying Agent hereunder with respect to the Certificates. Each such Authorized Agent shall be a bank or trust company, shall be a corporation organized and doing business under the laws of the United States or any state, with a combined capital and surplus of at least $75,000,000, or a corporation having a combined capital and surplus in excess of $5,000,000 the obligations of which are guaranteed by a corporation organized and doing business under the laws of the United States or any state, with a combined capital and surplus of at least $75,000,000, and shall be authorized under such laws to exercise corporate trust powers, subject to supervision by federal or state authorities. The Trustee shall initially be the Paying Agent and, as provided in Section 3.04, Registrar hereunder with respect to the Certificates. Each Registrar shall furnish to the Trustee, at stated intervals of not more than six months, and at such other times as the Trustee may request in writing, a copy of the Register maintained by such Registrar. (c) Any corporation into which any Authorized Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, consolidation or conversion to which any Authorized Agent, shall be a party, or any corporation succeeding to the corporate trust business of any Authorized Agent, shall be the successor of such Authorized Agent hereunder, if such successor corporation is otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the parties hereto or such Authorized Agent or such successor corporation. (d) Any Authorized Agent may at any time resign by giving written notice of resignation to the Trustee, the Company, the Owner Trustees and the Loan Trustees. The Company may, and at the request of the Trustee shall, at any time terminate the agency of any Authorized Agent by giving written notice of termination to such Authorized Agent and to the Trustee. Upon the resignation or termination of an Authorized Agent or in case at any time any such Authorized Agent shall cease to be eligible under this Section (when in either case, no other Authorized Agent performing the functions of such Authorized Agent shall have been appointed), the Company shall promptly appoint one or more qualified successor Authorized Agents, reasonably satisfactory to the Trustee, to perform the functions of the Authorized Agent which has resigned or whose agency has been terminated or who shall have ceased to be eligible under this Section. The Company shall give written notice of any such appointment made by it to the Trustee, the Owner Trustees and the Loan Trustees; and in each case the Trustee shall mail notice of such appointment to all Certificateholders as their names and addresses appear on the Register. (e) The Company agrees to pay, or cause to be paid, from time to time to each Authorized Agent reasonable compensation for its services and to reimburse it for its reasonable expenses. Section 7.12. Money for Certificate Payments to Be Held in TrustSection 7.12. Money for Certificate Payments to Be Held in TrustSection 7.12. Money for Certificate Payments to Be Held in TrustSection 7.12. Money for Certificate Payments to Be Held in Trust. All moneys deposited with any Paying Agent for the purpose of any payment on Certificates shall be deposited and held in trust for the benefit of the Certificateholders entitled to such payment, subject to the provisions of this Section. Moneys so deposited and held in trust shall constitute a separate trust fund for the benefit of the Certificateholders with respect to which such money was deposited. The Trustee may at any time, for the purpose of obtaining the satisfaction and discharge of this Agreement or for any other purpose, direct any Paying Agent to pay to the Trustee all sums held in trust by such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by such Paying Agent and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. Section 7.13. Registration of Equipment Notes in Name of Subordination AgentSection 7.13. Registration of Equipment Notes in Name of Subordination AgentSection 7.13. Registration of Equipment Notes in Name of Subordination AgentSection 7.13. Registration of Equipment Notes in Name of Subordination Agent. The Trustee agrees that all Equipment Notes to be purchased by the Trust shall be issued in the name of the Subordination Agent or its nominee and held by the Subordination Agent in trust for the benefit of the Certificateholders, or, if not so held, the Subordination Agent or its nominee shall be reflected as the owner of such Equipment Notes in the register of the issuer of such Equipment Notes. Section 7.14. Representations and Warranties of TrusteeSection 7.14. Representations and Warranties of TrusteeSection 7.14. Representations and Warranties of TrusteeSection 7.14. Representations and Warranties of Trustee. The Trustee hereby represents and warrants that: (a) the Trustee is a Delaware banking corporation organized and validly existing, and in good standing under the laws of the State of Delaware; (b) the Trustee has full power, authority and legal right to execute, deliver and perform this Agreement, the Intercreditor Agreement and the Participation Agreements and has taken all necessary action to authorize the execution, delivery and performance by it of this Agreement, the Intercreditor Agreement and the Participation Agreements; (c) the execution, delivery and performance by the Trustee of this Agreement, the Intercreditor Agreement and the Participation Agreements (i) will not violate any provision of any United States federal law or the law of the State of Delaware governing the banking and trust powers of the Trustee or any order, writ, judgment, or decree of any court, arbitrator,or governmental authority applicable to the Trustee or any of its assets, (ii) will not violate any provision of the articles of association or by-laws of the Trustee, and (iii) will not violate any provision of, or constitute, with or without notice or lapse of time, a default under, or result in the creation or imposition of any lien on any properties included in the Trust Property pursuant to the provisions of, any mortgage, indenture, contract, agreement or other undertaking to which it is a party, which violation, default or lien could reasonably be expected to have an adverse effect on the Trustee's performance or ability to perform its duties hereunder or thereunder or on the transactions contemplated herein or therein; (d) the execution, delivery and performance by the Trustee of this Agreement the Intercreditor Agreement and the Participation Agreements will not require the authorization, consent, or approval of, the giving of notice to, the filing or registration with, or the taking of any other action in respect of, any governmental authority or agency of the United States or the State of Delaware regulating the banking and corporate trust activities of the Trustee: and (e) this Agreement, the Participation Agreement, and the Intercreditor Agreement have been duly executed and delivered by the Trustee and constitute the legal, valid, and binding agreements of the Trustee, enforceable against it in accordance with their respective terms, provided that enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and (ii) general principles of equity. Section 7.15. Withholding Taxes; Information ReportingSection 7.15. Withholding Taxes; Information ReportingSection 7.15. Withholding Taxes; Information ReportingSection 7.15. Withholding Taxes; Information Reporting. (a) The Trustee, as trustee of the grantor trust created by this Agreement, shall exclude and withhold from each distribution of principal, premium, if any, and interest and other amounts due under this Agreement or under the Certificates any and all withholding taxes applicable thereto as required by law. The Trustee agrees to act as such withholding agent and, in connection therewith, whenever any taxes or similar charges are required to be withheld with respect to any amounts paid by or on behalf of the Trustee in respect of the Certificates, to withhold such amounts and timely pay the same to the authority in the name of and on behalf of the Certificateholders, that it will file any necessary withholding tax returns or statements when due, and that, as promptly as possible after the payment thereof, it will deliver to each such Certificateholder necessary documentation showing the payment thereof, together with such additional documentary evidence as such Certificateholders may reasonably request from time to time. The Trustee agrees to file any other information reports as it may be required to file under United States law. (b) The Trustee may satisfy certain of its obligations with respect to this Agreement by retaining, at the expense of the Company, a firm of independent public accountants (the "Accountants") which shall (i) be responsible for all tax filing requirements and (ii) perform the obligations of the Trustee in respect of tax filing requirements. The Trustee shall be deemed to have discharged its tax filing obligations under this Agreement upon its retention of the Accountants, and, if the Trustee shall have selected in the Accountants in good faith and without gross negligence, the Trustee shall not have any liability with respect to the default or misconduct of the Accountants. (c) The Trustee, at the request of the Company, will make such United States federal income tax elections as may be necessary to prevent the Trust from being classified for federal income tax purposes as an association taxable as a corporation. Section 7.16. Trustee's LiensSection 7.16. Trustee's LiensSection 7.16. Trustee's LiensSection 7.16. Trustee's Liens. The Trustee in its individual capacity agrees that it will at its own cost and expense promptly take any action as may be necessary to duly discharge and satisfy in full any mortgage, pledge, lien, charge, encumbrance, security interest or claim ("Trustee's Liens") on or with respect to the Trust Property which is attributable to the Trustee either (i) in its individual capacity and which is unrelated to the transactions contemplated by this Agreement, the Intercreditor Agreement, the Participation Agreements or the Note Documents, or (ii) as Trustee hereunder or in its individual capacity and which arises out of acts or omissions which are not contemplated by this Agreement. Section 7.17. Preferential Collection of ClaimsSection 7.17. Preferential Collection of ClaimsSection 7.17. Preferential Collection of ClaimsSection 7.17. Preferential Collection of Claims. The Trustee shall comply with Section 311(a) of the Trust Indenture Act, excluding any creditor relationship listed in Section 31l(b) of the Trust Indenture Act. If the Trustee shall resign or be removed as Trustee, it shall be subject to Section 311(a) of the Trust Indenture Act to the extent provided therein. ARTICLE VIII ARTICLE VIII ARTICLE VIII ARTICLE VIII CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE Section 8.01. The Company to Furnish Trustee with Names and Addresses of CertificateholdersSection 8.01. The Company to Furnish Trustee with Names and Addresses of CertificateholdersSection 8.01. The Company to Furnish Trustee with Names and Addresses of CertificateholdersSection 8.01. The Company to Furnish Trustee with Names and Addresses of Certificateholders. The Company will furnish or cause to be furnished to the Trustee within 15 days after each Record Date with respect to a Scheduled Payment, and at such other times as the Trustee may request in writing, within 30 days after receipt by the Company of any such request, a list, in such form as the Trustee may reasonably require, of all information in the possession or control of the Company as to the names and addresses of the Certificateholders, in each case as of a date not more than 15 days prior to the time such list is furnished; provided, however, that so long as the Trustee is the sole Registrar, no such list need be furnished; and provided further, however, that no such list need be furnished for so long as a copy of the Register is being furnished to the Trustee pursuant to Section 7.11. Section 8.02. Preservation of Information; Communications to CertificateholdersSection 8.02. Preservation of Information; Communications to CertificateholdersSection 8.02. Preservation of Information; Communications to CertificateholdersSection 8.02. Preservation of Information; Communications to Certificateholders. The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Certificateholders contained in the most recent list furnished to the Trustee as provided in Section 7.11 or Section 8.01, as the case may be, and the names and addresses of Certificateholders received by the Trustee in its capacity as Registrar, if so acting. The Trustee may destroy any list furnished to it as provided in Section 7.11 or Section 8.01, as the case may be, upon receipt of a new list so furnished. Section 8.03. Reports by TrusteeSection 8.03. Reports by TrusteeSection 8.03. Reports by TrusteeSection 8.03. Reports by Trustee. Within 60 days after May 15 of each year commencing with the first full year following the issuance of the Certificates, the Trustee shall transmit to the Certificateholders, as provided in Section 313(c) of the Trust Indenture Act, a brief report dated as of such May 15, if required by Section 313(a) of the Trust Indenture Act. Section 8.04. Reports by the Guarantor and CompanySection 8.04. Reports by the Guarantor and CompanySection 8.04. Reports by the Guarantor and CompanySection 8.04. Reports by the Guarantor and Company. The Guarantor and the Company each shall: (a) file with the Trustee, within 30 days after the Guarantor or the Company is required to file the same with the SEC, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may from time to time by rules and regulations prescribe) which the Guarantor or the Company is required to file with the SEC pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934, as amended; or, if the Guarantor or the Company is not required to file information, documents or reports pursuant to either of such sections, then to file with the Trustee and the SEC, in accordance with rules and regulations prescribed by the SEC, such of the supplementary and periodic information, documents and reports which may be required pursuant to section 13 of the Securities Exchange Act of 1934, as amended, in respect of a security listed and registered on a national securities exchange as may be prescribed in such rules and regulations; (b) file with the Trustee and the SEC, in accordance with the rules and regulations prescribed by the SEC, such additional information, documents and reports with respect to compliance by the Guarantor and the Company with the conditions and covenants of the Guarantor and the Company provided for in this Agreement, as may be required by such rules and regulations, including, in the case of annual reports, if required by such rules and regulations, certificates or opinions of independent public accountants, conforming to the requirements of Section 1.02; (c) transmit to all Certificateholders, in the manner and to the extent provided in Section 313(c) of the Trust Indenture Act, such summaries of any information, documents and reports required to be filed by the Guarantor and the Company pursuant to subsections (a) and (b) of this Section 8.04 as may be required by rules and regulations prescribed by the SEC; (d) furnish to the Trustee, not less often than annually, a brief certificate from the principal executive officer, principal financial officer or principal accounting officer as to his or her knowledge of the Guarantor's and the Company's compliance with all conditions and covenants under this Agreement (it being understood that for purposes of this paragraph (d), such compliance shall be determined without regard to any period of grace or requirement of notice provided under this Agreement); and (e) make available to any Certificateholder, upon request, the annual audited and quarterly unaudited financial statements of the Guarantor which are provided to the Trustee. ARTICLE IX ARTICLE IX ARTICLE IX ARTICLE IX SUPPLEMENTAL AGREEMENTS Section 9.01. Supplemental Agreements Without Consent of CertificateholdersSection 9.01. Supplemental Agreements Without Consent of CertificateholdersSection 9.01. Supplemental Agreements Without Consent of CertificateholdersSection 9.01. Supplemental Agreements Without Consent of Certificateholders. Without the consent of the Certificateholders, the Guarantor and the Company may, and the Trustee (subject to Section 9.03) shall, at any time and from time to time, enter into one or more agreements supplemental hereto or, if applicable, to the Intercreditor Agreement or the Liquidity Facility in form satisfactory to the Trustee, for any of the following purposes: (1) to evidence the succession of another corporation to the Company or the Guarantor and the assumption by any such successor of the covenants of the Company or the Guarantor herein contained; or (2) to add to the covenants of the Guarantor or the Company for the benefit of the Certificateholders, or to surrender any right or power in this Agreement conferred upon the Guarantor or the Company; or (3) to correct or supplement any provision in this Agreement, the Intercreditor Agreement or the Liquidity Facility which may be defective or inconsistent with any other provision herein or to make any other provisions with respect to matters or questions arising under this Agreement, the Intercreditor Agreement or the Liquidity Facility, provided that any such action shall not adversely affect the interests of the Certificateholders; or to cure any ambiguity or correct any mistake; or (4) to modify, eliminate or add to the provisions of this Agreement to such extent as shall be necessary to continue the qualification of this Agreement (including any supplemental agreement) under the Trust Indenture Act, or under any similar Federal statute hereafter enacted, and to add to this Agreement such other provisions as may be expressly permitted by the Trust Indenture Act, excluding, however, the provisions referred to in Section 316(a)(2) of the Trust Indenture Act as in effect at the date as of which this instrument was executed or any corresponding provision in any similar Federal statute hereafter enacted; or (5) to evidence and provide for the acceptance of appointment under this Agreement by the Trustee of a successor Trustee and to add to or change any of the provisions of this Agreement as shall be necessary to provide for or facilitate the administration of the Trust, pursuant to the requirements of Section 7.09; provided that no such action described in this Section 9.01 shall materially adversely affect the interests of the Certificateholders. Section 9.02. Supplemental Agreements with Consent of CertificateholdersSection 9.02. Supplemental Agreements with Consent of CertificateholdersSection 9.02. Supplemental Agreements with Consent of CertificateholdersSection 9.02. Supplemental Agreements with Consent of Certificateholders. With the consent of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest the Trust, by Act of said Certificateholders delivered to the Guarantor, the Company and the Trustee, the Guarantor and the Company may (with the consent of the Owner Trustees, if any, which consent shall not be unreasonably withheld), and the Trustee (subject to Section 9.03) shall, enter into an agreement or agreements supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement, the Intercreditor Agreement or the Liquidity Facility to the extent applicable to such Certificateholders or of modifying in any manner the rights and obligations of such Certificateholders under this Agreement; provided, however, that no such supplemental agreement shall, without the consent of the Certificateholder of each Outstanding Certificate affected thereby: (1) reduce in any manner the amount of, or delay the timing of, any receipt by the Trustee of payments on the Equipment Notes held in the Trust or distributions that are required to be made herein on any Certificate, or change any date of payment of any Certificate or change the place of payment where, or the coin or currency in which, any Certificate is payable, or impair the right to institute suit for the enforcement of any such payment or distribution on or after the Regular Distribution Date or Special Distribution Date applicable thereto; or (2) permit the disposition of any Equipment Note included in the Trust Property except as permitted by this Agreement, or otherwise deprive such Certificateholder of the benefit of the ownership of the Equipment Notes in the Trust; or (3) alter the priority of distributions specified in the Intercreditor Agreement; or (4) modify any of the provisions of this Section or Section 6.05, except to increase any such percentage or to provide that certain other provisions of this Agreement cannot be modified or waived without the consent of the Certificateholder of each Certificate affected thereby. It shall not be necessary for any Act of Certificateholders under this Section to approve the particular form of any proposed supplemental agreement but it shall be sufficient if such Act shall approve the substance thereof. Section 9.03. Documents Affecting Immunity or IndemnitySection 9.03. Documents Affecting Immunity or IndemnitySection 9.03. Documents Affecting Immunity or IndemnitySection 9.03. Documents Affecting Immunity or Indemnity. If in the opinion of the Trustee any document required to be executed by it pursuant to the terms of Section 9.01 or 9.02 affects any interest, right, duty, immunity or indemnity in favor of the Trustee under this Agreement, the Trustee may in its discretion decline to execute such document. Section 9.04. Execution of Supplemental AgreementsSection 9.04. Execution of Supplemental AgreementsSection 9.04. Execution of Supplemental AgreementsSection 9.04. Execution of Supplemental Agreements. In executing, or accepting the additional trusts created by, any supplemental agreement permitted by this Article or the modifications thereby of the trust created by this Agreement, the Trustee shall be entitled to receive, and shall be fully protected in relying upon, written advice of counsel or an Opinion of Counsel stating that the execution of such supplemental agreement is authorized or permitted by this Agreement. Section 9.05. Effect of Supplemental AgreementsSection 9.05. Effect of Supplemental AgreementsSection 9.05. Effect of Supplemental AgreementsSection 9.05. Effect of Supplemental Agreements. Upon the execution of any supplemental agreement under this Article, this Agreement shall be modified in accordance therewith, and such supplemental agreement shall form a part of this Agreement for all purposes; and every Certificateholder theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. Section 9.06. Conformity with Trust Indenture ActSection 9.06. Conformity with Trust Indenture ActSection 9.06. Conformity with Trust Indenture ActSection 9.06. Conformity with Trust Indenture Act. Every supplemental agreement executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act as then in effect. Section 9.07. Reference in Certificates to Supplemental AgreementsSection 9.07. Reference in Certificates to Supplemental AgreementsSection 9.07. Reference in Certificates to Supplemental AgreementsSection 9.07. Reference in Certificates to Supplemental Agreements. Certificates authenticated and delivered after the execution of any supplemental agreement pursuant to this Article may bear a notation in form approved by the Trustee as to any matter provided for in such supplemental agreement; and, in such case, suitable notation may be made upon Outstanding Certificates after proper presentation and demand. ARTICLE X ARTICLE X ARTICLE X ARTICLE X AMENDMENTS TO INDENTURES AND NOTE DOCUMENTS Section 10.01. Amendments and Supplements to Indentures and Other Note DocumentsSection 10.01. Amendments and Supplements to Indentures and Other Note DocumentsSection 10.01. Amendments and Supplements to Indentures and Other Note DocumentsSection 10.01. Amendments and Supplements to Indentures and Other Note Documents. In the event that the Trustee, as holder of any Equipment Notes in trust for the benefit of the Certificateholders or as Controlling Party, receives a request for a consent to any amendment, modification, waiver or supplement under any Indenture or other Note Document, the Trustee shall forthwith send a notice of such proposed amendment, modification, waiver or supplement to each Certificateholder registered on the Register as of the date of such notice. The Trustee shall request from the Certificateholders a Direction as to (a) whether or not to take or refrain from taking any action which a holder of such Equipment Note has the option to direct, (b) whether or not to give or execute any waivers, consents, amendments, modifications or supplements as a holder of such Equipment Note and (c) how to vote any Equipment Note if a vote has been called for with respect thereto. Provided such a request for Certificateholder Direction shall have been made, in directing any action or casting any vote or giving any consent as the holder of any Equipment Note, the Trustee shall vote for or give consent to any such action with respect to such Equipment Note in the same proportion as that of (i) the aggregate face amounts of all Certificates actually voted in favor of or for giving consent to such action by Acts of Certificateholders to (ii) the aggregate face amount of all Outstanding Certificates. For purposes of the immediately preceding sentence, a Certificate shall have been "actually voted" if the Holder of such Certificate has delivered to the Trustee an instrument evidencing such Holder's consent to such Direction on or prior to the Business Day before the Trustee directs such action or casts such vote or gives such consent. Notwithstanding the foregoing, but subject to Section 6.04 and any Intercreditor Agreement, the Trustee may, in its own discretion and at its own direction, consent and notify the relevant Loan Trustee of such consent to any amendment, modification, waiver or supplement under the relevant Indenture, the Liquidity Facility, or any Note Document, if an Event of Default hereunder shall have occurred and be continuing, or if such amendment, modification or waiver will not adversely affect the interests of the Certificateholders. ARTICLE XI ARTICLE XI ARTICLE XI ARTICLE XI TERMINATION OF TRUSTS Section 11.01. Termination of the TrustSection 11.01. Termination of the Trust2Section 11.01. Termination of the TrustSection 11.01. Termination of the Trust. The respective obligations and responsibilities of the Company, the Guarantor and the Trustee with respect to the Trust shall terminate upon distribution to all Holders of the Certificates and the Trustee of all amounts required to be distributed to them pursuant to this Agreement and the disposition of all property held as part of the Trust Property; provided, however, that in no event shall the Trust continue beyond one hundred ten (110) years following the date of the earliest execution of this Agreement. Notice of any termination, specifying the Regular Distribution Date (or Special Distribution Date, as the case may be) upon which the Certificateholders may surrender their Certificates to the Trustee for payment of the final distribution and cancellation, shall be mailed promptly, upon notice to the Trustee, by the Trustee to Certificateholders not earlier than the 60th day and not later than the 20th day next preceding such final distribution specifying (A) the Regular Distribution Date (or Special Distribution Date, as the case may be) upon which the proposed final payment of the Certificates will be made upon presentation and surrender of Certificates at the office or agency of the Trustee therein specified, (B) the amount of any such proposed final payment, and (C) that the Record Date otherwise applicable to such Regular Distribution Date (or Special Distribution Date, as the case may be) is not applicable, payments being made only upon presentation and surrender of the Certificates at the office or agency of the Trustee therein specified. The Trustee shall give such notice to the Registrar at the time such notice is given to Certificateholders. Upon presentation and surrender of the Certificates, the Trustee shall cause to be distributed to Certificateholders amounts distributable on such Regular Distribution Date (or Special Distribution Date, as the case may be) pursuant to Section 4.02. In the event that all of the Certificateholders shall not surrender their Certificates for cancellation within six months after the date specified in the above-mentioned written notice, the Trustee shall give a second written notice to the remaining Certificateholders to surrender their Certificates for cancellation and receive the final distribution with respect thereto. No additional interest shall accrue on the Certificates after the Regular Distribution Date (or Special Distribution Date, as the case may be). In the event that any money held by the Trustee for the payment of distributions on the Certificates shall remain unclaimed for two years (or such lesser time as the Trustee shall be satisfied, after sixty days' notice from the Company, is one month prior to the escheat period provided under applicable law) after the final distribution date with respect thereto, the Trustee shall pay to each Loan Trustee the appropriate amount of money relating to such Loan Trustee and shall give written notice thereof to the related Owner Trustees and the Company. ARTICLE XII ARTICLE XII ARTICLE XII ARTICLE XII MISCELLANEOUS PROVISIONS Section 12.01. Limitation on Rights of CertificateholdersSection 12.01. Limitation on Rights of CertificateholdersSection 12.01. Limitation on Rights of CertificateholdersSection 12.01. Limitation on Rights of Certificateholders. The death or incapacity of any Certificateholder shall not operate to terminate this Agreement, or the Trust, nor entitle such Certificateholder's legal representatives or heirs to claim an accounting or to take any action or commence any proceeding in any court for a partition or winding up of the Trust, nor otherwise affect the rights, obligations, and liabilities of the parties hereto or any of them. Section 12.02. Liabilities of CertificateholdersSection 12.02. Liabilities of CertificateholdersSection 12.02. Liabilities of CertificateholdersSection 12.02. Liabilities of Certificateholders. Neither the existence of the Trust nor any provision in this Agreement is intended to or shall limit the liability the Certificateholders would otherwise incur if the Certificateholders owned Trust Property as co-owners, or incurred any obligations of the Trust, directly rather than through the Trust. Section 12.03. Certificates Nonassessable and Fully PaidSection 12.03. Certificates Nonassessable and Fully PaidSection 12.03. Certificates Nonassessable and Fully PaidSection 12.03. Certificates Nonassessable and Fully Paid. Subject to Section 12.02, Certificateholders shall not be personally liable for obligations of the Trust, the Fractional Undivided Interests represented by the Certificates shall be nonassessable for any losses or expenses of the Trust or for any reason whatsoever, and Certificates upon authentication thereof by the Trustee pursuant to Section 3.03 are and shall be deemed fully paid. No Certificateholder shall have any right (except as expressly provided herein) to vote or in any manner otherwise control the operation and management of the Trust Property, the Trust, or the obligations of the parties hereto, nor shall anything set forth herein, or contained in the terms of the Certificates, be construed so as to constitute the Certificateholders from time to time as partners or members of an association. Section 12.04. [Intentionally omitted]Section 12.04. [Intentionally omitted]Section 12.04. [Intentionally omitted]Section 12.04. [Intentionally omitted]. Section 12.05. NoticesSection 12.05. NoticesSection 12.05. NoticesSection 12.05. Notices. (a) Unless otherwise specifically provided herein, all notices required under the terms and provisions of this Agreement shall be in English and in writing, and any such notice may be given by United States mail, courier service, telegram, telemessage, telecopy, telefax, cable or facsimile (confirmed by telephone or in writing in the case of notice by telegram, telemessage, telecopy, telefax, cable or facsimile) or any other customary means of communication, and any such notice shall be effective when delivered, or if mailed, three days after deposit in the United States mail with proper postage for ordinary mail prepaid, if to the Company or the Guarantor, to: American Trans Air, Inc. 7337 West Washington Street Indianapolis International Airport Indianapolis, Indiana 06927 Attention: Executive Vice President and Chief Financial Officer Facsimile: (317) 240-7087 if to the Trustee, to: Wilmington Trust Company Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 Attention: Corporate Trust Department Facsimile: (302) 651-8882 (b) The Company, the Guarantor or the Trustee, by notice to the other, may designate additional or different addresses for subsequent notices or communications. (c) Any notice or communication to Certificateholders shall be mailed by first-class mail to the addresses for Certificateholders shown on the Register kept by the Registrar and to addresses filed with the Trustee. Failure so to mail a notice or communication or any defect in such notice or communication shall not affect its sufficiency with respect to other Certificateholders. (d) If a notice or communication is mailed in the manner provided above within the time prescribed, it is conclusively presumed to have been duly given, whether or not the addressee receives it. (e) If the Company mails a notice or communication to the Certificateholders, it shall mail a copy to the Trustee and to each Paying Agent at the same time. (f) Notwithstanding the foregoing, all communications or notices to the Trustee shall be deemed to be given only when received by a Responsible Officer of the Trustee. (g) The Trustee shall promptly furnish the Company with a copy of any demand, notice or written communication received by the Trustee hereunder from any Certificateholder, Owner Trustee or Loan Trustee. Section 12.06. Governing LawSection 12.06. Governing LawSection 12.06. Governing LawSection 12.06. Governing Law. THIS AGREEMENT HAS BEEN DELIVERED IN THE STATE OF NEW YORK AND THIS AGREEMENT AND THE CERTIFICATES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT-OF-LAW PRINCIPLES. Section 12.07. Severability of ProvisionsSection 12.07. Severability of ProvisionsSection 12.07. Severability of ProvisionsSection 12.07. Severability of Provisions. If any one or more of the covenants, agreements, provisions, or terms of this Agreement shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions, or terms shall be deemed severable from the remaining covenants, agreements, provisions, or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement or the Trust or of the Certificates or the rights of the Certificateholders thereof. Section 12.08. [Intentionally omitted].Section 12.08. [Intentionally omitted].Section 12.08. [Intentionally omitted].Section 12.08. [Intentionally omitted]. Section 12.09. Effect of Headings and Table of ContentsSection 12.09. Effect of Headings and Table of ContentsSection 12.09. Effect of Headings and Table of ContentsSection 12.09. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. Section 12.10. Successors and AssignsSection 12.10. Successors and AssignsSection 12.10. Successors and AssignsSection 12.10. Successors and Assigns. All covenants, agreements, representations and warranties in this Agreement by the Trustee, the Guarantor and the Company shall bind and, to the extent permitted hereby, shall inure to the benefit of and be enforceable by their respective successors and assigns, whether so expressed or not. Section 12.11. Benefits of AgreementSection 12.11. Benefits of AgreementSection 12.11. Benefits of AgreementSection 12.11. Benefits of Agreement. Nothing in this Agreement or in the Certificates, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, and the Certificateholders, any benefit or any legal or equitable right, remedy or claim under this Agreement. Section 12.12. Legal HolidaysSection 12.12. Legal HolidaysSection 12.12. Legal HolidaysSection 12.12. Legal Holidays. In any case where any Regular Distribution Date or Special Distribution Date relating to any Certificate shall not be a Business Day, then (notwithstanding any other provision of this Agreement) payment need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on such Regular Distribution Date or Special Distribution Date, and no interest shall accrue during the intervening period. Section 12.13. CounterpartsSection 12.13. CounterpartsSection 12.13. CounterpartsSection 12.13. Counterparts. For the purpose of facilitating the execution of this Agreement and for other purposes, this Agreement may be executed simultaneously in any number of counterparts, each of which counterparts shall be deemed to be an original, and all of which counterparts shall constitute but one and the same instrument. Section 12.14. Communication by Certificateholders with Other CertificateholdersSection 12.14. Communication by Certificateholders with Other CertificateholdersSection 12.14. Communication by Certificateholders with Other CertificateholdersSection 12.14. Communication by Certificateholders with Other Certificateholders. Certificateholders may communicate with other Certificateholders with respect to their rights under this Agreement or the Certificates pursuant to Section 3.12(b) of the Trust Indenture Act. The Company, the Guarantor, the Trustee and any and all other persons benefitted by this Agreement shall have the protection afforded by Section 312(c) of the Trust Indenture Act. IN WITNESS WHEREOF, the Guarantor, the Company and the Trustee have caused this Agreement to be duly executed by their respective officers, all as of the day and year first above written. AMTRAN, INC. By /s/ Kenneth K. Wolff ----------------------------- Title: Executive Vice President and Chief Financial Officer AMERICAN TRANS AIR, INC. / By /s/ Kenneth K. Wolff ----------------------------- Title: Executive Vice President and Chief Financial Officer WILMINGTON TRUST COMPANY, as Trustee By /s/ Donald McKelcan ----------------------------- Title: Vice President SCHEDULE 1 Trust Indenture and Security Agreements 1) Trust Indenture and Security Agreement [ATA 1996 A], dated as of December 16, 1996 between Wilmington Trust Company, as Indenture Trustee, and First Security Bank, National Association, as Owner Trustee 2) Trust Indenture and Security Agreement [ATA 1996 B], dated as of December 16, 1996 between Wilmington Trust Company, as Indenture Trustee, and First Security Bank, National Association, as Owner Trustee SCHEDULE 2 Participation Agreements 1) Participation Agreement [ATA 1996 A], dated as of December 16, 1996 among the Company, as Lessee, Finova Capital Corporation, as Owner Participant, First Security Bank, National Association, as Owner Trustee, Wilmington Trust Company, as Indenture Trustee, the Trustee, the Other Trustees, and the Subordination Agent 2) Participation Agreement [ATA 1996 B], dated as of December 16, 1996 among the Company, as Lessee, General Electric Capital Corporation, as Owner Participant, First Security Bank, National Association, as Owner Trustee, Wilmington Trust Company, as Indenture Trustee, the Trustee, the Other Trustees, and the Subordination Agent -- EXHIBIT A FORM OF CERTIFICATE [THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS CERTIFICATE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT IT WILL NOT WITHIN THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY AMERICAN TRANS AIR, INC., THE TRUSTEE OR ANY AFFILIATE OF ANY OF SUCH PERSONS RESELL OR OTHERWISE TRANSFER THIS CERTIFICATE EXCEPT (A) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (B) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING $100,000 OR MORE AGGREGATE PRINCIPAL AMOUNT OF SUCH CERTIFICATE THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS CERTIFICATE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE), (C) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (E) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT; AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS CERTIFICATE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS CERTIFICATE WITHIN THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY AMERICAN TRANS AIR, INC., THE TRUSTEE OR ANY AFFILIATE OF ANY OF SUCH PERSONS THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE PASS THROUGH TRUST AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS.]1 [UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND 3.06 OF THE PASS THROUGH TRUST AGREEMENT REFERRED TO HEREIN.]2 AMERICAN TRANS AIR, INC. 1996-1B PASS THROUGH TRUST Pass Through Certificate, Series 1996-1B Issuance Date: ______________________________ Final Legal Distribution Date: ______________________________ Evidencing a Fractional Undivided Interest in The 1996-1B Trust, the Property of Which Includes Certain Equipment Notes each secured by Aircraft leased to American Trans Air, Inc. Certificate No. $ Fractional Undivided Interest representing ___________% of the Trustper $1,000 of Reference Principal Amount THIS CERTIFIES THAT ____________________________, for value received, is the registered owner of a Fractional Undivided Interest in the amount of __________ Dollars ($___________) (the "Reference Principal Amount") in the American Trans Air 1996-1B Pass Through Trust (the "Trust") created by Wilmington Trust Company, not in its individual capacity but solely as trustee (the "Trustee"), pursuant to a Pass Through Trust Agreement dated as of December 16, 1996 (the "Agreement"), among the Trustee, Amtran, Inc., a corporation incorporated under Indiana law (the "Guarantor"), and American Trans Air, Inc., a corporation incorporated under Indiana law (the "Company"), a summary of certain of the pertinent provisions of which is set forth below. To the extent not otherwise defined herein, the capitalized terms used herein have the meanings assigned to them in the Agreement. This Certificate is one of the duly authorized Certificates designated as "Pass Through Certificates, Series 1996-1B" (herein called the "Certificates"). This Certificate is issued under and is subject to the terms, provisions, and conditions of the Agreement and the Intercreditor Agreement, to which agreements the Certificateholder of this Certificate by virtue of the acceptance hereof assents and by which such Certificateholder is bound. The property of the Trust includes certain Equipment Notes and all rights of the Trust to receive any payments under the Intercreditor Agreement and the Liquidity Facility (the "Trust Property"). Each issue of the Equipment Notes is secured by a security interest in The Aircraft leased to the Company. Each of the Certificates represents a fractional undivided interest in the Trust and the Trust Property, and has no rights, benefits or interest in respect of any assets or property other than the Trust Property. The undivided percentage interest in the Trust represented by each of this Certificate (as specified above) and the other Pass Through Certificates, Series 1996-1B, was determined on the basis of (x) the aggregate of the Reference Principal Amount of this Certificate (as specified above) and of the other Pass Through Certificates, Series 1996-1B and (y) the aggregate original principal amounts of the Equipment Notes constituting the Trust Property. Subject to and in accordance with the terms of the Agreement and the Intercreditor Agreement, from funds then available to the Trustee, there will be distributed on each March 26, June 26, September 26 and December 26 (a "Regular Distribution Date"), commencing March 26, 1997, to the Person in whose name this Certificate is registered at the close of business on the 15th day preceding the Regular Distribution Date, an amount in respect of the Scheduled Payments on the Equipment Notes due on such Regular Distribution Date, the receipt of which has been confirmed by the Trustee, equal to the product of the percentage interest in the Trust evidenced by this Certificate and an amount equal to the sum of such Scheduled Payments. Subject to and in accordance with the terms of the Agreement and the Intercreditor Agreement, in the event that Special Payments on the Equipment Notes are received by the Trustee, from funds then available to the Trustee, there shall be distributed on the applicable Special Distribution Date, to the Person in whose name this Certificate is registered at the close of business on the 15th day preceding the Special Distribution Date, an amount in respect of such Special Payments on the Equipment Notes, the receipt of which has been confirmed by the Trustee, equal to the product of the percentage interest in the Trust evidenced by this Certificate and an amount equal to the sum of such Special Payments so received. If a Regular Distribution Date or Special Distribution Date is not a Business Day, distribution shall be made on the immediately following Business Day with the same force and effect as if made on such Regular Distribution Date or Special Distribution Date and no interest shall accrue during the intervening period. The Trustee shall mail notice of each Special Payment and the Special Distribution Date therefor to the Certificateholder of this Certificate. Distributions on this Certificate will be made by the Trustee by check mailed to the Person entitled thereto, without the presentation or surrender of this Certificate or the making of any notation hereon. Except as otherwise provided in the Agreement and notwithstanding the above, the final distribution on this Certificate will be made after notice mailed by the Trustee of the pendency of such distribution and only upon presentation and surrender of this Certificate at the office or agency of the Trustee specified in such notice. The Certificates do not represent a direct obligation of, or an obligation guaranteed by, or an interest in, the Guarantor, the Company or the Trustee or any affiliate thereof. The Certificates are limited in right of payment, all as more specifically set forth on the face hereof and in the Agreement. All payments or distributions made to Certificateholders under the Agreement shall be made only from the Trust Property and only to the extent that the Trustee shall have sufficient income or proceeds from the Trust Property to make such payments in accordance with the terms of the Agreement. Each Certificateholder of this Certificate, by its acceptance hereof, agrees that it will look solely to the income and proceeds from the Trust Property to the extent available for distribution to such Certificateholder as provided in the Agreement. This Certificate does not purport to summarize the Agreement and reference is made to the Agreement for information with respect to the interests, rights, benefits, obligations, proceeds, and duties evidenced hereby. A copy of the Agreement may be examined during normal business hours at the principal office of the Trustee, and at such other places, if any, designated by the Trustee, by any Certificateholder upon request. The Agreement permits, with certain exceptions therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Certificateholders under the Agreement at any time by the Guarantor, the Company and the Trustee with the consent of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust. Any such consent by the Certificateholder of this Certificate shall be conclusive and binding on such Certificateholder and upon all future Certificateholders of this Certificate and of any Certificate issued upon the transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent is made upon this Certificate. The Agreement also permits the amendment thereof, in certain limited circumstances, without the consent of the Certificateholders of any of the Certificates. As provided in the Agreement and subject to certain limitations set forth, the transfer of this Certificate is registrable in the Register upon surrender of this Certificate for registration of transfer at the offices or agencies maintained by the Trustee in its capacity as Registrar, or by any successor Registrar duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Trustee and the Registrar, duly executed by the Certificateholder hereof or such Certificateholder's attorney duly authorized in writing, and thereupon one or more new Certificates of authorized denominations evidencing the same aggregate Fractional Undivided Interest in the Trust will be issued to the designated transferee or transferees. The Certificates are issuable only as registered Certificates without coupons in minimum denominations of $100,000 Fractional Undivided Interest and integral multiples of $1,000 in excess thereof except that one Certificate may be in a denomination of less than $100,000 that is not a multiple of $1,000. As provided in the Agreement and subject to certain limitations therein set forth, the Certificates are exchangeable for new Certificates of authorized denominations evidencing the same aggregate Fractional Undivided Interest in the Trust, as requested by the Certificateholder surrendering the same. No service charge will be made for any such registration of transfer or exchange, but the Trustee shall require payment of a sum sufficient to cover any tax or governmental charge payable in connection therewith. The Trustee, the Registrar, and any agent of the Trustee or the Registrar may treat the person in whose name this Certificate is registered as the owner hereof for all purposes, and neither the Trustee, the Registrar, nor any such agent shall be affected by any notice to the contrary. The obligations and responsibilities created by the Agreement and the Trust created thereby shall terminate upon the distribution to Certificateholders of all amounts required to be distributed to them pursuant to the Agreement and the disposition of all property held as part of the Trust Property. THE AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES. Unless the certificate of authentication hereon has been executed by the Trustee, by manual signature, this Certificate shall not be entitled to any benefit under the Agreement or be valid for any purpose. IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed. AMERICAN TRANS AIR, INC. By: WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Trustee By Title: Dated: [FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION] This is one of the Certificates referred to in the within-mentioned Agreement. WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Trustee By: Authorized Officer FORM OF TRANSFER NOTICE FOR VALUE RECEIVED the undersigned registered holder hereby sell(s), assign(s) and transfer(s) unto Insert Taxpayer Identification No. please print or typewrite name and address including zip code of assignee the within Certificate and all rights thereunder, hereby irrevocably constituting and appointing attorney to transfer said Certificate on the books of the Trustee with full power of substitution in the premises. [THE FOLLOWING PROVISION TO BE INCLUDED ON ALL CERTIFICATES EXCEPT PERMANENT OFFSHORE GLOBAL AND OFFSHORE PHYSICAL CERTIFICATES] In connection with any transfer of this Certificate occurring prior to the date that is the earlier of the date of an effective Registration Statement or December 27, 1999, the undersigned confirms that without utilizing any general solicitation or general advertising that: [Check One] [ ] (a) this Certificate is being transferred in compliance with the exemption from registration under the Securities Act of 1933, as amended, provided by Rule 144A thereunder. or [ ] (b) this Certificate is being transferred other than in accordance with (a) above and documents are being furnished that comply with the conditions of transfer set forth in this Certificate and the Agreement. If neither of the foregoing boxes is checked, the Trustee or other Registrar shall not be obligated to register this Certificate in the name of any Person other than the Holder hereof unless and until the conditions to any such transfer of registration set forth herein and in Section 3.06 of the Agreement shall have been satisfied. Date: [Name of Transferor] NOTE: The signature must correspond with the name as written upon the face of the within-mentioned instrument in every particular, without alteration or any change whatsoever. Signature Guarantee: TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED. The undersigned represents and warrants that it is purchasing this Certificate for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933, as amended, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Dated: NOTE: To be executed by an executive officer. EXHIBIT B FORM OF CERTIFICATE FOR UNLEGENDED CERTIFICATES [Date] Wilmington Trust Company, not in its individual capacity but solely as Trustee Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 Attention: Corporate Trust Trustee Administration Re: American Trans Air 1996-1B Pass Through Trust, Pass Through Trust Certificates (the "Certificates") Dear Sirs: This letter relates to U.S. $__________ Fractional Undivided Interest of Certificates represented by a Certificate (the "Legended Certificate") which bears a legend outlining restrictions upon transfer of such Legended Certificate. Pursuant to Section 3.06 of the Pass Through Trust Agreement relating to the Certificates dated as of December 16, 1996 (the "Trust Agreement"), between American Trans Air, Inc. ("ATA") and you, we hereby certify that we are (or we will hold such securities on behalf of) a person outside the United States to whom the Certificates could be transferred in accordance with Rule 904 of Regulation S promulgated under the U.S. Securities Act of 1933, as amended. Accordingly, you are hereby requested to exchange the legended certificate for an unlegended certificate representing an identical principal amount of Certificates, all in the manner provided for in the Trust Agreement. You and ATA are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Terms used in this certificate have the meanings set forth in Regulation S. Very truly yours, [Name of Certificateholder] By: Authorized Signature EXHIBIT C FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH TRANSFERS PURSUANT TO REGULATION S [date] Wilmington Trust Company, not in its individual capacity but solely as Trustee Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 Attention: Corporate Trust Trustee Administration Re: American Trans Air 1996-1B Pass Through Trust (the "Trust"), 7.64% American Trans Air Pass Through Certificates Series 1996-1B (the "Certificates") Sirs: In connection with our proposed sale of $_______ Fractional Undivided Interest of the Certificates, we confirm that such sale has been effected pursuant to and in accordance with Regulation S under the Securities Act of 1933, as amended, and, accordingly, we represent that: (1) the offer of the Certificates was not made to a person in the United States; (2) either (a) at the time the buy order was originated, the transferee was outside the United States or we and any person acting on our behalf reasonably believed that the transferee was outside the United States or (b) the transaction was executed in, on or through the facilities of a designated off-shore securities market and neither we nor any person acting on our behalf knows that the transaction has been pre-arranged with a buyer in the United States; (3) no directed selling efforts have been made in the United States in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S, as applicable; and (4) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act. In addition, if the sale is made during a restricted period and the provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are applicable thereto, we confirm that such sale has been made in accordance with the applicable provisions of Rule 903(c)(3) or Rule 904(c)(1), as the case may be. You and American Trans Air, Inc. are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Terms used in this certificate have the meanings set forth in Regulation S. Very truly yours, [Name of Transferor] By:_______________________ Authorized Signature EXHIBIT D FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH TRANSFERS TO NON-QIB ACCREDITED INVESTORS [date] Wilmington Trust Company, not in its individual capacity but solely as Trustee Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 Attention: Corporate Trust Trustee Administration Re: American Trans Air 1996-1B Pass-Through Trust (the "Trust"), 7.64% American Trans Air Pass Through Certificates Series 1996-1B (the "Certificates") Dear Sirs: In connection with our proposed purchase of $_______________ aggregate principal amount of the Certificates, we confirm that: 1. We understand that any subsequent transfer of the Certificates is subject to certain restrictions and conditions set forth in the Pass Through Trust Agreement dated as of December 16, 1996 relating to the Certificates (the "Pass Through Trust Agreement") and the undersigned agrees to be bound by, and not to resell, pledge or otherwise transfer the Certificates except in compliance with, such restrictions and conditions and the Securities Act of 1933, as amended (the "Securities Act"). 2. We are purchasing Certificates having an aggregate principal amount of not less than $100,000 and each account (if any) for which we are purchasing Certificates is purchasing Certificates having an aggregate principal amount of not less than $100,000. 3. We understand that the Certificates have not been registered under the Securities Act, and that the Certificates may not be offered or sold except as permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for which we are acting as hereinafter stated, that if we should sell any Certificate, we will do so only (A) in accordance with Rule 144A under the Securities Act to a "qualified institutional buyer" (as defined therein), (B) to an institutional "accredited investor" (as defined below) that, prior to such transfer, furnishes to you and American Trans Air, Inc., a signed letter substantially in the form of this letter, (C) outside the United States in accordance with Rule 904 of Regulation S under the Securities Act, (D) pursuant to the exemption from registration provided by Rule 144 under the Securities Act, or (E) pursuant to an effective registration statement under the Securities Act, and we further agree to provide to any person purchasing any of the Certificates from us a notice advising such purchaser that resales of the Notes are restricted as stated herein. We further understand that the Certificates purchased by us will bear a legend to the foregoing effect. 4. We understand that, on any proposed resale of any Certificates, we will be required to furnish to you and American Trans Air, Inc. such certifications, legal opinions and other information as you and American Trans Air, Inc. may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. We further understand that the Certificates purchased by us will bear a legend to the foregoing effect. 5. We are an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Certificates and we and any accounts for which we are acting are each able to bear the economic risk of our or its investment. 6. We are acquiring the Certificates purchased by us for our own account or for one or more accounts (each of which is an institutional "accredited investor") as to each of which we exercise sole investment discretion. You and American Trans Air, Inc. are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Very truly yours, [Name of Transferor] By: Authorized Signature AMTRAN, INC. AMERICAN TRANS AIR, INC. and WILMINGTON TRUST COMPANY as Trustee PASS THROUGH TRUST AGREEMENT Dated as of December 16, 1996 American Trans Air 1996-1B Pass Through Trust 7.64% American Trans Air 1996-1B Pass Through Certificates Page TABLE OF CONTENTS Page ARTICLE I DEFINITIONS Section 1.01. Definitions......................................................2 Section 1.02. Compliance Certificates and Opinions............................12 Section 1.03. Form of Documents Delivered to Trustee..........................13 Section 1.04. Acts of Certificateholders......................................13 ARTICLE II ORIGINAL ISSUANCE OF CERTIFICATES; ACQUISITION OF EQUIPMENT NOTES Section 2.01. [Intentionally omitted].........................................15 Section 2.02. Issuance of Certificates; Acquisition of Equipment Notes........15 Section 2.03. Acceptance by Trustee...........................................17 Section 2.04. Limitation of Powers............................................17 ARTICLE III THE CERTIFICATES Section 3.01. Title, Form, Denomination and Execution of Certificates.........17 Section 3.02. Restrictive Legends.............................................19 Section 3.03. Authentication of Certificates..................................21 Section 3.04. Transfer and Exchange...........................................21 Section 3.05. Book-Entry Provisions for U.S. Global Certificate and Offshore Global Certificates............................................22 Section 3.06. Special Transfer Provisions.....................................23 Section 3.07. Mutilated, Destroyed, Lost or Stolen Certificates...............26 Section 3.08. Persons Deemed Owners...........................................27 Section 3.09. Cancellation....................................................27 Section 3.10. Limitation of Liability for Payments............................27 Section 3.11. Temporary Certificates..........................................27 ARTICLE IV DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS Section 4.01. Certificate Account and Special Payments Account................28 Section 4.02. Distributions from Certificate Account and Special Payments Account.........................................................28 Section 4.03. Statements to Certificateholders................................30 Section 4.04. Investment of Special Payment Moneys............................31 ARTICLE V THE COMPANY Section 5.01. Maintenance of Corporate Existence..............................31 Section 5.02. Consolidation, Merger, Etc......................................31 ARTICLE VI DEFAULT Section 6.01. Events of Default...............................................33 Section 6.02. Incidents of Sale of Equipment Notes............................35 Section 6.03. Judicial Proceedings Instituted by Trustee; Trustee May Bring Suit............................................................35 Section 6.04. Control by Certificateholders.................................. 35 Section 6.05. Waiver of Past Defaults........................................ 36 Section 6.06. Right of Certificateholders to Receive Payments Not to Be Impaired........................................................36 Section 6.07. Certificateholders May Not Bring Suit Except Under Certain Conditions......................................................37 Section 6.08. Remedies Cumulative.............................................37 Section 6.09. Undertaking for Costs...........................................38 ARTICLE VII THE TRUSTEE Section 7.01. Notice of Defaults..............................................38 Section 7.02. Certain Rights of Trustee.......................................38 Section 7.03. Not Responsible for Recitals or Issuance of Certificates........40 Section 7.04. May Hold Certificates...........................................40 Section 7.05. Money Held in Trust.............................................40 Section 7.06. Compensation and Reimbursement..................................40 Section 7.07. Corporate Trustee Required; Eligibility.........................42 Section 7.08. Resignation and Removal: Appointment of Successor...............42 Section 7.09. Acceptance of Appointment by Successor..........................44 Section 7.10. Merger, Conversion, Consolidation or Succession to Business.....44 Section 7.11. Maintenance of Agencies.........................................45 Section 7.12. Money for Certificate Payments to Be Held in Trust..............46 Section 7.13. Registration of Equipment Notes in Name of Subordination Agent Agent...........................................................46 Section 7.14. Representations and Warranties of Trustee.......................47 Section 7.15. Withholding Taxes; Information Reporting........................48 Section 7.16. Trustee's Liens.................................................48 Section 7.17. Preferential Collection of Claims...............................48 ARTICLE VIII CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE Section 8.01. The Company to Furnish Trustee with Names and Addresses of Certificateholders..............................................48 Section 8.02. Preservation of Information; Communications to Certificateholders ................................................................49 Section 8.03. Reports by Trustee..............................................49 Section 8.04. Reports by the Guarantor and Company............................49 ARTICLE IX SUPPLEMENTAL AGREEMENTS Section 9.01. Supplemental Agreements Without Consent of Certificateholders...50 Section 9.02. Supplemental Agreements with Consent of Certificateholders......51 Section 9.03. Documents Affecting Immunity or Indemnity.......................52 Section 9.04. Execution of Supplemental Agreements............................52 Section 9.05. Effect of Supplemental Agreements...............................52 Section 9.06. Conformity with Trust Indenture Act.............................53 Section 9.07. Reference in Certificates to Supplemental Agreements............53 ARTICLE X AMENDMENTS TO INDENTURES AND NOTE DOCUMENTS Section 10.01. Amendments and Supplements to Indentures and Other Note ...... Documents......................................................53 ARTICLE XI TERMINATION OF TRUSTS Section 11.01. Termination of the Trust..................................54 ARTICLE XII MISCELLANEOUS PROVISIONS Section 12.01. Limitation on Rights of Certificateholders.....................55 Section 12.02. Liabilities of Certificateholders..............................55 Section 12.03. Certificates Nonassessable and Fully Paid......................55 Section 12.04. [Intentionally omitted]........................................55 Section 12.05. Notices........................................................55 Section 12.06. Governing Law..................................................57 Section 12.07. Severability of Provisions.....................................57 Section 12.08. [Intentionally omitted]........................................57 Section 12.09. Effect of Headings and Table of Contents.......................57 Section 12.10. Successors and Assigns.........................................57 Section 12.11. Benefits of Agreement..........................................57 Section 12.12. Legal Holidays.................................................57 Section 12.13. Counterparts...................................................58 Section 12.14. Communication by Certificateholders with Other Certificateholders.............................................58 Schedule 1 - Trust Indenture and Security Agreements Schedule 2 - Participation Agreements Exhibit A - Form of Certificate Exhibit B - Form of Certificate for Unlegended Certificates Exhibit C - Form of Certificate to be Delivered in connection with Transfer/Pursuant to Regulation S Exhibit D - Form of Certificate to be Delivered in Connection with Transfers to Non-QIB Accredited Investors 1 Not to be included on the face of the Permanent Offshore Global Certificate. 2 To be included on the face of each Global Certificate. EX-4.13 8 file008.txt AMTRAN, INC., 2000 10K, EXHIBIT 4.13 This PASS THROUGH TRUST AGREEMENT, dated as of December 16, 1996, among AMTRAN, INC., an Indiana corporation (the "Guarantor"), AMERICAN TRANS AIR, INC., an Indiana corporation (the "Company"), and WILMINGTON TRUST COMPANY, a Delaware banking corporation, as Trustee, is made with respect to the formation of the American Trans Air 1996-1C Pass Through Trust, and the issuance of 7.82% American Trans Air 1996-1C Pass Through Certificates representing fractional undivided interests in the Trust. WITNESSETH: WHEREAS, the Company, each Owner Trustee and the corresponding Owner Participant (as such terms and certain other capitalized terms used herein are defined below) are concurrently herewith entering into a separate leveraged lease transaction in connection with the sale and leaseback of one Boeing 757-23N aircraft (one such aircraft bearing manufacturer's Serial No. 27973 and U.S. Registration Mark N517AT and one such aircraft bearing manufacturer's Serial No. 27974 and U.S. Registration Mark N518AT) (collectively, the "Aircraft"); WHEREAS, each Owner Trustee, acting on behalf of the corresponding Owner Participant, will issue pursuant to an Indenture, on a non-recourse basis, three series of Equipment Notes, among other things, to provide the debt portion of the purchase price of the related aircraft; WHEREAS, the Trustee, upon execution and delivery of this Agreement, hereby declares the creation of this Trust (the "1996-1C Trust") for the benefit of the Certificateholders, and the initial Certificateholders, as the grantors of the 1996-1C Trust, by their respective acceptances of the Certificates, join in the creation of this 1996-1C Trust with the Trustee; WHEREAS, all Certificates to be issued by the Trust will evidence fractional undivided interests in the Trust and will convey no rights, benefits or interests in respect of any property other than the Trust Property; WHEREAS, all of the conditions and requirements necessary to make this Agreement, when duly executed and delivered, a valid, binding and legal instrument, enforceable in accordance with its terms and for the purposes herein expressed, have been done, performed and fulfilled, and the execution and delivery of this Agreement in the form and with the terms hereof have been in all respects duly authorized; and WHEREAS, to facilitate the sale of Equipment Notes to, and the purchase of Equipment Notes by, the Trustee on behalf of the 1996-1C Trust, (i) the Company as the "issuer", as such term is defined in and solely for purposes of the Securities Act of 1933, as amended, of the Certificates to be issued pursuant hereto, and as the "obligor", as such term is defined in and solely for purposes of the Trust Indenture Act of 1939, as amended, and (ii) the Guarantor have each duly authorized the execution and delivery of this Agreement with respect to all such Certificates and are undertaking to perform certain administrative and ministerial duties hereunder and are also undertaking to pay the fees and expenses of the Trustee; NOW, THEREFORE, in consideration of the mutual agreements herein contained, and of other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I ARTICLE I DEFINITIONS Section 1.01. DefinitionsSection 1.01. Definitions. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: (1) the terms used herein that are defined in this Article have the meanings assigned to them in this Article, and include the plural as well as the singular; (2) all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference herein, have the meanings assigned to them therein; (3) all references in this Agreement to designated "Articles", "Sections" and other subdivisions are to the designated Articles, Sections and other subdivisions of this Agreement; (4) the words "herein", "hereof' and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision; and (5) unless the context otherwise requires, whenever the words "including", "include" or "includes" are used herein, it shall be deemed to be followed by the phrase "without limitation". Act: With respect to any Certificateholder has the meaning specified in Section 1.04. --- Affiliate: With respect to any specified Person, means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such Person. For the purposes of this definition, "control", when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms "controlling" and "controlled" have meanings correlative to the foregoing. Agent Members: Has the meaning specified in Section 3.05(a). Aircraft: Has the meaning specified in the first recital to this Agreement. Authorized Agent: Means any Paying Agent or Registrar for the Certificates. Avoidable Tax: Has the meaning specified in Section 7.08(e) hereof. Book-Entry Certificates: With respect to the Certificates, means a beneficial interest in the Certificates, ownership and transfers of which shall be made through book entries as described in Section 3.04. Business Day: Means any day other than a Saturday, a Sunday or a day on which commercial banks are required or authorized to close in Indianapolis, Indiana; New York, New York; or Phoenix, Arizona; and, so long as any such Certificate is outstanding, a city and state in which the Trustee or any related Loan Trustee maintains its Corporate Trust Office or receives and disburses funds. Cedel: Means Cedel Bank societe anonyme. Certificate: Means any one of the certificates executed and authenticated by the Trustee, substantially in the form of Exhibit A hereto. Certificate Account: Means the account or accounts created and maintained pursuant to Section 4.01(a). Certificateholder or Holder: Means the Person in whose name a Certificate is registered in the Register. Clearing Agency: Means an organization registered as a "clearing agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as amended. Clearing Agency Participant: Means a broker, dealer, bank, other financial institution or other Person for whom from time to time a Clearing Agency effects, directly or indirectly, book-entry transfers and pledges of securities deposited with the Clearing Agency. Company: Means American Trans Air, Inc., an Indiana corporation, or its successor in interest pursuant to Section 5.02. Controlling Party: Means the Person entitled to act as such pursuant to the terms of the Intercreditor Agreement. Corporate Trust Office: With respect to the Trustee or any Loan Trustee, means the office of such trustee in the city at which at any particular time its corporate trust business shall be principally administered. Cut-off Date: Means March 27, 1997. Depositary: Means The Depository Trust Company, its nominees and their respective successors. Direction: Has the meaning specified in Section 1.04(c). Distribution Date: Means each Regular Distribution Date and each Special Distribution Date. Equipment Note: Means the "secured certificates" as defined in the Indentures. ERISA: Means the Employee Retirement Income Security Act of 1974, as amended from time to time, or any successor federal statute. Escrow Account: Has the meaning specified in Section 2.02(b). Escrowed Funds: Has the meaning specified in Section 2.02(b). Euroclear: Means the Euroclear System. Event of Default: Means the occurrence of an Indenture Default under any Indenture pursuant to which Equipment Notes held by the Trust were issued. Fractional Undivided Interest: Means the fractional undivided interest in the Trust that is evidenced by a Certificate. Global Certificates: Has the meaning assigned to such term in Section 3.01. Guarantor: Means Amtran, Inc., an Indiana corporation, or its successor in interest. Indenture: Means each of the two separate trust indenture and security agreements described in Schedule 1 to this Agreement, as each such agreement may be amended or supplemented in accordance with its respective terms; and Indentures means all of such agreements. Indenture Default: With respect to any Indenture, means any Event of Default (as such term is defined in such Indenture). Initial Purchasers: Means Morgan Stanley & Co. Incorporated and Salomon Brothers Inc. Initial Regular Distribution Date: Means the first Regular Distribution Date on which a Scheduled Payment is to be made. Institutional Accredited Investor: Means an institutional investor that is an "accredited investor" within the meaning set forth in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act. Intercreditor Agreement: Means the Intercreditor Agreement dated December 27, 1996 among the Trustee, the Other Trustees, the Liquidity Provider, the liquidity providers, if any, relating to the Certificates issued under (and as defined in) the Other Pass Through Trust Agreements, and Wilmington Trust Company, as Subordination Agent thereunder, as amended, supplemented or otherwise modified from time to time in accordance with its terms. Issuance Date: Means the date of the issuance of the Certificates. Lease: Means any lease between an Owner Trustee, as the lessor, and the Company, as the lessee, referred to in the related Indenture, as each such lease may be amended or supplemented in accordance with its respective terms; and Leases means all such leases. Letter of Representations: Means the agreement dated the Issuance Date among the Company, the Trustee and the initial Clearing Agency. Liquidity Facility: Means the Irrevocable Revolving Credit Agreement Class C Certificates dated December 27, 1996 relating to the Certificates between the Liquidity Provider and the Subordination Agent, as amended, replaced, supplemented or otherwise modified from time to time in accordance with its terms and the terms of the Intercreditor Agreement. Liquidity Provider: Means, initially, Kredietbank N.V., New York Branch, and any replacement or successor therefor appointed in accordance with the Liquidity Facility and the Intercreditor Agreement. Loan Trustee: With respect to any Equipment Note or the Indenture applicable thereto, means the bank or trust company designated as loan or indenture trustee under such Indenture; and any successor to such Loan Trustee as such trustee; and Loan Trustees means all of the Loan Trustees under the Indentures. Non-U.S. Person: Means a Person that is not a U.S. Person as defined in Regulation S. Note Documents: With respect to any Equipment Note, means the related Indenture, Lease and Participation Agreement. Officer's Certificate: Means a certificate signed (a) in the case of the Guarantor or the Company, by (i) the President or any Executive Vice President or Senior Vice President of the Guarantor or the Company, respectively, signing alone or (ii) any Vice President of the Guarantor or the Company signing together with the Secretary, the Assistant Secretary, the Treasurer or any Assistant Treasurer of the Guarantor or the Company, respectively, or (b) in the case of the Trustee or an Owner Trustee or a Loan Trustee, a Responsible Officer of the Trustee or such Owner Trustee or such Loan Trustee, as the case may be. Offshore Certificates Exchange Date: Has the meaning specified in Section 3.01. Offshore Global Certificates: Has the meaning assigned to such term in Section 3.01. Offshore Physical Certificates: Has the meaning assigned to such term in Section 3.01. Opinion of Counsel: Means a written opinion of legal counsel who (a) in the case of counsel for the Guarantor or the Company, may be (i) a senior attorney in rank of the officers of the Guarantor or the Company a principal duty of which is furnishing advice as to legal matters or (ii) such other counsel designated by the Guarantor or the Company and reasonably acceptable to the Trustee and (b) in the case of any Owner Trustee or any Loan Trustee, may be such counsel as may be designated by any of them whether or not such counsel is an employee of any of them, and who shall be reasonably acceptable to the Trustee. Other Pass Through Trust Agreement: Means (i) the American Trans Air 1996-1B Pass Through Trust Agreement relating to the American Trans Air 1996-1B Pass Through Trust and (ii) the American Trans Air 1996-1A Pass Through Trust Agreement relating to the American Trans Air 1996-1A Pass Through Trust, each dated the date hereof; and Other Pass Through Trust Agreements means both such agreements. Other Trustee: Means the trustee under each of the Other Pass Through Trust Agreements, and any successor or other trustee appointed as provided therein and Other Pass Through Trustees means both such trustees. Outstanding: With respect to Certificates, means, as of the date of determination, all Certificates theretofore authenticated and delivered under this Agreement, except: (i) Certificates theretofore canceled by the Registrar or delivered to the Trustee or the Registrar for cancellation; (ii) All of the Certificates if money in the full amount required to make the final distribution with respect thereto pursuant to Section 11.01 hereof has been theretofore deposited with the Trustee in trust for the Holders of such Certificates as provided in Section 4.01 pending distribution of such money to such Certificateholders pursuant to such final distribution payment; and (iii) Certificates in exchange for or in lieu of which other Certificates have been authenticated and delivered pursuant to this Agreement. Owner Participant: With respect to any Equipment Note, means the "Owner Participant" as referred to in the Indenture pursuant to which such Equipment Note is issued and any permitted successor or assign of such Owner Participant; and Owner Participants at any time of determination means all of the Owner Participants thus referred to in the Indentures. Owner Trustee: With respect to any Equipment Note, means the "Owner Trustee", as referred to in the Indenture pursuant to which such Equipment Note is issued, not in its individual capacity but solely as trustee; and Owner Trustees means all of the Owner Trustees party to any of the respective Indentures. Participation Agreement: Means each of the Participation Agreements, dated as of December 16, 1996, listed on Schedule 2 hereto, providing for, among other things, the purchase of Equipment Notes by the Trustee on behalf of the Trust, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms; and Participation Agreements means all such agreements. Paying Agent: Means the paying agent maintained and appointed for the Certificates pursuant to Section 7.11. Permanent Offshore Global Certificates: Has the meaning specified in Section 3.01. Permanent Offshore Physical Certificates: Has the meaning specified in Section 3.01. Permitted Investments: Means obligations of the United States of America or agencies or instrumentalities thereof for the payment of which the full faith and credit of the United States of America is pledged, maturing in not more than 60 days or such lesser time as is necessary for payment of any Special Payments on a Special Distribution Date. Person: Means any person, including any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization, or government or any agency or political subdivision thereof. Physical Certificates: Has the meaning specified in Section 3.01. Pool Balance: Means, as of any date, (i) the original aggregate face amount of the Certificates less (ii) the aggregate amount of all payments made in respect of such Certificates other than payments made in respect of interest or premium thereon or reimbursement of any costs or expenses incurred in connection therewith. The Pool Balance as of any Distribution Date shall be computed after giving effect to the payment of principal, if any, on the Equipment Notes or other Trust Property held in the Trust and the distribution thereof to be made on such Distribution Date. Pool Factor: Means, as of any date, the quotient (rounded to the seventh decimal place) computed by dividing (i) the Pool Balance as at such date by (ii) the original aggregate face amount of the Certificates. The Pool Factor as of any Distribution Date shall be computed after giving effect to the payment of principal, if any, on the Equipment Notes or other Trust Property and the distribution thereof to be made on such Distribution Date. Postponed Notes: Means the Equipment Notes to be held in such Trust as to which a Postponement Notice shall have been delivered pursuant to Section 2.02(b). Postponement Notice: Means an Officer's Certificate of the Company (1) requesting that the Trustee temporarily postpone purchase pursuant to a Note Purchase Agreement of certain of the Equipment Notes to a date later than the Issuance Date, (2) identifying the amount of the purchase price of each such Equipment Note and the aggregate purchase price for all such Equipment Notes, (3) setting forth the reasons for such postponement and (4) with respect to each such Equipment Note, either (a) setting or resetting a new Transfer Date (which shall be on or prior to the applicable Cut-off Date) for payment by the Trustee of such purchase price and issuance of the related Equipment Note, or (b) indicating that such new Transfer Date (which shall be on or prior to the applicable Cut-off Date) will be set by subsequent written notice not less than one Business Day prior to such new Transfer Date. Private Placement Legend: Has the meaning specified in Section 3.02. PTC Event of Default: Means any failure to pay within 10 Business Days of the due date thereof: (i) the outstanding Pool Balance on September 26, 2005 or (ii) interest due on the Certificates on any Distribution Date (unless the Subordination Agent shall have made an Interest Drawing (as defined in the Intercreditor Agreement) with respect thereto in an amount sufficient to pay such interest and shall have distributed such amount to the Certificateholders). QIB: Means a qualified institutional buyer as defined in Rule 144A. Record Date: Means (i) for Scheduled Payments to be distributed on any Regular Distribution Date, other than the final distribution, the 15th day (whether or not a Business Day) preceding such Regular Distribution Date, and (ii) for Special Payments to be distributed on any Special Distribution Date, other than the final distribution, the 15th day (whether or not a Business Day) preceding such Special Distribution Date. Register and Registrar: Mean the register maintained and the registrar appointed pursuant to Sections 3.04 and 7.11. Regular Distribution Date: With respect to distributions of Scheduled Payments in respect of the Certificates, means each date designated as such in this Agreement, until payment of all the Scheduled Payments to be made under the Equipment Notes held in the Trust has been made; provided, however, that, if any such day shall not be a Business Day, the related distribution shall be made on the next succeeding Business Day without additional interest. Request: Means a request by the Company setting forth the subject matter of the request accompanied by an Officer's Certificate and an Opinion of Counsel as provided in Section 1.02 of this Agreement. Responsible Officer: With respect to the Trustee, any Loan Trustee and any Owner Trustee, means any officer in the Corporate Trust Division of the Trustee, Loan Trustee or Owner Trustee or any other officer customarily performing functions similar to those performed by the persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of his knowledge of and familiarity with a particular subject. Rule 144A: Means Rule 144A under the Securities Act and any successor regulation thereto. Scheduled Payment: With respect to any Equipment Note, means any payment of principal and interest on such Equipment Note or any payment of interest on the Certificates with funds drawn under the Liquidity Facility (other than any such payment which is not in fact received by the Trustee or any Subordination Agent within five days of the date on which such payment is scheduled to be made) due from the obligor thereon which payment represents the installment of principal at the stated maturity of such instrument of principal on such Equipment Note, the payment of regularly scheduled interest accrued on the unpaid principal amount of such Equipment Note, or both; provided that any payment of principal, premium, if any, or interest resulting from the redemption or purchase of any Equipment Note shall not constitute a Scheduled Payment. SEC: Means the Securities and Exchange Commission as from time to time constituted or created under the Securities Exchange Act of 1934, or, if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date. Securities Act: Means the United States Securities Act of 1933, as amended from time to time, or any successor thereto. Special Distribution Date: Means each date on which a Special Payment is to be distributed as specified in this Agreement; provided, however, that, if any such day shall not be a Business Day, the related distribution shall be made on the next succeeding Business Day without additional interest. Special Payment: Means (i) any payment (other than a Scheduled Payment) in respect of, or any proceeds of, any Equipment Note or Trust Indenture Estate (as defined in each Indenture) or (ii) the amounts required to be distributed pursuant to the last paragraph of Section 2.02(b) or (iii) the amounts required to be distributed pursuant to the penultimate paragraph of Section 2.02(b). Special Payments Account: Means the account or accounts created and maintained pursuant to Section 4.01(b). Specified Investments: Means (i) obligations of, or guaranteed by, the United States Government or agencies thereof, (ii) open market commercial paper of any corporation incorporated under the laws of the United States of America or any State thereof rated at least P-2 or its equivalent by Moody's Investors Service, Inc. or at least A-2 or its equivalent by Standard & Poor's Rating Group, (iii) certificates of deposit issued by commercial banks organized under the laws of the United States or of any political subdivision thereof having a combined capital and surplus in excess of $500,000,000 which banks or their holding companies have a rating of A or its equivalent by Moody's Investors Service, Inc. or Standard & Poor's Rating Group; provided, however, that the aggregate amount at any one time so invested in certificates of deposit issued by any one bank shall not exceed 5% of such bank's capital and surplus, (iv) U.S. dollar denominated offshore certificates of deposit issued by, or offshore time deposits with, any commercial bank described in (iii) or any subsidiary thereof and (v) repurchase agreements with any financial institution having combined capital and surplus of at least $500,000,000 with any of the obligations described in clauses (i) through (iv) as collateral; provided further that if all of the above investments are unavailable, the entire amounts to be invested may be used to purchase Federal Funds from an entity described in clause (iii) above; and provided further that no investment shall be eligible as a "Specified Investment" unless the final maturity or date of return of such investment is on or before the Special Distribution Date next following the Cut-off Date, if any, for the Trust by more than 20 days. Subordination Agent: Shall have the meaning specified therefor in the Intercreditor Agreement. Temporary Offshore Global Certificates: Has the meaning specified in Section 3.01. Transfer Date: Has the meaning assigned to that term or the term "Delivery Date" in a Participation Agreement. Triggering Event: Shall have the meaning specified therefor in the Intercreditor Agreement. Trust: Means the trust created by this Agreement, the estate of which consists of Trust Property. Trust Indenture Act: Except as otherwise provided in Section 9.06, means the Trust Indenture Act of 1939 as in force at the date as of which this Agreement was executed. Trust Property: Means (i) the Equipment Notes held as the property of the Trust, all monies at any time paid thereon and all monies due and to become due thereunder, (ii) the rights of the Trust under any Intercreditor Agreement, including all monies receivable in respect of such rights, (iii) all monies receivable under the Liquidity Facility and (iv) funds from time to time deposited in the Escrow Account, the Certificate Account and the Special Payments Account and any proceeds from the sale by the Trustee pursuant to Article VI hereof of any such Equipment Note. Trustee: Means Wilmington Trust Company, or its successor in interest, and any successor trustee appointed as provided herein. U.S. Global Certificate: Has the meaning specified in Section 3.01. U.S. Physical Certificates: Has the meaning specified in Section 3.01. Section 1.02. Compliance Certificates and OpinionsSection 1.02. Compliance Certificates and Opinions. Upon any application or request by the Company, any Owner Trustee or any Loan Trustee to the Trustee to take any action under any provision of this Agreement, the Company, such Owner Trustee or such Loan Trustee, as the case may be, shall furnish to the Trustee an Officers' Certificate stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Agreement relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Agreement relating to such particular application or request, no additional certificate or opinion need be furnished. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Agreement (other than a certificate provided pursuant to Section 8.04(d)) shall include: (1) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions in this Agreement relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. Section 1.03. Form of Documents Delivered to TrusteeSection 1.03. Form of Documents Delivered to Trustee. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters and any such Person may certify or give an opinion as to such matters in one or several documents. Any Opinion of Counsel stated to be based on the opinion of other counsel shall be accompanied by a copy of such other opinion. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Agreement, they may, but need not, be consolidated and form one instrument. Section 1.04. Acts of CertificateholdersSection 1.04. Acts of Certificateholders. (a) Any direction, consent, waiver or other action provided by this Agreement to be given or taken by Certificateholders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Certificateholders in person or by an agent or proxy duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required pursuant to this Agreement, to the Company or any Loan Trustee. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Certificateholders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Agreement and conclusive in favor of the Trustee, the Company and any Loan Trustee, if made in the manner provided in this Section. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the certificate of any notary public or other officer of any jurisdiction authorized to take acknowledgments of deeds or administer oaths that the Person executing such instrument acknowledged to him the execution thereof, or by an affidavit of a witness to such execution sworn to before any such notary or such other officer and where such execution is by an officer of a corporation or association or a member of a partnership, on behalf of such corporation, association or partnership, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other reasonable manner which the Trustee deems sufficient. (c) In determining whether the Certificateholders of the requisite Fractional Undivided Interests of Certificates Outstanding have given any direction, consent or waiver (a "Direction"), under this Agreement, Certificates owned by the Company, the Guarantor, any Owner Trustee, any Owner Participant or any Affiliate of any such Person shall be disregarded and deemed not to be Outstanding for purposes of any such determination. In determining whether the Trustee shall be protected in relying upon any such Direction, only Certificates which the Trustee knows to be so owned shall be so disregarded. Notwithstanding the foregoing, (i) if any such Person owns 100% of the Certificates Outstanding, such Certificates shall not be so disregarded as aforesaid, and (ii) if any amount of Certificates so owned by any such Person have been pledged in good faith, such Certificates shall not be disregarded as aforesaid if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Certificates and that the pledgee is not the Company, the Guarantor, any Owner Trustee, any Owner Participant or any Affiliate of any such Person. (d) The Company may, at its option by delivery of an Officer's Certificate to the Trustee, set a record date to determine the Certificateholders entitled to give any consent, request, demand, authorization, direction, notice, waiver or other Act. Notwithstanding Section 316(c) of the Trust Indenture Act, such record date shall be the record date specified in such Officer's Certificate which shall be a date not more than 30 days prior to the first solicitation of Certificateholders in connection therewith. If such a record date is fixed, such consent request, demand, authorization, direction, notice, waiver or other Act may be given before or after such record date, but only the Certificateholders of record at the close of business on such record date shall be deemed to be Certificateholders for the purposes of determining whether Certificateholders of the requisite proportion of Outstanding Certificates have authorized or agreed or consented to such consent, request, demand, authorization, direction, notice, waiver or other Act, and for that purpose the Outstanding Certificates shall be computed as of such record date; provided that no such consent, request, demand, authorization, direction, notice, waiver or other Act by the Certificateholders on such record date shall be deemed effective unless it shall become effective pursuant to the provisions of this Agreement not later than one year after the record date. (e) Any direction, consent, waiver or other action by the Certificateholder of any Certificate shall bind the Certificateholder of every Certificate issued upon the transfer thereof or in exchange therefor or in lieu thereof, whether or not notation of such action is made upon such Certificate. (f) Except as otherwise provided in Section 1.04(c), Certificates owned by or pledged to any Person shall have an equal and proportionate benefit under the provisions of this Agreement, without preference, priority, or distinction as among all of the Certificates. ARTICLE II ARTICLE II ORIGINAL ISSUANCE OF CERTIFICATES; ACQUISITION OF EQUIPMENT NOTES Section 2.01. [Intentionally omitted].Section 2.01. [Intentionally omitted]. Section 2.02. Issuance of Certificates; Acquisition of Equipment NotesSection 2.02. Issuance of Certificates; Acquisition of Equipment Notes. (a) On or prior to the Issuance Date of the Certificates, the Trustee shall execute and deliver the Intercreditor Agreement and each of the Participation Agreements in the form delivered to the Trustee by the Company. Upon the oral or written request of the Company or the Company's counsel acting on behalf of the Company and the satisfaction of the closing conditions specified in each of the Participation Agreements, the Trustee shall, execute, deliver and authenticate Certificates equalling in the aggregate the aggregate principal amount of the Equipment Notes to be purchased by the Trustee pursuant to each of the Participation Agreements on the Transfer Date, and evidencing the entire ownership interest in the Trust. The Trustee shall issue and sell such Certificates, in authorized denominations and in such Fractional Undivided Interests, so as to result in the receipt of consideration in an amount equal to the aggregate purchase price of such Equipment Notes and, concurrently therewith, the Trustee shall purchase, pursuant to the terms and conditions of the Participation Agreements, the Equipment Notes at a purchase price equal to the amount of such consideration so received. Except as provided in Sections 3.03, 3.04 and 3.05 hereof, the Trustee shall not execute, authenticate or deliver Certificates in excess of the aggregate amount specified in this paragraph. The provisions of this Subsection 2.02(a) are subject to the provisions of Subsection 2.02(b) below. (b) If on or prior to the Issuance Date the Company shall deliver to the Trustee a Postponement Notice relating to one or more Postponed Notes, the Trustee shall postpone the purchase of such Postponed Notes and shall deposit into an escrow account (the "Escrow Account") to be maintained as a part of the Trust an amount equal to the purchase price of such Postponed Notes (the "Escrowed Funds"). The Escrowed Funds so deposited shall be invested by the Trustee at the written direction of the Company in Specified Investments (i) maturing no later than any scheduled Transfer Date relating to the Postponed Notes or (ii) if no such Transfer Date has been scheduled, maturing on the next Business Day, or (iii) if the Company has given notice to the Trustee that any Postponed Notes will not be issued, with respect to the portion of the Escrowed Funds relating to such Postponed Notes, maturing on the next applicable Special Distribution Date, if such investments are reasonably available for purchase. The Trustee shall make withdrawals from the Escrow Account only as provided in this Agreement. Upon request of the Company on one or more occasions and the satisfaction of the closing conditions specified in the applicable Participation Agreements on or prior to the related Cut-off Date, the Trustee shall purchase the applicable Postponed Notes with the Escrowed Funds withdrawn from the Escrow Account. The purchase price shall equal the principal amount of such Postponed Notes. The Trustee shall hold all Specified Investments until the maturity thereof and will not sell or otherwise transfer Specified Investments. If Specified Investments held in an Escrow Account mature prior to any applicable Transfer Date, any proceeds received on the maturity of such Specified Investments (other than any earnings thereon) shall be reinvested by the Trustee at the written direction of the Company in Specified Investments maturing as provided in the peceding paragraph. Any earnings on Specified Investments received from time to time by the Trustee shall be promptly distributed to the Company. The Company shall pay to the Trustee for deposit to the Escrow Account an amount equal to any losses on such Specified Investments as incurred. On the Initial Regular Distribution Date, the Company will pay (in immediately available funds) to the Trustee an amount equal to the interest that would have accrued on any Postponed Notes, if any, purchased after the Issuance Date if such Postponed Notes had been purchased on the Issuance Date, from the Issuance Date to, but not including, the date of the purchase of such Postponed Notes by the Trustee. If the Company notifies the Trustee prior to the Cut-off Date that any Postponed Notes will not be issued on or prior to the Cut-off Date for any reason, on the next Specal Distribution Date occurring more than 20 days following the date of such notice (i) the Company shall pay to the Trustee for deposit in the Special Payments Account, in immediately available funds, an amount equal to the interest that would have accrued on the Postponed Notes designated in such notice at a rate equal to the interest rate applicable to the Certificates from the Issuance Date to, but not including, such Special Distribution Date and (ii) the Trustee shall transfer an amount equal to that amount of Escrowed Funds that would have been used to purchase the Postponed Notes designated in such notice and the amount paid by the Company pursuant to the immediately preceding clause (i) to the related Special Payments Account for distribution as a Special Payment in accordance with the provisions hereof. Wilmington Trust Company, in its individual capacity, in the absence of negligence or willful misconduct by any representative thereof, will have no liability with respect to Escrowed Funds. If, on the Cut-off Date, an amount equal to less than all of the Escrowed Funds (other than Escrowed Funds referred to in the immediately preceding paragraph) has been used to purchase Postponed Notes, on the next Special Distribution Date occrring more than 20 days following the Cut-off Date (i) the Company shall pay to the Trustee for deposit in the Special Payments Account, in immediately available funds, an amount equal to the interest that would have accrued on such Postponed Notes contemplated to be purchased with such unused Escrowed Funds (other than Escrowed Funds referred to in the immediately preceding paragraph) but not so purchased at a rate equal to the interest rate applicable to the Certificates from the Issuance Date to, but not including, such Special Distribution Date and (ii) the Trustee shall transfer such unused Escrowed Funds and the amount paid by the Company pursuant to the immediately preceding clause (i) to such Special Payments Account for distribution as a Special Payment in accordance with the provisions hereof. Section 2.03. Acceptance by TrusteeSection 2.03. Acceptance by Trustee. The Trustee, upon the execution and delivery of this Agreement, acknowledges its acceptance of all right, title, and interest in and to the Equipment Notes acquired pursuant to Section 2.02 hereof and the Participation Agreements and declares that he Trustee holds and will hold such right, title, and interest, together with all other property constituting the Trust Property, for the benefit of all then present and future Certificateholders, upon the trusts herein set forth. By its payment for and acceptance of each Certificate issued to it under this Agreement, each initial Certificateholder as grantor of the Trust thereby joins in the creation and declaration of the Trust. Section 2.04. Limitation of PowersSection 2.04. Limitation of Powers. The Trust is constituted solely for the purpose of making the investment in the Equipment Notes, and, except as set forth herein, the Trustee shall not be authorized or empowered o acquire any other investments or engage in any other activities and, in particular, the Trustee shall not be authorized or empowered to do anything that would cause such Trust to fail to qualify as a "grantor trust" for federal income tax purposes (including as subject to this restrictions acquiring the Aircraft (as defined in the respective related Indentures) by bidding such Equipment Notes or otherwise, or taking any action with respect to any such Aircraft once acquired). ARTICLE III ARTICLE III THE CERTIFICATES Section 3.01. Title, Form, Denomination and Execution of CertificatesSection 3.01. Title, Form, Denomination and Execution of Certificates. (a) The Certificates shall be known as the "7.82% 1996-1C Pass Through Certificates" of the Trust. Each Certificate will represent a fractional undivided interest in the Trust and shall be substantially in the form set forth as Exhibit A hereto, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Agreement and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such Certificates, as evidenced by their execution of the Certificates. Any portion of the text of any Certificate may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Certificate. (b) The Certificates shall be issued only in fully registered form without coupons and only in denominations of $100,000 or integral multiples of $1,000 in excess thereof, except that one Certificate may be issued in a denomination of less than $100,000. Each Certificate shall be dated the date of its authentication. The aggregate Fractional Undivided Interest of Certificates shall not at any time exceed $41,258,000. (c) Certificates offered and sold in reliance on Rule 144A shall be issued initially in the form of a single permanent global Certificate in registered form, substantially in the form set forth as Exhibit A hereto (the "U.S. Global Certificate"), duly executed and authenticated by the Trustee as hereinafter provided. The U.S. Global Certificate will be registered in the name of a nominee for the Depositary and deposited with the Trustee, as custodian for the Depositary. The aggregate principal amount of the U.S. Global Certificate may from time to time be increased or decreased by adjustments made on the records of the Depositary or its nominee, or of the Trustee, as custodian for the Depositary or its nominee, as hereinafter provided. (d) Certificates offered and sold in offshore transactions in reliance on Regulation S shall be issued initially in the form of a single temporary global Certificate in registered form, substantially in the form set forth as Exhibit A hereto (the "Temporary Offshore Global Certificate") duly executed and authenticated by the Trustee as hereinafter provided. The Temporary Offshore Global Certificate will be registered in the name of a nominee of the Depositary for credit to the account of the Agent Members acting as depositaries for Euroclear and Cedel and deposited with the Trustee as custodian for the Depositary. At any time following February 5, 1997 (the "Offshore Certificates Exchange Date"), upon receipt by the Trustee of a certificate substantially in the form of Exhibit B hereto, a single permanent global Certificate in registered form substantially in the form set forth in Exhibit A (the "Permanent Offshore Global Certificate"; and together with the Temporary Offshore Global Certificate, the "Offshore Global Certificates"), duly executed and authenticated by the Trustee as hereinafter provided, shall be registered in the name of a nominee for the Depositary and deposited with the Trustee, as custodian for the Depositary, and the Registrar shall reflect on its books and records the date of such transfer and a decrease in the principal amount of any Temporary Offshore Global Certificate in an amount equal to the principal amount of the beneficial interest in such Temporary Offshore Global Certificate transferred. The U.S. Global Certificate and the Offshore Global Certificates are sometimes referred to as the "Global Certificates". (e) Certificates offered and sold to Institutional Accredited Investors shall be issued in the form of permanent certificated Certificates in registered form in substantially the form set forth as Exhibit A hereto (the "U.S. Physical Certificates"). Certificates issued pursuant to Section 3.05(b) in exchange for interests in any Offshore Global Certificate shall be in the form of permanent certificated Certificates in registered form substantially in the form set forth in Exhibit A (the "Offshore Physical Certificates"). The Offshore Physical Certificates and U.S. Physical Certificates are sometimes collectively herein referred to as the "Physical Certificates". (f) The definitive Certificates shall be in registered form and shall be typed, printed, lithographed or engraved or produced by any combination of these methods or may be produced in any other manner, all as determined by the officers executing such Certificates, as evidenced by their execution of such Certificates. Section 3.02. Restrictive LegendsSection 3.02. Restrictive Legends. (a) Subject to Section 3.06, each Global Certificate (other than the Permanent Offshore Global Certificate) and each U.S. Physical Certificate shall bear the following legend (the "Private Placement Legend") on the face thereof: THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS CERTIFICATE IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT, WITHIN THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY AMERICAN TRANS AIR, INC. ("ATA") OR AN AFFILIATE OF ATA, RESELL OR OTHERWISE TRANSFER THIS CERTIFICATE EXCEPT (A) TO ATA OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING $100,000 OR MORE AGGREGATE PRINCIPAL AMOUNT OF SUCH CERTIFICATES THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS CERTIFICATE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS CERTIFICATE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS CERTIFICATE WITHIN THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THE CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY ATA OR AN AFFILIATE OF ATA, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND ATA SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE PASS THROUGH TRUST AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS. (b) Each Global Certificate shall also bear the following legend on the face thereof: UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND 3.06 OF THE PASS THROUGH TRUST AGREEMENT REFERRED TO HEREIN. Section 3.03. Authentication of CertificatesSection 3.03. Authentication of Certificates. (a) The Trustee shall duly execute, authenticate and deliver Certificates in authorized denominations equalling in the aggregate the aggregate principal amount of the Equipment Notes to be purchased by the Trustee pursuant to the Participation Agreements and evidencing the entire ownership of the Trust. (b) No Certificate shall be entitled to any benefit under this Agreement or be valid or obligatory for any purpose, unless there appears on such Certificate a certificate of authentication substantially in the form provided for herein executed by the Trustee by the manual signature of one of its authorized signatories, and such certificate upon any Certificate shall be conclusive evidence, and the only evidence, that such Certificate has been duly authenticated and delivered hereunder. Section 3.04. Transfer and ExchangeSection 3.04. Transfer and Exchange. (a) The Trustee shall cause to be kept at the office or agency to be maintained by it in accordance with the provisions of Section 7.11 of this Agreement a register (the "Register") for the Certificates in which, subject to such reasonable regulations as it may prescribe, the Trustee shall provide for the registration of the Certificates and of transfers and exchanges of the Certificates as herein provided. The Trustee shall initially be the registrar (the "Registrar") for the purpose of registering the Certificates and transfers and exchanges of the Certificates as herein provided. A Certificateholder may transfer a Certificate by written application to the Registrar stating the name of the proposed transferee and otherwise complying with the terms of this Agreement, including providing a written certificate or other evidence of compliance with any restrictions on transfer. No such transfer shall be effected until, and such transferee shall succeed to the rights of a Certificateholder only upon, final acceptance and registration of the transfer by the Registrar in the Register. Prior to the registration of any transfer by a Certificateholder as provided herein, the Trustee shall treat the person in whose name the Certificate is registered as the owner thereof for all purposes, and the Trustee shall not be affected by notice to the contrary. Furthermore, the Depositary shall, by acceptance of a Global Certificate, agree that transfers of beneficial interests in such Global Certificate may be effected only through a book-entry system maintained by the Depositary (or its agent), and that ownership of a beneficial interest in the Certificate shall be required to be reflected in a book entry. When Certificates are presented to the Registrar with a request to register the transfer or to exchange them for an equal face amount of Certificates of other authorized denominations, the Registrar shall register the transfer or make the exchange as requested if its requirements for such transactions are met. To permit registrations of transfers and exchanges in accordance with the terms, conditions and restrictions hereof, the Trustee shall execute and authenticate Certificates at the Registrar's request. No service charge shall be made for any registration of transfer or exchange of the Certificates, but the Trustee may require payment by the transferor of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or other similar governmental charges payable upon exchanges pursuant to Section 3.11 or 9.07). Section 3.05. Book-Entry Provisions for U.S. Global Certificate and Offshore Global CertificatesSection 3.05. Book-Entry Provisions for U.S. Global Certificate and Offshore Global Certificates. (a) Members of, or participants in, the Depositary ("Agent Members") shall have no rights under this Agreement with respect to any Global Certificate held on their behalf by the Depositary, or the Trustee as its custodian, and the Depositary may be treated by the Trustee and any agent of the Trustee as the absolute owner of such Global Certificate for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Trustee or any agent of the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or shall impair, as between the Depositary and its Agent Members, the operation of customary practices governing the exercise of the rights of a holder of any Certificate. Upon the issuance of any Global Certificate, the Registrar or its duly appointed agent shall record a nominee of the Depositary as the registered holder of such Global Certificate. (b) Transfers of any Global Certificate shall be limited to transfers of such Global Certificate in whole, but not in part, to nominees of the Depositary, its successor or such successor's nominees. Beneficial interests in the U.S. Global Certificate and any Offshore Global Certificate may be transferred in accordance with the rules and procedures of the Depositary and the provisions of Section 3.06. Beneficial interests in the U.S. Global Certificate or an Offshore Global Certificate shall be delivered to all beneficial owners in the form of U.S. Physical Certificates or Offshore Physical Certificates, as the case may be, if (i) the Company notifies the Trustee in writing that the Depositary is unwilling or unable to discharge properly its responsibilities as Depositary for the U.S. Global Certificate or such Offshore Global Certificate, as the case may be, and the Company is unable to locate a qualified successor depositary within 90 days of such notice or (ii) after the occurrence of an Event of Default, beneficial owners of the U.S. Global Certificate or Offshore Global Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust, by Act of such Certificateholders delivered to the Company and the Trustee, advise the Company, the Trustee and the Depositary through its Clearing Agency Participants in writing that the continuation of a book-entry system through the Depositary is no longer in the best interests of the Certificateholders, then the Trustee shall notify all owners of beneficial interests in the U.S. Global Certificate or an Offshore Global Certificate, through the Depositary, of the occurrence of any such event and the availability of definitive Certificates. (c) Any beneficial interest in one of the Global Certificates that is transferred to a Person who takes delivery in the form of an interest in the other Global Certificate will, upon such transfer, cease to be an interest in such Global Certificate and become an interest in the other Global Certificate and, accordingly, will thereafter be subject to all transfer restrictions, if any, and other procedures applicable to beneficial interests in such other Global Certificate for as long as it remains such an interest. (d) [Intentionally omitted]. (e) In connection with the transfer of the entire U.S. Global Certificate or an entire Offshore Global Certificate to the beneficial owners thereof pursuant to paragraph (b) of this Section 3.05, such U.S. Global Certificate or Offshore Global Certificate, as the case may be, shall be deemed to be surrendered to the Trustee for cancellation, and the Trustee shall execute, authenticate and deliver, to each beneficial owner identified by the Depositary in exchange for its beneficial interest in such U.S. Global Certificate or Offshore Global Certificate, as the case may be, an equal aggregate principal amount of U.S. Physical Certificates or Offshore Physical Certificates, as the case may be, of authorized denominations. (f) Any U.S. Physical Certificate delivered in exchange for an interest in the U.S. Global Certificate pursuant to paragraph (b) of this Section 3.05 shall, except as otherwise provided by paragraph (f) of Section 3.06, bear the Private Placement Legend. (g) Any Offshore Physical Certificate delivered in exchange for an interest in an Offshore Global Certificate pursuant to paragraph (b) of this Section shall, except as otherwise provided by paragraph (f) of Section 3.06, bear the applicable legend regarding transfer restrictions set forth in Section 3.02(a). (h) The registered holder of the U.S. Global Certificate or any Offshore Global Certificate may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Agreement or the Certificates. Section 3.06. Special Transfer ProvisionsSection 3.06. Special Transfer Provisions. The following provisions shall apply to the Certificates: (a) Transfers to Non-QIB Institutional Accredited Investors. The following provisions shall apply with respect to the registration of any proposed transfer of a Certificate to any Institutional Accredited Investor which is not a QIB (excluding transfers to or by Non-U.S. Persons): (i) The Registrar shall register the transfer of any Certificate, whether or not such Certificate bears the Private Placement Legend, if (x) the requested transfer is at least three years after the later of the original issue date of the Certificates and the last date on which such Certificate was held by the Company or any affiliate thereof or (y) the proposed transferee has delivered to the Registrar a letter substantially in the form of Exhibit D hereto and the aggregate principal amount of the Certificates being transferred is at least $100,000. (ii) If the proposed transferor is an Agent Member holding a beneficial interest in the U.S. Global Certificate, upon receipt by the Registrar of (x) the documents, if any, required by paragraph (i) and (y) instructions given in accordance with the Depositary's and the Registrar's procedures, the Registrar shall reflect on its books and records the date of the transfer and a decrease in the principal amount of such U.S. Global Certificate in an amount equal to the principal amount of the beneficial interest in such U.S. Global Certificate to be transferred, and the Company shall execute, and the Trustee shall authenticate and deliver to the transferor or at its direction, one or more U.S. Physical Certificates of like tenor and amount. (b) Transfers to QIBs. The following provisions shall apply with respect to the registration of any proposed transfer of a Certificate to a QIB (excluding Non-U.S. Persons): (i) If the Certificate to be transferred consists of U.S. Physical Certificates or an interest in any Temporary Offshore Global Certificate, the Registrar shall register the transfer if such transfer is being made by a proposed transferor who has checked the box provided for on the form of Certificate stating, or has otherwise advised the Trustee and the Registrar in writing, that the sale has been made in compliance with the provisions of Rule 144A to a transferee who has signed the certification provided for on the form of Certificate stating, or has otherwise advised the Trustee and the Registrar in writing, that it is purchasing the Certificate for its own account or an account with respect to which it exercises sole investment discretion and that it, or the Person on whose behalf it is acting with respect to any such account, is a QIB within the meaning of Rule 144A, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Trust and/or the Company as it has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon its foregoing representations in order to claim the exemption from registration provided by Rule 144A. (ii) Upon receipt by the Registrar of the documents referred to in clause (i) above and instructions given in accordance with the Depositary's and the Registrar's procedures therefor, the Registrar shall reflect on its books and records the date of such transfer and an increase in the principal amount of the U.S. Global Certificate in an amount equal to the principal amount of the U.S. Physical Certificates or interests in the Temporary Offshore Global Certificate, as the case may be, being transferred, and the Trustee shall cancel such Physical Certificates or decrease the amount of such Temporary Offshore Global Certificate so transferred. (c) [Intentionally omitted]. (d) Transfers of Interests in the Permanent Offshore Global Certificate or Offshore Physical Certificates. The Registrar shall register any transfer of interests in the Permanent Offshore Global Certificate or Offshore Physical Certificates without requiring any additional certification. (e) Transfers to Non-U.S. Persons at Any Time. The following provisions shall apply with respect to any registration of any transfer of a Certificate to a Non-U.S. Person: (i) Prior to the Offshore Certificates Exchange Date, the Registrar shall register any proposed transfer of a Certificate to a Non-U.S. Person upon receipt of a certificate substantially in the form set forth as Exhibit C hereto from the proposed transferor. (ii) On and after the Offshore Certificates Exchange Date, the Registrar shall register any proposed transfer to any Non-U.S. Person if the Certificate to be transferred is a U.S. Physical Certificate or an interest in the U.S. Global Certificate, upon receipt of a certificate substantially in the form of Exhibit C from the proposed transferor. The Registrar shall promptly send a copy of such certificate to the Company. (iii) Upon receipt by the Registrar of (x) the documents, if any, required by paragraph (ii) and (y) instructions in accordance with the Depositary's and the Registrar's procedures, the Registrar shall reflect on its books and records the date of such transfer and a decrease in the principal amount of such U.S. Global Certificate in an amount equal to the principal amount of the beneficial interest in such U.S. Global Certificate to be transferred, and (B) upon receipt by the Registrar of instructions given in accordance with the Depositary's and the Registrar's procedures, the Registrar shall reflect on its books and records the date and an increase in the principal amount of the Offshore Global Certificate in an amount equal to the principal amount of the U.S. Physical Certificate or the U.S. Global Certificate, as the case may be, to be transferred, and the Trustee shall cancel the Physical Certificate, if any, so transferred or decrease the amount of such U.S. Global Certificate. (f) Private Placement Legend. Upon the transfer, exchange or replacement of Certificates not bearing the Private Placement Legend, the Registrar shall deliver Certificates that do not bear the Private Placement Legend. Upon the transfer, exchange or replacement of Certificates bearing the Private Placement Legend, the Registrar shall deliver only Certificates that bear the Private Placement Legend unless either (i) the circumstances contemplated by paragraph (a)(i)(x) or (e)(ii) of this Section 3.06 exist or (ii) there is delivered to the Registrar an Opinion of Counsel to the effect that neither such legend nor the related restrictions on transfer are required in order to maintain compliance with the provisions of the Securities Act. (g) General. By its acceptance of any Certificate bearing the Private Placement Legend, each Holder of such a Certificate acknowledges the restrictions on transfer of such Certificate set forth in this Agreement and agrees that it will transfer such Certificate only as provided in this Agreement. The Registrar shall not register a transfer of any Certificate unless such transfer complies with the restrictions on transfer of such Certificate set forth in this Agreement. In connection with any transfer of Certificates, each Certificateholder agrees by its acceptance of the Certificates to furnish the Registrar or the Trustee such certifications, legal opinions or other information as either of them may reasonably require to confirm that such transfer is being made pursuant to an exemption from, or a transaction not subject to, the registration requirements of the Securities Act; provided that the Registrar shall not be required to determine the sufficiency of any such certifications, legal opinions or other information. Until such time as no Certificates remain Outstanding, the Registrar shall retain copies of all letters, notices and other written communications received pursuant to Section 3.05 or this Section 3.06. The Trustee, if not the Registrar at such time, shall have the right to inspect and make copies of all such letters, notices or other written communications at any reasonable time upon the giving of reasonable written notice to the Registrar. Section 3.07. Mutilated, Destroyed, Lost or Stolen CertificatesSection 3.07. Mutilated, Destroyed, Lost or Stolen Certificates. If (a) any mutilated Certificate is surrendered to the Registrar, or the Registrar receives evidence to its satisfaction of the destruction, loss or theft of any Certificate, and (b) there is delivered to the Registrar and the Trustee such security, indemnity or bond, as may be required by them to save each of them harmless, then, in the absence of notice to the Registrar or the Trustee that such Certificate has been acquired by a bona fide purchaser, the Trustee shall execute, authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate or Certificates, in authorized denominations and of like Fractional Undivided Interest. In connection with the issuance of any new Certificate under this Section 3.07, the Trustee shall require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee and the Registrar) connected therewith. Any duplicate Certificate issued pursuant to this Section 3.07 shall constitute conclusive evidence of the appropriate Fractional Undivided Interest in the related Trust, as if originally issued, whether or not the lost stolen or destroyed Certificate shall be found at any time. Section 3.08. Persons Deemed OwnersSection 3.08. Persons Deemed Owners. Prior to due presentation of a Certificate for registration of transfer, the Trustee, the Registrar, and any Paying Agent of the Trustee may treat the person in whose name any Certificate is registered as the owner of such Certificate for the purpose of receiving distributions pursuant to Section 4.02 and for all other purposes whatsoever, and neither the Trustee, the Registrar, nor any Paying Agent of the Trustee shall be affected by any notice to the contrary. Section 3.09. CancellationSection 3.09. Cancellation. All Certificates surrendered for payment or transfer or exchange shall, if surrendered to any Person party hereto other than the Registrar, be delivered to the Registrar for cancellation. No Certificates shall be authenticated in lieu of or in exchange for any Certificates cancelled as provided in this Section, except as expressly permitted by this Agreement. All cancelled Certificates held by the Registrar shall be destroyed and a certification of their destruction delivered to the Trustee. Section 3.10. Limitation of Liability for PaymentsSection 3.10. Limitation of Liability for Payments. All payments or distributions made to Certificateholders shall be made only from the Trust Property and only to the extent that the Trustee shall have sufficient income or proceeds from the Trust Property to make such payments in accordance with the terms of Article IV of this Agreement. Each Certificateholder, by its acceptance of a Certificate, agrees that it will look solely to the income and proceeds from the Trust Property to the extent available for distribution to such Certificateholder as provided in this Agreement. Section 3.11. Temporary CertificatesSection 3.11.Temporary Certificates. Until definitive Certificates are ready for delivery, the Trustee shall authenticate temporary Certificates. Temporary Certificates shall be substantially in the form of definitive Certificates but may have insertions, substitutions, omissions and other variations determined to be appropriate by the officers executing the temporary Certificates, as evidenced by their execution of such temporary Certificates. If temporary Certificates are issued, the Trustee will cause definitive Certificates to be prepared without unreasonable delay. After the preparation of definitive Certificates, the temporary Certificates shall be exchangeable for definitive Certificates upon surrender of the temporary Certificates at the office or agency of the Trustee designated for such purpose pursuant to Section 7.11, without charge to the Certificateholder. Upon surrender for cancellation of any one or more temporary Certificates, the Trustee shall execute, authenticate and deliver in exchange therefor a like face amount of definitive Certificates of authorized denominations. Until so exchanged, the temporary Certificates shall be entitled to the same benefits under this Agreement as definitive Certificates. ARTICLE IV ARTICLE IV DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS Section 4.01. Certificate Account and Special Payments AccountSection 4.01.Certificate Account and Special Payments Account. (a) The Trustee shall establish and maintain on behalf of the Certificateholders a Certificate Account as one or more non-interest-bearing accounts. The Trustee shall hold the Certificate Account in trust for the benefit of the Certificateholders, and shall make or permit withdrawals therefrom only as provided in this Agreement. On each day when a Scheduled Payment is made to the Trustee, the Trustee, upon receipt thereof, shall immediately deposit the aggregate amount of such Scheduled Payment into the Certificate Account. (b) The Trustee shall establish and maintain on behalf of the Certificateholders a Special Payments Account as one or more accounts, which shall be non-interest bearing except as provided in Section 4.04. The Trustee shall hold the Special Payments Account in trust for the benefit of the Certificateholders, and shall make or permit withdrawals therefrom only as provided in this Agreement. On each day when one or more Special Payments are made to the Trustee, the Trustee, upon receipt thereof, shall immediately deposit the aggregate amount of such Special Payments into the Special Payments Account. (c) The Trustee shall present to the Loan Trustee to which an Equipment Note relates such Equipment Note on the date of its stated final maturity or, in the case of any Equipment Note which is to be redeemed in whole pursuant to the relevant Indenture, on the applicable redemption date under such Indenture. Section 4.02. Distributions from Certificate Account and Special Payments AccountSection 4.02. Distributions from Certificate Account and Special Payments Account. (a) On each Regular Distribution Date or as soon thereafter as the Trustee has confirmed receipt of the payment of the Scheduled Payments due on such date, the Trustee shall distribute out of the Certificate Account the entire amount deposited therein pursuant to Section 4.01(a). There shall be so distributed to each Certificateholder of record on the Record Date with respect to such Regular Distribution Date (other than as provided in Section 11.01 concerning the final distribution), by check mailed to such Certificateholder at the address appearing in the Register, such Certificateholder's pro rata share (based on the aggregate Fractional Undivided Interest in the Trust held by such Certificateholder) of the aggregate amount in the Certificate Account, except that, with respect to Certificates registered on the Record Date in the name of the nominee of the Depositary (initially, such nominee to be Cede & Co.), such distribution shall be made by wire transfer in immediately available funds to the account designated by such nominee. (b) On each Special Distribution Date with respect to any Special Payment or as soon thereafter as the Trustee has confirmed receipt of any Special Payments due on the Equipment Notes or realized upon the sale of such Equipment Note, the Trustee shall distribute out of the Special Payments Account the entire amount deposited therein pursuant to Section 4.01(b) of such Special Payment. There shall be so distributed to each Certificateholder of record on the Record Date with respect to such Special Distribution Date (other than as provided in Section 11.01 concerning the final distribution), by check mailed to such Certificateholder at the address appearing in the Register, such Certificateholder's pro rata share (based on the aggregate Fractional Undivided Interest in the Trust held by such Certificateholder) of the aggregate amount in the Special Payments Account on account of such Special Payment, except that, with respect to Certificates registered on the Record Date in the name of the nominee of the Depositary (initially, such nominee to be Cede & Co.), such distribution shall be made by wire transfer in immediately available funds to the account designated by such nominee. (c) The Trustee shall, at the expense of the Company, cause notice of each Special Payment to be mailed to each Certificateholder at his address as it appears in the Register. In the event of redemption or purchase of Equipment Notes held in the Trust, such notice shall be mailed not less than 20 days prior to the date any such Special Payment is scheduled to be distributed. In the case of any other Special Payments, such notice shall be mailed as soon as practicable after the Trustee has confirmed that it has received funds for such Special Payment, stating the Special Distribution Date for such Special Payment which shall occur not less than 20 days after the date of such notice and as soon as practicable thereafter. Notices mailed by the Trustee shall set forth: (i) the Special Distribution Date and the Record Date therefor (except as otherwise provided in Section 11.01), (ii) the amount of the Special Payment for each $1,000 face amount Certificate (taking into account any payment to be made by the Company pursuant to Section 2.02(b)) and the amount thereof constituting principal, premium, if any, and interest, (iii) the reason for the Special Payment, and (iv) if the Special Distribution Date is the same date as a Regular Distribution Date for the Certificates, the total amount to be received on such date for each $1,000 face amount Certificate. If the amount of premium, if any, payable upon the redemption or purchase of an Equipment Note has not been calculated at the time that the Trustee mails notice of a Special Payment, it shall be sufficient if the notice sets forth the other amounts to be distributed and states that any premium received will also be distributed. If any redemption of the Equipment Notes held in the Trust is cancelled, the Trustee, as soon as possible after learning thereof, shall cause notice thereof to be mailed to each Certificateholder at its address as it appears on the Register. Section 4.03. Statements to CertificateholdersSection 4.03. Statements to Certificateholders. (a) On each Regular Distribution Date and Special Distribution Date, the Trustee will include with each distribution to Certificateholders a statement, giving effect to such distribution to be made on such Regular Distribution Date or Special Distribution Date, as the case may be, setting forth the following information (per a $1,000 face amount Certificate as to (i) and (ii) below): (i) the amount of such distribution allocable to principal and the amount allocable to premium, if any; (ii) the amount of such distribution allocable to interest; and (iii) the Pool Balance and the Pool Factor. With respect to the Certificates registered in the name of a Clearing Agency or its nominee, on the record date prior to each Distribution Date, the Trustee will request from the Clearing Agency a securities position listing setting forth the names of all the Clearing Agency Participants reflected on the Clearing Agency's books as holding interests in the Certificates on such record date. On each Distribution Date, the Trustee will mail to each such Clearing Agency Participant the statement described above and will make available additional copies as requested by such Clearing Agency Participant for forwarding to holders of Certificates. (b) Within a reasonable period of time after the end of each calendar year but not later than the latest date permitted by law, the Trustee shall furnish to each Person who at any time during such calendar year was a Certificateholder of record a statement containing the sum of the amounts determined pursuant to clauses (a)(i) and (a)(ii) with respect to the Trust for such calendar year or, in the event such Person was a Certificateholder of record during a portion of such calendar year, for the applicable portion of such year, and such other items as are readily available to the Trustee and which a Certificateholder shall reasonably request as necessary for the purpose of such Certificateholder's preparation of its federal income tax returns. With respect to Certificates registered in the name of a Clearing Agency or its nominee, such report and such other items shall be prepared on the basis of information supplied to the Trustee by the Clearing Agency Participants and shall be delivered by the Trustee to such Clearing Agency Participants to be available for forwarding by such Clearing Agency Participants. Section 4.04. Investment of Special Payment MoneysSection 4.04. Investment of Special Payment Moneys. Any money received by the Trustee pursuant to Section 4.01(b) representing a Special Payment which is not to be promptly distributed shall, to the extent practicable, be invested in Permitted Investments by the Trustee as directed in writing by the Company pending distribution of such Special Payment pursuant to Section 4.02. Any investment made pursuant to this Section 4.04 shall be in such Permitted Investments having maturities not later than the date that such moneys are required to be used to make the payment required under Section 4.02 on the applicable Special Distribution Date and the Trustee shall hold any such Permitted Investments until maturity. The Trustee shall have no liability with respect to any investment made pursuant to this Section 4.04, other than by reason of the willful misconduct or negligence of the Trustee. All income and earnings from such investments shall be distributed on such Special Distribution Date as part of such Special Payment. ARTICLE V ARTICLE V THE COMPANY Section 5.01. Maintenance of Corporate ExistenceSection 5.01. Maintenance of Corporate Existence. The Company, at its own cost and expense, will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence, rights and franchises, except as otherwise specifically permitted in Section 5.02; provided, however, that the Company shall not be required to preserve any right or franchise if the Company shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company. Section 5.02. Consolidation, Merger, EtcSection 5.02. Consolidation, Merger, Etc. The Company shall not consolidate with or merge into any other corporation or convey, transfer or lease substantially all of its assets as an entirety to any Person unless: (a) the corporation formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance, transfer or lease substantially all of the assets of the Company as an entirety shall be organized and validly existing under the laws of the United States of America or any state thereof or the District of Columbia and a "citizen of the United States" (as defined in Section 40102(a)(15) of Title 49 of the United States Code) holding an air carrier operating certificate issued by the Federal Aviation Administration, or any successor agency thereto (the "FAA"), pursuant to Chapter 447 of Title 49, United States Code, authorizing the operation in air transportation of aircraft capable of carrying 10 or more individuals or 6,000 pounds or more of cargo pursuant to Part 121 of the FAA's regulations (14 CFR Part 121); (b) the corporation formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance, transfer or lease substantially all of the assets of the Company as an entirety shall execute and deliver to the Trustee a duly authorized, valid, binding and enforceable agreement in form and substance reasonably satisfactory to the Trustee containing an assumption by such successor corporation or Person of the due and punctual performance and observance of each covenant and condition of the Note Documents and of this Agreement to be performed or observed by the Company; (c) immediately after giving effect to such transaction, no Event of Default applicable to the Certificates or event which is, or after notice or passage of time, or both, would be, such an Event of Default shall have occurred and be continuing; and (d) the Company shall have delivered to the Trustee an Officers' Certificate of the Company and an Opinion of Counsel of the Company (which may be the Company's General Counsel) reasonably satisfactory to the Trustee, each stating that such consolidation, merger, conveyance, transfer or lease and the assumption agreement mentioned in clause (b) above comply with this Section 5.02 and that all conditions precedent herein provided for relating to such transaction have been complied with. Upon any consolidation or merger, or any conveyance, transfer or lease of substantially all of the assets of the Company as an entirety in accordance with this Section 5.02, the successor corporation or Person formed by such consolidation or into which the Company is merged or to which such conveyance, offer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Agreement with the same effect as if such successor corporation or Person had been named as the Company herein. No such conveyance, transfer or lease of substantially all of the assets of the Company as an entirety shall have the effect of releasing the Company or any successor corporation or Person which shall theretofore have become such in the manner prescribed in this Section 5.02 from its liability in respect of this Agreement or any Note Document to which it is a party. ARTICLE VI ARTICLE VI DEFAULT Section 6.01. Events of DefaultSection 6.01. Events of Default. (a) Exercise of Remedies: Upon the occurrence and during the continuation of any Indenture Default under any Indenture, the Trustee may, to the extent it is the Controlling Party at such time, direct the exercise of remedies as provided in the Intercreditor Agreement. (b) Purchase Rights of Certificateholders: At any time after the occurrence and during the continuation of a Triggering Event each Certificateholder shall have the right (which shall not expire upon any purchase of the Class A Certificates pursuant to Section 6.01(b)(i) of the Class B Trust Agreement) to purchase all, but not less than all, of the Class A Certificates and the Class B Certificates by notifying in writing each of the Other Trustees and each other Certificateholder of such Certificateholder's intention to purchase the Class A Certificates and the Class B Certificates ten days after the date of such notification, provided that (A) if prior to the end of such ten-day period any other Certificateholder notifies such purchasing Certificateholder that such other Certificateholder wants to participate in such purchase, then such other Certificateholder may join with the purchasing Certificateholder to purchase all, but not less than all, of the Class A Certificates and the Class B Certificates pro rata based on the Fractional Undivided Interest in the Trust held by each such Certificateholder and (B) if prior to the end of such ten-day period any other Certificateholder fails to notify the purchasing Certificateholder of such other Certificateholder's desire to participate in such a purchase, then such other Certificateholder shall lose its right to purchase the Class A Certificates and the Class B Certificates pursuant to this Section 6.01(b). The purchase price with respect to each Class of Certificates shall be equal to the Pool Balance of such Class of Certificates, together with accrued and unpaid interest thereon to the date of such purchase, without premium, but including any other amounts then due and payable to the Certificateholders of such Class under the Other Pass Through Trust Agreement for such Class, the Intercreditor Agreement or any other Note Document or on or in respect of the Certificates of such Class; provided, however, that no such purchase of Certificates of any Class shall be effective unless the purchaser shall certify to the Other Trustee for such Class that contemporaneously with such purchase, such purchaser is purchasing, pursuant to the terms of this Agreement and the Other Pass Through Trust Agreements, the Class A Certificates and the Class B Certificates. Each payment of the purchase price of the Certificates of any Class referred to in the first sentence hereof shall be made to an account or accounts designated by the Other Trustee for such Class and each such purchase shall be subject to the terms of this Section 6.01(b). The Class A Certificates and the Class B Certificates will be deemed to be purchased on the date payment of the purchase price is made notwithstanding the failure of the Certificateholders of any Class to deliver any Certificates of such Class (whether in the form of Physical Certificates or beneficial interests in Global Certificates (as defined in the Other Pass Through Trust Agreement for such Class) and, upon such a purchase, (i) the only rights of the Certificateholders of such Class will be to deliver the Certificates of such Class to the purchaser and receive the purchase price for such Certificates of such Class and (ii) if the purchaser shall so request, such Certificateholder will comply with all the provisions of Section 3.04 of the Other Pass Through Trust Agreement for such Class to enable new Certificates of such Class to be issued to the purchaser in such denominations as it shall request. All charges and expenses in connection with the issuance of any such new Certificates of any Class shall be borne by the purchaser thereof. As used in this Section 6.01(b), the terms "Certificateholder", "Class", "Class A Certificate" and "Class B Certificate", shall have the respective meanings assigned to such terms in the Intercreditor Agreement. Section 6.02. Incidents of Sale of Equipment NotesSection 6.02. Incidents of Sale of Equipment Notes. Upon any sale of all or any part of the Equipment Notes made either under the power of sale given under this Agreement or otherwise for the enforcement of this Agreement, the following shall be applicable: (1) Certificateholders and Trustee May Purchase Equipment Notes. Any Certificateholder, the Trustee in its individual or any other capacity or any other Person may bid for and purchase any of the Equipment Notes, and upon compliance with the terms of sale, may hold, retain, possess and dispose of such Equipment Notes in their own absolute right without further accountability. (2) Receipt of Trustee Shall Discharge Purchaser. The receipt of the Trustee or of the officer making such sale shall be a sufficient discharge to any purchaser for his purchase money, and, after paying such purchase money and receiving such receipt, such purchaser or its personal representative or assigns shall not be obliged to see to the application of such purchase money, or be in any way answerable for any loss, misapplication or non-application thereof. (3) Application of Moneys Received upon Sale. Any moneys collected by the Trustee upon any sale made either under the power of sale given by this Agreement or otherwise for the enforcement of this Agreement shall be applied as provided in Section 4.02. Section 6.03. Judicial Proceedings Instituted by Trustee; Trustee May Bring SuitSection 6.03.Judicial Proceedings Instituted by Trustee; Trustee May Bring Suit. If there shall be a failure to make payment of the principal of, premium, if any, or interest on any Equipment Note, or if there shall be any failure to pay Rent (as defined in the relevant Lease) under any Lease when due and payable, then the Trustee, in its own name, and as trustee of an express trust, as holder of such Equipment Notes, to the extent permitted by and in accordance with the terms of the Intercreditor Agreement and the Note Documents (subject to the rights of the applicable Owner Trustee or Owner Participant to cure any such failure in accordance with Section 4.03 of the applicable Indenture), shall be entitled and empowered to institute any suits, actions or proceedings at law, in equity or otherwise, for the collection of the sums so due and unpaid on such Equipment Notes or under such Lease and may prosecute any such claim or proceeding to judgment or final decree with respect to the whole amount of any such sums so due and unpaid. Section 6.04. Control by CertificateholdersSection 6.04. Control by Certificateholders. Subject to Section 6.03 and the Intercreditor Agreement, the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee with respect to the Trust or pursuant to the terms of the Intercreditor Agreement, or exercising any trust or power conferred on the Trustee under this Agreement or the Intercreditor Agreement, including any right of the Trustee as Controlling Party under the Intercreditor Agreement or as holder of the Equipment Notes, provided that: (1) such Direction shall not be in conflict with any rule of law or with this Agreement and would not involve the Trustee in personal liability or expense, (2) the Trustee shall not determine that the action so directed would be unjustly prejudicial to the Certificateholders not taking part in such Direction, and (3) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such Direction. Section 6.05. Waiver of Past DefaultsSection 6.05. Waiver of Past Defaults. Subject to the Intercreditor Agreement, the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust (i) may on behalf of all of the Certificateholders waive any past Event of Default hereunder and its consequences or (ii) if the Trustee is the Controlling Party, may direct the Trustee to instruct the applicable Loan Trustee to waive any past Indenture Default under any Indenture and its consequences, and thereby annul any Direction given by such Certificateholders or the Trustee to such Loan Trustee with respect thereto, except a default: (1) in the deposit of any Scheduled Payment or Special Payment under Section 4.01 or in the distribution of any payment under Section 4.02 on the Certificates, or (2) in the payment of the principal of (premium, if any) or interest on the Equipment Notes, or (3) in respect of a covenant or provision hereof which under Article IX hereof cannot be modified or amended without the consent of each Certificateholder holding an Outstanding Certificate affected thereby. Upon any such waiver, such default shall cease to exist with respect to the Certificates and any Event of Default arising therefrom shall be deemed to have been cured for every purpose and any direction given by the Trustee on behalf of the Certificateholders to the relevant Loan Trustee shall be annulled with respect thereto; but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. Upon any such waiver, the Trustee shall vote the Equipment Notes issued under the relevant Indenture to waive the corresponding Indenture Default. Section 6.06. Right of Certificateholders to Receive Payments Not to Be ImpairedSection 6.06.Right of Certificateholders to Receive Payments Not to Be Impaired. Anything in this Agreement to the contrary notwithstanding, including, without limitation, Section 6.07 hereof, but subject to the Intercreditor Agreement, the right of any Certificateholder to receive distributions of payments required pursuant to Section 4.02 hereof on the Certificates when due, or to institute suit for the enforcement of any such payment on or after the applicable Regular Distribution Date or Special Distribution Date, shall not be impaired or affected without the consent of such Certificateholder. Section 6.07. Certificateholders May Not Bring Suit Except Under Certain ConditionsSection 6.07. Certificateholders May Not Bring Suit Except Under Certain Conditions. A Certificateholder shall not have the right to institute any suit, action or proceeding at law or in equity or otherwise with respect to this Agreement, for the appointment of a receiver or for the enforcement of any other remedy under this Agreement, unless: (1) such Certificateholder previously shall have given written notice to the Trustee of a continuing Event of Default; (2) Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than 25% of the Trust shall have requested the Trustee in writing to institute such action, suit or proceeding and shall have offered to the Trustee indemnity as provided in Section 7.02(e); (3) the Trustee shall have refused or neglected to institute any such action, suit or proceeding for 60 days after receipt of such notice, request and offer of indemnity; and (4) no Direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust. It is understood and intended that no one or more of the Certificateholders shall have any right in any manner whatever hereunder or under the Certificates to (i) surrender, impair, waive, affect, disturb or prejudice any property in the Trust Property or the lien of any Indenture on any property subject thereto, or the rights of the Certificateholders or the holders of the related Equipment Notes, (ii) obtain or seek to obtain priority over or preference to any other such Certificateholder or (iii) enforce any right under this Agreement, except in the manner herein provided and for the equal, ratable and common benefit of all the Certificateholders subject to the provisions of this Agreement. Section 6.08. Remedies CumulativeSection 6.08. Remedies Cumulative. Every remedy given hereunder to the Trustee or to any of the Certificateholders shall not be exclusive of any other remedy or remedies, and every such remedy shall be cumulative and in addition to every other remedy given hereunder or now or hereafter given by statute, law, equity or otherwise. Section 6.09. Undertaking for CostsSection 6.09. Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Agreement, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, a court may require any party litigant in such suit to file an undertaking to pay the costs of such suit, and may assess costs against any such party litigant, in the manner and to the extent provided in the Trust Indenture Act; provided that neither this Section nor the Trust Indenture Act shall be deemed to authorize any court to require such an undertaking or to make such an assessment in any suit instituted by the Company or the Guarantor. ARTICLE VII ARTICLE VII THE TRUSTEE Section 7.01. Notice of DefaultsSection 7.01. Notice of Defaults. As promptly as practicable after, and in any event within 90 days after the occurrence of any default (as such term is defined below) hereunder actually known to the Trustee, the Trustee shall transmit by mail to the Company, the related Owner Trustees, the related Loan Trustees and the Certificateholders in accordance with Section 313(c) of the Trust Indenture Act, notice of such default hereunder actually known to the Trustee, unless such default shall have been cured or waived; provided, however, that, except in the case of a default in the payment of the principal of (premium, if any) or interest on any Equipment Note, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Trustee in good faith determine that the withholding of such notice is in the interests of the Certificateholders. For the purpose of this Section, the term "default" means any event that is, or after notice or lapse of time or both would become, an Event of Default. Section 7.02. Certain Rights of TrusteeSection 7.02. Certain Rights of Trustee. Subject to the provisions of Section 315 of the Trust Indenture Act: (a) the Trustee may rely and shall be protected in acting or refraining from acting in reliance upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Request; (c) whenever in the administration of this Agreement or the Intercreditor Agreement the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate of the Company, any Owner Trustee or any Loan Trustee; (d) the Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Agreement or the Intercreditor Agreement at the request or direction of any of the Certificateholders pursuant to this Agreement or the Intercreditor Agreement unless such Certificateholders shall have offered to the Trustee reasonable security or indemnity against the cost, expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, or report, notice, request, direction, consent, order, bond, debenture or other paper or document; (g) the Trustee may execute any of the trusts or powers under this Agreement or the Intercreditor Agreement or perform any duties under this Agreement or the Intercreditor Agreement either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it under this Agreement or the Intercreditor Agreement; (h) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Agreement or the Intercreditor Agreement; (i) the Trustee shall not be required to expend or risk its own funds in the performance of any of its duties under this Agreement, or in the exercise of any of its rights or powers, if it shall have reason to believe that repayment of such funds or adequate indemnity against such risk is not reasonably assured to it; and (j) except during the continuance of an Event of Default, the Trustee undertakes and shall be responsible to perform only such duties as are specifically set forth herein and no implied covenants or obligations shall be read into this Agreement or be enforceable against Trustee. Section 7.03. Not Responsible for Recitals or Issuance of CertificatesSection 7.03. Not Responsible for Recitals or Issuance of Certificates. The recitals contained herein and in the Certificates, except the certificates of authentication, shall not be taken as the statements of the Trustee, and the Trustee assumes no responsibility for their correctness. Subject to Section 7.14, the Trustee makes no representations as to the validity or sufficiency of this Agreement, any Note Documents, any Participation Agreement or any Intercreditor Agreement, and Equipment Notes or the Certificates, except that the Trustee hereby represents and warrants that this Agreement has been, and each Certificate, the Intercreditor Agreement and each Participation Agreement will be, executed and delivered by one of its officers who is duly authorized to execute and deliver such document on its behalf. Section 7.04. May Hold CertificatesSection 7.04. May Hold Certificates. The Trustee, any Paying Agent, Registrar or any of their Affiliates or any other agent, in their respective individual or any other capacity, may become the owner or pledgee of Certificates and subject to Sections 310(b) and 311 of the Trust Indenture Act, if applicable, may otherwise deal with the Company, the Guarantor, the Owner Trustees or the Loan Trustees with the same rights it would have if it were not Trustee, Paying Agent, Registrar or such other agent. Section 7.05. Money Held in TrustSection 7.05. Money Held in Trust. Money held by the Trustee or the Paying Agent in trust hereunder need not be segregated from other funds except to the extent required herein or by law and neither the Trustee nor the Paying Agent shall have any liability for interest upon any such moneys except as provided for herein. Section 7.06. Compensation and ReimbursementSection 7.06. Compensation and Reimbursement. The Company agrees: (1) to pay, or cause to be paid, to the Trustee compensation (as set out in a separate fee agreement between the Trustee and the Company) for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (2) except as otherwise expressly provided herein to reimburse, or cause to be reimbursed, the Trustee upon its request for all reasonable out-of-pocket expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Agreement or the Intercreditor Agreement (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence, willful misconduct or bad faith or as may be incurred due to the Trustee's breach of its representations and warranties set forth in Section 7.14; (3) to indemnify, or cause to be indemnified, the Trustee for, and to hold it harmless against, any loss, liability or expense (other than for or with respect to any tax) incurred without negligence, willful misconduct or bad faith, on its part, arising out of or in connection with the acceptance or administration of this Trust, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder, except for any such loss, liability or expense incurred by reason of the Trustee's breach of its representations and warranties set forth in Section 7.14. The Trustee shall notify the Company and the Guarantor promptly of any claim for which it may seek indemnity. The Company and the Guarantor shall defend the claim and the Trustee shall cooperate in the defense. The Trustee may have separate counsel with the consent of the Company and the Guarantor and the Company and the Guarantor will pay the reasonable fees and expenses of such counsel. Neither the Company nor the Guarantor need pay for any settlement made without its consent; and (4) to indemnify, or cause to be indemnified, the Trustee, solely in its individual capacity, for, and to hold it harmless against, any tax (except to the extent the Trustee is reimbursed therefor pursuant to the next paragraph, provided that no indemnification shall be available with respect to any tax attributable to the Trustee's compensation for serving as such) incurred without negligence, willful misconduct or bad faith, on its part, arising out of or in connection with the acceptance or administration of this Trust, including any costs and expenses incurred in contesting the imposition of any such tax. The Trustee, in its individual capacity, shall notify the Company and the Guarantor promptly of any claim for any tax for which it may seek indemnity. The Trustee shall permit the Company and the Guarantor to contest the imposition of such tax and the Trustee, in its individual capacity, shall cooperate in the defense. The Trustee, in its individual capacity, may have separate counsel with the consent of the Company and the Guarantor and the Company and the Guarantor will pay the reasonable fees and expenses of such counsel. Neither the Company nor the Guarantor need pay for any taxes paid, in settlement or otherwise, without its consent. The Trustee shall be entitled to reimbursement from, and shall have a lien prior to the Certificates upon, the Trust Property for any tax incurred without negligence, bad faith or willful misconduct on its part, arising out of or in connection with the acceptance or administration of such Trust (other than any tax attributable to the Trustee's compensation for serving as such), including any costs and expenses incurred in contesting the imposition of any such tax. The Trustee shall notify the Company of any claim for any tax for which it may seek reimbursement. The Trustee shall cooperate in the contest by the Company of any such claim. If the Trustee reimburses itself from the Trust Property for any such tax it will within 30 days mail a brief report setting forth the amount of such tax and the circumstances thereof to all Certificateholders as their names and addresses appear in the Register. As security for the performance of the obligations of the Company under this Section the Trustee shall have a lien prior to the Certificates upon the Trust Property. Section 7.07. Corporate Trustee Required; EligibilitySection 7.07.Corporate Trustee Required; Eligibility. There shall at all times be a Trustee hereunder which shall be eligible to act as a trustee under Section 310(a) of the Trust Indenture Act and shall have a combined capital and surplus of at least $75,000,000 (or a combined capital and surplus in excess of $5,000,000 and the obligations of which, whether now in existence or hereafter incurred, are fully and unconditionally guaranteed by a corporation organized and doing business under the laws of the United States, any State or Territory thereof or of the District of Columbia that has a combined capital and surplus of at least $75,000,000). If such corporation publishes reports of conditions at least annually, pursuant to law or to the requirements of federal, state, territorial or District of Columbia supervising or examining authority, then for the purposes of this Section 7.07, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of conditions so published. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 7.07 to act as Trustee, the Trustee shall resign immediately as Trustee in the manner and with the effect specified in Section 7.08. Section 7.08. Resignation and Removal: Appointment of SuccessorSection 7.08. Resignation and Removal: Appointment of Successor. (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee under Section 7.09. (b) The Trustee may resign at any time as trustee by giving written notice thereof to the Company, the Authorized Agents, the Owner Trustees and the Loan Trustees. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Company, the Authorized Agents, the Owner Trustees, the Loan Trustees and the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee. (c) The Trustee may be removed at any time by Act of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust delivered to the Trustee, the Company, the Owner Trustees and the Loan Trustees. (d) If at any time: (1) the Trustee shall fail to comply with Section 310 of the Trust Indenture Act after written request therefor by the Company or by any Certificateholder who has been a bona fide certificateholder for at least six months; or (2) the Trustee shall cease to be eligible under Section 7.07 and shall fail to resign after written request therefor by the Company or by any such Certificateholder; or (3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation; then, in any case, (i) the Company may remove the Trustee or (ii) any Certificateholder who has been a bona fide Certificateholder for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. (e) If a Responsible Officer of the Trustee shall obtain actual knowledge of an Avoidable Tax (as hereinafter defined) which has been or is likely to be asserted, the Trustee shall promptly notify the Company and shall, within 30 days of such notification, resign as Trustee hereunder unless within such 30-day period the Trustee shall have received notice that the Company has agreed to pay such tax. The Company shall promptly appoint a successor Trustee in a jurisdiction where there are no Avoidable Taxes. As used herein, an "Avoidable Tax" means a state or local tax: (i) upon (w) the Trust, (x) the Trust Property, (y) Certificateholders or (z) the Trustee for which the Trustee is entitled to seek reimbursement from the Trust Property, and (ii) which would be avoided if the Trustee were located in another state, or jurisdiction within a state, within the United States. A tax shall not be an Avoidable Tax if the Company or any Owner Trustee shall agree to pay, and shall pay, such tax. (f) If the Trustee shall resign, be removed or become incapable of acting as trustee or if a vacancy shall occur in the office of the Trustee for any cause, the Company shall promptly appoint a successor Trustee. If, within 90 days after such resignation, removal or incapability, or other occurrence of such vacancy, a successor Trustee shall be appointed by Act of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust delivered to the Company, the Owner Trustees, the Loan Trustee and the retiring Trustee, the successor Trustees so appointed shall, with the approval of the Company, which approval shall not be unreasonably withheld, forthwith upon its acceptance of such appointment, become the successor Trustee and supersede the successor Trustee appointed as provided above. If no successor Trustee shall have been so appointed as provided above and accepted appointment in the manner hereinafter provided, the resigning Trustee or any Certificateholder who has been a bona fide Certificateholder for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee. (g) The successor Trustee of a Trust shall give notice of the resignation and removal of the Trustee and appointment of the successor Trustee by mailing written notice of such event by first-class mail, postage prepaid, to the Certificateholders as their names and addresses appear in the Register. Each notice shall include the name of such successor Trustee and the address of its Corporate Trust Office. Section 7.09. Acceptance of Appointment by SuccessorSection 7.09. Acceptance of Appointment by Successor. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on request of the Company or the successor Trustee, such retiring Trustee shall execute and deliver an instrument transferring to such successor Trustee all such rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee, subject nevertheless to its lien, if any, provided for in Section 7.06. Upon request of any such successor Trustee, the Company, the retiring Trustee and such successor Trustee shall execute and deliver any and all instruments containing such provisions as shall be necessary or desirable to transfer and confirm to, and for more fully and certainly vesting in, such successor Trustee all such rights, powers and trusts. No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article. Section 7.10. Merger, Conversion, Consolidation or Succession to BusinessSection 7.10. Merger, Conversion, Consolidation or Succession to Business. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Certificates shall have been executed or authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such execution or authentication and deliver the Certificates so executed or authenticated with the same effect as if such successor Trustee had itself executed or authenticated such Certificates. Section 7.11. Maintenance of AgenciesSection 7.11. Maintenance of Agencies. (a) There shall at all times be maintained an office or agency where Certificates may be presented or surrendered for registration of transfer or for exchange, and for payment thereof and where notices and demands to or upon the Trustee in respect of such Certificates may be served. Presentations and demands may be made and notices may be served at the Corporate Trust Office of the Trustee. (b) There shall at all times be a Registrar and a Paying Agent hereunder with respect to the Certificates. Each such Authorized Agent shall be a bank or trust company, shall be a corporation organized and doing business under the laws of the United States or any state, with a combined capital and surplus of at least $75,000,000, or a corporation having a combined capital and surplus in excess of $5,000,000 the obligations of which are guaranteed by a corporation organized and doing business under the laws of the United States or any state, with a combined capital and surplus of at least $75,000,000, and shall be authorized under such laws to exercise corporate trust powers, subject to supervision by federal or state authorities. The Trustee shall initially be the Paying Agent and, as provided in Section 3.04, Registrar hereunder with respect to the Certificates. Each Registrar shall furnish to the Trustee, at stated intervals of not more than six months, and at such other times as the Trustee may request in writing, a copy of the Register maintained by such Registrar. (c) Any corporation into which any Authorized Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, consolidation or conversion to which any Authorized Agent, shall be a party, or any corporation succeeding to the corporate trust business of any Authorized Agent, shall be the successor of such Authorized Agent hereunder, if such successor corporation is otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the parties hereto or such Authorized Agent or such successor corporation. (d) Any Authorized Agent may at any time resign by giving written notice of resignation to the Trustee, the Company, the Owner Trustees and the Loan Trustees. The Company may, and at the request of the Trustee shall, at any time terminate the agency of any Authorized Agent by giving written notice of termination to such Authorized Agent and to the Trustee. Upon the resignation or termination of an Authorized Agent or in case at any time any such Authorized Agent shall cease to be eligible under this Section (when in either case, no other Authorized Agent performing the functions of such Authorized Agent shall have been appointed), the Company shall promptly appoint one or more qualified successor Authorized Agents, reasonably satisfactory to the Trustee, to perform the functions of the Authorized Agent which has resigned or whose agency has been terminated or who shall have ceased to be eligible under this Section. The Company shall give written notice of any such appointment made by it to the Trustee, the Owner Trustees and the Loan Trustees; and in each case the Trustee shall mail notice of such appointment to all Certificateholders as their names and addresses appear on the Register. (e) The Company agrees to pay, or cause to be paid, from time to time to each Authorized Agent reasonable compensation for its services and to reimburse it for its reasonable expenses. Section 7.12. Money for Certificate Payments to Be Held in TrustSection 7.12. Money for Certificate Payments to Be Held in Trust. All moneys deposited with any Paying Agent for the purpose of any payment on Certificates shall be deposited and held in trust for the benefit of the Certificateholders entitled to such payment, subject to the provisions of this Section. Moneys so deposited and held in trust shall constitute a separate trust fund for the benefit of the Certificateholders with respect to which such money was deposited. The Trustee may at any time, for the purpose of obtaining the satisfaction and discharge of this Agreement or for any other purpose, direct any Paying Agent to pay to the Trustee all sums held in trust by such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by such Paying Agent and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. Section 7.13. Registration of Equipment Notes in Name of Subordination AgentSection 7.13. Registration of Equipment Notes in Name of Subordination Agent. The Trustee agrees that all Equipment Notes to be purchased by the Trust shall be issued in the name of the Subordination Agent or its nominee and held by the Subordination Agent in trust for the benefit of the Certificateholders, or, if not so held, the Subordination Agent or its nominee shall be reflected as the owner of such Equipment Notes in the register of the issuer of such Equipment Notes. Section 7.14. Representations and Warranties of TrusteeSection 7.14. Representations and Warranties of Trustee. The Trustee hereby represents and warrants that: (a) the Trustee is a Delaware banking corporation organized and validly existing, and in good standing under the laws of the State of Delaware; (b) the Trustee has full power, authority and legal right to execute, deliver and perform this Agreement, the Intercreditor Agreement and the Participation Agreements and has taken all necessary action to authorize the execution, delivery and performance by it of this Agreement, the Intercreditor Agreement and the Participation Agreements; (c) the execution, delivery and performance by the Trustee of this Agreement, the Intercreditor Agreement and the Participation Agreements (i) will not violate any provision of any United States federal law or the law of the State of Delaware governing the banking and trust powers of the Trustee or any order, writ, judgment, or decree of any court, arbitrator,or governmental authority applicable to the Trustee or any of its assets, (ii) will not violate any provision of the articles of association or by-laws of the Trustee, and (iii) will not violate any provision of, or constitute, with or without notice or lapse of time, a default under, or result in the creation or imposition of any lien on any properties included in the Trust Property pursuant to the provisions of, any mortgage, indenture, contract, agreement or other undertaking to which it is a party, which violation, default or lien could reasonably be expected to have an adverse effect on the Trustee's performance or ability to perform its duties hereunder or thereunder or on the transactions contemplated herein or therein; (d) the execution, delivery and performance by the Trustee of this Agreement the Intercreditor Agreement and the Participation Agreements will not require the authorization, consent, or approval of, the giving of notice to, the filing or registration with, or the taking of any other action in respect of, any governmental authority or agency of the United States or the State of Delaware regulating the banking and corporate trust activities of the Trustee: and (e) this Agreement, the Participation Agreement, and the Intercreditor Agreement have been duly executed and delivered by the Trustee and constitute the legal, valid, and binding agreements of the Trustee, enforceable against it in accordance with their respective terms, provided that enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and (ii) general principles of equity. Section 7.15. Withholding Taxes; Information ReportingSection 7.15. Withholding Taxes; Information Reporting. (a) The Trustee, as trustee of the grantor trust created by this Agreement, shall exclude and withhold from each distribution of principal, premium, if any, and interest and other amounts due under this Agreement or under the Certificates any and all withholding taxes applicable thereto as required by law. The Trustee agrees to act as such withholding agent and, in connection therewith, whenever any taxes or similar charges are required to be withheld with respect to any amounts paid by or on behalf of the Trustee in respect of the Certificates, to withhold such amounts and timely pay the same to the authority in the name of and on behalf of the Certificateholders, that it will file any necessary withholding tax returns or statements when due, and that, as promptly as possible after the payment thereof, it will deliver to each such Certificateholder necessary documentation showing the payment thereof, together with such additional documentary evidence as such Certificateholders may reasonably request from time to time. The Trustee agrees to file any other information reports as it may be required to file under United States law. (b) The Trustee may satisfy certain of its obligations with respect to this Agreement by retaining, at the expense of the Company, a firm of independent public accountants (the "Accountants") which shall (i) be responsible for all tax filing requirements and (ii) perform the obligations of the Trustee in respect of tax filing requirements. The Trustee shall be deemed to have discharged its tax filing obligations under this Agreement upon its retention of the Accountants, and, if the Trustee shall have selected in the Accountants in good faith and without gross negligence, the Trustee shall not have any liability with respect to the default or misconduct of the Accountants. (c) The Trustee, at the request of the Company, will make such United States federal income tax elections as may be necessary to prevent the Trust from being classified for federal income tax purposes as an association taxable as a corporation. Section 7.16. Trustee's LiensSection 7.16. Trustee's Liens. The Trustee in its individual capacity agrees that it will at its own cost and expense promptly take any action as may be necessary to duly discharge and satisfy in full any mortgage, pledge, lien, charge, encumbrance, security interest or claim ("Trustee's Liens") on or with respect to the Trust Property which is attributable to the Trustee either (i) in its individual capacity and which is unrelated to the transactions contemplated by this Agreement, the Intercreditor Agreement, the Participation Agreements or the Note Documents, or (ii) as Trustee hereunder or in its individual capacity and which arises out of acts or omissions which are not contemplated by this Agreement. Section 7.17. Preferential Collection of ClaimsSection 7.17. Preferential Collection of Claims. The Trustee shall comply with Section 311(a) of the Trust Indenture Act, excluding any creditor relationship listed in Section 31l(b) of the Trust Indenture Act. If the Trustee shall resign or be removed as Trustee, it shall be subject to Section 311(a) of the Trust Indenture Act to the extent provided therein. ARTICLE VIII ARTICLE VIII CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE Section 8.01. The Company to Furnish Trustee with Names and Addresses of CertificateholdersThe Company to Furnish Trustee with Names and Addresses of Certificateholders. The Company will furnish or cause to be furnished to the Trustee within 15 days after each Record Date with respect to a Scheduled Payment, and at such other times as the Trustee may request in writing, within 30 days after receipt by the Company of any such request, a list, in such form as the Trustee may reasonably require, of all information in the possession or control of the Company as to the names and addresses of the Certificateholders, in each case as of a date not more than 15 days prior to the time such list is furnished; provided, however, that so long as the Trustee is the sole Registrar, no such list need be furnished; and provided further, however, that no such list need be furnished for so long as a copy of the Register is being furnished to the Trustee pursuant to Section 7.11. Section 8.02. Preservation of Information; Communications to CertificateholdersSection 8.02. Preservation of Information; Communications to Certificateholders. The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Certificateholders contained in the most recent list furnished to the Trustee as provided in Section 7.11 or Section 8.01, as the case may be, and the names and addresses of Certificateholders received by the Trustee in its capacity as Registrar, if so acting. The Trustee may destroy any list furnished to it as provided in Section 7.11 or Section 8.01, as the case may be, upon receipt of a new list so furnished. Section 8.03. Reports by TrusteeSection 8.03. Reports by Trustee. Within 60 days after May 15 of each year commencing with the first full year following the issuance of the Certificates, the Trustee shall transmit to the Certificateholders, as provided in Section 313(c) of the Trust Indenture Act, a brief report dated as of such May 15, if required by Section 313(a) of the Trust Indenture Act. Section 8.04. Reports by the Guarantor and CompanySection 8.04. Reports by the Guarantor and Company. The Guarantor and the Company each shall: (a) file with the Trustee, within 30 days after the Guarantor or the Company is required to file the same with the SEC, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may from time to time by rules and regulations prescribe) which the Guarantor or the Company is required to file with the SEC pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934, as amended; or, if the Guarantor or the Company is not required to file information, documents or reports pursuant to either of such sections, then to file with the Trustee and the SEC, in accordance with rules and regulations prescribed by the SEC, such of the supplementary and periodic information, documents and reports which may be required pursuant to section 13 of the Securities Exchange Act of 1934, as amended, in respect of a security listed and registered on a national securities exchange as may be prescribed in such rules and regulations; (b) file with the Trustee and the SEC, in accordance with the rules and regulations prescribed by the SEC, such additional information, documents and reports with respect to compliance by the Guarantor and the Company with the conditions and covenants of the Guarantor and the Company provided for in this Agreement, as may be required by such rules and regulations, including, in the case of annual reports, if required by such rules and regulations, certificates or opinions of independent public accountants, conforming to the requirements of Section 1.02; (c) transmit to all Certificateholders, in the manner and to the extent provided in Section 313(c) of the Trust Indenture Act, such summaries of any information, documents and reports required to be filed by the Guarantor and the Company pursuant to subsections (a) and (b) of this Section 8.04 as may be required by rules and regulations prescribed by the SEC; (d) furnish to the Trustee, not less often than annually, a brief certificate from the principal executive officer, principal financial officer or principal accounting officer as to his or her knowledge of the Guarantor's and the Company's compliance with all conditions and covenants under this Agreement (it being understood that for purposes of this paragraph (d), such compliance shall be determined without regard to any period of grace or requirement of notice provided under this Agreement); and (e) make available to any Certificateholder, upon request, the annual audited and quarterly unaudited financial statements of the Guarantor which are provided to the Trustee. ARTICLE IX ARTICLE IX SUPPLEMENTAL AGREEMENTS Section 9.01. Supplemental Agreements Without Consent of CertificateholdersSection 9.01. Supplemental Agreements Without Consent of Certificateholders. Without the consent of the Certificateholders, the Guarantor and the Company may, and the Trustee (subject to Section 9.03) shall, at any time and from time to time, enter into one or more agreements supplemental hereto or, if applicable, to the Intercreditor Agreement or the Liquidity Facility in form satisfactory to the Trustee, for any of the following purposes: (1) to evidence the succession of another corporation to the Company or the Guarantor and the assumption by any such successor of the covenants of the Company or the Guarantor herein contained; or (2) to add to the covenants of the Guarantor or the Company for the benefit of the Certificateholders, or to surrender any right or power in this Agreement conferred upon the Guarantor or the Company; or (3) to correct or supplement any provision in this Agreement, the Intercreditor Agreement or the Liquidity Facility which may be defective or inconsistent with any other provision herein or to make any other provisions with respect to matters or questions arising under this Agreement, the Intercreditor Agreement or the Liquidity Facility, provided that any such action shall not adversely affect the interests of the Certificateholders; or to cure any ambiguity or correct any mistake; or (4) to modify, eliminate or add to the provisions of this Agreement to such extent as shall be necessary to continue the qualification of this Agreement (including any supplemental agreement) under the Trust Indenture Act, or under any similar Federal statute hereafter enacted, and to add to this Agreement such other provisions as may be expressly permitted by the Trust Indenture Act, excluding, however, the provisions referred to in Section 316(a)(2) of the Trust Indenture Act as in effect at the date as of which this instrument was executed or any corresponding provision in any similar Federal statute hereafter enacted; or (5) to evidence and provide for the acceptance of appointment under this Agreement by the Trustee of a successor Trustee and to add to or change any of the provisions of this Agreement as shall be necessary to provide for or facilitate the administration of the Trust, pursuant to the requirements of Section 7.09; provided that no such action described in this Section 9.01 shall materially adversely affect the interests of the Certificateholders. Section 9.02. Supplemental Agreements with Consent of CertificateholdersSection 9.02. Supplemental Agreements with Consent of Certificateholders. With the consent of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest the Trust, by Act of said Certificateholders delivered to the Guarantor, the Company and the Trustee, the Guarantor and the Company may (with the consent of the Owner Trustees, if any, which consent shall not be unreasonably withheld), and the Trustee (subject to Section 9.03) shall, enter into an agreement or agreements supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement, the Intercreditor Agreement or the Liquidity Facility to the extent applicable to such Certificateholders or of modifying in any manner the rights and obligations of such Certificateholders under this Agreement; provided, however, that no such supplemental agreement shall, without the consent of the Certificateholder of each Outstanding Certificate affected thereby: (1) reduce in any manner the amount of, or delay the timing of, any receipt by the Trustee of payments on the Equipment Notes held in the Trust or distributions that are required to be made herein on any Certificate, or change any date of payment of any Certificate or change the place of payment where, or the coin or currency in which, any Certificate is payable, or impair the right to institute suit for the enforcement of any such payment or distribution on or after the Regular Distribution Date or Special Distribution Date applicable thereto; or (2) permit the disposition of any Equipment Note included in the Trust Property except as permitted by this Agreement, or otherwise deprive such Certificateholder of the benefit of the ownership of the Equipment Notes in the Trust; or (3) alter the priority of distributions specified in the Intercreditor Agreement; or (4) modify any of the provisions of this Section or Section 6.05, except to increase any such percentage or to provide that certain other provisions of this Agreement cannot be modified or waived without the consent of the Certificateholder of each Certificate affected thereby. It shall not be necessary for any Act of Certificateholders under this Section to approve the particular form of any proposed supplemental agreement but it shall be sufficient if such Act shall approve the substance thereof. Section 9.03. Documents Affecting Immunity or IndemnitySection 9.03. Documents Affecting Immunity or Indemnity. If in the opinion of the Trustee any document required to be executed by it pursuant to the terms of Section 9.01 or 9.02 affects any interest, right, duty, immunity or indemnity in favor of the Trustee under this Agreement, the Trustee may in its discretion decline to execute such document. Section 9.04. Execution of Supplemental AgreementsSection 9.04. Execution of Supplemental Agreements. In executing, or accepting the additional trusts created by, any supplemental agreement permitted by this Article or the modifications thereby of the trust created by this Agreement, the Trustee shall be entitled to receive, and shall be fully protected in relying upon, written advice of counsel or an Opinion of Counsel stating that the execution of such supplemental agreement is authorized or permitted by this Agreement. Section 9.05. Effect of Supplemental AgreementsSection 9.05. Effect of Supplemental Agreements. Upon the execution of any supplemental agreement under this Article, this Agreement shall be modified in accordance therewith, and such supplemental agreement shall form a part of this Agreement for all purposes; and every Certificateholder theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. Section 9.06. Conformity with Trust Indenture ActSection 9.06. Conformity with Trust Indenture Act. Every supplemental agreement executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act as then in effect. Section 9.07. Reference in Certificates to Supplemental AgreementsSection 9.07. Reference in Certificates to Supplemental Agreements. Certificates authenticated and delivered after the execution of any supplemental agreement pursuant to this Article may bear a notation in form approved by the Trustee as to any matter provided for in such supplemental agreement; and, in such case, suitable notation may be made upon Outstanding Certificates after proper presentation and demand. ARTICLE X ARTICLE X AMENDMENTS TO INDENTURES AND NOTE DOCUMENTS Section 10.01. Amendments and Supplements to Indentures and Other Note DocumentsSection 10.01. Amendments and Supplements to Indentures and Other Note Documents. In the event that the Trustee, as holder of any Equipment Notes in trust for the benefit of the Certificateholders or as Controlling Party, receives a request for a consent to any amendment, modification, waiver or supplement under any Indenture or other Note Document, the Trustee shall forthwith send a notice of such proposed amendment, modification, waiver or supplement to each Certificateholder registered on the Register as of the date of such notice. The Trustee shall request from the Certificateholders a Direction as to (a) whether or not to take or refrain from taking any action which a holder of such Equipment Note has the option to direct, (b) whether or not to give or execute any waivers, consents, amendments, modifications or supplements as a holder of such Equipment Note and (c) how to vote any Equipment Note if a vote has been called for with respect thereto. Provided such a request for Certificateholder Direction shall have been made, in directing any action or casting any vote or giving any consent as the holder of any Equipment Note, the Trustee shall vote for or give consent to any such action with respect to such Equipment Note in the same proportion as that of (i) the aggregate face amounts of all Certificates actually voted in favor of or for giving consent to such action by Acts of Certificateholders to (ii) the aggregate face amount of all Outstanding Certificates. For purposes of the immediately preceding sentence, a Certificate shall have been "actually voted" if the Holder of such Certificate has delivered to the Trustee an instrument evidencing such Holder's consent to such Direction on or prior to the Business Day before the Trustee directs such action or casts such vote or gives such consent. Notwithstanding the foregoing, but subject to Section 6.04 and any Intercreditor Agreement, the Trustee may, in its own discretion and at its own direction, consent and notify the relevant Loan Trustee of such consent to any amendment, modification, waiver or supplement under the relevant Indenture, the Liquidity Facility, or any Note Document, if an Event of Default hereunder shall have occurred and be continuing, or if such amendment, modification or waiver will not adversely affect the interests of the Certificateholders. ARTICLE XI ARTICLE XI TERMINATION OF TRUSTS Section 11.01. Termination of the TrustSection 11.01. Termination of the Trust. The respective obligations and responsibilities of the Company, the Guarantor and the Trustee with respect to the Trust shall terminate upon distribution to all Holders of the Certificates and the Trustee of all amounts required to be distributed to them pursuant to this Agreement and the disposition of all property held as part of the Trust Property; provided, however, that in no event shall the Trust continue beyond one hundred ten (110) years following the date of the earliest execution of this Agreement. Notice of any termination, specifying the Regular Distribution Date (or Special Distribution Date, as the case may be) upon which the Certificateholders may surrender their Certificates to the Trustee for payment of the final distribution and cancellation, shall be mailed promptly, upon notice to the Trustee, by the Trustee to Certificateholders not earlier than the 60th day and not later than the 20th day next preceding such final distribution specifying (A) the Regular Distribution Date (or Special Distribution Date, as the case may be) upon which the proposed final payment of the Certificates will be made upon presentation and surrender of Certificates at the office or agency of the Trustee therein specified, (B) the amount of any such proposed final payment, and (C) that the Record Date otherwise applicable to such Regular Distribution Date (or Special Distribution Date, as the case may be) is not applicable, payments being made only upon presentation and surrender of the Certificates at the office or agency of the Trustee therein specified. The Trustee shall give such notice to the Registrar at the time such notice is given to Certificateholders. Upon presentation and surrender of the Certificates, the Trustee shall cause to be distributed to Certificateholders amounts distributable on such Regular Distribution Date (or Special Distribution Date, as the case may be) pursuant to Section 4.02. In the event that all of the Certificateholders shall not surrender their Certificates for cancellation within six months after the date specified in the above-mentioned written notice, the Trustee shall give a second written notice to the remaining Certificateholders to surrender their Certificates for cancellation and receive the final distribution with respect thereto. No additional interest shall accrue on the Certificates after the Regular Distribution Date (or Special Distribution Date, as the case may be). In the event that any money held by the Trustee for the payment of distributions on the Certificates shall remain unclaimed for two years (or such lesser time as the Trustee shall be satisfied, after sixty days' notice from the Company, is one month prior to the escheat period provided under applicable law) after the final distribution date with respect thereto, the Trustee shall pay to each Loan Trustee the appropriate amount of money relating to such Loan Trustee and shall give written notice thereof to the related Owner Trustees and the Company. ARTICLE XII ARTICLE XII MISCELLANEOUS PROVISIONS Section 12.01. Limitation on Rights of CertificateholdersSection 12.01. Limitation on Rights of Certificateholders. The death or incapacity of any Certificateholder shall not operate to terminate this Agreement, or the Trust, nor entitle such Certificateholder's legal representatives or heirs to claim an accounting or to take any action or commence any proceeding in any court for a partition or winding up of the Trust, nor otherwise affect the rights, obligations, and liabilities of the parties hereto or any of them. Section 12.02. Liabilities of CertificateholdersSection 12.02. Liabilities of Certificateholders. Neither the existence of the Trust nor any provision in this Agreement is intended to or shall limit the liability the Certificateholders would otherwise incur if the Certificateholders owned Trust Property as co-owners, or incurred any obligations of the Trust, directly rather than through the Trust. Section 12.03. Certificates Nonassessable and Fully PaidSection 12.03. Certificates Nonassessable and Fully Paid. Subject to Section 12.02, Certificateholders shall not be personally liable for obligations of the Trust, the Fractional Undivided Interests represented by the Certificates shall be nonassessable for any losses or expenses of the Trust or for any reason whatsoever, and Certificates upon authentication thereof by the Trustee pursuant to Section 3.03 are and shall be deemed fully paid. No Certificateholder shall have any right (except as expressly provided herein) to vote or in any manner otherwise control the operation and management of the Trust Property, the Trust, or the obligations of the parties hereto, nor shall anything set forth herein, or contained in the terms of the Certificates, be construed so as to constitute the Certificateholders from time to time as partners or members of an association. Section 12.04. [Intentionally omitted]Section 12.04. [Intentionally omitted]. Section 12.05. NoticesSection 12.05. Notices. (a) Unless otherwise specifically provided herein, all notices required under the terms and provisions of this Agreement shall be in English and in writing, and any such notice may be given by United States mail, courier service, telegram, telemessage, telecopy, telefax, cable or facsimile (confirmed by telephone or in writing in the case of notice by telegram, telemessage, telecopy, telefax, cable or facsimile) or any other customary means of communication, and any such notice shall be effective when delivered, or if mailed, three days after deposit in the United States mail with proper postage for ordinary mail prepaid, if to the Company or the Guarantor, to: American Trans Air, Inc. 7337 7337 West Washington Street Indianapolis International Airport Indianapolis, Indiana 06927 Indianapolis, Indiana 06927 Attention: Executive Vice President and Chief Financial Officer Facsimile: (317) 240-7087 if to the Trustee, to: Wilmington Trust Company Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 Attention: Corporate Trust Department Facsimile: (302) 651-8882 (b) The Company, the Guarantor or the Trustee, by notice to the other, may designate additional or different addresses for subsequent notices or communications. (c) Any notice or communication to Certificateholders shall be mailed by first-class mail to the addresses for Certificateholders shown on the Register kept by the Registrar and to addresses filed with the Trustee. Failure so to mail a notice or communication or any defect in such notice or communication shall not affect its sufficiency with respect to other Certificateholders. (d) If a notice or communication is mailed in the manner provided above within the time prescribed, it is conclusively presumed to have been duly given, whether or not the addressee receives it. (e) If the Company mails a notice or communication to the Certificateholders, it shall mail a copy to the Trustee and to each Paying Agent at the same time. (f) Notwithstanding the foregoing, all communications or notices to the Trustee shall be deemed to be given only when received by a Responsible Officer of the Trustee. (g) The Trustee shall promptly furnish the Company with a copy of any demand, notice or written communication received by the Trustee hereunder from any Certificateholder, Owner Trustee or Loan Trustee. Section 12.06. Governing LawSection 12.06. Governing Law. THIS AGREEMENT HAS BEEN DELIVERED IN THE STATE OF NEW YORK AND THIS AGREEMENT AND THE CERTIFICATES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT-OF-LAW PRINCIPLES. Section 12.07. Severability of ProvisionsSection 12.07. Severability of Provisions. If any one or more of the covenants, agreements, provisions, or terms of this Agreement shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions, or terms shall be deemed severable from the remaining covenants, agreements, provisions, or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement or the Trust or of the Certificates or the rights of the Certificateholders thereof. Section 12.08. [Intentionally omitted].Section 12.08. [Intentionally omitted]. Section 12.09. Effect of Headings and Table of ContentsSection 12.09. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. Section 12.10. Successors and AssignsSection 12.10. Successors and Assigns. All covenants, agreements, representations and warranties in this Agreement by the Trustee, the Guarantor and the Company shall bind and, to the extent permitted hereby, shall inure to the benefit of and be enforceable by their respective successors and assigns, whether so expressed or not. Section 12.11. Benefits of AgreementSection 12.11. Benefits of Agreement. Nothing in this Agreement or in the Certificates, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, and the Certificateholders, any benefit or any legal or equitable right, remedy or claim under this Agreement. Section 12.12. Legal HolidaysSection 12.12. Legal Holidays. In any case where any Regular Distribution Date or Special Distribution Date relating to any Certificate shall not be a Business Day, then (notwithstanding any other provision of this Agreement) payment need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on such Regular Distribution Date or Special Distribution Date, and no interest shall accrue during the intervening period. Section 12.13. CounterpartsSection 12.13. Counterparts. For the purpose of facilitating the execution of this Agreement and for other purposes, this Agreement may be executed simultaneously in any number of counterparts, each of which counterparts shall be deemed to be an original, and all of which counterparts shall constitute but one and the same instrument. Section 12.14. Communication by Certificateholders with Other CertificateholdersSection 12.14. Communication by Certificateholders with Other Certificateholders. Certificateholders may communicate with other Certificateholders with respect to their rights under this Agreement or the Certificates pursuant to Section 3.12(b) of the Trust Indenture Act. The Company, the Guarantor, the Trustee and any and all other persons benefitted by this Agreement shall have the protection afforded by Section 312(c) of the Trust Indenture Act. IN WITNESS WHEREOF, the Guarantor, the Company and the Trustee have caused this Agreement to be duly executed by their respective officers, all as of the day and year first above written. AMTRAN, INC. By /s/ Kenneth K. Wolff ----------------------------- Title: Executive Vice President and Chief Financial Officer AMERICAN TRANS AIR, INC. / By /s/ Kenneth K. Wolff ----------------------------- Title: Executive Vice President and Chief Financial Officer WILMINGTON TRUST COMPANY, as Trustee By /s/ Donald McKelcan ----------------------------- Title: Vice President SCHEDULE 1 Trust Indenture and Security Agreements 1) Trust Indenture and Security Agreement [ATA 1996 A], dated as of December 16, 1996 between Wilmington Trust Company, as Indenture Trustee, and First Security Bank, National Association, as Owner Trustee 2) Trust Indenture and Security Agreement [ATA 1996 B], dated as of December 16, 1996 between Wilmington Trust Company, as Indenture Trustee, and First Security Bank, National Association, as Owner Trustee -- SCHEDULE 2 Participation Agreements 1) Participation Agreement [ATA 1996 A], dated as of December 16, 1996 among the Company, as Lessee, Finova Capital Corporation, as Owner Participant, First Security Bank, National Association, as Owner Trustee, Wilmington Trust Company, as Indenture Trustee, the Trustee, the Other Trustees, and the Subordination Agent 2) Participation Agreement [ATA 1996 B], dated as of December 16, 1996 among the Company, as Lessee, General Electric Capital Corporation, as Owner Participant, First Security Bank, National Association, as Owner Trustee, Wilmington Trust Company, as Indenture Trustee, the Trustee, the Other Trustees, and the Subordination Agent EXHIBIT A FORM OF CERTIFICATE [THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS CERTIFICATE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT IT WILL NOT WITHIN THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY AMERICAN TRANS AIR, INC., THE TRUSTEE OR ANY AFFILIATE OF ANY OF SUCH PERSONS RESELL OR OTHERWISE TRANSFER THIS CERTIFICATE EXCEPT (A) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (B) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING $100,000 OR MORE AGGREGATE PRINCIPAL AMOUNT OF SUCH CERTIFICATE THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS CERTIFICATE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE), (C) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (E) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT; AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS CERTIFICATE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS CERTIFICATE WITHIN THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY AMERICAN TRANS AIR, INC., THE TRUSTEE OR ANY AFFILIATE OF ANY OF SUCH PERSONS THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE PASS THROUGH TRUST AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS.]1 [UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND 3.06 OF THE PASS THROUGH TRUST AGREEMENT REFERRED TO HEREIN.]2 AMERICAN TRANS AIR, INC. 1996-1C PASS THROUGH TRUST Pass Through Certificate, Series 1996-1C Issuance Date: ______________________________ Final Legal Distribution Date: ______________________________ Evidencing a Fractional Undivided Interest in The 1996-1C Trust, the Property of Which Includes Certain Equipment Notes each secured by Aircraft leased to American Trans Air, Inc. Certificate No. $ Fractional Undivided Interest representing -------------- ----------- ___________%of the Trust per $1,000 of Reference Principal Amount THIS CERTIFIES THAT ____________________________, for value received, is the registered owner of a Fractional Undivided Interest in the amount of __________ Dollars ($___________) (the "Reference Principal Amount") in the American Trans Air 1996-1C Pass Through Trust (the "Trust") created by Wilmington Trust Company, not in its individual capacity but solely as trustee (the "Trustee"), pursuant to a Pass Through Trust Agreement dated as of December __, 1996 (the "Agreement"), among the Trustee, Amtran, Inc., a corporation incorporated under Indiana law (the "Guarantor"), and American Trans Air, Inc., a corporation incorporated under Indiana law (the "Company"), a summary of certain of the pertinent provisions of which is set forth below. To the extent not otherwise defined herein, the capitalized terms used herein have the meanings assigned to them in the Agreement. This Certificate is one of the duly authorized Certificates designated as "Pass Through Certificates, Series 1996-1C" (herein called the "Certificates"). This Certificate is issued under and is subject to the terms, provisions, and conditions of the Agreement and the Intercreditor Agreement, to which agreements the Certificateholder of this Certificate by virtue of the acceptance hereof assents and by which such Certificateholder is bound. The property of the Trust includes certain Equipment Notes and all rights of the Trust to receive any payments under the Intercreditor Agreement and the Liquidity Facility (the "Trust Property"). Each issue of the Equipment Notes is secured by a security interest in The Aircraft leased to the Company. Each of the Certificates represents a fractional undivided interest in the Trust and the Trust Property, and has no rights, benefits or interest in respect of any assets or property other than the Trust Property. The undivided percentage interest in the Trust represented by each of this Certificate (as specified above) and the other Pass Through Certificates, Series 1996-1C, was determined on the basis of (x) the aggregate of the Reference Principal Amount of this Certificate (as specified above) and of the other Pass Through Certificates, Series 1996-1C and (y) the aggregate original principal amounts of the Equipment Notes constituting the Trust Property. Subject to and in accordance with the terms of the Agreement and the Intercreditor Agreement, from funds then available to the Trustee, there will be distributed on each March 26, June 26, September 26 and December 26 (a "Regular Distribution Date"), commencing March 26, 1997, to the Person in whose name this Certificate is registered at the close of business on the 15th day preceding the Regular Distribution Date, an amount in respect of the Scheduled Payments on the Equipment Notes due on such Regular Distribution Date, the receipt of which has been confirmed by the Trustee, equal to the product of the percentage interest in the Trust evidenced by this Certificate and an amount equal to the sum of such Scheduled Payments. Subject to and in accordance with the terms of the Agreement and the Intercreditor Agreement, in the event that Special Payments on the Equipment Notes are received by the Trustee, from funds then available to the Trustee, there shall be distributed on the applicable Special Distribution Date, to the Person in whose name this Certificate is registered at the close of business on the 15th day preceding the Special Distribution Date, an amount in respect of such Special Payments on the Equipment Notes, the receipt of which has been confirmed by the Trustee, equal to the product of the percentage interest in the Trust evidenced by this Certificate and an amount equal to the sum of such Special Payments so received. If a Regular Distribution Date or Special Distribution Date is not a Business Day, distribution shall be made on the immediately following Business Day with the same force and effect as if made on such Regular Distribution Date or Special Distribution Date and no interest shall accrue during the intervening period. The Trustee shall mail notice of each Special Payment and the Special Distribution Date therefor to the Certificateholder of this Certificate. Distributions on this Certificate will be made by the Trustee by check mailed to the Person entitled thereto, without the presentation or surrender of this Certificate or the making of any notation hereon. Except as otherwise provided in the Agreement and notwithstanding the above, the final distribution on this Certificate will be made after notice mailed by the Trustee of the pendency of such distribution and only upon presentation and surrender of this Certificate at the office or agency of the Trustee specified in such notice. The Certificates do not represent a direct obligation of, or an obligation guaranteed by, or an interest in, the Guarantor, the Company or the Trustee or any affiliate thereof. The Certificates are limited in right of payment, all as more specifically set forth on the face hereof and in the Agreement. All payments or distributions made to Certificateholders under the Agreement shall be made only from the Trust Property and only to the extent that the Trustee shall have sufficient income or proceeds from the Trust Property to make such payments in accordance with the terms of the Agreement. Each Certificateholder of this Certificate, by its acceptance hereof, agrees that it will look solely to the income and proceeds from the Trust Property to the extent available for distribution to such Certificateholder as provided in the Agreement. This Certificate does not purport to summarize the Agreement and reference is made to the Agreement for information with respect to the interests, rights, benefits, obligations, proceeds, and duties evidenced hereby. A copy of the Agreement may be examined during normal business hours at the principal office of the Trustee, and at such other places, if any, designated by the Trustee, by any Certificateholder upon request. The Agreement permits, with certain exceptions therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Certificateholders under the Agreement at any time by the Guarantor, the Company and the Trustee with the consent of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust. Any such consent by the Certificateholder of this Certificate shall be conclusive and binding on such Certificateholder and upon all future Certificateholders of this Certificate and of any Certificate issued upon the transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent is made upon this Certificate. The Agreement also permits the amendment thereof, in certain limited circumstances, without the consent of the Certificateholders of any of the Certificates. As provided in the Agreement and subject to certain limitations set forth, the transfer of this Certificate is registrable in the Register upon surrender of this Certificate for registration of transfer at the offices or agencies maintained by the Trustee in its capacity as Registrar, or by any successor Registrar duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Trustee and the Registrar, duly executed by the Certificateholder hereof or such Certificateholder's attorney duly authorized in writing, and thereupon one or more new Certificates of authorized denominations evidencing the same aggregate Fractional Undivided Interest in the Trust will be issued to the designated transferee or transferees. The Certificates are issuable only as registered Certificates without coupons in minimum denominations of $100,000 Fractional Undivided Interest and integral multiples of $1,000 in excess thereof except that one Certificate may be in a denomination of less than $100,000 that is not a multiple of $1,000. As provided in the Agreement and subject to certain limitations therein set forth, the Certificates are exchangeable for new Certificates of authorized denominations evidencing the same aggregate Fractional Undivided Interest in the Trust, as requested by the Certificateholder surrendering the same. No service charge will be made for any such registration of transfer or exchange, but the Trustee shall require payment of a sum sufficient to cover any tax or governmental charge payable in connection therewith. The Trustee, the Registrar, and any agent of the Trustee or the Registrar may treat the person in whose name this Certificate is registered as the owner hereof for all purposes, and neither the Trustee, the Registrar, nor any such agent shall be affected by any notice to the contrary. The obligations and responsibilities created by the Agreement and the Trust created thereby shall terminate upon the distribution to Certificateholders of all amounts required to be distributed to them pursuant to the Agreement and the disposition of all property held as part of the Trust Property. THE AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES. Unless the certificate of authentication hereon has been executed by the Trustee, by manual signature, this Certificate shall not be entitled to any benefit under the Agreement or be valid for any purpose. IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed. AMERICAN TRANS AIR, INC. By: WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Trustee By -------------------------------------------------------------- Title: ---------------------------------------------------------- Dated: ---------------------------- [FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION] This is one of the Certificates referred to in the within-mentioned Agreement. WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Trustee By: --------------------------------------------------- Authorized Officer FORM OF TRANSFER NOTICE FOR VALUE RECEIVED the undersigned registered holder hereby sell(s), assign(s) and transfer(s) unto Insert Taxpayer Identification No. please print or typewrite name and address including zip code of assignee the within Certificate and all rights thereunder, hereby irrevocably constituting and appointing attorney to transfer said Certificate on the books of the Trustee with full power of substitution in the premises. [THE FOLLOWING PROVISION TO BE INCLUDED ON ALL CERTIFICATES EXCEPT PERMANENT OFFSHORE GLOBAL AND OFFSHORE PHYSICAL CERTIFICATES] In connection with any transfer of this Certificate occurring prior to the date that is the earlier of the date of an effective Registration Statement or December 27, 1999, the undersigned confirms that without utilizing any general solicitation or general advertising that: [Check One] --------- [ ] (a) this Certificate is being transferred in compliance with the exemption from registration under the Securities Act of 1933, as amended, provided by Rule 144A thereunder. or [ ] (b) this Certificate is being transferred other than in accordance with (a) above and documents are being furnished that comply with the conditions of transfer set forth in this Certificate and the Agreement. If neither of the foregoing boxes is checked, the Trustee or other Registrar shall not be obligated to register this Certificate in the name of any Person other than the Holder hereof unless and until the conditions to any such transfer of registration set forth herein and in Section 3.06 of the Agreement shall have been satisfied. Date: [Name of Transferor] ---------------------- ------------------------------------------ NOTE: The signature must correspond with the name as written upon the face of the within-mentioned instrument in every particular, without alteration or any change whatsoever. Signature Guarantee: ---------------------------------------------------------- TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED. The undersigned represents and warrants that it is purchasing this Certificate for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933, as amended, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Dated: -------------------- NOTE: To be executed by an executive officer. -- EXHIBIT B FORM OF CERTIFICATE FOR UNLEGENDED CERTIFICATES [Date] Wilmington Trust Company, not in its individual capacity but solely as Trustee Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 Attention: Corporate Trust Trustee Administration Re: American Trans Air 1996-1C Pass Through Trust, Pass Through Trust Certificates (the "Certificates") Dear Sirs: This letter relates to U.S. $__________ Fractional Undivided Interest of Certificates represented by a Certificate (the "Legended Certificate") which bears a legend outlining restrictions upon transfer of such Legended Certificate. Pursuant to Section 3.06 of the Pass Through Trust Agreement relating to the Certificates dated as of December 16, 1996 (the "Trust Agreement"), between American Trans Air, Inc. ("ATA") and you, we hereby certify that we are (or we will hold such securities on behalf of) a person outside the United States to whom the Certificates could be transferred in accordance with Rule 904 of Regulation S promulgated under the U.S. Securities Act of 1933, as amended. Accordingly, you are hereby requested to exchange the legended certificate for an unlegended certificate representing an identical principal amount of Certificates, all in the manner provided for in the Trust Agreement. You and ATA are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Terms used in this certificate have the meanings set forth in Regulation S. Very truly yours, [Name of Certificateholder] By: -------------------------------------- Authorized Signature EXHIBIT C FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH TRANSFERS PURSUANT TO REGULATION S [date] Wilmington Trust Company, not in its individual capacity but solely as Trustee Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 Attention: Corporate Trust Trustee Administration Re: American Trans Air 1996-1C Pass Through Trust (the "Trust"), 7.82% American Trans Air Pass Through Certificates Series 1996-1C (the "Certificates") Sirs: In connection with our proposed sale of $_______ Fractional Undivided Interest of the Certificates, we confirm that such sale has been effected pursuant to and in accordance with Regulation S under the Securities Act of 1933, as amended, and, accordingly, we represent that: (1) the offer of the Certificates was not made to a person in the United States; (2) either (a) at the time the buy order was originated, the transferee was outside the United States or we and any person acting on our behalf reasonably believed that the transferee was outside the United States or (b) the transaction was executed in, on or through the facilities of a designated off-shore securities market and neither we nor any person acting on our behalf knows that the transaction has been pre-arranged with a buyer in the United States; (3) no directed selling efforts have been made in the United States in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S, as applicable; and (4) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act. In addition, if the sale is made during a restricted period and the provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are applicable thereto, we confirm that such sale has been made in accordance with the applicable provisions of Rule 903(c)(3) or Rule 904(c)(1), as the case may be. You and American Trans Air, Inc. are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Terms used in this certificate have the meanings set forth in Regulation S. Very truly yours, [Name of Transferor] By:_______________________ Authorized Signature EXHIBIT D FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH TRANSFERS TO NON-QIB ACCREDITED INVESTORS [date] Wilmington Trust Company, not in its individual capacity but solely as Trustee Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 Attention: Corporate Trust Trustee Administration Re: American Trans Air 1996-1C Pass-Through Trust (the "Trust"), 7.82% American Trans Air Pass Through Certificates Series 1996-1C (the "Certificates") Dear Sirs: In connection with our proposed purchase of $_______________ aggregate principal amount of the Certificates, we confirm that: 1. We understand that any subsequent transfer of the Certificates is subject to certain restrictions and conditions set forth in the Pass Through Trust Agreement dated as of December 16, 1996 relating to the Certificates (the "Pass Through Trust Agreement") and the undersigned agrees to be bound by, and not to resell, pledge or otherwise transfer the Certificates except in compliance with, such restrictions and conditions and the Securities Act of 1933, as amended (the "Securities Act"). 2. We are purchasing Certificates having an aggregate principal amount of not less than $100,000 and each account (if any) for which we are purchasing Certificates is purchasing Certificates having an aggregate principal amount of not less than $100,000. 3. We understand that the Certificates have not been registered under the Securities Act, and that the Certificates may not be offered or sold except as permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for which we are acting as hereinafter stated, that if we should sell any Certificate, we will do so only (A) in accordance with Rule 144A under the Securities Act to a "qualified institutional buyer" (as defined therein), (B) to an institutional "accredited investor" (as defined below) that, prior to such transfer, furnishes to you and American Trans Air, Inc., a signed letter substantially in the form of this letter, (C) outside the United States in accordance with Rule 904 of Regulation S under the Securities Act, (D) pursuant to the exemption from registration provided by Rule 144 under the Securities Act, or (E) pursuant to an effective registration statement under the Securities Act, and we further agree to provide to any person purchasing any of the Certificates from us a notice advising such purchaser that resales of the Notes are restricted as stated herein. We further understand that the Certificates purchased by us will bear a legend to the foregoing effect. 4. We understand that, on any proposed resale of any Certificates, we will be required to furnish to you and American Trans Air, Inc. such certifications, legal opinions and other information as you and American Trans Air, Inc. may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. We further understand that the Certificates purchased by us will bear a legend to the foregoing effect. 5. We are an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Certificates and we and any accounts for which we are acting are each able to bear the economic risk of our or its investment. 6. We are acquiring the Certificates purchased by us for our own account or for one or more accounts (each of which is an institutional "accredited investor") as to each of which we exercise sole investment discretion. You and American Trans Air, Inc. are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Very truly yours, [Name of Transferor] By: ------------------------------------------------- Authorized Signature AMTRAN, INC. AMERICAN TRANS AIR, INC. and WILMINGTON TRUST COMPANY as Trustee PASS THROUGH TRUST AGREEMENT Dated as of December 16, 1996 American Trans Air 1996-1C Pass Through Trust 7.82% American Trans Air 1996-1C Pass Through Certificates Page -- TABLE OF CONTENTS Page ARTICLE I DEFINITIONS Section 1.01. Definitions...................................................2 Section 1.02. Compliance Certificates and Opinions.........................12 Section 1.03. Form of Documents Delivered to Trustee.......................13 Section 1.04. Acts of Certificateholders...................................13 ARTICLE II ORIGINAL ISSUANCE OF CERTIFICATES; ACQUISITION OF EQUIPMENT NOTES Section 2.01. [Intentionally omitted]......................................15 Section 2.02. Issuance of Certificates; Acquisition of Equipment Notes.....15 Section 2.03. Acceptance by Trustee........................................17 Section 2.04. Limitation of Powers.........................................17 ARTICLE III THE CERTIFICATES Section 3.01. Title, Form, Denomination and Execution of Certificates......17 Section 3.02. Restrictive Legends..........................................19 Section 3.03. Authentication of Certificates...............................21 Section 3.04. Transfer and Exchange........................................21 Section 3.05. Book-Entry Provisions for U.S. Global Certificate and Offshore Global Certificates..........................................22 Section 3.06. Special Transfer Provisions..................................23 Section 3.07. Mutilated, Destroyed, Lost or Stolen Certificates............26 Section 3.08. Persons Deemed Owners........................................27 Section 3.09. Cancellation.................................................27 Section 3.10. Limitation of Liability for Payments.........................27 Section 3.11. Temporary Certificates.......................................27 ARTICLE IV DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS Section 4.01. Certificate Account and Special Payments Account.............28 Section 4.02. Distributions from Certificate Account and Special Payments Account......................................................28 Section 4.03. Statements to Certificateholders.............................30 Section 4.04. Investment of Special Payment Moneys.........................31 ARTICLE V THE COMPANY Section 5.01. Maintenance of Corporate Existence...........................31 Section 5.02. Consolidation, Merger, Etc...................................31 ARTICLE VI DEFAULT Section 6.01. Events of Default............................................33 Section 6.02. Incidents of Sale of Equipment Notes.........................35 Section 6.03. Judicial Proceedings Instituted by Trustee; Trustee May Bring Suit.........................................................35 Section 6.04. Control by Certificateholders...............................35 Section 6.05. Waiver of Past Defaults.....................................36 Section 6.06. Right of Certificateholders to Receive Payments Not to Be Impaired.....................................................36 Section 6.07. Certificateholders May Not Bring Suit Except Under Certain Conditions...................................................37 Section 6.08. Remedies Cumulative..........................................37 Section 6.09. Undertaking for Costs........................................38 ARTICLE VII THE TRUSTEE Section 7.01. Notice of Defaults...........................................38 Section 7.02. Certain Rights of Trustee....................................38 Section 7.03. Not Responsible for Recitals or Issuance of Certificates.....40 Section 7.04. May Hold Certificates........................................40 Section 7.05. Money Held in Trust..........................................40 Section 7.06. Compensation and Reimbursement...............................40 Section 7.07. Corporate Trustee Required; Eligibility......................42 Section 7.08. Resignation and Removal: Appointment of Successor............42 Section 7.09. Acceptance of Appointment by Successor.......................44 Section 7.10. Merger, Conversion, Consolidation or Succession to Business..44 Section 7.11. Maintenance of Agencies......................................45 Section 7.12. Money for Certificate Payments to Be Held in Trust...........46 Section 7.13. Registration of Equipment Notes in Name of Subordination Agent .............................................................46 Section 7.14. Representations and Warranties of Trustee....................47 Section 7.15. Withholding Taxes; Information Reporting.....................48 Section 7.16. Trustee's Liens..............................................48 Section 7.17. Preferential Collection of Claims............................48 ARTICLE VIII CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE Section 8.01. The Company to Furnish Trustee with Names and Addresses of Certificateholders...........................................48 Section 8.02. Preservation of Information; Communications to Certificateholders............................. Section 8.03. Reports by Trustee..........................................49 Section 8.04. Reports by the Guarantor and Company........................49 ARTICLE IX SUPPLEMENTAL AGREEMENTS Section 9.01. Supplemental Agreements Without Consent of Certificateholders50 Section 9.02. Supplemental Agreements with Consent of Certificateholders...51 Section 9.03. Documents Affecting Immunity or Indemnity....................52 Section 9.04. Execution of Supplemental Agreements.........................52 Section 9.05. Effect of Supplemental Agreements............................52 Section 9.06. Conformity with Trust Indenture Act..........................53 Section 9.07. Reference in Certificates to Supplemental Agreements.........53 ARTICLE X AMENDMENTS TO INDENTURES AND NOTE DOCUMENTS Section 10.01. Amendments and Supplements to Indentures and Other Note ...... Documents....................................................53 ARTICLE XI TERMINATION OF TRUSTS Section 11.01. Termination of the Trust...................................54 ARTICLE XII MISCELLANEOUS PROVISIONS Section 12.01. Limitation on Rights of Certificateholders.................55 Section 12.02. Liabilities of Certificateholders..........................55 Section 12.03. Certificates Nonassessable and Fully Paid..................55 Section 12.04. [Intentionally omitted]......................................55 Section 12.05. Notices....................................................55 Section 12.06. Governing Law..............................................57 Section 12.07. Severability of Provisions.................................57 Section 12.08. [Intentionally omitted]....................................57 Section 12.09. Effect of Headings and Table of Contents.....................57 Section 12.10. Successors and Assigns.....................................57 Section 12.11. Benefits of Agreement......................................57 Section 12.12. Legal Holidays...............................................57 Section 12.13. Counterparts...............................................58 Section 12.14. Communication by Certificateholders with Other .............. Certificateholders........................................58 Schedule 1 - Trust Indenture and Security Agreements Schedule 2 - Participation Agreements Exhibit A - Form of Certificate Exhibit B - Form of Certificate for Unlegended Certificates Exhibit C - Form of Certificate to be Delivered in connection with Transfer/Pursuant to RegulationS Exhibit D - Form of Certificate to be Delivered in Connection with d Transfers to Non-QIB AccrediteInvestors 1 Not to be included on the face of the Permanent Offshore Global Certificate. 2 To be included on the face of each Global Certificate. EX-4.14 9 file009.txt AMTRAN, INC., 2000 10-K, EXHIBIT 4.14 SCHEDULE II to Note Purchase Agreement AMTRAN, INC. AMERICAN TRANS AIR, INC. and WILMINGTON TRUST COMPANY as Trustee PASS THROUGH TRUST AGREEMENT Dated as of December 23, 1997 American Trans Air 1997-1A-O Pass Through Trust 6.99% American Trans Air 1997-1A-O Pass Through Certificates TABLE OF CONTENTS ARTICLE I DEFINITIONS.........................................................3 Section 1.01. Definitions.............................................3 Section 1.02. Compliance Certificates and Opinions...................13 Section 1.03. Form of Documents Delivered to Trustee.................14 Section 1.04. Acts of Certificateholders.............................14 ARTICLE II ORIGINAL ISSUANCE OF CERTIFICATES;................................16 Section 2.01. [Intentionally omitted]................................16 Section 2.02. Issuance of Certificates; Acquisition of Equipment Notes...................................................16 Section 2.03. Withdrawal of Deposits................................17 Section 2.04. Acceptance by Trustee.................................17 Section 2.05. Limitation of Powers...................................17 ARTICLE III THE CERTIFICATES..................................................18 Section 3.01. Title, Form, Denomination and Execution of Certificates.........................................................18 Section 3.02. Restrictive Legends....................................19 Section 3.03. Authentication of Certificates.........................21 Section 3.04. Transfer and Exchange..................................21 Section 3.05. Book-Entry Provisions for U.S. Global Certificate and Offshore Global Certificates.....................................22 Section 3.06. Special Transfer Provisions............................23 Section 3.07. Mutilated, Destroyed, Lost or Stolen Certificates......26 Section 3.08. Persons Deemed Owners..................................26 Section 3.09. Cancellation...........................................26 Section 3.10. Limitation of Liability for Payments...................26 Section 3.11. Temporary Certificates.................................27 ARTICLE IV DISTRIBUTIONS; STATEMENTS TO......................................27 Section 4.01. Certificate Account and Special Payments Account.......27 Section 4.02. Distributions from Certificate Account and Special Payments Account.....................................................28 Section 4.03. Statements to Certificateholders.......................29 Section 4.04. Investment of Special Payment Moneys...................31 ARTICLE V THE COMPANY........................................................31 Section 5.01. Maintenance of Corporate Existence.....................31 Section 5.02. Consolidation, Merger, Etc.............................31 Section 5.03. Rule 144A(d)(4) Information...........................33 ARTICLE VI DEFAULT...........................................................33 Section 6.01. Events of Default......................................33 Section 6.02. Incidents of Sale of Equipment Notes...................35 Section 6.03. Judicial Proceedings Instituted by Trustee; Trustee May Bring Suit.......................................................35 Section 6.04. Control by Certificateholders..........................36 Section 6.05. Waiver of Past Defaults................................36 Section 6.06. Right of Certificateholders to Receive Payments Not to Be Impaired.......................................................37 Section 6.07. Certificateholders May Not Bring Suit Except Under Certain Conditions...................................................37 Section 6.08. Remedies Cumulative....................................38 Section 6.09. Undertaking for Costs..................................38 ARTICLE VII THE TRUSTEE......................................................38 Section 7.01. Notice of Defaults.....................................38 Section 7.02. Certain Rights of Trustee..............................38 Section 7.03. Not Responsible for Recitals or Issuance of Certificates.........................................................40 Section 7.04. May Hold Certificates..................................40 Section 7.05. Money Held in Trust....................................40 Section 7.06. Compensation and Reimbursement.........................40 Section 7.07. Corporate Trustee Required, Eligibility................42 Section 7.08. Resignation and Removal: Appointment of Successor......42 Section 7.09. Acceptance of Appointment by Successor.................44 Section 7.10. Merger, Conversion, Consolidation or Succession to Business..........................................................44 Section 7.11. Maintenance of Agencies........................................44 Section 7.12. Money for Certificate Payments to Be Held in Trust.....46 Section 7.13. Registration of Equipment Notes in Name of Subordination Agent..................................................46 Section 7.14. Representations and Warranties of Trustee.......................46 Section 7.15. Withholding Taxes, Information Reporting...............47 Section 7.16. Trustee's Liens........................................48 Section 7.17. Preferential Collection of Claims......................48 ARTICLE VIII CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE................48 Section 8.01. The Company to Furnish Trustee with Names and Addresses of Certificateholders......................................48 Section 8.02. Preservation of Information; Communications to Certificateholders...................................................48 Section 8.03. Reports by Trustee.....................................49 Section 8.04. Reports by the Guarantor and Company...................49 ARTICLE IX SUPPLEMENTAL AGREEMENTS...........................................50 Section 9.01. Supplemental Agreements Without Consent of Certificateholders...................................................50 Section 9.02. Supplemental Agreements with Consent of Certificateholders...................................................51 Section 9.03. Documents Affecting Immunity or Indemnity..............52 Section 9.04. Execution of Supplemental Agreements...................52 Section 9.05. Effect of Supplemental Agreements......................52 Section 9.06. Conformity with Trust Indenture Act....................53 Section 9.07. Reference in Certificates to Supplemental Agreements...53 ARTICLE X AMENDMENTS TO INDENTURES AND NOTE DOCUMENTS........................53 Section 10.01. Amendments and Supplements to Indentures and Other Note Documents.................................................53 ARTICLE XI TERMINATION OF TRUSTS.............................................54 Section 11.01. Termination of the Trust..............................54 ARTICLE XII MISCELLANEOUS PROVISIONS.........................................57 Section 12.01. Limitation on Rights of Certificateholders............57 Section 12.02. Liabilities of Certificateholders.....................57 Section 12.03. Certificates Nonassessable and Fully Paid.............57 Section 12.04. [Intentionally omitted]...............................57 Section 12.05. Notices...............................................57 Section 12.06. Governing Law.........................................58 Section 12.07. Severability of Provisions............................59 Section 12.08. [Intentionally omitted]...............................59 Section 12.09. Effect of Headings and Table of Contents..............59 Section 12.10. Successors and Assigns................................59 Section 12.11. Benefits of Agreement.................................59 Section 12.12. Legal Holidays........................................59 Section 12.13. Counterparts..........................................59 Section 12.14. Communication by Certificateholders with Other Certificateholders...................................................60 Section 12.15. Intention of Parties..................................60 Exhibit A - Form of Certificate Exhibit B - Form of Certificate to be Delivered in Connection with Transfers Pursuant to Regulation S Exhibit C - Form of Certificate to be Delivered in Connection with Transfers to Non-QIB Accredited Investors Exhibit D - Form of Assignment and Assumption Agreement Exhibit E - Form of Certificate to be Delivered in Connection with Transfers to QIBs This PASS THROUGH TRUST AGREEMENT, dated as of December 23, 1997, among AMTRAN, INC., an Indiana corporation (the "Guarantor"), AMERICAN TRANS AIR, INC., an Indiana corporation (the "Company"), and WILMINGTON TRUST COMPANY, a Delaware banking corporation, as Trustee, is made with respect to the formation of the American Trans Air 1997-1A-O Pass Through Trust, and the issuance of 6.99% American Trans Air 1997-1A-O Pass Through Certificates representing fractional undivided interests in the Trust. WITNESSETH: WHEREAS, the Company has obtained commitments from The Boeing Company for the delivery of certain Aircraft; WHEREAS, the Company intends to finance the acquisition of each such Aircraft either (i) through separate leveraged lease transactions in which the Company will lease such aircraft (collectively, the "Leased Aircraft") or (ii) through separate secured loan transactions in which the Company will own such Aircraft (collectively, the "Owned Aircraft"); WHEREAS, in the case of each Leased Aircraft, each Owner Trustee, acting on behalf of the corresponding Owner Participant, will issue pursuant to an Indenture, on a non-recourse basis, three series of Equipment Notes in order to finance a portion of the purchase price of each such Leased Aircraft; WHEREAS, in the case of each Owned Aircraft, the Company, will issue pursuant to an Indenture, on a recourse basis, three series of Equipment Notes to finance a portion of the purchase price of each such Owned Aircraft; WHEREAS, the Trustee, upon execution and delivery of this Agreement, hereby declares the creation of this Trust (the "1997-1A-O Trust") for the benefit of the Certificateholders, and the initial Certificateholders, as the grantors of the 1997-1A-O Trust, by their respective acceptances of the Certificates, join in the creation of this 1997-1A-O Trust with the Trustee; WHEREAS, except for those Certificates to which an Escrow Receipt has been affixed, all Certificates to be issued by the Trust will evidence fractional undivided interests in the Trust and will convey no rights, benefits or interests in respect of any property other than the Trust Property; WHEREAS, the Escrow Agent and the Initial Purchasers have contemporaneously herewith entered into an Escrow Agreement with the Escrow Paying Agent pursuant to which the Initial Purchasers have delivered to the Escrow Agent the proceeds from the sale of the Certificates and have irrevocably instructed the Escrow Agent to withdraw and pay funds from such proceeds upon request and proper certification by the Trustee to purchase Equipment Notes at the times at which the Aircraft are delivered as contemplated by the Note Purchase Agreement from time to time prior to the Delivery Period Termination Date (other than the delivery of an Aircraft on the Issuance Date, if applicable); WHEREAS, the Escrow Agent on behalf of the Certificateholders has contemporaneously herewith entered into a Deposit Agreement with the Depositary under which the Deposits referred to therein will be made and from which the Escrow Agent will withdraw funds to allow the Trustee to purchase Equipment Notes from time to time prior to the Delivery Period Termination Date (other than with respect to Equipment Notes relating to an Aircraft delivered on the Issuance Date, if applicable); WHEREAS, pursuant to the terms and conditions of this Agreement and the Note Purchase Agreement, upon or shortly following the delivery of an Aircraft (other than delivery of an Aircraft on or prior to the Issuance Date, if applicable), the Trustee on behalf of the Trust, using funds withdrawn pursuant to the Escrow Agreement, shall (subject to certain conditions) purchase an Equipment Note having the same interest rate as, and final maturity date not later than the final Regular Distribution Date of, the Certificates issued hereunder and shall hold such Equipment Note in trust for the benefit of the Certificateholders; WHEREAS, pursuant to the terms and conditions of this Agreement and the Note Purchase Agreement, upon the delivery of an Aircraft on the Issuance Date, if applicable, the Trustee on behalf of the Trust, using funds from the proceeds of the sale of the Certificates, shall (subject to certain conditions) purchase an Equipment Note having the same interest rate as, and final maturity date not later than the final Regular Distribution Date of, the Certificates issued hereunder and shall hold such Equipment Note in trust for the benefit of the Certificateholders; WHEREAS, all of the conditions and requirements necessary to make this Agreement, when duly executed and delivered, a valid, binding and legal instrument, enforceable in accordance with its terms and for the purposes herein expressed, have been done, performed and fulfilled, and the execution and delivery of this Agreement in the form and with the terms hereof have been in all respects duly authorized; and WHEREAS, to facilitate the sale of Equipment Notes to, and the purchase of Equipment Notes by, the Trustee on behalf of the 1997-1A-O Trust, (i) the Company as the "issuer", as such term is defined in and solely for purposes of the Securities Act of 1933, as amended, of the Certificates to be issued pursuant hereto, and as the "obligor", as such term is defined in and solely for purposes of the Trust Indenture Act of 1939, as amended, and (ii) the Guarantor have each duly authorized the execution and delivery of this Agreement with respect to all such Certificates and are undertaking to perform certain administrative and ministerial duties hereunder and are also undertaking to pay the fees and expenses of the Trustee; NOW, THEREFORE, in consideration of the mutual agreements herein contained, and of other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I DEFINITIONS Section 1.01. Definitions. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: (1) the terms used herein that are defined in this Article have the meanings assigned to them in this Article, and include the plural as well as the singular; (2) all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference herein, have the meanings assigned to them therein; (3) all references in this Agreement to designated "Articles", "Sections" and other subdivisions are to the designated Articles, Sections and other subdivisions of this Agreement; (4) the words "herein", "hereof' and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision; and (5) unless the context otherwise requires, whenever the words "including", "include" or "includes" are used herein, it shall be deemed to be followed by the phrase "without limitation". Act: With respect to any Certificateholder has the meaning specified in Section 1.04. Affiliate: With respect to any specified Person, means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such Person. For the purposes of this definition, "control", when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms "controlling" and "controlled" have meanings correlative to the foregoing. Agent Members: Has the meaning specified in Section 3.05(a). Aircraft: means each of the Aircraft or Substitute Aircraft in respect of which a Participation Agreement is entered into in accordance with the Note Purchase Agreement. Applicable Delivery Date: Has the meaning specified in Section 2.01(b). - Applicable Participation Agreement: Has the meaning specified in Section 2.01(b). Assignment and Assumption Agreement: Means the assignment and assumption agreement substantially in the form of Exhibit D hereto executed and delivered in accordance with Section 11.01. Authorized Agent: Means any Paying Agent or Registrar for the Certificates. Avoidable Tax: Has the meaning specified in Section 7.08(e) hereof. Book-Entry Certificates: With respect to the Certificates, means a beneficial interest in the Certificates, ownership and transfers of which shall be made through book entries as described in Section 3.04. Business Day: Means any day other than a Saturday, a Sunday or a day on which commercial banks are required or authorized to close in Indianapolis, Indiana; New York, New York; or Phoenix, Arizona; and, so long as any such Certificate is outstanding, a city and state in which the Trustee or any related Loan Trustee maintains its Corporate Trust Office or receives and disburses funds. Cedel: Means Cedel Bank societe anonyme. Certificate: Means any one of the certificates executed and authenticated by the Trustee, substantially in the form of Exhibit A hereto. Certificate Account: Means the account or accounts created and maintained pursuant to Section 4.01(a). Certificateholder or Holder: Means the Person in whose name a Certificate is registered in the Register. Clearing Agency: Means an organization registered as a "clearing agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as amended. Clearing Agency Participant: Means a broker, dealer, bank, other financial institution or other Person for whom from time to time a Clearing Agency effects, directly or indirectly, book-entry transfers and pledges of securities deposited with the Clearing Agency. Company: Means American Trans Air, Inc., an Indiana corporation, or its successor in interest pursuant to Section 5.02. Controlling Party: Means the Person entitled to act as such pursuant to the terms of the Intercreditor Agreement. Corporate Trust Office: With respect to the Trustee or any Loan Trustee, means the office of such trustee in the city at which at any particular time its corporate trust business shall be principally administered. Cut-off Date: Means the earlier of (a) the Delivery Period Termination Date and (b) the date on which a Triggering Event occurs. Delivery Date: Has the meaning specified in Section 1(b) of the Note Purchase Agreement. Delivery Notice: Has the meaning specified in Annex A to the Note Purchase Agreement. Delivery Period Termination Date: Has the meaning specified in Annex A to the Note Purchase Agreement. Deposit Agreement: Means the Deposit Agreement (Class A) dated as of December 23, 1997 relating to the Certificates, between the Depositary and the Escrow Agent, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. Depositary: Means NBD Bank, National Association, a national banking association. Deposits: Has the meaning specified in the Deposit Agreement. Direction: Has the meaning specified in Section 1.04(c). Distribution Date: Means each Regular Distribution Date and each Special Distribution Date. DTC: Means The Depository Trust Company, its nominees and their respective successors. Equipment Note: Means the "Secured Certificates" as defined in the Indentures. ERISA: Means the Employee Retirement Income Security Act of 1974, as amended from time to time, or any successor federal statute. Escrow Agent: Means, initially, First Security Bank, National Association, and any replacement or successor therefor appointed in accordance with the Escrow Agreement. Escrow Agreement: Means the Escrow and Paying Agent Agreement (Class A) dated as of December 23, 1997 relating to the Certificates, among the Escrow Agent, the Escrow Paying Agent, the Trustee and the Initial Purchasers, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. Escrow Paying Agent: Means the Person acting as paying agent under the Escrow Agreement. Escrow Receipt: Means the receipt substantially in the form annexed to the Escrow Agreement representing a fractional undivided interest in the funds held in escrow thereunder. Euroclear: Means the Euroclear System. Event of Default: Means the occurrence of an Indenture Default under any Indenture pursuant to which Equipment Notes held by the Trust were issued. Final Withdrawal: Has the meaning specified in the Escrow Agreement. Final Withdrawal Date: Has the meaning specified in the Escrow Agreement. Final Withdrawal Notice: Has the meaning specified in Section 2.03. Fractional Undivided Interest: Means the fractional undivided interest in the Trust that is evidenced by a - Certificate. Global Certificates: Has the meaning assigned to such term in Section 3.01. Guarantor: Means Amtran, Inc., an Indiana corporation, or its successor in interest. Indenture: Means each of the three separate trust indenture and security agreements relating to the Aircraft, each entered into pursuant to the related Participation Agreement, in each case as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. Indenture Default: With respect to any Indenture, means any Event of Default (as such term is defined in such Indenture). Initial Purchasers: Means Salomon Brothers Inc and Furman Selz LLC, collectively. Initial Regular Distribution Date: Meansthe first Regular Distribution Date on which a Scheduled Payment is to be made. Institutional Accredited Investor: Means an institutional investor that is an "accredited investor" within the meaning set forth in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act. Intercreditor Agreement: Means the Intercreditor Agreement dated December 23, 1997 among the Trustee, the Other Trustees, the Liquidity Provider, the liquidity providers, if any, relating to the Certificates issued under (and as defined in) the Other Pass Through Trust Agreements, and Wilmington Trust Company, as Subordination Agent thereunder, as amended, supplemented or otherwise modified from time to time in accordance with its terms. Issuance Date: Means the date of the issuance of the Certificates. Lease: Means any lease between an Owner Trustee, as the lessor, and the Company, as the lessee, referred to in the related Indenture, as each such lease may be amended or supplemented in accordance with its respective terms; and Leases means all such leases. Leased Aircraft: Has the meaning specified in the second recital to this Agreement. Letter of Representations: Means the agreement dated the Issuance Date among the Company, the Trustee and the initial Clearing Agency. Liquidity Facility: Means the Irrevocable Revolving Credit Agreement Class A Certificates dated December 23, 1997 relating to the Certificates between the Liquidity Provider and the Subordination Agent, as amended, replaced, supplemented or otherwise modified from time to time in accordance with its terms and the terms of the Intercreditor Agreement. Liquidity Provider: Means, initially, ING Bank, a Dutch bank, and any replacement or successor therefor appointed in accordance with the Liquidity Facility and the Intercreditor Agreement. Loan Trustee: With respect to any Equipment Note or the Indenture applicable thereto, means the bank or trust company designated as loan or indenture trustee under such Indenture; and any successor to such Loan Trustee as such trustee; and Loan Trustees means all of the Loan Trustees under the Indentures. Non-U.S. Person: Means a Person that is not a U.S. Person as defined in Regulation S. Note Documents: With respect to any Equipment Note, means the related Indenture, Lease (if the related Aircraft is leased to the Company) and Participation Agreement. Note Purchase Agreement: Means the Note Purchase Agreement dated as of December 23, 1997 among the Trustee, the Other Trustees, the Company, the Escrow Agent, the Escrow Paying Agent and the Subordination Agent, providing for, among other things, the purchase of Equipment Notes by the Trustee on behalf of the Trust, as the same may be amended, supplemented or otherwise modified from time to time, in accordance with its terms. Notice of Purchase Withdrawal: Has the meaning specified in the Deposit Agreement. Offering Memorandum: Means the Offering Memorandum dated December 17, 1997 relating to the offering of the Certificates and the certificates issued under the Other Pass Through Trust Agreements. Officer's Certificate: Means a certificate signed (a) in the case of the Guarantor or the Company, by (i) the President or any Executive Vice President or Senior Vice President of the Guarantor or the Company, respectively, signing alone or (ii) any Vice President of the Guarantor or the Company signing together with the Secretary, the Assistant Secretary, the Treasurer or any Assistant Treasurer of the Guarantor or the Company, respectively, or (b) in the case of the Trustee or an Owner Trustee or a Loan Trustee, a Responsible Officer of the Trustee or such Owner Trustee or such Loan Trustee, as the case may be. Offshore Global Certificates: Has the meaning assigned to such term in Section 3.01. Offshore Physical Certificates: Has the meaning assigned to such term in Section 3.01. Opinion of Counsel: Means a written opinion of legal counsel who (a) in the case of counsel for the Guarantor or the Company, may be (i) a senior attorney in rank of the officers of the Guarantor or the Company a principal duty of which is furnishing advice as to legal matters or (ii) such other counsel designated by the Guarantor or the Company and reasonably acceptable to the Trustee and (b) in the case of any Owner Trustee or any Loan Trustee, may be such counsel as may be designated by any of them whether or not such counsel is an employee of any of them, and who shall be reasonably acceptable to the Trustee. Other Pass Through Trust Agreement: Means (i) the American Trans Air 1997-1B-O Pass Through Trust Agreement relating to the American Trans Air 1997-1B-O Pass Through Trust, and (ii) the American Trans Air 1997-1C-O Pass Through Trust Agreement relating to the American Trans Air 1997-1C-O Pass Through Trust, each dated the date hereof; and Other Pass Through Trust Agreements means all such agreements. Other Trustee: Means the trustee under each of the Other Pass Through Trust Agreements, and any successor or other trustee appointed as provided therein and Other Pass Through Trustees means both such trustees. Other Trusts: Means the American Trans Air 1997-1B-O Pass Through Trust and the American Trans Air 1997-1C-O Pass Through Trust. Outstanding: With respect to Certificates, means, as of the date of determination, all Certificates theretofore authenticated and delivered under this Agreement, except: (i) Certificates theretofore canceled by the Registrar or delivered to the Trustee or the Registrar for cancellation; (ii) All of the Certificates if money in the full amount required to make the final distribution with respect thereto pursuant to Section 11.01 hereof has been theretofore deposited with the Trustee in trust for the Holders of such Certificates as provided in Section 4.01 pending distribution of such money to such Certificateholders pursuant to such final distribution payment; and (iii) Certificates in exchange for or in lieu of which other Certificates have been authenticated and delivered pursuant to this Agreement. Owned Aircraft: Has the meaning specified in the second recital to this Agreement. Owner Participant: With respect to any Equipment Note, means the "Owner Participant" as referred to in the Indenture pursuant to which such Equipment Note is issued and any permitted successor or assign of such Owner Participant; and Owner Participants at any time of determination means all of the Owner Participants thus referred to in the Indentures. Owner Trustee: With respect to any Equipment Note, means the "Owner Trustee", as referred to in the Indenture pursuant to which such Equipment Note is issued, not in its individual capacity but solely as trustee; and Owner Trustees means all of the Owner Trustees party to any of the respective Indentures. Participation Agreement: Means each Participation Agreement to be entered into by the Trustee and the Other Trustees pursuant to the Note Purchase Agreement, as the same may be amended, supplemented or otherwise modified in accordance with its terms; and Participation Agreements means all such agreements. Paying Agent: Means the paying agent maintained and appointed for the Certificates pursuant to Section 7.11. Permitted Investments: Means obligations of the United States of America or agencies or instrumentalities thereof for the payment of which the full faith and credit of the United States of America is pledged, maturing in not more than 60 days or such lesser time as is necessary for payment of any Special Payments on a Special Distribution Date. Person: Means any person, including any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization, or government or any agency or political subdivision thereof. Physical Certificates: Has the meaning specified in Section 3.01. Pool Balance: Means, as of any date, (i) the original aggregate face amount of the Certificates less (ii) the aggregate amount of all payments made in respect of such Certificates other than payments made in respect of interest or premium thereon or reimbursement of any costs or expenses incurred in connection therewith less (iii) the aggregate amount of unused Deposits distributed as a Final Withdrawal other than payments in respect of interest or premium thereon. The Pool Balance as of any Distribution Date shall be computed after giving effect to the payment of principal, if any, on the Equipment Notes or other Trust Property held in the Trust and the distribution thereof to be made on such Distribution Date and the distribution of the Final Withdrawal to be made on such Distribution Date. Pool Factor: Means, as of any date, the quotient (rounded to the seventh decimal place) computed by dividing (i) the Pool Balance as at such date by (ii) the original aggregate face amount of the Certificates. The Pool Factor as of any Distribution Date shall be computed after giving effect to the payment of principal, if any, on the Equipment Notes or other Trust Property and the distribution thereof to be made on such Distribution Date and the distribution of the Final Withdrawal to be made on such Distribution Date. Private Placement Legend: Has the meaning specified in Section 3.02. PTC Event of Default: Means any failure to pay within 10 Business Days of the due date thereof: (i) the outstanding Pool Balance on October 15, 2018 or (ii) interest due on the Certificates on any Distribution Date (unless the Subordination Agent shall have made an Interest Drawing (as defined in the Intercreditor Agreement) or a withdrawal or withdrawals from a cash collateral account pursuant to Section 3.6(f) of the Intercreditor Agreement, with respect thereto in an amount sufficient to pay such interest and shall have distributed such amount to the Certificateholders). Purchase Agreement: Means the Purchase Agreement dated December 17, 1997 among the Initial Purchasers, the Company and the Depositary, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. QIB: Means a qualified institutional buyer as defined in Rule 144A. Record Date: Means (i) for Scheduled Payments to be distributed on any Regular Distribution Date, other than the final distribution, the 15th day (whether or not a Business Day) preceding such Regular Distribution Date, and (ii) for Special Payments to be distributed on any Special Distribution Date, other than the final distribution, the 15th day (whether or not a Business Day) preceding such Special Distribution Date. Register and Registrar: Mean the register maintained and the registrar appointed pursuant to Sections 3.04 and 7.11. Regular Distribution Date: With respect to distributions of Scheduled Payments in respect of the Certificates, means each date designated as such in this Agreement, until payment of all the Scheduled Payments to be made under the Equipment Notes held in the Trust has been made; provided, however, that, if any such day shall not be a Business Day, the related distribution shall be made on the next succeeding Business Day without additional interest. Regulation S Restricted Date: Means the date 40-days after the later of the commencement of the initial offering of the Certificates and the date of initial issuance thereof. Related Pass Through Trust Agreement: Means the American Trans Air 1997-1A-S Pass Through Trust Agreement relating to the American Trans Air 1997-1A-S Pass Through Trust, dated the date hereof, entered into by the Company and the institution acting as trustee thereunder, which agreement becomes effective upon the execution and delivery of the Assignment and Assumption Agreement pursuant to Section 11.01. Related Trust: Means the American Trans Air 1997-1A-S Pass Through Trust, formed under the Related Pass Through Trust Agreement. Related Trustee: Means the trustee under the Related Pass Through Trust Agreement. Request: Means a request by the Company setting forth the subject matter of the request accompanied by an Officer's Certificate and an Opinion of Counsel as provided in Section 1.02 of this Agreement. Responsible Officer: With respect to the Trustee, any Loan Trustee and any Owner Trustee, means any officer in the Corporate Trust Division of the Trustee, Loan Trustee or Owner Trustee or any other officer customarily performing functions similar to those performed by the persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of his knowledge of and familiarity with a particular subject. Rule 144A: Means Rule 144A under the Securities Act and any successor regulation thereto. Scheduled Payment: With respect to any Equipment Note, means any payment of principal and interest on such Equipment Note or any payment of interest on the Certificates with funds drawn under the Liquidity Facility (other than any such payment which is not in fact received by the Trustee or any Subordination Agent within five days of the date on which such payment is scheduled to be made) due from the obligor thereon which payment represents the installment of principal at the stated maturity of such installment of principal on such Equipment Note, the payment of regularly scheduled interest accrued on the unpaid principal amount of such Equipment Note, or both; provided that any payment of principal, premium, if any, or interest resulting from the redemption or purchase of any Equipment Note shall not constitute a Scheduled Payment. SEC: Means the Securities and Exchange Commission as from time to time constituted or created under the Securities Exchange Act of 1934, or, if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date. Securities Act: Means the United States Securities Act of 1933, as amended from time to time, or any successor thereto. Special Distribution Date: Means each date on which a Special Payment is to be distributed as specified in this Agreement; provided, however, that, if any such day shall not be a Business Day, the related distribution shall be made on the next succeeding Business Day without additional interest. Special Payment: Means any payment (other than a Scheduled Payment) in respect of, or any proceeds of, any Equipment Note or Trust Indenture Estate (as defined in each Indenture) or Special Redemption Premium (if applicable). Special Payments Account: Means the account or accounts created and maintained pursuant to Section 4.01(b). Special Redemption Premium: Means the premium, if any, payable by the Company in respect of the Final Withdrawal pursuant to the Note Purchase Agreement. Subordination Agent: Shall have the meaning specified therefor in the Intercreditor Agreement. Substitute Aircraft: Has the meaning specified in the Note Purchase Agreement. Transfer Date: Has the meaning specified in Section 11.01. Triggering Event: Shall have the meaning specified therefor in the Intercreditor Agreement. Trust: Means the trust created by this Agreement, the estate of which consists of Trust Property. Trust Indenture Act: Except as otherwise provided in Section 9.06, means the Trust Indenture Act of 1939 as in force at the date as of which this Agreement was executed. Trust Property: Means (i) the Equipment Notes held as the property of the Trust, all monies at any time paid thereon and all monies due and to become due thereunder, (ii) the rights of the Trust and the Trustee, on behalf of the Trust, under the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement and the Liquidity Facilities, including, without limitation, all monies receivable in respect of such rights, provided that rights with respect to the Deposits or under the Escrow Agreement, except for the right to direct withdrawals for the purchase of Equipment Notes to be held herein, will not constitute Trust Property, and (iii) funds from time to time deposited in the Certificate Account and the Special Payments Account and, subject to the Intercreditor Agreement, any proceeds from the sale by the Trustee pursuant to Article VI hereof of any such Equipment Note. Trustee: Means Wilmington Trust Company, or its successor in interest, and any successor trustee appointed as provided herein. U.S. Global Certificate: Has the meaning specified in Section 3.01. U.S. Physical Certificates: Has the meaning specified in Section 3.01. Section 1.02. Compliance Certificates and Opinions. Upon any application or request by the Company, any Owner Trustee or any Loan Trustee to the Trustee to take any action under any provision of this Agreement, the Company, such Owner Trustee or such Loan Trustee, as the case may be, shall furnish to the Trustee an Officers' Certificate stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Agreement relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Agreement relating to such particular application or request, no additional certificate or opinion need be furnished. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Agreement (other than a certificate provided pursuant to Section 8.04(d)) shall include: (1) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions in this Agreement relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. Section 1.03. Form of Documents Delivered to Trustee. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters and any such Person may certify or give an opinion as to such matters in one or several documents. Any Opinion of Counsel stated to be based on the opinion of other counsel shall be accompanied by a copy of such other opinion. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Agreement, they may, but need not, be consolidated and form one instrument. Section 1.04. Acts of Certificateholders. -------------------------- (a)......Any direction, consent, waiver or other action provided by this Agreement to be given or taken by Certificateholders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Certificateholders in person or by an agent or proxy duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required pursuant to this Agreement, to the Company or any Loan Trustee. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Certificateholders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Agreement and conclusive in favor of the Trustee, the Company and any Loan Trustee, if made in the manner provided in this Section. (b)......The fact and date of the execution by any Person of any such instrument or writing may be proved by the certificate of any notary public or other officer of any jurisdiction authorized to take acknowledgments of deeds or administer oaths that the Person executing such instrument acknowledged to him the execution thereof, or by an affidavit of a witness to such execution sworn to before any such notary or such other officer and where such execution is by an officer of a corporation or association or a member of a partnership, on behalf of such corporation, association or partnership, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other reasonable manner which the Trustee deems sufficient. (c)......In determining whether the Certificateholders of the requisite Fractional Undivided Interests of Certificates Outstanding have given any direction, consent or waiver (a "Direction"), under this Agreement, Certificates owned by the Company, the Guarantor, any Owner Trustee, any Owner Participant or any Affiliate of any such Person shall be disregarded and deemed not to be Outstanding for purposes of any such determination. In determining whether the Trustee shall be protected in relying upon any such Direction, only Certificates which the Trustee knows to be so owned shall be so disregarded. Notwithstanding the foregoing, (i) if any such Person owns 100% of the Certificates Outstanding, such Certificates shall not be so disregarded as aforesaid, and (ii) if any amount of Certificates so owned by any such Person have been pledged in good faith, such Certificates shall not be disregarded as aforesaid if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Certificates and that the pledgee is not the Company, the Guarantor, any Owner Trustee, any Owner Participant or any Affiliate of any such Person. (d)......The Company may, at its option by delivery of an Officer's Certificate to the Trustee, set a record date to determine the Certificateholders entitled to give any consent, request, demand, authorization, direction, notice, waiver or other Act. Notwithstanding Section 316(c) of the Trust Indenture Act, such record date shall be the record date specified in such Officer's Certificate which shall be a date not more than 30 days prior to the first solicitation of Certificateholders in connection therewith. If such a record date is fixed, such consent request, demand, authorization, direction, notice, waiver or other Act may be given before or after such record date, but only the Certificateholders of record at the close of business on such record date shall be deemed to be Certificateholders for the purposes of determining whether Certificateholders of the requisite proportion of Outstanding Certificates have authorized or agreed or consented to such consent, request, demand, authorization, direction, notice, waiver or other Act, and for that purpose the Outstanding Certificates shall be computed as of such record date; provided that no such consent, request, demand, authorization, direction, notice, waiver or other Act by the Certificateholders on such record date shall be deemed effective unless it shall become effective pursuant to the provisions of this Agreement not later than one year after the record date. (e)......Any direction, consent, waiver or other action by the Certificateholder of any Certificate shall bind the Certificateholder of every Certificate issued upon the transfer thereof or in exchange therefor or in lieu thereof, whether or not notation of such action is made upon such Certificate. (f)......Except as otherwise provided in Section 1.04(c), Certificates owned by or pledged to any Person shall have an equal and proportionate benefit under the provisions of this Agreement, without preference, priority, or distinction as among all of the Certificates. ARTICLE II ORIGINAL ISSUANCE OF CERTIFICATES; ACQUISITION OF EQUIPMENT NOTES Section 2.01. [Intentionally omitted]. Section 2.02. Issuance of Certificates; Acquisition of Equipment Notes. -------------------------------------------------------- (a)......On or prior to the Issuance Date of the Certificates, the Trustee shall execute and deliver the Intercreditor Agreement, the Escrow Agreement and the Note Purchase Agreement, each in the form delivered to the Trustee by the Company. Upon the oral or written request of the Company or the Company's counsel acting on behalf of the Company and the satisfaction of the closing conditions specified in the Purchase Agreement, the Trustee shall, execute, deliver and authenticate Certificates equalling in the aggregate the amount set forth, with respect to the Trust, in Schedule A to the Purchase Agreement, and evidencing the entire ownership interest in the Trust, which amount equals the maximum aggregate principal amount of Equipment Notes which may be purchased by the Trustee pursuant to the Note Purchase Agreement. (b)......On or after the Issuance Date, the Company may deliver from time to time to the Trustee a Delivery Notice relating to one or more Aircraft. After receipt of a Delivery Notice and in any case no later than one Business Day prior to a Delivery Date as to which such Delivery Notice relates (the "Applicable Delivery Date") (or, if the Issuance Date is an Applicable Delivery Date, on the Issuance Date), the Trustee shall (as and when specified in the Delivery Notice) instruct the Escrow Agent to provide a Notice of Purchase Withdrawal to the Depositary requesting (i) the withdrawal of one or more Deposits on the Applicable Delivery Date in accordance with and to the extent permitted by the terms of the Escrow Agreement and the Deposit Agreement and (ii) the payment of all, or a portion, of such Deposit or Deposits, in an aggregate amount equal to the purchase price of the Equipment Notes relating to the Aircraft to be delivered on such Applicable Delivery Date, to or on behalf of the Owner Trustee or the Company, as the case may be, issuing such Equipment Notes, all as shall be described in the Delivery Notice; provided that, if the Issuance Date is an Applicable Delivery Date, such purchase price shall be paid from a portion of the proceeds of the sale of the Certificates. The Trustee shall (as and when specified in such Delivery Notice), subject to the conditions set forth in Sections 1 and 2 of the Note Purchase Agreement, enter into and perform its obligations under the Participation Agreement specified in such Delivery Notice (the "Applicable Participation Agreement") and cause such certificates, documents and legal opinions relating to the Trustee to be duly delivered as required by the Applicable Participation Agreement. If at any time prior to the Applicable Delivery Date, the Trustee receives a notice of postponement pursuant to Section 1(d) or 1(e) of the Note Purchase Agreement, then the Trustee shall give the Depositary (with a copy to the Escrow Agent) a notice of cancellation of such Notice of Purchase Withdrawal relating to such Deposit or Deposits on such Applicable Delivery Date. Upon satisfaction of the conditions specified in the Note Purchase Agreement and the Applicable Participation Agreement, the Trustee shall purchase the applicable Equipment Notes with the proceeds of the withdrawals of one or more Deposits made on the Applicable Delivery Date in accordance with the terms of the Deposit Agreement and the Escrow Agreement (or, if the Issuance Date is the Applicable Delivery Date with respect to such Applicable Participation Agreement, from a portion of the proceeds of the sale of the Certificates). The purchase price of such Equipment Notes shall equal the principal amount of such Equipment Notes. Amounts withdrawn from such Deposit or Deposits in excess of the purchase price of the Equipment Notes or to the extent not applied on the Applicable Delivery Date to the purchase price of the Equipment Notes, shall be re-deposited by the Trustee with the Depositary on the Applicable Delivery Date in accordance with the terms of the Deposit Agreement. Section 2.03. Withdrawal of Deposits. If any Deposits remain outstanding on the Business Day next succeeding the Cut-Off Date, (i) the Trustee shall give the Escrow Agent notice that the Trustee's obligation to purchase Equipment Notes under the Note Purchase Agreement has terminated and instruct the Escrow Agent to provide a notice of Final Withdrawal to the Depositary substantially in the form of Exhibit B to the Deposit Agreement (the "Final Withdrawal Notice") and (ii) the Trustee will make a demand upon the Company under the Note Purchase Agreement for an amount equal to the Special Redemption Premium, such payment to be made on the Final Withdrawal Date. Section 2.04. Acceptance by Trustee. The Trustee, upon the execution and delivery of this Agreement, acknowledges its acceptance of all right, title, and interest in and to the Trust Property and declares that the Trustee holds and will hold such right, title, and interest for the benefit of all then present and future Certificateholders, upon the trusts herein set forth. By its payment for and acceptance of each Certificate issued to it under this Agreement, each initial Certificateholder as grantor of the Trust thereby joins in the creation and declaration of the Trust. Section 2.05. Limitation of Powers. The Trust is constituted solely for the purpose of making the investment in the Equipment Notes, and, except as set forth herein, the Trustee shall not be authorized or empowered to acquire any other investments or engage in any other activities and, in particular, the Trustee shall not be authorized or empowered to do anything that would cause such Trust to fail to qualify as a "grantor trust" for federal income tax purposes (including as subject to this restrictions acquiring the Aircraft (as defined in the respective related Indentures) by bidding such Equipment Notes or otherwise, or taking any action with respect to any such Aircraft once acquired). ARTICLE III THE CERTIFICATES Section 3.01. Title, Form, Denomination and Execution of Certificates. ------------------------------------------------------- (a)......The Certificates shall be known as the "6.99% 1997-1A-O Pass Through Certificates" of the Trust. Each Certificate will represent a fractional undivided interest in the Trust and shall be substantially in the form set forth as Exhibit A hereto, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Agreement and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such Certificates, as evidenced by their execution of the Certificates. Any portion of the text of any Certificate may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Certificate. At the Escrow Agent's request under the Escrow Agreement, the Trustee shall affix the corresponding Escrow Receipt to each Certificate. Any transfer or exchange of any Certificate shall also effect a transfer or exchange of the related Escrow Receipt. Prior to the Final Withdrawal Date, no transfer or exchange of any Certificate shall be permitted unless the corresponding Escrow Receipt is attached thereto and also is so transferred or exchanged. By acceptance of any Certificate to which an Escrow Receipt is attached, each Holder of such Certificate acknowledges and accepts the restrictions on transfer of the Escrow Receipt set forth herein and in the Escrow Agreement. (b)......The Certificates shall be issued only in fully registered form without coupons and only in denominations of $100,000 or integral multiples of $1,000 in excess thereof, except that one Certificate may be issued in a denomination of less than $100,000. Each Certificate shall be dated the date of its authentication. The aggregate Fractional Undivided Interest of Certificates shall not at any time exceed $63,105,000. (c)......Certificates offered and sold in reliance on Rule 144A shall be issued initially in the form of a single permanent global Certificate in registered form, substantially in the form set forth as Exhibit A hereto with such applicable legends as are provided for in clauses (a) and (b) of Section 3.02 (the "U.S. Global Certificate"), duly executed and authenticated by the Trustee as hereinafter provided. The U.S. Global Certificate will be registered in the name of a nominee for DTC and deposited with the Trustee, as custodian for DTC. The aggregate principal amount of the U.S. Global Certificate may from time to time be increased or decreased by adjustments made on the records of DTC or its nominee, or of the Trustee, as custodian for the DTC or its nominee, as hereinafter provided. (d)......Certificates offered and sold in offshore transactions in reliance on Regulation S shall be issued in the form of a single global Certificate in registered form, substantially in the form set forth as Exhibit A hereto with such applicable legends as are provided for in clause (b) of Section 3.02 (the "Offshore Global Certificate") duly executed and authenticated by the Trustee as hereinafter provided. The Temporary Offshore Global Certificate will be registered in the name of a nominee of DTC for credit to the account of the Agent Members acting as depositories for Euroclear and Cedel and deposited with the Trustee as custodian for DTC. The U.S. Global Certificate and the Offshore Global Certificates are sometimes referred to as the "Global Certificates". (e)......Certificates offered and sold to Institutional Accredited Investors shall be issued in the form of permanent certificated Certificates in registered form in substantially the form set forth as Exhibit A hereto with such applicable legends as are provided for in clauses (a) and (b) of Section 3.02 hereto (the "U.S. Physical Certificates"). Certificates issued pursuant to Section 3.05(b) in exchange for interests in any Offshore Global Certificate shall be in the form of permanent certificated Certificates in registered form substantially in the form set forth in Exhibit A (the "Offshore Physical Certificates"). The Offshore Physical Certificates and U.S. Physical Certificates are sometimes collectively herein referred to as the "Physical Certificates". (f)......The definitive Certificates shall be in registered form and shall be typed, printed, lithographed or engraved or produced by any combination of these methods or may be produced in any other manner, all as determined by the officers executing such Certificates, as evidenced by their execution of such Certificates. Section 3.02. Restrictive Legends. ------------------- (a)......Subject to Section 3.06, each U.S. Global Certificate and each U.S. Physical Certificate shall bear the following legend (the "Private Placement Legend") on the face thereof: THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS CERTIFICATE IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT, WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY AMERICAN TRANS AIR, INC. ("ATA") OR AN AFFILIATE OF ATA, RESELL OR OTHERWISE TRANSFER THIS CERTIFICATE EXCEPT (A) TO ATA OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING $100,000 OR MORE AGGREGATE PRINCIPAL AMOUNT OF SUCH CERTIFICATES THAT, TAKES DELIVERY OF THIS CERTIFICATE IN DEFINITIVE FORM AND PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS CERTIFICATE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS CERTIFICATE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CASE THIS CERTIFICATE IS IN DEFINITIVE FORM IN CONNECTION WITH ANY TRANSFER OF THIS CERTIFICATE WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THE CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY ATA OR AN AFFILIATE OF ATA, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE PASS THROUGH TRUST AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS. (b)......Each Global Certificate shall also bear the following legend on the face thereof: UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND 3.06 OF THE PASS THROUGH TRUST AGREEMENT REFERRED TO HEREIN. Section 3.03. Authentication of Certificates. ------------------------------ (a)......The Trustee shall duly execute, authenticate and deliver Certificates in authorized denominations equalling in the aggregate the amount set forth, with respect to the Trust, in Schedule A to the Purchase Agreement, and evidencing the entire ownership interest of the Trust, which amount equals the maximum aggregate principal amount of Equipment Notes to be purchased by the Trustee pursuant to the Note Purchase Agreement. (b)......No Certificate shall be entitled to any benefit under this Agreement or be valid or obligatory for any purpose, unless there appears on such Certificate a certificate of authentication substantially in the form provided for herein executed by the Trustee by the manual signature of one of its authorized signatories, and such certificate upon any Certificate shall be conclusive evidence, and the only evidence, that such Certificate has been duly authenticated and delivered hereunder. Section 3.04. Transfer and Exchange. --------------------- (a)......The Trustee shall cause to be kept at the office or agency to be maintained by it in accordance with the provisions of Section 7.11 of this Agreement a register (the "Register") for the Certificates in which, subject to such reasonable regulations as it may prescribe, the Trustee shall provide for the registration of the Certificates and of transfers and exchanges of the Certificates as herein provided. The Trustee shall initially be the registrar (the "Registrar") for the purpose of registering the Certificates and transfers and exchanges of the Certificates as herein provided. A Certificateholder may transfer a Certificate by written application to the Registrar stating the name of the proposed transferee and otherwise complying with the terms of this Agreement, including providing a written certificate or other evidence of compliance with any restrictions on transfer. No such transfer shall be effected until, and such transferee shall succeed to the rights of a Certificateholder only upon, final acceptance and registration of the transfer by the Registrar in the Register. Prior to the registration of any transfer by a Certificateholder as provided herein, the Trustee shall treat the person in whose name the Certificate is registered as the owner thereof for all purposes, and the Trustee shall not be affected by notice to the contrary. Furthermore, DTC shall, by acceptance of a Global Certificate, agree that transfers of beneficial interests in such Global Certificate may be effected only through a book-entry system maintained by DTC (or its agent), and that ownership of a beneficial interest in the Certificate shall be required to be reflected in a book entry. When Certificates are presented to the Registrar with a request to register the transfer or to exchange them for an equal face amount of Certificates of other authorized denominations, the Registrar shall register the transfer or make the exchange as requested if its requirements for such transactions are met. To permit registrations of transfers and exchanges in accordance with the terms, conditions and restrictions hereof, the Trustee shall execute and authenticate Certificates at the Registrar's request. No service charge shall be made for any registration of transfer or exchange of the Certificates, but the Trustee may require payment by the transferor of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or other similar governmental charges payable upon exchanges pursuant to Section 3.11 or 9.07). Section 3.05. Book-Entry Provisions for U.S. Global Certificate and Offshore Global Certificates. (a)......Members of, or participants in, DTC ("Agent Members") shall have no rights under this Agreement with respect to any Global Certificate held on their behalf by DTC, or the Trustee as its custodian, and DTC may be treated by the Trustee and any agent of the Trustee as the absolute owner of such Global Certificate for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Trustee or any agent of the Trustee from giving effect to any written certification, proxy or other authorization furnished by DTC or shall impair, as between DTC and its Agent Members, the operation of customary practices governing the exercise of the rights of a holder of any Certificate. Upon the issuance of any Global Certificate, the Registrar or its duly appointed agent shall record a nominee of DTC as the registered holder of such Global Certificate. (b)......Transfers of any Global Certificate shall be limited to transfers of such Global Certificate in whole, but not in part, to nominees of DTC, its successor or such successor's nominees. Beneficial interests in the U.S. Global Certificate and any Offshore Global Certificate may be transferred in accordance with the rules and procedures of DTC and the provisions of Section 3.06. Beneficial interests in the U.S. Global Certificate or an Offshore Global Certificate shall be delivered to all beneficial owners in the form of U.S. Physical Certificates or Offshore Physical Certificates, as the case may be, if (i) the Company notifies the Trustee in writing that DTC is unwilling or unable to discharge properly its responsibilities as depositary for the U.S. Global Certificate or such Offshore Global Certificate, as the case may be, and the Company is unable to locate a qualified successor depositary within 90 days of such notice or (ii) after the occurrence of an Event of Default, beneficial owners of the U.S. Global Certificate or Offshore Global Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust, by Act of such Certificateholders delivered to the Company and the Trustee, advise the Company, the Trustee and DTC through its Clearing Agency Participants in writing that the continuation of a book-entry system through DTC is no longer in the best interests of the Certificateholders, then the Trustee shall notify all owners of beneficial interests in the U.S. Global Certificate or an Offshore Global Certificate, through DTC, of the occurrence of any such event and the availability of definitive Certificates. (c)......Any beneficial interest in one of the Global Certificates that is transferred to a Person who takes delivery in the form of an interest in the other Global Certificate will, upon such transfer, cease to be an interest in such Global Certificate and become an interest in the other Global Certificate and, accordingly, will thereafter be subject to all transfer restrictions, if any, and other procedures applicable to beneficial interests in such other Global Certificate for as long as it remains such an interest. (d)......[Intentionally omitted]. (e)......In connection with the transfer of the entire U.S. Global Certificate or an entire Offshore Global Certificate to the beneficial owners thereof pursuant to paragraph (b) of this Section 3.05, such U.S. Global Certificate or Offshore Global Certificate, as the case may be, shall be deemed to be surrendered to the Trustee for cancellation, and the Trustee shall execute, authenticate and deliver, to each beneficial owner identified by DTC in exchange for its beneficial interest in such U.S. Global Certificate or Offshore Global Certificate, as the case may be, an equal aggregate principal amount of U.S. Physical Certificates or Offshore Physical Certificates, as the case may be, of authorized denominations. (f)......Any U.S. Physical Certificate delivered in exchange for an interest in the U.S. Global Certificate pursuant to paragraph (b) of this Section 3.05 shall, except as otherwise provided by paragraph (f) of Section 3.06, bear the Private Placement Legend. (g)......Any Offshore Physical Certificate delivered in exchange for an interest in an Offshore Global Certificate pursuant to paragraph (b) of this Section shall, except as otherwise provided by paragraph (f) of Section 3.06, bear the applicable legend regarding transfer restrictions set forth in Section 3.02(a). (h)......The registered holder of the U.S. Global Certificate or any Offshore Global Certificate may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Agreement or the Certificates. Section 3.06. Special Transfer Provisions. The following provisions shall apply to the Certificates: (a)......Transfers to Non-QIB Institutional Accredited Investors. The following provisions shall apply with respect to the registration of any proposed transfer of a Certificate to any Institutional Accredited Investor which is not a QIB (excluding transfers to, or on or after the Regulation S Restricted Date, by Non-U.S. Persons): (i) The Registrar shall register the transfer of any Certificate, whether or not such Certificate bears the Private Placement Legend, if (x) the requested transfer is at least two years after the later of the original issue date of the Certificates and the last date on which such Certificate was held by the Company or any affiliate thereof or (y) the proposed transferee has delivered to the Registrar a letter substantially in the form of Exhibit C hereto and the aggregate principal amount of the Certificates being transferred is at least $100,000. (ii) If the proposed transferor is an Agent Member holding a beneficial interest in the U.S. Global Certificate or, at a date prior to the Regulation S Restricted Date, an Offshore Global Certificate, upon receipt by the Registrar of (x) the documents, if any, required by paragraph (i) and (y) instructions given in accordance with DTC's and the Registrar's procedures, the Registrar shall reflect on its books and records the date of the transfer and a decrease in the principal amount of such U.S. Global Certificate in an amount equal to the principal amount of the beneficial interest in such U.S. Global Certificate to be transferred, and the Company shall execute, and the Trustee shall authenticate and deliver to the transferor or at its direction, one or more U.S. Physical Certificates of like tenor and amount. (b)......Transfers to QIBS. The following provisions shall apply with respect to the registration of any proposed transfer of a Certificate to a QIB (excluding Non-U.S. Persons): (i) If the Certificate to be transferred consists of U.S. Physical Certificates or an interest in any Offshore Global Certificate prior to the Regulation S Restricted Date, the Registrar shall register the transfer if such transfer is being made by a proposed transferor who has checked the box provided for on the form of U.S. Physical Certificate or delivered a certificate to the Trustee in the form of Exhibit E hereto stating, or has otherwise advised the Trustee and the Registrar in writing, that the sale has been made in compliance with the provisions of Rule 144A to a transferee who, in the case of a transfer of a U.S. Physical Certificate, has signed the certification provided for on the form of Certificate and, in the case of an Offshore Global Certificate transferred prior to the Regulation S Restricted Date, who has signed the certification provided for in Exhibit E hereto, stating, or has otherwise advised the Trustee and the Registrar in writing, that it is purchasing the Certificate for its own account or an account with respect to which it exercises sole investment discretion and that it, or the Person on whose behalf it is acting with respect to any such account, is a QIB within the meaning of Rule 144A, and is aware that the sale to it is being made in reliance on Rule 144A and has been advised of the applicable transfer restrictions relating to the Certificates and acknowledges that it has received such information regarding the Trust and/or the Company as it has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon its foregoing representations in order to claim the exemption from registration provided by Rule 144A. (ii) Upon receipt by the Registrar of the documents referred to in clause (i) above and instructions given in accordance with DTC's and the Registrar's procedures therefor, the Registrar shall reflect on its books and records the date of such transfer and an increase in the principal amount of the U.S. Global Certificate in an amount equal to the principal amount of the U.S. Physical Certificates or interests in the Offshore Global Certificate, as the case may be, being transferred, and the Trustee shall cancel such U.S. Physical Certificates or decrease the amount of such Offshore Global Certificate so transferred. (c)......[Intentionally omitted]. (d)......Transfers of Interests in the Offshore Global Certificate on or after the Regulation S Restricted Date. The Registrar shall register any transfer of interests in the Offshore Global Certificate on or after the Regulation S Restricted Date without requiring any additional certification. (e)......Transfers to Non-U.S. Persons at Any Time. The following provisions shall apply with respect to any registration of any transfer of a Certificate to a Non-U.S. Person: (i) The Registrar shall register any proposed transfer of a U.S. Global Certificate or U.S. Physical Certificate to any Non-U.S. Person, upon receipt of a certificate substantially in the form of Exhibit B hereto from the proposed transferor. The Registrar shall promptly send a copy of such certificate to the Company. (ii) (A) Upon receipt by the Registrar of (x) the documents, if any, required by paragraph (c) and (y) instructions in accordance with DTC's and the Registrar's procedures, the Registrar shall reflect on its books and records the date of such transfer and shall cancel the Physical Certificate, if any, so transferred, or decrease the principal amount ofany such U.S. Global Certificate in an amount equal to the principal amount of the beneficial interest in such U.S. Global Certificate to be transferred, and (B) upon receipt by the Registrar of instructions given in accordance with DTC's and the Registrar's procedures, the Registrar shall reflect on its books and records the date and an increase in the principal amount of the Offshore Global Certificate in an amount equal to the principal amount of the U.S. Physical Certificate or the U.S. Global Certificate, as the case may be, to be transferred, and the Trustee shall cancel the Physical Certificate, if any, so transferred or decrease the amount of such U.S. Global Certificate. (f)......Private Placement Legend. Upon the transfer, exchange or replacement of Certificates not bearing the Private Placement Legend, the Registrar shall deliver Certificates that do not bear the Private Placement Legend. Upon the transfer, exchange or replacement of Certificates bearing the Private Placement Legend, the Registrar shall deliver only Certificates that bear the Private Placement Legend unless either (i) the circumstances contemplated by paragraph (a)(i)(x) or (e)(ii) of this Section 3.06 exist or (ii) there is delivered to the Registrar an Opinion of Counsel to the effect that neither such legend nor the related restrictions on transfer are required in order to maintain compliance with the provisions of the Securities Act. (g)......General. By its acceptance of any Certificate bearing the Private Placement Legend, each Holder of such a Certificate acknowledges the restrictions on transfer of such Certificate set forth in this Agreement and agrees that it will transfer such Certificate only as provided in this Agreement. The Registrar shall not register a transfer of any Certificate unless such transfer complies with the restrictions on transfer of such Certificate set forth in this Agreement. In connection with any transfer of Certificates, each Certificateholder agrees by its acceptance of the Certificates to furnish the Registrar or the Trustee such certifications, legal opinions or other information as either of them may reasonably require to confirm that such transfer is being made pursuant to an exemption from, or a transaction not subject to, the registration requirements of the Securities Act; provided that the Registrar shall not be required to determine the sufficiency of any such certifications, legal opinions or other information. Until such time as no Certificates remain Outstanding, the Registrar shall retain copies of all letters, notices and other written communications received pursuant to Section 3.05 or this Section 3.06. The Trustee, if not the Registrar at such time, shall have the right to inspect and make copies of all such letters, notices or other written communications at any reasonable time upon the giving of reasonable written notice to the Registrar. Section 3.07. Mutilated, Destroyed, Lost or Stolen Certificates. If (a) any mutilated Certificate is surrendered to the Registrar, or the Registrar receives evidence to its satisfaction of the destruction, loss or theft of any Certificate, and (b) there is delivered to the Registrar and the Trustee such security, indemnity or bond, as may be required by them to save each of them harmless, then, in the absence of notice to the Registrar or the Trustee that such Certificate has been acquired by a bona fide purchaser, the Trustee shall execute, authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate or Certificates, in authorized denominations and of like Fractional Undivided Interest. In connection with the issuance of any new Certificate under this Section 3.07, the Trustee shall require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee and the Registrar) connected therewith. Any duplicate Certificate issued pursuant to this Section 3.07 shall constitute conclusive evidence of the appropriate Fractional Undivided Interest in the related Trust, as if originally issued, whether or not the lost stolen or destroyed Certificate shall be found at any time. Section 3.08. Persons Deemed Owners. Prior to due presentation of a Certificate for registration of transfer, the Trustee, the Registrar, and any Paying Agent of the Trustee may treat the person in whose name any Certificate is registered as the owner of such Certificate for the purpose of receiving distributions pursuant to Section 4.02 and for all other purposes whatsoever, and neither the Trustee, the Registrar, nor any Paying Agent of the Trustee shall be affected by any notice to the contrary. Section 3.09. Cancellation. All Certificates surrendered for payment or transfer or exchange shall, if surrendered to any Person party hereto other than the Registrar, be delivered to the Registrar for cancellation. No Certificates shall be authenticated in lieu of or in exchange for any Certificates cancelled as provided in this Section, except as expressly permitted by this Agreement. All cancelled Certificates held by the Registrar shall be destroyed and a certification of their destruction delivered to the Trustee. Section 3.10. Limitation of Liability for Payments. All payments or distributions made to Certificateholders shall be made only from the Trust Property and only to the extent that the Trustee shall have sufficient income or proceeds from the Trust Property to make such payments in accordance with the terms of Article IV of this Agreement. Each Certificateholder, by its acceptance of a Certificate, agrees that it will look solely to the income and proceeds from the Trust Property to the extent available for distribution to such Certificateholder as provided in this Agreement. Section 3.11. Temporary Certificates. Until definitive Certificates are ready for delivery, the Trustee shall authenticate temporary Certificates. Temporary Certificates shall be substantially in the form of definitive Certificates but may have insertions, substitutions, omissions and other variations determined to be appropriate by the officers executing the temporary Certificates, as evidenced by their execution of such temporary Certificates. If temporary Certificates are issued, the Trustee will cause definitive Certificates to be prepared without unreasonable delay. After the preparation of definitive Certificates, the temporary Certificates shall be exchangeable for definitive Certificates upon surrender of the temporary Certificates at the office or agency of the Trustee designated for such purpose pursuant to Section 7.11, without charge to the Certificateholder. Upon surrender for cancellation of any one or more temporary Certificates, the Trustee shall execute, authenticate and deliver in exchange therefor a like face amount of definitive Certificates of authorized denominations. Until so exchanged, the temporary Certificates shall be entitled to the same benefits under this Agreement as definitive Certificates. ARTICLE IV DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS Section 4.01. Certificate Account and Special Payments Account. ------------------------------------------------ (a)......The Trustee shall establish and maintain on behalf of the Certificateholders a Certificate Account as one or more non-interest-bearing accounts. The Trustee shall hold the Certificate Account in trust for the benefit of the Certificateholders, and shall make or permit withdrawals therefrom only as provided in this Agreement. On each day when a Scheduled Payment is made to the Trustee, the Trustee, upon receipt thereof, shall immediately deposit the aggregate amount of such Scheduled Payment into the Certificate Account. (b)......The Trustee shall establish and maintain on behalf of the Certificateholders a Special Payments Account as one or more accounts, which shall be non-interest-bearing except as provided in Section 4.04. The Trustee shall hold the Special Payments Account in trust for the benefit of the Certificateholders, and shall make or permit withdrawals therefrom only as provided in this Agreement. On each day when one or more Special Payments are made to the Trustee, the Trustee, upon receipt thereof, shall immediately deposit the aggregate amount of such Special Payments into the Special Payments Account. (c)......The Trustee shall cause the Subordination Agent to present to the Loan Trustee to which an Equipment Note relates such Equipment Note on the date of its stated final maturity or, in the case of any Equipment Note which is to be redeemed in whole pursuant to the relevant Indenture, on the applicable redemption date under such Indenture. Section 4.02.Distributions from Certificate Account and Special Payments Account ------------------------------------------------------------------- (a)......On each Regular Distribution Date or as soon thereafter as the Trustee has confirmed receipt of the payment of the Scheduled Payments due on such date, the Trustee shall distribute out of the Certificate Account the entire amount deposited therein pursuant to Section 4.01 (a). There shall be so distributed to each Certificateholder of record on the Record Date with respect to such Regular Distribution Date (other than as provided in Section 11.01 concerning the final distribution), by check mailed to such Certificateholder at the address appearing in the Register, such Certificateholder's pro rata share (based on the aggregate Fractional Undivided Interest in the Trust held by such Certificateholder) of the aggregate amount in the Certificate Account, except that, with respect to Certificates registered on the Record Date in the name of the nominee of DTC (initially, such nominee to be Cede & Co.), such distribution shall be made by wire transfer in immediately available funds to the account designated by such nominee. (b)......On each Special Distribution Date with respect to any Special Payment or as soon thereafter as the Trustee has confirmed receipt of any Special Payments due on the Equipment Notes or realized upon the sale of such Equipment Note, the Trustee shall distribute out of the Special Payments Account the entire amount deposited therein pursuant to Section 4.01(b) of such Special Payment. There shall be so distributed to each Certificateholder of record on the Record Date with respect to such Special Distribution Date (other than as provided in Section 11.01 concerning the final distribution), by check mailed to such Certificateholder at the address appearing in the Register, such Certificateholder's pro rata share (based on the aggregate Fractional Undivided Interest in the Trust held by such Certificateholder) of the aggregate amount in the Special Payments Account on account of such Special Payment, except that, with respect to Certificates registered on the Record Date in the name of the nominee of DTC (initially, such nominee to be Cede & Co.), such distribution shall be made by wire transfer in immediately available funds to the account designated by such nominee. (c)......The Trustee shall, at the expense of the Company, cause notice of each Special Payment to be mailed to each Certificateholder at his address as it appears in the Register. In the event of redemption or purchase of Equipment Notes held in the Trust, such notice shall be mailed not less than 20 days prior to the date any such Special Payment is scheduled to be distributed. In the event the Company is required to pay a Special Redemption Premium to the Trustee under the Note Purchase Agreement, such notice shall be mailed, together with the notice by the Escrow Paying Agent under Section 2.06 of the Escrow Agreement, not less than 20 days prior to the Special Distribution Date for such amount, which Special Distribution Date shall be the Final Withdrawal Date. In the case of any other Special Payments, such notice shall be mailed as soon as practicable after the Trustee has confirmed that it has received funds for such Special Payment, stating the Special Distribution Date for such Special Payment which shall occur not less than 20 days after the date of such notice and as soon as practicable thereafter. Notices mailed by the Trustee shall set forth: (i) the Special Distribution Date and the Record Date therefor (except as otherwise provided in Section 11.01), (ii) the amount of the Special Payment for each $1,000 face amount Certificate and the amount thereof constituting principal, premium, if any, and interest, (iii) the reason for the Special Payment, and (iv) if the Special Distribution Date is the same date as a Regular Distribution Date for the Certificates, the total amount to be received on such date for each $1,000 face amount Certificate. If the amount of (i) premium, if any, payable upon the redemption or purchase of an Equipment Note or (ii) the Special Redemption Premium, if any, has not been calculated at the time that the Trustee mails notice of a Special Payment, it shall be sufficient if the notice sets forth the other amounts to be distributed and states that any premium received will also be distributed. If any redemption of the Equipment Notes held in the Trust is cancelled, the Trustee, as soon as possible after leasing thereof, shall cause notice thereof to be mailed to each Certificateholder at its address as it appears on the Register. Section 4.03. Statements to Certificateholders. -------------------------------- (a) On each Regular Distribution Date and Special Distribution Date, the Trustee will include with each distribution to Certificateholders a statement, giving effect to such distribution to be made on such Regular Distribution Date or Special Distribution Date, as the case may be, setting forth the following information (in the case of a Special Payment, including any Special Redemption Premium, reflecting in part the information provided by the Escrow Paying Agent under the Escrow Agreement) (per a $1,000 face amount Certificate as to clauses (ii), (iii), (iv) and (v) below): (i) the aggregate amount of funds distributed on such Distribution Date hereunder and under the Escrow Agreement, indicating the amount allocable to each source; (ii) the amount of such distribution allocable to principal and the amount allocable to premium (including any Special Redemption Premium), if any; (iii) the amount of such distribution hereunder allocable to interest; (iv) the amount of such distribution under the Escrow Agreement allocable to interest on the Deposits; (v) the amount of such distribution under the Escrow Agreement allocable to the principal of the unused Deposits; and (vi) the Pool Balance and the Pool Factor. With respect to the Certificates registered in the name of a Clearing Agency or its nominee, on the record date prior to each Distribution Date, the Trustee will request from the Clearing Agency a securities position listing setting forth the names of all the Clearing Agency Participants reflected on the Clearing Agency's books as holding interests in the Certificates on such record date. On each Distribution Date, the Trustee will mail to each such Clearing Agency Participant the statement described above and will make available additional copies as requested by such Clearing Agency Participant for forwarding to holders of Certificates. (b) Within a reasonable period of time after the end of each calendar year but not later than the latest date permitted by law, the Trustee shall furnish to each Person who at any time during such calendar year was a Certificateholder of record a statement containing the sum of the amounts determined pursuant to clauses (a)(i) through (a)(v), inclusive, above with respect to the Trust for such calendar year or, in the event such Person was a Certificateholder of record during a portion of such calendar year, for the applicable portion of such year, and such other items as are readily available to the Trustee and which a Certificateholder shall reasonably request as necessary for the purpose of such Certificateholder's preparation of its federal income tax returns. With respect to Certificates registered in the name of a Clearing Agency or its nominee, such report and such other items shall be prepared on the basis of information supplied to the Trustee by the Clearing Agency Participants and shall be delivered by the Trustee to such Clearing Agency Participants to be available for forwarding by such Clearing Agency Participants. (c) Promptly following (i) the Delivery Period Termination Date, if there has been any change in the information set forth in clauses (x), (y) and (z) below from that set forth in pages 102 and 103 of the Offering Memorandum, and (ii) any early redemption or purchase of, or any default in the payment of principal or interest in respect of, any of the Equipment Notes held in the Trust, or any Final Withdrawal, the Trustee shall furnish to Certificateholders of record on such date a statement setting forth (x) the expected Pool Balances for each subsequent Regular Distribution Date following the Delivery Period Termination Date, (y) the related Pool Factors for such Regular Distribution Dates and (z) the expected principal distribution schedule of the Equipment Notes, in the aggregate, held as Trust Property at the date of such notice. With respect to the Certificates registered in the name of a Clearing Agency or its nominee, on the Delivery Period Termination Date, the Trustee will request from the Clearing Agency a securities position listing setting forth the names of all the Clearing Agency Participants reflected on the Clearing Agency's books as holding interests in the Certificates on such date. The Trustee will mail to each such Clearing Agency Participant the statement described above and will make available additional copies as requested by such Clearing Agency Participant for forwarding to holders of Certificates. Section 4.04. Investment of Special Payment Moneys. Any money received by the Trustee pursuant to Section 4.01(b) representing a Special Payment which is not to be promptly distributed shall, to the extent practicable, be invested in Permitted Investments by the Trustee (and such Permitted Investments shall be registered in the name of the Trustee) as directed in writing by the Company pending distribution of such Special Payment pursuant to Section 4.02. Any investment made pursuant to this Section 4.04 shall be in such Permitted Investments having maturities not later than the date that such moneys are required to be used to make the payment required under Section 4.02 on the applicable Special Distribution Date and the Trustee shall hold any such Permitted Investments until maturity. The Trustee shall have no liability with respect to any investment made pursuant to this Section 4.04, other than by reason of the willful misconduct or negligence of the Trustee. All income and earnings from such investments shall be distributed on such Special Distribution Date as part of such Special Payment. ARTICLE V THE COMPANY Section 5.01. Maintenance of Corporate Existence. The Company, at its own cost and expense, will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence, rights and franchises, except as otherwise specifically permitted in Section 5.02; provided, however, that the Company shall not be required to preserve any right or franchise if the Company shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company. Section 5.02. Consolidation, Merger, Etc. The Company shall not consolidate with or merge into any other corporation or convey, transfer or lease substantially all of its assets as an entirety to any Person unless: (a) the corporation formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance, transfer or lease substantially all of the assets of the Company as an entirety shall be organized and validly existing under the laws of the United States of America or any state thereof or the District of Columbia and a "citizen of the United States" (as defined in Section 40102(a)(15) of Title 49 of the United States Code) holding an air carrier operating certificate issued by the Federal Aviation Administration, or any successor agency thereto (the "FAA"), pursuant to Chapter 447 of Title 49, United States Code, authorizing the operation in air transportation of aircraft capable of carrying 10 or more individuals or 6,000 pounds or more of cargo pursuant to Part 121 of the FAA's regulations (14 CFR Part 121); (b) the corporation formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance, transfer or lease substantially all of the assets of the Company as an entirety shall execute and deliver to the Trustee a duly authorized, valid, binding and enforceable agreement in form and substance reasonably satisfactory to the Trustee containing an assumption by such successor corporation or Person of the due and punctual performance and observance of each covenant and condition of the Note Documents, the Note Purchase Agreement, the Other Pass Through Trust Agreements and of this Agreement to be performed or observed by the Company; (c) immediately after giving effect to such transaction, no Event of Default applicable to the Certificates or event which is, or after notice or passage of time, or both, would be, such an Event of Default shall have occurred and be continuing; and (d) the Company shall have delivered to the Trustee an Officers' Certificate of the Company and an Opinion of Counsel of the Company (which may be the Company's General Counsel) reasonably satisfactory to the Trustee, each stating that such consolidation, merger, conveyance, transfer or lease and the assumption agreement mentioned in clause (b) above comply with this Section 5.02 and that all conditions precedent herein provided for relating to such transaction have been complied with. Upon any consolidation or merger, or any conveyance, transfer or lease of substantially all of the assets of the Company as an entirety in accordance with this Section 5.02, the successor corporation or Person formed by such consolidation or into which the Company is merged or to which such conveyance, offer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Agreement with the same effect as if such successor corporation or Person had been named as the Company herein. No such conveyance, transfer or lease of substantially all of the assets of the Company as an entirety shall have the effect of releasing the Company or any successor corporation or Person which shall theretofore have become such in the manner prescribed in this Section 5.02 from its liability in respect of this Agreement, the Note Purchase Agreement or any Note Document to which it is a party. Section 5.03. Rule 144A(d)(4) Information. So long as any of the Certificates are "restricted securities" within the meaning of Rule 144(a)(3) under the Securities Act, at any time when the Guarantor is neither subject to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Company and the Guarantor will provide to any holder of such restricted securities, or to any prospective purchaser of such restricted securities designated by a holder, upon the request of such holder or prospective purchaser, any information required to be delivered to holders and prospective purchasers of the Certificates pursuant to Rule 144A(d)(4) under the Securities Act. ARTICLE VI DEFAULT Section 6.01. Events of Default. ----------------- (a) Exercise of Remedies. Upon the occurrence and during the continuation of any Indenture Default under any Indenture, the Trustee may, to the extent it is the Controlling Party at such time, direct the exercise of remedies as provided in the Intercreditor Agreement. (b) Purchase Rights of Certificateholders. By acceptance of its Certificate, each Certificateholder agrees that at any time after the occurrence and during the continuation of a Triggering Event: (i) each Class B Certificateholder shall have the right to purchase all, but not less than all, of the Certificates upon ten days' written notice to the Trustee and each other Class B Certificateholder, provided that (A) if prior to the end of such ten-day period any other Class B Certificateholder notifies such purchasing Class B Certificateholder that such other Class B Certificateholder wants to participate in such purchase, then such other Class B Certificateholder may join with the purchasing Class B Certificateholder to purchase all, but not less than all, of the Certificates pro rata based on the Fractional Undivided Interest in the Class B Trust held by each such Class B Certificateholder and (B) if prior to the end of such ten-day period any other Class B Certificateholder fails to notify the purchasing Class B Certificateholder of such other Class B Certificateholder's desire to participate in such a purchase, then such other Class B Certificateholder shall lose its right to purchase the Certificates pursuant to this Section 6.01(b); and (ii) each Class C Certificateholder shall have the right (which shall not expire upon any purchase of the Certificates pursuant to clause (i) above) to purchase all, but not less than all, of the Certificates and the Class B Certificates upon ten days' written notice to the Trustee, the Class B Trustee and each other Class C Certificateholder, provided that (A) if prior to the end of such ten-day period any other Class C Certificateholder notifies such purchasing Class C Certificateholder that such other Class C Certificateholder wants to participate in such purchase, then such other Class C Certificateholder may join with the purchasing Class C Certificateholder to purchase all, but not less than all, of the Certificates and the Class B Certificates pro rata based on the Fractional Undivided Interest in the Class C Trust held by each such Class C Certificateholder and (B) if prior to the end of such ten-day period any other Class C Certificateholder fails to notify the purchasing Class C Certificateholder of such other Class C Certificateholder's desire to participate in such a purchase, then such other Class C Certificateholder shall lose its right to purchase the Certificates pursuant to this Section 6.01(b); The purchase price with respect to the Certificates shall be equal to the Pool Balance of the Certificates, together with accrued and unpaid interest thereon to the date of such purchase, without premium, but including any other amounts then due and payable to the Certificateholders under this Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement or any Note Document or on or in respect of the Certificates; provided, however, that (i) if such purchase occurs after the Record Date with respect to the Final Withdrawal Date, such purchase price shall be reduced by the aggregate amount of unused Deposits and interest to be distributed under the Escrow Agreement (which deducted amounts shall remain distributable to, and may be retained by, the Certificateholder as of such Record Date) and (ii) if such purchase occurs after a Record Date but prior to the Distribution Date relating to such Record Date, such purchase price shall be reduced by the amount to be distributed hereunder on such related Distribution Date (which deducted amounts shall remain distributable to, and may be retained by, the Certificateholder as of such Record Date); provided, further, that no such purchase of Certificates shall be effective unless the purchaser shall certify to the Trustee that contemporaneously with such purchase, such purchaser is purchasing, pursuant to the terms of this Agreement and the Other Pass Through Trust Agreements, the Certificates, and the Class B Certificates which are senior to the Certificates held by such purchaser. Each payment of the purchase price of the Certificates shall be made to an account or accounts designated by the Trustee and each such purchase shall be subject to the terms of this Section. Each Certificateholder agrees by its acceptance of its Certificates that it will, subject to Section 3.04 hereof, upon payment from such Class B Certificateholder(s) or Class C Certificateholder(s), as the case may be, of the purchase price set forth in the first sentence of this paragraph, forthwith sell, assign, transfer and convey to the purchaser thereof (without recourse, representation or warranty of any kind except for its own acts), all of the right, title, interest and obligation of such Certificateholder in, this Agreement, the Escrow Agreement, the Deposit Agreement, the Intercreditor Agreement, the Liquidity Facility, the Note Documents, the Note Purchase Agreement and all Certificates and Escrow Receipts held by such Certificateholder (excluding all right, title and interest under any of the foregoing to the extent such right, title or interest is with respect to an obligation not then due and payable as respects any action or inaction or state of affairs occurring prior to such sale) and the purchaser shall assume all of such Certificateholder's obligations under this Agreement, the Escrow Agreement, the Deposit Agreement, the Intercreditor Agreement, the Liquidity Facility, the Note Documents and the Note Purchase Agreement and all such Certificates and Escrow Receipts. The Certificates will be deemed to be purchased on the date payment of the purchase price is made notwithstanding the failure of the Certificateholders to deliver any Certificates (whether in the form of Physical Certificates or beneficial interests in Global Certificates) and, upon such a purchase, (i) the only rights of the Certificateholders will be to deliver the Certificates to the purchaser and receive the purchase price for the Certificates and (ii) if the purchaser shall so request such Certificateholder will comply with all of the provisions of Section 3.04 hereof to enable new Certificates to be issued to the purchaser in such denominations as it shall request. All charges and expenses in connection with the issuance of any such new Certificates shall be borne by the purchaser thereof. As used in this Section 6.01(b), the terms "Certificateholder", "Class", "Class B Certificate", "Class B Certificateholder", "Class B Trust", "Class B Trustee", "Class C Certificate", "Class C Certificateholder", "Class C Trust" and "Class C Trustee" shall have the respective meanings assigned to such terms in the Intercreditor Agreement. Section 6.02. Incidents of Sale of Equipment Notes. Upon any sale of all or any part of the Equipment Notes made either under the power of sale given under this Agreement or otherwise for the enforcement of this Agreement, the following shall be applicable: (1) Certificateholders and Trustee May Purchase Equipment Notes. Any Certificateholder, the Trustee in its individual or any other capacity or any other Person may bid for and purchase any of the Equipment Notes, and upon compliance with the terms of sale, may hold, retain, possess and dispose of such Equipment Notes in their own absolute right without further accountability. (2) Receipt of Trustee Shall Discharge Purchaser. The receipt of the Trustee or of the officer making such sale shall be a sufficient discharge to any purchaser for his purchase money, and, after paying such purchase money and receiving such receipt, such purchaser or its personal representative or assigns shall not be obliged to see to the application of such purchase money, or be in any way answerable for any loss, misapplication or non-application thereof. (3) Application of Moneys Received upon Sale. Any moneys collected by the Trustee upon any sale made either under the power of sale given by this Agreement or otherwise for the enforcement of this Agreement shall be applied as provided in Section 4.02. Section 6.03. Judicial Proceedings Instituted by Trustee; Trustee May Bring Suit. If there shall be a failure to make payment of the principal of, premium, if any, or interest on any Equipment Note, or if there shall be any failure to pay Rent (as defined in the relevant Lease) under any Lease when due and payable, then the Trustee, in its own name, and as trustee of an express trust, as holder of such Equipment Notes, to the extent permitted by and in accordance with the terms of the Intercreditor Agreement, the Note Purchase Agreement and the Note Documents (subject to the rights of the applicable Owner Trustee or Owner Participant to cure any such failure in accordance with Section 4.03 of the applicable Indenture), shall be entitled and empowered to institute any suits, actions or proceedings at law, in equity or otherwise, for the collection of the sums so due and unpaid on such Equipment Notes or under such Lease and may prosecute any such claim or proceeding to judgment or final decree with respect to the whole amount of any such sums so due and unpaid. Section 6.04. Control by Certificateholders. Subject to Section 6.03 and the Intercreditor Agreement, the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee with respect to the Trust or pursuant to the terms of the Intercreditor Agreement, or exercising any trust or power conferred on the Trustee under this Agreement or the Intercreditor Agreement, including any right of the Trustee as Controlling Party under the Intercreditor Agreement or as holder of the Equipment Notes, provided that: (1) such Direction shall not be in conflict with any rule of law or with this Agreement and would not involve the Trustee in personal liability or expense, (2) the Trustee shall not determine that the action so directed would be unjustly prejudicial to the Certificateholders not taking part in such Direction, and (3) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such Direction. Section 6.05. Waiver of Past Defaults. Subject to the Intercreditor Agreement, the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust (i) may on behalf of all of the Certificateholders waive any past Event of Default hereunder and its consequences or (ii) if the Trustee is the Controlling Party, may direct the Trustee to instruct the applicable Loan Trustee to waive any past Indenture Default under any Indenture and its consequences, and thereby annul any Direction given by such Certificateholders or the Trustee to such Loan Trustee with respect thereto, except a default: (1) in the deposit of any Scheduled Payment or Special Payment under Section 4.01 or in the distribution of any payment under Section 4.02 on the Certificates, or (2) in the payment of the principal of (premium, if any) or interest on the Equipment Notes, or (3) in respect of a covenant or provision hereof which under Article IX hereof cannot be modified or amended without the consent of each Certificateholder holding an Outstanding Certificate affected thereby. Upon any such waiver, such default shall cease to exist with respect to the Certificates and any Event of Default arising therefrom shall be deemed to have been cured for every purpose and any direction given by the Trustee on behalf of the Certificateholders to the relevant Loan Trustee shall be annulled with respect thereto; but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. Upon any such waiver, the Trustee shall vote the Equipment Notes issued under the relevant Indenture to waive the corresponding Indenture Default. Section 6.06. Right of Certificateholders to Receive Payments Not to Be Impaired. Anything in this Agreement to the contrary notwithstanding, including, without limitation, Section 6.07 hereof, but subject to the Intercreditor Agreement, the right of any Certificateholder to receive distributions of payments required pursuant to Section 4.02 hereof on the Certificates when due, or to institute suit for the enforcement of any such payment on or after the applicable Regular Distribution Date or Special Distribution Date, shall not be impaired or affected without the consent of such Certificateholder. Section 6.07. Certificateholders May Not Bring Suit Except Under Certain Conditions. A Certificateholder shall not have the right to institute any suit, action or proceeding at law or in equity or otherwise with respect to this Agreement, for the appointment of a receiver or for the enforcement of any other remedy under this Agreement, unless: (1) such Certificateholder previously shall have given written notice to the Trustee of a continuing Event of Default; (2) Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than 25% of the Trust shall have requested the Trustee in writing to institute such action, suit or proceeding and shall have offered to the Trustee indemnity as provided in Section 7.02(e); (3) the Trustee shall have refused or neglected to institute any such action, suit or proceeding for 60 days after receipt of such notice, request and offer of indemnity; and (4) no Direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust. It is understood and intended that no one or more of the Certificateholders shall have any right in any manner whatever hereunder or under the Certificates to (i) surrender, impair, waive, affect, disturb or prejudice any property in the Trust Property or the lien of any Indenture on any property subject thereto, or the rights of the Certificateholders or the holders of the related Equipment Notes, (ii) obtain or seek to obtain priority over or preference to any other such Certificateholder or (iii) enforce any right under this Agreement, except in the manner herein provided and for the equal, ratable and common benefit of all the Certificateholders subject to the provisions of this Agreement. Section 6.08. Remedies Cumulative. Every remedy given hereunder to the Trustee or to any of the Certificateholders shall not be exclusive of any other remedy or remedies, and every such remedy shall be cumulative and in addition to every other remedy given hereunder or now or hereafter given by statute, law, equity or otherwise. Section 6.09. Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Agreement, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, a court may require any party litigant in such suit to file an undertaking to pay the costs of such suit, and may assess costs against any such party litigant, in the manner and to the extent provided in the Trust Indenture Act; provided that neither this Section nor the Trust Indenture Act shall be deemed to authorize any court to require such an undertaking or to make such an assessment in any suit instituted by the Company or the Guarantor. ARTICLE VII THE TRUSTEE Section 7.01. Notice of Defaults. As promptly as practicable after, and in any event within 90 days after the occurrence of any default (as such term is defined below) hereunder actually known to the Trustee, the Trustee shall transmit by mail to the Company, the related Owner Trustees, the related Loan Trustees and the Certificateholders in accordance with Section 313(c) of the Trust Indenture Act, notice of such default hereunder actually known to the Trustee, unless such default shall have been cured or waived; provided, however, that, except in the case of a default in the payment of the principal of (premium, if any) or interest on any Equipment Note, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Trustee in good faith determine that the withholding of such notice is in the interests of the Certificateholders. For the purpose of this Section, the term "default" means any event that is, or after notice or lapse of time or both would become, an Event of Default. Section 7.02. Certain Rights of Trustee. Subject to the provisions of Section 315 of the Trust Indenture Act: (a) the Trustee may rely and shall be protected in acting or refraining from acting in reliance upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Request; (c) whenever in the administration of this Agreement or the Intercreditor Agreement the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate of the Company, any Owner Trustee or any Loan Trustee; (d) the Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Agreement or the Intercreditor Agreement at the request or direction of any of the Certificateholders pursuant to this Agreement or the Intercreditor Agreement unless such Certificateholders shall have offered to the Trustee reasonable security or indemnity against the cost, expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, or report, notice, request, direction, consent, order, bond, debenture or other paper or document; (g) the Trustee may execute any of the trusts or powers under this Agreement or the Intercreditor Agreement or perform any duties under this Agreement or the Intercreditor Agreement either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it under this Agreement or the Intercreditor Agreement; (h) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Agreement or the Intercreditor Agreement; (i) the Trustee shall not be required to expend or risk its own funds in the performance of any of its duties under this Agreement, or in the exercise of any of its rights or powers, if it shall have reason to believe that repayment of such funds or adequate indemnity against such risk is not reasonably assured to it; and (j) except during the continuance of an Event of Default, the Trustee undertakes and shall be responsible to perform only such duties as are specifically set forth herein and no implied covenants or obligations shall be read into this Agreement or be enforceable against Trustee. Section 7.03. Not Responsible for Recitals or Issuance of Certificates. The recitals contained herein and in the Certificates, except the certificates of authentication, shall not be taken as the statements of the Trustee, and the Trustee assumes no responsibility for their correctness. Subject to Section 7.14, the Trustee makes no representations as to the validity or sufficiency of this Agreement, the Note Purchase Agreement, any Note Documents, any Participation Agreement or any Intercreditor Agreement, the Deposit Agreement, the Escrow Agreement and Equipment Notes or the Certificates, except that the Trustee hereby represents and warrants that this Agreement has been, and each Certificate, the Intercreditor Agreement, the Note Purchase Agreement, the Escrow Agreement and each Certificate will be, executed and delivered by one of its officers who is duly authorized to execute and deliver such document on its behalf. Section 7.04. May Hold Certificates. The Trustee, any Paying Agent, Registrar or any of their Affiliates or any other agent, in their respective individual or any other capacity, may become the owner or pledgee of Certificates and subject to Sections 310(b) and 311 of the Trust Indenture Act, if applicable, may otherwise deal with the Company, the Guarantor, the Owner Trustees or the Loan Trustees with the same rights it would have if it were not Trustee, Paying Agent, Registrar or such other agent. Section 7.05. Money Held in Trust. Money held by the Trustee or the Paying Agent in trust hereunder need not be segregated from other funds except to the extent required herein or by law and neither the Trustee nor the Paying Agent shall have any liability for interest upon any such moneys except as provided for herein. Section 7.06. Compensation and Reimbursement. The Company agrees: ------------------------------ (1) to pay, or cause to be paid, to the Trustee compensation (as set out in a separate fee agreement between the Trustee and the Company) for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (2) except as otherwise expressly provided herein to reimburse, or cause to be reimbursed, the Trustee upon its request for all reasonable out-of-pocket expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Agreement or the Intercreditor Agreement (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence, willful misconduct or bad faith or as may be incurred due to the Trustee's breach of its representations and warranties set forth in Section 7.14; (3) to indemnify, or cause to be indemnified, the Trustee for, and to hold it harmless against, any loss, liability or expense (other than for or with respect to any tax) incurred without negligence, willful misconduct or bad faith, on its part, arising out of or in connection with the acceptance or administration of this Trust, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder, except for any such loss, liability or expense incurred by reason of the Trustee's breach of its representations and warranties set forth in Section 7.14. The Trustee shall notify the Company and the Guarantor promptly of any claim for which it may seek indemnity. The Company and the Guarantor shall defend the claim and the Trustee shall cooperate in the defense. The Trustee may have separate counsel with the consent of the Company and the Guarantor and the Company and the Guarantor will pay the reasonable fees and expenses of such counsel. Neither the Company nor the Guarantor need pay for any settlement made without its consent; and (4) to indemnify, or cause to be indemnified, the Trustee, solely in its individual capacity, for, and to hold it harmless against, any tax (except to the extent the Trustee is reimbursed therefor pursuant to the next paragraph, provided that no indemnification shall be available with respect to any tax attributable to the Trustee's compensation for serving as such) incurred without negligence, willful misconduct or bad faith, on its part, arising out of or in connection with the acceptance or administration of this Trust, including any costs and expenses incurred in contesting the imposition of any such tax. The Trustee, in its individual capacity, shall notify the Company and the Guarantor promptly of any claim for any tax for which it may seek indemnity. The Trustee shall permit the Company and the Guarantor to contest the imposition of such tax and the Trustee, in its individual capacity, shall cooperate in the defense. The Trustee, in its individual capacity, may have separate counsel with the consent of the Company and the Guarantor and the Company and the Guarantor will pay the reasonable fees and expenses of such counsel. Neither the Company nor the Guarantor need pay for any taxes paid, in settlement or otherwise, without its consent. The Trustee shall be entitled to reimbursement from, and shall have a lien prior to the Certificates upon, the Trust Property for any tax incurred without negligence, bad faith or willful misconduct on its part, arising out of or in connection with the acceptance or administration of such Trust (other than any tax attributable to the Trustee's compensation for serving as such), including any costs and expenses incurred in contesting the imposition of any such tax. The Trustee shall notify the Company of any claim for any tax for which it may seek reimbursement. The Trustee shall cooperate in the contest by the Company of any such claim. If the Trustee reimburses itself from the Trust Property for any such tax it will within 30 days mail a brief report setting forth the amount of such tax and the circumstances thereof to all Certificateholders as their names and addresses appear in the Register. As security for the performance of the obligations of the Company under this Section the Trustee shall have a lien prior to the Certificates upon the Trust Property. Section 7.07. Corporate Trustee Required, Eligibility . There shall at all times be a Trustee hereunder which shall be eligible to act as a trustee under Section 310(a) of the Trust Indenture Act and shall have a combined capital and surplus of at least $75,000,000 (or a combined capital and surplus in excess of $5,000,000 and the obligations of which, whether now in existence or hereafter incurred, are fully and unconditionally guaranteed by a corporation organized and doing business under the laws of the United States, any State or Territory thereof or of the District of Columbia that has a combined capital and surplus of at least $75,000,000). If such corporation publishes reports of conditions at least annually, pursuant to law or to the requirements of federal, state, territorial or District of Columbia supervising or examining authority, then for the purposes of this Section 7.07, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of conditions so published. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 7.07 to act as Trustee, the Trustee shall resign immediately as Trustee in the manner and with the effect specified in Section 7.08. Section 7.08. Resignation and Removal: Appointment of Successor. ------------------------------------------------- (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee under Section 7.09. (b) The Trustee may resign at any time as trustee by giving written notice thereof to the Company, the Authorized Agents, the Owner Trustees and the Loan Trustees. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Company, the Authorized Agents, the Owner Trustees, the Loan Trustees and the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee. (c) The Trustee may be removed at any time by Act of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust delivered to the Trustee, the Company, the Owner Trustees and the Loan Trustees. (d) If at any time: (1) the Trustee shall fail to comply with Section 310 of the Trust Indenture Act after written request therefor by the Company or by any Certificateholder who has been a bona fide certificateholder for at least six months; or (2) the Trustee shall cease to be eligible under Section 7.07 and shall fail to resign after written request therefor by the Company or by any such Certificateholder; or (3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation; then, in any case, (i) the Company may remove the Trustee or (ii) any Certificateholder who has been a bona fide Certificateholder for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. (e) If a Responsible Officer of the Trustee shall obtain actual knowledge of an Avoidable Tax (as hereinafter defined) which has been or is likely to be asserted, the Trustee shall promptly notify the Company and shall, within 30 days of such notification, resign as Trustee hereunder unless within such 30-day period the Trustee shall have received notice that the Company has agreed to pay such tax. The Company shall promptly appoint a successor Trustee in a jurisdiction where there are no Avoidable Taxes. As used herein, an "Avoidable Tax" means a state or local tax: (i) upon (w) the Trust, (x) the Trust Property, (y) Certificateholders or (z) the Trustee for which the Trustee is entitled to seek reimbursement from the Trust Property, and (ii) which would be avoided if the Trustee were located in another state, or jurisdiction within a state, within the United States. A tax shall not be an Avoidable Tax if the Company or any Owner Trustee shall agree to pay, and shall pay, such tax. (f) If the Trustee shall resign, be removed or become incapable of acting as trustee or if a vacancy shall occur in the office of the Trustee for any cause, the Company shall promptly appoint a successor Trustee. If, within 90 days after such resignation, removal or incapability, or other occurrence of such vacancy, a successor Trustee shall be appointed by Act of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust delivered to the Company, the Owner Trustees, the Loan Trustee and the retiring Trustee, the successor Trustees so appointed shall, with the approval of the Company, which approval shall not be unreasonably withheld, forthwith upon its acceptance of such appointment, become the successor Trustee and supersede the successor Trustee appointed as provided above. If no successor Trustee shall have been so appointed as provided above and accepted appointment in the manner hereinafter provided, the resigning Trustee or any Certificateholder who has been a bona fide Certificateholder for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee. (g) The successor Trustee of a Trust shall give notice of the resignation and removal of the Trustee and appointment of the successor Trustee by mailing written notice of such event by first-class mail, postage prepaid, to the Certificateholders as their names and addresses appear in the Register. Each notice shall include the name of such successor Trustee and the address of its Corporate Trust Office. Section 7.09. Acceptance of Appointment by Successor. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on request of the Company or the successor Trustee, such retiring Trustee shall execute and deliver an instrument transferring to such successor Trustee all such rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee, subject nevertheless to its lien, if any, provided for in Section 7.06. Upon request of any such successor Trustee, the Company, the retiring Trustee and such successor Trustee shall execute and deliver any and all instruments containing such provisions as shall be necessary or desirable to transfer and confirm to, and for more fully and certainly vesting in, such successor Trustee all such rights, powers and trusts. No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article. Section 7.10. Merger, Conversion, Consolidation or Succession to Business. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Certificates shall have been executed or authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such execution or authentication and deliver the Certificates so executed or authenticated with the same effect as if such successor Trustee had itself executed or authenticated such Certificates. Section 7.11. Maintenance of Agencies. ----------------------- (a) There shall at all times be maintained an office or agency where Certificates may be presented or surrendered for registration of transfer or for exchange, and for payment thereof and where notices and demands to or upon the Trustee in respect of such Certificates may be served. Presentations and demands may be made and notices may be served at the Corporate Trust Office of the Trustee. (b) There shall at all times be a Registrar and a Paying Agent hereunder with respect to the Certificates. Each such Authorized Agent shall be a bank or trust company, shall be a corporation organized and doing business under the laws of the United States or any state, with a combined capital and surplus of at least $75,000,000, or a corporation having a combined capital and surplus in excess of $5,000,000 the obligations of which are guaranteed by a corporation organized and doing business under the laws of the United States or any state, with a combined capital and surplus of at least $75,000,000, and shall be authorized under such laws to exercise corporate trust powers, subject to supervision by federal or state authorities. The Trustee shall initially be the Paying Agent and, as provided in Section 3.04, Registrar hereunder with respect to the Certificates. Each Registrar shall furnish to the Trustee, at stated intervals of not more than six months, and at such other times as the Trustee may request in writing, a copy of the Register maintained by such Registrar. (c) Any corporation into which any Authorized Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, consolidation or conversion to which any Authorized Agent, shall be a party, or any corporation succeeding to the corporate trust business of any Authorized Agent, shall be the successor of such Authorized Agent hereunder, if such successor corporation is otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the parties hereto or such Authorized Agent or such successor corporation. (d) Any Authorized Agent may at any time resign by giving written notice of resignation to the Trustee, the Company, the Owner Trustees and the Loan Trustees. The Company may, and at the request of the Trustee shall, at any time terminate the agency of any Authorized Agent by giving written notice of termination to such Authorized Agent and to the Trustee. Upon the resignation or termination of an Authorized Agent or in case at any time any such Authorized Agent shall cease to be eligible under this Section (when in either case, no other Authorized Agent performing the functions of such Authorized Agent shall have been appointed), the Company shall promptly appoint one or more qualified successor Authorized Agents, reasonably satisfactory to the Trustee, to perform the functions of the Authorized Agent which has resigned or whose agency has been terminated or who shall have ceased to be eligible under this Section. The Company shall give written notice of any such appointment made by it to the Trustee, the Owner Trustees and the Loan Trustees; and in each case the Trustee shall mail notice of such appointment to all Certificateholders as their names and addresses appear on the Register. (e) The Company agrees to pay, or cause to be paid, from time to time to each Authorized Agent reasonable compensation for its services and to reimburse it for its reasonable expenses. Section 7.12. Money for Certificate Payments to Be Held in Trust. All moneys deposited with any Paying Agent for the purpose of any payment on Certificates shall be deposited and held in trust for the benefit of the Certificateholders entitled to such payment, subject to the provisions of this Section. Moneys so deposited and held in trust shall constitute a separate trust fund for the benefit of the Certificateholders with respect to which such money was deposited. The Trustee may at any time, for the purpose of obtaining the satisfaction and discharge of this Agreement or for any other purpose, direct any Paying Agent to pay to the Trustee all sums held in trust by such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by such Paying Agent and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. Section 7.13. Registration of Equipment Notes in Name of Subordination Agent. The Trustee agrees that all Equipment Notes to be purchased by the Trust shall be issued in the name of the Subordination Agent or its nominee and held by the Subordination Agent in trust for the benefit of the Certificateholders, or, if not so held, the Subordination Agent or its nominee shall be reflected as the owner of such Equipment Notes in the register of the issuer of such Equipment Notes. Section 7.14. Representations and Warranties of Trustee. The Trustee hereby represents and warrants that: (a) the Trustee is a Delaware banking corporation organized and validly existing, and in good standing under the laws of the State of Delaware; (b) the Trustee has full power, authority and legal right to execute, deliver and perform this Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement and the Note Documents to which it is a party and has taken all necessary action to authorize the execution, delivery and performance by it of this Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement and the Note Documents to which it is a party; (c) the execution, delivery and performance by the Trustee of this Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement and the Note Documents to which it is a party (i) will not violate any provision of any United States federal law or the law of the State of Delaware governing the banking and trust powers of the Trustee or any order, writ, judgment, or decree of any court, arbitrator,or governmental authority applicable to the Trustee or any of its assets, (ii) will not violate any provision of the articles of association or by-laws of the Trustee, and (iii) will not violate any provision of, or constitute, with or without notice or lapse of time, a default under, or result in the creation or imposition of any lien on any properties included in the Trust Property pursuant to the provisions of, any mortgage, indenture, contract, agreement or other undertaking to which it is a party, which violation, default or lien could reasonably be expected to have an adverse effect on the Trustee's performance or ability to perform its duties hereunder or thereunder or on the transactions contemplated herein or therein; (d) the execution, delivery and performance by the Trustee of this Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement and the Note Documents to which it is a party will not require the authorization, consent, or approval of, the giving of notice to, the filing or registration with, or the taking of any other action in respect of, any governmental authority or agency of the United States or the State of Delaware regulating the banking and corporate trust activities of the Trustee; and (e) this Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement and the Note Documents to which it is a party have been duly executed and delivered by the Trustee and constitute the legal, valid, and binding agreements of the Trustee, enforceable against it in accordance with their respective terms, provided that enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and (ii) general principles of equity. Section 7.15. Withholding Taxes, Information Reporting. (a) The Trustee, as trustee of the grantor trust created by this Agreement, shall exclude and withhold from each distribution of principal, premium, if any, and interest and other amounts due under this Agreement or under the Certificates any and all withholding taxes applicable thereto as required by law. The Trustee agrees to act as such withholding agent and, in connection therewith, whenever any taxes or similar charges are required to be withheld with respect to any amounts paid by or on behalf of the Trustee in respect of the Certificates, to withhold such amounts and timely pay the same to the authority in the name of and on behalf of the Certificateholders, that it will file any necessary withholding tax returns or statements when due, and that, as promptly as possible after the payment thereof, it will deliver to each such Certificateholder necessary documentation showing the payment thereof, together with such additional documentary evidence as such Certificateholders may reasonably request from time to time. The Trustee agrees to file any other information reports as it may be required to file under United States law. (b) The Trustee may satisfy certain of its obligations with respect to this Agreement by retaining, at the expense of the Company, a firm of independent public accountants (the "Accountants") which shall (i) be responsible for all tax filing requirements and (ii) perform the obligations of the Trustee in respect of tax filing requirements. The Trustee shall be deemed to have discharged its tax filing obligations under this Agreement upon its retention of the Accountants, and, if the Trustee shall have selected in the Accountants in good faith and without gross negligence, the Trustee shall not have any liability with respect to the default or misconduct of the Accountants. (c) The Trustee, at the request of the Company, will make such United States federal income tax elections as may be necessary to prevent the Trust from being classified for federal income tax purposes as an association taxable as a corporation. Section 7.16. Trustee's Liens. The Trustee in its individual capacity agrees that it will at its own cost and expense promptly take any action as may be necessary to duly discharge and satisfy in full any mortgage, pledge, lien, charge, encumbrance, security interest or claim ("Trustee's Liens") on or with respect to the Trust Property which is attributable to the Trustee either (i) in its individual capacity and which is unrelated to the transactions contemplated by this Agreement, the Intercreditor Agreement, the Participation Agreements, the Note Purchase Agreement or the Note Documents, or (ii) as Trustee hereunder or in its individual capacity and which arises out of acts or omissions which are not contemplated by this Agreement. Section 7.17. Preferential Collection of Claims. The Trustee shall comply with Section 311(a) of the Trust Indenture Act, excluding any creditor relationship listed in Section 311(b) of the Trust Indenture Act. If the Trustee shall resign or be removed as Trustee, it shall be subject to Section 311(a) of the Trust Indenture Act to the extent provided therein. ARTICLE VIII CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE Section 8.01. The Company to Furnish Trustee with Names and Addresses of Certificateholders. The Company will furnish or cause to be furnished to the Trustee within 15 days after each Record Date with respect to a Scheduled Payment, and at such other times as the Trustee may request in writing, within 30 days after receipt by the Company of any such request, a list, in such form as the Trustee may reasonably require, of all information in the possession or control of the Company as to the names and addresses of the Certificateholders, in each case as of a date not more than 15 days prior to the time such list is furnished; provided, however, that so long as the Trustee is the sole Registrar, no such list need be furnished; and provided further, however, that no such list need be furnished for so long as a copy of the Register is being furnished to the Trustee pursuant to Section 7.11. Section 8.02. Preservation of Information; Communications to Certificateholders. The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Certificateholders contained in the most recent list furnished to the Trustee as provided in Section 7.11 or Section 8.01, as the case may be, and the names and addresses of Certificateholders received by the Trustee in its capacity as Registrar, if so acting. The Trustee may destroy any list furnished to it as provided in Section 7.11 or Section 8.01, as the case may be, upon receipt of a new list so furnished. Section 8.03. Reports by Trustee. Within 60 days after May 15 of each year commencing with the first full year following the issuance of the Certificates, the Trustee shall transmit to the Certificateholders, as provided in Section 313(c) of the Trust Indenture Act, a brief report dated as of such May 15, if required by Section 313(a) of the Trust Indenture Act. Section 8.04. Reports by the Guarantor and Company. The Guarantor and the Company each shall: (a) file with the Trustee, within 30 days after the Guarantor or the Company is required to file the same with the SEC, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may from time to time by rules and regulations prescribe) which the Guarantor or the Company is required to file with the SEC pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934, as amended; or, if the Guarantor or the Company is not required to file information, documents or reports pursuant to either of such sections, then to file with the Trustee and the SEC, in accordance with rules and regulations prescribed by the SEC, such of the supplementary and periodic information, documents and reports which may be required pursuant to section 13 of the Securities Exchange Act of 1934, as amended, in respect of a security listed and registered on a national securities exchange as may be prescribed in such rules and regulations; (b) file with the Trustee and the SEC, in accordance with the rules and regulations prescribed by the SEC, such additional information, documents and reports with respect to compliance by the Guarantor and the Company with the conditions and covenants of the Guarantor and the Company provided for in this Agreement, as may be required by such rules and regulations, including, in the case of annual reports, if required by such rules and regulations, certificates or opinions of independent public accountants, conforming to the requirements of Section 1.02; (c) transmit to all Certificateholders, in the manner and to the extent provided in Section 313(c) of the Trust Indenture Act, such summaries of any information, documents and reports required to be filed by the Guarantor and the Company pursuant to subsections (a) and (b) of this Section 8.04 as may be required by rules and regulations prescribed by the SEC; (d) furnish to the Trustee, not less often than annually, a brief certificate from the principal executive officer, principal financial officer or principal accounting officer as to his or her knowledge of the Guarantor's and the Company's compliance with all conditions and covenants under this Agreement (it being understood that for purposes of this paragraph (d), such compliance shall be determined without regard to any period of grace or requirement of notice provided under this Agreement); and (e) make available to any Certificateholder, upon request, the annual audited and quarterly unaudited financial statements of the Guarantor which are provided to the Trustee. ARTICLE IX SUPPLEMENTAL AGREEMENTS Section 9.01. Supplemental Agreements Without Consent of Certificateholders. Without the consent of the Certificateholders, the Guarantor and the Company may, and the Trustee (subject to Section 9.03) shall, at any time and from time to time, enter into one or more agreements supplemental hereto or, if applicable, to the Indenture, the Lease, the Participation Agreement, Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement, the Deposit Agreement or the Liquidity Facility in form satisfactory to the Trustee, for any of the following purposes: (1) to evidence the succession of another corporation to the Company or the Guarantor and the assumption by any such successor of the covenants of the Company or the Guarantor contained herein or in each of the other related documents to which Company or the Guarantor is a party; or (2) to add to the covenants of the Guarantor or the Company for the benefit of the Certificateholders, or to surrender any right or power in this Agreement, the Note Purchase Agreement, the Intercreditor Agreement or any Liquidity Facility conferred upon the Guarantor or the Company; or (3) to correct or supplement any provision in this Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement, the Deposit Agreement or the Liquidity Facility which may be defective or inconsistent with any other provision herein or therein or to modify any other provisions with respect to matters or questions arising under this Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement, the Deposit Agreement or the Liquidity Facility, provided that any such action shall not adversely affect the interests of the Certificateholders; or to cure any ambiguity or correct any mistake in such documents, or as provided in the Intercreditor Agreement, to give effect to or provide for a Replacement Liquidity Facility (as defined in the Intercreditor Agreement); or (4) to comply with any requirement of the SEC, any applicable law, rules or regulations of any exchange or quotation system on which the Certificates are listed, or any regulatory body; or (5) to modify, eliminate or add to the provisions of this Agreement to such extent as shall be necessary to continue the qualification of this Agreement (including any supplemental agreement) under the Trust Indenture Act, or under any similar Federal statute hereafter enacted, and to add to this Agreement such other provisions as may be expressly permitted by the Trust Indenture Act, excluding, however, the provisions referred to in Section 316(a)(2) of the Trust Indenture Act as in effect at the date as of which this instrument was executed or any corresponding provision in any similar Federal statute hereafter enacted; or (6) to evidence and provide for the acceptance of appointment under this Agreement by the Trustee of a successor Trustee and to add to or change any of the provisions of this Agreement as shall be necessary to provide for or facilitate the administration of the Trust, pursuant to the requirements of Section 7.09; or (7) if with respect to any Owned Aircraft the Company issues "class D" pass through certificates, to modify, eliminate or add to the provisions of this Agreement to the extent necessary to provide for the subordination of such "class D" pass through certificates to the Certificates; provided that no such action described in this Section 9.01 shall materially adversely affect the interests of the Certificateholders. Section 9.02. Supplemental Agreements with Consent of Certificateholders. With the consent of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest of the Trust, by Act of said Certificateholders delivered to the Guarantor, the Company and the Trustee, the Guarantor and the Company may (with the consent of the Owner Trustees, if any, which consent shall not be unreasonably withheld), and the Trustee (subject to Section 9.03) shall, enter into an agreement or agreements supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement, the Deposit Agreement or the Liquidity Facility to the extent applicable to such Certificateholders or of modifying in any manner the rights and obligations of such Certificateholders under this Agreement, the Intercreditor Agreement, any Liquidity Facility, the Escrow Agreement, the Deposit Agreement or the Note Purchase Agreement; provided, however, that no such supplemental agreement shall, without the consent of the Certificateholder of each Outstanding Certificate affected thereby: (1) reduce in any manner the amount of, or delay the timing of, any receipt by the Trustee (or, with respect to the Deposits, the Certificateholders) of payments on the Equipment Notes held in the Trust or under the Deposit Agreement or distributions that are required to be made herein on any Certificate, or change any date of payment of any Certificate or change the place of payment where, or the coin or currency in which, any Certificate is payable, or impair the right to institute suit for the enforcement of any such payment or distribution on or after the Regular Distribution Date or Special Distribution Date applicable thereto; or (2) permit the disposition of any Equipment Note included in the Trust Property except as permitted by this Agreement, or otherwise deprive such Certificateholder of the benefit of the ownership of the Equipment Notes in the Trust; or (3) alter the priority of distributions specified in the Intercreditor Agreement; or (4) modify any of the provisions of this Section or Section 6.05, except to increase any such percentage or to provide that certain other provisions of this Agreement cannot be modified or waived without the consent of the Certificateholder of each Certificate affected thereby; or (5) adversely affect the status of any Trust as a grantor trust under Subpart E, Part I of Subchapter J of Chapter 1 of Subtitle A of the Internal Revenue Code of 1986, as amended, for U.S. federal income tax purposes. It shall not be necessary for any Act of Certificateholders under this Section to approve the particular form of any proposed supplemental agreement but it shall be sufficient if such Act shall approve the substance thereof. Section 9.03. Documents Affecting Immunity or Indemnity. If in the opinion of the Trustee any document required to be executed by it pursuant to the terms of Section 9.01 or 9.02 affects any interest, right, duty, immunity or indemnity in favor of the Trustee under this Agreement, the Trustee may in its discretion decline to execute such document. Section 9.04. Execution of Supplemental Agreements. In executing, or accepting the additional trusts created by, any supplemental agreement permitted by this Article or the modifications thereby of the trust created by this Agreement, the Trustee shall be entitled to receive, and shall be fully protected in relying upon, written advice of counsel or an Opinion of Counsel stating that the execution of such supplemental agreement is authorized or permitted by this Agreement. Section 9.05. Effect of Supplemental Agreements. Upon the execution of any supplemental agreement under this Article, this Agreement shall be modified in accordance therewith, and such supplemental agreement shall form a part of this Agreement for all purposes; and every Certificateholder theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. Section 9.06. Conformity with Trust Indenture Act. Every supplemental agreement executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act as then in effect. Section 9.07. Reference in Certificates to Supplemental Agreements. Certificates authenticated and delivered after the execution of any supplemental agreement pursuant to this Article may bear a notation in form approved by the Trustee as to any matter provided for in such supplemental agreement; and, in such case, suitable notation may be made upon Outstanding Certificates after proper presentation and demand. ARTICLE X AMENDMENTS TO INDENTURES AND NOTE DOCUMENTS Section 10.01. Amendments and Supplements to Indentures and Other Note Documents. In the event that the Trustee, as holder (or beneficial owner through the Subordination Agent) of any Equipment Note in trust for the benefit of the Certificateholders or as Controlling Party under the Intercreditor Agreement, receives (directly or indirectly through the Subordination Agent) a request for a consent to any amendment, modification, waiver or supplement under any Indenture, any other Note Document, any Equipment Note, the Note Purchase Agreement or any other related document, the Trustee shall forthwith send a notice of such proposed amendment, modification, waiver or supplement to each Certificateholder registered on the Register as of the date of such notice. The Trustee shall request from the Certificateholders a Direction as to (a) whether or not to take or refrain from taking (or direct the Subordination Agent to take or refrain from taking) any action which a holder of such Equipment Note has the option to direct, (b) whether or not to give or execute (or direct the Subordination Agent to give or execute) any waivers, consents, amendments, modifications or supplements as a holder of such Equipment Note or a Controlling Party and (c) how to vote (or direct the Subordination Agent to vote) any Equipment Note if a vote has been called for with respect thereto. Provided such a request for Certificateholder Direction shall have been made, in directing any action or casting any vote or giving any consent as the holder of any Equipment Note (or in directing the Subordination Agent in any of the foregoing), (i) other than as Controlling Party, the Trustee shall vote for or give consent to any such action with respect to such Equipment Note in the same proportion as that of (A) the aggregate face amounts of all Certificates actually voted in favor of or for giving consent to such action by such Direction of Certificateholders to (B) the aggregate face amount of all Outstanding Certificates and (ii) as Controlling Party, the Trustee shall vote as directed in such Certificateholder Direction by the Certificateholders evidencing a Fractional Undivided Interest aggregating not less than a majority in interest in the Trust. For purposes of the immediately preceding sentence, a Certificate shall have been "actually voted" if the Holder of such Certificate has delivered to the Trustee an instrument evidencing such Holder's consent to such Direction prior to two Business Days before the Trustee directs such action or casts such vote or gives such consent. Notwithstanding the foregoing, but subject to Section 6.04 and the Intercreditor Agreement, the Trustee may, in its own discretion and at its own direction, consent and notify the relevant Loan Trustee of such consent (or direct the Subordination Agent to consent and notify the Loan Trustee of such consent) to any amendment, modification, waiver or supplement under the relevant Indenture, any other Note Document, any Equipment Note, the Note Purchase Agreement or any other related document, if an Event of Default hereunder shall have occurred and be continuing, or if such amendment, modification, waiver or supplement will not materially adversely affect the interests of the Certificateholders. ARTICLE XI TERMINATION OF TRUSTS Section 11.01. Termination of the Trust. The respective obligations and responsibilities of the Company, the Guarantor and the Trustee with respect to the Trust shall terminate upon the earlier of (A) the completion of the assignment, transfer and discharge described in the first sentence of the immediately following paragraph and (B) distribution to all Holders of the Certificates and the Trustee of all amounts required to be distributed to them pursuant to this Agreement and the disposition of all property held as part of the Trust Property; provided, however, that in no event shall the Trust continue beyond one hundred ten (110) years following the date of the earliest execution of this Agreement. Upon the earlier of (i) the first Business Day following January 31, 1999, or, if later, the fifth Business Day following the Delivery Period Termination Date and (ii) the fifth Business Day following the date on which a Triggering Event occurs (such date, the "Transfer Date"), or, if later the date on which all of the conditions set forth in the immediately following sentence have been satisfied, the Trustee is hereby directed (subject only to the immediately following sentence) to, and the Company shall direct the institution that will serve as the Related Trustee under the Related Pass Through Trust Agreement to, execute and deliver the Assignment and Assumption Agreement, pursuant to which the Trustee shall assign, transfer and deliver all of the Trustee's right, title and interest to the Trust Property to the Related Trustee under the Related Pass Through Trust Agreement. The Trustee and the Related Trustee shall execute and deliver the Assignment and Assumption Agreement upon the satisfaction of the following conditions: (i) The Trustee, the Related Trustee and each of the Rating Agencies (as defined in the Intercreditor Agreement) then rating the Certificates shall have received an Officer's Certificate and an Opinion of Counsel dated the date of the Assignment and Assumption Agreement and each satisfying the requirements of Section 1.02, which Opinion of Counsel shall be substantially to the effect set forth below and may be relied upon by the Beneficiaries (as defined in the Assignment and Assumption Agreement): (a) upon the execution and delivery thereof by the parties thereto in accordance with the terms of this Agreement and the Related Pass Through Trust Agreement, the Assignment and Assumption Agreement will constitute the valid and binding obligation of each of the parties thereto enforceable against each such party in accordance with its terms (subject to applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditor's rights generally and to general principles of equity); (b) upon the execution and delivery of the Assignment and Assumption Agreement in accordance with the terms of this Agreement and the Related Pass Through Trust Agreement, each of the Certificates then Outstanding will be entitled to the benefits of the Related Pass Through Trust Agreement; (c) the Related Trust is not required to be registered as an investment company under the Investment Company Act of 1940, as amended; (d) the Related Pass Through Trust Agreement constitutes the valid and binding obligation of the Company enforceable against the Company in accordance with its terms (subject to applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditor's rights generally and to general principles of equity); and (e) neither the execution and delivery of the Assignment and Assumption Agreement in accordance with the terms of this Agreement and the Related Pass Through Trust Agreement, nor the consummation by the parties thereto of the transactions contemplated to be consummated thereunder on the date thereof, will violate any law or governmental rule or regulation of the State of New York or the United States of America known to such counsel to be applicable to the transactions contemplated by the Assignment and Assumption Agreement. (ii) The Trustee and the Company shall have received (x) a copy of the articles of incorporation and bylaws of the Related Trustee certified as of the Transfer Date by the Secretary or Assistant Secretary of such institution and (y) a copy of the filing (including all attachments thereto) made by the institution serving as the Related Trustee with the Office of the Superintendent, State of New York Banking Department for the qualification of the Related Trustee under Section 131(3) of the New York Banking Law. Upon the execution of the Assignment and Assumption Agreement by the parties thereto, the Trust shall be terminated, the Certificateholders shall receive beneficial interests in the Related Trust in exchange for their interests in the Trust equal to their respective beneficial interests in the Trust, and the Outstanding Certificates representing Fractional Undivided Interests in the Trust shall be deemed for all purposes of this Agreement and the Related Pass Through Trust Agreement, without further signature or action of any party or Certificateholder, to be certificates representing the same fractional undivided interests in the Related Trust and its trust property. By acceptance of its Certificate, each Certificateholder consents to such assignment, transfer and delivery of the Trust Property to the trustee of the Related Trust upon the execution and delivery of the Assignment and Assumption Agreement. In connection with the occurrence of the event set forth in clause (B) above, notice of such termination, specifying the Regular Distribution Date (or Special Distribution Date, as the case may be) upon which the Certificateholders may surrender their Certificates to the Trustee for payment of the final distribution and cancellation, shall be mailed promptly, upon notice to the Trustee, by the Trustee to Certificateholders not earlier than the 60th day and not later than the 20th day next preceding such final distribution specifying (A) the Regular Distribution Date (or Special Distribution Date, as the case may be) upon which the proposed final payment of the Certificates will be made upon presentation and surrender of Certificates at the office or agency of the Trustee therein specified, (B) the amount of any such proposed final payment, and (C) that the Record Date otherwise applicable to such Regular Distribution Date (or Special Distribution Date, as the case may be) is not applicable, payments being made only upon presentation and surrender of the Certificates at the office or agency of the Trustee therein specified. The Trustee shall give such notice to the Registrar at the time such notice is given to Certificateholders. Upon presentation and surrender of the Certificates, the Trustee shall cause to be distributed to Certificateholders amounts distributable on such Regular Distribution Date (or Special Distribution Date, as the case may be) pursuant to Section 4.02. In the event that all of the Certificateholders shall not surrender their Certificates for cancellation within six months after the date specified in the above-mentioned written notice, the Trustee shall give a second written notice to the remaining Certificateholders to surrender their Certificates for cancellation and receive the final distribution with respect thereto. No additional interest shall accrue on the Certificates after the Regular Distribution Date (or Special Distribution Date, as the case may be). In the event that any money held by the Trustee for the payment of distributions on the Certificates shall remain unclaimed for two years (or such lesser time as the Trustee shall be satisfied, after sixty days' notice from the Company, is one month prior to the escheat period provided under applicable law) after the final distribution date with respect thereto, the Trustee shall pay to each Loan Trustee the appropriate amount of money relating to such Loan Trustee and shall give written notice thereof to the related Owner Trustees and the Company. ARTICLE XII MISCELLANEOUS PROVISIONS Section 12.01. Limitation on Rights of Certificateholders. The death or incapacity of any Certificateholder shall not operate to terminate this Agreement, or the Trust, nor entitle such Certificateholder's legal representatives or heirs to claim an accounting or to take any action or commence any proceeding in any court for a partition or winding up of the Trust, nor otherwise affect the rights, obligations, and liabilities of the parties hereto or any of them. Section 12.02. Liabilities of Certificateholders. Neither the existence of the Trust nor any provision in this Agreement is intended to or shall limit the liability the Certificateholders would otherwise incur if the Certificateholders owned Trust Property as co-owners, or incurred any obligations of the Trust, directly rather than through the Trust. Section 12.03. Certificates Nonassessable and Fully Paid. Subject to Section 12.02, Certificateholders shall not be personally liable for obligations of the Trust, the Fractional Undivided Interests represented by the Certificates shall be nonassessable for any losses or expenses of the Trust or for any reason whatsoever, and Certificates upon authentication thereof by the Trustee pursuant to Section 3.03 are and shall be deemed fully paid. No Certificateholder shall have any right (except as expressly provided herein) to vote or in any manner otherwise control the operation and management of the Trust Property, the Trust, or the obligations of the parties hereto, nor shall anything set forth herein, or contained in the terms of the Certificates, be construed so as to constitute the Certificateholders from time to time as partners or members of an association. Section 12.04. [Intentionally omitted]. Section 12.05. Notices. ------- (a) Unless otherwise specifically provided herein, all notices required under the terms and provisions of this Agreement shall be in English and in writing, and any such notice may be given by United States mail, courier service, telegram, telemessage, telecopy, telefax, cable or facsimile (confirmed by telephone or in writing in the case of notice by telegram, telemessage, telecopy, telefax, cable or facsimile) or any other customary means of communication, and any such notice shall be effective when delivered, or if mailed, three days after deposit in the United States mail with proper postage for ordinary mail prepaid, if to the Company or the Guarantor, to: American Trans Air, Inc. 7337 West Washington Street Indianapolis International Airport Indianapolis, Indiana 06927 Attention: Executive Vice President and Chief Financial Officer Facsimile: (317) 240-7087 if to the Trustee, to: Wilmington Trust Company Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 Attention: Corporate Trust Administration Facsimile: (302) 651-8882 (b) The Company, the Guarantor or the Trustee, by notice to the other, may designate additional or different addresses for subsequent notices or communications. (c) Any notice or communication to Certificateholders shall be mailed by first-class mail to the addresses for Certificateholders shown on the Register kept by the Registrar and to addresses filed with the Trustee. Failure so to mail a notice or communication or any defect in such notice or communication shall not affect its sufficiency with respect to other Certificateholders. (d) If a notice or communication is mailed in the manner provided above within the time prescribed, it is conclusively presumed to have been duly given, whether or not the addressee receives it. (e) If the Company mails a notice or communication to the Certificateholders, it shall mail a copy to the Trustee and to each Paying Agent at the same time. (f) Notwithstanding the foregoing, all communications or notices to the Trustee shall be deemed to be given only when received by a Responsible Officer of the Trustee. (g) The Trustee shall promptly furnish the Company with a copy of any demand, notice or written communication received by the Trustee hereunder from any Certificateholder, Owner Trustee or Loan Trustee. Section 12.06. Governing Law. THIS AGREEMENT HAS BEEN DELIVERED IN THE STATE OF DELAWARE AND THIS AGREEMENT AND THE CERTIFICATES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO CONFLICT-OF-LAW PRINCIPLES. Section 12.07. Severability of Provisions. If any one or more of the covenants, agreements, provisions, or terms of this Agreement shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions, or terms shall be deemed severable from the remaining covenants, agreements, provisions, or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement or the Trust or of the Certificates or the rights of the Certificateholders thereof. Section 12.08. [Intentionally omitted]. Section 12.09. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. Section 12.10. Successors and Assigns. All covenants, agreements, representations and warranties in this Agreement by the Trustee, the Guarantor and the Company shall bind and, to the extent permitted hereby, shall inure to the benefit of and be enforceable by their respective successors and assigns, whether so expressed or not. Section 12.11. Benefits of Agreement. Nothing in this Agreement or in the Certificates, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, and the Certificateholders, any benefit or any legal or equitable right, remedy or claim under this Agreement. Section 12.12. Legal Holidays. In any case where any Regular Distribution Date or Special Distribution Date relating to any Certificate shall not be a Business Day, then (notwithstanding any other provision of this Agreement) payment need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on such Regular Distribution Date or Special Distribution Date, and no interest shall accrue during the intervening period. Section 12.13. Counterparts. For the purpose of facilitating the execution of this Agreement and for other purposes, this Agreement may be executed simultaneously in any number of counterparts, each of which counterparts shall be deemed to be an original, and all of which counterparts shall constitute but one and the same instrument. Section 12.14. Communication by Certificateholders with Other Certificateholders. Certificateholders may communicate with other Certificateholders with respect to their rights under this Agreement or the Certificates pursuant to Section 3.12(b) of the Trust Indenture Act. The Company, the Guarantor, the Trustee and any and all other persons benefitted by this Agreement shall have the protection afforded by Section 312(c) of the Trust Indenture Act. Section 12.15. Intention of Parties. The parties hereto intend that the Trust be classified for U.S. federal income tax purposes as a grantor trust under Subpart E, Part I of Subchapter J of the Internal Revenue Code of 1986, as amended, and not as a trust or association taxable as a corporation or as a partnership. Each Certificateholder, by its acceptance of its Certificate or a beneficial interest therein, agrees to treat the Trust as a grantor trust for all U.S. federal, state and local income tax purposes. The powers granted and obligations undertaken pursuant to this Agreement shall be so construed so as to further such intent. IN WITNESS WHEREOF, the Guarantor, the Company and the Trustee have caused this Agreement to be duly executed by their respective officers, all as of the day and year first above written. AMTRAN, INC. By /s/ Kenneth K. Wolff ----------------------------- Title: Executive Vice President and Chief Financial Officer AMERICAN TRANS AIR, INC. / By /s/ Kenneth K. Wolff ----------------------------- Title: Chief Financial Officer WILMINGTON TRUST COMPANY, as Trustee By /s/ Patricia A. Evans ----------------------------- Title: Financial Services Officer FORM OF CERTIFICATE [THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS CERTIFICATE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY AMERICAN TRANS AIR, INC., ("ATA") OR AN AFFILIATE OF ATA RESELL OR OTHERWISE TRANSFER THIS CERTIFICATE EXCEPT (A) TO ATA OR ANY SUBSIDIARY THEREOF,(B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING $100,000 OR MORE AGGREGATE PRINCIPAL AMOUNT OF SUCH CERTIFICATES THAT, TAKES DELIVERY OF THIS CERTIFICATE IN DEFINITIVE FORM AND PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS CERTIFICATE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS CERTIFICATE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CASE THIS CERTIFICATE IS IN DEFINITIVE FORM, IN CONNECTION WITH ANY TRANSFER OF THIS CERTIFICATE WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY ATA OR AN AFFILIATE OF ATA THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE PASS THROUGH TRUST AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS.]1 [UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND 3.06 OF THE PASS THROUGH TRUST AGREEMENT REFERRED TO HEREIN .]2 AMERICAN TRANS AIR, INC. 1997-1A-O PASS THROUGH TRUST Pass Through Certificate, Series 1997-1A-O Issuance Date: Final Legal Distribution Date: Evidencing a Fractional Undivided Interest in the 1997-1A-O Trust, the Property of Which Includes Certain Equipment Notes each secured by Aircraft leased to American Trans Air, Inc. Certificate No. $ Fractional Undivided Interest representing % of the --------- ------- ----- Trust per $1,000 of Reference Principal Amount THIS CERTIFIES THAT , for value received, is the registered owner of a Fractional Undivided Interest in the amount of Dollars ($ ) (the "Reference Principal Amount") in the American Trans Air 1997-1A-O Pass Through Trust (the "Trust") created by Wilmington Trust Company, not in its individual capacity but solely as trustee (the "Trustee"), pursuant to a Pass Through Trust Agreement dated as of December , 1997 (the "Agreement"), among the Trustee, Amtran, Inc., a corporation incorporated under Indiana law (the "Guarantor"), and American Trans Air, Inc., a corporation incorporated under Indiana law (the "Company"), a summary of certain of the pertinent provisions of which is set forth below. To the extent not otherwise defined herein, the capitalized terms used herein have the meanings assigned to them in the Agreement. This Certificate is one of the duly authorized Certificates designated as "Pass Through Certificates, Series 1997-1A-O" (herein called the "Certificates"). This Certificate is issued under and is subject to the terms, provisions, and conditions of the Agreement and the Intercreditor Agreement, to which agreements the Certificateholder of this Certificate by virtue of the acceptance hereof assents and by which such Certificateholder is bound. The property of the Trust includes certain Equipment Notes and all rights of the Trust to receive any payments under the Intercreditor Agreement and the Liquidity Facility (the "Trust Property"). Each issue of the Equipment Notes is secured by a security interest in The Aircraft leased to the Company. Each of the Certificates represents a fractional undivided interest in the Trust and the Trust Property, and has no rights, benefits or interest in respect of any assets or property other than the Trust Property. The undivided percentage interest in the Trust represented by each of this Certificate (as specified above) and the other Pass Through Certificates, Series 1997-1A-O, was determined on the basis of (x) the aggregate of the Reference Principal Amount of this Certificate (as specified above) and of the other Pass Through Certificates, Series 1997-1A-O and (y) the aggregate original principal amounts of the Equipment Notes constituting the Trust Property. Subject to and in accordance with the terms of the Agreement and the Intercreditor Agreement, from funds then available to the Trustee, there will be distributed on each January 15, April 15, July 15 and October 15 (a "Regular Distribution Date"), commencing January 15, 1998, to the Person in whose name this Certificate is registered at the close of business on the 15th day preceding the Regular Distribution Date, an amount in respect of the Scheduled Payments on the Equipment Notes due on such Regular Distribution Date, the receipt of which has been confirmed by the Trustee, equal to the product of the percentage interest in the Trust evidenced by this Certificate and an amount equal to the sum of such Scheduled Payments. Subject to and in accordance with the terms of the Agreement and the Intercreditor Agreement, in the event that Special Payments on the Equipment Notes are received by the Trustee, from funds then available to the Trustee, there shall be distributed on the applicable Special Distribution Date, to the Person in whose name this Certificate is registered at the close of business on the 15th day preceding the Special Distribution Date, an amount in respect of such Special Payments on the Equipment Notes, the receipt of which has been confirmed by the Trustee, equal to the product of the percentage interest in the Trust evidenced by this Certificate and an amount equal to the sum of such Special Payments so received. If a Regular Distribution Date or Special Distribution Date is not a Business Day, distribution shall be made on the immediately following Business Day with the same force and effect as if made on such Regular Distribution Date or Special Distribution Date and no interest shall accrue during the intervening period. The Trustee shall mail notice of each Special Payment and the Special Distribution Date therefor to the Certificateholder of this Certificate. Distributions on this Certificate will be made by the Trustee by check mailed to the Person entitled thereto, without the presentation or surrender of this Certificate or the making of any notation hereon. Except as otherwise provided in the Agreement and notwithstanding the above, the final distribution on this Certificate will be made after notice mailed by the Trustee of the pendency of such distribution and only upon presentation and surrender of this Certificate at the office or agency of the Trustee specified in such notice. The Certificates do not represent a direct obligation of, or an obligation guaranteed by, or an interest in, the Guarantor, the Company or the Trustee or any affiliate thereof. The Certificates are limited in right of payment, all as more specifically set forth on the face hereof and in the Agreement. All payments or distributions made to Certificateholders under the Agreement shall be made only from the Trust Property and only to the extent that the Trustee shall have sufficient income or proceeds from the Trust Property to make such payments in accordance with the terms of the Agreement. Each Certificateholder of this Certificate, by its acceptance hereof, agrees that it will look solely to the income and proceeds from the Trust Property to the extent available for distribution to such Certificateholder as provided in the Agreement. This Certificate does not purport to summarize the Agreement and reference is made to the Agreement for information with respect to the interests, rights, benefits, obligations, proceeds, and duties evidenced hereby. A copy of the Agreement may be examined during normal business hours at the principal office of the Trustee, and at such other places, if any, designated by the Trustee, by any Certificateholder upon request. The Agreement permits, with certain exceptions therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Certificateholders under the Agreement at any time by the Guarantor, the Company and the Trustee with the consent of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust. Any such consent by the Certificateholder of this Certificate shall be conclusive and binding on such Certificateholder and upon all future Certificateholders of this Certificate and of any Certificate issued upon the transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent is made upon this Certificate. The Agreement also permits the amendment thereof, in certain limited circumstances, without the consent of the Certificateholders of any of the Certificates. As provided in the Agreement and subject to certain limitations set forth, the transfer of this Certificate is registrable in the Register upon surrender of this Certificate for registration of transfer at the offices or agencies maintained by the Trustee in its capacity as Registrar, or by any successor Registrar duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Trustee and the Registrar, duly executed by the Certificateholder hereof or such Certificateholder's attorney duly authorized in writing, and thereupon one or more new Certificates of authorized denominations evidencing the same aggregate Fractional Undivided Interest in the Trust will be issued to the designated transferee or transferees. The Certificates are issuable only as registered Certificates without coupons in minimum denominations of $100,000 Fractional Undivided Interest and integral multiples of $1,000 in excess thereof except that one Certificate may be in a denomination of less than $100,000 that is not a multiple of $1,000. As provided in the Agreement and subject to certain limitations therein set forth, the Certificates are exchangeable for new Certificates of authorized denominations evidencing the same aggregate Fractional Undivided Interest in the Trust, as requested by the Certificateholder surrendering the same. No service charge will be made for any such registration of transfer or exchange, but the Trustee shall require payment of a sum sufficient to cover any tax or governmental charge payable in connection therewith. The Trustee, the Registrar, and any agent of the Trustee or the Registrar may treat the person in whose name this Certificate is registered as the owner hereof for all purposes, and neither the Trustee, the Registrar, nor any such agent shall be affected by any notice to the contrary. The obligations and responsibilities created by the Agreement and the Trust created thereby shall terminate upon the distribution to Certificateholders of all amounts required to be distributed to them pursuant to the Agreement and the disposition of all property held as part of the Trust Property. Any person acquiring or accepting this Certificate or an interest herein will, by such acquisition or acceptance, be deemed to have represented and warranted to and for the benefit of each Owner Participant and the Company that either: (i) the assets of an employee benefit plan subject to Title I of the Employment Retirement Income Security Act of 1974, as amended ("ERISA"), or of a plan subject to Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code"), have not been used to purchase this Certificate or interest herein are exempt from the prohibited transaction restrictions of ERISA and the Code pursuant to one or more prohibited transaction or statutory exemptions. THE AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES. Unless the certificate of authentication hereon has been executed by the Trustee, by manual signature, this Certificate shall not be entitled to any benefit under the Agreement or be valid for any purpose. IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed. AMERICAN TRANS AIR, INC. By: WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Trustee By: ----------------------------------------------------------- Title: Dated: ---------- [FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION] This is one of the Certificates referred to in the within-mentioned Agreement. By: WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Trustee By: ------ Authorized Officer FORM OF TRANSFER NOTICE FOR VALUE RECEIVED the undersigned registered holder hereby sell(s), assign(s) and transfer(s) unto Insert Taxpayer Identification No.please print or typewrite name and address including zip code of assignee the within Certificate and all rights thereunder, hereby irrevocably constituting and appointing attorney to transfer said Certificate on the books of the Trustee with full power of substitution in the premises. [THE FOLLOWING PROVISION TO BE INCLUDED ON ALL U.S. PHYSICAL CERTIFICATES] In connection with any transfer of this Certificate occurring prior to the date that is the earlier of the date of an effective Registration Statement or December __, 1999, the undersigned confirms that without utilizing any general solicitation or general advertising that: [Check One] [ ] (a) this Certificate is being transferred in compliance with the exemption from registration under the Securities Act of 1933, as amended, provided by Rule 144A thereunder. or [ ] (b) this Certificate is being transferred other than in accordance with (a) above and documents are being furnished that comply with the conditions of transfer set forth in this Certificate and the Agreement. If neither of the foregoing boxes is checked, the Trustee or other Registrar shall not be obligated to register this Certificate in the name of any Person other than the Holder hereof unless and until the conditions to any such transfer of registration set forth herein and in Section 3.06 of the Agreement shall have been satisfied. Date: [Name of Transferor] ------------ -------------------- NOTE: The signature must correspond with the name as written upon the face of the within-mentioned instrument in every particular, without alteration or any change whatsoever. Signature Guarantee: TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED. The undersigned represents and warrants that it is purchasing this Certificate for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933, as amended, and is aware that the sale to it is being made in reliance on Rule 144A and has been advised of the applicable transfer restrictions relating to the Certificates and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. [Name of Transferee] Dated: NOTE: To be executed by an executive officer. FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH TRANSFERS PURSUANT TO REGULATION S [date] Wilmington Trust Company, not in its individual capacity but solely as Trustee Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 Attention: Corporate Trust Administration Re: American Trans Air 1997-1A-O Pass Through Trust (the "Trust"), ____% American Trans Air Pass Through Certificates Series 1997-1A-O (the "Certificates") Sirs: In connection with our proposed sale of $ Fractional Undivided Interest of the Certificates, we confirm that such sale has been effected pursuant to and in accordance with Regulation S under the Securities Act of 1933, as amended, and, accordingly, we represent that: (1) the offer of the Certificates was not made to a person in the United States; (2) either (a) at the time the buy order was originated, the transferee was outside the United States or we and any person acting on our behalf reasonably believed that the transferee was outside the United States or (b) the transaction was executed in, on or through the facilities of a designated off-shore securities market and neither we nor any person acting on our behalf knows that the transaction has been pre-arranged with a buyer in the United States; (3) no directed selling efforts have been made in the United States in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S, as applicable; and (4) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act. In addition, if the sale is made during a restricted period and the provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are applicable thereto, we confirm that such sale has been made in accordance with the applicable provisions of Rule 903(c)(3) or Rule 904(c)(1), as the case may be. You and American Trans Air, Inc. are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Terms used in this certificate have the meanings set forth in Regulation S. Very truly yours, [Name of Transferor] By: ------ Authorized Signature EXHIBIT C FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH TRANSFERS TO NON-QIB ACCREDITED INVESTORS [date] Wilmington Trust Company, not in its individual capacity but solely as Trustee Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 Attention: Corporate Trust Administration Re: American Trans Air 1997-1A-O Pass-Through Trust (the "Trust"), ____% American Trans Air Pass Through Certificates Series 1997-1A-O (the "Certificates") Dear Sirs: In connection with our proposed purchase of $ aggregate principal amount of the Certificates, we confirm ----------- that: 1. We understand that any subsequent transfer of the Certificates is subject to certain restrictions and conditions set forth in the Pass Through Trust Agreement dated as of December __, 1997 relating to the Certificates (the "Pass Through Trust Agreement") and the undersigned agrees to be bound by, and not to resell, pledge or otherwise transfer the Certificates except in compliance with, such restrictions and conditions and the Securities Act of 1933, as amended (the "Securities Act"). 2. We are purchasing Certificates having an aggregate principal amount of not less than $100,000 and each account (if any) for which we are purchasing Certificates is purchasing Certificates having an aggregate principal amount of not less than $100,000. 3. We understand that the Certificates have not been registered under the Securities Act, and that the Certificates may not be offered or sold except as permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for which we are acting as hereinafter stated, that if we should sell any Certificate, we will do so only (A) in accordance with Rule 144A under the Securities Act to a "qualified institutional buyer" (as defined therein), (B) to an institutional "accredited investor" (as defined below) that, prior to such transfer, furnishes to you and American Trans Air, Inc., a signed letter substantially in the form of this letter, (C) outside the United States in accordance with Rule 904 of Regulation S under the Securities Act, (D) pursuant to the exemption from registration provided by Rule 144 under the Securities Act, or (E) pursuant to an effective registration statement under the Securities Act, and we further agree to provide to any person purchasing any of the Certificates from us a notice advising such purchaser that resales of the Notes are restricted as stated herein. We further understand that the Certificates purchased by us will bear a legend to the foregoing effect. 4. We understand that, on any proposed resale of any Certificates, we will be required to furnish to you and American Trans Air, Inc. such certifications, legal opinions and other information as you and American Trans Air, Inc. may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. We further understand that the Certificates purchased by us will bear a legend to the foregoing effect. 5. We are an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Certificates and we and any accounts for which we are acting are each able to bear the economic risk of our or its investment. 6. We are acquiring the Certificates purchased by us for our own account or for one or more accounts (each of which is an institutional "accredited investor") as to each of which we exercise sole investment discretion. You and American Trans Air, Inc. are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Very truly yours, [Name of Transferee] By: ------ Authorized Signature EXHIBIT D FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT American Trans Air 1997-1[__] Pass Through Trust ASSIGNMENT AND ASSUMPTION AGREEMENT, dated ____________, 199_ (the "Agreement"), between Wilmington Trust Company, a Delaware banking corporation ("WTC"), not in its individual capacity except as expressly provided herein, but solely as trustee under the Pass Through Trust Agreement dated as of December __, 1997 (as amended, modified or otherwise supplemented from time to time, the "Pass Through Trust Agreement") in respect of the American Trans Air 1997-1A-O Pass Through Trust (the "Assignor"), and Wilmington Trust Company, a Delaware banking corporation, not in its individual capacity except as expressly provided herein, but solely as trustee under the Pass Through Trust Agreement dated as of December __, 1997 (the "New Pass Through Trust Agreement") in respect of the American Trans Air 1997-1A-S Pass Through Trust (the "Assignee"). W I T N E S S E T H: - - - - - - - - - - WHEREAS, the parties hereto desire to effect on the date hereof (the "Transfer Date") (a) the transfer by the Assignor to the Assignee of all of the right, title and interest of the Assignor in, under and with respect to, among other things, the Trust Property and each of the documents listed in Schedule I hereto (the "Scheduled Documents") and (b) the assumption by the Assignee of the obligations of the Assignor (i) under the Scheduled Documents and (ii) in respect of the Certificates issued under the Pass Through Trust Agreement; and WHEREAS, the Scheduled Documents permit such transfer upon satisfaction of certain conditions heretofore or concurrently herewith being complied with; NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements herein contained, the parties hereto do hereby agree as follows (capitalized terms used herein without definition having the meaning ascribed thereto in the Pass Through Trust Agreement): 1. Assignment. The Assignor does hereby sell, assign, convey, transfer and set over unto the Assignee as of the Transfer Date all of its present and future right, title and interest in, under and with respect to the Trust Property and the Scheduled Documents and each other contract, agreement, document or instrument relating to the Trust Property or the Scheduled Documents (such other contracts, agreements, documents or instruments, together with the Scheduled Documents, to be referred to as the "Assigned Documents"), and any proceeds therefrom, together with all documents and instruments evidencing any of such right, title and interest. 2. Assumption. The Assignee hereby assumes for the benefit of the Assignor and each of the parties listed in Schedule II hereto (collectively, the "Beneficiaries") all of the duties and obligations of the Assignor, whenever accrued, pursuant to the Assigned Documents and hereby confirms that it shall be deemed a party to each of the Assigned Documents to which the Assignor is a party and shall be bound by all the terms thereof (including the agreements and obligations of the Assignor set forth therein) as if therein named as the Assignor. Further, the Assignee hereby assumes for the benefit of the Assignor and the Beneficiaries all of the duties and obligations of the Assignor under the Outstanding Certificates and hereby confirms that the Certificates representing Fractional Undivided Interests under the Pass Through Trust Agreement shall be deemed for all purposes of the Pass Through Trust Agreement and the New Pass Through Trust Agreement to be certificates representing the same fractional undivided interests under the New Pass Through Trust Agreement equal to their respective beneficial interests in the trust created under the Pass Through Trust Agreement. 3. Effectiveness. This Agreement shall be effective upon the execution and delivery hereof by the parties hereto, and each Certificateholder, by its acceptance of its Certificate or a beneficial interest therein, agrees to be bound by the terms of this Agreement. 4. Payments. The Assignor hereby covenants and agrees to pay over to the Assignee, if and when received following the Transfer Date, any amounts (including any sums payable as interest in respect thereof) paid to or for the benefit of the Assignor that, under Section 1 hereof, belong to the Assignee. 5. Further Assurances. The Assignor shall, at any time and from time to time, upon the request of the Assignee, promptly and duly execute and deliver any and all such further instruments and documents and take such further action as the Assignee may reasonably request to obtain the full benefits of this Agreement and of the right and powers herein granted. The Assignor agrees to deliver the Global Certificates, and all Trust Property, if any, then in the physical possession of the Assignor, to the Assignee. 6. Representations and Warranties. (a) The Assignee represents and warrants to the Assignor and each of the Beneficiaries that: (i) it has all requisite power and authority and legal right to enter into and carry out the transactions contemplated hereby and to carry out and perform the obligations of the "Pass Through Trustee" under the Assigned Documents; (ii) on and as of the date hereof, the representations and warranties of the Assignee set forth in Section 7.14 of the New Pass Through Trust Agreement are true and correct. (b) The Assignor represents and warrants to the Assignee that: (i) it is duly incorporated, validly existing and in good standing under the laws of the State of Delaware and has the full trust power, authority and legal right under the laws of the State of Delaware and the United States pertaining to its trust and fiduciary powers to execute and deliver this Agreement; (ii) the execution and delivery by it of this Agreement and the performance by it of its obligations hereunder have been duly authorized by it and will not violate its articles of association or by-laws or the provisions of any indenture, mortgage, contract or other agreement to which it is a party or by which it is bound; and (iii) this Agreement constitutes the legal, valid and binding obligations of it enforceable against it in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity. 7. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK INCLUDING MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS. 8. Counterparts. This Agreement may be executed in any number of counterparts, all of which together shall constitute a single instrument. It shall not be necessary that any counterpart be signed by both parties so long as each party shall sign at least one counterpart. 9. Third Party Beneficiaries. The Assignee hereby agrees, for the benefit of the Beneficiaries, that its representations, warranties and covenants contained herein are also intended to be for the benefit of each Beneficiary, and each Beneficiary shall be deemed to be an express third party beneficiary with respect thereto, entitled to enforce directly and in its own name any rights or claims it may have against such party as such beneficiary. IN WITNESS WHEREOF, the parties hereto, through their respective officers thereunto duly authorized, have duly executed this Assignment as of the day and year first above written. ASSIGNOR: WILMINGTON TRUST COMPANY, not in its individual capacity except as expressly provided herein, but solely as trustee under the Pass Through Trust Agreement in respect of the American Trans Air 1997-1A-O Pass Through Trust By:___________________________ Title: ASSIGNEE: WILMINGTON TRUST COMPANY, not in its individual capacity except as expressly provided herein, but solely as trustee under the Pass Through Trust Agreement in respect of the American Trans Air 1997-1A-S Pass Through Trust By:__________________________ Title: Schedule I Schedule of Assigned Documents (1) Intercreditor Agreement dated as of December 23, 1997 among the Trustee, the Other Trustees, the Liquidity Providers, the liquidity providers, if any, relating to the Certificates issued under (and as defined in) each of the Other Pass Through Trust Agreements and the Subordination Agent. (2) Escrow and Paying Agent Agreement (Class A) dated as of December 23, 1997 among the Escrow Agent, the Initial Purchasers, the Trustee and the Paying Agent. (3) Note Purchase Agreement dated as of December 23, 1997 among the Company, the Trustee, the Other Trustees, the Depositary, the Escrow Agent, the Paying Agent and the Subordination Agent. (4) Deposit Agreement (Class A) dated as of December 23, 1997 between the Escrow Agent and the Depositary. (5) Each of the Operative Documents (as defined in the Participation Agreement for each Aircraft) in effect as of the Transfer Date. Schedule II Schedule of Beneficiaries Wilmington Trust Company, not in its individual capacity but solely as Subordination Agent. Wilmington Trust Company, not in its individual capacity but solely as Paying Agent ING Bank, as Liquidity Provider Amtran, Inc. American Trans Air, Inc. Salomon Brothers Inc, as Initial Purchaser Furman Selz LLC, as Initial Purchaser First Security Bank, National Association, as Escrow Agent Each of the other parties to the Assigned Documents EXHIBIT E FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH TRANSFERS TO QIBs [date] Wilmington Trust Company, not in its individual capacity but solely as Trustee Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 Attention: Corporate Trust Administration Re: American Trans Air 1997-1A-O Pass Through Trust (the "Trust"), ____% American Trans Air Pass Through Certificates Series 1997-1A-O (the "Certificates") Sirs: In connection with our proposed sale of $ Fractional Undivided Interest of the Certificates, we confirm that without utilizing any general solicitation or general advertising that such Certificates are being transferred in compliance with the exemption from registration under the Securities Act of 1933, as amended, provided by Rule 144A thereunder. Date: [Name of Transferor ------------ ------------------- NOTE: The signature must correspond with the name as written upon the face of the within-mentioned Certificate in every particular, without alteration or any change whatsoever. Signature Guarantee: TO BE COMPLETED BY PURCHASER: The undersigned represents and warrants that it is purchasing the within-mentioned Certificate for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933, as amended, and is aware that the sale to it is being made in reliance on Rule 144A and has been advised of the applicable transfer restrictions relating to the Certificates and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Dated: ------------- [Name of Transferee] NOTE: To be executed by an executive officer. 1Not to be included on the face of the Offshore Global Certificate or any Offshore Physical Certificates. 2To be included on the face of each Global Certificate. EX-4.15 10 file010.txt AMTRAN, INC., 2000 10-K, EXHIBIT 4.15 EXECUTION COPY AMTRAN, INC. AMERICAN TRANS AIR, INC. and WILMINGTON TRUST COMPANY as Trustee PASS THROUGH TRUST AGREEMENT Dated as of December 23, 1997 American Trans Air 1997-1A-S Pass Through Trust 6.99% American Trans Air 1997-1A-S Pass Through Certificates TABLE OF CONTENTS ARTICLE I DEFINITIONS.........................................................2 Section 1.01. Definitions.............................................2 Section 1.02. COMPLIANCE CERTIFICATES AND OPINIONS...................12 Section 1.03. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.................13 Section 1.04. ACTS OF CERTIFICATEHOLDERS.............................13 ARTICLE II ACQUISITION OF TRUST PROPERTY.....................................15 Section 2.01. [Intentionally omitted]................................15 Section 2.02. ACQUISITION OF TRUST PROPERTY..........................15 Section 2.03. ACCEPTANCE BY TRUSTEE.................................16 Section 2.04. LIMITATION OF POWERS..................................16 ARTICLE III THE CERTIFICATES..................................................16 Section 3.01. TITLE, FORM, DENOMINATION AND EXECUTION OF CERTIFICATES.........................................................16 Section 3.02. RESTRICTIVE LEGENDS....................................18 Section 3.03. AUTHENTICATION OF CERTIFICATES.........................19 Section 3.04. TRANSFER AND EXCHANGE..................................19 Section 3.05. BOOK-ENTRY PROVISIONS FOR U.S. GLOBAL CERTIFICATE AND OFFSHORE GLOBAL CERTICIATES......................20 Section 3.06. SPECIAL TRANSFER PROVISIONS............................22 Section 3.07. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES......24 Section 3.08. PERSONS DEEMED OWNERS..................................25 Section 3.09. CANCELLATION...........................................25 Section 3.10. LIMITATION OF LIABILITY FOR PAYMENTS...................25 Section 3.11. TEMPORARY CERTIFICATES.................................25 ARTICLE IV DISTRIBUTIONS; STATEMENTS TO......................................26 Section 4.01. CERTIFICATE ACCOUNT AND SPECIAL PAYMENTS ACCOUNT.......26 Section 4.02. DISTRIBUTIONS FROM CERTIFICATE ACCOUNT AND SPECIAL PAYMENTS ACCOUNT.....................................................26 Section 4.03. STATEMENTS TO CERTIFICATEHOLDERS.......................28 Section 4.04. INVESTMENT OF SPECIAL PAYMENT MONEYS...................29 ARTICLE V THE COMPANY........................................................30 Section 5.01. MAINTENANCE OF CORPORATE EXISTENCE.....................30 Section 5.02. CONSOLIDATION, MERGER, ETC.............................30 Section 5.03. RULE 144A(D)(4) INFORMATION...........................31 ARTICLE VI DEFAULT...........................................................31 Section 6.01. EVENTS OF DEFAULT......................................31 Section 6.02. INCIDENTS OF SALE OF EQUIPMENT NOTES...................33 Section 6.03. JUDICIAL PROCEEDINGS INSTITUTED BY TRUSTEE; TRUSTEE MAY BRING SUIT.......................................................34 Section 6.04. CONTROL BY CERTIFICATEHOLDERS..........................34 Section 6.05. WAIVER OF PAST DEFAULTS................................34 Section 6.06. RIGHT OF CERTIFICATEHOLDERS TO RECEIVE PAYMENTS NOT TO BE IMPAIRED.......................................................35 Section 6.07. CERTIFICATEHOLDERS MAY NOT BRING SUIT EXCEPT UNDER CERTAIN CONDITIONS...................................................35 Section 6.08. REMEDIES CUMULATIVE....................................36 Section 6.09. UNDERTAKING FOR COSTS..................................36 ARTICLE VII THE TRUSTEE......................................................36 Section 7.01. NOTICE OF DEFAULTS.....................................36 Section 7.02. CERTAIN RIGHTS OF TRUSTEE..............................37 Section 7.03. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF CERTIFICATES.........................................................38 Section 7.04. MAY HOLD CERTIFICATES..................................38 Section 7.05. MONEY HELD IN TRUST....................................38 Section 7.06. COMPENSATION AND REIMBURSEMENT.........................39 Section 7.07. CORPORATE TRUSTEE REQUIRED, ELIGIBILITY................40 Section 7.08. RESIGNATION AND REMOVAL: APPOINTMENT OF SUCCESSOR......40 Section 7.09. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.................42 Section 7.10. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.............................................................42 Section 7.11. MAINTENANCE OF AGENCIES................................43 Section 7.12. MONEY FOR CERTIFICATE PAYMENTS TO BE HELD IN TRUST.....44 Section 7.13. REGISTRATION OF EQUIPMENT NOTES IN NAME OF SUBORDINATION AGENT............................44 Section 7.14. REPRESENTATIONS AND WARRANTIES OF TRUSTEE..............44 Section 7.15. WITHHOLDING TAXES, INFORMATION REPORTING...............45 Section 7.16. TRUSTEE'S LIENS........................................46 Section 7.17. PREFERENTIAL COLLECTION OF CLAIMS......................46 ARTICLE VIII CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE................46 Section 8.01. THE COMPANY TO FURNISH TRUSTEE WITH NAMES AND ADDRESSES OF CERTIFICATEHOLDERS......................................46 Section 8.02. PRESERVATION OF INFORMATION; COMMUNICATIONS TO CERTIFICATEHOLDERS...................................................47 Section 8.03. REPORTS BY TRUSTEE.....................................47 Section 8.04. REPORTS BY THE GUARANTOR AND COMPANY...................47 ARTICLE IX SUPPLEMENTAL AGREEMENTS...........................................48 Section 9.01. SUPPLEMENTAL AGREEMENTS WITHOUT CONSENT OF CERTIFICATEHOLDERS...................................................48 Section 9.02. SUPPLEMENTAL AGREEMENTS WITH CONSENT OF CERTIFICATEHOLDERS...................................................49 Section 9.03. DOCUMENTS AFFECTING IMMUNITY OR INDEMNITY..............50 Section 9.04. EXECUTION OF SUPPLEMENTAL AGREEMENTS...................50 Section 9.05. EFFECT OF SUPPLEMENTAL AGREEMENTS......................51 Section 9.06. CONFORMITY WITH TRUST INDENTURE ACT....................51 Section 9.07. REFERENCE IN CERTIFICATES TO SUPPLEMENTAL AGREEMENTS...51 ARTICLE X AMENDMENTS TO INDENTURES AND NOTE DOCUMENTS........................51 Section 10.01. AMENDMENTS AND SUPPLEMENTS TO INDENTURES AND OTHER NOTE DOCUMENTS........................................51 ARTICLE XI TERMINATION OF TRUSTS.............................................52 Section 11.01. TERMINATION OF THE TRUST..............................52 ARTICLE XII MISCELLANEOUS PROVISIONS.........................................53 Section 12.01. LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS............53 Section 12.02. LIABILITIES OF CERTIFICATEHOLDERS.....................53 Section 12.03. CERTIFICATES NONASSESSABLE AND FULLY PAID.............53 Section 12.04. [Intentionally omitted]...............................53 Section 12.05. NOTICES...............................................54 Section 12.06. GOVERNING LAW.........................................55 Section 12.07. SEVERABILITY OF PROVISIONS............................55 Section 12.08. [Intentionally omitted]...............................55 Section 12.09. EFFECT OF HEADINGS AND TABLE OF CONTENTS..............55 Section 12.10. SUCCESSORS AND ASSIGNS................................55 Section 12.11. BENEFITS OF AGREEMENT.................................55 Section 12.12. LEGAL HOLIDAYS........................................55 Section 12.13. COUNTERPARTS..........................................55 Section 12.14. COMMUNICATION BY CERTIFICATEHOLDERS WITH OTHER CERTIFICATEHOLDERS...................................................56 Section 12.15. INTENTION OF PARTIES.................................56 Exhibit A - Form of Certificate to be Delivered in Connection with Transfers Pursuant to Regulation S Exhibit B - Form of Certificate to be Delivered in Connection with Transfers to Non-QIB Accredited Investors Exhibit C - Form of Assignment and Assumption Agreement Exhibit D - Form of Certificate to be Delivered in Connection with Transfers to QIBs .........This PASS THROUGH TRUST AGREEMENT, dated as of December 23, 1997, among AMTRAN, INC., an Indiana corporation (the "Guarantor"), AMERICAN TRANS AIR, INC., an Indiana corporation (the "Company"), and WILMINGTON TRUST COMPANY, a Delaware banking corporation, as Trustee, is made with respect to the formation of the American Trans Air 1997-1A-S Pass Through Trust, and the issuance of 6.99% American Trans Air 1997-1A-S Pass Through Certificates representing fractional undivided interests in the Trust. WITNESSETH: .........WHEREAS, the Company has obtained commitments from The Boeing Company for the delivery of certain Aircraft; .........WHEREAS, as of the Transfer Date (as defined below) the Company will have financed the acquisition of all or a portion of such Aircraft either (i) through separate leveraged lease transactions in which the Company leases such aircraft (collectively, the "LEASED AIRCRAFT") or (ii) through separate secured loan transactions in which the Company owns such Aircraft (collectively, the "OWNED AIRCRAFT"); .........WHEREAS, as of the Transfer Date (as defined below) in the case of each Leased Aircraft, each Owner Trustee, acting on behalf of the corresponding Owner Participant, will have issued pursuant to an Indenture, on a non-recourse basis, three series of Equipment Notes in order to finance a portion of the purchase price of each such Leased Aircraft; .........WHEREAS, as of the Transfer Date (as defined below) in the case of each Owned Aircraft, the Company, will have issued pursuant to an Indenture, on a recourse basis, three series of Equipment Notes to finance a portion of the purchase price of each such Owned Aircraft; .........WHEREAS, as of the Transfer Date, the Related Trustee will assign, transfer and deliver all of such trustee's right, title and interest to the trust property held by the Related Trustee to the Trustee pursuant to the Assignment and Assumption Agreement (as defined below); .........WHEREAS, the Trustee, effectively only, but automatically, upon execution and delivery of the Assignment and Assumption Agreement, will be deemed to have declared the creation of this Trust (the "1997-1A-S Trust") for the benefit of the Certificateholders, and each Holder of Certificates outstanding as of the Transfer Date, as the grantors of the 1997-1A-S Trust, by their respective acceptances of the Certificates, will join in the creation of this 1997-1A-S Trust with the Trustee; .........WHEREAS, except for those Certificates to which an Escrow Receipt (as defined below) has been affixed, all Certificates deemed issued by the Trust will evidence fractional undivided interests in the Trust and will convey no rights, benefits or interests in respect of any property other than the Trust Property; .........WHEREAS, the Company as the "issuer", as such term is defined in and solely for purposes of the Securities Act of 1933, as amended, of the Certificates to be issued pursuant hereto, and as the "obligor", as such term is defined in and solely for purposes of the Trust Indenture Act of 1939, as amended, and (ii) the Guarantor have each duly authorized the execution, delivery and effectiveness of this Agreement with respect to all such Certificates and are undertaking to perform certain administrative and ministerial duties hereunder and are also undertaking to pay the fees and expenses of the Trustee; and .........WHEREAS, upon the execution and delivery of the Assignment and Assumption Agreement, all of the conditions and requirements necessary to make this Agreement a valid, binding and legal instrument, enforceable in accordance with its terms and for the purposes herein expressed, will have been done, performed and fulfilled, and the execution and delivery of this Agreement in the form and with the terms hereof will have been in all respects duly authorized; .........NOW, THEREFORE, in consideration of the mutual agreements herein contained, and of other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I DEFINITIONS .........Section 1.01. Definitions. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: (1) the terms used herein that are defined in this Article have the meanings assigned to them in this Article, and include the plural as well as the singular; (2) all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference herein, have the meanings assigned to them therein; (3) all references in this Agreement to designated "Articles", "Sections" and other subdivisions are to the designated Articles, Sections and other subdivisions of this Agreement; (4) the words "herein", "hereof' and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision; and (5) unless the context otherwise requires, whenever the words "including", "include" or "includes" are used herein, it shall be deemed to be followed by the phrase "without limitation". ACT: With respect to any Certificateholder has the meaning specified in Section 1.04. AFFILIATE: With respect to any specified Person, means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such Person. For the purposes of this definition, "control", when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms "controlling" and "controlled" have meanings correlative to the foregoing. AGENT MEMBERS: Has the meaning specified in Section 3.05(a). AIRCRAFT: means each of the Aircraft or Substitute Aircraft in respect of which a Participation Agreement is entered into in accordance with the Note Purchase Agreement. ASSIGNMENT AND ASSUMPTION AGREEMENT: Means the assignment and assumption agreement substantially in the form of Exhibit D to the Related Pass Through Trust Agreement executed and delivered in accordance with Section 11.01 thereof. AUTHORIZED AGENT: Means any Paying Agent or Registrar for the Certificates. AVOIDABLE TAX: Has the meaning specified in Section 7.08(e) hereof. BOOK-ENTRY CERTIFICATES: With respect to the Certificates, means a beneficial interest in the Certificates, ownership and transfers of which shall be made through book entries as described in Section 3.04. BUSINESS DAY: Means any day other than a Saturday, a Sunday or a day on which commercial banks are required or authorized to close in Indianapolis, Indiana; New York, New York; or Phoenix, Arizona; and, so long as any such Certificate is outstanding, a city and state in which the Trustee or any related Loan Trustee maintains its Corporate Trust Office or receives and disburses funds. CEDEL: Means Cedel Bank societe anonyme. CERTIFICATE: Means any one of the certificates issued by the Related Trust and that are "Outstanding" (as defined in the Related Pass Through Trust Agreement) as of the Transfer Date (the "Transfer Date Certificates") and any such certificate issued in exchange therefor or replacement thereof pursuant to this Agreement. CERTIFICATE ACCOUNT: Means the account or accounts created and maintained pursuant to Section 4.01(a). CERTIFICATEHOLDER OR HOLDER: Means the Person in whose name a Certificate is registered in the Register. CLEARING AGENCY: Means an organization registered as a "clearing agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as amended. CLEARING AGENCY PARTICIPANT: Means a broker, dealer, bank, other financial institution or other Person for whom from time to time a Clearing Agency effects, directly or indirectly, book-entry transfers and pledges of securities deposited with the Clearing Agency. COMPANY: Means American Trans Air, Inc., an Indiana corporation, or its successor in interest pursuant to Section 5.02. CONTROLLING PARTY: Means the Person entitled to act as such pursuant to the terms of the Intercreditor Agreement. CORPORATE TRUST OFFICE: With respect to the Trustee or any Loan Trustee, means the office of such trustee in the city at which at any particular time its corporate trust business shall be principally administered. DELIVERY PERIOD TERMINATION DATE: Has the meaning specified in Annex A to the Note Purchase Agreement. DEPOSIT AGREEMENT: Means the Deposit Agreement (Class A) dated as of December 23, 1997 relating to the Certificates, between the Depositary and the Escrow Agent, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. DEPOSITARY: Means NBD Bank, National Association, a national banking association. DEPOSITS: Has the meaning specified in the Deposit Agreement. DIRECTION: Has the meaning specified in Section 1.04(c). DISTRIBUTION DATE: Means each Regular Distribution Date and each Special Distribution Date. DTC: Means The Depository Trust Company, its nominees and their respective successors. EQUIPMENT NOTE: Means the "Secured Certificates" as defined in the Indentures. ERISA: Means the Employee Retirement Income Security Act of 1974, as amended from time to time, or any successor federal statute. ESCROW AGENT: Means, initially, First Security Bank, National Association, and any replacement or successor therefor appointed in accordance with the Escrow Agreement. ESCROW AGREEMENT: Means the Escrow and Paying Agent Agreement (Class A) dated as of December 23, 1997 relating to the Certificates, among the Escrow Agent, the Escrow Paying Agent, the Related Trustee (and after the Transfer Date, the Trustee) and the Initial Purchasers, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. ESCROW PAYING AGENT: Means the Person acting as paying agent under the Escrow Agreement. ESCROW RECEIPT: Means the receipt substantially in the form annexed to the Escrow Agreement representing a fractional undivided interest in the funds held in escrow thereunder. EUROCLEAR: Means the Euroclear System. EVENT OF DEFAULT: Means the occurrence of an Indenture Default under any Indenture pursuant to which Equipment Notes held by the Trust were issued. FINAL WITHDRAWAL: Has the meaning specified in the Escrow Agreement. FINAL WITHDRAWAL DATE: Has the meaning specified in the Escrow Agreement. FRACTIONAL UNDIVIDED INTEREST: Means the fractional undivided interest in the Trust that is evidenced by a Certificate. GLOBAL CERTIFICATES: Has the meaning assigned to such term in Section 3.01. GUARANTOR: Means Amtran, Inc., an Indiana corporation, or its successor in interest. INDENTURE: Means each of the three separate trust indenture and security agreements relating to the Aircraft, each entered into pursuant to the related Participation Agreement, in each case as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. INDENTURE DEFAULT: With respect to any Indenture, means any Event of Default (as such term is defined in such Indenture). INITIAL PURCHASERS: Means Salomon Brothers Inc and Furman Selz LLC, collectively. INITIAL REGULAR DISTRIBUTION DATE: Means the first Regular Distribution Date on which a Scheduled Payment is to be made. INSTITUTIONAL ACCREDITED INVESTOR: Means an institutional investor that is an "accredited investor" within the meaning set forth in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act. INTERCREDITOR AGREEMENT: Means the Intercreditor Agreement dated December 23, 1997 among the Related Trustee (and after the Transfer Date, the Trustee), the Related Other Trustees (and after the Transfer Date, the Other Trustees), the Liquidity Provider, the liquidity providers, if any, relating to the Certificates issued under (and as defined in) the Related Other Pass Through Trust Agreements, and Wilmington Trust Company, as Subordination Agent thereunder, as amended, supplemented or otherwise modified from time to time in accordance with its terms. ISSUANCE DATE: Means the date of the issuance of the Certificates. LEASE: Means any lease between an Owner Trustee, as the lessor, and the Company, as the lessee, referred to in the related Indenture, as each such lease may be amended or supplemented in accordance with its respective terms; and LEASES means all such leases. LEASED AIRCRAFT: Has the meaning specified in the second recital to this Agreement. LETTER OF REPRESENTATIONS: Means the agreement dated the Issuance Date among the Company, the Trustee and the initial Clearing Agency. LIQUIDITY FACILITY: Means the Irrevocable Revolving Credit Agreement Class A Certificates dated December 23, 1997 relating to the Certificates between the Liquidity Provider and the Subordination Agent, as amended, replaced, supplemented or otherwise modified from time to time in accordance with its terms and the terms of the Intercreditor Agreement. LIQUIDITY PROVIDER: Means, initially, ING Bank, a Dutch bank, and any replacement or successor therefor appointed in accordance with the Liquidity Facility and the Intercreditor Agreement. LOAN TRUSTEE: With respect to any Equipment Note or the Indenture applicable thereto, means the bank or trust company designated as loan or indenture trustee under such Indenture; and any successor to such Loan Trustee as such trustee; and LOAN TRUSTEES means all of the Loan Trustees under the Indentures. NON-U.S. PERSON: Means a Person that is not a U.S. Person as defined in Regulation S. NOTE DOCUMENTS: With respect to any Equipment Note, means the related Indenture, Lease (if the related Aircraft is leased to the Company) and Participation Agreement. NOTE PURCHASE AGREEMENT: Means the Note Purchase Agreement dated as of December 23, 1997 among the Related Trustee (and after the Transfer Date, the Trustee), the Related Other Trustees (and after the Transfer Date, the Other Trustees), the Company, the Escrow Agent, the Escrow Paying Agent and the Subordination Agent, as the same may be amended, supplemented or otherwise modified from time to time, in accordance with its terms. OFFERING MEMORANDUM: Means the Offering Memorandum dated December 17, 1997 relating to the offering of the Certificates and the certificates issued under the Related Other Pass Through Trust Agreements. OFFICER'S CERTIFICATE: Means a certificate signed (a) in the case of the Guarantor or the Company, by (i) the President or any Executive Vice President or Senior Vice President of the Guarantor or the Company, respectively, signing alone or (ii) any Vice President of the Guarantor or the Company signing together with the Secretary, the Assistant Secretary, the Treasurer or any Assistant Treasurer of the Guarantor or the Company, respectively, or (b) in the case of the Trustee or an Owner Trustee or a Loan Trustee, a Responsible Officer of the Trustee or such Owner Trustee or such Loan Trustee, as the case may be. OFFSHORE GLOBAL CERTIFICATES: Has the meaning assigned to such term in Section 3.01. OFFSHORE PHYSICAL CERTIFICATES: Has the meaning assigned to such term in Section 3.01. OPINION OF COUNSEL: Means a written opinion of legal counsel who (a) in the case of counsel for the Guarantor or the Company, may be (i) a senior attorney in rank of the officers of the Guarantor or the Company a principal duty of which is furnishing advice as to legal matters or (ii) such other counsel designated by the Guarantor or the Company and reasonably acceptable to the Trustee and (b) in the case of any Owner Trustee or any Loan Trustee, may be such counsel as may be designated by any of them whether or not such counsel is an employee of any of them, and who shall be reasonably acceptable to the Trustee. OTHER PASS THROUGH TRUST AGREEMENT: Means (i) the American Trans Air 1997-1B-S Pass Through Trust Agreement relating to the American Trans Air 1997-1B-S Pass Through Trust, and (ii) the American Trans Air 1997-1C-S Pass Through Trust Agreement relating to the American Trans Air 1997-1C-S Pass Through Trust, each dated the date hereof; and OTHER PASS THROUGH TRUST AGREEMENTS means all such agreements. OTHER TRUSTEE: Means the trustee under each of the Other Pass Through Trust Agreements, and any successor or other trustee appointed as provided therein and Other Pass Through Trustees means both such trustees. OTHER TRUSTS: Means the American Trans Air 1997-1B-S Pass Through Trust and the American Trans Air 1997-1C-S Pass Through Trust. OUTSTANDING: With respect to Certificates, means, as of the date of determination, all Transfer Date Certificates, and all other Certificates theretofore authenticated and delivered under this Agreement, in each case except: (i) Certificates theretofore canceled by the Registrar or delivered to the Trustee or the Registrar for cancellation; (ii) All of the Certificates if money in the full amount required to make the final distribution with respect thereto pursuant to Section 11.01 hereof has been theretofore deposited with the Trustee in trust for the Holders of such Certificates as provided in Section 4.01 pending distribution of such money to such Certificateholders pursuant to such final distribution payment; and (iii) Certificates in exchange for or in lieu of which other Certificates have been authenticated and delivered pursuant to this Agreement. OWNED AIRCRAFT: Has the meaning specified in the second recital to this Agreement. OWNER PARTICIPANT: With respect to any Equipment Note, means the "Owner Participant" as referred to in the Indenture pursuant to which such Equipment Note is issued and any permitted successor or assign of such Owner Participant; and Owner Participants at any time of determination means all of the Owner Participants thus referred to in the Indentures. OWNER TRUSTEE: With respect to any Equipment Note, means the "Owner Trustee", as referred to in the Indenture pursuant to which such Equipment Note is issued, not in its individual capacity but solely as trustee; and Owner Trustees means all of the Owner Trustees party to any of the respective Indentures. PARTICIPATION AGREEMENT: Means each Participation Agreement to be entered into by the Related Trustee and the Related Other Trustees pursuant to the Note Purchase Agreement, as the same may be amended, supplemented or otherwise modified in accordance with its terms; and PARTICIPATION AGREEMENTS means all such agreements. PAYING AGENT: Means the paying agent maintained and appointed for the Certificates pursuant to Section 7.11. PERMITTED INVESTMENTS: Means obligations of the United States of America or agencies or instrumentalities thereof for the payment of which the full faith and credit of the United States of America is pledged, maturing in not more than 60 days or such lesser time as is necessary for payment of any Special Payments on a Special Distribution Date. PERSON: Means any person, including any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization, or government or any agency or political subdivision thereof. PHYSICAL CERTIFICATES: Has the meaning specified in Section 3.01. POOL BALANCE: Means, as of any date, (i) the original aggregate face amount of the "Certificates" as defined in the Related Pass Through Trust Agreement less (ii) the aggregate amount of all payments made in respect of such Certificates other than payments made in respect of interest or premium thereon or reimbursement of any costs or expenses incurred in connection therewith less (iii) the aggregate amount of unused Deposits distributed as a Final Withdrawal other than payments in respect of interest or premium thereon. The Pool Balance as of any Distribution Date shall be computed after giving effect to the payment of principal, if any, on the Equipment Notes or other Trust Property held in the Trust and the distribution thereof to be made on such Distribution Date and the distribution of the Final Withdrawal to be made on such Distribution Date. POOL FACTOR: Means, as of any date, the quotient (rounded to the seventh decimal place) computed by dividing (i) the Pool Balance as at such date by (ii) the original aggregate face amount of the "Certificates" as defined in the Related Pass Through Trust Agreement. The Pool Factor as of any Distribution Date shall be computed after giving effect to the payment of principal, if any, on the Equipment Notes or other Trust Property and the distribution thereof to be made on such Distribution Date and the distribution of the Final Withdrawal to be made on such Distribution Date. PRIVATE PLACEMENT LEGEND: Has the meaning specified in Section 3.02. PTC EVENT OF DEFAULT: Means any failure to pay within 10 Business Days of the due date thereof: (i) the outstanding Pool Balance on October 15, 2018 or (ii) interest due on the Certificates on any Distribution Date (unless the Subordination Agent shall have made an Interest Drawing (as defined in the Intercreditor Agreement) or a withdrawal or withdrawals from a cash collateral account pursuant to Section 3.6(f) of the Intercreditor Agreement, with respect thereto in an amount sufficient to pay such interest and shall have distributed such amount to the Certificateholders). PURCHASE AGREEMENT: Means the Purchase Agreement dated December 17, 1997 among the Initial Purchasers, the Company and the Depositary, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. QIB: Means a qualified institutional buyer as defined in Rule 144A. RECORD DATE: Means (i) for Scheduled Payments to be distributed on any Regular Distribution Date, other than the final distribution, the 15th day (whether or not a Business Day) preceding such Regular Distribution Date, and (ii) for Special Payments to be distributed on any Special Distribution Date, other than the final distribution, the 15th day (whether or not a Business Day) preceding such Special Distribution Date. REGISTER and REGISTRAR: Mean the register maintained and the registrar appointed pursuant to Sections 3.04 and 7.11. REGULAR DISTRIBUTION DATE: With respect to distributions of Scheduled Payments in respect of the Certificates, means each date designated as such in this Agreement, until payment of all the Scheduled Payments to be made under the Equipment Notes held in the Trust has been made; PROVIDED, HOWEVER, that, if any such day shall not be a Business Day, the related distribution shall be made on the next succeeding Business Day without additional interest. REGULATION S RESTRICTED DATE: Means the date 40-days after the later of the commencement of the initial offering of the Certificates and the date of initial issuance thereof. RELATED OTHER PASS THROUGH TRUST AGREEMENTS: Means the "Other Pass Through Trust Agreements" as defined in the Related Pass Through Trust Agreement. RELATED OTHER TRUSTS: Means the "Other Trustees" as defined in the Related Pass Through Trust Agreement. RELATED OTHER TRUSTS: Means the "Other Trusts" as defined in the Related Pass Through Trust Agreement. RELATED PASS THROUGH TRUST AGREEMENT: Means the American Trans Air 1997-1A-O Pass Through Trust Agreement relating to the American Trans Air 1997-1A-O Pass Through Trust, dated as of December 23, 1997, between the Company and the institution acting as trustee thereunder as amended, supplemented or otherwise modified from time to time in accordance with its terms. RELATED TRUST: Means the American Trans Air 1997-1A-O Pass Through Trust, formed under the Related Pass Through Trust Agreement. RELATED TRUSTEE: Means the institution serving as the trustee under the Related Pass Through Trust Agreement. REQUEST: Means a request by the Company setting forth the subject matter of the request accompanied by an Officer's Certificate and an Opinion of Counsel as provided in Section 1.02 of this Agreement. RESPONSIBLE OFFICER: With respect to the Trustee, any Loan Trustee and any Owner Trustee, means any officer in the Corporate Trust Division of the Trustee, Loan Trustee or Owner Trustee or any other officer customarily performing functions similar to those performed by the persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of his knowledge of and familiarity with a particular subject. RULE 144A: Means Rule 144A under the Securities Act and any successor regulation thereto. SCHEDULED PAYMENT: With respect to any Equipment Note, means any payment of principal and interest on such Equipment Note or any payment of interest on the Certificates with funds drawn under the Liquidity Facility (other than any such payment which is not in fact received by the Trustee or any Subordination Agent within five days of the date on which such payment is scheduled to be made) due from the obligor thereon which payment represents the installment of principal at the stated maturity of such installment of principal on such Equipment Note, the payment of regularly scheduled interest accrued on the unpaid principal amount of such Equipment Note, or both; PROVIDED that any payment of principal, premium, if any, or interest resulting from the redemption or purchase of any Equipment Note shall not constitute a Scheduled Payment. SEC: Means the Securities and Exchange Commission as from time to time constituted or created under the Securities Exchange Act of 1934, or, if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date. SECURITIES ACT: Means the United States Securities Act of 1933, as amended from time to time, or any successor thereto. SPECIAL DISTRIBUTION DATE: Means each date on which a Special Payment is to be distributed as specified in this Agreement; PROVIDED, HOWEVER, that, if any such day shall not be a Business Day, the related distribution shall be made on the next succeeding Business Day without additional interest. SPECIAL PAYMENT: Means any payment (other than a Scheduled Payment) in respect of, or any proceeds of, any Equipment Note or Trust Indenture Estate (as defined in each Indenture) or Special Redemption Premium (if applicable). SPECIAL PAYMENTS ACCOUNT: Means the account or accounts created and maintained pursuant to Section 4.01(b). SPECIAL REDEMPTION PREMIUM: Means the premium, if any, payable by the Company in respect of the Final Withdrawal pursuant to the Note Purchase Agreement. SUBORDINATION AGENT: Shall have the meaning specified therefor in the Intercreditor Agreement. SUBSTITUTE AIRCRAFT: Has the meaning specified in the Note Purchase Agreement. TRANSFER DATE: Means the moment of execution and delivery of the Assignment and Assumption Agreement by each of the parties thereto. TRANSFER DATE CERTIFICATES: Has the meaning specified in the definition of "Certificates". TRUST: Means the trust created by this Agreement, the estate of which consists of Trust Property. TRUST INDENTURE ACT: Except as otherwise provided in Section 9.06, means the Trust Indenture Act of 1939 as in force at the date as of which this Agreement was executed. TRUST PROPERTY: Means (i) the Equipment Notes held as the property of the Trust, all monies at any time paid thereon and all monies due and to become due thereunder, (ii) the rights of the Trust and the Trustee, on behalf of the Trust, under the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement and the Liquidity Facilities, including, without limitation, all monies receivable in respect of such rights, PROVIDED that rights with respect to the Deposits or under the Escrow Agreement will not constitute Trust Property, and (iii) funds from time to time deposited in the Certificate Account and the Special Payments Account and, subject to the Intercreditor Agreement, any proceeds from the sale by the Trustee pursuant to Article VI hereof of any such Equipment Note. TRUSTEE: Means Wilmington Trust Company, or its successor in interest, and any successor trustee appointed as provided herein. U.S. GLOBAL CERTIFICATE: Has the meaning specified in Section 3.01. U.S. PHYSICAL CERTIFICATES: Has the meaning specified in Section 3.01. Section 1.02. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any application or request by the Company, any Owner Trustee or any Loan Trustee to the Trustee to take any action under any provision of this Agreement, the Company, such Owner Trustee or such Loan Trustee, as the case may be, shall furnish to the Trustee an Officers' Certificate stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Agreement relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Agreement relating to such particular application or request, no additional certificate or opinion need be furnished. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Agreement (other than a certificate provided pursuant to Section 8.04(d)) shall include: (1) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions in this Agreement relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. Section 1.03. FORM OF DOCUMENTS DELIVERED TO TRUSTEE. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters and any such Person may certify or give an opinion as to such matters in one or several documents. Any Opinion of Counsel stated to be based on the opinion of other counsel shall be accompanied by a copy of such other opinion. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Agreement, they may, but need not, be consolidated and form one instrument. Section 1.04. ACTS OF CERTIFICATEHOLDERS. -------------------------- (a) Any direction, consent, waiver or other action provided by this Agreement to be given or taken by Certificateholders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Certificateholders in person or by an agent or proxy duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required pursuant to this Agreement, to the Company or any Loan Trustee. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Certificateholders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Agreement and conclusive in favor of the Trustee, the Company and any Loan Trustee, if made in the manner provided in this Section. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the certificate of any notary public or other officer of any jurisdiction authorized to take acknowledgments of deeds or administer oaths that the Person executing such instrument acknowledged to him the execution thereof, or by an affidavit of a witness to such execution sworn to before any such notary or such other officer and where such execution is by an officer of a corporation or association or a member of a partnership, on behalf of such corporation, association or partnership, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other reasonable manner which the Trustee deems sufficient. (c) In determining whether the Certificateholders of the requisite Fractional Undivided Interests of Certificates Outstanding have given any direction, consent or waiver (a "Direction"), under this Agreement, Certificates owned by the Company, the Guarantor, any Owner Trustee, any Owner Participant or any Affiliate of any such Person shall be disregarded and deemed not to be Outstanding for purposes of any such determination. In determining whether the Trustee shall be protected in relying upon any such Direction, only Certificates which the Trustee knows to be so owned shall be so disregarded. Notwithstanding the foregoing, (i) if any such Person owns 100% of the Certificates Outstanding, such Certificates shall not be so disregarded as aforesaid, and (ii) if any amount of Certificates so owned by any such Person have been pledged in good faith, such Certificates shall not be disregarded as aforesaid if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Certificates and that the pledgee is not the Company, the Guarantor, any Owner Trustee, any Owner Participant or any Affiliate of any such Person. (d) The Company may, at its option by delivery of an Officer's Certificate to the Trustee, set a record date to determine the Certificateholders entitled to give any consent, request, demand, authorization, direction, notice, waiver or other Act. Notwithstanding Section 316(c) of the Trust Indenture Act, such record date shall be the record date specified in such Officer's Certificate which shall be a date not more than 30 days prior to the first solicitation of Certificateholders in connection therewith. If such a record date is fixed, such consent request, demand, authorization, direction, notice, waiver or other Act may be given before or after such record date, but only the Certificateholders of record at the close of business on such record date shall be deemed to be Certificateholders for the purposes of determining whether Certificateholders of the requisite proportion of Outstanding Certificates have authorized or agreed or consented to such consent, request, demand, authorization, direction, notice, waiver or other Act, and for that purpose the Outstanding Certificates shall be computed as of such record date; PROVIDED that no such consent, request, demand, authorization, direction, notice, waiver or other Act by the Certificateholders on such record date shall be deemed effective unless it shall become effective pursuant to the provisions of this Agreement not later than one year after the record date. (e) Any direction, consent, waiver or other action by the Certificateholder of any Certificate shall bind the Certificateholder of every Certificate issued upon the transfer thereof or in exchange therefor or in lieu thereof, whether or not notation of such action is made upon such Certificate. (f) Except as otherwise provided in Section 1.04(c), Certificates owned by or pledged to any Person shall have an equal and proportionate benefit under the provisions of this Agreement, without preference, priority, or distinction as among all of the Certificates. ARTICLE II ACQUISITION OF TRUST PROPERTY Section 2.01. [Intentionally omitted]. Section 2.02. ACQUISITION OF TRUST PROPERTY. The Trustee is hereby irrevocably authorized and directed to execute and deliver the Assignment and Assumption Agreement on the date specified in Section 11.01 of the Related Pass Through Trust Agreement, subject only to the satisfaction of the conditions to such execution set forth in said Section 11.01. This Agreement (except only for the immediately preceding sentence hereof, which is effective upon execution and delivery hereof) shall become effective upon the execution and delivery of the Assignment and Assumption Agreement by the Trustee and the Related Trustee, automatically and without any further signature or action on the part of the Company and the Trustee, and shall thereupon constitute the legal, valid and binding obligation of the parties hereto enforceable against each of the parties hereto in accordance with its terms. Upon such execution and delivery of the Assignment and Assumption Agreement, the Related Trust shall be terminated, the Certificateholders shall receive beneficial interests in the Trust in exchange for their interests in the Related Trust equal to their respective beneficial interests in the Related Trust and the "Outstanding" (as defined in the Related Pass Through Trust Agreement) pass through certificates representing fractional undivided interests in the Related Trust shall be deemed for all purposes of this Agreement and the Related Pass Through Trust Agreement, without further signature or action of any party or Certificateholder, to be Certificates representing the same Fractional Undivided Interests in the Trust and the Trust Property. By acceptance of its Certificate, each Certificateholder consents to and ratifies such assignment, transfer and delivery of the trust property of the Related Trust to the Trustee upon the execution and delivery of the Assignment and Assumption Agreement. Section 2.03. ACCEPTANCE BY TRUSTEE. The Trustee, upon the execution and delivery of the Assignment and Assumption Agreement, acknowledges its acceptance of all right, title, and interest in and to the Trust Property and declares that the Trustee holds and will hold such right, title, and interest for the benefit of all then present and future Certificateholders, upon the trusts herein set forth. By the acceptance of each Certificate issued to it under the Related Pass Through Trust Agreement and deemed issued under this Agreement, each Holder of any such Certificate as grantor of the Trust thereby joins in the creation and declaration of the Trust. Section 2.04. LIMITATION OF POWERS. The Trust is constituted solely for the purpose of making the investment in the Equipment Notes, and, except as set forth herein, the Trustee shall not be authorized or empowered to acquire any other investments or engage in any other activities and, in particular, the Trustee shall not be authorized or empowered to do anything that would cause such Trust to fail to qualify as a "grantor trust" for federal income tax purposes (including as subject to this restrictions acquiring the Aircraft (as defined in the respective related Indentures) by bidding such Equipment Notes or otherwise, or taking any action with respect to any such Aircraft once acquired). ARTICLE III THE CERTIFICATES Section 3.01. TITLE, FORM, DENOMINATION AND EXECUTION OF CERTIFICATES. ------------------------------------------------------- (a) The Certificates shall be known as the "6.99% 1997-1A-S Pass Through Certificates" of the Trust. Each Certificate will represent a fractional undivided interest in the Trust and shall be substantially in the form set forth as Exhibit A to the Related Pass Through Trust Agreement, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by the Related Pass Through Trust Agreement or this Agreement, as the case may be, or as the Trustee may deem appropriate to reflect the fact that the Certificates are being issued hereunder as opposed to the Related Pass Through Trust Agreement, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such Certificates, as evidenced by their execution of the Certificates. Any portion of the text of any Certificate may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Certificate. At the Escrow Agent's request under the Escrow Agreement, the Trustee shall affix the corresponding Escrow Receipt to any Certificate issued hereunder. Any transfer or exchange of any Certificate shall also effect a transfer or exchange of the related Escrow Receipt. Prior to the Final Withdrawal Date, no transfer or exchange of any Certificate shall be permitted unless the corresponding Escrow Receipt is attached thereto and also is so transferred or exchanged. By acceptance of any Certificate to which an Escrow Receipt is attached, each Holder of such Certificate acknowledges and accepts the restrictions on transfer of the Escrow Receipt set forth herein and in the Escrow Agreement. (b) The Certificates shall be issued only in fully registered form without coupons and only in denominations of $100,000 or integral multiples of $1,000 in excess thereof, except that one Certificate may be issued in a denomination of less than $100,000. Each Certificate shall be dated the date of its authentication. The aggregate Fractional Undivided Interest of Certificates shall not at any time exceed $63,105,000. (c) Certificates offered and sold in reliance on Rule 144A shall be issued initially in the form of a single permanent global Certificate in registered form, substantially in the form set forth as Exhibit A to the Related Pass Through Trust Agreement with such applicable legends as are provided for in clauses (a) and (b) of Section 3.02 (the "U.S. Global Certificate"). The U.S. Global Certificate will be registered in the name of a nominee for DTC and deposited with the Trustee, as custodian for DTC. The aggregate principal amount of the U.S. Global Certificate may from time to time be increased or decreased by adjustments made on the records of DTC or its nominee, or of the Trustee, as custodian for the DTC or its nominee, as hereinafter provided. (d) Certificates offered and sold in offshore transactions in reliance on Regulation S shall be issued in the form of a single global Certificate in registered form, substantially in the form set forth as Exhibit A to the Related Pass Through Trust Agreement with such applicable legends as are provided for in clause (b) of Section 3.02 (the "Offshore Global Certificate"). The Temporary Offshore Global Certificate will be registered in the name of a nominee of DTC for credit to the account of the Agent Members acting as depositories for Euroclear and Cedel and deposited with the Trustee as custodian for DTC. The U.S. Global Certificate and the Offshore Global Certificates are sometimes referred to as the "Global Certificates". (e) Certificates offered and sold to Institutional Accredited Investors shall be issued in the form of permanent certificated Certificates in registered form in substantially the form set forth as Exhibit A to the Related Pass Through Trust Agreement with such applicable legends as are provided for in clauses (a) and (b) of Section 3.02 hereto (the "U.S. Physical Certificates"). Certificates issued pursuant to Section 3.05(b) in exchange for interests in any Offshore Global Certificate shall be in the form of permanent certificated Certificates in registered form substantially in the form set forth in Exhibit A (the "Offshore Physical Certificates"). The Offshore Physical Certificates and U.S. Physical Certificates are sometimes collectively herein referred to as the "Physical Certificates". (f) The definitive Certificates shall be in registered form and shall be typed, printed, lithographed or engraved or produced by any combination of these methods or may be produced in any other manner, all as determined by the officers executing such Certificates, as evidenced by their execution of such Certificates. Section 3.02. RESTRICTIVE LEGENDS. ------------------- (a) Subject to Section 3.06, each U.S. Global Certificate and each U.S. Physical Certificate shall bear the following legend (the "Private Placement Legend") on the face thereof: THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS CERTIFICATE IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT, WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY AMERICAN TRANS AIR, INC. ("ATA") OR AN AFFILIATE OF ATA, RESELL OR OTHERWISE TRANSFER THIS CERTIFICATE EXCEPT (A) TO ATA OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING $100,000 OR MORE AGGREGATE PRINCIPAL AMOUNT OF SUCH CERTIFICATES THAT, TAKES DELIVERY OF THIS CERTIFICATE IN DEFINITIVE FORM AND PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS CERTIFICATE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS CERTIFICATE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CASE THIS CERTIFICATE IS IN DEFINITIVE FORM IN CONNECTION WITH ANY TRANSFER OF THIS CERTIFICATE WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THE CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY ATA OR AN AFFILIATE OF ATA, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE PASS THROUGH TRUST AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS. (b) Each Global Certificate shall also bear the following legend on the face thereof: UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND 3.06 OF THE PASS THROUGH TRUST AGREEMENT REFERRED TO HEREIN. Section 3.03. AUTHENTICATION OF CERTIFICATES. No Certificate shall be entitled to any benefit under this Agreement or be valid or obligatory for any purpose, unless there appears on such Certificate a certificate of authentication substantially in the form provided for herein executed by the Trustee by the manual signature of one of its authorized signatories, and such certificate upon any Certificate shall be conclusive evidence, and the only evidence, that such Certificate has been duly authenticated and delivered hereunder. Section 3.04. TRANSFER AND EXCHANGE. --------------------- (a) The Trustee shall cause to be kept at the office or agency to be maintained by it in accordance with the provisions of Section 7.11 of this Agreement a register (the "Register") for the Certificates in which, subject to such reasonable regulations as it may prescribe, the Trustee shall provide for the registration of the Certificates and of transfers and exchanges of the Certificates as herein provided. The Trustee shall initially be the registrar (the "Registrar") for the purpose of registering the Certificates and transfers and exchanges of the Certificates as herein provided. A Certificateholder may transfer a Certificate by written application to the Registrar stating the name of the proposed transferee and otherwise complying with the terms of this Agreement, including providing a written certificate or other evidence of compliance with any restrictions on transfer. No such transfer shall be effected until, and such transferee shall succeed to the rights of a Certificateholder only upon, final acceptance and registration of the transfer by the Registrar in the Register. Prior to the registration of any transfer by a Certificateholder as provided herein, the Trustee shall treat the person in whose name the Certificate is registered as the owner thereof for all purposes, and the Trustee shall not be affected by notice to the contrary. Furthermore, DTC shall, by acceptance of a Global Certificate, agree that transfers of beneficial interests in such Global Certificate may be effected only through a book-entry system maintained by DTC (or its agent), and that ownership of a beneficial interest in the Certificate shall be required to be reflected in a book entry. When Certificates are presented to the Registrar with a request to register the transfer or to exchange them for an equal face amount of Certificates of other authorized denominations, the Registrar shall register the transfer or make the exchange as requested if its requirements for such transactions are met. To permit registrations of transfers and exchanges in accordance with the terms, conditions and restrictions hereof, the Trustee shall execute and authenticate Certificates at the Registrar's request. No service charge shall be made for any registration of transfer or exchange of the Certificates, but the Trustee may require payment by the transferor of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or other similar governmental charges payable upon exchanges pursuant to Section 3.11 or 9.07). Section 3.05. BOOK-ENTRY PROVISIONS FOR U.S. GLOBAL CERTIFICATE AND OFFSHORE GLOBAL CERTIFICATES. (a) Members of, or participants in, DTC ("Agent Members") shall have no rights under this Agreement with respect to any Global Certificate held on their behalf by DTC, or the Trustee as its custodian, and DTC may be treated by the Trustee and any agent of the Trustee as the absolute owner of such Global Certificate for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Trustee or any agent of the Trustee from giving effect to any written certification, proxy or other authorization furnished by DTC or shall impair, as between DTC and its Agent Members, the operation of customary practices governing the exercise of the rights of a holder of any Certificate. Upon the issuance of any Global Certificate, the Registrar or its duly appointed agent shall record a nominee of DTC as the registered holder of such Global Certificate. (b) Transfers of any Global Certificate shall be limited to transfers of such Global Certificate in whole, but not in part, to nominees of DTC, its successor or such successor's nominees. Beneficial interests in the U.S. Global Certificate and any Offshore Global Certificate may be transferred in accordance with the rules and procedures of DTC and the provisions of Section 3.06. Beneficial interests in the U.S. Global Certificate or an Offshore Global Certificate shall be (or, under the Related Pass Through Trust Agreement, may have been) delivered to all beneficial owners in the form of U.S. Physical Certificates or Offshore Physical Certificates, as the case may be, if (i) the Company notifies the Trustee in writing that DTC is unwilling or unable to discharge properly its responsibilities as depositary for the U.S. Global Certificate or such Offshore Global Certificate, as the case may be, and the Company is unable to locate a qualified successor depositary within 90 days of such notice or (ii) after the occurrence of an Event of Default, beneficial owners of the U.S. Global Certificate or Offshore Global Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust, by Act of such Certificateholders delivered to the Company and the Trustee, advise the Company, the Trustee and DTC through its Clearing Agency Participants in writing that the continuation of a book-entry system through DTC is no longer in the best interests of the Certificateholders, then the Trustee shall notify all owners of beneficial interests in the U.S. Global Certificate or an Offshore Global Certificate, through DTC, of the occurrence of any such event and the availability of definitive Certificates. (c) Any beneficial interest in one of the Global Certificates that is transferred to a Person who takes delivery in the form of an interest in the other Global Certificate will, upon such transfer, cease to be an interest in such Global Certificate and become an interest in the other Global Certificate and, accordingly, will thereafter be subject to all transfer restrictions, if any, and other procedures applicable to beneficial interests in such other Global Certificate for as long as it remains such an interest. (d) [Intentionally omitted]. (e) In connection with the transfer of the entire U.S. Global Certificate or an entire Offshore Global Certificate to the beneficial owners thereof pursuant to paragraph (b) of this Section 3.05, such U.S. Global Certificate or Offshore Global Certificate, as the case may be, shall be deemed to be surrendered to the Trustee for cancellation, and the Trustee shall execute, authenticate and deliver, to each beneficial owner identified by DTC in exchange for its beneficial interest in such U.S. Global Certificate or Offshore Global Certificate, as the case may be, an equal aggregate principal amount of U.S. Physical Certificates or Offshore Physical Certificates, as the case may be, of authorized denominations. (f) Any U.S. Physical Certificate delivered in exchange for an interest in the U.S. Global Certificate pursuant to paragraph (b) of this Section 3.05 shall, except as otherwise provided by paragraph (f) of Section 3.06, bear the Private Placement Legend. (g) Any Offshore Physical Certificate delivered in exchange for an interest in an Offshore Global Certificate pursuant to paragraph (b) of this Section shall, except as otherwise provided by paragraph (f) of Section 3.06, bear the applicable legend regarding transfer restrictions set forth in Section 3.02(a). (h) The registered holder of the U.S. Global Certificate or any Offshore Global Certificate may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Agreement or the Certificates. Section 3.06. SPECIAL TRANSFER PROVISIONS. The following provisions shall apply to theCertificates: (a) TRANSFERS TO NON-QIB INSTITUTIONAL ACCREDITED INVESTORS. The following provisions shall apply with respect to the registration of any proposed transfer of a Certificate to any Institutional Accredited Investor which is not a QIB (excluding transfers to, or on or after the Regulation S Restricted Date, by Non-U.S. Persons): (i) The Registrar shall register the transfer of any Certificate, whether or not such Certificate bears the Private Placement Legend, if (x) the requested transfer is at least two years after the later of the original issue date of the Certificates and the last date on which such Certificate was held by the Company or any affiliate thereof or (y) the proposed transferee has delivered to the Registrar a letter substantially in the form of Exhibit B hereto and the aggregate principal amount of the Certificates being transferred is at least $100,000. (ii) If the proposed transferor is an Agent Member holding a beneficial interest in the U.S. Global Certificate or, at a date prior to the Regulation S Restricted Date, an Offshore Global Certificate, upon receipt by the Registrar of (x) the documents, if any, required by paragraph (i) and (y) instructions given in accordance with DTC's and the Registrar's procedures, the Registrar shall reflect on its books and records the date of the transfer and a decrease in the principal amount of such U.S. Global Certificate in an amount equal to the principal amount of the beneficial interest in such U.S. Global Certificate to be transferred, and the Company shall execute, and the Trustee shall authenticate and deliver to the transferor or at its direction, one or more U.S. Physical Certificates of like tenor and amount. (b) TRANSFERS TO QIBS. The following provisions shall apply with respect to the registration of any proposed transfer of a Certificate to a QIB (excluding Non-U.S. Persons): (i) If the Certificate to be transferred consists of U.S. Physical Certificates or an interest in any Offshore Global Certificate prior to the Regulation S Restricted Date, the Registrar shall register the transfer if such transfer is being made by a proposed transferor who has checked the box provided for on the form of U.S. Physical Certificate or delivered a certificate to the Trustee in the form of Exhibit E hereto stating, or has otherwise advised the Trustee and the Registrar in writing, that the sale has been made in compliance with the provisions of Rule 144A to a transferee who, in the case of a transfer of a U.S. Physical Certificate, has signed the certification provided for on the form of Certificate and, in the case of an Offshore Global Certificate transferred prior to the Regulation S Restricted Date, who has signed the certification provided for in Exhibit E hereto, stating, or has otherwise advised the Trustee and the Registrar in writing, that it is purchasing the Certificate for its own account or an account with respect to which it exercises sole investment discretion and that it, or the Person on whose behalf it is acting with respect to any such account, is a QIB within the meaning of Rule 144A, and is aware that the sale to it is being made in reliance on Rule 144A and has been advised of the applicable transfer restrictions relating to the Certificates and acknowledges that it has received such information regarding the Trust and/or the Company as it has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon its foregoing representations in order to claim the exemption from registration provided by Rule 144A. (ii) Upon receipt by the Registrar of the documents referred to in clause (i) above and instructions given in accordance with DTC's and the Registrar's procedures therefor, the Registrar shall reflect on its books and records the date of such transfer and an increase in the principal amount of the U.S. Global Certificate in an amount equal to the principal amount of the U.S. Physical Certificates or interests in the Offshore Global Certificate, as the case may be, being transferred, and the Trustee shall cancel such U.S. Physical Certificates or decrease the amount of such Offshore Global Certificate so transferred. (c) [Intentionally omitted]. (d) TRANSFERS OF INTERESTS IN THE OFFSHORE GLOBAL CERTIFICATE ON OR AFTER THE REGULATION S RESTRICTED DATE. The Registrar shall register any transfer of interests in the Offshore Global Certificate on or after the Regulation S Restricted Date without requiring any additional certification. (e) TRANSFERS TO NON-U.S. PERSONS AT ANY TIME. The following provisions shall apply with respect to any registration of any transfer of a Certificate to a Non-U.S. Person: (i) The Registrar shall register any proposed transfer of a U.S. Global Certificate or U.S. Physical Certificate to any Non-U.S. Person, upon receipt of a certificate substantially in the form of Exhibit A hereto from the proposed transferor. The Registrar shall promptly send a copy of such certificate to the Company. (ii) (A) Upon receipt by the Registrar of (x) the documents, if any, required by paragraph (c) and (y) instructions in accordance with DTC's and the Registrar's procedures, the Registrar shall reflect on its books and records the date of such transfer and shall cancel the Physical Certificate, if any, so transferred, or decrease the principal amount of any such U.S. Global Certificate in an amount equal to the principal amount of the beneficial interest in such U.S. Global Certificate to be transferred, and (B) upon receipt by the Registrar of instructions given in accordance with DTC's and the Registrar's procedures, the Registrar shall reflect on its books and records the date and an increase in the principal amount of the Offshore Global Certificate in an amount equal to the principal amount of the U.S. Physical Certificate or the U.S. Global Certificate, as the case may be, to be transferred, and the Trustee shall cancel the Physical Certificate, if any, so transferred or decrease the amount of such U.S. Global Certificate. (f) PRIVATE PLACEMENT LEGEND. Upon the transfer, exchange or replacement of Certificates not bearing the Private Placement Legend, the Registrar shall deliver Certificates that do not bear the Private Placement Legend. Upon the transfer, exchange or replacement of Certificates bearing the Private Placement Legend, the Registrar shall deliver only Certificates that bear the Private Placement Legend unless either (i) the circumstances contemplated by paragraph (a)(i)(x) or (e)(ii) of this Section 3.06 exist or (ii) there is delivered to the Registrar an Opinion of Counsel to the effect that neither such legend nor the related restrictions on transfer are required in order to maintain compliance with the provisions of the Securities Act. (g) GENERAL. By its acceptance of any Certificate bearing the Private Placement Legend, each Holder of such a Certificate acknowledges the restrictions on transfer of such Certificate set forth in this Agreement and agrees that it will transfer such Certificate only as provided in this Agreement. The Registrar shall not register a transfer of any Certificate unless such transfer complies with the restrictions on transfer of such Certificate set forth in this Agreement. In connection with any transfer of Certificates, each Certificateholder agrees by its acceptance of the Certificates to furnish the Registrar or the Trustee such certifications, legal opinions or other information as either of them may reasonably require to confirm that such transfer is being made pursuant to an exemption from, or a transaction not subject to, the registration requirements of the Securities Act; PROVIDED that the Registrar shall not be required to determine the sufficiency of any such certifications, legal opinions or other information. Until such time as no Certificates remain Outstanding, the Registrar shall retain copies of all letters, notices and other written communications received pursuant to Section 3.05 or this Section 3.06. The Trustee, if not the Registrar at such time, shall have the right to inspect and make copies of all such letters, notices or other written communications at any reasonable time upon the giving of reasonable written notice to the Registrar. Section 3.07. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES. If (a) any mutilated Certificate is surrendered to the Registrar, or the Registrar receives evidence to its satisfaction of the destruction, loss or theft of any Certificate, and (b) there is delivered to the Registrar and the Trustee such security, indemnity or bond, as may be required by them to save each of them harmless, then, in the absence of notice to the Registrar or the Trustee that such Certificate has been acquired by a bona fide purchaser, the Trustee shall execute, authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate or Certificates, in authorized denominations and of like Fractional Undivided Interest. In connection with the issuance of any new Certificate under this Section 3.07, the Trustee shall require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee and the Registrar) connected therewith. Any duplicate Certificate issued pursuant to this Section 3.07 shall constitute conclusive evidence of the appropriate Fractional Undivided Interest in the related Trust, as if originally issued, whether or not the lost stolen or destroyed Certificate shall be found at any time. Section 3.08. PERSONS DEEMED OWNERS. Prior to due presentation of a Certificate for registration of transfer, the Trustee, the Registrar, and any Paying Agent of the Trustee may treat the person in whose name any Certificate is registered as the owner of such Certificate for the purpose of receiving distributions pursuant to Section 4.02 and for all other purposes whatsoever, and neither the Trustee, the Registrar, nor any Paying Agent of the Trustee shall be affected by any notice to the contrary. Section 3.09. CANCELLATION. All Certificates surrendered for payment or transfer or exchange shall, if surrendered to any Person party hereto other than the Registrar, be delivered to the Registrar for cancellation. No Certificates shall be authenticated in lieu of or in exchange for any Certificates cancelled as provided in this Section, except as expressly permitted by this Agreement. All cancelled Certificates held by the Registrar shall be destroyed and a certification of their destruction delivered to the Trustee. Section 3.10. LIMITATION OF LIABILITY FOR PAYMENTS. All payments or distributions made to Certificateholders shall be made only from the Trust Property and only to the extent that the Trustee shall have sufficient income or proceeds from the Trust Property to make such payments in accordance with the terms of Article IV of this Agreement. Each Certificateholder, by its acceptance of a Certificate, agrees that it will look solely to the income and proceeds from the Trust Property to the extent available for distribution to such Certificateholder as provided in this Agreement. Section 3.11. TEMPORARY CERTIFICATES. Until definitive Certificates are ready for delivery, the Trustee shall authenticate temporary Certificates. Temporary Certificates shall be substantially in the form of definitive Certificates but may have insertions, substitutions, omissions and other variations determined to be appropriate by the officers executing the temporary Certificates, as evidenced by their execution of such temporary Certificates. If temporary Certificates are issued, the Trustee will cause definitive Certificates to be prepared without unreasonable delay. After the preparation of definitive Certificates, the temporary Certificates shall be exchangeable for definitive Certificates upon surrender of the temporary Certificates at the office or agency of the Trustee designated for such purpose pursuant to Section 7.11, without charge to the Certificateholder. Upon surrender for cancellation of any one or more temporary Certificates, the Trustee shall execute, authenticate and deliver in exchange therefor a like face amount of definitive Certificates of authorized denominations. Until so exchanged, the temporary Certificates shall be entitled to the same benefits under this Agreement as definitive Certificates. ARTICLE IV DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS Section 4.01. CERTIFICATE ACCOUNT AND SPECIAL PAYMENTS ACCOUNT. ------------------------------------------------ (a) The Trustee shall establish and maintain on behalf of the Certificateholders a Certificate Account as one or more non-interest-bearing accounts. The Trustee shall hold the Certificate Account in trust for the benefit of the Certificateholders, and shall make or permit withdrawals therefrom only as provided in this Agreement. On each day when a Scheduled Payment is made to the Trustee, the Trustee, upon receipt thereof, shall immediately deposit the aggregate amount of such Scheduled Payment into the Certificate Account. (b) The Trustee shall establish and maintain on behalf of the Certificateholders a Special Payments Account as one or more accounts, which shall be non-interest-bearing except as provided in Section 4.04. The Trustee shall hold the Special Payments Account in trust for the benefit of the Certificateholders, and shall make or permit withdrawals therefrom only as provided in this Agreement. On each day when one or more Special Payments are made to the Trustee, the Trustee, upon receipt thereof, shall immediately deposit the aggregate amount of such Special Payments into the Special Payments Account. (c) The Trustee shall cause the Subordination Agent to present to the Loan Trustee to which an Equipment Note relates such Equipment Note on the date of its stated final maturity or, in the case of any Equipment Note which is to be redeemed in whole pursuant to the relevant Indenture, on the applicable redemption date under such Indenture. Section 4.02. DISTRIBUTIONS FROM CERTIFICATE ACCOUNT AND SPECIAL PAYMENTS ACCOUNT. ------------------------------------------------------------------- (a) On each Regular Distribution Date or as soon thereafter as the Trustee has confirmed receipt of the payment of the Scheduled Payments due on such date, the Trustee shall distribute out of the Certificate Account the entire amount deposited therein pursuant to Section 4.01 (a). There shall be so distributed to each Certificateholder of record on the Record Date with respect to such Regular Distribution Date (other than as provided in Section 11.01 concerning the final distribution), by check mailed to such Certificateholder at the address appearing in the Register, such Certificateholder's PRO RATA share (based on the aggregate Fractional Undivided Interest in the Trust held by such Certificateholder) of the aggregate amount in the Certificate Account, except that, with respect to Certificates registered on the Record Date in the name of the nominee of DTC (initially, such nominee to be Cede & Co.), such distribution shall be made by wire transfer in immediately available funds to the account designated by such nominee. (b) On each Special Distribution Date with respect to any Special Payment or as soon thereafter as the Trustee has confirmed receipt of any Special Payments due on the Equipment Notes or realized upon the sale of such Equipment Note, the Trustee shall distribute out of the Special Payments Account the entire amount deposited therein pursuant to Section 4.01(b) of such Special Payment. There shall be so distributed to each Certificateholder of record on the Record Date with respect to such Special Distribution Date (other than as provided in Section 11.01 concerning the final distribution), by check mailed to such Certificateholder at the address appearing in the Register, such Certificateholder's pro rata share (based on the aggregate Fractional Undivided Interest in the Trust held by such Certificateholder) of the aggregate amount in the Special Payments Account on account of such Special Payment, except that, with respect to Certificates registered on the Record Date in the name of the nominee of DTC (initially, such nominee to be Cede & Co.), such distribution shall be made by wire transfer in immediately available funds to the account designated by such nominee. (c) The Trustee shall, at the expense of the Company, cause notice of each Special Payment to be mailed to each Certificateholder at his address as it appears in the Register. In the event of redemption or purchase of Equipment Notes held in the Trust, such notice shall be mailed not less than 20 days prior to the date any such Special Payment is scheduled to be distributed. In the event the Company is required to pay a Special Redemption Premium to the Trustee under the Note Purchase Agreement, such notice shall be mailed, together with the notice by the Escrow Paying Agent under Section 2.06 of the Escrow Agreement, not less than 20 days prior to the Special Distribution Date for such amount, which Special Distribution Date shall be the Final Withdrawal Date. In the case of any other Special Payments, such notice shall be mailed as soon as practicable after the Trustee has confirmed that it has received funds for such Special Payment, stating the Special Distribution Date for such Special Payment which shall occur not less than 20 days after the date of such notice and as soon as practicable thereafter. Notices mailed by the Trustee shall set forth: (i) the Special Distribution Date and the Record Date therefor (except as otherwise provided in Section 11.01), (ii) the amount of the Special Payment for each $1,000 face amount Certificate and the amount thereof constituting principal, premium, if any, and interest, (iii) the reason for the Special Payment, and (iv) if the Special Distribution Date is the same date as a Regular Distribution Date for the Certificates, the total amount to be received on such date for each $1,000 face amount Certificate. If the amount of (i) premium, if any, payable upon the redemption or purchase of an Equipment Note or (ii) the Special Redemption Premium, if any, has not been calculated at the time that the Trustee mails notice of a Special Payment, it shall be sufficient if the notice sets forth the other amounts to be distributed and states that any premium received will also be distributed. If any redemption of the Equipment Notes held in the Trust is cancelled, the Trustee, as soon as possible after leasing thereof, shall cause notice thereof to be mailed to each Certificateholder at its address as it appears on the Register. Section 4.03. STATEMENTS TO CERTIFICATEHOLDERS. -------------------------------- (a) On each Regular Distribution Date and Special Distribution Date, the Trustee will include with each distribution to Certificateholders a statement, giving effect to such distribution to be made on such Regular Distribution Date or Special Distribution Date, as the case may be, setting forth the following information (in the case of a Special Payment, including any Special Redemption Premium, reflecting in part the information provided by the Escrow Paying Agent under the Escrow Agreement) (per a $1,000 face amount Certificate as to clauses (ii), (iii), (iv) and (v) below): (i) the aggregate amount of funds distributed on such Distribution Date hereunder and under the Escrow Agreement, indicating the amount allocable to each source; (ii) the amount of such distribution allocable to principal and the amount allocable to premium (including any Special Redemption Premium), if any; (iii) the amount of such distribution hereunder allocable to interest; (iv) the amount of such distribution under the Escrow Agreement allocable to interest on the Deposits; (v) the amount of such distribution under the Escrow Agreement allocable to the principal of the unused Deposits; and (vi) the Pool Balance and the Pool Factor. With respect to the Certificates registered in the name of a Clearing Agency or its nominee, on the record date prior to each Distribution Date, the Trustee will request from the Clearing Agency a securities position listing setting forth the names of all the Clearing Agency Participants reflected on the Clearing Agency's books as holding interests in the Certificates on such record date. On each Distribution Date, the Trustee will mail to each such Clearing Agency Participant the statement described above and will make available additional copies as requested by such Clearing Agency Participant for forwarding to holders of Certificates. (b) Within a reasonable period of time after the end of each calendar year but not later than the latest date permitted by law, the Trustee shall furnish to each Person who at any time during such calendar year was a Certificateholder of record a statement containing the sum of the amounts determined pursuant to clauses (a)(i) through (a)(v), inclusive, above with respect to the Trust for such calendar year or, in the event such Person was a Certificateholder of record during a portion of such calendar year, for the applicable portion of such year, and such other items as are readily available to the Trustee and which a Certificateholder shall reasonably request as necessary for the purpose of such Certificateholder's preparation of its federal income tax returns. With respect to Certificates registered in the name of a Clearing Agency or its nominee, such report and such other items shall be prepared on the basis of information supplied to the Trustee by the Clearing Agency Participants and shall be delivered by the Trustee to such Clearing Agency Participants to be available for forwarding by such Clearing Agency Participants. (c) Promptly following (i) the Transfer Date, if there has been any change in the information set forth in clauses (x), (y) and (z) below from that set forth in pages 102 and 103 of the Offering Memorandum, and (ii) any early redemption or purchase of, or any default in the payment of principal or interest in respect of, any of the Equipment Notes held in the Trust, or any Final Withdrawal, the Trustee shall furnish to Certificateholders of record on such date a statement setting forth (x) the expected Pool Balances for each subsequent Regular Distribution Date following the Transfer Date, (y) the related Pool Factors for such Regular Distribution Dates and (z) the expected principal distribution schedule of the Equipment Notes, in the aggregate, held as Trust Property at the date of such notice. With respect to the Certificates registered in the name of a Clearing Agency or its nominee, on the Transfer Date, the Trustee will request from the Clearing Agency a securities position listing setting forth the names of all the Clearing Agency Participants reflected on the Clearing Agency's books as holding interests in the "Certificates" (as defined in the Related Pass Through Trust Agreement) on the Delivery Period Termination Date. The Trustee will mail to each such Clearing Agency Participant the statement described above and will make available additional copies as requested by such Clearing Agency Participant for forwarding to holders of Certificates. Section 4.04. INVESTMENT OF SPECIAL PAYMENT MONEYS. Any money received by the Trustee pursuant to Section 4.01(b) representing a Special Payment which is not to be promptly distributed shall, to the extent practicable, be invested in Permitted Investments by the Trustee (and such Permitted Investments shall be registered in the name of the Trustee) as directed in writing by the Company pending distribution of such Special Payment pursuant to Section 4.02. Any investment made pursuant to this Section 4.04 shall be in such Permitted Investments having maturities not later than the date that such moneys are required to be used to make the payment required under Section 4.02 on the applicable Special Distribution Date and the Trustee shall hold any such Permitted Investments until maturity. The Trustee shall have no liability with respect to any investment made pursuant to this Section 4.04, other than by reason of the willful misconduct or negligence of the Trustee. All income and earnings from such investments shall be distributed on such Special Distribution Date as part of such Special Payment. ARTICLE V THE COMPANY Section 5.01. MAINTENANCE OF CORPORATE EXISTENCE. The Company, at its own cost and expense, will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence, rights and franchises, except as otherwise specifically permitted in Section 5.02; PROVIDED, HOWEVER, that the Company shall not be required to preserve any right or franchise if the Company shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company. Section 5.02. CONSOLIDATION, MERGER, ETC. The Company shall not consolidate with or merge into any other corporation or convey, transfer or lease substantially all of its assets as an entirety to any Person unless: (a) the corporation formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance, transfer or lease substantially all of the assets of the Company as an entirety shall be organized and validly existing under the laws of the United States of America or any state thereof or the District of Columbia and a "citizen of the United States" (as defined in Section 40102(a)(15) of Title 49 of the United States Code) holding an air carrier operating certificate issued by the Federal Aviation Administration, or any successor agency thereto (the "FAA"), pursuant to Chapter 447 of Title 49, United States Code, authorizing the operation in air transportation of aircraft capable of carrying 10 or more individuals or 6,000 pounds or more of cargo pursuant to Part 121 of the FAA's regulations (14 CFR Part 121); (b) the corporation formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance, transfer or lease substantially all of the assets of the Company as an entirety shall execute and deliver to the Trustee a duly authorized, valid, binding and enforceable agreement in form and substance reasonably satisfactory to the Trustee containing an assumption by such successor corporation or Person of the due and punctual performance and observance of each covenant and condition of the Note Documents, the Note Purchase Agreement, the Other Pass Through Trust Agreements and of this Agreement to be performed or observed by the Company; (c) immediately after giving effect to such transaction, no Event of Default applicable to the Certificates or event which is, or after notice or passage of time, or both, would be, such an Event of Default shall have occurred and be continuing; and (d) the Company shall have delivered to the Trustee an Officers' Certificate of the Company and an Opinion of Counsel of the Company (which may be the Company's General Counsel) reasonably satisfactory to the Trustee, each stating that such consolidation, merger, conveyance, transfer or lease and the assumption agreement mentioned in clause (b) above comply with this Section 5.02 and that all conditions precedent herein provided for relating to such transaction have been complied with. Upon any consolidation or merger, or any conveyance, transfer or lease of substantially all of the assets of the Company as an entirety in accordance with this Section 5.02, the successor corporation or Person formed by such consolidation or into which the Company is merged or to which such conveyance, offer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Agreement with the same effect as if such successor corporation or Person had been named as the Company herein. No such conveyance, transfer or lease of substantially all of the assets of the Company as an entirety shall have the effect of releasing the Company or any successor corporation or Person which shall theretofore have become such in the manner prescribed in this Section 5.02 from its liability in respect of this Agreement, the Note Purchase Agreement or any Note Document to which it is a party. Section 5.03. RULE 144A(D)(4) INFORMATION. So long as any of the Certificates are "restricted securities" within the meaning of Rule 144(a)(3) under the Securities Act, at any time when the Guarantor is neither subject to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), the Company and the Guarantor will provide to any holder of such restricted securities, or to any prospective purchaser of such restricted securities designated by a holder, upon the request of such holder or prospective purchaser, any information required to be delivered to holders and prospective purchasers of the Certificates pursuant to Rule 144A(d)(4) under the Securities Act. ARTICLE VI DEFAULT Section 6.01. EVENTS OF DEFAULT. ----------------- (a) EXERCISE OF REMEDIES. Upon the occurrence and during the continuation of any Indenture Default under any Indenture, the Trustee may, to the extent it is the Controlling Party at such time, direct the exercise of remedies as provided in the Intercreditor Agreement. (b) PURCHASE RIGHTS OF CERTIFICATEHOLDERS. By acceptance of its Certificate, each Certificateholder agrees that at any time after the occurrence and during the continuation of a Triggering Event: (i) each Class B Certificateholder shall have the right to purchase all, but not less than all, of the Certificates upon ten days' written notice to the Trustee and each other Class B Certificateholder, PROVIDED that (A) if prior to the end of such ten-day period any other Class B Certificateholder notifies such purchasing Class B Certificateholder that such other Class B Certificateholder wants to participate in such purchase, then such other Class B Certificateholder may join with the purchasing Class B Certificateholder to purchase all, but not less than all, of the Certificates pro rata based on the Fractional Undivided Interest in the Class B Trust held by each such Class B Certificateholder and (B) if prior to the end of such ten-day period any other Class B Certificateholder fails to notify the purchasing Class B Certificateholder of such other Class B Certificateholder's desire to participate in such a purchase, then such other Class B Certificateholder shall lose its right to purchase the Certificates pursuant to this Section 6.01(b); and (ii) each Class C Certificateholder shall have the right (which shall not expire upon any purchase of the Certificates pursuant to clause (i) above) to purchase all, but not less than all, of the Certificates and the Class B Certificates upon ten days' written notice to the Trustee, the Class B Trustee and each other Class C Certificateholder, PROVIDED that (A) if prior to the end of such ten-day period any other Class C Certificateholder notifies such purchasing Class C Certificateholder that such other Class C Certificateholder wants to participate in such purchase, then such other Class C Certificateholder may join with the purchasing Class C Certificateholder to purchase all, but not less than all, of the Certificates and the Class B Certificates pro rata based on the Fractional Undivided Interest in the Class C Trust held by each such Class C Certificateholder and (B) if prior to the end of such ten-day period any other Class C Certificateholder fails to notify the purchasing Class C Certificateholder of such other Class C Certificateholder's desire to participate in such a purchase, then such other Class C Certificateholder shall lose its right to purchase the Certificates pursuant to this Section 6.01(b); The purchase price with respect to the Certificates shall be equal to the Pool Balance of the Certificates, together with accrued and unpaid interest thereon to the date of such purchase, without premium, but including any other amounts then due and payable to the Certificateholders under this Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement or any Note Document or on or in respect of the Certificates; PROVIDED, HOWEVER, that (i) if such purchase occurs after the Record Date with respect to the Final Withdrawal Date, such purchase price shall be reduced by the aggregate amount of unused Deposits and interest to be distributed under the Escrow Agreement (which deducted amounts shall remain distributable to, and may be retained by, the Certificateholder as of such Record Date) and (ii) if such purchase occurs after a Record Date but prior to the Distribution Date relating to such Record Date, such purchase price shall be reduced by the amount to be distributed hereunder on such related Distribution Date (which deducted amounts shall remain distributable to, and may be retained by, the Certificateholder as of such Record Date); PROVIDED, FURTHER, that no such purchase of Certificates shall be effective unless the purchaser shall certify to the Trustee that contemporaneously with such purchase, such purchaser is purchasing, pursuant to the terms of this Agreement and the Other Pass Through Trust Agreements, the Certificates, and the Class B Certificates which are senior to the Certificates held by such purchaser. Each payment of the purchase price of the Certificates shall be made to an account or accounts designated by the Trustee and each such purchase shall be subject to the terms of this Section. Each Certificateholder agrees by its acceptance of its Certificates that it will, subject to Section 3.04 hereof, upon payment from such Class B Certificateholder(s) or Class C Certificateholder(s), as the case may be, of the purchase price set forth in the first sentence of this paragraph, forthwith sell, assign, transfer and convey to the purchaser thereof (without recourse, representation or warranty of any kind except for its own acts), all of the right, title, interest and obligation of such Certificateholder in, this Agreement, the Escrow Agreement, the Deposit Agreement, the Intercreditor Agreement, the Liquidity Facility, the Note Documents, the Note Purchase Agreement and all Certificates and Escrow Receipts held by such Certificateholder (excluding all right, title and interest under any of the foregoing to the extent such right, title or interest is with respect to an obligation not then due and payable as respects any action or inaction or state of affairs occurring prior to such sale) and the purchaser shall assume all of such Certificateholder's obligations under this Agreement, the Escrow Agreement, the Deposit Agreement, the Intercreditor Agreement, the Liquidity Facility, the Note Documents and the Note Purchase Agreement and all such Certificates and Escrow Receipts. The Certificates will be deemed to be purchased on the date payment of the purchase price is made notwithstanding the failure of the Certificateholders to deliver any Certificates (whether in the form of Physical Certificates or beneficial interests in Global Certificates) and, upon such a purchase, (i) the only rights of the Certificateholders will be to deliver the Certificates to the purchaser and receive the purchase price for the Certificates and (ii) if the purchaser shall so request such Certificateholder will comply with all of the provisions of Section 3.04 hereof to enable new Certificates to be issued to the purchaser in such denominations as it shall request. All charges and expenses in connection with the issuance of any such new Certificates shall be borne by the purchaser thereof. As used in this Section 6.01(b), the terms "Certificateholder", "Class", "Class B Certificate", "Class B Certificateholder", "Class B Trust", "Class B Trustee", "Class C Certificate", "Class C Certificateholder", "Class C Trust" and "Class C Trustee" shall have the respective meanings assigned to such terms in the Intercreditor Agreement. Section 6.02. INCIDENTS OF SALE OF EQUIPMENT NOTES. Upon any sale of all or any part of the Equipment Notes made either under the power of sale given under this Agreement or otherwise for the enforcement of this Agreement, the following shall be applicable: (1) CERTIFICATEHOLDERS AND TRUSTEE MAY PURCHASE EQUIPMENT NOTES. Any Certificateholder, the Trustee in its individual or any other capacity or any other Person may bid for and purchase any of the Equipment Notes, and upon compliance with the terms of sale, may hold, retain, possess and dispose of such Equipment Notes in their own absolute right without further accountability. (2) RECEIPT OF TRUSTEE SHALL DISCHARGE PURCHASER. The receipt of the Trustee or of the officer making such sale shall be a sufficient discharge to any purchaser for his purchase money, and, after paying such purchase money and receiving such receipt, such purchaser or its personal representative or assigns shall not be obliged to see to the application of such purchase money, or be in any way answerable for any loss, misapplication or non-application thereof. (3) APPLICATION OF MONEYS RECEIVED UPON SALE. Any moneys collected by the Trustee upon any sale made either under the power of sale given by this Agreement or otherwise for the enforcement of this Agreement shall be applied as provided in Section 4.02. Section 6.03. JUDICIAL PROCEEDINGS INSTITUTED BY TRUSTEE; TRUSTEE MAY BRING SUIT. If there shall be a failure to make payment of the principal of, premium, if any, or interest on any Equipment Note, or if there shall be any failure to pay Rent (as defined in the relevant Lease) under any Lease when due and payable, then the Trustee, in its own name, and as trustee of an express trust, as holder of such Equipment Notes, to the extent permitted by and in accordance with the terms of the Intercreditor Agreement, the Note Purchase Agreement and the Note Documents (subject to the rights of the applicable Owner Trustee or Owner Participant to cure any such failure in accordance with Section 4.03 of the applicable Indenture), shall be entitled and empowered to institute any suits, actions or proceedings at law, in equity or otherwise, for the collection of the sums so due and unpaid on such Equipment Notes or under such Lease and may prosecute any such claim or proceeding to judgment or final decree with respect to the whole amount of any such sums so due and unpaid. Section 6.04. CONTROL BY CERTIFICATEHOLDERS. Subject to Section 6.03 and the Intercreditor Agreement, the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee with respect to the Trust or pursuant to the terms of the Intercreditor Agreement, or exercising any trust or power conferred on the Trustee under this Agreement or the Intercreditor Agreement, including any right of the Trustee as Controlling Party under the Intercreditor Agreement or as holder of the Equipment Notes, PROVIDED that: (1) such Direction shall not be in conflict with any rule of law or with this Agreement and would not involve the Trustee in personal liability or expense, (2) the Trustee shall not determine that the action so directed would be unjustly prejudicial to the Certificateholders not taking part in such Direction, and (3) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such Direction. Section 6.05. WAIVER OF PAST DEFAULTS. Subject to the Intercreditor Agreement, the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust (i) may on behalf of all of the Certificateholders waive any past Event of Default hereunder and its consequences or (ii) if the Trustee is the Controlling Party, may direct the Trustee to instruct the applicable Loan Trustee to waive any past Indenture Default under any Indenture and its consequences, and thereby annul any Direction given by such Certificateholders or the Trustee to such Loan Trustee with respect thereto, except a default: (1) in the deposit of any Scheduled Payment or Special Payment under Section 4.01 or in the distribution of any payment under Section 4.02 on the Certificates, or (2) in the payment of the principal of (premium, if any) or interest on the Equipment Notes, or (3) in respect of a covenant or provision hereof which under Article IX hereof cannot be modified or amended without the consent of each Certificateholder holding an Outstanding Certificate affected thereby. Upon any such waiver, such default shall cease to exist with respect to the Certificates and any Event of Default arising therefrom shall be deemed to have been cured for every purpose and any direction given by the Trustee on behalf of the Certificateholders to the relevant Loan Trustee shall be annulled with respect thereto; but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. Upon any such waiver, the Trustee shall vote the Equipment Notes issued under the relevant Indenture to waive the corresponding Indenture Default. Section 6.06. RIGHT OF CERTIFICATEHOLDERS TO RECEIVE PAYMENTS NOT TO BE IMPAIRED. Anything in this Agreement to the contrary notwithstanding, including, without limitation, Section 6.07 hereof, but subject to the Intercreditor Agreement, the right of any Certificateholder to receive distributions of payments required pursuant to Section 4.02 hereof on the Certificates when due, or to institute suit for the enforcement of any such payment on or after the applicable Regular Distribution Date or Special Distribution Date, shall not be impaired or affected without the consent of such Certificateholder. Section 6.07. CERTIFICATEHOLDERS MAY NOT BRING SUIT EXCEPT UNDER CERTAIN CONDITIONS. A Certificateholder shall not have the right to institute any suit, action or proceeding at law or in equity or otherwise with respect to this Agreement, for the appointment of a receiver or for the enforcement of any other remedy under this Agreement, unless: (1) such Certificateholder previously shall have given written notice to the Trustee of a continuing Event of Default; (2) Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than 25% of the Trust shall have requested the Trustee in writing to institute such action, suit or proceeding and shall have offered to the Trustee indemnity as provided in Section 7.02(e); (3) the Trustee shall have refused or neglected to institute any such action, suit or proceeding for 60 days after receipt of such notice, request and offer of indemnity; and (4) no Direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust. It is understood and intended that no one or more of the Certificateholders shall have any right in any manner whatever hereunder or under the Certificates to (i) surrender, impair, waive, affect, disturb or prejudice any property in the Trust Property or the lien of any Indenture on any property subject thereto, or the rights of the Certificateholders or the holders of the related Equipment Notes, (ii) obtain or seek to obtain priority over or preference to any other such Certificateholder or (iii) enforce any right under this Agreement, except in the manner herein provided and for the equal, ratable and common benefit of all the Certificateholders subject to the provisions of this Agreement. Section 6.08. REMEDIES CUMULATIVE. Every remedy given hereunder to the Trustee or to any of the Certificateholders shall not be exclusive of any other remedy or remedies, and every such remedy shall be cumulative and in addition to every other remedy given hereunder or now or hereafter given by statute, law, equity or otherwise. Section 6.09. UNDERTAKING FOR COSTS. In any suit for the enforcement of any right or remedy under this Agreement, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, a court may require any party litigant in such suit to file an undertaking to pay the costs of such suit, and may assess costs against any such party litigant, in the manner and to the extent provided in the Trust Indenture Act; PROVIDED that neither this Section nor the Trust Indenture Act shall be deemed to authorize any court to require such an undertaking or to make such an assessment in any suit instituted by the Company or the Guarantor. ARTICLE VII THE TRUSTEE Section 7.01. NOTICE OF DEFAULTS. As promptly as practicable after, and in any event within 90 days after the occurrence of any default (as such term is defined below) hereunder actually known to the Trustee, the Trustee shall transmit by mail to the Company, the related Owner Trustees, the related Loan Trustees and the Certificateholders in accordance with Section 313(c) of the Trust Indenture Act, notice of such default hereunder actually known to the Trustee, unless such default shall have been cured or waived; PROVIDED, HOWEVER, that, except in the case of a default in the payment of the principal of (premium, if any) or interest on any Equipment Note, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Trustee in good faith determine that the withholding of such notice is in the interests of the Certificateholders. For the purpose of this Section, the term "default" means any event that is, or after notice or lapse of time or both would become, an Event of Default. Section 7.02. CERTAIN RIGHTS OF TRUSTEE. Subject to the provisions of Section 315 of the Trust Indenture Act: (a) the Trustee may rely and shall be protected in acting or refraining from acting in reliance upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Request; (c) whenever in the administration of this Agreement or the Intercreditor Agreement the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate of the Company, any Owner Trustee or any Loan Trustee; (d) the Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Agreement or the Intercreditor Agreement at the request or direction of any of the Certificateholders pursuant to this Agreement or the Intercreditor Agreement unless such Certificateholders shall have offered to the Trustee reasonable security or indemnity against the cost, expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, or report, notice, request, direction, consent, order, bond, debenture or other paper or document; (g) the Trustee may execute any of the trusts or powers under this Agreement or the Intercreditor Agreement or perform any duties under this Agreement or the Intercreditor Agreement either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it under this Agreement or the Intercreditor Agreement; (h) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Agreement or the Intercreditor Agreement; (i) the Trustee shall not be required to expend or risk its own funds in the performance of any of its duties under this Agreement, or in the exercise of any of its rights or powers, if it shall have reason to believe that repayment of such funds or adequate indemnity against such risk is not reasonably assured to it; and (j) except during the continuance of an Event of Default, the Trustee undertakes and shall be responsible to perform only such duties as are specifically set forth herein and no implied covenants or obligations shall be read into this Agreement or be enforceable against Trustee. Section 7.03. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF CERTIFICATES. The recitals contained herein and in the Certificates, except the certificates of authentication, shall not be taken as the statements of the Trustee, and the Trustee assumes no responsibility for their correctness. Subject to Section 7.14, the Trustee makes no representations as to the validity or sufficiency of this Agreement, the Note Purchase Agreement, any Note Documents, any Participation Agreement or any Intercreditor Agreement, the Deposit Agreement, the Escrow Agreement and Equipment Notes or the Certificates, except that the Trustee hereby represents and warrants that this Agreement has been, and each Certificate, the Intercreditor Agreement, the Note Purchase Agreement, the Escrow Agreement and each Certificate will be, executed and delivered by one of its officers who is duly authorized to execute and deliver such document on its behalf. Section 7.04. MAY HOLD CERTIFICATES. The Trustee, any Paying Agent, Registrar or any of their Affiliates or any other agent, in their respective individual or any other capacity, may become the owner or pledgee of Certificates and subject to Sections 310(b) and 311 of the Trust Indenture Act, if applicable, may otherwise deal with the Company, the Guarantor, the Owner Trustees or the Loan Trustees with the same rights it would have if it were not Trustee, Paying Agent, Registrar or such other agent. Section 7.05. MONEY HELD IN TRUST. Money held by the Trustee or the Paying Agent in trust hereunder need not be segregated from other funds except to the extent required herein or by law and neither the Trustee nor the Paying Agent shall have any liability for interest upon any such moneys except as provided for herein. Section 7.06. COMPENSATION AND REIMBURSEMENT. The Company agrees: ------------------------------ (1) to pay, or cause to be paid, to the Trustee compensation (as set out in a separate fee agreement between the Trustee and the Company) for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (2) except as otherwise expressly provided herein to reimburse, or cause to be reimbursed, the Trustee upon its request for all reasonable out-of-pocket expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Agreement or the Intercreditor Agreement (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence, willful misconduct or bad faith or as may be incurred due to the Trustee's breach of its representations and warranties set forth in Section 7.14; (3) to indemnify, or cause to be indemnified, the Trustee for, and to hold it harmless against, any loss, liability or expense (other than for or with respect to any tax) incurred without negligence, willful misconduct or bad faith, on its part, arising out of or in connection with the acceptance or administration of this Trust, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder, except for any such loss, liability or expense incurred by reason of the Trustee's breach of its representations and warranties set forth in Section 7.14. The Trustee shall notify the Company and the Guarantor promptly of any claim for which it may seek indemnity. The Company and the Guarantor shall defend the claim and the Trustee shall cooperate in the defense. The Trustee may have separate counsel with the consent of the Company and the Guarantor and the Company and the Guarantor will pay the reasonable fees and expenses of such counsel. Neither the Company nor the Guarantor need pay for any settlement made without its consent; and (4) to indemnify, or cause to be indemnified, the Trustee, solely in its individual capacity, for, and to hold it harmless against, any tax (except to the extent the Trustee is reimbursed therefor pursuant to the next paragraph, provided that no indemnification shall be available with respect to any tax attributable to the Trustee's compensation for serving as such) incurred without negligence, willful misconduct or bad faith, on its part, arising out of or in connection with the acceptance or administration of this Trust, including any costs and expenses incurred in contesting the imposition of any such tax. The Trustee, in its individual capacity, shall notify the Company and the Guarantor promptly of any claim for any tax for which it may seek indemnity. The Trustee shall permit the Company and the Guarantor to contest the imposition of such tax and the Trustee, in its individual capacity, shall cooperate in the defense. The Trustee, in its individual capacity, may have separate counsel with the consent of the Company and the Guarantor and the Company and the Guarantor will pay the reasonable fees and expenses of such counsel. Neither the Company nor the Guarantor need pay for any taxes paid, in settlement or otherwise, without its consent. The Trustee shall be entitled to reimbursement from, and shall have a lien prior to the Certificates upon, the Trust Property for any tax incurred without negligence, bad faith or willful misconduct on its part, arising out of or in connection with the acceptance or administration of such Trust (other than any tax attributable to the Trustee's compensation for serving as such), including any costs and expenses incurred in contesting the imposition of any such tax. The Trustee shall notify the Company of any claim for any tax for which it may seek reimbursement. The Trustee shall cooperate in the contest by the Company of any such claim. If the Trustee reimburses itself from the Trust Property for any such tax it will within 30 days mail a brief report setting forth the amount of such tax and the circumstances thereof to all Certificateholders as their names and addresses appear in the Register. As security for the performance of the obligations of the Company under this Section the Trustee shall have a lien prior to the Certificates upon the Trust Property. Section 7.07. CORPORATE TRUSTEE REQUIRED, ELIGIBILITY . There shall at all times be a Trustee hereunder which shall be eligible to act as a trustee under Section 310(a) of the Trust Indenture Act and shall have a combined capital and surplus of at least $75,000,000 (or a combined capital and surplus in excess of $5,000,000 and the obligations of which, whether now in existence or hereafter incurred, are fully and unconditionally guaranteed by a corporation organized and doing business under the laws of the United States, any State or Territory thereof or of the District of Columbia that has a combined capital and surplus of at least $75,000,000). If such corporation publishes reports of conditions at least annually, pursuant to law or to the requirements of federal, state, territorial or District of Columbia supervising or examining authority, then for the purposes of this Section 7.07, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of conditions so published. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 7.07 to act as Trustee, the Trustee shall resign immediately as Trustee in the manner and with the effect specified in Section 7.08. Section 7.08. RESIGNATION AND REMOVAL: APPOINTMENT OF SUCCESSOR. ------------------------------------------------- (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee under Section 7.09. (b) The Trustee may resign at any time as trustee by giving written notice thereof to the Company, the Authorized Agents, the Owner Trustees and the Loan Trustees. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Company, the Authorized Agents, the Owner Trustees, the Loan Trustees and the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee. (c) The Trustee may be removed at any time by Act of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust delivered to the Trustee, the Company, the Owner Trustees and the Loan Trustees. (d) If at any time: (1) the Trustee shall fail to comply with Section 310 of the Trust Indenture Act after written request therefor by the Company or by any Certificateholder who has been a bona fide certificateholder for at least six months; or (2) the Trustee shall cease to be eligible under Section 7.07 and shall fail to resign after written request therefor by the Company or by any such Certificateholder; or (3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation; then, in any case, (i) the Company may remove the Trustee or (ii) any Certificateholder who has been a bona fide Certificateholder for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. (e) If a Responsible Officer of the Trustee shall obtain actual knowledge of an Avoidable Tax (as hereinafter defined) which has been or is likely to be asserted, the Trustee shall promptly notify the Company and shall, within 30 days of such notification, resign as Trustee hereunder unless within such 30-day period the Trustee shall have received notice that the Company has agreed to pay such tax. The Company shall promptly appoint a successor Trustee in a jurisdiction where there are no Avoidable Taxes. As used herein, an "Avoidable Tax" means a state or local tax: (i) upon (w) the Trust, (x) the Trust Property, (y) Certificateholders or (z) the Trustee for which the Trustee is entitled to seek reimbursement from the Trust Property, and (ii) which would be avoided if the Trustee were located in another state, or jurisdiction within a state, within the United States. A tax shall not be an Avoidable Tax if the Company or any Owner Trustee shall agree to pay, and shall pay, such tax. (f) If the Trustee shall resign, be removed or become incapable of acting as trustee or if a vacancy shall occur in the office of the Trustee for any cause, the Company shall promptly appoint a successor Trustee. If, within 90 days after such resignation, removal or incapability, or other occurrence of such vacancy, a successor Trustee shall be appointed by Act of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust delivered to the Company, the Owner Trustees, the Loan Trustee and the retiring Trustee, the successor Trustees so appointed shall, with the approval of the Company, which approval shall not be unreasonably withheld, forthwith upon its acceptance of such appointment, become the successor Trustee and supersede the successor Trustee appointed as provided above. If no successor Trustee shall have been so appointed as provided above and accepted appointment in the manner hereinafter provided, the resigning Trustee or any Certificateholder who has been a bona fide Certificateholder for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee. (g) The successor Trustee of a Trust shall give notice of the resignation and removal of the Trustee and appointment of the successor Trustee by mailing written notice of such event by first-class mail, postage prepaid, to the Certificateholders as their names and addresses appear in the Register. Each notice shall include the name of such successor Trustee and the address of its Corporate Trust Office. Section 7.09. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on request of the Company or the successor Trustee, such retiring Trustee shall execute and deliver an instrument transferring to such successor Trustee all such rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee, subject nevertheless to its lien, if any, provided for in Section 7.06. Upon request of any such successor Trustee, the Company, the retiring Trustee and such successor Trustee shall execute and deliver any and all instruments containing such provisions as shall be necessary or desirable to transfer and confirm to, and for more fully and certainly vesting in, such successor Trustee all such rights, powers and trusts. No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article. Section 7.10. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, PROVIDED such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Certificates shall have been executed or authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such execution or authentication and deliver the Certificates so executed or authenticated with the same effect as if such successor Trustee had itself executed or authenticated such Certificates. Section 7.11. MAINTENANCE OF AGENCIES. ----------------------- (a) There shall at all times be maintained an office or agency where Certificates may be presented or surrendered for registration of transfer or for exchange, and for payment thereof and where notices and demands to or upon the Trustee in respect of such Certificates may be served. Presentations and demands may be made and notices may be served at the Corporate Trust Office of the Trustee. (b) There shall at all times be a Registrar and a Paying Agent hereunder with respect to the Certificates. Each such Authorized Agent shall be a bank or trust company, shall be a corporation organized and doing business under the laws of the United States or any state, with a combined capital and surplus of at least $75,000,000, or a corporation having a combined capital and surplus in excess of $5,000,000 the obligations of which are guaranteed by a corporation organized and doing business under the laws of the United States or any state, with a combined capital and surplus of at least $75,000,000, and shall be authorized under such laws to exercise corporate trust powers, subject to supervision by federal or state authorities. The Trustee shall initially be the Paying Agent and, as provided in Section 3.04, Registrar hereunder with respect to the Certificates. Each Registrar shall furnish to the Trustee, at stated intervals of not more than six months, and at such other times as the Trustee may request in writing, a copy of the Register maintained by such Registrar. (c) Any corporation into which any Authorized Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, consolidation or conversion to which any Authorized Agent, shall be a party, or any corporation succeeding to the corporate trust business of any Authorized Agent, shall be the successor of such Authorized Agent hereunder, if such successor corporation is otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the parties hereto or such Authorized Agent or such successor corporation. (d) Any Authorized Agent may at any time resign by giving written notice of resignation to the Trustee, the Company, the Owner Trustees and the Loan Trustees. The Company may, and at the request of the Trustee shall, at any time terminate the agency of any Authorized Agent by giving written notice of termination to such Authorized Agent and to the Trustee. Upon the resignation or termination of an Authorized Agent or in case at any time any such Authorized Agent shall cease to be eligible under this Section (when in either case, no other Authorized Agent performing the functions of such Authorized Agent shall have been appointed), the Company shall promptly appoint one or more qualified successor Authorized Agents, reasonably satisfactory to the Trustee, to perform the functions of the Authorized Agent which has resigned or whose agency has been terminated or who shall have ceased to be eligible under this Section. The Company shall give written notice of any such appointment made by it to the Trustee, the Owner Trustees and the Loan Trustees; and in each case the Trustee shall mail notice of such appointment to all Certificateholders as their names and addresses appear on the Register. (e) The Company agrees to pay, or cause to be paid, from time to time to each Authorized Agent reasonable compensation for its services and to reimburse it for its reasonable expenses. Section 7.12. MONEY FOR CERTIFICATE PAYMENTS TO BE HELD IN TRUST. All moneys deposited with any Paying Agent for the purpose of any payment on Certificates shall be deposited and held in trust for the benefit of the Certificateholders entitled to such payment, subject to the provisions of this Section. Moneys so deposited and held in trust shall constitute a separate trust fund for the benefit of the Certificateholders with respect to which such money was deposited. The Trustee may at any time, for the purpose of obtaining the satisfaction and discharge of this Agreement or for any other purpose, direct any Paying Agent to pay to the Trustee all sums held in trust by such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by such Paying Agent and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. Section 7.13. REGISTRATION OF EQUIPMENT NOTES IN NAME OF SUBORDINATION AGENT. The Trustee agrees that all Equipment Notes to be purchased by the Trust shall be issued in the name of the Subordination Agent or its nominee and held by the Subordination Agent in trust for the benefit of the Certificateholders, or, if not so held, the Subordination Agent or its nominee shall be reflected as the owner of such Equipment Notes in the register of the issuer of such Equipment Notes. Section 7.14. REPRESENTATIONS AND WARRANTIES OF TRUSTEE. The Trustee hereby represents and warrants on the Transfer Date that: (a) the Trustee is a Delaware banking corporation organized and validly existing, and in good standing under the laws of the State of Delaware; (b) the Trustee has full power, authority and legal right to receive the Trust Property assigned by the Related Trustee, assume the obligations under, and perform, the Assignment and Assumption Agreement, this Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement and the Note Documents to which it is a party and has taken all necessary action to authorize such receipt, assumption and performance by it of the Assignment and Assumption Agreement, this Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement and the Note Documents to which it is a party; (c) the receipt of the Trust Property under the Assignment and Assumption Agreement and the performance by the Trustee of the Assignment and Assumption Agreement, this Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement and the Note Documents to which it is a party (i) will not violate any provision of any United States federal law or the law of the State of Delaware governing the banking and trust powers of the Trustee or any order, writ, judgment, or decree of any court, arbitrator,or governmental authority applicable to the Trustee or any of its assets, (ii) will not violate any provision of the articles of association or by-laws of the Trustee, and (iii) will not violate any provision of, or constitute, with or without notice or lapse of time, a default under, or result in the creation or imposition of any lien on any properties included in the Trust Property pursuant to the provisions of, any mortgage, indenture, contract, agreement or other undertaking to which it is a party, which violation, default or lien could reasonably be expected to have an adverse effect on the Trustee's performance or ability to perform its duties hereunder or thereunder or on the transactions contemplated herein or therein; (d) the receipt of the Trust Property under the Assignment and Assumption Agreement and the performance by the Trustee of the Assignment and Assumption Agreement, this Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement and the Note Documents to which it is a party will not require the authorization, consent, or approval of, the giving of notice to, the filing or registration with, or the taking of any other action in respect of, any governmental authority or agency of the United States or the State of Delaware regulating the banking and corporate trust activities of the Trustee; and (e) the Assignment and Assumption Agreement has been duly executed and delivered by the Trustee and this Agreement, the Assignment and Assumption Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement and the Note Documents to which it is a party have been duly executed and delivered by the Trustee and constitute the legal, valid, and binding agreements of the Trustee, enforceable against it in accordance with their respective terms, provided that enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and (ii) general principles of equity. Section 7.15. WITHHOLDING TAXES, INFORMATION REPORTING. (a) The Trustee, as trustee of the grantor trust created by this Agreement, shall exclude and withhold from each distribution of principal, premium, if any, and interest and other amounts due under this Agreement or under the Certificates any and all withholding taxes applicable thereto as required by law. The Trustee agrees to act as such withholding agent and, in connection therewith, whenever any taxes or similar charges are required to be withheld with respect to any amounts paid by or on behalf of the Trustee in respect of the Certificates, to withhold such amounts and timely pay the same to the authority in the name of and on behalf of the Certificateholders, that it will file any necessary withholding tax returns or statements when due, and that, as promptly as possible after the payment thereof, it will deliver to each such Certificateholder necessary documentation showing the payment thereof, together with such additional documentary evidence as such Certificateholders may reasonably request from time to time. The Trustee agrees to file any other information reports as it may be required to file under United States law. (b) The Trustee may satisfy certain of its obligations with respect to this Agreement by retaining, at the expense of the Company, a firm of independent public accountants (the "Accountants") which shall (i) be responsible for all tax filing requirements and (ii) perform the obligations of the Trustee in respect of tax filing requirements. The Trustee shall be deemed to have discharged its tax filing obligations under this Agreement upon its retention of the Accountants, and, if the Trustee shall have selected in the Accountants in good faith and without gross negligence, the Trustee shall not have any liability with respect to the default or misconduct of the Accountants. (c) The Trustee, at the request of the Company, will make such United States federal income tax elections as may be necessary to prevent the Trust from being classified for federal income tax purposes as an association taxable as a corporation. Section 7.16. TRUSTEE'S LIENS. The Trustee in its individual capacity agrees that it will at its own cost and expense promptly take any action as may be necessary to duly discharge and satisfy in full any mortgage, pledge, lien, charge, encumbrance, security interest or claim ("Trustee's Liens") on or with respect to the Trust Property which is attributable to the Trustee either (i) in its individual capacity and which is unrelated to the transactions contemplated by this Agreement, the Intercreditor Agreement, the Participation Agreements, the Note Purchase Agreement or the Note Documents, or (ii) as Trustee hereunder or in its individual capacity and which arises out of acts or omissions which are not contemplated by this Agreement. Section 7.17. PREFERENTIAL COLLECTION OF CLAIMS. The Trustee shall comply with Section 311(a) of the Trust Indenture Act, excluding any creditor relationship listed in Section 311(b) of the Trust Indenture Act. If the Trustee shall resign or be removed as Trustee, it shall be subject to Section 311(a) of the Trust Indenture Act to the extent provided therein. ARTICLE VIII CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE Section 8.01. THE COMPANY TO FURNISH TRUSTEE WITH NAMES AND ADDRESSES OF CERTIFICATEHOLDERS. The Company will furnish or cause to be furnished to the Trustee within 15 days after each Record Date with respect to a Scheduled Payment, and at such other times as the Trustee may request in writing, within 30 days after receipt by the Company of any such request, a list, in such form as the Trustee may reasonably require, of all information in the possession or control of the Company as to the names and addresses of the Certificateholders, in each case as of a date not more than 15 days prior to the time such list is furnished; PROVIDED, HOWEVER, that so long as the Trustee is the sole Registrar, no such list need be furnished; and provided FURTHER, HOWEVER, that no such list need be furnished for so long as a copy of the Register is being furnished to the Trustee pursuant to Section 7.11. Section 8.02. PRESERVATION OF INFORMATION; COMMUNICATIONS TO CERTIFICATEHOLDERS. The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Certificateholders contained in the most recent list furnished to the Trustee as provided in Section 7.11 or Section 8.01, as the case may be, and the names and addresses of Certificateholders received by the Trustee in its capacity as Registrar, if so acting. The Trustee may destroy any list furnished to it as provided in Section 7.11 or Section 8.01, as the case may be, upon receipt of a new list so furnished. Section 8.03. REPORTS BY TRUSTEE. Within 60 days after May 15 of each year commencing with the first full year following the date hereof, the Trustee shall transmit to the Certificateholders, as provided in Section 313(c) of the Trust Indenture Act, a brief report dated as of such May 15, if required by Section 313(a) of the Trust Indenture Act. Section 8.04. REPORTS BY THE GUARANTOR AND COMPANY. The Guarantor and the Company each shall: (a) file with the Trustee, within 30 days after the Guarantor or the Company is required to file the same with the SEC, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may from time to time by rules and regulations prescribe) which the Guarantor or the Company is required to file with the SEC pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934, as amended; or, if the Guarantor or the Company is not required to file information, documents or reports pursuant to either of such sections, then to file with the Trustee and the SEC, in accordance with rules and regulations prescribed by the SEC, such of the supplementary and periodic information, documents and reports which may be required pursuant to section 13 of the Securities Exchange Act of 1934, as amended, in respect of a security listed and registered on a national securities exchange as may be prescribed in such rules and regulations; (b) file with the Trustee and the SEC, in accordance with the rules and regulations prescribed by the SEC, such additional information, documents and reports with respect to compliance by the Guarantor and the Company with the conditions and covenants of the Guarantor and the Company provided for in this Agreement, as may be required by such rules and regulations, including, in the case of annual reports, if required by such rules and regulations, certificates or opinions of independent public accountants, conforming to the requirements of Section 1.02; (c) transmit to all Certificateholders, in the manner and to the extent provided in Section 313(c) of the Trust Indenture Act, such summaries of any information, documents and reports required to be filed by the Guarantor and the Company pursuant to subsections (a) and (b) of this Section 8.04 as may be required by rules and regulations prescribed by the SEC; (d) furnish to the Trustee, not less often than annually, a brief certificate from the principal executive officer, principal financial officer or principal accounting officer as to his or her knowledge of the Guarantor's and the Company's compliance with all conditions and covenants under this Agreement (it being understood that for purposes of this paragraph (d), such compliance shall be determined without regard to any period of grace or requirement of notice provided under this Agreement); and (e) make available to any Certificateholder, upon request, the annual audited and quarterly unaudited financial statements of the Guarantor which are provided to the Trustee. ARTICLE IX SUPPLEMENTAL AGREEMENTS Section 9.01. SUPPLEMENTAL AGREEMENTS WITHOUT CONSENT OF CERTIFICATEHOLDERS. Without the consent of the Certificateholders, the Guarantor and the Company may, and the Trustee (subject to Section 9.03) shall, at any time and from time to time, enter into one or more agreements supplemental hereto or, if applicable, to the Indenture, the Lease, the Participation Agreement, Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement, the Deposit Agreement or the Liquidity Facility in form satisfactory to the Trustee, for any of the following purposes: (1) to evidence the succession of another corporation to the Company or the Guarantor and the assumption by any such successor of the covenants of the Company or the Guarantor contained herein or in each of the other related documents to which Company or the Guarantor is a party; or (2) to add to the covenants of the Guarantor or the Company for the benefit of the Certificateholders, or to surrender any right or power in this Agreement, the Note Purchase Agreement, the Intercreditor Agreement or any Liquidity Facility conferred upon the Guarantor or the Company; or (3) to correct or supplement any provision in this Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement, the Deposit Agreement or the Liquidity Facility which may be defective or inconsistent with any other provision herein or therein or to modify any other provisions with respect to matters or questions arising under this Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement, the Deposit Agreement or the Liquidity Facility, provided that any such action shall not adversely affect the interests of the Certificateholders; or to cure any ambiguity or correct any mistake in such documents, or as provided in the Intercreditor Agreement, to give effect to or provide for a Replacement Liquidity Facility (as defined in the Intercreditor Agreement); or (4) to comply with any requirement of the SEC, any applicable law, rules or regulations of any exchange or quotation system on which the Certificates are listed, or any regulatory body; or (5) to modify, eliminate or add to the provisions of this Agreement to such extent as shall be necessary to continue the qualification of this Agreement (including any supplemental agreement) under the Trust Indenture Act, or under any similar Federal statute hereafter enacted, and to add to this Agreement such other provisions as may be expressly permitted by the Trust Indenture Act, excluding, however, the provisions referred to in Section 316(a)(2) of the Trust Indenture Act as in effect at the date as of which this instrument was executed or any corresponding provision in any similar Federal statute hereafter enacted; or (6) to evidence and provide for the acceptance of appointment under this Agreement by the Trustee of a successor Trustee and to add to or change any of the provisions of this Agreement as shall be necessary to provide for or facilitate the administration of the Trust, pursuant to the requirements of Section 7.09; or (7) if with respect to any Owned Aircraft the Company issues "class D" pass through certificates, to modify, eliminate or add to the provisions of this Agreement to the extent necessary to provide for the subordination of such "class D" pass through certificates to the Certificates; PROVIDED that no such action described in this Section 9.01 shall materially adversely affect the interests of the Certificateholders. Section 9.02. SUPPLEMENTAL AGREEMENTS WITH CONSENT OF CERTIFICATEHOLDERS. With the consent of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest of the Trust, by Act of said Certificateholders delivered to the Guarantor, the Company and the Trustee, the Guarantor and the Company may (with the consent of the Owner Trustees, if any, which consent shall not be unreasonably withheld), and the Trustee (subject to Section 9.03) shall, enter into an agreement or agreements supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement, the Deposit Agreement or the Liquidity Facility to the extent applicable to such Certificateholders or of modifying in any manner the rights and obligations of such Certificateholders under this Agreement, the Intercreditor Agreement, any Liquidity Facility, the Escrow Agreement, the Deposit Agreement or the Note Purchase Agreement; PROVIDED, HOWEVER, that no such supplemental agreement shall, without the consent of the Certificateholder of each Outstanding Certificate affected thereby: (1) reduce in any manner the amount of, or delay the timing of, any receipt by the Trustee (or, with respect to the Deposits, the Certificateholders) of payments on the Equipment Notes held in the Trust or under the Deposit Agreement or distributions that are required to be made herein on any Certificate, or change any date of payment of any Certificate or change the place of payment where, or the coin or currency in which, any Certificate is payable, or impair the right to institute suit for the enforcement of any such payment or distribution on or after the Regular Distribution Date or Special Distribution Date applicable thereto; or (2) permit the disposition of any Equipment Note included in the Trust Property except as permitted by this Agreement, or otherwise deprive such Certificateholder of the benefit of the ownership of the Equipment Notes in the Trust; or (3) alter the priority of distributions specified in the Intercreditor Agreement; or (4) modify any of the provisions of this Section or Section 6.05, except to increase any such percentage or to provide that certain other provisions of this Agreement cannot be modified or waived without the consent of the Certificateholder of each Certificate affected thereby; or (5) adversely affect the status of any Trust as a grantor trust under Subpart E, Part I of Subchapter J of Chapter 1 of Subtitle A of the Internal Revenue Code of 1986, as amended, for U.S. federal income tax purposes. It shall not be necessary for any Act of Certificateholders under this Section to approve the particular form of any proposed supplemental agreement but it shall be sufficient if such Act shall approve the substance thereof. Section 9.03. DOCUMENTS AFFECTING IMMUNITY OR INDEMNITY. If in the opinion of the Trustee any document required to be executed by it pursuant to the terms of Section 9.01 or 9.02 affects any interest, right, duty, immunity or indemnity in favor of the Trustee under this Agreement, the Trustee may in its discretion decline to execute such document. Section 9.04. EXECUTION OF SUPPLEMENTAL AGREEMENTS. In executing, or accepting the additional trusts created by, any supplemental agreement permitted by this Article or the modifications thereby of the trust created by this Agreement, the Trustee shall be entitled to receive, and shall be fully protected in relying upon, written advice of counsel or an Opinion of Counsel stating that the execution of such supplemental agreement is authorized or permitted by this Agreement. Section 9.05. EFFECT OF SUPPLEMENTAL AGREEMENTS. Upon the execution of any supplemental agreement under this Article, this Agreement shall be modified in accordance therewith, and such supplemental agreement shall form a part of this Agreement for all purposes; and every Certificateholder theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. Section 9.06. CONFORMITY WITH TRUST INDENTURE ACT. Every supplemental agreement executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act as then in effect. Section 9.07. REFERENCE IN CERTIFICATES TO SUPPLEMENTAL AGREEMENTS. Certificates authenticated and delivered after the execution of any supplemental agreement pursuant to this Article may bear a notation in form approved by the Trustee as to any matter provided for in such supplemental agreement; and, in such case, suitable notation may be made upon Outstanding Certificates after proper presentation and demand. ARTICLE X AMENDMENTS TO INDENTURES AND NOTE DOCUMENTS Section 10.01. AMENDMENTS AND SUPPLEMENTS TO INDENTURES AND OTHER NOTE DOCUMENTS. In the event that the Trustee, as holder (or beneficial owner through the Subordination Agent) of any Equipment Note in trust for the benefit of the Certificateholders or as Controlling Party under the Intercreditor Agreement, receives (directly or indirectly through the Subordination Agent) a request for a consent to any amendment, modification, waiver or supplement under any Indenture, any other Note Document, any Equipment Note, the Note Purchase Agreement or any other related document, the Trustee shall forthwith send a notice of such proposed amendment, modification, waiver or supplement to each Certificateholder registered on the Register as of the date of such notice. The Trustee shall request from the Certificateholders a Direction as to (a) whether or not to take or refrain from taking (or direct the Subordination Agent to take or refrain from taking) any action which a holder of such Equipment Note has the option to direct, (b) whether or not to give or execute (or direct the Subordination Agent to give or execute) any waivers, consents, amendments, modifications or supplements as a holder of such Equipment Note or a Controlling Party and (c) how to vote (or direct the Subordination Agent to vote) any Equipment Note if a vote has been called for with respect thereto. Provided such a request for Certificateholder Direction shall have been made, in directing any action or casting any vote or giving any consent as the holder of any Equipment Note (or in directing the Subordination Agent in any of the foregoing), (i) other than as Controlling Party, the Trustee shall vote for or give consent to any such action with respect to such Equipment Note in the same proportion as that of (A) the aggregate face amounts of all Certificates actually voted in favor of or for giving consent to such action by such Direction of Certificateholders to (B) the aggregate face amount of all Outstanding Certificates and (ii) as Controlling Party, the Trustee shall vote as directed in such Certificateholder Direction by the Certificateholders evidencing a Fractional Undivided Interest aggregating not less than a majority in interest in the Trust. For purposes of the immediately preceding sentence, a Certificate shall have been "actually voted" if the Holder of such Certificate has delivered to the Trustee an instrument evidencing such Holder's consent to such Direction prior to two Business Days before the Trustee directs such action or casts such vote or gives such consent. Notwithstanding the foregoing, but subject to Section 6.04 and the Intercreditor Agreement, the Trustee may, in its own discretion and at its own direction, consent and notify the relevant Loan Trustee of such consent (or direct the Subordination Agent to consent and notify the Loan Trustee of such consent) to any amendment, modification, waiver or supplement under the relevant Indenture, any other Note Document, any Equipment Note, the Note Purchase Agreement or any other related document, if an Event of Default hereunder shall have occurred and be continuing, or if such amendment, modification, waiver or supplement will not materially adversely affect the interests of the Certificateholders. ARTICLE XI TERMINATION OF TRUSTS Section 11.01. TERMINATION OF THE TRUST. The respective obligations and responsibilities of the Company, the Guarantor and the Trustee with respect to the Trust shall terminate upon the distribution to all Holders of the Certificates and the Trustee of all amounts required to be distributed to them pursuant to this Agreement and the disposition of all property held as part of the Trust Property; PROVIDED, HOWEVER, that in no event shall the Trust continue beyond one hundred ten (110) years following the date of the earliest execution of this Agreement. Notice of any termination, specifying the Regular Distribution Date (or Special Distribution Date, as the case may be) upon which the Certificateholders may surrender their Certificates to the Trustee for payment of the final distribution and cancellation, shall be mailed promptly by the Trustee to Certificateholders not earlier than the 60th day and not later than the 20th day next preceding such final distribution specifying (A) the Regular Distribution Date (or Special Distribution Date, as the case may be) upon which the proposed final payment of the Certificates will be made upon presentation and surrender of Certificates at the office or agency of the Trustee therein specified, (B) the amount of any such proposed final payment, and (C) that the Record Date otherwise applicable to such Regular Distribution Date (or Special Distribution Date, as the case may be) is not applicable, payments being made only upon presentation and surrender of the Certificates at the office or agency of the Trustee therein specified. The Trustee shall give such notice to the Registrar at the time such notice is given to Certificateholders. Upon presentation and surrender of the Certificates, the Trustee shall cause to be distributed to Certificateholders amounts distributable on such Regular Distribution Date (or Special Distribution Date, as the case may be) pursuant to Section 4.02. In the event that all of the Certificateholders shall not surrender their Certificates for cancellation within six months after the date specified in the above-mentioned written notice, the Trustee shall give a second written notice to the remaining Certificateholders to surrender their Certificates for cancellation and receive the final distribution with respect thereto. No additional interest shall accrue on the Certificates after the Regular Distribution Date (or Special Distribution Date, as the case may be). In the event that any money held by the Trustee for the payment of distributions on the Certificates shall remain unclaimed for two years (or such lesser time as the Trustee shall be satisfied, after sixty days' notice from the Company, is one month prior to the escheat period provided under applicable law) after the final distribution date with respect thereto, the Trustee shall pay to each Loan Trustee the appropriate amount of money relating to such Loan Trustee and shall give written notice thereof to the related Owner Trustees and the Company. ARTICLE XII MISCELLANEOUS PROVISIONS Section 12.01. LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS. The death or incapacity of any Certificateholder shall not operate to terminate this Agreement, or the Trust, nor entitle such Certificateholder's legal representatives or heirs to claim an accounting or to take any action or commence any proceeding in any court for a partition or winding up of the Trust, nor otherwise affect the rights, obligations, and liabilities of the parties hereto or any of them. Section 12.02. LIABILITIES OF CERTIFICATEHOLDERS. Neither the existence of the Trust nor any provision in this Agreement is intended to or shall limit the liability the Certificateholders would otherwise incur if the Certificateholders owned Trust Property as co-owners, or incurred any obligations of the Trust, directly rather than through the Trust. Section 12.03. CERTIFICATES NONASSESSABLE AND FULLY PAID. Subject to Section 12.02, Certificateholders shall not be personally liable for obligations of the Trust, the Fractional Undivided Interests represented by the Certificates shall be nonassessable for any losses or expenses of the Trust or for any reason whatsoever, and Certificates upon authentication thereof by the Trustee pursuant to Section 3.03 are and shall be deemed fully paid. No Certificateholder shall have any right (except as expressly provided herein) to vote or in any manner otherwise control the operation and management of the Trust Property, the Trust, or the obligations of the parties hereto, nor shall anything set forth herein, or contained in the terms of the Certificates, be construed so as to constitute the Certificateholders from time to time as partners or members of an association. Section 12.04. [Intentionally omitted]. Section 12.05. NOTICES. ------- (a) Unless otherwise specifically provided herein, all notices required under the terms and provisions of this Agreement shall be in English and in writing, and any such notice may be given by United States mail, courier service, telegram, telemessage, telecopy, telefax, cable or facsimile (confirmed by telephone or in writing in the case of notice by telegram, telemessage, telecopy, telefax, cable or facsimile) or any other customary means of communication, and any such notice shall be effective when delivered, or if mailed, three days after deposit in the United States mail with proper postage for ordinary mail prepaid, if to the Company or the Guarantor, to: American Trans Air, Inc. 7337 West Washington Street Indianapolis International Airport Indianapolis, Indiana 06927 ATTENTION: Executive Vice President and Chief Financial Officer ---------- FACSIMILE: (317) 240-7087 ---------- if to the Trustee, to: Wilmington Trust Company Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 ATTENTION: Corporate Trust Administration ---------- FACSIMILE: (302) 651-8882 ---------- (b) The Company, the Guarantor or the Trustee, by notice to the other, may designate additional or different addresses for subsequent notices or communications. (c) Any notice or communication to Certificateholders shall be mailed by first-class mail to the addresses for Certificateholders shown on the Register kept by the Registrar and to addresses filed with the Trustee. Failure so to mail a notice or communication or any defect in such notice or communication shall not affect its sufficiency with respect to other Certificateholders. (d) If a notice or communication is mailed in the manner provided above within the time prescribed, it is conclusively presumed to have been duly given, whether or not the addressee receives it. (e) If the Company mails a notice or communication to the Certificateholders, it shall mail a copy to the Trustee and to each Paying Agent at the same time. (f) Notwithstanding the foregoing, all communications or notices to the Trustee shall be deemed to be given only when received by a Responsible Officer of the Trustee. (g) The Trustee shall promptly furnish the Company with a copy of any demand, notice or written communication received by the Trustee hereunder from any Certificateholder, Owner Trustee or Loan Trustee. Section 12.06. GOVERNING LAW. THIS AGREEMENT HAS BEEN DELIVERED IN THE STATE OF NEW YORK AND THIS AGREEMENT AND THE CERTIFICATES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT-OF-LAW PRINCIPLES. Section 12.07. SEVERABILITY OF PROVISIONS. If any one or more of the covenants, agreements, provisions, or terms of this Agreement shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions, or terms shall be deemed severable from the remaining covenants, agreements, provisions, or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement or the Trust or of the Certificates or the rights of the Certificateholders thereof. Section 12.08. [Intentionally omitted]. Section 12.09. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. Section 12.10. SUCCESSORS AND ASSIGNS. All covenants, agreements, representations and warranties in this Agreement by the Trustee, the Guarantor and the Company shall bind and, to the extent permitted hereby, shall inure to the benefit of and be enforceable by their respective successors and assigns, whether so expressed or not. Section 12.11. BENEFITS OF AGREEMENT. Nothing in this Agreement or in the Certificates, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, and the Certificateholders, any benefit or any legal or equitable right, remedy or claim under this Agreement. Section 12.12. LEGAL HOLIDAYS. In any case where any Regular Distribution Date or Special Distribution Date relating to any Certificate shall not be a Business Day, then (notwithstanding any other provision of this Agreement) payment need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on such Regular Distribution Date or Special Distribution Date, and no interest shall accrue during the intervening period. Section 12.13. COUNTERPARTS. For the purpose of facilitating the execution of this Agreement and for other purposes, this Agreement may be executed simultaneously in any number of counterparts, each of which counterparts shall be deemed to be an original, and all of which counterparts shall constitute but one and the same instrument. Section 12.14. COMMUNICATION BY CERTIFICATEHOLDERS WITH OTHER CERTIFICATEHOLDERS. Certificateholders may communicate with other Certificateholders with respect to their rights under this Agreement or the Certificates pursuant to Section 3.12(b) of the Trust Indenture Act. The Company, the Guarantor, the Trustee and any and all other persons benefitted by this Agreement shall have the protection afforded by Section 312(c) of the Trust Indenture Act. Section 12.15. INTENTION OF PARTIES. The parties hereto intend that the Trust be classified for U.S. federal income tax purposes as a grantor trust under Subpart E, Part I of Subchapter J of the Internal Revenue Code of 1986, as amended, and not as a trust or association taxable as a corporation or as a partnership. Each Certificateholder, by its acceptance of its Certificate or a beneficial interest therein, agrees to treat the Trust as a grantor trust for all U.S. federal, state and local income tax purposes. The powers granted and obligations undertaken pursuant to this Agreement shall be so construed so as to further such intent. IN WITNESS WHEREOF, the Guarantor, the Company and the Trustee have caused this Agreement to be duly executed by their respective officers, all as of the day and year first above written. AMTRAN, INC. By /s/ Kenneth K. Wolff ----------------------------- Title: Executive Vice President and Chief Financial Officer AMERICAN TRANS AIR, INC. / By /s/ Kenneth K. Wolff ----------------------------- Title: Chief Financial Officer WILMINGTON TRUST COMPANY, as Trustee By /s/ Patricia A. Evans ----------------------------- Title: Financial Services Officer EXHIBIT A FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH TRANSFERS PURSUANT TO REGULATION S [date] Wilmington Trust Company, not in its individual capacity but solely as Trustee Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 Attention: Corporate Trust Administration Re: American Trans Air 1997-1A-S Pass Through Trust (the "Trust"), ____% American Trans Air Pass Through Certificates Series 1997-1A-S (the "CERTIFICATES") - -------------------------------------------------------------------------------- Sirs: In connection with our proposed sale of $ Fractional Undivided Interest of the Certificates, we confirm that such sale has been effected pursuant to and in accordance with Regulation S under the Securities Act of 1933, as amended, and, accordingly, we represent that: (1) the offer of the Certificates was not made to a person in the United States; (2) either (a) at the time the buy order was originated, the transferee was outside the United States or we and any person acting on our behalf reasonably believed that the transferee was outside the United States or (b) the transaction was executed in, on or through the facilities of a designated off-shore securities market and neither we nor any person acting on our behalf knows that the transaction has been pre-arranged with a buyer in the United States; (3) no directed selling efforts have been made in the United States in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S, as applicable; and (4) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act. In addition, if the sale is made during a restricted period and the provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are applicable thereto, we confirm that such sale has been made in accordance with the applicable provisions of Rule 903(c)(3) or Rule 904(c)(1), as the case may be. You and American Trans Air, Inc. are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Terms used in this certificate have the meanings set forth in Regulation S. Very truly yours, [Name of Transferor] By: ------ Authorized Signature EXHIBIT B FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH TRANSFERS TO NON-QIB ACCREDITED INVESTORS [date] Wilmington Trust Company, not in its individual capacity but solely as Trustee Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 Attention: Corporate Trust Administration Re: American Trans Air 1997-1A-S Pass-Through Trust (the "Trust"), ____% American Trans Air Pass Through Certificates Series 1997-1A-S (THE "CERTIFICATES") - --------------------------------------------------------------------------- Dear Sirs: In connection with our proposed purchase of $ aggregate principal amount of the Certificates, we confirm that: 1. We understand that any subsequent transfer of the Certificates is subject to certain restrictions and conditions set forth in the Pass Through Trust Agreement dated as of December __, 1997 relating to the Certificates (the "Pass Through Trust Agreement") and the undersigned agrees to be bound by, and not to resell, pledge or otherwise transfer the Certificates except in compliance with, such restrictions and conditions and the Securities Act of 1933, as amended (the "Securities Act"). 2. We are purchasing Certificates having an aggregate principal amount of not less than $100,000 and each account (if any) for which we are purchasing Certificates is purchasing Certificates having an aggregate principal amount of not less than $100,000. 3. We understand that the Certificates have not been registered under the Securities Act, and that the Certificates may not be offered or sold except as permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for which we are acting as hereinafter stated, that if we should sell any Certificate, we will do so only (A) in accordance with Rule 144A under the Securities Act to a "qualified institutional buyer" (as defined therein), (B) to an institutional "accredited investor" (as defined below) that, prior to such transfer, furnishes to you and American Trans Air, Inc., a signed letter substantially in the form of this letter, (C) outside the United States in accordance with Rule 904 of Regulation S under the Securities Act, (D) pursuant to the exemption from registration provided by Rule 144 under the Securities Act, or (E) pursuant to an effective registration statement under the Securities Act, and we further agree to provide to any person purchasing any of the Certificates from us a notice advising such purchaser that resales of the Notes are restricted as stated herein. We further understand that the Certificates purchased by us will bear a legend to the foregoing effect. 4. We understand that, on any proposed resale of any Certificates, we will be required to furnish to you and American Trans Air, Inc. such certifications, legal opinions and other information as you and American Trans Air, Inc. may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. We further understand that the Certificates purchased by us will bear a legend to the foregoing effect. 5. We are an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Certificates and we and any accounts for which we are acting are each able to bear the economic risk of our or its investment. 6. We are acquiring the Certificates purchased by us for our own account or for one or more accounts (each of which is an institutional "accredited investor") as to each of which we exercise sole investment discretion. You and American Trans Air, Inc. are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Very truly yours, [Name of Transferee] By: ------ Authorized Signature EXHIBIT C FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT American Trans Air 1997-1[__] Pass Through Trust ASSIGNMENT AND ASSUMPTION AGREEMENT, dated ____________, 199_ (the "AGREEMENT"), between Wilmington Trust Company, a Delaware banking corporation ("WTC"), not in its individual capacity except as expressly provided herein, but solely as trustee under the Pass Through Trust Agreement dated as of December __, 1997 (as amended, modified or otherwise supplemented from time to time, the "PASS THROUGH TRUST AGREEMENT") in respect of the American Trans Air 1997-1A-S Pass Through Trust (the "ASSIGNOR"), and Wilmington Trust Company, a Delaware banking corporation, not in its individual capacity except as expressly provided herein, but solely as trustee under the Pass Through Trust Agreement dated as of December __, 1997 (the "NEW PASS THROUGH TRUST AGREEMENT") in respect of the American Trans Air 1997-1A-S Pass Through Trust (the "ASSIGNEE"). W I T N E S S E T H: - - - - - - - - - - WHEREAS, the parties hereto desire to effect on the date hereof (the "TRANSFER DATE") (a) the transfer by the Assignor to the Assignee of all of the right, title and interest of the Assignor in, under and with respect to, among other things, the Trust Property and each of the documents listed in Schedule I hereto (the "SCHEDULED DOCUMENTS") and (b) the assumption by the Assignee of the obligations of the Assignor (i) under the Scheduled Documents and (ii) in respect of the Certificates issued under the Pass Through Trust Agreement; and WHEREAS, the Scheduled Documents permit such transfer upon satisfaction of certain conditions heretofore or concurrently herewith being complied with; NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements herein contained, the parties hereto do hereby agree as follows (capitalized terms used herein without definition having the meaning ascribed thereto in the Pass Through Trust Agreement): 1. ASSIGNMENT. The Assignor does hereby sell, assign, convey, transfer and set over unto the Assignee as of the Transfer Date all of its present and future right, title and interest in, under and with respect to the Trust Property and the Scheduled Documents and each other contract, agreement, document or instrument relating to the Trust Property or the Scheduled Documents (such other contracts, agreements, documents or instruments, together with the Scheduled Documents, to be referred to as the "ASSIGNED DOCUMENTS"), and any proceeds therefrom, together with all documents and instruments evidencing any of such right, title and interest. 2. ASSUMPTION. The Assignee hereby assumes for the benefit of the Assignor and each of the parties listed in Schedule II hereto (collectively, the "BENEFICIARIES") all of the duties and obligations of the Assignor, whenever accrued, pursuant to the Assigned Documents and hereby confirms that it shall be deemed a party to each of the Assigned Documents to which the Assignor is a party and shall be bound by all the terms thereof (including the agreements and obligations of the Assignor set forth therein) as if therein named as the Assignor. Further, the Assignee hereby assumes for the benefit of the Assignor and the Beneficiaries all of the duties and obligations of the Assignor under the Outstanding Certificates and hereby confirms that the Certificates representing Fractional Undivided Interests under the Pass Through Trust Agreement shall be deemed for all purposes of the Pass Through Trust Agreement and the New Pass Through Trust Agreement to be certificates representing the same fractional undivided interests under the New Pass Through Trust Agreement equal to their respective beneficial interests in the trust created under the Pass Through Trust Agreement. 3. EFFECTIVENESS. This Agreement shall be effective upon the execution and delivery hereof by the parties hereto, and each Certificateholder, by its acceptance of its Certificate or a beneficial interest therein, agrees to be bound by the terms of this Agreement. 4. PAYMENTS. The Assignor hereby covenants and agrees to pay over to the Assignee, if and when received following the Transfer Date, any amounts (including any sums payable as interest in respect thereof) paid to or for the benefit of the Assignor that, under Section 1 hereof, belong to the Assignee. 5. FURTHER ASSURANCES. The Assignor shall, at any time and from time to time, upon the request of the Assignee, promptly and duly execute and deliver any and all such further instruments and documents and take such further action as the Assignee may reasonably request to obtain the full benefits of this Agreement and of the right and powers herein granted. The Assignor agrees to deliver the Global Certificates, and all Trust Property, if any, then in the physical possession of the Assignor, to the Assignee. 6. REPRESENTATIONS AND WARRANTIES. (a) The Assignee represents and warrants to the Assignor and each of the Beneficiaries that: (i) it has all requisite power and authority and legal right to enter into and carry out the transactions contemplated hereby and to carry out and perform the obligations of the "Pass Through Trustee" under the Assigned Documents; (ii) on and as of the date hereof, the representations and warranties of the Assignee set forth in Section 7.14 of the New Pass Through Trust Agreement are true and correct. (b) The Assignor represents and warrants to the Assignee that: (i) it is duly incorporated, validly existing and in good standing under the laws of the State of Delaware and has the full trust power, authority and legal right under the laws of the State of Delaware and the United States pertaining to its trust and fiduciary powers to execute and deliver this Agreement; (ii) the execution and delivery by it of this Agreement and the performance by it of its obligations hereunder have been duly authorized by it and will not violate its articles of association or by-laws or the provisions of any indenture, mortgage, contract or other agreement to which it is a party or by which it is bound; and (iii) this Agreement constitutes the legal, valid and binding obligations of it enforceable against it in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity. 7. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK INCLUDING MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS. 8. COUNTERPARTS. This Agreement may be executed in any number of counterparts, all of which together shall constitute a single instrument. It shall not be necessary that any counterpart be signed by both parties so long as each party shall sign at least one counterpart. 9. THIRD PARTY BENEFICIARIES. The Assignee hereby agrees, for the benefit of the Beneficiaries, that its representations, warranties and covenants contained herein are also intended to be for the benefit of each Beneficiary, and each Beneficiary shall be deemed to be an express third party beneficiary with respect thereto, entitled to enforce directly and in its own name any rights or claims it may have against such party as such beneficiary. IN WITNESS WHEREOF, the parties hereto, through their respective officers thereunto duly authorized, have duly executed this Assignment as of the day and year first above written. ASSIGNOR: WILMINGTON TRUST COMPANY, not in its individual capacity except as expressly provided herein, but solely as trustee under the Pass Through Trust Agreement in respect of the American Trans Air 1997-1A-S Pass Through Trust By:___________________________ Title: ASSIGNEE: WILMINGTON TRUST COMPANY, not in its individual capacity except as expressly provided herein, but solely as trustee under the Pass Through Trust Agreement in respect of the American Trans Air 1997-1A-S Pass Through Trust By:__________________________ Title: Schedule I Schedule of Assigned Documents (1) Intercreditor Agreement dated as of December 23, 1997 among the Trustee, the Other Trustees, the Liquidity Providers, the liquidity providers, if any, relating to the Certificates issued under (and as defined in) each of the Other Pass Through Trust Agreements and the Subordination Agent. (2) Escrow and Paying Agent Agreement (Class A) dated as of December 23, 1997 among the Escrow Agent, the Initial Purchasers, the Trustee and the Paying Agent. (3) Note Purchase Agreement dated as of December 23, 1997 among the Company, the Trustee, the Other Trustees, the Depositary, the Escrow Agent, the Paying Agent and the Subordination Agent. (4) Deposit Agreement (Class A) dated as of December 23, 1997 between the Escrow Agent and the Depositary. (5) Each of the Operative Documents (as defined in the Participation Agreement for each Aircraft) in effect as of the Transfer Date. Schedule II Schedule of Beneficiaries Wilmington Trust Company, not in its individual capacity but solely as Subordination Agent. Wilmington Trust Company, not in its individual capacity but solely as Paying Agent ING Bank, as Liquidity Provider Amtran, Inc. American Trans Air, Inc. Salomon Brothers Inc, as Initial Purchaser Furman Selz LLC, as Initial Purchaser First Security Bank, National Association, as Escrow Agent Each of the other parties to the Assigned Documents EXHIBIT D FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH TRANSFERS TO QIBs [date] Wilmington Trust Company, not in its individual capacity but solely as Trustee Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 Attention: Corporate Trust Administration Re: American Trans Air 1997-1A-S Pass Through Trust (the "Trust"), ____% American Trans Air Pass Through Certificates Series 1997-1A-S (the "CERTIFICATES") - -------------------------------------------------------------------------------- Sirs: In connection with our proposed sale of $ Fractional Undivided Interest of the Certificates, we confirm that without utilizing any general solicitation or general advertising that such Certificates are being transferred in compliance with the exemption from registration under the Securities Act of 1933, as amended, provided by Rule 144A thereunder. Date: [NAME OF TRANSFEROR ------------ ------------------- NOTE: The signature must correspond with the name as written upon the face of the within-mentioned Certificate in every particular, without alteration or any change whatsoever. Signature Guarantee: TO BE COMPLETED BY PURCHASER: The undersigned represents and warrants that it is purchasing the within-mentioned Certificate for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933, as amended, and is aware that the sale to it is being made in reliance on Rule 144A and has been advised of the applicable transfer restrictions relating to the Certificates and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Dated: ------------- [Name of Transferee] NOTE: To be executed by an executive officer. EX-4.16 11 file011.txt AMTRAN, INC., 2000 10-K, EXHIBIT 4.16 EXECUTION COPY AMTRAN, INC. AMERICAN TRANS AIR, INC. and WILMINGTON TRUST COMPANY as Trustee PASS THROUGH TRUST AGREEMENT Dated as of December 23, 1997 American Trans Air 1997-1B-O Pass Through Trust 7.19% American Trans Air 1997-1B-O Pass Through Certificates TABLE OF CONTENTS ARTICLE I DEFINITIONS.........................................................3 Section 1.01. Definitions.............................................3 Section 1.02. COMPLIANCE CERTIFICATES AND OPINIONS...................13 Section 1.03. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.................14 Section 1.04. ACTS OF CERTIFICATEHOLDERS.............................14 ARTICLE II ORIGINAL ISSUANCE OF CERTIFICATES;................................16 Section 2.01. [Intentionally omitted]................................16 Section 2.02. ISSUANCE OF CERTIFICATES; ACQUISITION OF ..............16 EQUIPMENT NOTES CERTIFICATES.........................................18 Section 2.03. WITHDRAWAL OF DEPOSITS................................17 Section 2.04. ACCEPTANCE BY TRUSTEE.................................17 Section 2.05. LIMITATION OF POWERS...................................17 ARTICLE III THE CERTIFICATES..................................................18 Section 3.01. TITLE, FORM, DENOMINATION AND EXECUTION OF CERTIFICATES.........................................................18 Section 3.02. RESTRICTIVE LEGENDS....................................19 Section 3.03. AUTHENTICATION OF CERTIFICATES.........................21 Section 3.04. TRANSFER AND EXCHANGE..................................21 Section 3.05. BOOK-ENTRY PROVISIONS FOR U.S. GLOBAL CERTIFICATE AND OFFSHORE GLOBAL CERTIFICATES.....................22 Section 3.06. SPECIAL TRANSFER PROVISIONS............................23 Section 3.07. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES......26 Section 3.08. PERSONS DEEMED OWNERS..................................26 Section 3.09. CANCELLATION...........................................26 Section 3.10. LIMITATION OF LIABILITY FOR PAYMENTS...................26 Section 3.11. TEMPORARY CERTIFICATES.................................27 ARTICLE IV DISTRIBUTIONS; STATEMENTS TO......................................27 Section 4.01. CERTIFICATE ACCOUNT AND SPECIAL PAYMENTS ACCOUNT.......27 Section 4.02. DISTRIBUTIONS FROM CERTIFICATE ACCOUNT AND SPECIAL PAYMENTS ACCOUNT.............................................28 Section 4.03. STATEMENTS TO CERTIFICATEHOLDERS.......................29 Section 4.04. INVESTMENT OF SPECIAL PAYMENT MONEYS...................31 ARTICLE V THE COMPANY........................................................31 Section 5.01. MAINTENANCE OF CORPORATE EXISTENCE.....................31 Section 5.02. CONSOLIDATION, MERGER, ETC.............................31 Section 5.03. RULE 144A(D)(4) INFORMATION...........................33 ARTICLE VI DEFAULT...........................................................33 Section 6.01. EVENTS OF DEFAULT......................................33 Section 6.02. INCIDENTS OF SALE OF EQUIPMENT NOTES...................35 Section 6.03. JUDICIAL PROCEEDINGS INSTITUTED BY TRUSTEE; TRUSTEE MAY BRING SUIT........................35 Section 6.04. CONTROL BY CERTIFICATEHOLDERS..........................36 Section 6.05. WAIVER OF PAST DEFAULTS................................36 Section 6.06. RIGHT OF CERTIFICATEHOLDERS TO RECEIVE PAYMENTS NOT TO BE IMPAIRED.......................................................37 Section 6.07. CERTIFICATEHOLDERS MAY NOT BRING SUIT EXCEPT UNDER CERTAIN CONDITIONS...................................................37 Section 6.08. REMEDIES CUMULATIVE....................................38 Section 6.09. UNDERTAKING FOR COSTS..................................38 ARTICLE VII THE TRUSTEE......................................................38 Section 7.01. NOTICE OF DEFAULTS.....................................38 Section 7.02. CERTAIN RIGHTS OF TRUSTEE..............................38 Section 7.03. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF CERTIFICATES.........................................................40 Section 7.04. MAY HOLD CERTIFICATES..................................40 Section 7.05. MONEY HELD IN TRUST....................................40 Section 7.06. COMPENSATION AND REIMBURSEMENT.........................40 Section 7.07. CORPORATE TRUSTEE REQUIRED, ELIGIBILITY................42 Section 7.08. RESIGNATION AND REMOVAL: APPOINTMENT OF SUCCESSOR......42 Section 7.09. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.................44 Section 7.10. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS..........................................................44 Section 7.11. MAINTENANCE OF AGENCIES................................44 Section 7.12. MONEY FOR CERTIFICATE PAYMENTS TO BE HELD IN TRUST.....45 Section 7.13. REGISTRATION OF EQUIPMENT NOTES IN NAME OF SUBORDINATION AGENT..................................................46 Section 7.14. REPRESENTATIONS AND WARRANTIES OF TRUSTEE..............46 Section 7.15. WITHHOLDING TAXES, INFORMATION REPORTING...............47 Section 7.16. TRUSTEE'S LIENS........................................47 Section 7.17. PREFERENTIAL COLLECTION OF CLAIMS......................48 ARTICLE VIII CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE................48 Section 8.01. THE COMPANY TO FURNISH TRUSTEE WITH NAMES AND ADDRESSES OF CERTIFICATEHOLDERS......................................48 Section 8.02. PRESERVATION OF INFORMATION; COMMUNICATIONS TO CERTIFICATEHOLDERS................................................48 Section 8.03. REPORTS BY TRUSTEE.....................................48 Section 8.04. REPORTS BY THE GUARANTOR AND COMPANY...................48 ARTICLE IX SUPPLEMENTAL AGREEMENTS...........................................49 Section 9.01. SUPPLEMENTAL AGREEMENTS WITHOUT CONSENT OF CERTIFICATEHOLDERS...................................................49 Section 9.02. SUPPLEMENTAL AGREEMENTS WITH CONSENT OF CERTIFICATEHOLDERS...................................................51 Section 9.03. DOCUMENTS AFFECTING IMMUNITY OR INDEMNITY..............52 Section 9.04. EXECUTION OF SUPPLEMENTAL AGREEMENTS...................52 Section 9.05. EFFECT OF SUPPLEMENTAL AGREEMENTS......................52 Section 9.06. CONFORMITY WITH TRUST INDENTURE ACT....................52 Section 9.07. REFERENCE IN CERTIFICATES TO SUPPLEMENTAL AGREEMENTS...52 ARTICLE X AMENDMENTS TO INDENTURES AND NOTE DOCUMENTS........................53 Section 10.01. AMENDMENTS AND SUPPLEMENTS TO INDENTURES AND OTHER NOTE DOCUMENTS.................................................53 ARTICLE XI TERMINATION OF TRUSTS.............................................54 Section 11.01. TERMINATION OF THE TRUST..............................54 ARTICLE XII MISCELLANEOUS PROVISIONS.........................................56 Section 12.01. LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS............56 Section 12.02. LIABILITIES OF CERTIFICATEHOLDERS.....................57 Section 12.03. CERTIFICATES NONASSESSABLE AND FULLY PAID.............57 Section 12.04. [Intentionally omitted]...............................57 Section 12.05. NOTICES...............................................57 Section 12.06. GOVERNING LAW.........................................58 Section 12.07. SEVERABILITY OF PROVISIONS............................59 Section 12.08. [Intentionally omitted]...............................59 Section 12.09. EFFECT OF HEADINGS AND TABLE OF CONTENTS..............59 Section 12.10. SUCCESSORS AND ASSIGNS................................59 Section 12.11. BENEFITS OF AGREEMENT.................................59 Section 12.12. LEGAL HOLIDAYS........................................59 Section 12.13. COUNTERPARTS..........................................59 Section 12.14. COMMUNICATION BY CERTIFICATEHOLDERS WITH OTHER CERTIFICATEHOLDERS...................................................59 Section 12.15. INTENTION OF PARTIES..................................59 Exhibit A - Form of Certificate Exhibit B - Form of Certificate to be Delivered in Connection with Transfers Pursuant to Regulation S Exhibit C - Form of Certificate to be Delivered in Connection with Transfers to Non-QIB Accredited Investors Exhibit D - Form of Assignment and Assumption Agreement Exhibit E - Form of Certificate to be Delivered in Connection with Transfers to QIBs This PASS THROUGH TRUST AGREEMENT, dated as of December 23, 1997, among AMTRAN, INC., an Indiana corporation (the "Guarantor"), AMERICAN TRANS AIR, INC., an Indiana corporation (the "Company"), and WILMINGTON TRUST COMPANY, a Delaware banking corporation, as Trustee, is made with respect to the formation of the American Trans Air 1997-1B-O Pass Through Trust, and the issuance of 7.19% American Trans Air 1997-1B-O Pass Through Certificates representing fractional undivided interests in the Trust. WITNESSETH: WHEREAS, the Company has obtained commitments from The Boeing Company for the delivery of certain Aircraft; WHEREAS, the Company intends to finance the acquisition of each such Aircraft either (i) through separate leveraged lease transactions in which the Company will lease such aircraft (collectively, the "LEASED AIRCRAFT") or (ii) through separate secured loan transactions in which the Company will own such Aircraft (collectively, the "OWNED AIRCRAFT"); WHEREAS, in the case of each Leased Aircraft, each Owner Trustee, acting on behalf of the corresponding Owner Participant, will issue pursuant to an Indenture, on a non-recourse basis, three series of Equipment Notes in order to finance a portion of the purchase price of each such Leased Aircraft; WHEREAS, in the case of each Owned Aircraft, the Company, will issue pursuant to an Indenture, on a recourse basis, three series of Equipment Notes to finance a portion of the purchase price of each such Owned Aircraft; WHEREAS, the Trustee, upon execution and delivery of this Agreement, hereby declares the creation of this Trust (the "1997-1B-O Trust") for the benefit of the Certificateholders, and the initial Certificateholders, as the grantors of the 1997-1B-O Trust, by their respective acceptances of the Certificates, join in the creation of this 1997-1B-O Trust with the Trustee; WHEREAS, except for those Certificates to which an Escrow Receipt has been affixed, all Certificates to be issued by the Trust will evidence fractional undivided interests in the Trust and will convey no rights, benefits or interests in respect of any property other than the Trust Property; WHEREAS, the Escrow Agent and the Initial Purchasers have contemporaneously herewith entered into an Escrow Agreement with the Escrow Paying Agent pursuant to which the Initial Purchasers have delivered to the Escrow Agent the proceeds from the sale of the Certificates and have irrevocably instructed the Escrow Agent to withdraw and pay funds from such proceeds upon request and proper certification by the Trustee to purchase Equipment Notes at the times at which the Aircraft are delivered as contemplated by the Note Purchase Agreement from time to time prior to the Delivery Period Termination Date (other than the delivery of an Aircraft on the Issuance Date, if applicable); WHEREAS, the Escrow Agent on behalf of the Certificateholders has contemporaneously herewith entered into a Deposit Agreement with the Depositary under which the Deposits referred to therein will be made and from which the Escrow Agent will withdraw funds to allow the Trustee to purchase Equipment Notes from time to time prior to the Delivery Period Termination Date (other than with respect to Equipment Notes relating to an Aircraft delivered on the Issuance Date, if applicable); WHEREAS, pursuant to the terms and conditions of this Agreement and the Note Purchase Agreement, upon or shortly following the delivery of an Aircraft (other than delivery of an Aircraft on or prior to the Issuance Date, if applicable), the Trustee on behalf of the Trust, using funds withdrawn pursuant to the Escrow Agreement, shall (subject to certain conditions) purchase an Equipment Note having the same interest rate as, and final maturity date not later than the final Regular Distribution Date of, the Certificates issued hereunder and shall hold such Equipment Note in trust for the benefit of the Certificateholders; WHEREAS, pursuant to the terms and conditions of this Agreement and the Note Purchase Agreement, upon the delivery of an Aircraft on the Issuance Date, if applicable, the Trustee on behalf of the Trust, using funds from the proceeds of the sale of the Certificates, shall (subject to certain conditions) purchase an Equipment Note having the same interest rate as, and final maturity date not later than the final Regular Distribution Date of, the Certificates issued hereunder and shall hold such Equipment Note in trust for the benefit of the Certificateholders; WHEREAS, all of the conditions and requirements necessary to make this Agreement, when duly executed and delivered, a valid, binding and legal instrument, enforceable in accordance with its terms and for the purposes herein expressed, have been done, performed and fulfilled, and the execution and delivery of this Agreement in the form and with the terms hereof have been in all respects duly authorized; and WHEREAS, to facilitate the sale of Equipment Notes to, and the purchase of Equipment Notes by, the Trustee on behalf of the 1997-1B-O Trust, (i) the Company as the "issuer", as such term is defined in and solely for purposes of the Securities Act of 1933, as amended, of the Certificates to be issued pursuant hereto, and as the "obligor", as such term is defined in and solely for purposes of the Trust Indenture Act of 1939, as amended, and (ii) the Guarantor have each duly authorized the execution and delivery of this Agreement with respect to all such Certificates and are undertaking to perform certain administrative and ministerial duties hereunder and are also undertaking to pay the fees and expenses of the Trustee; NOW, THEREFORE, in consideration of the mutual agreements herein contained, and of other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I DEFINITIONS Section 1.01. Definitions. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: (1) the terms used herein that are defined in this Article have the meanings assigned to them in this Article, and include the plural as well as the singular; (2) all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference herein, have the meanings assigned to them therein; (3) all references in this Agreement to designated "Articles", "Sections" and other subdivisions are to the designated Articles, Sections and other subdivisions of this Agreement; (4) the words "herein", "hereof' and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision; and (5) unless the context otherwise requires, whenever the words "including", "include" or "includes" are used herein, it shall be deemed to be followed by the phrase "without limitation". ACT: With respect to any Certificateholder has the meaning specified in Section 1.04. AFFILIATE: With respect to any specified Person, means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such Person. For the purposes of this definition, "control", when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms "controlling" and "controlled" have meanings correlative to the foregoing. AGENT MEMBERS: Has the meaning specified in Section 3.05(a). AIRCRAFT: means each of the Aircraft or Substitute Aircraft in respect of which a Participation Agreement is entered into in accordance with the Note Purchase Agreement. APPLICABLE DELIVERY DATE: Has the meaning specified in Section 2.01(b). APPLICABLE PARTICIPATION AGREEMENT: Has the meaning specified in Section 2.01(b). ASSIGNMENT AND ASSUMPTION AGREEMENT: Means the assignment and assumption agreement substantially in the form of Exhibit D hereto executed and delivered in accordance with Section 11.01. AUTHORIZED AGENT: Means any Paying Agent or Registrar for the Certificates. AVOIDABLE TAX: Has the meaning specified in Section 7.08(e) hereof. BOOK-ENTRY CERTIFICATES: With respect to the Certificates, means a beneficial interest in the Certificates, ownership and transfers of which shall be made through book entries as described in Section 3.04. BUSINESS DAY: Means any day other than a Saturday, a Sunday or a day on which commercial banks are required or authorized to close in Indianapolis, Indiana; New York, New York; or Phoenix, Arizona; and, so long as any such Certificate is outstanding, a city and state in which the Trustee or any related Loan Trustee maintains its Corporate Trust Office or receives and disburses funds. CEDEL: Means Cedel Bank societe anonyme. CERTIFICATE: Means any one of the certificates executed and authenticated by the Trustee, substantially in the form of Exhibit A hereto. CERTIFICATE ACCOUNT: Means the account or accounts created and maintained pursuant to Section 4.01(a). CERTIFICATEHOLDER OR HOLDER: Means the Person in whose name a Certificate is registered in the Register. CLEARING AGENCY: Means an organization registered as a "clearing agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as amended. CLEARING AGENCY PARTICIPANT: Means a broker, dealer, bank, other financial institution or other Person for whom from time to time a Clearing Agency effects, directly or indirectly, book-entry transfers and pledges of securities deposited with the Clearing Agency. COMPANY: Means American Trans Air, Inc., an Indiana corporation, or its successor in interest pursuant to Section 5.02. CONTROLLING PARTY: Means the Person entitled to act as such pursuant to the terms of the Intercreditor Agreement. CORPORATE TRUST OFFICE: With respect to the Trustee or any Loan Trustee, means the office of such trustee in the city at which at any particular time its corporate trust business shall be principally administered. CUT-OFF DATE: Means the earlier of (a) the Delivery Period Termination Date and (b) the date on which a Triggering Event occurs. DELIVERY DATE: Has the meaning specified in Section 1(b) of the Note Purchase Agreement. DELIVERY NOTICE: Has the meaning specified in Annex A to the Note Purchase Agreement. DELIVERY PERIOD TERMINATION DATE: Has the meaning specified in Annex A to the Note Purchase Agreement. DEPOSIT AGREEMENT: Means the Deposit Agreement (Class B) dated as of December 23, 1997 relating to the Certificates, between the Depositary and the Escrow Agent, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. DEPOSITARY: Means NBD Bank, National Association, a national banking association. DEPOSITS: Has the meaning specified in the Deposit Agreement. DIRECTION: Has the meaning specified in Section 1.04(c). DISTRIBUTION DATE: Means each Regular Distribution Date and each Special Distribution Date. DTC: Means The Depository Trust Company, its nominees and their respective successors. EQUIPMENT NOTE: Means the "Secured Certificates" as defined in the Indentures. ERISA: Means the Employee Retirement Income Security Act of 1974, as amended from time to time, or any successor federal statute. ESCROW AGENT: Means, initially, First Security Bank, National Association, and any replacement or successor therefor appointed in accordance with the Escrow Agreement. ESCROW AGREEMENT: Means the Escrow and Paying Agent Agreement (Class B) dated as of December 23, 1997 relating to the Certificates, among the Escrow Agent, the Escrow Paying Agent, the Trustee and the Initial Purchasers, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. ESCROW PAYING AGENT: Means the Person acting as paying agent under the Escrow Agreement. ESCROW RECEIPT: Means the receipt substantially in the form annexed to the Escrow Agreement representing a fractional undivided interest in the funds held in escrow thereunder. EUROCLEAR: Means the Euroclear System. EVENT OF DEFAULT: Means the occurrence of an Indenture Default under any Indenture pursuant to which Equipment Notes held by the Trust were issued. FINAL WITHDRAWAL: Has the meaning specified in the Escrow Agreement. FINAL WITHDRAWAL DATE: Has the meaning specified in the Escrow Agreement. FINAL WITHDRAWAL NOTICE: Has the meaning specified in Section 2.03. FRACTIONAL UNDIVIDED INTEREST: Means the fractional undivided interest in the Trust that is evidenced by a Certificate. GLOBAL CERTIFICATES: Has the meaning assigned to such term in Section 3.01. GUARANTOR: Means Amtran, Inc., an Indiana corporation, or its successor in interest. INDENTURE: Means each of the three separate trust indenture and security agreements relating to the Aircraft, each entered into pursuant to the related Participation Agreement, in each case as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. INDENTURE DEFAULT: With respect to any Indenture, means any Event of Default (as such term is defined in such Indenture). INITIAL PURCHASERS: Means Salomon Brothers Inc and Furman Selz LLC, collectively. INITIAL REGULAR DISTRIBUTION DATE: Means the first Regular Distribution Date on which a Scheduled Payment is to be made. INSTITUTIONAL ACCREDITED INVESTOR: Means an institutional investor that is an "accredited investor" within the meaning set forth in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act. INTERCREDITOR AGREEMENT: Means the Intercreditor Agreement dated December 23, 1997 among the Trustee, the Other Trustees, the Liquidity Provider, the liquidity providers, if any, relating to the Certificates issued under (and as defined in) the Other Pass Through Trust Agreements, and Wilmington Trust Company, as Subordination Agent thereunder, as amended, supplemented or otherwise modified from time to time in accordance with its terms. ISSUANCE DATE: Means the date of the issuance of the Certificates. LEASE: Means any lease between an Owner Trustee, as the lessor, and the Company, as the lessee, referred to in the related Indenture, as each such lease may be amended or supplemented in accordance with its respective terms; and LEASES means all such leases. LEASED AIRCRAFT: Has the meaning specified in the second recital to this Agreement. LETTER OF REPRESENTATIONS: Means the agreement dated the Issuance Date among the Company, the Trustee and the initial Clearing Agency. LIQUIDITY FACILITY: Means the Irrevocable Revolving Credit Agreement Class A Certificates dated December 23, 1997 relating to the Certificates between the Liquidity Provider and the Subordination Agent, as amended, replaced, supplemented or otherwise modified from time to time in accordance with its terms and the terms of the Intercreditor Agreement. LIQUIDITY PROVIDER: Means, initially, ING Bank, a Dutch bank, and any replacement or successor therefor appointed in accordance with the Liquidity Facility and the Intercreditor Agreement. LOAN TRUSTEE: With respect to any Equipment Note or the Indenture applicable thereto, means the bank or trust company designated as loan or indenture trustee under such Indenture; and any successor to such Loan Trustee as such trustee; and LOAN TRUSTEES means all of the Loan Trustees under the Indentures. NON-U.S. PERSON: Means a Person that is not a U.S. Person as defined in Regulation S. NOTE DOCUMENTS: With respect to any Equipment Note, means the related Indenture, Lease (if the related Aircraft is leased to the Company) and Participation Agreement. NOTE PURCHASE AGREEMENT: Means the Note Purchase Agreement dated as of December 23, 1997 among the Trustee, the Other Trustees, the Company, the Escrow Agent, the Escrow Paying Agent and the Subordination Agent, providing for, among other things, the purchase of Equipment Notes by the Trustee on behalf of the Trust, as the same may be amended, supplemented or otherwise modified from time to time, in accordance with its terms. NOTICE OF PURCHASE WITHDRAWAL: Has the meaning specified in the Deposit Agreement. OFFERING MEMORANDUM: Means the Offering Memorandum dated December 17, 1997 relating to the offering of the Certificates and the certificates issued under the Other Pass Through Trust Agreements. OFFICER'S CERTIFICATE: Means a certificate signed (a) in the case of the Guarantor or the Company, by (i) the President or any Executive Vice President or Senior Vice President of the Guarantor or the Company, respectively, signing alone or (ii) any Vice President of the Guarantor or the Company signing together with the Secretary, the Assistant Secretary, the Treasurer or any Assistant Treasurer of the Guarantor or the Company, respectively, or (b) in the case of the Trustee or an Owner Trustee or a Loan Trustee, a Responsible Officer of the Trustee or such Owner Trustee or such Loan Trustee, as the case may be. OFFSHORE GLOBAL CERTIFICATES: Has the meaning assigned to such term in Section 3.01. OFFSHORE PHYSICAL CERTIFICATES: Has the meaning assigned to such term in Section 3.01. OPINION OF COUNSEL: Means a written opinion of legal counsel who (a) in the case of counsel for the Guarantor or the Company, may be (i) a senior attorney in rank of the officers of the Guarantor or the Company a principal duty of which is furnishing advice as to legal matters or (ii) such other counsel designated by the Guarantor or the Company and reasonably acceptable to the Trustee and (b) in the case of any Owner Trustee or any Loan Trustee, may be such counsel as may be designated by any of them whether or not such counsel is an employee of any of them, and who shall be reasonably acceptable to the Trustee. OTHER PASS THROUGH TRUST AGREEMENT: Means (i) the American Trans Air 1997-1A-O Pass Through Trust Agreement relating to the American Trans Air 1997-1A-O Pass Through Trust, and (ii) the American Trans Air 1997-1C-O Pass Through Trust Agreement relating to the American Trans Air 1997-1C-O Pass Through Trust, each dated the date hereof; and OTHER PASS THROUGH TRUST AGREEMENTS means all such agreements. OTHER TRUSTEE: Means the trustee under each of the Other Pass Through Trust Agreements, and any successor or other trustee appointed as provided therein and Other Pass Through Trustees means both such trustees. OTHER TRUSTS: Means the American Trans Air 1997-1A-O Pass Through Trust and the American Trans Air 1997-1C-O Pass Through Trust. OUTSTANDING: With respect to Certificates, means, as of the date of determination, all Certificates theretofore authenticated and delivered under this Agreement, except: (i) Certificates theretofore canceled by the Registrar or delivered to the Trustee or the Registrar for cancellation; (ii) All of the Certificates if money in the full amount required to make the final distribution with respect thereto pursuant to Section 11.01 hereof has been theretofore deposited with the Trustee in trust for the Holders of such Certificates as provided in Section 4.01 pending distribution of such money to such Certificateholders pursuant to such final distribution payment; and (iii) Certificates in exchange for or in lieu of which other Certificates have been authenticated and delivered pursuant to this Agreement. OWNED AIRCRAFT: Has the meaning specified in the second recital to this Agreement. OWNER PARTICIPANT: With respect to any Equipment Note, means the "Owner Participant" as referred to in the Indenture pursuant to which such Equipment Note is issued and any permitted successor or assign of such Owner Participant; and Owner Participants at any time of determination means all of the Owner Participants thus referred to in the Indentures. OWNER TRUSTEE: With respect to any Equipment Note, means the "Owner Trustee", as referred to in the Indenture pursuant to which such Equipment Note is issued, not in its individual capacity but solely as trustee; and Owner Trustees means all of the Owner Trustees party to any of the respective Indentures. PARTICIPATION AGREEMENT: Means each Participation Agreement to be entered into by the Trustee and the Other Trustees pursuant to the Note Purchase Agreement, as the same may be amended, supplemented or otherwise modified in accordance with its terms; and PARTICIPATION AGREEMENTS means all such agreements. PAYING AGENT: Means the paying agent maintained and appointed for the Certificates pursuant to Section 7.11. PERMITTED INVESTMENTS: Means obligations of the United States of America or agencies or instrumentalities thereof for the payment of which the full faith and credit of the United States of America is pledged, maturing in not more than 60 days or such lesser time as is necessary for payment of any Special Payments on a Special Distribution Date. PERSON: Means any person, including any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization, or government or any agency or political subdivision thereof. PHYSICAL CERTIFICATES: Has the meaning specified in Section 3.01. POOL BALANCE: Means, as of any date, (i) the original aggregate face amount of the Certificates less (ii) the aggregate amount of all payments made in respect of such Certificates other than payments made in respect of interest or premium thereon or reimbursement of any costs or expenses incurred in connection therewith less (iii) the aggregate amount of unused Deposits distributed as a Final Withdrawal other than payments in respect of interest or premium thereon. The Pool Balance as of any Distribution Date shall be computed after giving effect to the payment of principal, if any, on the Equipment Notes or other Trust Property held in the Trust and the distribution thereof to be made on such Distribution Date and the distribution of the Final Withdrawal to be made on such Distribution Date. POOL FACTOR: Means, as of any date, the quotient (rounded to the seventh decimal place) computed by dividing (i) the Pool Balance as at such date by (ii) the original aggregate face amount of the Certificates. The Pool Factor as of any Distribution Date shall be computed after giving effect to the payment of principal, if any, on the Equipment Notes or other Trust Property and the distribution thereof to be made on such Distribution Date and the distribution of the Final Withdrawal to be made on such Distribution Date. PRIVATE PLACEMENT LEGEND: Has the meaning specified in Section 3.02. PTC EVENT OF DEFAULT: Means any failure to pay within 10 Business Days of the due date thereof: (i) the outstanding Pool Balance on June 15, 2013 or (ii) interest due on the Certificates on any Distribution Date (unless the Subordination Agent shall have made an Interest Drawing (as defined in the Intercreditor Agreement) or a withdrawal or withdrawals from a cash collateral account pursuant to Section 3.6(f) of the Intercreditor Agreement, with respect thereto in an amount sufficient to pay such interest and shall have distributed such amount to the Certificateholders). PURCHASE AGREEMENT: Means the Purchase Agreement dated December 17, 1997 among the Initial Purchasers, the Company and the Depositary, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. QIB: Means a qualified institutional buyer as defined in Rule 144A. RECORD DATE: Means (i) for Scheduled Payments to be distributed on any Regular Distribution Date, other than the final distribution, the 15th day (whether or not a Business Day) preceding such Regular Distribution Date, and (ii) for Special Payments to be distributed on any Special Distribution Date, other than the final distribution, the 15th day (whether or not a Business Day) preceding such Special Distribution Date. REGISTER and REGISTRAR: Mean the register maintained and the registrar appointed pursuant to Sections 3.04 and 7.11. REGULAR DISTRIBUTION DATE: With respect to distributions of Scheduled Payments in respect of the Certificates, means each date designated as such in this Agreement, until payment of all the Scheduled Payments to be made under the Equipment Notes held in the Trust has been made; PROVIDED, HOWEVER, that, if any such day shall not be a Business Day, the related distribution shall be made on the next succeeding Business Day without additional interest. REGULATION S RESTRICTED DATE: Means the date 40-days after the later of the commencement of the initial offering of the Certificates and the date of initial issuance thereof. RELATED PASS THROUGH TRUST AGREEMENT: Means the American Trans Air 1997-1B-S Pass Through Trust Agreement relating to the American Trans Air 1997-1B-S Pass Through Trust, dated the date hereof, entered into by the Company and the institution acting as trustee thereunder, which agreement becomes effective upon the execution and delivery of the Assignment and Assumption Agreement pursuant to Section 11.01. RELATED TRUST: Means the American Trans Air 1997-1B-S Pass Through Trust, formed under the Related Pass Through Trust Agreement. RELATED TRUSTEE: Means the trustee under the Related Pass Through Trust Agreement. REQUEST: Means a request by the Company setting forth the subject matter of the request accompanied by an Officer's Certificate and an Opinion of Counsel as provided in Section 1.02 of this Agreement. RESPONSIBLE OFFICER: With respect to the Trustee, any Loan Trustee and any Owner Trustee, means any officer in the Corporate Trust Division of the Trustee, Loan Trustee or Owner Trustee or any other officer customarily performing functions similar to those performed by the persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of his knowledge of and familiarity with a particular subject. RULE 144A: Means Rule 144A under the Securities Act and any successor regulation thereto. SCHEDULED PAYMENT: With respect to any Equipment Note, means any payment of principal and interest on such Equipment Note or any payment of interest on the Certificates with funds drawn under the Liquidity Facility (other than any such payment which is not in fact received by the Trustee or any Subordination Agent within five days of the date on which such payment is scheduled to be made) due from the obligor thereon which payment represents the installment of principal at the stated maturity of such installment of principal on such Equipment Note, the payment of regularly scheduled interest accrued on the unpaid principal amount of such Equipment Note, or both; PROVIDED that any payment of principal, premium, if any, or interest resulting from the redemption or purchase of any Equipment Note shall not constitute a Scheduled Payment. SEC: Means the Securities and Exchange Commission as from time to time constituted or created under the Securities Exchange Act of 1934, or, if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date. SECURITIES ACT: Means the United States Securities Act of 1933, as amended from time to time, or any successor thereto. SPECIAL DISTRIBUTION DATE: Means each date on which a Special Payment is to be distributed as specified in this Agreement; PROVIDED, HOWEVER, that, if any such day shall not be a Business Day, the related distribution shall be made on the next succeeding Business Day without additional interest. SPECIAL PAYMENT: Means any payment (other than a Scheduled Payment) in respect of, or any proceeds of, any Equipment Note or Trust Indenture Estate (as defined in each Indenture) or Special Redemption Premium (if applicable). SPECIAL PAYMENTS ACCOUNT: Means the account or accounts created and maintained pursuant to Section 4.01(b). SPECIAL REDEMPTION PREMIUM: Means the premium, if any, payable by the Company in respect of the Final Withdrawal pursuant to the Note Purchase Agreement. SUBORDINATION AGENT: Shall have the meaning specified therefor in the Intercreditor Agreement. SUBSTITUTE AIRCRAFT: Has the meaning specified in the Note Purchase Agreement. TRANSFER DATE: Has the meaning specified in Section 11.01. TRIGGERING EVENT: Shall have the meaning specified therefor in the Intercreditor Agreement. TRUST: Means the trust created by this Agreement, the estate of which consists of Trust Property. TRUST INDENTURE ACT: Except as otherwise provided in Section 9.06, means the Trust Indenture Act of 1939 as in force at the date as of which this Agreement was executed. TRUST PROPERTY: Means (i) the Equipment Notes held as the property of the Trust, all monies at any time paid thereon and all monies due and to become due thereunder, (ii) the rights of the Trust and the Trustee, on behalf of the Trust, under the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement and the Liquidity Facilities, including, without limitation, all monies receivable in respect of such rights, PROVIDED that rights with respect to the Deposits or under the Escrow Agreement, except for the right to direct withdrawals for the purchase of Equipment Notes to be held herein, will not constitute Trust Property, and (iii) funds from time to time deposited in the Certificate Account and the Special Payments Account and, subject to the Intercreditor Agreement, any proceeds from the sale by the Trustee pursuant to Article VI hereof of any such Equipment Note. TRUSTEE: Means Wilmington Trust Company, or its successor in interest, and any successor trustee appointed as provided herein. U.S. GLOBAL CERTIFICATE: Has the meaning specified in Section 3.01. U.S. PHYSICAL CERTIFICATES: Has the meaning specified in Section 3.01. Section 1.02. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any application or request by the Company, any Owner Trustee or any Loan Trustee to the Trustee to take any action under any provision of this Agreement, the Company, such Owner Trustee or such Loan Trustee, as the case may be, shall furnish to the Trustee an Officers' Certificate stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Agreement relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Agreement relating to such particular application or request, no additional certificate or opinion need be furnished. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Agreement (other than a certificate provided pursuant to Section 8.04(d)) shall include: (1) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions in this Agreement relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. Section 1.03. FORM OF DOCUMENTS DELIVERED TO TRUSTEE. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters and any such Person may certify or give an opinion as to such matters in one or several documents. Any Opinion of Counsel stated to be based on the opinion of other counsel shall be accompanied by a copy of such other opinion. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Agreement, they may, but need not, be consolidated and form one instrument. Section 1.04. ACTS OF CERTIFICATEHOLDERS. -------------------------- (a)......Any direction, consent, waiver or other action provided by this Agreement to be given or taken by Certificateholders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Certificateholders in person or by an agent or proxy duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required pursuant to this Agreement, to the Company or any Loan Trustee. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Certificateholders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Agreement and conclusive in favor of the Trustee, the Company and any Loan Trustee, if made in the manner provided in this Section. (b)......The fact and date of the execution by any Person of any such instrument or writing may be proved by the certificate of any notary public or other officer of any jurisdiction authorized to take acknowledgments of deeds or administer oaths that the Person executing such instrument acknowledged to him the execution thereof, or by an affidavit of a witness to such execution sworn to before any such notary or such other officer and where such execution is by an officer of a corporation or association or a member of a partnership, on behalf of such corporation, association or partnership, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other reasonable manner which the Trustee deems sufficient. (c)......In determining whether the Certificateholders of the requisite Fractional Undivided Interests of Certificates Outstanding have given any direction, consent or waiver (a "Direction"), under this Agreement, Certificates owned by the Company, the Guarantor, any Owner Trustee, any Owner Participant or any Affiliate of any such Person shall be disregarded and deemed not to be Outstanding for purposes of any such determination. In determining whether the Trustee shall be protected in relying upon any such Direction, only Certificates which the Trustee knows to be so owned shall be so disregarded. Notwithstanding the foregoing, (i) if any such Person owns 100% of the Certificates Outstanding, such Certificates shall not be so disregarded as aforesaid, and (ii) if any amount of Certificates so owned by any such Person have been pledged in good faith, such Certificates shall not be disregarded as aforesaid if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Certificates and that the pledgee is not the Company, the Guarantor, any Owner Trustee, any Owner Participant or any Affiliate of any such Person. (d)......The Company may, at its option by delivery of an Officer's Certificate to the Trustee, set a record date to determine the Certificateholders entitled to give any consent, request, demand, authorization, direction, notice, waiver or other Act. Notwithstanding Section 316(c) of the Trust Indenture Act, such record date shall be the record date specified in such Officer's Certificate which shall be a date not more than 30 days prior to the first solicitation of Certificateholders in connection therewith. If such a record date is fixed, such consent request, demand, authorization, direction, notice, waiver or other Act may be given before or after such record date, but only the Certificateholders of record at the close of business on such record date shall be deemed to be Certificateholders for the purposes of determining whether Certificateholders of the requisite proportion of Outstanding Certificates have authorized or agreed or consented to such consent, request, demand, authorization, direction, notice, waiver or other Act, and for that purpose the Outstanding Certificates shall be computed as of such record date; PROVIDED that no such consent, request, demand, authorization, direction, notice, waiver or other Act by the Certificateholders on such record date shall be deemed effective unless it shall become effective pursuant to the provisions of this Agreement not later than one year after the record date. (e)......Any direction, consent, waiver or other action by the Certificateholder of any Certificate shall bind the Certificateholder of every Certificate issued upon the transfer thereof or in exchange therefor or in lieu thereof, whether or not notation of such action is made upon such Certificate. (f)......Except as otherwise provided in Section 1.04(c), Certificates owned by or pledged to any Person shall have an equal and proportionate benefit under the provisions of this Agreement, without preference, priority, or distinction as among all of the Certificates. ARTICLE II ORIGINAL ISSUANCE OF CERTIFICATES; ACQUISITION OF EQUIPMENT NOTES Section 2.01. [Intentionally omitted]. Section 2.02. ISSUANCE OF CERTIFICATES; ACQUISITION OF EQUIPMENT NOTES. -------------------------------------------------------- (a)......On or prior to the Issuance Date of the Certificates, the Trustee shall execute and deliver the Intercreditor Agreement, the Escrow Agreement and the Note Purchase Agreement, each in the form delivered to the Trustee by the Company. Upon the oral or written request of the Company or the Company's counsel acting on behalf of the Company and the satisfaction of the closing conditions specified in the Purchase Agreement, the Trustee shall, execute, deliver and authenticate Certificates equalling in the aggregate the amount set forth, with respect to the Trust, in Schedule A to the Purchase Agreement, and evidencing the entire ownership interest in the Trust, which amount equals the maximum aggregate principal amount of Equipment Notes which may be purchased by the Trustee pursuant to the Note Purchase Agreement. (b)......On or after the Issuance Date, the Company may deliver from time to time to the Trustee a Delivery Notice relating to one or more Aircraft. After receipt of a Delivery Notice and in any case no later than one Business Day prior to a Delivery Date as to which such Delivery Notice relates (the "APPLICABLE DELIVERY DATE") (or, if the Issuance Date is an Applicable Delivery Date, on the Issuance Date), the Trustee shall (as and when specified in the Delivery Notice) instruct the Escrow Agent to provide a Notice of Purchase Withdrawal to the Depositary requesting (i) the withdrawal of one or more Deposits on the Applicable Delivery Date in accordance with and to the extent permitted by the terms of the Escrow Agreement and the Deposit Agreement and (ii) the payment of all, or a portion, of such Deposit or Deposits, in an aggregate amount equal to the purchase price of the Equipment Notes relating to the Aircraft to be delivered on such Applicable Delivery Date, to or on behalf of the Owner Trustee or the Company, as the case may be, issuing such Equipment Notes, all as shall be described in the Delivery Notice; PROVIDED that, if the Issuance Date is an Applicable Delivery Date, such purchase price shall be paid from a portion of the proceeds of the sale of the Certificates. The Trustee shall (as and when specified in such Delivery Notice), subject to the conditions set forth in Sections 1 and 2 of the Note Purchase Agreement, enter into and perform its obligations under the Participation Agreement specified in such Delivery Notice (the "APPLICABLE PARTICIPATION AGREEMENT") and cause such certificates, documents and legal opinions relating to the Trustee to be duly delivered as required by the Applicable Participation Agreement. If at any time prior to the Applicable Delivery Date, the Trustee receives a notice of postponement pursuant to Section 1(d) or 1(e) of the Note Purchase Agreement, then the Trustee shall give the Depositary (with a copy to the Escrow Agent) a notice of cancellation of such Notice of Purchase Withdrawal relating to such Deposit or Deposits on such Applicable Delivery Date. Upon satisfaction of the conditions specified in the Note Purchase Agreement and the Applicable Participation Agreement, the Trustee shall purchase the applicable Equipment Notes with the proceeds of the withdrawals of one or more Deposits made on the Applicable Delivery Date in accordance with the terms of the Deposit Agreement and the Escrow Agreement (or, if the Issuance Date is the Applicable Delivery Date with respect to such Applicable Participation Agreement, from a portion of the proceeds of the sale of the Certificates). The purchase price of such Equipment Notes shall equal the principal amount of such Equipment Notes. Amounts withdrawn from such Deposit or Deposits in excess of the purchase price of the Equipment Notes or to the extent not applied on the Applicable Delivery Date to the purchase price of the Equipment Notes, shall be re-deposited by the Trustee with the Depositary on the Applicable Delivery Date in accordance with the terms of the Deposit Agreement. Section 2.03. WITHDRAWAL OF DEPOSITS. If any Deposits remain outstanding on the Business Day next succeeding the Cut-Off Date, (i) the Trustee shall give the Escrow Agent notice that the Trustee's obligation to purchase Equipment Notes under the Note Purchase Agreement has terminated and instruct the Escrow Agent to provide a notice of Final Withdrawal to the Depositary substantially in the form of Exhibit B to the Deposit Agreement (the "FINAL WITHDRAWAL NOTICE") and (ii) the Trustee will make a demand upon the Company under the Note Purchase Agreement for an amount equal to the Special Redemption Premium, such payment to be made on the Final Withdrawal Date. Section 2.04. ACCEPTANCE BY TRUSTEE. The Trustee, upon the execution and delivery of this Agreement, acknowledges its acceptance of all right, title, and interest in and to the Trust Property and declares that the Trustee holds and will hold such right, title, and interest for the benefit of all then present and future Certificateholders, upon the trusts herein set forth. By its payment for and acceptance of each Certificate issued to it under this Agreement, each initial Certificateholder as grantor of the Trust thereby joins in the creation and declaration of the Trust. Section 2.05. LIMITATION OF POWERS. The Trust is constituted solely for the purpose of making the investment in the Equipment Notes, and, except as set forth herein, the Trustee shall not be authorized or empowered to acquire any other investments or engage in any other activities and, in particular, the Trustee shall not be authorized or empowered to do anything that would cause such Trust to fail to qualify as a "grantor trust" for federal income tax purposes (including as subject to this restrictions acquiring the Aircraft (as defined in the respective related Indentures) by bidding such Equipment Notes or otherwise, or taking any action with respect to any such Aircraft once acquired). ARTICLE III THE CERTIFICATES Section 3.01. TITLE, FORM, DENOMINATION AND EXECUTION OF CERTIFICATES. ------------------------------------------------------- (a)......The Certificates shall be known as the "7.19% 1997-1B-O Pass Through Certificates" of the Trust. Each Certificate will represent a fractional undivided interest in the Trust and shall be substantially in the form set forth as Exhibit A hereto, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Agreement and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such Certificates, as evidenced by their execution of the Certificates. Any portion of the text of any Certificate may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Certificate. At the Escrow Agent's request under the Escrow Agreement, the Trustee shall affix the corresponding Escrow Receipt to each Certificate. Any transfer or exchange of any Certificate shall also effect a transfer or exchange of the related Escrow Receipt. Prior to the Final Withdrawal Date, no transfer or exchange of any Certificate shall be permitted unless the corresponding Escrow Receipt is attached thereto and also is so transferred or exchanged. By acceptance of any Certificate to which an Escrow Receipt is attached, each Holder of such Certificate acknowledges and accepts the restrictions on transfer of the Escrow Receipt set forth herein and in the Escrow Agreement. (b)......The Certificates shall be issued only in fully registered form without coupons and only in denominations of $100,000 or integral multiples of $1,000 in excess thereof, except that one Certificate may be issued in a denomination of less than $100,000. Each Certificate shall be dated the date of its authentication. The aggregate Fractional Undivided Interest of Certificates shall not at any time exceed $26,333,000. (c)......Certificates offered and sold in reliance on Rule 144A shall be issued initially in the form of a single permanent global Certificate in registered form, substantially in the form set forth as Exhibit A hereto with such applicable legends as are provided for in clauses (a) and (b) of Section 3.02 (the "U.S. Global Certificate"), duly executed and authenticated by the Trustee as hereinafter provided. The U.S. Global Certificate will be registered in the name of a nominee for DTC and deposited with the Trustee, as custodian for DTC. The aggregate principal amount of the U.S. Global Certificate may from time to time be increased or decreased by adjustments made on the records of DTC or its nominee, or of the Trustee, as custodian for the DTC or its nominee, as hereinafter provided. (d)......Certificates offered and sold in offshore transactions in reliance on Regulation S shall be issued in the form of a single global Certificate in registered form, substantially in the form set forth as Exhibit A hereto with such applicable legends as are provided for in clause (b) of Section 3.02 (the "Offshore Global Certificate") duly executed and authenticated by the Trustee as hereinafter provided. The Temporary Offshore Global Certificate will be registered in the name of a nominee of DTC for credit to the account of the Agent Members acting as depositories for Euroclear and Cedel and deposited with the Trustee as custodian for DTC. The U.S. Global Certificate and the Offshore Global Certificates are sometimes referred to as the "Global Certificates". (e)......Certificates offered and sold to Institutional Accredited Investors shall be issued in the form of permanent certificated Certificates in registered form in substantially the form set forth as Exhibit A hereto with such applicable legends as are provided for in clauses (a) and (b) of Section 3.02 hereto (the "U.S. Physical Certificates"). Certificates issued pursuant to Section 3.05(b) in exchange for interests in any Offshore Global Certificate shall be in the form of permanent certificated Certificates in registered form substantially in the form set forth in Exhibit A (the "Offshore Physical Certificates"). The Offshore Physical Certificates and U.S. Physical Certificates are sometimes collectively herein referred to as the "Physical Certificates". (f)......The definitive Certificates shall be in registered form and shall be typed, printed, lithographed or engraved or produced by any combination of these methods or may be produced in any other manner, all as determined by the officers executing such Certificates, as evidenced by their execution of such Certificates. Section 3.02. RESTRICTIVE LEGENDS. ------------------- (a)......Subject to Section 3.06, each U.S. Global Certificate and each U.S. Physical Certificate shall bear the following legend (the "Private Placement Legend") on the face thereof: THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS CERTIFICATE IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT, WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY AMERICAN TRANS AIR, INC. ("ATA") OR AN AFFILIATE OF ATA, RESELL OR OTHERWISE TRANSFER THIS CERTIFICATE EXCEPT (A) TO ATA OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING $100,000 OR MORE AGGREGATE PRINCIPAL AMOUNT OF SUCH CERTIFICATES THAT, TAKES DELIVERY OF THIS CERTIFICATE IN DEFINITIVE FORM AND PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS CERTIFICATE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS CERTIFICATE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CASE THIS CERTIFICATE IS IN DEFINITIVE FORM IN CONNECTION WITH ANY TRANSFER OF THIS CERTIFICATE WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THE CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY ATA OR AN AFFILIATE OF ATA, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE PASS THROUGH TRUST AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS. (b)......Each Global Certificate shall also bear the following legend on the face thereof: UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND 3.06 OF THE PASS THROUGH TRUST AGREEMENT REFERRED TO HEREIN. Section 3.03. AUTHENTICATION OF CERTIFICATES. ------------------------------ (a)......The Trustee shall duly execute, authenticate and deliver Certificates in authorized denominations equalling in the aggregate the amount set forth, with respect to the Trust, in Schedule A to the Purchase Agreement, and evidencing the entire ownership interest of the Trust, which amount equals the maximum aggregate principal amount of Equipment Notes to be purchased by the Trustee pursuant to the Note Purchase Agreement. (b)......No Certificate shall be entitled to any benefit under this Agreement or be valid or obligatory for any purpose, unless there appears on such Certificate a certificate of authentication substantially in the form provided for herein executed by the Trustee by the manual signature of one of its authorized signatories, and such certificate upon any Certificate shall be conclusive evidence, and the only evidence, that such Certificate has been duly authenticated and delivered hereunder. Section 3.04. TRANSFER AND EXCHANGE. --------------------- (a)......The Trustee shall cause to be kept at the office or agency to be maintained by it in accordance with the provisions of Section 7.11 of this Agreement a register (the "Register") for the Certificates in which, subject to such reasonable regulations as it may prescribe, the Trustee shall provide for the registration of the Certificates and of transfers and exchanges of the Certificates as herein provided. The Trustee shall initially be the registrar (the "Registrar") for the purpose of registering the Certificates and transfers and exchanges of the Certificates as herein provided. A Certificateholder may transfer a Certificate by written application to the Registrar stating the name of the proposed transferee and otherwise complying with the terms of this Agreement, including providing a written certificate or other evidence of compliance with any restrictions on transfer. No such transfer shall be effected until, and such transferee shall succeed to the rights of a Certificateholder only upon, final acceptance and registration of the transfer by the Registrar in the Register. Prior to the registration of any transfer by a Certificateholder as provided herein, the Trustee shall treat the person in whose name the Certificate is registered as the owner thereof for all purposes, and the Trustee shall not be affected by notice to the contrary. Furthermore, DTC shall, by acceptance of a Global Certificate, agree that transfers of beneficial interests in such Global Certificate may be effected only through a book-entry system maintained by DTC (or its agent), and that ownership of a beneficial interest in the Certificate shall be required to be reflected in a book entry. When Certificates are presented to the Registrar with a request to register the transfer or to exchange them for an equal face amount of Certificates of other authorized denominations, the Registrar shall register the transfer or make the exchange as requested if its requirements for such transactions are met. To permit registrations of transfers and exchanges in accordance with the terms, conditions and restrictions hereof, the Trustee shall execute and authenticate Certificates at the Registrar's request. No service charge shall be made for any registration of transfer or exchange of the Certificates, but the Trustee may require payment by the transferor of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or other similar governmental charges payable upon exchanges pursuant to Section 3.11 or 9.07). Section 3.05. BOOK-ENTRY PROVISIONS FOR U.S. GLOBAL CERTIFICATE AND OFFSHORE GLOBAL CERTIFICATES. (a)......Members of, or participants in, DTC ("Agent Members") shall have no rights under this Agreement with respect to any Global Certificate held on their behalf by DTC, or the Trustee as its custodian, and DTC may be treated by the Trustee and any agent of the Trustee as the absolute owner of such Global Certificate for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Trustee or any agent of the Trustee from giving effect to any written certification, proxy or other authorization furnished by DTC or shall impair, as between DTC and its Agent Members, the operation of customary practices governing the exercise of the rights of a holder of any Certificate. Upon the issuance of any Global Certificate, the Registrar or its duly appointed agent shall record a nominee of DTC as the registered holder of such Global Certificate. (b)......Transfers of any Global Certificate shall be limited to transfers of such Global Certificate in whole, but not in part, to nominees of DTC, its successor or such successor's nominees. Beneficial interests in the U.S. Global Certificate and any Offshore Global Certificate may be transferred in accordance with the rules and procedures of DTC and the provisions of Section 3.06. Beneficial interests in the U.S. Global Certificate or an Offshore Global Certificate shall be delivered to all beneficial owners in the form of U.S. Physical Certificates or Offshore Physical Certificates, as the case may be, if (i) the Company notifies the Trustee in writing that DTC is unwilling or unable to discharge properly its responsibilities as depositary for the U.S. Global Certificate or such Offshore Global Certificate, as the case may be, and the Company is unable to locate a qualified successor depositary within 90 days of such notice or (ii) after the occurrence of an Event of Default, beneficial owners of the U.S. Global Certificate or Offshore Global Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust, by Act of such Certificateholders delivered to the Company and the Trustee, advise the Company, the Trustee and DTC through its Clearing Agency Participants in writing that the continuation of a book-entry system through DTC is no longer in the best interests of the Certificateholders, then the Trustee shall notify all owners of beneficial interests in the U.S. Global Certificate or an Offshore Global Certificate, through DTC, of the occurrence of any such event and the availability of definitive Certificates. (c)......Any beneficial interest in one of the Global Certificates that is transferred to a Person who takes delivery in the form of an interest in the other Global Certificate will, upon such transfer, cease to be an interest in such Global Certificate and become an interest in the other Global Certificate and, accordingly, will thereafter be subject to all transfer restrictions, if any, and other procedures applicable to beneficial interests in such other Global Certificate for as long as it remains such an interest. (d)......[Intentionally omitted]. (e)......In connection with the transfer of the entire U.S. Global Certificate or an entire Offshore Global Certificate to the beneficial owners thereof pursuant to paragraph (b) of this Section 3.05, such U.S. Global Certificate or Offshore Global Certificate, as the case may be, shall be deemed to be surrendered to the Trustee for cancellation, and the Trustee shall execute, authenticate and deliver, to each beneficial owner identified by DTC in exchange for its beneficial interest in such U.S. Global Certificate or Offshore Global Certificate, as the case may be, an equal aggregate principal amount of U.S. Physical Certificates or Offshore Physical Certificates, as the case may be, of authorized denominations. (f)......Any U.S. Physical Certificate delivered in exchange for an interest in the U.S. Global Certificate pursuant to paragraph (b) of this Section 3.05 shall, except as otherwise provided by paragraph (f) of Section 3.06, bear the Private Placement Legend. (g)......Any Offshore Physical Certificate delivered in exchange for an interest in an Offshore Global Certificate pursuant to paragraph (b) of this Section shall, except as otherwise provided by paragraph (f) of Section 3.06, bear the applicable legend regarding transfer restrictions set forth in Section 3.02(a). (h)......The registered holder of the U.S. Global Certificate or any Offshore Global Certificate may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Agreement or the Certificates. Section 3.06. SPECIAL TRANSFER PROVISIONS. The following provisions shall apply to the Certificates: (a)......TRANSFERS TO NON-QIB INSTITUTIONAL ACCREDITED INVESTORS. The following provisions shall apply with respect to the registration of any proposed transfer of a Certificate to any Institutional Accredited Investor which is not a QIB (excluding transfers to, or on or after the Regulation S Restricted Date, by Non-U.S. Persons): (i) The Registrar shall register the transfer of any Certificate, whether or not such Certificate bears the Private Placement Legend, if (x) the requested transfer is at least two years after the later of the original issue date of the Certificates and the last date on which such Certificate was held by the Company or any affiliate thereof or (y) the proposed transferee has delivered to the Registrar a letter substantially in the form of Exhibit C hereto and the aggregate principal amount of the Certificates being transferred is at least $100,000. (ii) If the proposed transferor is an Agent Member holding a beneficial interest in the U.S. Global Certificate or, at a date prior to the Regulation S Restricted Date, an Offshore Global Certificate, upon receipt by the Registrar of (x) the documents, if any, required by paragraph (i) and (y) instructions given in accordance with DTC's and the Registrar's procedures, the Registrar shall reflect on its books and records the date of the transfer and a decrease in the principal amount of such U.S. Global Certificate in an amount equal to the principal amount of the beneficial interest in such U.S. Global Certificate to be transferred, and the Company shall execute, and the Trustee shall authenticate and deliver to the transferor or at its direction, one or more U.S. Physical Certificates of like tenor and amount. (b)......TRANSFERS TO QIBS. The following provisions shall apply with respect to the registration of any proposed transfer of a Certificate to a QIB (excluding Non-U.S. Persons): (i) If the Certificate to be transferred consists of U.S. Physical Certificates or an interest in any Offshore Global Certificate prior to the Regulation S Restricted Date, the Registrar shall register the transfer if such transfer is being made by a proposed transferor who has checked the box provided for on the form of U.S. Physical Certificate or delivered a certificate to the Trustee in the form of Exhibit E hereto stating, or has otherwise advised the Trustee and the Registrar in writing, that the sale has been made in compliance with the provisions of Rule 144A to a transferee who, in the case of a transfer of a U.S. Physical Certificate, has signed the certification provided for on the form of Certificate and, in the case of an Offshore Global Certificate transferred prior to the Regulation S Restricted Date, who has signed the certification provided for in Exhibit E hereto, stating, or has otherwise advised the Trustee and the Registrar in writing, that it is purchasing the Certificate for its own account or an account with respect to which it exercises sole investment discretion and that it, or the Person on whose behalf it is acting with respect to any such account, is a QIB within the meaning of Rule 144A, and is aware that the sale to it is being made in reliance on Rule 144A and has been advised of the applicable transfer restrictions relating to the Certificates and acknowledges that it has received such information regarding the Trust and/or the Company as it has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon its foregoing representations in order to claim the exemption from registration provided by Rule 144A. (ii) Upon receipt by the Registrar of the documents referred to in clause (i) above and instructions given in accordance with DTC's and the Registrar's procedures therefor, the Registrar shall reflect on its books and records the date of such transfer and an increase in the principal amount of the U.S. Global Certificate in an amount equal to the principal amount of the U.S. Physical Certificates or interests in the Offshore Global Certificate, as the case may be, being transferred, and the Trustee shall cancel such U.S. Physical Certificates or decrease the amount of such Offshore Global Certificate so transferred. (c)......[Intentionally omitted]. (d)......TRANSFERS OF INTERESTS IN THE OFFSHORE GLOBAL CERTIFICATE ON OR AFTER THE REGULATION S RESTRICTED DATE. The Registrar shall register any transfer of interests in the Offshore Global Certificate on or after the Regulation S Restricted Date without requiring any additional certification. (e)......TRANSFERS TO NON-U.S. PERSONS AT ANY TIME. The following provisions shall apply with respect to any registration of any transfer of a Certificate to a Non-U.S. Person: (i) The Registrar shall register any proposed transfer of a U.S. Global Certificate or U.S. Physical Certificate to any Non-U.S. Person, upon receipt of a certificate substantially in the form of Exhibit B hereto from the proposed transferor. The Registrar shall promptly send a copy of such certificate to the Company. (ii) (A) Upon receipt by the Registrar of (x) the documents, if any, required by paragraph (c) and (y) instructions in accordance with DTC's and the Registrar's procedures, the Registrar shall reflect on its books and records the date of such transfer and shall cancel the Physical Certificate, if any, so transferred, or decrease the principal amount ofany such U.S. Global Certificate in an amount equal to the principal amount of the beneficial interest in such U.S. Global Certificate to be transferred, and (B) upon receipt by the Registrar of instructions given in accordance with DTC's and the Registrar's procedures, the Registrar shall reflect on its books and records the date and an increase in the principal amount of the Offshore Global Certificate in an amount equal to the principal amount of the U.S. Physical Certificate or the U.S. Global Certificate, as the case may be, to be transferred, and the Trustee shall cancel the Physical Certificate, if any, so transferred or decrease the amount of such U.S. Global Certificate. (f)......PRIVATE PLACEMENT LEGEND. Upon the transfer, exchange or replacement of Certificates not bearing the Private Placement Legend, the Registrar shall deliver Certificates that do not bear the Private Placement Legend. Upon the transfer, exchange or replacement of Certificates bearing the Private Placement Legend, the Registrar shall deliver only Certificates that bear the Private Placement Legend unless either (i) the circumstances contemplated by paragraph (a)(i)(x) or (e)(ii) of this Section 3.06 exist or (ii) there is delivered to the Registrar an Opinion of Counsel to the effect that neither such legend nor the related restrictions on transfer are required in order to maintain compliance with the provisions of the Securities Act. (g)......GENERAL. By its acceptance of any Certificate bearing the Private Placement Legend, each Holder of such a Certificate acknowledges the restrictions on transfer of such Certificate set forth in this Agreement and agrees that it will transfer such Certificate only as provided in this Agreement. The Registrar shall not register a transfer of any Certificate unless such transfer complies with the restrictions on transfer of such Certificate set forth in this Agreement. In connection with any transfer of Certificates, each Certificateholder agrees by its acceptance of the Certificates to furnish the Registrar or the Trustee such certifications, legal opinions or other information as either of them may reasonably require to confirm that such transfer is being made pursuant to an exemption from, or a transaction not subject to, the registration requirements of the Securities Act; PROVIDED that the Registrar shall not be required to determine the sufficiency of any such certifications, legal opinions or other information. Until such time as no Certificates remain Outstanding, the Registrar shall retain copies of all letters, notices and other written communications received pursuant to Section 3.05 or this Section 3.06. The Trustee, if not the Registrar at such time, shall have the right to inspect and make copies of all such letters, notices or other written communications at any reasonable time upon the giving of reasonable written notice to the Registrar. Section 3.07. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES. If (a) any mutilated Certificate is surrendered to the Registrar, or the Registrar receives evidence to its satisfaction of the destruction, loss or theft of any Certificate, and (b) there is delivered to the Registrar and the Trustee such security, indemnity or bond, as may be required by them to save each of them harmless, then, in the absence of notice to the Registrar or the Trustee that such Certificate has been acquired by a bona fide purchaser, the Trustee shall execute, authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate or Certificates, in authorized denominations and of like Fractional Undivided Interest. In connection with the issuance of any new Certificate under this Section 3.07, the Trustee shall require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee and the Registrar) connected therewith. Any duplicate Certificate issued pursuant to this Section 3.07 shall constitute conclusive evidence of the appropriate Fractional Undivided Interest in the related Trust, as if originally issued, whether or not the lost stolen or destroyed Certificate shall be found at any time. Section 3.08. PERSONS DEEMED OWNERS. Prior to due presentation of a Certificate for registration of transfer, the Trustee, the Registrar, and any Paying Agent of the Trustee may treat the person in whose name any Certificate is registered as the owner of such Certificate for the purpose of receiving distributions pursuant to Section 4.02 and for all other purposes whatsoever, and neither the Trustee, the Registrar, nor any Paying Agent of the Trustee shall be affected by any notice to the contrary. Section 3.09. CANCELLATION. All Certificates surrendered for payment or transfer or exchange shall, if surrendered to any Person party hereto other than the Registrar, be delivered to the Registrar for cancellation. No Certificates shall be authenticated in lieu of or in exchange for any Certificates cancelled as provided in this Section, except as expressly permitted by this Agreement. All cancelled Certificates held by the Registrar shall be destroyed and a certification of their destruction delivered to the Trustee. Section 3.10. LIMITATION OF LIABILITY FOR PAYMENTS. All payments or distributions made to Certificateholders shall be made only from the Trust Property and only to the extent that the Trustee shall have sufficient income or proceeds from the Trust Property to make such payments in accordance with the terms of Article IV of this Agreement. Each Certificateholder, by its acceptance of a Certificate, agrees that it will look solely to the income and proceeds from the Trust Property to the extent available for distribution to such Certificateholder as provided in this Agreement. Section 3.11. TEMPORARY CERTIFICATES. Until definitive Certificates are ready for delivery, the Trustee shall authenticate temporary Certificates. Temporary Certificates shall be substantially in the form of definitive Certificates but may have insertions, substitutions, omissions and other variations determined to be appropriate by the officers executing the temporary Certificates, as evidenced by their execution of such temporary Certificates. If temporary Certificates are issued, the Trustee will cause definitive Certificates to be prepared without unreasonable delay. After the preparation of definitive Certificates, the temporary Certificates shall be exchangeable for definitive Certificates upon surrender of the temporary Certificates at the office or agency of the Trustee designated for such purpose pursuant to Section 7.11, without charge to the Certificateholder. Upon surrender for cancellation of any one or more temporary Certificates, the Trustee shall execute, authenticate and deliver in exchange therefor a like face amount of definitive Certificates of authorized denominations. Until so exchanged, the temporary Certificates shall be entitled to the same benefits under this Agreement as definitive Certificates. ARTICLE IV DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS Section 4.01. CERTIFICATE ACCOUNT AND SPECIAL PAYMENTS ACCOUNT. ------------------------------------------------ (a)......The Trustee shall establish and maintain on behalf of the Certificateholders a Certificate Account as one or more non-interest-bearing accounts. The Trustee shall hold the Certificate Account in trust for the benefit of the Certificateholders, and shall make or permit withdrawals therefrom only as provided in this Agreement. On each day when a Scheduled Payment is made to the Trustee, the Trustee, upon receipt thereof, shall immediately deposit the aggregate amount of such Scheduled Payment into the Certificate Account. (b)......The Trustee shall establish and maintain on behalf of the Certificateholders a Special Payments Account as one or more accounts, which shall be non-interest-bearing except as provided in Section 4.04. The Trustee shall hold the Special Payments Account in trust for the benefit of the Certificateholders, and shall make or permit withdrawals therefrom only as provided in this Agreement. On each day when one or more Special Payments are made to the Trustee, the Trustee, upon receipt thereof, shall immediately deposit the aggregate amount of such Special Payments into the Special Payments Account. (c)......The Trustee shall cause the Subordination Agent to present to the Loan Trustee to which an Equipment Note relates such Equipment Note on the date of its stated final maturity or, in the case of any Equipment Note which is to be redeemed in whole pursuant to the relevant Indenture, on the applicable redemption date under such Indenture. Section 4.02. DISTRIBUTIONS FROM CERTIFICATE ACCOUNT AND SPECIAL PAYMENTS ACCOUNT. (a)......On each Regular Distribution Date or as soon thereafter as the Trustee has confirmed receipt of the payment of the Scheduled Payments due on such date, the Trustee shall distribute out of the Certificate Account the entire amount deposited therein pursuant to Section 4.01 (a). There shall be so distributed to each Certificateholder of record on the Record Date with respect to such Regular Distribution Date (other than as provided in Section 11.01 concerning the final distribution), by check mailed to such Certificateholder at the address appearing in the Register, such Certificateholder's PRO RATA share (based on the aggregate Fractional Undivided Interest in the Trust held by such Certificateholder) of the aggregate amount in the Certificate Account, except that, with respect to Certificates registered on the Record Date in the name of the nominee of DTC (initially, such nominee to be Cede & Co.), such distribution shall be made by wire transfer in immediately available funds to the account designated by such nominee. (b)......On each Special Distribution Date with respect to any Special Payment or as soon thereafter as the Trustee has confirmed receipt of any Special Payments due on the Equipment Notes or realized upon the sale of such Equipment Note, the Trustee shall distribute out of the Special Payments Account the entire amount deposited therein pursuant to Section 4.01(b) of such Special Payment. There shall be so distributed to each Certificateholder of record on the Record Date with respect to such Special Distribution Date (other than as provided in Section 11.01 concerning the final distribution), by check mailed to such Certificateholder at the address appearing in the Register, such Certificateholder's pro rata share (based on the aggregate Fractional Undivided Interest in the Trust held by such Certificateholder) of the aggregate amount in the Special Payments Account on account of such Special Payment, except that, with respect to Certificates registered on the Record Date in the name of the nominee of DTC (initially, such nominee to be Cede & Co.), such distribution shall be made by wire transfer in immediately available funds to the account designated by such nominee. (c)......The Trustee shall, at the expense of the Company, cause notice of each Special Payment to be mailed to each Certificateholder at his address as it appears in the Register. In the event of redemption or purchase of Equipment Notes held in the Trust, such notice shall be mailed not less than 20 days prior to the date any such Special Payment is scheduled to be distributed. In the event the Company is required to pay a Special Redemption Premium to the Trustee under the Note Purchase Agreement, such notice shall be mailed, together with the notice by the Escrow Paying Agent under Section 2.06 of the Escrow Agreement, not less than 20 days prior to the Special Distribution Date for such amount, which Special Distribution Date shall be the Final Withdrawal Date. In the case of any other Special Payments, such notice shall be mailed as soon as practicable after the Trustee has confirmed that it has received funds for such Special Payment, stating the Special Distribution Date for such Special Payment which shall occur not less than 20 days after the date of such notice and as soon as practicable thereafter. Notices mailed by the Trustee shall set forth: (i) the Special Distribution Date and the Record Date therefor (except as otherwise provided in Section 11.01), (ii) the amount of the Special Payment for each $1,000 face amount Certificate and the amount thereof constituting principal, premium, if any, and interest, (iii) the reason for the Special Payment, and (iv) if the Special Distribution Date is the same date as a Regular Distribution Date for the Certificates, the total amount to be received on such date for each $1,000 face amount Certificate. If the amount of (i) premium, if any, payable upon the redemption or purchase of an Equipment Note or (ii) the Special Redemption Premium, if any, has not been calculated at the time that the Trustee mails notice of a Special Payment, it shall be sufficient if the notice sets forth the other amounts to be distributed and states that any premium received will also be distributed. If any redemption of the Equipment Notes held in the Trust is cancelled, the Trustee, as soon as possible after leasing thereof, shall cause notice thereof to be mailed to each Certificateholder at its address as it appears on the Register. Section 4.03. STATEMENTS TO CERTIFICATEHOLDERS. -------------------------------- (a) On each Regular Distribution Date and Special Distribution Date, the Trustee will include with each distribution to Certificateholders a statement, giving effect to such distribution to be made on such Regular Distribution Date or Special Distribution Date, as the case may be, setting forth the following information (in the case of a Special Payment, including any Special Redemption Premium, reflecting in part the information provided by the Escrow Paying Agent under the Escrow Agreement) (per a $1,000 face amount Certificate as to clauses (ii), (iii), (iv) and (v) below): (i) the aggregate amount of funds distributed on such Distribution Date hereunder and under the Escrow Agreement, indicating the amount allocable to each source; (ii) the amount of such distribution allocable to principal and the amount allocable to premium (including any Special Redemption Premium), if any; (iii) the amount of such distribution hereunder allocable to interest; (iv) the amount of such distribution under the Escrow Agreement allocable to interest on the Deposits; (v) the amount of such distribution under the Escrow Agreement allocable to the principal of the unused Deposits; and (vi) the Pool Balance and the Pool Factor. With respect to the Certificates registered in the name of a Clearing Agency or its nominee, on the record date prior to each Distribution Date, the Trustee will request from the Clearing Agency a securities position listing setting forth the names of all the Clearing Agency Participants reflected on the Clearing Agency's books as holding interests in the Certificates on such record date. On each Distribution Date, the Trustee will mail to each such Clearing Agency Participant the statement described above and will make available additional copies as requested by such Clearing Agency Participant for forwarding to holders of Certificates. (b) Within a reasonable period of time after the end of each calendar year but not later than the latest date permitted by law, the Trustee shall furnish to each Person who at any time during such calendar year was a Certificateholder of record a statement containing the sum of the amounts determined pursuant to clauses (a)(i) through (a)(v), inclusive, above with respect to the Trust for such calendar year or, in the event such Person was a Certificateholder of record during a portion of such calendar year, for the applicable portion of such year, and such other items as are readily available to the Trustee and which a Certificateholder shall reasonably request as necessary for the purpose of such Certificateholder's preparation of its federal income tax returns. With respect to Certificates registered in the name of a Clearing Agency or its nominee, such report and such other items shall be prepared on the basis of information supplied to the Trustee by the Clearing Agency Participants and shall be delivered by the Trustee to such Clearing Agency Participants to be available for forwarding by such Clearing Agency Participants. (c) Promptly following (i) the Delivery Period Termination Date, if there has been any change in the information set forth in clauses (x), (y) and (z) below from that set forth in pages 102 and 103 of the Offering Memorandum, and (ii) any early redemption or purchase of, or any default in the payment of principal or interest in respect of, any of the Equipment Notes held in the Trust, or any Final Withdrawal, the Trustee shall furnish to Certificateholders of record on such date a statement setting forth (x) the expected Pool Balances for each subsequent Regular Distribution Date following the Delivery Period Termination Date, (y) the related Pool Factors for such Regular Distribution Dates and (z) the expected principal distribution schedule of the Equipment Notes, in the aggregate, held as Trust Property at the date of such notice. With respect to the Certificates registered in the name of a Clearing Agency or its nominee, on the Delivery Period Termination Date, the Trustee will request from the Clearing Agency a securities position listing setting forth the names of all the Clearing Agency Participants reflected on the Clearing Agency's books as holding interests in the Certificates on such date. The Trustee will mail to each such Clearing Agency Participant the statement described above and will make available additional copies as requested by such Clearing Agency Participant for forwarding to holders of Certificates. Section 4.04. INVESTMENT OF SPECIAL PAYMENT MONEYS. Any money received by the Trustee pursuant to Section 4.01(b) representing a Special Payment which is not to be promptly distributed shall, to the extent practicable, be invested in Permitted Investments by the Trustee (and such Permitted Investments shall be registered in the name of the Trustee) as directed in writing by the Company pending distribution of such Special Payment pursuant to Section 4.02. Any investment made pursuant to this Section 4.04 shall be in such Permitted Investments having maturities not later than the date that such moneys are required to be used to make the payment required under Section 4.02 on the applicable Special Distribution Date and the Trustee shall hold any such Permitted Investments until maturity. The Trustee shall have no liability with respect to any investment made pursuant to this Section 4.04, other than by reason of the willful misconduct or negligence of the Trustee. All income and earnings from such investments shall be distributed on such Special Distribution Date as part of such Special Payment. ARTICLE V THE COMPANY Section 5.01. MAINTENANCE OF CORPORATE EXISTENCE. The Company, at its own cost and expense, will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence, rights and franchises, except as otherwise specifically permitted in Section 5.02; PROVIDED, HOWEVER, that the Company shall not be required to preserve any right or franchise if the Company shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company. Section 5.02. CONSOLIDATION, MERGER, ETC. The Company shall not consolidate with or merge into any other corporation or convey, transfer or lease substantially all of its assets as an entirety to any Person unless: (a) the corporation formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance, transfer or lease substantially all of the assets of the Company as an entirety shall be organized and validly existing under the laws of the United States of America or any state thereof or the District of Columbia and a "citizen of the United States" (as defined in Section 40102(a)(15) of Title 49 of the United States Code) holding an air carrier operating certificate issued by the Federal Aviation Administration, or any successor agency thereto (the "FAA"), pursuant to Chapter 447 of Title 49, United States Code, authorizing the operation in air transportation of aircraft capable of carrying 10 or more individuals or 6,000 pounds or more of cargo pursuant to Part 121 of the FAA's regulations (14 CFR Part 121); (b) the corporation formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance, transfer or lease substantially all of the assets of the Company as an entirety shall execute and deliver to the Trustee a duly authorized, valid, binding and enforceable agreement in form and substance reasonably satisfactory to the Trustee containing an assumption by such successor corporation or Person of the due and punctual performance and observance of each covenant and condition of the Note Documents, the Note Purchase Agreement, the Other Pass Through Trust Agreements and of this Agreement to be performed or observed by the Company; (c) immediately after giving effect to such transaction, no Event of Default applicable to the Certificates or event which is, or after notice or passage of time, or both, would be, such an Event of Default shall have occurred and be continuing; and (d) the Company shall have delivered to the Trustee an Officers' Certificate of the Company and an Opinion of Counsel of the Company (which may be the Company's General Counsel) reasonably satisfactory to the Trustee, each stating that such consolidation, merger, conveyance, transfer or lease and the assumption agreement mentioned in clause (b) above comply with this Section 5.02 and that all conditions precedent herein provided for relating to such transaction have been complied with. Upon any consolidation or merger, or any conveyance, transfer or lease of substantially all of the assets of the Company as an entirety in accordance with this Section 5.02, the successor corporation or Person formed by such consolidation or into which the Company is merged or to which such conveyance, offer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Agreement with the same effect as if such successor corporation or Person had been named as the Company herein. No such conveyance, transfer or lease of substantially all of the assets of the Company as an entirety shall have the effect of releasing the Company or any successor corporation or Person which shall theretofore have become such in the manner prescribed in this Section 5.02 from its liability in respect of this Agreement, the Note Purchase Agreement or any Note Document to which it is a party. Section 5.03. RULE 144A(D)(4) INFORMATION. So long as any of the Certificates are "restricted securities" within the meaning of Rule 144(a)(3) under the Securities Act, at any time when the Guarantor is neither subject to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), the Company and the Guarantor will provide to any holder of such restricted securities, or to any prospective purchaser of such restricted securities designated by a holder, upon the request of such holder or prospective purchaser, any information required to be delivered to holders and prospective purchasers of the Certificates pursuant to Rule 144A(d)(4) under the Securities Act. ARTICLE VI DEFAULT Section 6.01. EVENTS OF DEFAULT. ----------------- (a) EXERCISE OF REMEDIES. Upon the occurrence and during the continuation of any Indenture Default under any Indenture, the Trustee may, to the extent it is the Controlling Party at such time, direct the exercise of remedies as provided in the Intercreditor Agreement. (b) PURCHASE RIGHTS OF CERTIFICATEHOLDERS. ------------------------------------- (i) At any time after the occurrence and during the continuation of a Triggering Event, each Certificateholder shall have the right to purchase all, but not less than all, of the Class A Certificates upon ten days' written notice to the Class A Trustee and each other Certificateholder, PROVIDED that (A) if prior to the end of such ten-day period any other Certificateholder notifies such purchasing Certificateholder that such other Certificateholder wants to participate in such purchase, then such other Certificateholder may join with the purchasing Certificateholder to purchase all, but not less than all, of the Class A Certificates pro rata based on the Fractional Undivided Interest of each such Certificateholder and (B) if prior to the end of such ten-day period any other Certificateholder fails to notify the purchasing Certificateholder of such other Certificateholder's desire to participate in such a purchase, then such other Certificateholder shall lose its right to purchase the Class A Certificates pursuant to this Section 6.01(b); and (ii) By acceptance of its Certificate, each Certificateholder agrees that at any time after the occurrence and during the continuation of a Triggering Event, each Class C Certificateholder shall have the right (which right shall not expire upon any purchase of the Class A Certificates pursuant to paragraph (i) above) to purchase all, but not less than all, of the Class A Certificates and the Certificates upon ten days' written notice to the Class A Trustee and the Trustee and each other Class C Certificateholder, PROVIDED that (A) if prior to the end of such ten-day period any other Class C Certificateholder notifies such purchasing Class C Certificateholder that such other Class C Certificateholder wants to participate in such purchase, then such other Class C Certificateholder may join with the purchasing Class C Certificateholder to purchase all, but not less than all, of the Class A Certificates and the Certificates pro rata based on the Fractional Undivided Interest in the Class C Trust held by each such Class C Certificateholder and (B) if prior to the end of such ten-day period any other Class C Certificateholder fails to notify the purchasing Class C Certificateholder of such other Class C Certificateholder's desire to participate in such a purchase, then such other Class C Certificateholder shall lose its right to purchase the Class A Certificates and the Certificates pursuant to this Section 6.01(b). The purchase price with respect to the Certificates shall be equal to the Pool Balance of the Certificates, together with accrued and unpaid interest thereon to the date of such purchase, without premium, but including any other amounts then due and payable to the Certificateholders under this Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement or any Note Document or on or in respect of the Certificates; PROVIDED, HOWEVER, that (i) if such purchase occurs after the Record Date with respect to the Final Withdrawal Date, such purchase price shall be reduced by the aggregate amount of unused Deposits and interest to be distributed under the Escrow Agreement (which deducted amounts shall remain distributable to, and may be retained by, the Certificateholder as of such Record Date) and (ii) if such purchase occurs after a Record Date but prior to the Distribution Date relating to such Record Date, such purchase price shall be reduced by the amount to be distributed hereunder on such related Distribution Date (which deducted amounts shall remain distributable to, and may be retained by, the Certificateholder as of such Record Date); PROVIDED, FURTHER, that no such purchase of Certificates shall be effective unless the purchaser shall certify to the Trustee that contemporaneously with such purchase, such purchaser is purchasing, pursuant to the terms of this Agreement and the Other Pass Through Trust Agreements, the Class A Certificates and the Certificates which are senior to the Certificates held by such purchaser. Each payment of the purchase price of the Certificates shall be made to an account or accounts designated by the Trustee and each such purchase shall be subject to the terms of this Section. Each Certificateholder agrees by its acceptance of its Certificates that it will, subject to Section 3.04 hereof, upon payment from such Class C Certificateholder(s) of the purchase price set forth in the first sentence of this paragraph, forthwith sell, assign, transfer and convey to the purchaser thereof (without recourse, representation or warranty of any kind except for its own acts), all of the right, title, interest and obligation of such Certificateholder in, this Agreement, the Escrow Agreement, the Deposit Agreement, the Intercreditor Agreement, the Liquidity Facility, the Note Documents, the Note Purchase Agreement and all Certificates and Escrow Receipts held by such Certificateholder (excluding all right, title and interest under any of the foregoing to the extent such right, title or interest is with respect to an obligation not then due and payable as respects any action or inaction or state of affairs occurring prior to such sale) and the purchaser shall assume all of such Certificateholder's obligations under this Agreement, the Escrow Agreement, the Deposit Agreement, the Intercreditor Agreement, the Liquidity Facility, the Note Documents and the Note Purchase Agreement and all such Certificates and Escrow Receipts. The Certificates will be deemed to be purchased on the date payment of the purchase price is made notwithstanding the failure of the Certificateholders to deliver any Certificates (whether in the form of Physical Certificates or beneficial interests in Global Certificates) and, upon such a purchase, (i) the only rights of the Certificateholders will be to deliver the Certificates to the purchaser and receive the purchase price for the Certificates and (ii) if the purchaser shall so request such Certificateholder will comply with all of the provisions of Section 3.04 hereof to enable new Certificates to be issued to the purchaser in such denominations as it shall request. All charges and expenses in connection with the issuance of any such new Certificates shall be borne by the purchaser thereof. As used in this Section 6.01(b), the terms "Certificateholder", "Class", "Class A Certificate", "Class A Certificateholder", "Class A Trustee", "Class C Certificate", "Class C Certificateholder", "Class C Trust" and "Class C Trustee" shall have the respective meanings assigned to such terms in the Intercreditor Agreement. Section 6.02. INCIDENTS OF SALE OF EQUIPMENT NOTES. Upon any sale of all or any part of the Equipment Notes made either under the power of sale given under this Agreement or otherwise for the enforcement of this Agreement, the following shall be applicable: (1) CERTIFICATEHOLDERS AND TRUSTEE MAY PURCHASE EQUIPMENT NOTES. Any Certificateholder, the Trustee in its individual or any other capacity or any other Person may bid for and purchase any of the Equipment Notes, and upon compliance with the terms of sale, may hold, retain, possess and dispose of such Equipment Notes in their own absolute right without further accountability. (2) RECEIPT OF TRUSTEE SHALL DISCHARGE PURCHASER. The receipt of the Trustee or of the officer making such sale shall be a sufficient discharge to any purchaser for his purchase money, and, after paying such purchase money and receiving such receipt, such purchaser or its personal representative or assigns shall not be obliged to see to the application of such purchase money, or be in any way answerable for any loss, misapplication or non-application thereof. (3) APPLICATION OF MONEYS RECEIVED UPON SALE. Any moneys collected by the Trustee upon any sale made either under the power of sale given by this Agreement or otherwise for the enforcement of this Agreement shall be applied as provided in Section 4.02. Section 6.03. JUDICIAL PROCEEDINGS INSTITUTED BY TRUSTEE; TRUSTEE MAY BRING SUIT. If there shall be a failure to make payment of the principal of, premium, if any, or interest on any Equipment Note, or if there shall be any failure to pay Rent (as defined in the relevant Lease) under any Lease when due and payable, then the Trustee, in its own name, and as trustee of an express trust, as holder of such Equipment Notes, to the extent permitted by and in accordance with the terms of the Intercreditor Agreement, the Note Purchase Agreement and the Note Documents (subject to the rights of the applicable Owner Trustee or Owner Participant to cure any such failure in accordance with Section 4.03 of the applicable Indenture), shall be entitled and empowered to institute any suits, actions or proceedings at law, in equity or otherwise, for the collection of the sums so due and unpaid on such Equipment Notes or under such Lease and may prosecute any such claim or proceeding to judgment or final decree with respect to the whole amount of any such sums so due and unpaid. Section 6.04. CONTROL BY CERTIFICATEHOLDERS. Subject to Section 6.03 and the Intercreditor Agreement, the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee with respect to the Trust or pursuant to the terms of the Intercreditor Agreement, or exercising any trust or power conferred on the Trustee under this Agreement or the Intercreditor Agreement, including any right of the Trustee as Controlling Party under the Intercreditor Agreement or as holder of the Equipment Notes, PROVIDED that: (1) such Direction shall not be in conflict with any rule of law or with this Agreement and would not involve the Trustee in personal liability or expense, (2) the Trustee shall not determine that the action so directed would be unjustly prejudicial to the Certificateholders not taking part in such Direction, and (3) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such Direction. Section 6.05. WAIVER OF PAST DEFAULTS. Subject to the Intercreditor Agreement, the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust (i) may on behalf of all of the Certificateholders waive any past Event of Default hereunder and its consequences or (ii) if the Trustee is the Controlling Party, may direct the Trustee to instruct the applicable Loan Trustee to waive any past Indenture Default under any Indenture and its consequences, and thereby annul any Direction given by such Certificateholders or the Trustee to such Loan Trustee with respect thereto, except a default: (1) in the deposit of any Scheduled Payment or Special Payment under Section 4.01 or in the distribution of any payment under Section 4.02 on the Certificates, or (2) in the payment of the principal of (premium, if any) or interest on the Equipment Notes, or (3) in respect of a covenant or provision hereof which under Article IX hereof cannot be modified or amended without the consent of each Certificateholder holding an Outstanding Certificate affected thereby. Upon any such waiver, such default shall cease to exist with respect to the Certificates and any Event of Default arising therefrom shall be deemed to have been cured for every purpose and any direction given by the Trustee on behalf of the Certificateholders to the relevant Loan Trustee shall be annulled with respect thereto; but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. Upon any such waiver, the Trustee shall vote the Equipment Notes issued under the relevant Indenture to waive the corresponding Indenture Default. Section 6.06. RIGHT OF CERTIFICATEHOLDERS TO RECEIVE PAYMENTS NOT TO BE IMPAIRED. Anything in this Agreement to the contrary notwithstanding, including, without limitation, Section 6.07 hereof, but subject to the Intercreditor Agreement, the right of any Certificateholder to receive distributions of payments required pursuant to Section 4.02 hereof on the Certificates when due, or to institute suit for the enforcement of any such payment on or after the applicable Regular Distribution Date or Special Distribution Date, shall not be impaired or affected without the consent of such Certificateholder. Section 6.07. CERTIFICATEHOLDERS MAY NOT BRING SUIT EXCEPT UNDER CERTAIN CONDITIONS. A Certificateholder shall not have the right to institute any suit, action or proceeding at law or in equity or otherwise with respect to this Agreement, for the appointment of a receiver or for the enforcement of any other remedy under this Agreement, unless: (1) such Certificateholder previously shall have given written notice to the Trustee of a continuing Event of Default; (2) Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than 25% of the Trust shall have requested the Trustee in writing to institute such action, suit or proceeding and shall have offered to the Trustee indemnity as provided in Section 7.02(e); (3) the Trustee shall have refused or neglected to institute any such action, suit or proceeding for 60 days after receipt of such notice, request and offer of indemnity; and (4) no Direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust. It is understood and intended that no one or more of the Certificateholders shall have any right in any manner whatever hereunder or under the Certificates to (i) surrender, impair, waive, affect, disturb or prejudice any property in the Trust Property or the lien of any Indenture on any property subject thereto, or the rights of the Certificateholders or the holders of the related Equipment Notes, (ii) obtain or seek to obtain priority over or preference to any other such Certificateholder or (iii) enforce any right under this Agreement, except in the manner herein provided and for the equal, ratable and common benefit of all the Certificateholders subject to the provisions of this Agreement. Section 6.08. REMEDIES CUMULATIVE. Every remedy given hereunder to the Trustee or to any of the Certificateholders shall not be exclusive of any other remedy or remedies, and every such remedy shall be cumulative and in addition to every other remedy given hereunder or now or hereafter given by statute, law, equity or otherwise. Section 6.09. UNDERTAKING FOR COSTS. In any suit for the enforcement of any right or remedy under this Agreement, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, a court may require any party litigant in such suit to file an undertaking to pay the costs of such suit, and may assess costs against any such party litigant, in the manner and to the extent provided in the Trust Indenture Act; PROVIDED that neither this Section nor the Trust Indenture Act shall be deemed to authorize any court to require such an undertaking or to make such an assessment in any suit instituted by the Company or the Guarantor. ARTICLE VII THE TRUSTEE Section 7.01. NOTICE OF DEFAULTS. As promptly as practicable after, and in any event within 90 days after the occurrence of any default (as such term is defined below) hereunder actually known to the Trustee, the Trustee shall transmit by mail to the Company, the related Owner Trustees, the related Loan Trustees and the Certificateholders in accordance with Section 313(c) of the Trust Indenture Act, notice of such default hereunder actually known to the Trustee, unless such default shall have been cured or waived; PROVIDED, HOWEVER, that, except in the case of a default in the payment of the principal of (premium, if any) or interest on any Equipment Note, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Trustee in good faith determine that the withholding of such notice is in the interests of the Certificateholders. For the purpose of this Section, the term "default" means any event that is, or after notice or lapse of time or both would become, an Event of Default. Section 7.02. CERTAIN RIGHTS OF TRUSTEE. Subject to the provisions of Section 315 of the Trust Indenture Act: (a) the Trustee may rely and shall be protected in acting or refraining from acting in reliance upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Request; (c) whenever in the administration of this Agreement or the Intercreditor Agreement the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate of the Company, any Owner Trustee or any Loan Trustee; (d) the Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Agreement or the Intercreditor Agreement at the request or direction of any of the Certificateholders pursuant to this Agreement or the Intercreditor Agreement unless such Certificateholders shall have offered to the Trustee reasonable security or indemnity against the cost, expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, or report, notice, request, direction, consent, order, bond, debenture or other paper or document; (g) the Trustee may execute any of the trusts or powers under this Agreement or the Intercreditor Agreement or perform any duties under this Agreement or the Intercreditor Agreement either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it under this Agreement or the Intercreditor Agreement; (h) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Agreement or the Intercreditor Agreement; (i) the Trustee shall not be required to expend or risk its own funds in the performance of any of its duties under this Agreement, or in the exercise of any of its rights or powers, if it shall have reason to believe that repayment of such funds or adequate indemnity against such risk is not reasonably assured to it; and (j) except during the continuance of an Event of Default, the Trustee undertakes and shall be responsible to perform only such duties as are specifically set forth herein and no implied covenants or obligations shall be read into this Agreement or be enforceable against Trustee. Section 7.03. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF CERTIFICATES. The recitals contained herein and in the Certificates, except the certificates of authentication, shall not be taken as the statements of the Trustee, and the Trustee assumes no responsibility for their correctness. Subject to Section 7.14, the Trustee makes no representations as to the validity or sufficiency of this Agreement, the Note Purchase Agreement, any Note Documents, any Participation Agreement or any Intercreditor Agreement, the Deposit Agreement, the Escrow Agreement and Equipment Notes or the Certificates, except that the Trustee hereby represents and warrants that this Agreement has been, and each Certificate, the Intercreditor Agreement, the Note Purchase Agreement, the Escrow Agreement and each Certificate will be, executed and delivered by one of its officers who is duly authorized to execute and deliver such document on its behalf. Section 7.04. MAY HOLD CERTIFICATES. The Trustee, any Paying Agent, Registrar or any of their Affiliates or any other agent, in their respective individual or any other capacity, may become the owner or pledgee of Certificates and subject to Sections 310(b) and 311 of the Trust Indenture Act, if applicable, may otherwise deal with the Company, the Guarantor, the Owner Trustees or the Loan Trustees with the same rights it would have if it were not Trustee, Paying Agent, Registrar or such other agent. Section 7.05. MONEY HELD IN TRUST. Money held by the Trustee or the Paying Agent in trust hereunder need not be segregated from other funds except to the extent required herein or by law and neither the Trustee nor the Paying Agent shall have any liability for interest upon any such moneys except as provided for herein. Section 7.06. COMPENSATION AND REIMBURSEMENT. The Company agrees: ------------------------------ (1) to pay, or cause to be paid, to the Trustee compensation (as set out in a separate fee agreement between the Trustee and the Company) for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (2) except as otherwise expressly provided herein to reimburse, or cause to be reimbursed, the Trustee upon its request for all reasonable out-of-pocket expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Agreement or the Intercreditor Agreement (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence, willful misconduct or bad faith or as may be incurred due to the Trustee's breach of its representations and warranties set forth in Section 7.14; (3) to indemnify, or cause to be indemnified, the Trustee for, and to hold it harmless against, any loss, liability or expense (other than for or with respect to any tax) incurred without negligence, willful misconduct or bad faith, on its part, arising out of or in connection with the acceptance or administration of this Trust, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder, except for any such loss, liability or expense incurred by reason of the Trustee's breach of its representations and warranties set forth in Section 7.14. The Trustee shall notify the Company and the Guarantor promptly of any claim for which it may seek indemnity. The Company and the Guarantor shall defend the claim and the Trustee shall cooperate in the defense. The Trustee may have separate counsel with the consent of the Company and the Guarantor and the Company and the Guarantor will pay the reasonable fees and expenses of such counsel. Neither the Company nor the Guarantor need pay for any settlement made without its consent; and (4) to indemnify, or cause to be indemnified, the Trustee, solely in its individual capacity, for, and to hold it harmless against, any tax (except to the extent the Trustee is reimbursed therefor pursuant to the next paragraph, provided that no indemnification shall be available with respect to any tax attributable to the Trustee's compensation for serving as such) incurred without negligence, willful misconduct or bad faith, on its part, arising out of or in connection with the acceptance or administration of this Trust, including any costs and expenses incurred in contesting the imposition of any such tax. The Trustee, in its individual capacity, shall notify the Company and the Guarantor promptly of any claim for any tax for which it may seek indemnity. The Trustee shall permit the Company and the Guarantor to contest the imposition of such tax and the Trustee, in its individual capacity, shall cooperate in the defense. The Trustee, in its individual capacity, may have separate counsel with the consent of the Company and the Guarantor and the Company and the Guarantor will pay the reasonable fees and expenses of such counsel. Neither the Company nor the Guarantor need pay for any taxes paid, in settlement or otherwise, without its consent. The Trustee shall be entitled to reimbursement from, and shall have a lien prior to the Certificates upon, the Trust Property for any tax incurred without negligence, bad faith or willful misconduct on its part, arising out of or in connection with the acceptance or administration of such Trust (other than any tax attributable to the Trustee's compensation for serving as such), including any costs and expenses incurred in contesting the imposition of any such tax. The Trustee shall notify the Company of any claim for any tax for which it may seek reimbursement. The Trustee shall cooperate in the contest by the Company of any such claim. If the Trustee reimburses itself from the Trust Property for any such tax it will within 30 days mail a brief report setting forth the amount of such tax and the circumstances thereof to all Certificateholders as their names and addresses appear in the Register. As security for the performance of the obligations of the Company under this Section the Trustee shall have a lien prior to the Certificates upon the Trust Property. Section 7.07. CORPORATE TRUSTEE REQUIRED, ELIGIBILITY . There shall at all times be a Trustee hereunder which shall be eligible to act as a trustee under Section 310(a) of the Trust Indenture Act and shall have a combined capital and surplus of at least $75,000,000 (or a combined capital and surplus in excess of $5,000,000 and the obligations of which, whether now in existence or hereafter incurred, are fully and unconditionally guaranteed by a corporation organized and doing business under the laws of the United States, any State or Territory thereof or of the District of Columbia that has a combined capital and surplus of at least $75,000,000). If such corporation publishes reports of conditions at least annually, pursuant to law or to the requirements of federal, state, territorial or District of Columbia supervising or examining authority, then for the purposes of this Section 7.07, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of conditions so published. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 7.07 to act as Trustee, the Trustee shall resign immediately as Trustee in the manner and with the effect specified in Section 7.08. Section 7.08. RESIGNATION AND REMOVAL: APPOINTMENT OF SUCCESSOR. ------------------------------------------------- (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee under Section 7.09. (b) The Trustee may resign at any time as trustee by giving written notice thereof to the Company, the Authorized Agents, the Owner Trustees and the Loan Trustees. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Company, the Authorized Agents, the Owner Trustees, the Loan Trustees and the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee. (c) The Trustee may be removed at any time by Act of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust delivered to the Trustee, the Company, the Owner Trustees and the Loan Trustees. (d) If at any time: (1) the Trustee shall fail to comply with Section 310 of the Trust Indenture Act after written request therefor by the Company or by any Certificateholder who has been a bona fide certificateholder for at least six months; or (2) the Trustee shall cease to be eligible under Section 7.07 and shall fail to resign after written request therefor by the Company or by any such Certificateholder; or (3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation; then, in any case, (i) the Company may remove the Trustee or (ii) any Certificateholder who has been a bona fide Certificateholder for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. (e) If a Responsible Officer of the Trustee shall obtain actual knowledge of an Avoidable Tax (as hereinafter defined) which has been or is likely to be asserted, the Trustee shall promptly notify the Company and shall, within 30 days of such notification, resign as Trustee hereunder unless within such 30-day period the Trustee shall have received notice that the Company has agreed to pay such tax. The Company shall promptly appoint a successor Trustee in a jurisdiction where there are no Avoidable Taxes. As used herein, an "Avoidable Tax" means a state or local tax: (i) upon (w) the Trust, (x) the Trust Property, (y) Certificateholders or (z) the Trustee for which the Trustee is entitled to seek reimbursement from the Trust Property, and (ii) which would be avoided if the Trustee were located in another state, or jurisdiction within a state, within the United States. A tax shall not be an Avoidable Tax if the Company or any Owner Trustee shall agree to pay, and shall pay, such tax. (f) If the Trustee shall resign, be removed or become incapable of acting as trustee or if a vacancy shall occur in the office of the Trustee for any cause, the Company shall promptly appoint a successor Trustee. If, within 90 days after such resignation, removal or incapability, or other occurrence of such vacancy, a successor Trustee shall be appointed by Act of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust delivered to the Company, the Owner Trustees, the Loan Trustee and the retiring Trustee, the successor Trustees so appointed shall, with the approval of the Company, which approval shall not be unreasonably withheld, forthwith upon its acceptance of such appointment, become the successor Trustee and supersede the successor Trustee appointed as provided above. If no successor Trustee shall have been so appointed as provided above and accepted appointment in the manner hereinafter provided, the resigning Trustee or any Certificateholder who has been a bona fide Certificateholder for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee. (g) The successor Trustee of a Trust shall give notice of the resignation and removal of the Trustee and appointment of the successor Trustee by mailing written notice of such event by first-class mail, postage prepaid, to the Certificateholders as their names and addresses appear in the Register. Each notice shall include the name of such successor Trustee and the address of its Corporate Trust Office. Section 7.09. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on request of the Company or the successor Trustee, such retiring Trustee shall execute and deliver an instrument transferring to such successor Trustee all such rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee, subject nevertheless to its lien, if any, provided for in Section 7.06. Upon request of any such successor Trustee, the Company, the retiring Trustee and such successor Trustee shall execute and deliver any and all instruments containing such provisions as shall be necessary or desirable to transfer and confirm to, and for more fully and certainly vesting in, such successor Trustee all such rights, powers and trusts. No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article. Section 7.10. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, PROVIDED such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Certificates shall have been executed or authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such execution or authentication and deliver the Certificates so executed or authenticated with the same effect as if such successor Trustee had itself executed or authenticated such Certificates. Section 7.11. MAINTENANCE OF AGENCIES. ----------------------- (a) There shall at all times be maintained an office or agency where Certificates may be presented or surrendered for registration of transfer or for exchange, and for payment thereof and where notices and demands to or upon the Trustee in respect of such Certificates may be served. Presentations and demands may be made and notices may be served at the Corporate Trust Office of the Trustee. (b) There shall at all times be a Registrar and a Paying Agent hereunder with respect to the Certificates. Each such Authorized Agent shall be a bank or trust company, shall be a corporation organized and doing business under the laws of the United States or any state, with a combined capital and surplus of at least $75,000,000, or a corporation having a combined capital and surplus in excess of $5,000,000 the obligations of which are guaranteed by a corporation organized and doing business under the laws of the United States or any state, with a combined capital and surplus of at least $75,000,000, and shall be authorized under such laws to exercise corporate trust powers, subject to supervision by federal or state authorities. The Trustee shall initially be the Paying Agent and, as provided in Section 3.04, Registrar hereunder with respect to the Certificates. Each Registrar shall furnish to the Trustee, at stated intervals of not more than six months, and at such other times as the Trustee may request in writing, a copy of the Register maintained by such Registrar. (c) Any corporation into which any Authorized Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, consolidation or conversion to which any Authorized Agent, shall be a party, or any corporation succeeding to the corporate trust business of any Authorized Agent, shall be the successor of such Authorized Agent hereunder, if such successor corporation is otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the parties hereto or such Authorized Agent or such successor corporation. (d) Any Authorized Agent may at any time resign by giving written notice of resignation to the Trustee, the Company, the Owner Trustees and the Loan Trustees. The Company may, and at the request of the Trustee shall, at any time terminate the agency of any Authorized Agent by giving written notice of termination to such Authorized Agent and to the Trustee. Upon the resignation or termination of an Authorized Agent or in case at any time any such Authorized Agent shall cease to be eligible under this Section (when in either case, no other Authorized Agent performing the functions of such Authorized Agent shall have been appointed), the Company shall promptly appoint one or more qualified successor Authorized Agents, reasonably satisfactory to the Trustee, to perform the functions of the Authorized Agent which has resigned or whose agency has been terminated or who shall have ceased to be eligible under this Section. The Company shall give written notice of any such appointment made by it to the Trustee, the Owner Trustees and the Loan Trustees; and in each case the Trustee shall mail notice of such appointment to all Certificateholders as their names and addresses appear on the Register. (e) The Company agrees to pay, or cause to be paid, from time to time to each Authorized Agent reasonable compensation for its services and to reimburse it for its reasonable expenses. Section 7.12. MONEY FOR CERTIFICATE PAYMENTS TO BE HELD IN TRUST. All moneys deposited with any Paying Agent for the purpose of any payment on Certificates shall be deposited and held in trust for the benefit of the Certificateholders entitled to such payment, subject to the provisions of this Section. Moneys so deposited and held in trust shall constitute a separate trust fund for the benefit of the Certificateholders with respect to which such money was deposited. The Trustee may at any time, for the purpose of obtaining the satisfaction and discharge of this Agreement or for any other purpose, direct any Paying Agent to pay to the Trustee all sums held in trust by such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by such Paying Agent and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. Section 7.13. REGISTRATION OF EQUIPMENT NOTES IN NAME OF SUBORDINATION AGENT. The Trustee agrees that all Equipment Notes to be purchased by the Trust shall be issued in the name of the Subordination Agent or its nominee and held by the Subordination Agent in trust for the benefit of the Certificateholders, or, if not so held, the Subordination Agent or its nominee shall be reflected as the owner of such Equipment Notes in the register of the issuer of such Equipment Notes. Section 7.14. REPRESENTATIONS AND WARRANTIES OF TRUSTEE. The Trustee hereby represents and warrants that: (a) the Trustee is a Delaware banking corporation organized and validly existing, and in good standing under the laws of the State of Delaware; (b) the Trustee has full power, authority and legal right to execute, deliver and perform this Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement and the Note Documents to which it is a party and has taken all necessary action to authorize the execution, delivery and performance by it of this Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement and the Note Documents to which it is a party; (c) the execution, delivery and performance by the Trustee of this Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement and the Note Documents to which it is a party (i) will not violate any provision of any United States federal law or the law of the State of Delaware governing the banking and trust powers of the Trustee or any order, writ, judgment, or decree of any court, arbitrator,or governmental authority applicable to the Trustee or any of its assets, (ii) will not violate any provision of the articles of association or by-laws of the Trustee, and (iii) will not violate any provision of, or constitute, with or without notice or lapse of time, a default under, or result in the creation or imposition of any lien on any properties included in the Trust Property pursuant to the provisions of, any mortgage, indenture, contract, agreement or other undertaking to which it is a party, which violation, default or lien could reasonably be expected to have an adverse effect on the Trustee's performance or ability to perform its duties hereunder or thereunder or on the transactions contemplated herein or therein; (d) the execution, delivery and performance by the Trustee of this Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement and the Note Documents to which it is a party will not require the authorization, consent, or approval of, the giving of notice to, the filing or registration with, or the taking of any other action in respect of, any governmental authority or agency of the United States or the State of Delaware regulating the banking and corporate trust activities of the Trustee; and (e) this Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement and the Note Documents to which it is a party have been duly executed and delivered by the Trustee and constitute the legal, valid, and binding agreements of the Trustee, enforceable against it in accordance with their respective terms, provided that enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and (ii) general principles of equity. Section 7.15. WITHHOLDING TAXES, INFORMATION REPORTING. (a) The Trustee, as trustee of the grantor trust created by this Agreement, shall exclude and withhold from each distribution of principal, premium, if any, and interest and other amounts due under this Agreement or under the Certificates any and all withholding taxes applicable thereto as required by law. The Trustee agrees to act as such withholding agent and, in connection therewith, whenever any taxes or similar charges are required to be withheld with respect to any amounts paid by or on behalf of the Trustee in respect of the Certificates, to withhold such amounts and timely pay the same to the authority in the name of and on behalf of the Certificateholders, that it will file any necessary withholding tax returns or statements when due, and that, as promptly as possible after the payment thereof, it will deliver to each such Certificateholder necessary documentation showing the payment thereof, together with such additional documentary evidence as such Certificateholders may reasonably request from time to time. The Trustee agrees to file any other information reports as it may be required to file under United States law. (b) The Trustee may satisfy certain of its obligations with respect to this Agreement by retaining, at the expense of the Company, a firm of independent public accountants (the "Accountants") which shall (i) be responsible for all tax filing requirements and (ii) perform the obligations of the Trustee in respect of tax filing requirements. The Trustee shall be deemed to have discharged its tax filing obligations under this Agreement upon its retention of the Accountants, and, if the Trustee shall have selected in the Accountants in good faith and without gross negligence, the Trustee shall not have any liability with respect to the default or misconduct of the Accountants. (c) The Trustee, at the request of the Company, will make such United States federal income tax elections as may be necessary to prevent the Trust from being classified for federal income tax purposes as an association taxable as a corporation. Section 7.16. TRUSTEE'S LIENS. The Trustee in its individual capacity agrees that it will at its own cost and expense promptly take any action as may be necessary to duly discharge and satisfy in full any mortgage, pledge, lien, charge, encumbrance, security interest or claim ("Trustee's Liens") on or with respect to the Trust Property which is attributable to the Trustee either (i) in its individual capacity and which is unrelated to the transactions contemplated by this Agreement, the Intercreditor Agreement, the Participation Agreements, the Note Purchase Agreement or the Note Documents, or (ii) as Trustee hereunder or in its individual capacity and which arises out of acts or omissions which are not contemplated by this Agreement. Section 7.17. PREFERENTIAL COLLECTION OF CLAIMS. The Trustee shall comply with Section 311(a) of the Trust Indenture Act, excluding any creditor relationship listed in Section 311(b) of the Trust Indenture Act. If the Trustee shall resign or be removed as Trustee, it shall be subject to Section 311(a) of the Trust Indenture Act to the extent provided therein. ARTICLE VIII CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE Section 8.01. THE COMPANY TO FURNISH TRUSTEE WITH NAMES AND ADDRESSES OF CERTIFICATEHOLDERS. The Company will furnish or cause to be furnished to the Trustee within 15 days after each Record Date with respect to a Scheduled Payment, and at such other times as the Trustee may request in writing, within 30 days after receipt by the Company of any such request, a list, in such form as the Trustee may reasonably require, of all information in the possession or control of the Company as to the names and addresses of the Certificateholders, in each case as of a date not more than 15 days prior to the time such list is furnished; PROVIDED, HOWEVER, that so long as the Trustee is the sole Registrar, no such list need be furnished; and provided FURTHER, HOWEVER, that no such list need be furnished for so long as a copy of the Register is being furnished to the Trustee pursuant to Section 7.11. Section 8.02. PRESERVATION OF INFORMATION; COMMUNICATIONS TO CERTIFICATEHOLDERS. The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Certificateholders contained in the most recent list furnished to the Trustee as provided in Section 7.11 or Section 8.01, as the case may be, and the names and addresses of Certificateholders received by the Trustee in its capacity as Registrar, if so acting. The Trustee may destroy any list furnished to it as provided in Section 7.11 or Section 8.01, as the case may be, upon receipt of a new list so furnished. Section 8.03. REPORTS BY TRUSTEE. Within 60 days after May 15 of each year commencing with the first full year following the issuance of the Certificates, the Trustee shall transmit to the Certificateholders, as provided in Section 313(c) of the Trust Indenture Act, a brief report dated as of such May 15, if required by Section 313(a) of the Trust Indenture Act. Section 8.04. REPORTS BY THE GUARANTOR AND COMPANY. The Guarantor and the Company each shall: (a) file with the Trustee, within 30 days after the Guarantor or the Company is required to file the same with the SEC, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may from time to time by rules and regulations prescribe) which the Guarantor or the Company is required to file with the SEC pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934, as amended; or, if the Guarantor or the Company is not required to file information, documents or reports pursuant to either of such sections, then to file with the Trustee and the SEC, in accordance with rules and regulations prescribed by the SEC, such of the supplementary and periodic information, documents and reports which may be required pursuant to section 13 of the Securities Exchange Act of 1934, as amended, in respect of a security listed and registered on a national securities exchange as may be prescribed in such rules and regulations; (b) file with the Trustee and the SEC, in accordance with the rules and regulations prescribed by the SEC, such additional information, documents and reports with respect to compliance by the Guarantor and the Company with the conditions and covenants of the Guarantor and the Company provided for in this Agreement, as may be required by such rules and regulations, including, in the case of annual reports, if required by such rules and regulations, certificates or opinions of independent public accountants, conforming to the requirements of Section 1.02; (c) transmit to all Certificateholders, in the manner and to the extent provided in Section 313(c) of the Trust Indenture Act, such summaries of any information, documents and reports required to be filed by the Guarantor and the Company pursuant to subsections (a) and (b) of this Section 8.04 as may be required by rules and regulations prescribed by the SEC; (d) furnish to the Trustee, not less often than annually, a brief certificate from the principal executive officer, principal financial officer or principal accounting officer as to his or her knowledge of the Guarantor's and the Company's compliance with all conditions and covenants under this Agreement (it being understood that for purposes of this paragraph (d), such compliance shall be determined without regard to any period of grace or requirement of notice provided under this Agreement); and (e) make available to any Certificateholder, upon request, the annual audited and quarterly unaudited financial statements of the Guarantor which are provided to the Trustee. ARTICLE IX SUPPLEMENTAL AGREEMENTS Section 9.01. SUPPLEMENTAL AGREEMENTS WITHOUT CONSENT OF CERTIFICATEHOLDERS. Without the consent of the Certificateholders, the Guarantor and the Company may, and the Trustee (subject to Section 9.03) shall, at any time and from time to time, enter into one or more agreements supplemental hereto or, if applicable, to the Indenture, the Lease, the Participation Agreement, Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement, the Deposit Agreement or the Liquidity Facility in form satisfactory to the Trustee, for any of the following purposes: (1) to evidence the succession of another corporation to the Company or the Guarantor and the assumption by any such successor of the covenants of the Company or the Guarantor contained herein or in each of the other related documents to which Company or the Guarantor is a party; or (2) to add to the covenants of the Guarantor or the Company for the benefit of the Certificateholders, or to surrender any right or power in this Agreement, the Note Purchase Agreement, the Intercreditor Agreement or any Liquidity Facility conferred upon the Guarantor or the Company; or (3) to correct or supplement any provision in this Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement, the Deposit Agreement or the Liquidity Facility which may be defective or inconsistent with any other provision herein or therein or to modify any other provisions with respect to matters or questions arising under this Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement, the Deposit Agreement or the Liquidity Facility, provided that any such action shall not adversely affect the interests of the Certificateholders; or to cure any ambiguity or correct any mistake in such documents, or as provided in the Intercreditor Agreement, to give effect to or provide for a Replacement Liquidity Facility (as defined in the Intercreditor Agreement); or (4) to comply with any requirement of the SEC, any applicable law, rules or regulations of any exchange or quotation system on which the Certificates are listed, or any regulatory body; or (5) to modify, eliminate or add to the provisions of this Agreement to such extent as shall be necessary to continue the qualification of this Agreement (including any supplemental agreement) under the Trust Indenture Act, or under any similar Federal statute hereafter enacted, and to add to this Agreement such other provisions as may be expressly permitted by the Trust Indenture Act, excluding, however, the provisions referred to in Section 316(a)(2) of the Trust Indenture Act as in effect at the date as of which this instrument was executed or any corresponding provision in any similar Federal statute hereafter enacted; or (6) to evidence and provide for the acceptance of appointment under this Agreement by the Trustee of a successor Trustee and to add to or change any of the provisions of this Agreement as shall be necessary to provide for or facilitate the administration of the Trust, pursuant to the requirements of Section 7.09; or (7) if with respect to any Owned Aircraft the Company issues "class D" pass through certificates, to modify, eliminate or add to the provisions of this Agreement to the extent necessary to provide for the subordination of such "class D" pass through certificates to the Certificates; PROVIDED that no such action described in this Section 9.01 shall materially adversely affect the interests of the Certificateholders. Section 9.02. SUPPLEMENTAL AGREEMENTS WITH CONSENT OF CERTIFICATEHOLDERS. With the consent of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest of the Trust, by Act of said Certificateholders delivered to the Guarantor, the Company and the Trustee, the Guarantor and the Company may (with the consent of the Owner Trustees, if any, which consent shall not be unreasonably withheld), and the Trustee (subject to Section 9.03) shall, enter into an agreement or agreements supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement, the Deposit Agreement or the Liquidity Facility to the extent applicable to such Certificateholders or of modifying in any manner the rights and obligations of such Certificateholders under this Agreement, the Intercreditor Agreement, any Liquidity Facility, the Escrow Agreement, the Deposit Agreement or the Note Purchase Agreement; PROVIDED, HOWEVER, that no such supplemental agreement shall, without the consent of the Certificateholder of each Outstanding Certificate affected thereby: (1) reduce in any manner the amount of, or delay the timing of, any receipt by the Trustee (or, with respect to the Deposits, the Certificateholders) of payments on the Equipment Notes held in the Trust or under the Deposit Agreement or distributions that are required to be made herein on any Certificate, or change any date of payment of any Certificate or change the place of payment where, or the coin or currency in which, any Certificate is payable, or impair the right to institute suit for the enforcement of any such payment or distribution on or after the Regular Distribution Date or Special Distribution Date applicable thereto; or (2) permit the disposition of any Equipment Note included in the Trust Property except as permitted by this Agreement, or otherwise deprive such Certificateholder of the benefit of the ownership of the Equipment Notes in the Trust; or (3) alter the priority of distributions specified in the Intercreditor Agreement; or (4) modify any of the provisions of this Section or Section 6.05, except to increase any such percentage or to provide that certain other provisions of this Agreement cannot be modified or waived without the consent of the Certificateholder of each Certificate affected thereby; or (5) adversely affect the status of any Trust as a grantor trust under Subpart E, Part I of Subchapter J of Chapter 1 of Subtitle A of the Internal Revenue Code of 1986, as amended, for U.S. federal income tax purposes. It shall not be necessary for any Act of Certificateholders under this Section to approve the particular form of any proposed supplemental agreement but it shall be sufficient if such Act shall approve the substance thereof. Section 9.03. DOCUMENTS AFFECTING IMMUNITY OR INDEMNITY. If in the opinion of the Trustee any document required to be executed by it pursuant to the terms of Section 9.01 or 9.02 affects any interest, right, duty, immunity or indemnity in favor of the Trustee under this Agreement, the Trustee may in its discretion decline to execute such document. Section 9.04. EXECUTION OF SUPPLEMENTAL AGREEMENTS. In executing, or accepting the additional trusts created by, any supplemental agreement permitted by this Article or the modifications thereby of the trust created by this Agreement, the Trustee shall be entitled to receive, and shall be fully protected in relying upon, written advice of counsel or an Opinion of Counsel stating that the execution of such supplemental agreement is authorized or permitted by this Agreement. Section 9.05. EFFECT OF SUPPLEMENTAL AGREEMENTS. Upon the execution of any supplemental agreement under this Article, this Agreement shall be modified in accordance therewith, and such supplemental agreement shall form a part of this Agreement for all purposes; and every Certificateholder theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. Section 9.06. CONFORMITY WITH TRUST INDENTURE ACT. Every supplemental agreement executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act as then in effect. Section 9.07. REFERENCE IN CERTIFICATES TO SUPPLEMENTAL AGREEMENTS. Certificates authenticated and delivered after the execution of any supplemental agreement pursuant to this Article may bear a notation in form approved by the Trustee as to any matter provided for in such supplemental agreement; and, in such case, suitable notation may be made upon Outstanding Certificates after proper presentation and demand. ARTICLE X AMENDMENTS TO INDENTURES AND NOTE DOCUMENTS Section 10.01. AMENDMENTS AND SUPPLEMENTS TO INDENTURES AND OTHER NOTE DOCUMENTS. In the event that the Trustee, as holder (or beneficial owner through the Subordination Agent) of any Equipment Note in trust for the benefit of the Certificateholders or as Controlling Party under the Intercreditor Agreement, receives (directly or indirectly through the Subordination Agent) a request for a consent to any amendment, modification, waiver or supplement under any Indenture, any other Note Document, any Equipment Note, the Note Purchase Agreement or any other related document, the Trustee shall forthwith send a notice of such proposed amendment, modification, waiver or supplement to each Certificateholder registered on the Register as of the date of such notice. The Trustee shall request from the Certificateholders a Direction as to (a) whether or not to take or refrain from taking (or direct the Subordination Agent to take or refrain from taking) any action which a holder of such Equipment Note has the option to direct, (b) whether or not to give or execute (or direct the Subordination Agent to give or execute) any waivers, consents, amendments, modifications or supplements as a holder of such Equipment Note or a Controlling Party and (c) how to vote (or direct the Subordination Agent to vote) any Equipment Note if a vote has been called for with respect thereto. Provided such a request for Certificateholder Direction shall have been made, in directing any action or casting any vote or giving any consent as the holder of any Equipment Note (or in directing the Subordination Agent in any of the foregoing), (i) other than as Controlling Party, the Trustee shall vote for or give consent to any such action with respect to such Equipment Note in the same proportion as that of (A) the aggregate face amounts of all Certificates actually voted in favor of or for giving consent to such action by such Direction of Certificateholders to (B) the aggregate face amount of all Outstanding Certificates and (ii) as Controlling Party, the Trustee shall vote as directed in such Certificateholder Direction by the Certificateholders evidencing a Fractional Undivided Interest aggregating not less than a majority in interest in the Trust. For purposes of the immediately preceding sentence, a Certificate shall have been "actually voted" if the Holder of such Certificate has delivered to the Trustee an instrument evidencing such Holder's consent to such Direction prior to two Business Days before the Trustee directs such action or casts such vote or gives such consent. Notwithstanding the foregoing, but subject to Section 6.04 and the Intercreditor Agreement, the Trustee may, in its own discretion and at its own direction, consent and notify the relevant Loan Trustee of such consent (or direct the Subordination Agent to consent and notify the Loan Trustee of such consent) to any amendment, modification, waiver or supplement under the relevant Indenture, any other Note Document, any Equipment Note, the Note Purchase Agreement or any other related document, if an Event of Default hereunder shall have occurred and be continuing, or if such amendment, modification, waiver or supplement will not materially adversely affect the interests of the Certificateholders. ARTICLE XI TERMINATION OF TRUSTS Section 11.01. TERMINATION OF THE TRUST. The respective obligations and responsibilities of the Company, the Guarantor and the Trustee with respect to the Trust shall terminate upon the earlier of (A) the completion of the assignment, transfer and discharge described in the first sentence of the immediately following paragraph and (B) distribution to all Holders of the Certificates and the Trustee of all amounts required to be distributed to them pursuant to this Agreement and the disposition of all property held as part of the Trust Property; PROVIDED, HOWEVER, that in no event shall the Trust continue beyond one hundred ten (110) years following the date of the earliest execution of this Agreement. Upon the earlier of (i) the first Business Day following January 31, 1999, or, if later, the fifth Business Day following the Delivery Period Termination Date and (ii) the fifth Business Day following the date on which a Triggering Event occurs (such date, the "Transfer Date"), or, if later the date on which all of the conditions set forth in the immediately following sentence have been satisfied, the Trustee is hereby directed (subject only to the immediately following sentence) to, and the Company shall direct the institution that will serve as the Related Trustee under the Related Pass Through Trust Agreement to, execute and deliver the Assignment and Assumption Agreement, pursuant to which the Trustee shall assign, transfer and deliver all of the Trustee's right, title and interest to the Trust Property to the Related Trustee under the Related Pass Through Trust Agreement. The Trustee and the Related Trustee shall execute and deliver the Assignment and Assumption Agreement upon the satisfaction of the following conditions: (i) The Trustee, the Related Trustee and each of the Rating Agencies (as defined in the Intercreditor Agreement) then rating the Certificates shall have received an Officer's Certificate and an Opinion of Counsel dated the date of the Assignment and Assumption Agreement and each satisfying the requirements of Section 1.02, which Opinion of Counsel shall be substantially to the effect set forth below and may be relied upon by the Beneficiaries (as defined in the Assignment and Assumption Agreement): (a) upon the execution and delivery thereof by the parties thereto in accordance with the terms of this Agreement and the Related Pass Through Trust Agreement, the Assignment and Assumption Agreement will constitute the valid and binding obligation of each of the parties thereto enforceable against each such party in accordance with its terms (subject to applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditor's rights generally and to general principles of equity); (b) upon the execution and delivery of the Assignment and Assumption Agreement in accordance with the terms of this Agreement and the Related Pass Through Trust Agreement, each of the Certificates then Outstanding will be entitled to the benefits of the Related Pass Through Trust Agreement; (c) the Related Trust is not required to be registered as an investment company under the Investment Company Act of 1940, as amended; (d) the Related Pass Through Trust Agreement constitutes the valid and binding obligation of the Company enforceable against the Company in accordance with its terms (subject to applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditor's rights generally and to general principles of equity); and (e) neither the execution and delivery of the Assignment and Assumption Agreement in accordance with the terms of this Agreement and the Related Pass Through Trust Agreement, nor the consummation by the parties thereto of the transactions contemplated to be consummated thereunder on the date thereof, will violate any law or governmental rule or regulation of the State of New York or the United States of America known to such counsel to be applicable to the transactions contemplated by the Assignment and Assumption Agreement. (ii) The Trustee and the Company shall have received (x) a copy of the articles of incorporation and bylaws of the Related Trustee certified as of the Transfer Date by the Secretary or Assistant Secretary of such institution and (y) a copy of the filing (including all attachments thereto) made by the institution serving as the Related Trustee with the Office of the Superintendent, State of New York Banking Department for the qualification of the Related Trustee under Section 131(3) of the New York Banking Law. Upon the execution of the Assignment and Assumption Agreement by the parties thereto, the Trust shall be terminated, the Certificateholders shall receive beneficial interests in the Related Trust in exchange for their interests in the Trust equal to their respective beneficial interests in the Trust, and the Outstanding Certificates representing Fractional Undivided Interests in the Trust shall be deemed for all purposes of this Agreement and the Related Pass Through Trust Agreement, without further signature or action of any party or Certificateholder, to be certificates representing the same fractional undivided interests in the Related Trust and its trust property. By acceptance of its Certificate, each Certificateholder consents to such assignment, transfer and delivery of the Trust Property to the trustee of the Related Trust upon the execution and delivery of the Assignment and Assumption Agreement. In connection with the occurrence of the event set forth in clause (B) above, notice of such termination, specifying the Regular Distribution Date (or Special Distribution Date, as the case may be) upon which the Certificateholders may surrender their Certificates to the Trustee for payment of the final distribution and cancellation, shall be mailed promptly, upon notice to the Trustee, by the Trustee to Certificateholders not earlier than the 60th day and not later than the 20th day next preceding such final distribution specifying (A) the Regular Distribution Date (or Special Distribution Date, as the case may be) upon which the proposed final payment of the Certificates will be made upon presentation and surrender of Certificates at the office or agency of the Trustee therein specified, (B) the amount of any such proposed final payment, and (C) that the Record Date otherwise applicable to such Regular Distribution Date (or Special Distribution Date, as the case may be) is not applicable, payments being made only upon presentation and surrender of the Certificates at the office or agency of the Trustee therein specified. The Trustee shall give such notice to the Registrar at the time such notice is given to Certificateholders. Upon presentation and surrender of the Certificates, the Trustee shall cause to be distributed to Certificateholders amounts distributable on such Regular Distribution Date (or Special Distribution Date, as the case may be) pursuant to Section 4.02. In the event that all of the Certificateholders shall not surrender their Certificates for cancellation within six months after the date specified in the above-mentioned written notice, the Trustee shall give a second written notice to the remaining Certificateholders to surrender their Certificates for cancellation and receive the final distribution with respect thereto. No additional interest shall accrue on the Certificates after the Regular Distribution Date (or Special Distribution Date, as the case may be). In the event that any money held by the Trustee for the payment of distributions on the Certificates shall remain unclaimed for two years (or such lesser time as the Trustee shall be satisfied, after sixty days' notice from the Company, is one month prior to the escheat period provided under applicable law) after the final distribution date with respect thereto, the Trustee shall pay to each Loan Trustee the appropriate amount of money relating to such Loan Trustee and shall give written notice thereof to the related Owner Trustees and the Company. ARTICLE XII MISCELLANEOUS PROVISIONS Section 12.01. LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS. The death or incapacity of any Certificateholder shall not operate to terminate this Agreement, or the Trust, nor entitle such Certificateholder's legal representatives or heirs to claim an accounting or to take any action or commence any proceeding in any court for a partition or winding up of the Trust, nor otherwise affect the rights, obligations, and liabilities of the parties hereto or any of them. Section 12.02. LIABILITIES OF CERTIFICATEHOLDERS. Neither the existence of the Trust nor any provision in this Agreement is intended to or shall limit the liability the Certificateholders would otherwise incur if the Certificateholders owned Trust Property as co-owners, or incurred any obligations of the Trust, directly rather than through the Trust. Section 12.03. CERTIFICATES NONASSESSABLE AND FULLY PAID. Subject to Section 12.02, Certificateholders shall not be personally liable for obligations of the Trust, the Fractional Undivided Interests represented by the Certificates shall be nonassessable for any losses or expenses of the Trust or for any reason whatsoever, and Certificates upon authentication thereof by the Trustee pursuant to Section 3.03 are and shall be deemed fully paid. No Certificateholder shall have any right (except as expressly provided herein) to vote or in any manner otherwise control the operation and management of the Trust Property, the Trust, or the obligations of the parties hereto, nor shall anything set forth herein, or contained in the terms of the Certificates, be construed so as to constitute the Certificateholders from time to time as partners or members of an association. Section 12.04. [Intentionally omitted]. Section 12.05. NOTICES. ------- (a) Unless otherwise specifically provided herein, all notices required under the terms and provisions of this Agreement shall be in English and in writing, and any such notice may be given by United States mail, courier service, telegram, telemessage, telecopy, telefax, cable or facsimile (confirmed by telephone or in writing in the case of notice by telegram, telemessage, telecopy, telefax, cable or facsimile) or any other customary means of communication, and any such notice shall be effective when delivered, or if mailed, three days after deposit in the United States mail with proper postage for ordinary mail prepaid, if to the Company or the Guarantor, to: American Trans Air, Inc. 7337 West Washington Street Indianapolis International Airport Indianapolis, Indiana 06927 ATTENTION: Executive Vice President and Chief Financial Officer ---------- FACSIMILE: (317) 240-7087 ---------- if to the Trustee, to: Wilmington Trust Company Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 ATTENTION: Corporate Trust Administration ---------- FACSIMILE: (302) 651-8882 ---------- (b) The Company, the Guarantor or the Trustee, by notice to the other, may designate additional or different addresses for subsequent notices or communications. (c) Any notice or communication to Certificateholders shall be mailed by first-class mail to the addresses for Certificateholders shown on the Register kept by the Registrar and to addresses filed with the Trustee. Failure so to mail a notice or communication or any defect in such notice or communication shall not affect its sufficiency with respect to other Certificateholders. (d) If a notice or communication is mailed in the manner provided above within the time prescribed, it is conclusively presumed to have been duly given, whether or not the addressee receives it. (e) If the Company mails a notice or communication to the Certificateholders, it shall mail a copy to the Trustee and to each Paying Agent at the same time. (f) Notwithstanding the foregoing, all communications or notices to the Trustee shall be deemed to be given only when received by a Responsible Officer of the Trustee. (g) The Trustee shall promptly furnish the Company with a copy of any demand, notice or written communication received by the Trustee hereunder from any Certificateholder, Owner Trustee or Loan Trustee. Section 12.06. GOVERNING LAW. THIS AGREEMENT HAS BEEN DELIVERED IN THE STATE OF DELAWARE AND THIS AGREEMENT AND THE CERTIFICATES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO CONFLICT-OF-LAW PRINCIPLES. Section 12.07. SEVERABILITY OF PROVISIONS. If any one or more of the covenants, agreements, provisions, or terms of this Agreement shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions, or terms shall be deemed severable from the remaining covenants, agreements, provisions, or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement or the Trust or of the Certificates or the rights of the Certificateholders thereof. Section 12.08. [Intentionally omitted]. Section 12.09. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. Section 12.10. SUCCESSORS AND ASSIGNS. All covenants, agreements, representations and warranties in this Agreement by the Trustee, the Guarantor and the Company shall bind and, to the extent permitted hereby, shall inure to the benefit of and be enforceable by their respective successors and assigns, whether so expressed or not. Section 12.11. BENEFITS OF AGREEMENT. Nothing in this Agreement or in the Certificates, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, and the Certificateholders, any benefit or any legal or equitable right, remedy or claim under this Agreement. Section 12.12. LEGAL HOLIDAYS. In any case where any Regular Distribution Date or Special Distribution Date relating to any Certificate shall not be a Business Day, then (notwithstanding any other provision of this Agreement) payment need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on such Regular Distribution Date or Special Distribution Date, and no interest shall accrue during the intervening period. Section 12.13. COUNTERPARTS. For the purpose of facilitating the execution of this Agreement and for other purposes, this Agreement may be executed simultaneously in any number of counterparts, each of which counterparts shall be deemed to be an original, and all of which counterparts shall constitute but one and the same instrument. Section 12.14. COMMUNICATION BY CERTIFICATEHOLDERS WITH OTHER CERTIFICATEHOLDERS. Certificateholders may communicate with other Certificateholders with respect to their rights under this Agreement or the Certificates pursuant to Section 3.12(b) of the Trust Indenture Act. The Company, the Guarantor, the Trustee and any and all other persons benefitted by this Agreement shall have the protection afforded by Section 312(c) of the Trust Indenture Act. Section 12.15. INTENTION OF PARTIES. The parties hereto intend that the Trust be classified for U.S. federal income tax purposes as a grantor trust under Subpart E, Part I of Subchapter J of the Internal Revenue Code of 1986, as amended, and not as a trust or association taxable as a corporation or as a partnership. Each Certificateholder, by its acceptance of its Certificate or a beneficial interest therein, agrees to treat the Trust as a grantor trust for all U.S. federal, state and local income tax purposes. The powers granted and obligations undertaken pursuant to this Agreement shall be so construed so as to further such intent. IN WITNESS WHEREOF, the Guarantor, the Company and the Trustee have caused this Agreement to be duly executed by their respective officers, all as of the day and year first above written. AMTRAN, INC. By /s/ Kenneth K. Wolff ----------------------------- Title: Executive Vice President and Chief Financial Officer AMERICAN TRANS AIR, INC. / By /s/ Kenneth K. Wolff ----------------------------- Title: Chief Financial Officer WILMINGTON TRUST COMPANY, as Trustee By /s/ Patricia A. Evans ----------------------------- Title: Financial Services Officer EXHIBIT A FORM OF CERTIFICATE [THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS CERTIFICATE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY AMERICAN TRANS AIR, INC., ("ATA") OR AN AFFILIATE OF ATA RESELL OR OTHERWISE TRANSFER THIS CERTIFICATE EXCEPT (A) TO ATA OR ANY SUBSIDIARY THEREOF,(B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING $100,000 OR MORE AGGREGATE PRINCIPAL AMOUNT OF SUCH CERTIFICATES THAT, TAKES DELIVERY OF THIS CERTIFICATE IN DEFINITIVE FORM AND PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS CERTIFICATE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS CERTIFICATE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CASE THIS CERTIFICATE IS IN DEFINITIVE FORM, IN CONNECTION WITH ANY TRANSFER OF THIS CERTIFICATE WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY ATA OR AN AFFILIATE OF ATA THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE PASS THROUGH TRUST AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS.]1 [UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND 3.06 OF THE PASS THROUGH TRUST AGREEMENT REFERRED TO HEREIN .]2 AMERICAN TRANS AIR, INC. 1997-1B-O PASS THROUGH TRUST Pass Through Certificate, Series 1997-1B-O Issuance Date: Final Legal Distribution Date: Evidencing a Fractional Undivided Interest in the 1997-1B-O Trust, the Property of Which Includes Certain Equipment Notes each secured by Aircraft leased to American Trans Air, Inc. Certificate No. $ Fractional Undivided Interest representing % of --------- ------- ----- the Trust per $1,000 of Reference Principal Amount THIS CERTIFIES THAT , for value received, is the registered owner of a Fractional Undivided Interest in the amount of Dollars ($ ) (the "Reference Principal Amount") in the American Trans Air 1997-1B-O Pass Through Trust (the "Trust") created by Wilmington Trust Company, not in its individual capacity but solely as trustee (the "Trustee"), pursuant to a Pass Through Trust Agreement dated as of December , 1997 (the "Agreement"), among the Trustee, Amtran, Inc., a corporation incorporated under Indiana law (the "Guarantor"), and American Trans Air, Inc., a corporation incorporated under Indiana law (the "Company"), a summary of certain of the pertinent provisions of which is set forth below. To the extent not otherwise defined herein, the capitalized terms used herein have the meanings assigned to them in the Agreement. This Certificate is one of the duly authorized Certificates designated as "Pass Through Certificates, Series 1997-1B-O" (herein called the "Certificates"). This Certificate is issued under and is subject to the terms, provisions, and conditions of the Agreement and the Intercreditor Agreement, to which agreements the Certificateholder of this Certificate by virtue of the acceptance hereof assents and by which such Certificateholder is bound. The property of the Trust includes certain Equipment Notes and all rights of the Trust to receive any payments under the Intercreditor Agreement and the Liquidity Facility (the "Trust Property"). Each issue of the Equipment Notes is secured by a security interest in The Aircraft leased to the Company. Each of the Certificates represents a fractional undivided interest in the Trust and the Trust Property, and has no rights, benefits or interest in respect of any assets or property other than the Trust Property. The undivided percentage interest in the Trust represented by each of this Certificate (as specified above) and the other Pass Through Certificates, Series 1997-1B-O, was determined on the basis of (x) the aggregate of the Reference Principal Amount of this Certificate (as specified above) and of the other Pass Through Certificates, Series 1997-1B-O and (y) the aggregate original principal amounts of the Equipment Notes constituting the Trust Property. Subject to and in accordance with the terms of the Agreement and the Intercreditor Agreement, from funds then available to the Trustee, there will be distributed on each January 15, April 15, July 15 and October 15 (a "Regular Distribution Date"), commencing January 15, 1998, to the Person in whose name this Certificate is registered at the close of business on the 15th day preceding the Regular Distribution Date, an amount in respect of the Scheduled Payments on the Equipment Notes due on such Regular Distribution Date, the receipt of which has been confirmed by the Trustee, equal to the product of the percentage interest in the Trust evidenced by this Certificate and an amount equal to the sum of such Scheduled Payments. Subject to and in accordance with the terms of the Agreement and the Intercreditor Agreement, in the event that Special Payments on the Equipment Notes are received by the Trustee, from funds then available to the Trustee, there shall be distributed on the applicable Special Distribution Date, to the Person in whose name this Certificate is registered at the close of business on the 15th day preceding the Special Distribution Date, an amount in respect of such Special Payments on the Equipment Notes, the receipt of which has been confirmed by the Trustee, equal to the product of the percentage interest in the Trust evidenced by this Certificate and an amount equal to the sum of such Special Payments so received. If a Regular Distribution Date or Special Distribution Date is not a Business Day, distribution shall be made on the immediately following Business Day with the same force and effect as if made on such Regular Distribution Date or Special Distribution Date and no interest shall accrue during the intervening period. The Trustee shall mail notice of each Special Payment and the Special Distribution Date therefor to the Certificateholder of this Certificate. Distributions on this Certificate will be made by the Trustee by check mailed to the Person entitled thereto, without the presentation or surrender of this Certificate or the making of any notation hereon. Except as otherwise provided in the Agreement and notwithstanding the above, the final distribution on this Certificate will be made after notice mailed by the Trustee of the pendency of such distribution and only upon presentation and surrender of this Certificate at the office or agency of the Trustee specified in such notice. The Certificates do not represent a direct obligation of, or an obligation guaranteed by, or an interest in, the Guarantor, the Company or the Trustee or any affiliate thereof. The Certificates are limited in right of payment, all as more specifically set forth on the face hereof and in the Agreement. All payments or distributions made to Certificateholders under the Agreement shall be made only from the Trust Property and only to the extent that the Trustee shall have sufficient income or proceeds from the Trust Property to make such payments in accordance with the terms of the Agreement. Each Certificateholder of this Certificate, by its acceptance hereof, agrees that it will look solely to the income and proceeds from the Trust Property to the extent available for distribution to such Certificateholder as provided in the Agreement. This Certificate does not purport to summarize the Agreement and reference is made to the Agreement for information with respect to the interests, rights, benefits, obligations, proceeds, and duties evidenced hereby. A copy of the Agreement may be examined during normal business hours at the principal office of the Trustee, and at such other places, if any, designated by the Trustee, by any Certificateholder upon request. The Agreement permits, with certain exceptions therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Certificateholders under the Agreement at any time by the Guarantor, the Company and the Trustee with the consent of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust. Any such consent by the Certificateholder of this Certificate shall be conclusive and binding on such Certificateholder and upon all future Certificateholders of this Certificate and of any Certificate issued upon the transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent is made upon this Certificate. The Agreement also permits the amendment thereof, in certain limited circumstances, without the consent of the Certificateholders of any of the Certificates. As provided in the Agreement and subject to certain limitations set forth, the transfer of this Certificate is registrable in the Register upon surrender of this Certificate for registration of transfer at the offices or agencies maintained by the Trustee in its capacity as Registrar, or by any successor Registrar duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Trustee and the Registrar, duly executed by the Certificateholder hereof or such Certificateholder's attorney duly authorized in writing, and thereupon one or more new Certificates of authorized denominations evidencing the same aggregate Fractional Undivided Interest in the Trust will be issued to the designated transferee or transferees. The Certificates are issuable only as registered Certificates without coupons in minimum denominations of $100,000 Fractional Undivided Interest and integral multiples of $1,000 in excess thereof except that one Certificate may be in a denomination of less than $100,000 that is not a multiple of $1,000. As provided in the Agreement and subject to certain limitations therein set forth, the Certificates are exchangeable for new Certificates of authorized denominations evidencing the same aggregate Fractional Undivided Interest in the Trust, as requested by the Certificateholder surrendering the same. No service charge will be made for any such registration of transfer or exchange, but the Trustee shall require payment of a sum sufficient to cover any tax or governmental charge payable in connection therewith. The Trustee, the Registrar, and any agent of the Trustee or the Registrar may treat the person in whose name this Certificate is registered as the owner hereof for all purposes, and neither the Trustee, the Registrar, nor any such agent shall be affected by any notice to the contrary. The obligations and responsibilities created by the Agreement and the Trust created thereby shall terminate upon the distribution to Certificateholders of all amounts required to be distributed to them pursuant to the Agreement and the disposition of all property held as part of the Trust Property. Any person acquiring or accepting this Certificate or an interest herein will, by such acquisition or acceptance, be deemed to have represented and warranted to and for the benefit of each Owner Participant and the Company that either: (i) the assets of an employee benefit plan subject to Title I of the Employment Retirement Income Security Act of 1974, as amended ("ERISA"), or of a plan subject to Section 4975 of the Internal Revenue Code of 1986, as amended (the "CODE"), have not been used to purchase this Certificate or interest herein are exempt from the prohibited transaction restrictions of ERISA and the Code pursuant to one or more prohibited transaction or statutory exemptions. THE AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES. Unless the certificate of authentication hereon has been executed by the Trustee, by manual signature, this Certificate shall not be entitled to any benefit under the Agreement or be valid for any purpose. IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed. AMERICAN TRANS AIR, INC. By: WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Trustee By: ---------------------------------------------------------- Title: Dated: ---------- [FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION] This is one of the Certificates referred to in the within-mentioned Agreement. WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Trustee By: ------ Authorized Officer FORM OF TRANSFER NOTICE FOR VALUE RECEIVED the undersigned registered holder hereby sell(s), assign(s) and transfer(s) unto INSERT TAXPAYER IDENTIFICATION NO. - --------------------------------- please print or typewrite name and address including zip code of assignee the within Certificate and all rights thereunder, hereby irrevocably constituting and appointing attorney to transfer said Certificate on the books of the Trustee with full power of substitution in the premises. [THE FOLLOWING PROVISION TO BE INCLUDED ON ALL U.S. PHYSICAL CERTIFICATES] In connection with any transfer of this Certificate occurring prior to the date that is the earlier of the date of an effective Registration Statement or December __, 1999, the undersigned confirms that without utilizing any general solicitation or general advertising that: [CHECK ONE] [ ] (a) this Certificate is being transferred in compliance with the exemption from registration under the Securities Act of 1933, as amended, provided by Rule 144A thereunder. OR [ ] (b) this Certificate is being transferred other than in accordance with (a) above and documents are being furnished that comply with the conditions of transfer set forth in this Certificate and the Agreement. If neither of the foregoing boxes is checked, the Trustee or other Registrar shall not be obligated to register this Certificate in the name of any Person other than the Holder hereof unless and until the conditions to any such transfer of registration set forth herein and in Section 3.06 of the Agreement shall have been satisfied. Date: [NAME OF TRANSFEROR] ------------ -------------------- NOTE: The signature must correspond with the name as written upon the face of the within-mentioned instrument in every particular, without alteration or any change whatsoever. Signature Guarantee: TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED. The undersigned represents and warrants that it is purchasing this Certificate for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933, as amended, and is aware that the sale to it is being made in reliance on Rule 144A and has been advised of the applicable transfer restrictions relating to the Certificates and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. [Name of Transferee] Dated: ------------- NOTE: To be executed by an executive officer. EXHIBIT B FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH TRANSFERS PURSUANT TO REGULATION S [date] Wilmington Trust Company, not in its individual capacity but solely as Trustee Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 Attention: Corporate Trust Administration Re: American Trans Air 1997-1B-O Pass Through Trust (the "Trust"), ____% American Trans Air Pass Through Certificates Series 1997-1B-O (the "CERTIFICATES") - ------------------------------------------------------------------------------- Sirs: In connection with our proposed sale of $ Fractional Undivided Interest of the Certificates, we confirm that such sale has been effected pursuant to and in accordance with Regulation S under the Securities Act of 1933, as amended, and, accordingly, we represent that: (1) the offer of the Certificates was not made to a person in the United States; (2) either (a) at the time the buy order was originated, the transferee was outside the United States or we and any person acting on our behalf reasonably believed that the transferee was outside the United States or (b) the transaction was executed in, on or through the facilities of a designated off-shore securities market and neither we nor any person acting on our behalf knows that the transaction has been pre-arranged with a buyer in the United States; (3) no directed selling efforts have been made in the United States in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S, as applicable; and (4) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act. In addition, if the sale is made during a restricted period and the provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are applicable thereto, we confirm that such sale has been made in accordance with the applicable provisions of Rule 903(c)(3) or Rule 904(c)(1), as the case may be. You and American Trans Air, Inc. are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Terms used in this certificate have the meanings set forth in Regulation S. Very truly yours, [Name of Transferor] By: ------ Authorized Signature EXHIBIT C FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH TRANSFERS TO NON-QIB ACCREDITED INVESTORS [date] Wilmington Trust Company, not in its individual capacity but solely as Trustee Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 Attention: Corporate Trust Administration Re: American Trans Air 1997-1B-O Pass-Through Trust (the "Trust"), ____% American Trans Air Pass Through Certificates Series 1997-1B-O (THE "CERTIFICATES") - --------------------------------------------------------------------------- Dear Sirs: In connection with our proposed purchase of $ aggregate principal amount of the ----------- Certificates, we confirm that: 1. We understand that any subsequent transfer of the Certificates is subject to certain restrictions and conditions set forth in the Pass Through Trust Agreement dated as of December __, 1997 relating to the Certificates (the "Pass Through Trust Agreement") and the undersigned agrees to be bound by, and not to resell, pledge or otherwise transfer the Certificates except in compliance with, such restrictions and conditions and the Securities Act of 1933, as amended (the "Securities Act"). 2. We are purchasing Certificates having an aggregate principal amount of not less than $100,000 and each account (if any) for which we are purchasing Certificates is purchasing Certificates having an aggregate principal amount of not less than $100,000. 3. We understand that the Certificates have not been registered under the Securities Act, and that the Certificates may not be offered or sold except as permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for which we are acting as hereinafter stated, that if we should sell any Certificate, we will do so only (A) in accordance with Rule 144A under the Securities Act to a "qualified institutional buyer" (as defined therein), (B) to an institutional "accredited investor" (as defined below) that, prior to such transfer, furnishes to you and American Trans Air, Inc., a signed letter substantially in the form of this letter, (C) outside the United States in accordance with Rule 904 of Regulation S under the Securities Act, (D) pursuant to the exemption from registration provided by Rule 144 under the Securities Act, or (E) pursuant to an effective registration statement under the Securities Act, and we further agree to provide to any person purchasing any of the Certificates from us a notice advising such purchaser that resales of the Notes are restricted as stated herein. We further understand that the Certificates purchased by us will bear a legend to the foregoing effect. 4. We understand that, on any proposed resale of any Certificates, we will be required to furnish to you and American Trans Air, Inc. such certifications, legal opinions and other information as you and American Trans Air, Inc. may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. We further understand that the Certificates purchased by us will bear a legend to the foregoing effect. 5. We are an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Certificates and we and any accounts for which we are acting are each able to bear the economic risk of our or its investment. 6. We are acquiring the Certificates purchased by us for our own account or for one or more accounts (each of which is an institutional "accredited investor") as to each of which we exercise sole investment discretion. You and American Trans Air, Inc. are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Very truly yours, [Name of Transferee] By: ------ Authorized Signature EXHIBIT D FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT American Trans Air 1997-1[__] Pass Through Trust ASSIGNMENT AND ASSUMPTION AGREEMENT, dated ____________, 199_ (the "AGREEMENT"), between Wilmington Trust Company, a Delaware banking corporation ("WTC"), not in its individual capacity except as expressly provided herein, but solely as trustee under the Pass Through Trust Agreement dated as of December __, 1997 (as amended, modified or otherwise supplemented from time to time, the "PASS THROUGH TRUST AGREEMENT") in respect of the American Trans Air 1997-1B-O Pass Through Trust (the "ASSIGNOR"), and Wilmington Trust Company, a Delaware banking corporation, not in its individual capacity except as expressly provided herein, but solely as trustee under the Pass Through Trust Agreement dated as of December __, 1997 (the "NEW PASS THROUGH TRUST AGREEMENT") in respect of the American Trans Air 1997-1B-S Pass Through Trust (the "ASSIGNEE"). W I T N E S S E T H: - - - - - - - - - - WHEREAS, the parties hereto desire to effect on the date hereof (the "TRANSFER DATE") (a) the transfer by the Assignor to the Assignee of all of the right, title and interest of the Assignor in, under and with respect to, among other things, the Trust Property and each of the documents listed in Schedule I hereto (the "SCHEDULED DOCUMENTS") and (b) the assumption by the Assignee of the obligations of the Assignor (i) under the Scheduled Documents and (ii) in respect of the Certificates issued under the Pass Through Trust Agreement; and WHEREAS, the Scheduled Documents permit such transfer upon satisfaction of certain conditions heretofore or concurrently herewith being complied with; NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements herein contained, the parties hereto do hereby agree as follows (capitalized terms used herein without definition having the meaning ascribed thereto in the Pass Through Trust Agreement): 1. ASSIGNMENT. The Assignor does hereby sell, assign, convey, transfer and set over unto the Assignee as of the Transfer Date all of its present and future right, title and interest in, under and with respect to the Trust Property and the Scheduled Documents and each other contract, agreement, document or instrument relating to the Trust Property or the Scheduled Documents (such other contracts, agreements, documents or instruments, together with the Scheduled Documents, to be referred to as the "ASSIGNED DOCUMENTS"), and any proceeds therefrom, together with all documents and instruments evidencing any of such right, title and interest. 2. ASSUMPTION. The Assignee hereby assumes for the benefit of the Assignor and each of the parties listed in Schedule II hereto (collectively, the "BENEFICIARIES") all of the duties and obligations of the Assignor, whenever accrued, pursuant to the Assigned Documents and hereby confirms that it shall be deemed a party to each of the Assigned Documents to which the Assignor is a party and shall be bound by all the terms thereof (including the agreements and obligations of the Assignor set forth therein) as if therein named as the Assignor. Further, the Assignee hereby assumes for the benefit of the Assignor and the Beneficiaries all of the duties and obligations of the Assignor under the Outstanding Certificates and hereby confirms that the Certificates representing Fractional Undivided Interests under the Pass Through Trust Agreement shall be deemed for all purposes of the Pass Through Trust Agreement and the New Pass Through Trust Agreement to be certificates representing the same fractional undivided interests under the New Pass Through Trust Agreement equal to their respective beneficial interests in the trust created under the Pass Through Trust Agreement. 3. EFFECTIVENESS. This Agreement shall be effective upon the execution and delivery hereof by the parties hereto, and each Certificateholder, by its acceptance of its Certificate or a beneficial interest therein, agrees to be bound by the terms of this Agreement. 4. PAYMENTS. The Assignor hereby covenants and agrees to pay over to the Assignee, if and when received following the Transfer Date, any amounts (including any sums payable as interest in respect thereof) paid to or for the benefit of the Assignor that, under Section 1 hereof, belong to the Assignee. 5. FURTHER ASSURANCES. The Assignor shall, at any time and from time to time, upon the request of the Assignee, promptly and duly execute and deliver any and all such further instruments and documents and take such further action as the Assignee may reasonably request to obtain the full benefits of this Agreement and of the right and powers herein granted. The Assignor agrees to deliver the Global Certificates, and all Trust Property, if any, then in the physical possession of the Assignor, to the Assignee. 6. REPRESENTATIONS AND WARRANTIES. (a) The Assignee represents and warrants to the Assignor and each of the Beneficiaries that: (i) it has all requisite power and authority and legal right to enter into and carry out the transactions contemplated hereby and to carry out and perform the obligations of the "Pass Through Trustee" under the Assigned Documents; (ii) on and as of the date hereof, the representations and warranties of the Assignee set forth in Section 7.14 of the New Pass Through Trust Agreement are true and correct. (b) The Assignor represents and warrants to the Assignee that: (i) it is duly incorporated, validly existing and in good standing under the laws of the State of Delaware and has the full trust power, authority and legal right under the laws of the State of Delaware and the United States pertaining to its trust and fiduciary powers to execute and deliver this Agreement; (ii) the execution and delivery by it of this Agreement and the performance by it of its obligations hereunder have been duly authorized by it and will not violate its articles of association or by-laws or the provisions of any indenture, mortgage, contract or other agreement to which it is a party or by which it is bound; and (iii) this Agreement constitutes the legal, valid and binding obligations of it enforceable against it in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity. 7. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK INCLUDING MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS. 8. COUNTERPARTS. This Agreement may be executed in any number of counterparts, all of which ------------ together shall constitute a single instrument. It shall not be necessary that any counterpart be signed by both parties so long as each party shall sign at least one counterpart. 9. THIRD PARTY BENEFICIARIES. The Assignee hereby agrees, for the benefit of the Beneficiaries, that its representations, warranties and covenants contained herein are also intended to be for the benefit of each Beneficiary, and each Beneficiary shall be deemed to be an express third party beneficiary with respect thereto, entitled to enforce directly and in its own name any rights or claims it may have against such party as such beneficiary. IN WITNESS WHEREOF, the parties hereto, through their respective officers thereunto duly authorized, have duly executed this Assignment as of the day and year first above written. ASSIGNOR: WILMINGTON TRUST COMPANY, not in its individual capacity except as expressly provided herein, but solely as trustee under the Pass Through Trust Agreement in respect of the American Trans Air 1997-1B-O Pass Through Trust By:___________________________ Title: ASSIGNEE: WILMINGTON TRUST COMPANY, not in its individual capacity except as expressly provided herein, but solely as trustee under the Pass Through Trust Agreement in respect of the American Trans Air 1997-1B-S Pass Through Trust By:__________________________ Title: Schedule I Schedule of Assigned Documents (1) Intercreditor Agreement dated as of December 23, 1997 among the Trustee, the Other Trustees, the Liquidity Providers, the liquidity providers, if any, relating to the Certificates issued under (and as defined in) each of the Other Pass Through Trust Agreements and the Subordination Agent. (2) Escrow and Paying Agent Agreement (Class B) dated as of December 23, 1997 among the Escrow Agent, the Initial Purchasers, the Trustee and the Paying Agent. (3) Note Purchase Agreement dated as of December 23, 1997 among the Company, the Trustee, the Other Trustees, the Depositary, the Escrow Agent, the Paying Agent and the Subordination Agent. (4) Deposit Agreement (Class B) dated as of December 23, 1997 between the Escrow Agent and the Depositary. (5) Each of the Operative Documents (as defined in the Participation Agreement for each Aircraft) in effect as of the Transfer Date. Schedule II Schedule of Beneficiaries Wilmington Trust Company, not in its individual capacity but solely as Subordination Agent. Wilmington Trust Company, not in its individual capacity but solely as Paying Agent ING Bank, as Liquidity Provider Amtran, Inc. American Trans Air, Inc. Salomon Brothers Inc, as Initial Purchaser Furman Selz LLC, as Initial Purchaser First Security Bank, National Association, as Escrow Agent Each of the other parties to the Assigned Documents EXHIBIT E FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH TRANSFERS TO QIBs [date] Wilmington Trust Company, not in its individual capacity but solely as Trustee Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 Attention: Corporate Trust Administration Re: American Trans Air 1997-1B-O Pass Through Trust (the "Trust"), ____% American Trans Air Pass Through Certificates Series 1997-1B-O (the "CERTIFICATES") - ------------------------------------------------------------------------------- Sirs: In connection with our proposed sale of $ Fractional Undivided Interest of the Certificates, we confirm that without utilizing any general solicitation or general advertising that such Certificates are being transferred in compliance with the exemption from registration under the Securities Act of 1933, as amended, provided by Rule 144A thereunder. Date: [NAME OF TRANSFEROR ------------ ------------------- NOTE: The signature must correspond with the name as written upon the face of the within-mentioned Certificate in every particular, without alteration or any change whatsoever. Signature Guarantee: TO BE COMPLETED BY PURCHASER: The undersigned represents and warrants that it is purchasing the within-mentioned Certificate for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933, as amended, and is aware that the sale to it is being made in reliance on Rule 144A and has been advised of the applicable transfer restrictions relating to the Certificates and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Dated: ------------- [Name of Transferee] NOTE: To be executed by an executive officer. 1Not to be included on the face of the Offshore Global Certificate or any Offshore Physical Certificates. 2To be included on the face of each Global Certificate. EX-4.17 12 file012.txt AMTRAN, INC., 2000 10K, EXHIBIT 4.17 EXECUTION COPY AMTRAN, INC. AMERICAN TRANS AIR, INC. and WILMINGTON TRUST COMPANY as Trustee PASS THROUGH TRUST AGREEMENT Dated as of December 23, 1997 American Trans Air 1997-1B-S Pass Through Trust 7.19% American Trans Air 1997-1B-S Pass Through Certificates TABLE OF CONTENTS Page ARTICLE I DEFINITIONS.........................................................2 Section 1.01. Definitions.............................................2 Section 1.02. Compliance Certificates and Opinions...................13 Section 1.03. Form of Documents Delivered to Trustee.................14 Section 1.04. Acts of Certificateholders.............................14 ARTICLE II ACQUISITION OF TRUST PROPERTY.....................................16 Section 2.01. [Intentionally omitted]................................16 Section 2.02. Acquisition of Trust Property..........................16 Section 2.03. Acceptance by Trustee.................................16 Section 2.04. Limitation of Powers...................................17 ARTICLE III THE CERTIFICATES..................................................17 Section 3.01. Title, Form, Denomination and Execution of Certificates17 Section 3.02. Restrictive Legends....................................18 Section 3.03. Authentication of Certificates.........................20 Section 3.04. Transfer and Exchange..................................20 Section 3.05. Book-Entry Provisions for U.S. Global Certificate and Offshore Global Certificates...........................21 Section 3.06. Special Transfer Provisions............................23 Section 3.07. Mutilated, Destroyed, Lost or Stolen Certificates......25 Section 3.08. Persons Deemed Owners..................................26 Section 3.09. Cancellation...........................................26 Section 3.10. Limitation of Liability for Payments...................26 Section 3.11. Temporary Certificates.................................26 ARTICLE IV DISTRIBUTIONS; STATEMENTS TO......................................27 Section 4.01. Certificate Account and Special Payments Account.......27 Section 4.02. Distributions from Certificate Account and Special Payments Account.......................................27 Section 4.0..........................................................29 Section 4.04. Investment of Special Payment Moneys...................30 ARTICLE V THE COMPANY........................................................31 Section 5.01. Maintenance of Corporate Existence.....................31 Section 5.02. Consolidation, Merger, Etc.............................31 Section 5.03. Rule 144A(d)(4) Information...........................32 ARTICLE VI DEFAULT...........................................................33 Section 6.01. Events of Default......................................33 Section 6.02. Incidents of Sale of Equipment Notes...................35 Section 6.03. Judicial Proceedings Instituted by Trustee; Trustee May Bring Suit.............................................36 Section 6............................................................36 Section 6.05. Waiver of Past Defaults................................36 Section 6.06. Right of Certificateholders to Receive Payments Not to Be Impaired..............................................37 Section 6.07. Certificateholders May Not Bring Suit Except Under Certain Conditions.....................................37 Section 6.08. Remedies Cumulative....................................38 Section 6.09. Undertaking for Costs..................................38 ARTICLE VII THE TRUSTEE......................................................38 Section 7.01. Notice of Defaults.....................................38 Section 7.02. Certain Rights of Trustee..............................39 Section 7.03. Not Responsible for Recitals or Issuance of Certificates..........................................40 Section 7.04. May Hold Certificates..................................40 Section 7.05. Money Held in Trust....................................40 Section 7.06. Compensation and Reimbursement.........................41 Section 7.07. Corporate Trustee Required, Eligibility................42 Section 7.08. Resignation and Removal: Appointment of Successor......42 Section 7.09. Acceptance of Appointment by Successor.................44 Section 7.10. Merger, Conversion, Consolidation or Succession to Business..............................................44 Section 7.11. Maintenance of Agencies................................45 Section 7.12. Money for Certificate Payments to Be Held in Trust.....46 Section 7.13. Registration of Equipment Notes in Name of Subordination Agent..................................................46 Section 7.14. Representations and Warranties of Trustee..............46 Section 7.15. Withholding Taxes, Information Reporting...............48 Section 7.16. Trustee's Liens........................................48 Section 7.17. Preferential Collection of Claims......................49 ARTICLE VIII CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE................49 Section 8.01. The Company to Furnish Trustee with Names and Addresses of Certificateholders..................................49 Section 8.02. Preservation of Information; Communications to Certificateholders.....................................49 Section 8.03. Reports by Trustee.....................................49 Section 8.04. Reports by the Guarantor and Company...................49 ARTICLE IX SUPPLEMENTAL AGREEMENTS...........................................50 Section 9.01. Supplemental Agreements Without Consent of Certificateholders.....................................50 Section 9.02. Supplemental Agreements with Consent of Certificateholders.....................................52 Section 9.03. Documents Affecting Immunity or Indemnity..............53 Section 9.04. Execution of Supplemental Agreements...................53 Section 9.05. Effect of Supplemental Agreements......................53 Section 9.06. Conformity with Trust Indenture Act....................53 Section 9.07. Reference in Certificates to Supplemental Agreements...53 ARTICLE X AMENDMENTS TO INDENTURES AND NOTE DOCUMENTS........................54 Section 10.01. Amendments and Supplements to Indentures and Other Note Documents.............................................54 ARTICLE XI TERMINATION OF TRUSTS.............................................55 Section 11.01. Termination of the Trust..............................55 ARTICLE XII MISCELLANEOUS PROVISIONS.........................................56 Section 12.01. Limitation on Rights of Certificateholders............56 Section 12.02. Liabilities of Certificateholders.....................56 Section 12.03. Certificates Nonassessable and Fully Paid.............56 Section 12.04. [Intentionally omitted]...............................56 Section 12.05. Notices...............................................56 Section 12.06. Governing Law.........................................57 Section 12.07. Severability of Provisions............................58 Section 12.08. [Intentionally omitted]...............................58 Section 12.09. Effect of Headings and Table of Contents..............58 Section 12.10. Successors and Assigns................................58 Section 12.11. Benefits of Agreement.................................58 Section 12.12. Legal Holidays........................................58 Section 12.13. Counterparts..........................................58 Section 12.14. Communication by Certificateholders with Other Certificateholders...................................58 Section 12.15. Intention of Parties...............................59 Exhibit A - Form of Certificate to be Delivered in Connection with Transfers Pursuant to Regulation S Exhibit B - Form of Certificate to be Delivered in Connection with Transfers to Non-QIB Accredited Investors Exhibit C - Form of Assignment and Assumption Agreement Exhibit D - Form of Certificate to be Delivered in Connection with Transfers to QIBs This PASS THROUGH TRUST AGREEMENT, dated as of December 23, 1997, among AMTRAN, INC., an Indiana corporation (the "Guarantor"), AMERICAN TRANS AIR, INC., an Indiana corporation (the "Company"), and WILMINGTON TRUST COMPANY, a Delaware banking corporation, as Trustee, is made with respect to the formation of the American Trans Air 1997-1B-S Pass Through Trust, and the issuance of 7.19% American Trans Air 1997-1B-S Pass Through Certificates representing fractional undivided interests in the Trust. WITNESSETH: WHEREAS, the Company has obtained commitments from The Boeing Company for the delivery of certain Aircraft; WHEREAS, as of the Transfer Date (as defined below) the Company will have financed the acquisition of all or a portion of such Aircraft either (i) through separate leveraged lease transactions in which the Company leases such aircraft (collectively, the "Leased Aircraft") or (ii) through separate secured loan transactions in which the Company owns such Aircraft (collectively, the "Owned Aircraft"); WHEREAS, as of the Transfer Date (as defined below) in the case of each Leased Aircraft, each Owner Trustee, acting on behalf of the corresponding Owner Participant, will have issued pursuant to an Indenture, on a non-recourse basis, three series of Equipment Notes in order to finance a portion of the purchase price of each such Leased Aircraft; WHEREAS, as of the Transfer Date (as defined below) in the case of each Owned Aircraft, the Company, will have issued pursuant to an Indenture, on a recourse basis, three series of Equipment Notes to finance a portion of the purchase price of each such Owned Aircraft; WHEREAS, as of the Transfer Date, the Related Trustee will assign, transfer and deliver all of such trustee's right, title and interest to the trust property held by the Related Trustee to the Trustee pursuant to the Assignment and Assumption Agreement (as defined below); WHEREAS, the Trustee, effectively only, but automatically upon execution and delivery of this Assignment and Assumption Agreement, will be deemed to have declared the creation of this Trust (the "1997-1B-S Trust") for the benefit of the Certificateholders, and each Holder of Certificates outstanding as of the Transfer Date, as the grantors of the 1997-1B-S Trust, by their respective acceptances of the Certificates, will join in the creation of this 1997-1B-S Trust with the Trustee; WHEREAS, except for those Certificates to which an Escrow Receipt (as defined below) has been affixed, all Certificates deemed issued by the Trust will evidence fractional undivided interests in the Trust and will convey no rights, benefits or interests in respect of any property other than the Trust Property; WHEREAS, the Company as the "issuer", as such term is defined in and solely for purposes of the Securities Act of 1933, as amended, of the Certificates to be issued pursuant hereto, and as the "obligor", as such term is defined in and solely for purposes of the Trust Indenture Act of 1939, as amended, and (ii) the Guarantor have each duly authorized the execution, delivery and effectiveness of this Agreement with respect to all such Certificates and are undertaking to perform certain administrative and ministerial duties hereunder and are also undertaking to pay the fees and expenses of the Trustee; and WHEREAS, upon the execution and delivery of the Assignment and Assumption Agreement, all of the conditions and requirements necessary to make this Agreement, a valid, binding and legal instrument, enforceable in accordance with its terms and for the purposes herein expressed, will have been done, performed and fulfilled, and the execution and delivery of this Agreement in the form and with the terms hereof will be in all respects duly authorized; NOW, THEREFORE, in consideration of the mutual agreements herein contained, and of other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I DEFINITIONS Section 1.01. Definitions. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: (1) the terms used herein that are defined in this Article have the meanings assigned to them in this Article, and include the plural as well as the singular; (2) all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference herein, have the meanings assigned to them therein; (3) all references in this Agreement to designated "Articles", "Sections" and other subdivisions are to the designated Articles, Sections and other subdivisions of this Agreement; (4) the words "herein", "hereof' and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision; and (5) unless the context otherwise requires, whenever the words "including", "include" or "includes" are used herein, it shall be deemed to be followed by the phrase "without limitation". Act: With respect to any Certificateholder has the meaning specified in Section 1.04. Affiliate: With respect to any specified Person, means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such Person. For the purposes of this definition, "control", when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms "controlling" and "controlled" have meanings correlative to the foregoing. Agent Members: Has the meaning specified in Section 3.05(a). Aircraft: means each of the Aircraft or Substitute Aircraft in respect of which a Participation Agreement is entered into in accordance with the Note Purchase Agreement. Assignment and Assumption Agreement: Means the assignment and assumption agreement substantially in the form of Exhibit D to the Related Pass Through Trust Agreement executed and delivered in accordance with Section 11.01 thereto. Authorized Agent: Means any Paying Agent or Registrar for the Certificates. Avoidable Tax: Has the meaning specified in Section 7.08(e) hereof. Book-Entry Certificates: With respect to the Certificates, means a beneficial interest in the Certificates, ownership and transfers of which shall be made through book entries as described in Section 3.04. Business Day: Means any day other than a Saturday, a Sunday or a day on which commercial banks are required or authorized to close in Indianapolis, Indiana; New York, New York; or Phoenix, Arizona; and, so long as any such Certificate is outstanding, a city and state in which the Trustee or any related Loan Trustee maintains its Corporate Trust Office or receives and disburses funds. Cedel: Means Cedel Bank societe anonyme. Certificate: Means any one of the certificates issued by the Related Trust and that are "Outstanding" (as defined in the Related Pass Through Trust Agreement) as of the Transfer Date (the "Transfer Date Certificates") and any such Certificate issued in exchange therefor or replacement thereof pursuant to this Agreement. Certificate Account: Means the account or accounts created and maintained pursuant to Section 4.01(a). Certificateholder or Holder: Means the Person in whose name a Certificate is registered in the Register. Clearing Agency: Means an organization registered as a "clearing agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as amended. Clearing Agency Participant: Means a broker, dealer, bank, other financial institution or other Person for whom from time to time a Clearing Agency effects, directly or indirectly, book-entry transfers and pledges of securities deposited with the Clearing Agency. Company: Means American Trans Air, Inc., an Indiana corporation, or its successor in interest pursuant to Section 5.02. Controlling Party: Means the Person entitled to act as such pursuant to the terms of the Intercreditor Agreement. Corporate Trust Office: With respect to the Trustee or any Loan Trustee, means the office of such trustee in the city at which at any particular time its corporate trust business shall be principally administered. Delivery Period Termination Date: Has the meaning specified in Annex A to the Note Purchase Agreement. Deposit Agreement: Means the Deposit Agreement (Class B) dated as of December 23, 1997 relating to the Certificates, between the Depositary and the Escrow Agent, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. Depositary: Means NBD Bank, National Association, a national banking association.- Deposits: Has the meaning specified in the Deposit Agreement. Direction: Has the meaning specified in Section 1.04(c). Distribution Date: Means each Regular Distribution Date and each Special Distribution Date. DTC: Means The Depository Trust Company, its nominees and their respective successors. Equipment Note: Means the "Secured Certificates" as defined in the Indentures. ERISA: Means the Employee Retirement Income Security Act of 1974, as amended from time to time, or any successor federal statute. Escrow Agent: Means, initially, First Security Bank, National Association, and any replacement or successortherefor appointed in accordance with the Escrow Agreement. Escrow Agreement: Means the Escrow and Paying Agent Agreement (Class B) dated as of December 23, 1997 relating to the Certificates, among the Escrow Agent, the Escrow Paying Agent, the Related Trustee (and after the Transfer Date, the Trustee) and the Initial Purchasers, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. Escrow Paying Agent: Means the Person acting as paying agent under the Escrow Agreement. Escrow Receipt: Means the receipt substantially in the form annexed to the Escrow Agreement representing a fractional undivided interest in the funds held in escrow thereunder. Euroclear: Means the Euroclear System. Event of Default: Means the occurrence of an Indenture Default under any Indenture pursuant to which Equipment Notes held by the Trust were issued. Final Withdrawal: Has the meaning specified in the Escrow Agreement. Final Withdrawal Date: Has the meaning specified in the Escrow Agreement. Fractional Undivided Interest: Means the fractional undivided interest in the Trust that is evidenced by aCertificate. Global Certificates: Has the meaning assigned to such term in Section 3.01. Guarantor: Means Amtran, Inc., an Indiana corporation, or its successor in interest. Indenture: Means each of the three separate trust indenture and security agreements relating to the Aircraft, each entered into pursuant to the related Participation Agreement, in each case as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. Indenture Default: With respect to any Indenture, means any Event of Default (as such term is defined in such Indenture). Initial Purchasers: Means Salomon Brothers Inc and Furman Selz LLC, collectively. Initial Regular Distribution Date: Means the first Regular Distribution Date on which a Scheduled Payment is to be made. Institutional Accredited Investor: Means an institutional investor that is an "accredited investor" within the meaning set forth in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act. Intercreditor Agreement: Means the Intercreditor Agreement dated December 23, 1997 among the Related Trustee (and after the Transfer Date, the Trustee), the Related Other Trustees (and after the Transfer Date, the Other Trustees), the Liquidity Provider, the liquidity providers, if any, relating to the Certificates issued under (and as defined in) the Related Other Pass Through Trust Agreements, and Wilmington Trust Company, as Subordination Agent thereunder, as amended, supplemented or otherwise modified from time to time in accordance with its terms. Issuance Date: Means the date of the issuance of the Certificates. Lease: Means any lease between an Owner Trustee, as the lessor, and the Company, as the lessee, referred to in the related Indenture, as each such lease may be amended or supplemented in accordance with its respective terms; and Leases means all such leases. Leased Aircraft: Has the meaning specified in the second recital to this Agreement. Letter of Representations: Means the agreement dated the Issuance Date among the Company, the Trustee and the initial Clearing Agency. Liquidity Facility: Means the Irrevocable Revolving Credit Agreement Class A Certificates dated December 23, 1997 relating to the Certificates between the Liquidity Provider and the Subordination Agent, as amended, replaced, supplemented or otherwise modified from time to time in accordance with its terms and the terms of the Intercreditor Agreement. Liquidity Provider: Means, initially, ING Bank, a Dutch bank, and any replacement or successor therefor appointed in accordance with the Liquidity Facility and the Intercreditor Agreement. Loan Trustee: With respect to any Equipment Note or the Indenture applicable thereto, means the bank or trust company designated as loan or indenture trustee under such Indenture; and any successor to such Loan Trustee as such trustee; and Loan Trustees means all of the Loan Trustees under the Indentures. Non-U.S. Person: Means a Person that is not a U.S. Person as defined in Regulation S. Note Documents: With respect to any Equipment Note, means the related Indenture, Lease (if the related Aircraft is leased to the Company) and Participation Agreement. Note Purchase Agreement: Means the Note Purchase Agreement dated as of December 23, 1997 among the Related Trustee (and after the Transfer Date, the Trustee), the Related Other Trustees (and after the Transfer Date, the Other Trustees), the Company, the Escrow Agent, the Escrow Paying Agent and the Subordination Agent, as the same may be amended, supplemented or otherwise modified from time to time, in accordance with its terms. Offering Memorandum: Means the Offering Memorandum dated December 17, 1997 relating to the offering of the Certificates and the certificates issued under the Related Other Pass Through Trust Agreements. Officer's Certificate: Means a certificate signed (a) in the case of the Guarantor or the Company, by (i) the President or any Executive Vice President or Senior Vice President of the Guarantor or the Company, respectively, signing alone or (ii) any Vice President of the Guarantor or the Company signing together with the Secretary, the Assistant Secretary, the Treasurer or any Assistant Treasurer of the Guarantor or the Company, respectively, or (b) in the case of the Trustee or an Owner Trustee or a Loan Trustee, a Responsible Officer of the Trustee or such Owner Trustee or such Loan Trustee, as the case may be. Offshore Global Certificates: Has the meaning assigned to such term in Section 3.01. Offshore Physical Certificates: Has the meaning assigned to such term in Section 3.01. Opinion of Counsel: Means a written opinion of legal counsel who (a) in the case of counsel for the Guarantor or the Company, may be (i) a senior attorney in rank of the officers of the Guarantor or the Company a principal duty of which is furnishing advice as to legal matters or (ii) such other counsel designated by the Guarantor or the Company and reasonably acceptable to the Trustee and (b) in the case of any Owner Trustee or any Loan Trustee, may be such counsel as may be designated by any of them whether or not such counsel is an employee of any of them, and who shall be reasonably acceptable to the Trustee. Other Pass Through Trust Agreement: Means (i) the American Trans Air 1997-1A-S Pass Through Trust Agreement relating to the American Trans Air 1997-1A-S Pass Through Trust, and (ii) the American Trans Air 1997-1C-S Pass Through Trust Agreement relating to the American Trans Air 1997-1C-S Pass Through Trust, each dated the date hereof; and Other Pass Through Trust Agreements means all such agreements. Other Trustee: Means the trustee under each of the Other Pass Through Trust Agreements, and any successor or other trustee appointed as provided therein and Other Pass Through Trustees means both such trustees. Other Trusts: Means the American Trans Air 1997-1A-S Pass Through Trust and the American Trans Air 1997-1C-S Pass Through Trust. Outstanding: With respect to Certificates, means, as of the date of determination, all Transfer Date Certificates, and all other Certificates theretofore authenticated and delivered under this Agreement, in each case except: (i) Certificates theretofore canceled by the Registrar or delivered to the Trustee or the Registrar for cancellation; (ii) All of the Certificates if money in the full amount required to make the final distribution with respect thereto pursuant to Section 11.01 hereof has been theretofore deposited with the Trustee in trust for the Holders of such Certificates as provided in Section 4.01 pending distribution of such money to such Certificateholders pursuant to such final distribution payment; and (iii) Certificates in exchange for or in lieu of which other Certificates have been authenticated and delivered pursuant to this Agreement. Owned Aircraft: Has the meaning specified in the second recital to this Agreement. Owner Participant: With respect to any Equipment Note, means the "Owner Participant" as referred to in the Indenture pursuant to which such Equipment Note is issued and any permitted successor or assign of such Owner Participant; and Owner Participants at any time of determination means all of the Owner Participants thus referred to in the Indentures. Owner Trustee: With respect to any Equipment Note, means the "Owner Trustee", as referred to in the Indenture pursuant to which such Equipment Note is issued, not in its individual capacity but solely as trustee; and Owner Trustees means all of the Owner Trustees party to any of the respective Indentures. Participation Agreement: Means each Participation Agreement to be entered into by the Related Trustee and the Related Other Trustees pursuant to the Note Purchase Agreement, as the same may be amended, supplemented or otherwise modified in accordance with its terms; and Participation Agreements means all such agreements. Paying Agent: Means the paying agent maintained and appointed for the Certificates pursuant to Section 7.11. Permitted Investments: Means obligations of the United States of America or agencies or instrumentalities thereof for the payment of which the full faith and credit of the United States of America is pledged, maturing in not more than 60 days or such lesser time as is necessary for payment of any Special Payments on a Special Distribution Date. Person: Means any person, including any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization, or government or any agency or political subdivision thereof. Physical Certificates: Has the meaning specified in Section 3.01. Pool Balance: Means, as of any date, (i) the original aggregate face amount of the "Certificates" as defined in the Related Pass Through Trust Agreement less (ii) the aggregate amount of all payments made in respect of such Certificates other than payments made in respect of interest or premium thereon or reimbursement of any costs or expenses incurred in connection therewith less (iii) the aggregate amount of unused Deposits distributed as a Final Withdrawal other than payments in respect of interest or premium thereon. The Pool Balance as of any Distribution Date shall be computed after giving effect to the payment of principal, if any, on the Equipment Notes or Other Trust Property held in the Trust and the distribution thereof to be made on such Distribution Date and the distribution of the Final Withdrawal to be made on such Distribution Date. Pool Factor: Means, as of any date, the quotient (rounded to the seventh decimal place) computed by dividing (i) the Pool Balance as at such date by (ii) the original aggregate face amount of the "Certificates" as defined in the Related Pass Through Trust Agreement. The Pool Factor as of any Distribution Date shall be computed after giving effect to the payment of principal, if any, on the Equipment Notes or other Trust Property and the distribution thereof to be made on such Distribution Date and the distribution of the Final Withdrawal to be made on such Distribution Date. Private Placement Legend: Has the meaning specified in Section 3.02. PTC Event of Default: Means any failure to pay within 10 Business Days of the due date thereof: (i) the outstanding Pool Balance on June 15, 2013 or (ii) interest due on the Certificates on any Distribution Date (unless the Subordination Agent shall have made an Interest Drawing (as defined in the Intercreditor Agreement) or a withdrawal or withdrawals from a cash collateral account pursuant to Section 3.6(f) of the Intercreditor Agreement, with respect thereto in an amount sufficient to pay such interest and shall have distributed such amount to the Certificateholders). Purchase Agreement: Means the Purchase Agreement dated December 17, 1997 among the Initial Purchasers, the Company and the Depositary, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. QIB: Means a qualified institutional buyer as defined in Rule 144A. Record Date: Means (i) for Scheduled Payments to be distributed on any Regular Distribution Date, other than the final distribution, the 15th day (whether or not a Business Day) preceding such Regular Distribution Date, and (ii) for Special Payments to be distributed on any Special Distribution Date, other than the final distribution, the 15th day (whether or not a Business Day) preceding such Special Distribution Date. Register and Registrar: Mean the register maintained and the registrar appointed pursuant to Sections 3.04 and 7.11. Regular Distribution Date: With respect to distributions of Scheduled Payments in respect of the Certificates, means each date designated as such in this Agreement, until payment of all the Scheduled Payments to be made under the Equipment Notes held in the Trust has been made; provided, however, that, if any such day shall not be a Business Day, the related distribution shall be made on the next succeeding Business Day without additional interest. Regulation S Restricted Date: Means the date 40-days after the later of the commencement of the initial offering of the Certificates and the date of initial issuance thereof. Regulated Other Pass Through Trust Agreements: Means the "Other Pass Through Trust Agreements" as defined in the Related Pass Through Trust Agreement. Related Other Trustee: Means the "Other Trustees" as defined in the Related Pass Through Trust Agreement. Related Other Trusts: Means the "Other Trusts" as defined in the Related Pass Through Trust Agreement. Related Pass Through Trust Agreement: Means the American Trans Air 1997-1B-O Pass Through Trust Agreement relating to the American Trans Air 1997-1B-O Pass Through Trust, dated as of December 23, 1997, between the Company and the institution acting as trustee thereunder, as amended, supplemented or otherwise modified from time to time in accordance with its terms. Related Trust: Means the American Trans Air 1997-1B-O Pass Through Trust, formed under the Related Pass Through Trust Agreement. Related Trustee: Means the institution serving as the trustee under the Related Pass Through Trust Agreement. Request: Means a request by the Company setting forth the subject matter of the request accompanied by an Officer's Certificate and an Opinion of Counsel as provided in Section 1.02 of this Agreement. Responsible Officer: With respect to the Trustee, any Loan Trustee and any Owner Trustee, means any officer in the Corporate Trust Division of the Trustee, Loan Trustee or Owner Trustee or any other officer customarily performing functions similar to those performed by the persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of his knowledge of and familiarity with a particular subject. Rule 144A: Means Rule 144A under the Securities Act and any successor regulation thereto. Scheduled Payment: With respect to any Equipment Note, means any payment of principal and interest on such Equipment Note or any payment of interest on the Certificates with funds drawn under the Liquidity Facility (other than any such payment which is not in fact received by the Trustee or any Subordination Agent within five days of the date on which such payment is scheduled to be made) due from the obligor thereon which payment represents the installment of principal at the stated maturity of such installment of principal on such Equipment Note, the payment of regularly scheduled interest accrued on the unpaid principal amount of such Equipment Note, or both; provided that any payment of principal, premium, if any, or interest resulting from the redemption or purchase of any Equipment Note shall not constitute a Scheduled Payment. SEC: Means the Securities and Exchange Commission as from time to time constituted or created under the Securities Exchange Act of 1934, or, if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date. Securities Act: Means the United States Securities Act of 1933, as amended from time to time, or any successor thereto. Special Distribution Date: Means each date on which a Special Payment is to be distributed as specified in this Agreement; provided, however, that, if any such day shall not be a Business Day, the related distribution shall be made on the next succeeding Business Day without additional interest. Special Payment: Means any payment (other than a Scheduled Payment) in respect of, or any proceeds of, any Equipment Note or Trust Indenture Estate (as defined in each Indenture) or Special Redemption Premium (if applicable). Special Payments Account: Means the account or accounts created and maintained pursuant to Section 4.01(b). Special Redemption Premium: Means the premium, if any, payable by the Company in respect of the Final Withdrawal pursuant to the Note Purchase Agreement. Subordination Agent: Shall have the meaning specified therefor in the Intercreditor Agreement. Substitute Aircraft: Has the meaning specified in the Note Purchase Agreement. Transfer Date: Means the moment of execution and delivery of the Assignment and Assumption Agreement by each of the parties thereto. Transfer Date Certificates: Has the arrears meaning in the definition of "Certificates". Trust: Means the trust created by this Agreement, the estate of which consists of Trust Property. Trust Indenture Act: Except as otherwise provided in Section 9.06, means the Trust Indenture Act of 1939 as in force at the date as of which this Agreement was executed. Trust Property: Means (i) the Equipment Notes held as the property of the Trust, all monies at any time paid thereon and all monies due and to become due thereunder, (ii) the rights of the Trust and the Trustee, on behalf of the Trust, under the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement and the Liquidity Facilities, including, without limitation, all monies receivable in respect of such rights, provided that rights with respect to the Deposits or under the Escrow Agreement will not constitute Trust Property, and (iii) funds from time to time deposited in the Certificate Account and the Special Payments Account and, subject to the Intercreditor Agreement, any proceeds from the sale by the Trustee pursuant to Article VI hereof of any such Equipment Note. Trustee: Means Wilmington Trust Company, or its successor in interest, and any successor trustee appointed as provided herein. U.S. Global Certificate: Has the meaning specified in Section 3.01. U.S. Physical Certificates: Has the meaning specified in Section 3.01. Section 1.02. Compliance Certificates and Opinions. Upon any application or request by the Company, any Owner Trustee or any Loan Trustee to the Trustee to take any action under any provision of this Agreement, the Company, such Owner Trustee or such Loan Trustee, as the case may be, shall furnish to the Trustee an Officers' Certificate stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Agreement relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Agreement relating to such particular application or request, no additional certificate or opinion need be furnished. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Agreement (other than a certificate provided pursuant to Section 8.04(d)) shall include: (1) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions in this Agreement relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. Section 1.03. Form of Documents Delivered to Trustee. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters and any such Person may certify or give an opinion as to such matters in one or several documents. Any Opinion of Counsel stated to be based on the opinion of other counsel shall be accompanied by a copy of such other opinion. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Agreement, they may, but need not, be consolidated and form one instrument. Section 1.04. Acts of Certificateholders. -------------------------- (a) Any direction, consent, waiver or other action provided by this Agreement to be given or taken by Certificateholders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Certificateholders in person or by an agent or proxy duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required pursuant to this Agreement, to the Company or any Loan Trustee. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Certificateholders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Agreement and conclusive in favor of the Trustee, the Company and any Loan Trustee, if made in the manner provided in this Section. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the certificate of any notary public or other officer of any jurisdiction authorized to take acknowledgments of deeds or administer oaths that the Person executing such instrument acknowledged to him the execution thereof, or by an affidavit of a witness to such execution sworn to before any such notary or such other officer and where such execution is by an officer of a corporation or association or a member of a partnership, on behalf of such corporation, association or partnership, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other reasonable manner which the Trustee deems sufficient. (c) In determining whether the Certificateholders of the requisite Fractional Undivided Interests of Certificates Outstanding have given any direction, consent or waiver (a "Direction"), under this Agreement, Certificates owned by the Company, the Guarantor, any Owner Trustee, any Owner Participant or any Affiliate of any such Person shall be disregarded and deemed not to be Outstanding for purposes of any such determination. In determining whether the Trustee shall be protected in relying upon any such Direction, only Certificates which the Trustee knows to be so owned shall be so disregarded. Notwithstanding the foregoing, (i) if any such Person owns 100% of the Certificates Outstanding, such Certificates shall not be so disregarded as aforesaid, and (ii) if any amount of Certificates so owned by any such Person have been pledged in good faith, such Certificates shall not be disregarded as aforesaid if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Certificates and that the pledgee is not the Company, the Guarantor, any Owner Trustee, any Owner Participant or any Affiliate of any such Person. (d) The Company may, at its option by delivery of an Officer's Certificate to the Trustee, set a record date to determine the Certificateholders entitled to give any consent, request, demand, authorization, direction, notice, waiver or other Act. Notwithstanding Section 316(c) of the Trust Indenture Act, such record date shall be the record date specified in such Officer's Certificate which shall be a date not more than 30 days prior to the first solicitation of Certificateholders in connection therewith. If such a record date is fixed, such consent request, demand, authorization, direction, notice, waiver or other Act may be given before or after such record date, but only the Certificateholders of record at the close of business on such record date shall be deemed to be Certificateholders for the purposes of determining whether Certificateholders of the requisite proportion of Outstanding Certificates have authorized or agreed or consented to such consent, request, demand, authorization, direction, notice, waiver or other Act, and for that purpose the Outstanding Certificates shall be computed as of such record date; provided that no such consent, request, demand, authorization, direction, notice, waiver or other Act by the Certificateholders on such record date shall be deemed effective unless it shall become effective pursuant to the provisions of this Agreement not later than one year after the record date. (e) Any direction, consent, waiver or other action by the Certificateholder of any Certificate shall bind the Certificateholder of every Certificate issued upon the transfer thereof or in exchange therefor or in lieu thereof, whether or not notation of such action is made upon such Certificate. (f) Except as otherwise provided in Section 1.04(c), Certificates owned by or pledged to any Person shall have an equal and proportionate benefit under the provisions of this Agreement, without preference, priority, or distinction as among all of the Certificates. ARTICLE II ACQUISITION OF TRUST PROPERTY Section 2.01. [Intentionally omitted]. Section 2.02. Acquisition of Trust Property. The Trustee is hereby irrevocably authorized and directed to execute and deliver the Assignment and Assumption Agreement on the date specified in Section 11.01 of the Related Pass Through Trust Agreement, subject only to the satisfaction of the conditions to such execution set forth in said Section 11.01. This Agreement (except only for the immediately preceding sentence hereof, which is effective upon execution and delivery hereof) shall become effective upon the execution and delivery of the Assignment and Assumption Agreement by the Trustee and the Related Trustee, automatically and without any further signature or action on the part of the Company and the Trustee, and shall thereupon constitute the legal, valid and binding obligation of the parties hereto enforceable against each of the parties hereto in accordance with its terms. Upon such execution and delivery of the Assignment and Assumption Agreement, the Related Trust shall be terminated, the Certificateholders shall receive beneficial interests in the Trust in exchange for their interests in the Related Trust equal to their respective beneficial interests in the Related Trust and the "Outstanding" (as defined in the Related Pass Through Trust Agreement) pass through certificates representing fractional undivided interests in the Related Trust shall be deemed for all purposes of this Agreement and the Related Pass Through Trust Agreement, without further signature or action of any party or Certificateholder, to be Certificates representing the same Fractional Undivided Interests in the Trust and the Trust Property. By acceptance of its Certificate, each Certificateholder consents to and ratifies such assignment, transfer and delivery of the trust property of the Related Trust to the Trustee upon the execution and delivery of the Assignment and Assumption Agreement. Section 2.03. Acceptance by Trustee. The Trustee, upon the execution and delivery of the Assignment and Assumption Agreement, acknowledges its acceptance of all right, title, and interest in and to the Trust Property and declares that the Trustee holds and will hold such right, title, and interest for the benefit of all then present and future Certificateholders, upon the trusts herein set forth. By the acceptance of each Certificate issued to it under the Related Pass Through Trust Agreement and deemed issued under this Agreement, each Holder of any such Certificate as grantor of the Trust thereby joins in the creation and declaration of the Trust. Section 2.04. Limitation of Powers. The Trust is constituted solely for the purpose of making the investment in the Equipment Notes, and, except as set forth herein, the Trustee shall not be authorized or empowered to acquire any other investments or engage in any other activities and, in particular, the Trustee shall not be authorized or empowered to do anything that would cause such Trust to fail to qualify as a "grantor trust" for federal income tax purposes (including as subject to this restrictions acquiring the Aircraft (as defined in the respective related Indentures) by bidding such Equipment Notes or otherwise, or taking any action with respect to any such Aircraft once acquired). ARTICLE III THE CERTIFICATES Section 3.01. Title, Form, Denomination and Execution of Certificates. (a) The Certificates shall be known as the "7.19% 1997-1B-S Pass Through Certificates" of the Trust. Each Certificate will represent a fractional undivided interest in the Trust and shall be substantially in the form set forth as Exhibit A to the Related Pass Through Trust Agreement, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by the Related Pass Through Trust Agreement or this Agreement, as the case may be, or as the Trustee may deem appropriate to reflect the fact that the Certificates are being issued hereunder as opposed to the Related Pass Through Trust Agreement, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such Certificates, as evidenced by their execution of the Certificates. Any portion of the text of any Certificate may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Certificate. At the Escrow Agent's request under the Escrow Agreement, the Trustee shall affix the corresponding Escrow Receipt to any Certificate issued hereunder. Any transfer or exchange of any Certificate shall also effect a transfer or exchange of the related Escrow Receipt. Prior to the Final Withdrawal Date, no transfer or exchange of any Certificate shall be permitted unless the corresponding Escrow Receipt is attached thereto and also is so transferred or exchanged. By acceptance of any Certificate to which an Escrow Receipt is attached, each Holder of such Certificate acknowledges and accepts the restrictions on transfer of the Escrow Receipt set forth herein and in the Escrow Agreement. (b) The Certificates shall be issued only in fully registered form without coupons and only in denominations of $100,000 or integral multiples of $1,000 in excess thereof, except that one Certificate may be issued in a denomination of less than $100,000. Each Certificate shall be dated the date of its authentication. The aggregate Fractional Undivided Interest of Certificates shall not at any time exceed $26,333,000. (c) Certificates offered and sold in reliance on Rule 144A shall be issued initially in the form of a single permanent global Certificate in registered form, substantially in the form set forth as Exhibit A to the Related Pass Through Trust Agreement with such applicable legends as are provided for in clauses (a) and (b) of Section 3.02 (the "U.S. Global Certificate"). The U.S. Global Certificate will be registered in the name of a nominee for DTC and deposited with the Trustee, as custodian for DTC. The aggregate principal amount of the U.S. Global Certificate may from time to time be increased or decreased by adjustments made on the records of DTC or its nominee, or of the Trustee, as custodian for the DTC or its nominee, as hereinafter provided. (d) Certificates offered and sold in offshore transactions in reliance on Regulation S shall be issued in the form of a single global Certificate in registered form, substantially in the form set forth as Exhibit A to the Related Pass Through Trust Agreement with such applicable legends as are provided for in clause (b) of Section 3.02 (the "Offshore Global Certificate"). The Temporary Offshore Global Certificate will be registered in the name of a nominee of DTC for credit to the account of the Agent Members acting as depositories for Euroclear and Cedel and deposited with the Trustee as custodian for DTC. The U.S. Global Certificate and the Offshore Global Certificates are sometimes referred to as the "Global Certificates". (e) Certificates offered and sold to Institutional Accredited Investors shall be issued in the form of permanent certificated Certificates in registered form in substantially the form set forth as Exhibit A to the Related Pass Through Trust Agreement with such applicable legends as are provided for in clauses (a) and (b) of Section 3.02 hereto (the "U.S. Physical Certificates"). Certificates issued pursuant to Section 3.05(b) in exchange for interests in any Offshore Global Certificate shall be in the form of permanent certificated Certificates in registered form substantially in the form set forth in Exhibit A (the "Offshore Physical Certificates"). The Offshore Physical Certificates and U.S. Physical Certificates are sometimes collectively herein referred to as the "Physical Certificates". (f) The definitive Certificates shall be in registered form and shall be typed, printed, lithographed or engraved or produced by any combination of these methods or may be produced in any other manner, all as determined by the officers executing such Certificates, as evidenced by their execution of such Certificates. Section 3.02. Restrictive Legends. ------------------- (a) Subject to Section 3.06, each U.S. Global Certificate and each U.S. Physical Certificate shall bear the following legend (the "Private Placement Legend") on the face thereof: THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS CERTIFICATE IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT, WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY AMERICAN TRANS AIR, INC. ("ATA") OR AN AFFILIATE OF ATA, RESELL OR OTHERWISE TRANSFER THIS CERTIFICATE EXCEPT (A) TO ATA OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING $100,000 OR MORE AGGREGATE PRINCIPAL AMOUNT OF SUCH CERTIFICATES THAT, TAKES DELIVERY OF THIS CERTIFICATE IN DEFINITIVE FORM AND PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS CERTIFICATE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS CERTIFICATE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CASE THIS CERTIFICATE IS IN DEFINITIVE FORM IN CONNECTION WITH ANY TRANSFER OF THIS CERTIFICATE WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THE CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY ATA OR AN AFFILIATE OF ATA, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE PASS THROUGH TRUST AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS. (b)Each Global Certificate shall also bear the following legend on the face thereof: UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND 3.06 OF THE PASS THROUGH TRUST AGREEMENT REFERRED TO HEREIN. Section 3.03. Authentication of Certificates. No Certificate shall be entitled to any benefit under this Agreement or be valid or obligatory for any purpose, unless there appears on such Certificate a certificate of authentication substantially in the form provided for herein executed by the Trustee by the manual signature of one of its authorized signatories, and such certificate upon any Certificate shall be conclusive evidence, and the only evidence, that such Certificate has been duly authenticated and delivered hereunder. Section 3.04. Transfer and Exchange. --------------------- (a) The Trustee shall cause to be kept at the office or agency to be maintained by it in accordance with the provisions of Section 7.11 of this Agreement a register (the "Register") for the Certificates in which, subject to such reasonable regulations as it may prescribe, the Trustee shall provide for the registration of the Certificates and of transfers and exchanges of the Certificates as herein provided. The Trustee shall initially be the registrar (the "Registrar") for the purpose of registering the Certificates and transfers and exchanges of the Certificates as herein provided. A Certificateholder may transfer a Certificate by written application to the Registrar stating the name of the proposed transferee and otherwise complying with the terms of this Agreement, including providing a written certificate or other evidence of compliance with any restrictions on transfer. No such transfer shall be effected until, and such transferee shall succeed to the rights of a Certificateholder only upon, final acceptance and registration of the transfer by the Registrar in the Register. Prior to the registration of any transfer by a Certificateholder as provided herein, the Trustee shall treat the person in whose name the Certificate is registered as the owner thereof for all purposes, and the Trustee shall not be affected by notice to the contrary. Furthermore, DTC shall, by acceptance of a Global Certificate, agree that transfers of beneficial interests in such Global Certificate may be effected only through a book-entry system maintained by DTC (or its agent), and that ownership of a beneficial interest in the Certificate shall be required to be reflected in a book entry. When Certificates are presented to the Registrar with a request to register the transfer or to exchange them for an equal face amount of Certificates of other authorized denominations, the Registrar shall register the transfer or make the exchange as requested if its requirements for such transactions are met. To permit registrations of transfers and exchanges in accordance with the terms, conditions and restrictions hereof, the Trustee shall execute and authenticate Certificates at the Registrar's request. No service charge shall be made for any registration of transfer or exchange of the Certificates, but the Trustee may require payment by the transferor of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or other similar governmental charges payable upon exchanges pursuant to Section 3.11 or 9.07). Section 3.05. Book-Entry Provisions for U.S. Global Certificate and Offshore Global Certificates. (a) Members of, or participants in, DTC ("Agent Members") shall have no rights under this Agreement with respect to any Global Certificate held on their behalf by DTC, or the Trustee as its custodian, and DTC may be treated by the Trustee and any agent of the Trustee as the absolute owner of such Global Certificate for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Trustee or any agent of the Trustee from giving effect to any written certification, proxy or other authorization furnished by DTC or shall impair, as between DTC and its Agent Members, the operation of customary practices governing the exercise of the rights of a holder of any Certificate. Upon the issuance of any Global Certificate, the Registrar or its duly appointed agent shall record a nominee of DTC as the registered holder of such Global Certificate. (b) Transfers of any Global Certificate shall be limited to transfers of such Global Certificate in whole, but not in part, to nominees of DTC, its successor or such successor's nominees. Beneficial interests in the U.S. Global Certificate and any Offshore Global Certificate may be transferred in accordance with the rules and procedures of DTC and the provisions of Section 3.06. Beneficial interests in the U.S. Global Certificate or an Offshore Global Certificate shall be (or, under the Related Pass Through Trust Agreement, may have been) delivered to all beneficial owners in the form of U.S. Physical Certificates or Offshore Physical Certificates, as the case may be, if (i) the Company notifies the Trustee in writing that DTC is unwilling or unable to discharge properly its responsibilities as depositary for the U.S. Global Certificate or such Offshore Global Certificate, as the case may be, and the Company is unable to locate a qualified successor depositary within 90 days of such notice or (ii) after the occurrence of an Event of Default, beneficial owners of the U.S. Global Certificate or Offshore Global Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust, by Act of such Certificateholders delivered to the Company and the Trustee, advise the Company, the Trustee and DTC through its Clearing Agency Participants in writing that the continuation of a book-entry system through DTC is no longer in the best interests of the Certificateholders, then the Trustee shall notify all owners of beneficial interests in the U.S. Global Certificate or an Offshore Global Certificate, through DTC, of the occurrence of any such event and the availability of definitive Certificates. (c) Any beneficial interest in one of the Global Certificates that is transferred to a Person who takes delivery in the form of an interest in the other Global Certificate will, upon such transfer, cease to be an interest in such Global Certificate and become an interest in the other Global Certificate and, accordingly, will thereafter be subject to all transfer restrictions, if any, and other procedures applicable to beneficial interests in such other Global Certificate for as long as it remains such an interest. (d)[Intentionally omitted]. (e) In connection with the transfer of the entire U.S. Global Certificate or an entire Offshore Global Certificate to the beneficial owners thereof pursuant to paragraph (b) of this Section 3.05, such U.S. Global Certificate or Offshore Global Certificate, as the case may be, shall be deemed to be surrendered to the Trustee for cancellation, and the Trustee shall execute, authenticate and deliver, to each beneficial owner identified by DTC in exchange for its beneficial interest in such U.S. Global Certificate or Offshore Global Certificate, as the case may be, an equal aggregate principal amount of U.S. Physical Certificates or Offshore Physical Certificates, as the case may be, of authorized denominations. (f) Any U.S. Physical Certificate delivered in exchange for an interest in the U.S. Global Certificate pursuant to paragraph (b) of this Section 3.05 shall, except as otherwise provided by paragraph (f) of Section 3.06, bear the Private Placement Legend. (g) Any Offshore Physical Certificate delivered in exchange for an interest in an Offshore Global Certificate pursuant to paragraph (b) of this Section shall, except as otherwise provided by paragraph (f) of Section 3.06, bear the applicable legend regarding transfer restrictions set forth in Section 3.02(a). (h) The registered holder of the U.S. Global Certificate or any Offshore Global Certificate may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Agreement or the Certificates. Section 3.06. Special Transfer Provisions. The following provisions shall apply to the Certificates: (a) Transfers to Non-QIB Institutional Accredited Investors. The following provisions shall apply with respect to the registration of any proposed transfer of a Certificate to any Institutional Accredited Investor which is not a QIB (excluding transfers to, or on or after the Regulation S Restricted Date, by Non-U.S. Persons): (i) The Registrar shall register the transfer of any Certificate, whether or not such Certificate bears the Private Placement Legend, if (x) the requested transfer is at least two years after the later of the original issue date of the Certificates and the last date on which such Certificate was held by the Company or any affiliate thereof or (y) the proposed transferee has delivered to the Registrar a letter substantially in the form of Exhibit B hereto and the aggregate principal amount of the Certificates being transferred is at least $100,000. (ii) If the proposed transferor is an Agent Member holding a beneficial interest in the U.S. Global Certificate or, at a date prior to the Regulation S Restricted Date, an Offshore Global Certificate, upon receipt by the Registrar of (x) the documents, if any, required by paragraph (i) and (y) instructions given in accordance with DTC's and the Registrar's procedures, the Registrar shall reflect on its books and records the date of the transfer and a decrease in the principal amount of such U.S. Global Certificate in an amount equal to the principal amount of the beneficial interest in such U.S. Global Certificate to be transferred, and the Company shall execute, and the Trustee shall authenticate and deliver to the transferor or at its direction, one or more U.S. Physical Certificates of like tenor and amount. (b)Transfers to QIBS. The following provisions shall apply with respect to the registration of any proposed transfer of a Certificate to a QIB (excluding Non-U.S. Persons): (i) If the Certificate to be transferred consists of U.S. Physical Certificates or an interest in any Offshore Global Certificate prior to the Regulation S Restricted Date, the Registrar shall register the transfer if such transfer is being made by a proposed transferor who has checked the box provided for on the form of U.S. Physical Certificate or delivered a certificate to the Trustee in the form of Exhibit E hereto stating, or has otherwise advised the Trustee and the Registrar in writing, that the sale has been made in compliance with the provisions of Rule 144A to a transferee who, in the case of a transfer of a U.S. Physical Certificate, has signed the certification provided for on the form of Certificate and, in the case of an Offshore Global Certificate transferred prior to the Regulation S Restricted Date, who has signed the certification provided for in Exhibit E hereto, stating, or has otherwise advised the Trustee and the Registrar in writing, that it is purchasing the Certificate for its own account or an account with respect to which it exercises sole investment discretion and that it, or the Person on whose behalf it is acting with respect to any such account, is a QIB within the meaning of Rule 144A, and is aware that the sale to it is being made in reliance on Rule 144A and has been advised of the applicable transfer restrictions relating to the Certificates and acknowledges that it has received such information regarding the Trust and/or the Company as it has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon its foregoing representations in order to claim the exemption from registration provided by Rule 144A. (ii) Upon receipt by the Registrar of the documents referred to in clause (i) above and instructions given in accordance with DTC's and the Registrar's procedures therefor, the Registrar shall reflect on its books and records the date of such transfer and an increase in the principal amount of the U.S. Global Certificate in an amount equal to the principal amount of the U.S. Physical Certificates or interests in the Offshore Global Certificate, as the case may be, being transferred, and the Trustee shall cancel such U.S. Physical Certificates or decrease the amount of such Offshore Global Certificate so transferred. (c) [Intentionally omitted]. (d) Transfers of Interests in the Offshore Global Certificate on or after the Regulation S Restricted Date. The Registrar shall register any transfer of interests in the Offshore Global Certificate on or after the Regulation S Restricted Date without requiring any additional certification. (e) Transfers to Non-U.S. Persons at Any Time. The following provisions shall apply with respect to any registration of any transfer of a Certificate to a Non-U.S. Person: (i) The Registrar shall register any proposed transfer of a U.S. Global Certificate or U.S. Physical Certificate to any Non-U.S. Person, upon receipt of a certificate substantially in the form of Exhibit A hereto from the proposed transferor. The Registrar shall promptly send a copy of such certificate to the Company. (ii) (A) Upon receipt by the Registrar of (x) the documents, if any, required by paragraph (c) and (y) instructions in accordance with DTC's and the Registrar's procedures, the Registrar shall reflect on its books and records the date of such transfer and shall cancel the Physical Certificate, if any, so transferred, or decrease the principal amount of any such U.S. Global Certificate in an amount equal to the principal amount of the beneficial interest in such U.S. Global Certificate to be transferred, and (B) upon receipt by the Registrar of instructions given in accordance with DTC's and the Registrar's procedures, the Registrar shall reflect on its books and records the date and an increase in the principal amount of the Offshore Global Certificate in an amount equal to the principal amount of the U.S. Physical Certificate or the U.S. Global Certificate, as the case may be, to be transferred, and the Trustee shall cancel the Physical Certificate, if any, so transferred or decrease the amount of such U.S. Global Certificate. (f) Private Placement Legend. Upon the transfer, exchange or replacement of Certificates not bearing the Private Placement Legend, the Registrar shall deliver Certificates that do not bear the Private Placement Legend. Upon the transfer, exchange or replacement of Certificates bearing the Private Placement Legend, the Registrar shall deliver only Certificates that bear the Private Placement Legend unless either (i) the circumstances contemplated by paragraph (a)(i)(x) or (e)(ii) of this Section 3.06 exist or (ii) there is delivered to the Registrar an Opinion of Counsel to the effect that neither such legend nor the related restrictions on transfer are required in order to maintain compliance with the provisions of the Securities Act. (g) General. By its acceptance of any Certificate bearing the Private Placement Legend, each Holder of such a Certificate acknowledges the restrictions on transfer of such Certificate set forth in this Agreement and agrees that it will transfer such Certificate only as provided in this Agreement. The Registrar shall not register a transfer of any Certificate unless such transfer complies with the restrictions on transfer of such Certificate set forth in this Agreement. In connection with any transfer of Certificates, each Certificateholder agrees by its acceptance of the Certificates to furnish the Registrar or the Trustee such certifications, legal opinions or other information as either of them may reasonably require to confirm that such transfer is being made pursuant to an exemption from, or a transaction not subject to, the registration requirements of the Securities Act; provided that the Registrar shall not be required to determine the sufficiency of any such certifications, legal opinions or other information. Until such time as no Certificates remain Outstanding, the Registrar shall retain copies of all letters, notices and other written communications received pursuant to Section 3.05 or this Section 3.06. The Trustee, if not the Registrar at such time, shall have the right to inspect and make copies of all such letters, notices or other written communications at any reasonable time upon the giving of reasonable written notice to the Registrar. Section 3.07. Mutilated, Destroyed, Lost or Stolen Certificates. If (a) any mutilated Certificate is surrendered to the Registrar, or the Registrar receives evidence to its satisfaction of the destruction, loss or theft of any Certificate, and (b) there is delivered to the Registrar and the Trustee such security, indemnity or bond, as may be required by them to save each of them harmless, then, in the absence of notice to the Registrar or the Trustee that such Certificate has been acquired by a bona fide purchaser, the Trustee shall execute, authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate or Certificates, in authorized denominations and of like Fractional Undivided Interest. In connection with the issuance of any new Certificate under this Section 3.07, the Trustee shall require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee and the Registrar) connected therewith. Any duplicate Certificate issued pursuant to this Section 3.07 shall constitute conclusive evidence of the appropriate Fractional Undivided Interest in the related Trust, as if originally issued, whether or not the lost stolen or destroyed Certificate shall be found at any time. Section 3.08. Persons Deemed Owners. Prior to due presentation of a Certificate for registration of transfer, the Trustee, the Registrar, and any Paying Agent of the Trustee may treat the person in whose name any Certificate is registered as the owner of such Certificate for the purpose of receiving distributions pursuant to Section 4.02 and for all other purposes whatsoever, and neither the Trustee, the Registrar, nor any Paying Agent of the Trustee shall be affected by any notice to the contrary. Section 3.09. Cancellation. All Certificates surrendered for payment or transfer or exchange shall, if surrendered to any Person party hereto other than the Registrar, be delivered to the Registrar for cancellation. No Certificates shall be authenticated in lieu of or in exchange for any Certificates cancelled as provided in this Section, except as expressly permitted by this Agreement. All cancelled Certificates held by the Registrar shall be destroyed and a certification of their destruction delivered to the Trustee. Section 3.10. Limitation of Liability for Payments. All payments or distributions made to Certificateholders shall be made only from the Trust Property and only to the extent that the Trustee shall have sufficient income or proceeds from the Trust Property to make such payments in accordance with the terms of Article IV of this Agreement. Each Certificateholder, by its acceptance of a Certificate, agrees that it will look solely to the income and proceeds from the Trust Property to the extent available for distribution to such Certificateholder as provided in this Agreement. Section 3.11. Temporary Certificates. Until definitive Certificates are ready for delivery, the Trustee shall authenticate temporary Certificates. Temporary Certificates shall be substantially in the form of definitive Certificates but may have insertions, substitutions, omissions and other variations determined to be appropriate by the officers executing the temporary Certificates, as evidenced by their execution of such temporary Certificates. If temporary Certificates are issued, the Trustee will cause definitive Certificates to be prepared without unreasonable delay. After the preparation of definitive Certificates, the temporary Certificates shall be exchangeable for definitive Certificates upon surrender of the temporary Certificates at the office or agency of the Trustee designated for such purpose pursuant to Section 7.11, without charge to the Certificateholder. Upon surrender for cancellation of any one or more temporary Certificates, the Trustee shall execute, authenticate and deliver in exchange therefor a like face amount of definitive Certificates of authorized denominations. Until so exchanged, the temporary Certificates shall be entitled to the same benefits under this Agreement as definitive Certificates. ARTICLE IV DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS Section 4.01. Certificate Account and Special Payments Account. ------------------------------------------------ (a) The Trustee shall establish and maintain on behalf of the Certificateholders a Certificate Account as one or more non-interest-bearing accounts. The Trustee shall hold the Certificate Account in trust for the benefit of the Certificateholders, and shall make or permit withdrawals therefrom only as provided in this Agreement. On each day when a Scheduled Payment is made to the Trustee, the Trustee, upon receipt thereof, shall immediately deposit the aggregate amount of such Scheduled Payment into the Certificate Account. (b) The Trustee shall establish and maintain on behalf of the Certificateholders a Special Payments Account as one or more accounts, which shall be non-interest-bearing except as provided in Section 4.04. The Trustee shall hold the Special Payments Account in trust for the benefit of the Certificateholders, and shall make or permit withdrawals therefrom only as provided in this Agreement. On each day when one or more Special Payments are made to the Trustee, the Trustee, upon receipt thereof, shall immediately deposit the aggregate amount of such Special Payments into the Special Payments Account. (c) The Trustee shall cause the Subordination Agent to present to the Loan Trustee to which an Equipment Note relates such Equipment Note on the date of its stated final maturity or, in the case of any Equipment Note which is to be redeemed in whole pursuant to the relevant Indenture, on the applicable redemption date under such Indenture. Section 4.02. Distributions from Certificate Account and Special Payments Account. (a) On each Regular Distribution Date or as soon thereafter as the Trustee has confirmed receipt of the payment of the Scheduled Payments due on such date, the Trustee shall distribute out of the Certificate Account the entire amount deposited therein pursuant to Section 4.01 (a). There shall be so distributed to each Certificateholder of record on the Record Date with respect to such Regular Distribution Date (other than as provided in Section 11.01 concerning the final distribution), by check mailed to such Certificateholder at the address appearing in the Register, such Certificateholder's pro rata share (based on the aggregate Fractional Undivided Interest in the Trust held by such Certificateholder) of the aggregate amount in the Certificate Account, except that, with respect to Certificates registered on the Record Date in the name of the nominee of DTC (initially, such nominee to be Cede & Co.), such distribution shall be made by wire transfer in immediately available funds to the account designated by such nominee. (b) On each Special Distribution Date with respect to any Special Payment or as soon thereafter as the Trustee has confirmed receipt of any Special Payments due on the Equipment Notes or realized upon the sale of such Equipment Note, the Trustee shall distribute out of the Special Payments Account the entire amount deposited therein pursuant to Section 4.01(b) of such Special Payment. There shall be so distributed to each Certificateholder of record on the Record Date with respect to such Special Distribution Date (other than as provided in Section 11.01 concerning the final distribution), by check mailed to such Certificateholder at the address appearing in the Register, such Certificateholder's pro rata share (based on the aggregate Fractional Undivided Interest in the Trust held by such Certificateholder) of the aggregate amount in the Special Payments Account on account of such Special Payment, except that, with respect to Certificates registered on the Record Date in the name of the nominee of DTC (initially, such nominee to be Cede & Co.), such distribution shall be made by wire transfer in immediately available funds to the account designated by such nominee. (c) The Trustee shall, at the expense of the Company, cause notice of each Special Payment to be mailed to each Certificateholder at his address as it appears in the Register. In the event of redemption or purchase of Equipment Notes held in the Trust, such notice shall be mailed not less than 20 days prior to the date any such Special Payment is scheduled to be distributed. In the event the Company is required to pay a Special Redemption Premium to the Trustee under the Note Purchase Agreement, such notice shall be mailed, together with the notice by the Escrow Paying Agent under Section 2.06 of the Escrow Agreement, not less than 20 days prior to the Special Distribution Date for such amount, which Special Distribution Date shall be the Final Withdrawal Date. In the case of any other Special Payments, such notice shall be mailed as soon as practicable after the Trustee has confirmed that it has received funds for such Special Payment, stating the Special Distribution Date for such Special Payment which shall occur not less than 20 days after the date of such notice and as soon as practicable thereafter. Notices mailed by the Trustee shall set forth: (i) the Special Distribution Date and the Record Date therefor (except as otherwise provided in Section 11.01), (ii) the amount of the Special Payment for each $1,000 face amount Certificate and the amount thereof constituting principal, premium, if any, and interest, (iii) the reason for the Special Payment, and (iv) if the Special Distribution Date is the same date as a Regular Distribution Date for the Certificates, the total amount to be received on such date for each $1,000 face amount Certificate. If the amount of (i) premium, if any, payable upon the redemption or purchase of an Equipment Note or (ii) the Special Redemption Premium, if any, has not been calculated at the time that the Trustee mails notice of a Special Payment, it shall be sufficient if the notice sets forth the other amounts to be distributed and states that any premium received will also be distributed. If any redemption of the Equipment Notes held in the Trust is cancelled, the Trustee, as soon as possible after leasing thereof, shall cause notice thereof to be mailed to each Certificateholder at its address as it appears on the Register. Section 4.03. Statements to Certificateholders. -------------------------------- (a) On each Regular Distribution Date and Special Distribution Date, the Trustee will include with each distribution to Certificateholders a statement, giving effect to such distribution to be made on such Regular Distribution Date or Special Distribution Date, as the case may be, setting forth the following information (in the case of a Special Payment, including any Special Redemption Premium, reflecting in part the information provided by the Escrow Paying Agent under the Escrow Agreement) (per a $1,000 face amount Certificate as to clauses (ii), (iii), (iv) and (v) below): (i) the aggregate amount of funds distributed on such Distribution Date hereunder and under the Escrow Agreement, indicating the amount allocable to each source; (ii) the amount of such distribution allocable to principal and the amount allocable to premium (including any Special Redemption Premium), if any; (iii) the amount of such distribution hereunder allocable to interest; (iv) the amount of such distribution under the Escrow Agreement allocable to interest on the Deposits; (v) the amount of such distribution under the Escrow Agreement allocable to the principal of the unused Deposits; and (vi) the Pool Balance and the Pool Factor. With respect to the Certificates registered in the name of a Clearing Agency or its nominee, on the record date prior to each Distribution Date, the Trustee will request from the Clearing Agency a securities position listing setting forth the names of all the Clearing Agency Participants reflected on the Clearing Agency's books as holding interests in the Certificates on such record date. On each Distribution Date, the Trustee will mail to each such Clearing Agency Participant the statement described above and will make available additional copies as requested by such Clearing Agency Participant for forwarding to holders of Certificates. (b) Within a reasonable period of time after the end of each calendar year but not later than the latest date permitted by law, the Trustee shall furnish to each Person who at any time during such calendar year was a Certificateholder of record a statement containing the sum of the amounts determined pursuant to clauses (a)(i) through (a)(v), inclusive, above with respect to the Trust for such calendar year or, in the event such Person was a Certificateholder of record during a portion of such calendar year, for the applicable portion of such year, and such other items as are readily available to the Trustee and which a Certificateholder shall reasonably request as necessary for the purpose of such Certificateholder's preparation of its federal income tax returns. With respect to Certificates registered in the name of a Clearing Agency or its nominee, such report and such other items shall be prepared on the basis of information supplied to the Trustee by the Clearing Agency Participants and shall be delivered by the Trustee to such Clearing Agency Participants to be available for forwarding by such Clearing Agency Participants. (c) Promptly following (i) the Transfer Date, if there has been any change in the information set forth in clauses (x), (y) and (z) below from that set forth in pages 102 and 103 of the Offering Memorandum, and (ii) any early redemption or purchase of, or any default in the payment of principal or interest in respect of, any of the Equipment Notes held in the Trust, or any Final Withdrawal, the Trustee shall furnish to Certificateholders of record on such date a statement setting forth (x) the expected Pool Balances for each subsequent Regular Distribution Date following the Delivery Period Termination Date, (y) the related Pool Factors for such Regular Distribution Dates and (z) the expected principal distribution schedule of the Equipment Notes, in the aggregate, held as Trust Property at the date of such notice. With respect to the Certificates registered in the name of a Clearing Agency or its nominee, on the Transfer Date, the Trustee will request from the Clearing Agency a securities position listing setting forth the names of all the Clearing Agency Participants reflected on the Clearing Agency's books as holding interests in the "Certificates" (as defined in the Related Pass Through Trust Agreement) on the Delivery Period Termination Date. The Trustee will mail to each such Clearing Agency Participant the statement described above and will make available additional copies as requested by such Clearing Agency Participant for forwarding to holders of Certificates. Section 4.04. Investment of Special Payment Moneys. Any money received by the Trustee pursuant to Section 4.01(b) representing a Special Payment which is not to be promptly distributed shall, to the extent practicable, be invested in Permitted Investments by the Trustee (and such Permitted Investments shall be registered in the name of the Trustee) as directed in writing by the Company pending distribution of such Special Payment pursuant to Section 4.02. Any investment made pursuant to this Section 4.04 shall be in such Permitted Investments having maturities not later than the date that such moneys are required to be used to make the payment required under Section 4.02 on the applicable Special Distribution Date and the Trustee shall hold any such Permitted Investments until maturity. The Trustee shall have no liability with respect to any investment made pursuant to this Section 4.04, other than by reason of the willful misconduct or negligence of the Trustee. All income and earnings from such investments shall be distributed on such Special Distribution Date as part of such Special Payment. ARTICLE V THE COMPANY Section 5.01. Maintenance of Corporate Existence. The Company, at its own cost and expense, will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence, rights and franchises, except as otherwise specifically permitted in Section 5.02; provided, however, that the Company shall not be required to preserve any right or franchise if the Company shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company. Section 5.02. Consolidation, Merger, Etc. The Company shall not consolidate with or merge into any other corporation or convey, transfer or lease substantially all of its assets as an entirety to any Person unless: (a) the corporation formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance, transfer or lease substantially all of the assets of the Company as an entirety shall be organized and validly existing under the laws of the United States of America or any state thereof or the District of Columbia and a "citizen of the United States" (as defined in Section 40102(a)(15) of Title 49 of the United States Code) holding an air carrier operating certificate issued by the Federal Aviation Administration, or any successor agency thereto (the "FAA"), pursuant to Chapter 447 of Title 49, United States Code, authorizing the operation in air transportation of aircraft capable of carrying 10 or more individuals or 6,000 pounds or more of cargo pursuant to Part 121 of the FAA's regulations (14 CFR Part 121); (b) the corporation formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance, transfer or lease substantially all of the assets of the Company as an entirety shall execute and deliver to the Trustee a duly authorized, valid, binding and enforceable agreement in form and substance reasonably satisfactory to the Trustee containing an assumption by such successor corporation or Person of the due and punctual performance and observance of each covenant and condition of the Note Documents, the Note Purchase Agreement, the Other Pass Through Trust Agreements and of this Agreement to be performed or observed by the Company; (c) immediately after giving effect to such transaction, no Event of Default applicable to the Certificates or event which is, or after notice or passage of time, or both, would be, such an Event of Default shall have occurred and be continuing; and (d) the Company shall have delivered to the Trustee an Officers' Certificate of the Company and an Opinion of Counsel of the Company (which may be the Company's General Counsel) reasonably satisfactory to the Trustee, each stating that such consolidation, merger, conveyance, transfer or lease and the assumption agreement mentioned in clause (b) above comply with this Section 5.02 and that all conditions precedent herein provided for relating to such transaction have been complied with. Upon any consolidation or merger, or any conveyance, transfer or lease of substantially all of the assets of the Company as an entirety in accordance with this Section 5.02, the successor corporation or Person formed by such consolidation or into which the Company is merged or to which such conveyance, offer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Agreement with the same effect as if such successor corporation or Person had been named as the Company herein. No such conveyance, transfer or lease of substantially all of the assets of the Company as an entirety shall have the effect of releasing the Company or any successor corporation or Person which shall theretofore have become such in the manner prescribed in this Section 5.02 from its liability in respect of this Agreement, the Note Purchase Agreement or any Note Document to which it is a party. Section 5.03. Rule 144A(d)(4) Information. So long as any of the Certificates are "restricted securities" within the meaning of Rule 144(a)(3) under the Securities Act, at any time when the Guarantor is neither subject to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Company and the Guarantor will provide to any holder of such restricted securities, or to any prospective purchaser of such restricted securities designated by a holder, upon the request of such holder or prospective purchaser, any information required to be delivered to holders and prospective purchasers of the Certificates pursuant to Rule 144A(d)(4) under the Securities Act. ARTICLE VI DEFAULT Section 6.01. Events of Default. ----------------- (a) Exercise of Remedies. Upon the occurrence and during the continuation of any Indenture Default under any Indenture, the Trustee may, to the extent it is the Controlling Party at such time, direct the exercise of remedies as provided in the Intercreditor Agreement. (b) Purchase Rights of Certificateholders. ------------------------------------- (i) At any time after the occurrence and during the continuation of a Triggering Event, each Certificateholder shall have the right to purchase all, but not less than all, of the Class A Certificates upon ten days' written notice to the Class A Trustee and each other Certificateholder, provided that (A) if prior to the end of such ten-day period any other Certificateholder notifies such purchasing Certificateholder that such other Certificateholder wants to participate in such purchase, then such other Certificateholder may join with the purchasing Certificateholder to purchase all, but not less than all, of the Class A Certificates pro rata based on the outstanding principal amount of the Certificates held by each such Certificateholder and (B) if prior to the end of such ten-day period any other Certificateholder fails to notify the purchasing Certificateholder of such other Certificateholder's desire to participate in such a purchase, then such other Certificateholder shall lose its right to purchase the Class A Certificates pursuant to this Section 6.01(b); and (ii) By acceptance of its Certificate, each Certificateholder agrees that at any time after the occurrence and during the continuation of a Triggering Event, each Class C Certificateholder shall have the right (which right shall not expire upon any purchase of the Class A Certificates pursuant to paragraph (i) above) to purchase all, but not less than all, of the Class A Certificates and the Certificates upon ten days' written notice to the Class A Trustee and the Trustee and each other Class C Certificateholder, provided that (A) if prior to the end of such ten-day period any other Class C Certificateholder notifies such purchasing Class C Certificateholder that such other Class C Certificateholder wants to participate in such purchase, then such other Class C Certificateholder may join with the purchasing Class C Certificateholder to purchase all, but not less than all, of the Class A Certificates and the Certificates pro rata based on the Fractional Undivided Interest in the Class C Trust held by each such Class C Certificateholder and (B) if prior to the end of such ten-day period any other Class C Certificateholder fails to notify the purchasing Class C Certificateholder of such other Class C Certificateholder's desire to participate in such a purchase, then such other Class C Certificateholder shall lose its right to purchase the Class A Certificates and the Certificates pursuant to this Section 6.01(b). The purchase price with respect to the Certificates shall be equal to the Pool Balance of the Certificates, together with accrued and unpaid interest thereon to the date of such purchase, without premium, but including any other amounts then due and payable to the Certificateholders under this Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement or any Note Document or on or in respect of the Certificates; provided, however, that (i) if such purchase occurs after the Record Date with respect to the Final Withdrawal Date, such purchase price shall be reduced by the aggregate amount of unused Deposits and interest to be distributed under the Escrow Agreement (which deducted amounts shall remain distributable to, and may be retained by, the Certificateholder as of such Record Date) and (ii) if such purchase occurs after a Record Date but prior to the Distribution Date relating to such Record Date, such purchase price shall be reduced by the amount to be distributed hereunder on such related Distribution Date (which deducted amounts shall remain distributable to, and may be retained by, the Certificateholder as of such Record Date); provided, further, that no such purchase of Certificates shall be effective unless the purchaser shall certify to the Trustee that contemporaneously with such purchase, such purchaser is purchasing, pursuant to the terms of this Agreement and the Other Pass Through Trust Agreements, the Class A Certificates and the Certificates which are senior to the Certificates held by such purchaser. Each payment of the purchase price of the Certificates shall be made to an account or accounts designated by the Trustee and each such purchase shall be subject to the terms of this Section. Each Certificateholder agrees by its acceptance of its Certificates that it will, subject to Section 3.04 hereof, upon payment from such Class C Certificateholder(s) of the purchase price set forth in the first sentence of this paragraph, forthwith sell, assign, transfer and convey to the purchaser thereof (without recourse, representation or warranty of any kind except for its own acts), all of the right, title, interest and obligation of such Certificateholder in, this Agreement, the Escrow Agreement, the Deposit Agreement, the Intercreditor Agreement, the Liquidity Facility, the Note Documents, the Note Purchase Agreement and all Certificates and Escrow Receipts held by such Certificateholder (excluding all right, title and interest under any of the foregoing to the extent such right, title or interest is with respect to an obligation not then due and payable as respects any action or inaction or state of affairs occurring prior to such sale) and the purchaser shall assume all of such Certificateholder's obligations under this Agreement, the Escrow Agreement, the Deposit Agreement, the Intercreditor Agreement, the Liquidity Facility, the Note Documents and the Note Purchase Agreement and all such Certificates and Escrow Receipts. The Certificates will be deemed to be purchased on the date payment of the purchase price is made notwithstanding the failure of the Certificateholders to deliver any Certificates (whether in the form of Physical Certificates or beneficial interests in Global Certificates) and, upon such a purchase, (i) the only rights of the Certificateholders will be to deliver the Certificates to the purchaser and receive the purchase price for the Certificates and (ii) if the purchaser shall so request such Certificateholder will comply with all of the provisions of Section 3.04 hereof to enable new Certificates to be issued to the purchaser in such denominations as it shall request. All charges and expenses in connection with the issuance of any such new Certificates shall be borne by the purchaser thereof. As used in this Section 6.01(b), the terms "Certificateholder", "Class", "Class ACertificate", "Class A Certificateholder", "Class A Trustee", "Class C Certificate", "Class C Certificateholder", "Class C Trust" and "Class C Trustee" shall have the respective meanings assigned to such terms in the Intercreditor Agreement. Section 6.02. Incidents of Sale of Equipment Notes. Upon any sale of all or any part of the Equipment Notes made either under the power of sale given under this Agreement or otherwise for the enforcement of this Agreement, the following shall be applicable: (1) Certificateholders and Trustee May Purchase Equipment Notes. Any Certificateholder, the Trustee in its individual or any other capacity or any other Person may bid for and purchase any of the Equipment Notes, and upon compliance with the terms of sale, may hold, retain, possess and dispose of such Equipment Notes in their own absolute right without further accountability. (2) Receipt of Trustee Shall Discharge Purchaser. The receipt of the Trustee or of the officer making such sale shall be a sufficient discharge to any purchaser for his purchase money, and, after paying such purchase money and receiving such receipt, such purchaser or its personal representative or assigns shall not be obliged to see to the application of such purchase money, or be in any way answerable for any loss, misapplication or non-application thereof. (3) Application of Moneys Received upon Sale. Any moneys collected by the Trustee upon any sale made either under the power of sale given by this Agreement or otherwise for the enforcement of this Agreement shall be applied as provided in Section 4.02. Section 6.03. Judicial Proceedings Instituted by Trustee; Trustee May Bring Suit. If there shall be a failure to make payment of the principal of, premium, if any, or interest on any Equipment Note, or if there shall be any failure to pay Rent (as defined in the relevant Lease) under any Lease when due and payable, then the Trustee, in its own name, and as trustee of an express trust, as holder of such Equipment Notes, to the extent permitted by and in accordance with the terms of the Intercreditor Agreement, the Note Purchase Agreement and the Note Documents (subject to the rights of the applicable Owner Trustee or Owner Participant to cure any such failure in accordance with Section 4.03 of the applicable Indenture), shall be entitled and empowered to institute any suits, actions or proceedings at law, in equity or otherwise, for the collection of the sums so due and unpaid on such Equipment Notes or under such Lease and may prosecute any such claim or proceeding to judgment or final decree with respect to the whole amount of any such sums so due and unpaid. Section 6.04. Control by Certificateholders. Subject to Section 6.03 and the Intercreditor Agreement, the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee with respect to the Trust or pursuant to the terms of the Intercreditor Agreement, or exercising any trust or power conferred on the Trustee under this Agreement or the Intercreditor Agreement, including any right of the Trustee as Controlling Party under the Intercreditor Agreement or as holder of the Equipment Notes, provided that: (1) such Direction shall not be in conflict with any rule of law or with this Agreement and would not involve the Trustee in personal liability or expense, (2) the Trustee shall not determine that the action so directed would be unjustly prejudicial to the Certificateholders not taking part in such Direction, and (3) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such Direction. Section 6.05. Waiver of Past Defaults. Subject to the Intercreditor Agreement, the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust (i) may on behalf of all of the Certificateholders waive any past Event of Default hereunder and its consequences or (ii) if the Trustee is the Controlling Party, may direct the Trustee to instruct the applicable Loan Trustee to waive any past Indenture Default under any Indenture and its consequences, and thereby annul any Direction given by such Certificateholders or the Trustee to such Loan Trustee with respect thereto, except a default: (1) in the deposit of any Scheduled Payment or Special Payment under Section 4.01 or in the distribution of any payment under Section 4.02 on the Certificates, or (2) in the payment of the principal of (premium, if any) or interest on the Equipment Notes, or (3) in respect of a covenant or provision hereof which under Article IX hereof cannot be modified or amended without the consent of each Certificateholder holding an Outstanding Certificate affected thereby. Upon any such waiver, such default shall cease to exist with respect to the Certificates and any Event of Default arising therefrom shall be deemed to have been cured for every purpose and any direction given by the Trustee on behalf of the Certificateholders to the relevant Loan Trustee shall be annulled with respect thereto; but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. Upon any such waiver, the Trustee shall vote the Equipment Notes issued under the relevant Indenture to waive the corresponding Indenture Default. Section 6.06. Right of Certificateholders to Receive Payments Not to Be Impaired. Anything in this Agreement to the contrary notwithstanding, including, without limitation, Section 6.07 hereof, but subject to the Intercreditor Agreement, the right of any Certificateholder to receive distributions of payments required pursuant to Section 4.02 hereof on the Certificates when due, or to institute suit for the enforcement of any such payment on or after the applicable Regular Distribution Date or Special Distribution Date, shall not be impaired or affected without the consent of such Certificateholder. Section 6.07. Certificateholders May Not Bring Suit Except Under Certain Conditions. A Certificateholder shall not have the right to institute any suit, action or proceeding at law or in equity or otherwise with respect to this Agreement, for the appointment of a receiver or for the enforcement of any other remedy under this Agreement, unless: (1) such Certificateholder previously shall have given written notice to the Trustee of a continuing Event of Default; (2) Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than 25% of the Trust shall have requested the Trustee in writing to institute such action, suit or proceeding and shall have offered to the Trustee indemnity as provided in Section 7.02(e); (3) the Trustee shall have refused or neglected to institute any such action, suit or proceeding for 60 days after receipt of such notice, request and offer of indemnity; and (4) no Direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust. It is understood and intended that no one or more of the Certificateholders shall have any right in any manner whatever hereunder or under the Certificates to (i) surrender, impair, waive, affect, disturb or prejudice any property in the Trust Property or the lien of any Indenture on any property subject thereto, or the rights of the Certificateholders or the holders of the related Equipment Notes, (ii) obtain or seek to obtain priority over or preference to any other such Certificateholder or (iii) enforce any right under this Agreement, except in the manner herein provided and for the equal, ratable and common benefit of all the Certificateholders subject to the provisions of this Agreement. Section 6.08. Remedies Cumulative. Every remedy given hereunder to the Trustee or to any of the Certificateholders shall not be exclusive of any other remedy or remedies, and every such remedy shall be cumulative and in addition to every other remedy given hereunder or now or hereafter given by statute, law, equity or otherwise. Section 6.09. Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Agreement, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, a court may require any party litigant in such suit to file an undertaking to pay the costs of such suit, and may assess costs against any such party litigant, in the manner and to the extent provided in the Trust Indenture Act; provided that neither this Section nor the Trust Indenture Act shall be deemed to authorize any court to require such an undertaking or to make such an assessment in any suit instituted by the Company or the Guarantor. ARTICLE VII THE TRUSTEE Section 7.01. Notice of Defaults. As promptly as practicable after, and in any event within 90 days after the occurrence of any default (as such term is defined below) hereunder actually known to the Trustee, the Trustee shall transmit by mail to the Company, the related Owner Trustees, the related Loan Trustees and the Certificateholders in accordance with Section 313(c) of the Trust Indenture Act, notice of such default hereunder actually known to the Trustee, unless such default shall have been cured or waived; provided, however, that, except in the case of a default in the payment of the principal of (premium, if any) or interest on any Equipment Note, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Trustee in good faith determine that the withholding of such notice is in the interests of the Certificateholders. For the purpose of this Section, the term "default" means any event that is, or after notice or lapse of time or both would become, an Event of Default. Section 7.02. Certain Rights of Trustee. Subject to the provisions of Section 315 of the Trust Indenture Act: (a) the Trustee may rely and shall be protected in acting or refraining from acting in reliance upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Request; (c) whenever in the administration of this Agreement or the Intercreditor Agreement the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate of the Company, any Owner Trustee or any Loan Trustee; (d) the Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Agreement or the Intercreditor Agreement at the request or direction of any of the Certificateholders pursuant to this Agreement or the Intercreditor Agreement unless such Certificateholders shall have offered to the Trustee reasonable security or indemnity against the cost, expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, or report, notice, request, direction, consent, order, bond, debenture or other paper or document; (g) the Trustee may execute any of the trusts or powers under this Agreement or the Intercreditor Agreement or perform any duties under this Agreement or the Intercreditor Agreement either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it under this Agreement or the Intercreditor Agreement; (h) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Agreement or the Intercreditor Agreement; (i) the Trustee shall not be required to expend or risk its own funds in the performance of any of its duties under this Agreement, or in the exercise of any of its rights or powers, if it shall have reason to believe that repayment of such funds or adequate indemnity against such risk is not reasonably assured to it; and (j) except during the continuance of an Event of Default, the Trustee undertakes and shall be responsible to perform only such duties as are specifically set forth herein and no implied covenants or obligations shall be read into this Agreement or be enforceable against Trustee. Section 7.03. Not Responsible for Recitals or Issuance of Certificates. The recitals contained herein and in the Certificates, except the certificates of authentication, shall not be taken as the statements of the Trustee, and the Trustee assumes no responsibility for their correctness. Subject to Section 7.14, the Trustee makes no representations as to the validity or sufficiency of this Agreement, the Note Purchase Agreement, any Note Documents, any Participation Agreement or any Intercreditor Agreement, the Deposit Agreement, the Escrow Agreement and Equipment Notes or the Certificates, except that the Trustee hereby represents and warrants that this Agreement has been, and each Certificate, the Intercreditor Agreement, the Note Purchase Agreement, the Escrow Agreement and each Certificate will be, executed and delivered by one of its officers who is duly authorized to execute and deliver such document on its behalf. Section 7.04. May Hold Certificates. The Trustee, any Paying Agent, Registrar or any of their Affiliates or any other agent, in their respective individual or any other capacity, may become the owner or pledgee of Certificates and subject to Sections 310(b) and 311 of the Trust Indenture Act, if applicable, may otherwise deal with the Company, the Guarantor, the Owner Trustees or the Loan Trustees with the same rights it would have if it were not Trustee, Paying Agent, Registrar or such other agent. Section 7.05. Money Held in Trust. Money held by the Trustee or the Paying Agent in trust hereunder need not be segregated from other funds except to the extent required herein or by law and neither the Trustee nor the Paying Agent shall have any liability for interest upon any such moneys except as provided for herein. Section 7.06. Compensation and Reimbursement. The Company agrees: (1) to pay, or cause to be paid, to the Trustee compensation (as set out in a separate fee agreement between the Trustee and the Company) for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (2) except as otherwise expressly provided herein to reimburse, or cause to be reimbursed, the Trustee upon its request for all reasonable out-of-pocket expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Agreement or the Intercreditor Agreement (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence, willful misconduct or bad faith or as may be incurred due to the Trustee's breach of its representations and warranties set forth in Section 7.14; (3) to indemnify, or cause to be indemnified, the Trustee for, and to hold it harmless against, any loss, liability or expense (other than for or with respect to any tax) incurred without negligence, willful misconduct or bad faith, on its part, arising out of or in connection with the acceptance or administration of this Trust, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder, except for any such loss, liability or expense incurred by reason of the Trustee's breach of its representations and warranties set forth in Section 7.14. The Trustee shall notify the Company and the Guarantor promptly of any claim for which it may seek indemnity. The Company and the Guarantor shall defend the claim and the Trustee shall cooperate in the defense. The Trustee may have separate counsel with the consent of the Company and the Guarantor and the Company and the Guarantor will pay the reasonable fees and expenses of such counsel. Neither the Company nor the Guarantor need pay for any settlement made without its consent; and (4) to indemnify, or cause to be indemnified, the Trustee, solely in its individual capacity, for, and to hold it harmless against, any tax (except to the extent the Trustee is reimbursed therefor pursuant to the next paragraph, provided that no indemnification shall be available with respect to any tax attributable to the Trustee's compensation for serving as such) incurred without negligence, willful misconduct or bad faith, on its part, arising out of or in connection with the acceptance or administration of this Trust, including any costs and expenses incurred in contesting the imposition of any such tax. The Trustee, in its individual capacity, shall notify the Company and the Guarantor promptly of any claim for any tax for which it may seek indemnity. The Trustee shall permit the Company and the Guarantor to contest the imposition of such tax and the Trustee, in its individual capacity, shall cooperate in the defense. The Trustee, in its individual capacity, may have separate counsel with the consent of the Company and the Guarantor and the Company and the Guarantor will pay the reasonable fees and expenses of such counsel. Neither the Company nor the Guarantor need pay for any taxes paid, in settlement or otherwise, without its consent. The Trustee shall be entitled to reimbursement from, and shall have a lien prior to the Certificates upon, the Trust Property for any tax incurred without negligence, bad faith or willful misconduct on its part, arising out of or in connection with the acceptance or administration of such Trust (other than any tax attributable to the Trustee's compensation for serving as such), including any costs and expenses incurred in contesting the imposition of any such tax. The Trustee shall notify the Company of any claim for any tax for which it may seek reimbursement. The Trustee shall cooperate in the contest by the Company of any such claim. If the Trustee reimburses itself from the Trust Property for any such tax it will within 30 days mail a brief report setting forth the amount of such tax and the circumstances thereof to all Certificateholders as their names and addresses appear in the Register. As security for the performance of the obligations of the Company under this Section the Trustee shall have a lien prior to the Certificates upon the Trust Property. Section 7.07. Corporate Trustee Required, Eligibility . There shall at all times be a Trustee hereunder which shall be eligible to act as a trustee under Section 310(a) of the Trust Indenture Act and shall have a combined capital and surplus of at least $75,000,000 (or a combined capital and surplus in excess of $5,000,000 and the obligations of which, whether now in existence or hereafter incurred, are fully and unconditionally guaranteed by a corporation organized and doing business under the laws of the United States, any State or Territory thereof or of the District of Columbia that has a combined capital and surplus of at least $75,000,000). If such corporation publishes reports of conditions at least annually, pursuant to law or to the requirements of federal, state, territorial or District of Columbia supervising or examining authority, then for the purposes of this Section 7.07, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of conditions so published. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 7.07 to act as Trustee, the Trustee shall resign immediately as Trustee in the manner and with the effect specified in Section 7.08. Section 7.08. Resignation and Removal: Appointment of Successor. ------------------------------------------------- (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee under Section 7.09. (b) The Trustee may resign at any time as trustee by giving written notice thereof to the Company, the Authorized Agents, the Owner Trustees and the Loan Trustees. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Company, the Authorized Agents, the Owner Trustees, the Loan Trustees and the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee. (c) The Trustee may be removed at any time by Act of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust delivered to the Trustee, the Company, the Owner Trustees and the Loan Trustees. (d) If at any time: (1) the Trustee shall fail to comply with Section 310 of the Trust Indenture Act after written request therefor by the Company or by any Certificateholder who has been a bona fide certificateholder for at least six months; or (2) the Trustee shall cease to be eligible under Section 7.07 and shall fail to resign after written request therefor by the Company or by any such Certificateholder; or (3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation; then, in any case, (i) the Company may remove the Trustee or (ii) any Certificateholder who has been a bona fide Certificateholder for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. (e) If a Responsible Officer of the Trustee shall obtain actual knowledge of an Avoidable Tax (as hereinafter defined) which has been or is likely to be asserted, the Trustee shall promptly notify the Company and shall, within 30 days of such notification, resign as Trustee hereunder unless within such 30-day period the Trustee shall have received notice that the Company has agreed to pay such tax. The Company shall promptly appoint a successor Trustee in a jurisdiction where there are no Avoidable Taxes. As used herein, an "Avoidable Tax" means a state or local tax: (i) upon (w) the Trust, (x) the Trust Property, (y) Certificateholders or (z) the Trustee for which the Trustee is entitled to seek reimbursement from the Trust Property, and (ii) which would be avoided if the Trustee were located in another state, or jurisdiction within a state, within the United States. A tax shall not be an Avoidable Tax if the Company or any Owner Trustee shall agree to pay, and shall pay, such tax. (f) If the Trustee shall resign, be removed or become incapable of acting as trustee or if a vacancy shall occur in the office of the Trustee for any cause, the Company shall promptly appoint a successor Trustee. If, within 90 days after such resignation, removal or incapability, or other occurrence of such vacancy, a successor Trustee shall be appointed by Act of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust delivered to the Company, the Owner Trustees, the Loan Trustee and the retiring Trustee, the successor Trustees so appointed shall, with the approval of the Company, which approval shall not be unreasonably withheld, forthwith upon its acceptance of such appointment, become the successor Trustee and supersede the successor Trustee appointed as provided above. If no successor Trustee shall have been so appointed as provided above and accepted appointment in the manner hereinafter provided, the resigning Trustee or any Certificateholder who has been a bona fide Certificateholder for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee. (g) The successor Trustee of a Trust shall give notice of the resignation and removal of the Trustee and appointment of the successor Trustee by mailing written notice of such event by first-class mail, postage prepaid, to the Certificateholders as their names and addresses appear in the Register. Each notice shall include the name of such successor Trustee and the address of its Corporate Trust Office. Section 7.09. Acceptance of Appointment by Successor. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on request of the Company or the successor Trustee, such retiring Trustee shall execute and deliver an instrument transferring to such successor Trustee all such rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee, subject nevertheless to its lien, if any, provided for in Section 7.06. Upon request of any such successor Trustee, the Company, the retiring Trustee and such successor Trustee shall execute and deliver any and all instruments containing such provisions as shall be necessary or desirable to transfer and confirm to, and for more fully and certainly vesting in, such successor Trustee all such rights, powers and trusts. No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article. Section 7.10. Merger, Conversion, Consolidation or Succession to Business. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Certificates shall have been executed or authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such execution or authentication and deliver the Certificates so executed or authenticated with the same effect as if such successor Trustee had itself executed or authenticated such Certificates. Section 7.11. Maintenance of Agencies. ----------------------- (a) There shall at all times be maintained an office or agency where Certificates may be presented or surrendered for registration of transfer or for exchange, and for payment thereof and where notices and demands to or upon the Trustee in respect of such Certificates may be served. Presentations and demands may be made and notices may be served at the Corporate Trust Office of the Trustee. (b) There shall at all times be a Registrar and a Paying Agent hereunder with respect to the Certificates. Each such Authorized Agent shall be a bank or trust company, shall be a corporation organized and doing business under the laws of the United States or any state, with a combined capital and surplus of at least $75,000,000, or a corporation having a combined capital and surplus in excess of $5,000,000 the obligations of which are guaranteed by a corporation organized and doing business under the laws of the United States or any state, with a combined capital and surplus of at least $75,000,000, and shall be authorized under such laws to exercise corporate trust powers, subject to supervision by federal or state authorities. The Trustee shall initially be the Paying Agent and, as provided in Section 3.04, Registrar hereunder with respect to the Certificates. Each Registrar shall furnish to the Trustee, at stated intervals of not more than six months, and at such other times as the Trustee may request in writing, a copy of the Register maintained by such Registrar. (c) Any corporation into which any Authorized Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, consolidation or conversion to which any Authorized Agent, shall be a party, or any corporation succeeding to the corporate trust business of any Authorized Agent, shall be the successor of such Authorized Agent hereunder, if such successor corporation is otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the parties hereto or such Authorized Agent or such successor corporation. (d) Any Authorized Agent may at any time resign by giving written notice of resignation to the Trustee, the Company, the Owner Trustees and the Loan Trustees. The Company may, and at the request of the Trustee shall, at any time terminate the agency of any Authorized Agent by giving written notice of termination to such Authorized Agent and to the Trustee. Upon the resignation or termination of an Authorized Agent or in case at any time any such Authorized Agent shall cease to be eligible under this Section (when in either case, no other Authorized Agent performing the functions of such Authorized Agent shall have been appointed), the Company shall promptly appoint one or more qualified successor Authorized Agents, reasonably satisfactory to the Trustee, to perform the functions of the Authorized Agent which has resigned or whose agency has been terminated or who shall have ceased to be eligible under this Section. The Company shall give written notice of any such appointment made by it to the Trustee, the Owner Trustees and the Loan Trustees; and in each case the Trustee shall mail notice of such appointment to all Certificateholders as their names and addresses appear on the Register. (e) The Company agrees to pay, or cause to be paid, from time to time to each Authorized Agent reasonable compensation for its services and to reimburse it for its reasonable expenses. Section 7.12. Money for Certificate Payments to Be Held in Trust. All moneys deposited with any Paying Agent for the purpose of any payment on Certificates shall be deposited and held in trust for the benefit of the Certificateholders entitled to such payment, subject to the provisions of this Section. Moneys so deposited and held in trust shall constitute a separate trust fund for the benefit of the Certificateholders with respect to which such money was deposited. The Trustee may at any time, for the purpose of obtaining the satisfaction and discharge of this Agreement or for any other purpose, direct any Paying Agent to pay to the Trustee all sums held in trust by such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by such Paying Agent and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. Section 7.13. Registration of Equipment Notes in Name of Subordination Agent. The Trustee agrees that all Equipment Notes to be purchased by the Trust shall be issued in the name of the Subordination Agent or its nominee and held by the Subordination Agent in trust for the benefit of the Certificateholders, or, if not so held, the Subordination Agent or its nominee shall be reflected as the owner of such Equipment Notes in the register of the issuer of such Equipment Notes. Section 7.14. Representations and Warranties of Trustee. The Trustee hereby represents and warrants on the Transfer Date that: (a) the Trustee is a Delaware banking corporation organized and validly existing, and in good standing under the laws of the State of Delaware; (b) the Trustee has full power, authority and legal right to receive the Trust Property assigned by the Related Trustee, assume the obligations under, and perform, the Assignment and Assumption Agreement, this Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement and the Note Documents to which it is a party and has taken all necessary action to authorize such receipt, assumption and performance by it of the Assignment and Assumption Agreement, this Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement and the Note Documents to which it is a party; (c) the receipt of the Trust Property under the Assignment and Assumption Agreement and the performance by the Trustee of the Assignment and Assumption Agreement, this Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement and the Note Documents to which it is a party (i) will not violate any provision of any United States federal law or the law of the State of Delaware governing the banking and trust powers of the Trustee or any order, writ, judgment, or decree of any court, arbitrator,or governmental authority applicable to the Trustee or any of its assets, (ii) will not violate any provision of the articles of association or by-laws of the Trustee, and (iii) will not violate any provision of, or constitute, with or without notice or lapse of time, a default under, or result in the creation or imposition of any lien on any properties included in the Trust Property pursuant to the provisions of, any mortgage, indenture, contract, agreement or other undertaking to which it is a party, which violation, default or lien could reasonably be expected to have an adverse effect on the Trustee's performance or ability to perform its duties hereunder or thereunder or on the transactions contemplated herein or therein; (d) the receipt of the Trust Property under the Assignment and Assumption Agreement and the performance by the Trustee of the Assignment and Assumption Agreement, this Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement and the Note Documents to which it is a party will not require the authorization, consent, or approval of, the giving of notice to, the filing or registration with, or the taking of any other action in respect of, any governmental authority or agency of the United States or the State of Delaware regulating the banking and corporate trust activities of the Trustee; and (e) the Assignment and Assumption Agreement has been duly executed and delivered by the Trustee and this Agreement, the Assignment and Assumption Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement and the Note Documents to which it is a party have been duly executed and delivered by the Trustee and constitute the legal, valid, and binding agreements of the Trustee, enforceable against it in accordance with their respective terms, provided that enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and (ii) general principles of equity. Section 7.15. Withholding Taxes, Information Reporting. (a) The Trustee, as trustee of the grantor trust created by this Agreement, shall exclude and withhold from each distribution of principal, premium, if any, and interest and other amounts due under this Agreement or under the Certificates any and all withholding taxes applicable thereto as required by law. The Trustee agrees to act as such withholding agent and, in connection therewith, whenever any taxes or similar charges are required to be withheld with respect to any amounts paid by or on behalf of the Trustee in respect of the Certificates, to withhold such amounts and timely pay the same to the authority in the name of and on behalf of the Certificateholders, that it will file any necessary withholding tax returns or statements when due, and that, as promptly as possible after the payment thereof, it will deliver to each such Certificateholder necessary documentation showing the payment thereof, together with such additional documentary evidence as such Certificateholders may reasonably request from time to time. The Trustee agrees to file any other information reports as it may be required to file under United States law. (b) The Trustee may satisfy certain of its obligations with respect to this Agreement by retaining, at the expense of the Company, a firm of independent public accountants (the "Accountants") which shall (i) be responsible for all tax filing requirements and (ii) perform the obligations of the Trustee in respect of tax filing requirements. The Trustee shall be deemed to have discharged its tax filing obligations under this Agreement upon its retention of the Accountants, and, if the Trustee shall have selected in the Accountants in good faith and without gross negligence, the Trustee shall not have any liability with respect to the default or misconduct of the Accountants. (c) The Trustee, at the request of the Company, will make such United States federal income tax elections as may be necessary to prevent the Trust from being classified for federal income tax purposes as an association taxable as a corporation. Section 7.16. Trustee's Liens. The Trustee in its individual capacity agrees that it will at its own cost and expense promptly take any action as may be necessary to duly discharge and satisfy in full any mortgage, pledge, lien, charge, encumbrance, security interest or claim ("Trustee's Liens") on or with respect to the Trust Property which is attributable to the Trustee either (i) in its individual capacity and which is unrelated to the transactions contemplated by this Agreement, the Intercreditor Agreement, the Participation Agreements, the Note Purchase Agreement or the Note Documents, or (ii) as Trustee hereunder or in its individual capacity and which arises out of acts or omissions which are not contemplated by this Agreement. Section 7.17. Preferential Collection of Claims. The Trustee shall comply with Section 311(a) of the Trust Indenture Act, excluding any creditor relationship listed in Section 311(b) of the Trust Indenture Act. If the Trustee shall resign or be removed as Trustee, it shall be subject to Section 311(a) of the Trust Indenture Act to the extent provided therein. ARTICLE VIII CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE Section 8.01. The Company to Furnish Trustee with Names and Addresses of Certificateholders. The Company will furnish or cause to be furnished to the Trustee within 15 days after each Record Date with respect to a Scheduled Payment, and at such other times as the Trustee may request in writing, within 30 days after receipt by the Company of any such request, a list, in such form as the Trustee may reasonably require, of all information in the possession or control of the Company as to the names and addresses of the Certificateholders, in each case as of a date not more than 15 days prior to the time such list is furnished; provided, however, that so long as the Trustee is the sole Registrar, no such list need be furnished; and provided further, however, that no such list need be furnished for so long as a copy of the Register is being furnished to the Trustee pursuant to Section 7.11. Section 8.02. Preservation of Information; Communications to Certificateholders. The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Certificateholders contained in the most recent list furnished to the Trustee as provided in Section 7.11 or Section 8.01, as the case may be, and the names and addresses of Certificateholders received by the Trustee in its capacity as Registrar, if so acting. The Trustee may destroy any list furnished to it as provided in Section 7.11 or Section 8.01, as the case may be, upon receipt of a new list so furnished. Section 8.03. Reports by Trustee. Within 60 days after May 15 of each year commencing with the first full year following the date hereof, the Trustee shall transmit to the Certificateholders, as provided in Section 313(c) of the Trust Indenture Act, a brief report dated as of such May 15, if required by Section 313(a) of the Trust Indenture Act. Section 8.04. Reports by the Guarantor and Company. The Guarantor and the Company each shall: (a) file with the Trustee, within 30 days after the Guarantor or the Company is required to file the same with the SEC, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may from time to time by rules and regulations prescribe) which the Guarantor or the Company is required to file with the SEC pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934, as amended; or, if the Guarantor or the Company is not required to file information, documents or reports pursuant to either of such sections, then to file with the Trustee and the SEC, in accordance with rules and regulations prescribed by the SEC, such of the supplementary and periodic information, documents and reports which may be required pursuant to section 13 of the Securities Exchange Act of 1934, as amended, in respect of a security listed and registered on a national securities exchange as may be prescribed in such rules and regulations; (b) file with the Trustee and the SEC, in accordance with the rules and regulations prescribed by the SEC, such additional information, documents and reports with respect to compliance by the Guarantor and the Company with the conditions and covenants of the Guarantor and the Company provided for in this Agreement, as may be required by such rules and regulations, including, in the case of annual reports, if required by such rules and regulations, certificates or opinions of independent public accountants, conforming to the requirements of Section 1.02; (c) transmit to all Certificateholders, in the manner and to the extent provided in Section 313(c) of the Trust Indenture Act, such summaries of any information, documents and reports required to be filed by the Guarantor and the Company pursuant to subsections (a) and (b) of this Section 8.04 as may be required by rules and regulations prescribed by the SEC; (d) furnish to the Trustee, not less often than annually, a brief certificate from the principal executive officer, principal financial officer or principal accounting officer as to his or her knowledge of the Guarantor's and the Company's compliance with all conditions and covenants under this Agreement (it being understood that for purposes of this paragraph (d), such compliance shall be determined without regard to any period of grace or requirement of notice provided under this Agreement); and (e) make available to any Certificateholder, upon request, the annual audited and quarterly unaudited financial statements of the Guarantor which are provided to the Trustee. ARTICLE IX SUPPLEMENTAL AGREEMENTS Section 9.01. Supplemental Agreements Without Consent of Certificateholders. Without the consent of the Certificateholders, the Guarantor and the Company may, and the Trustee (subject to Section 9.03) shall, at any time and from time to time, enter into one or more agreements supplemental hereto or, if applicable, to the Indenture, the Lease, the Participation Agreement, Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement, the Deposit Agreement or the Liquidity Facility in form satisfactory to the Trustee, for any of the following purposes: (1) to evidence the succession of another corporation to the Company or the Guarantor and the assumption by any such successor of the covenants of the Company or the Guarantor contained herein or in each of the other related documents to which Company or the Guarantor is a party; or (2) to add to the covenants of the Guarantor or the Company for the benefit of the Certificateholders, or to surrender any right or power in this Agreement, the Note Purchase Agreement, the Intercreditor Agreement or any Liquidity Facility conferred upon the Guarantor or the Company; or (3) to correct or supplement any provision in this Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement, the Deposit Agreement or the Liquidity Facility which may be defective or inconsistent with any other provision herein or therein or to modify any other provisions with respect to matters or questions arising under this Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement, the Deposit Agreement or the Liquidity Facility, provided that any such action shall not adversely affect the interests of the Certificateholders; or to cure any ambiguity or correct any mistake in such documents, or as provided in the Intercreditor Agreement, to give effect to or provide for a Replacement Liquidity Facility (as defined in the Intercreditor Agreement); or (4) to comply with any requirement of the SEC, any applicable law, rules or regulations of any exchange or quotation system on which the Certificates are listed, or any regulatory body; or (5) to modify, eliminate or add to the provisions of this Agreement to such extent as shall be necessary to continue the qualification of this Agreement (including any supplemental agreement) under the Trust Indenture Act, or under any similar Federal statute hereafter enacted, and to add to this Agreement such other provisions as may be expressly permitted by the Trust Indenture Act, excluding, however, the provisions referred to in Section 316(a)(2) of the Trust Indenture Act as in effect at the date as of which this instrument was executed or any corresponding provision in any similar Federal statute hereafter enacted; or (6) to evidence and provide for the acceptance of appointment under this Agreement by the Trustee of a successor Trustee and to add to or change any of the provisions of this Agreement as shall be necessary to provide for or facilitate the administration of the Trust, pursuant to the requirements of Section 7.09; or (7) if with respect to any Owned Aircraft the Company issues "class D" pass through certificates, to modify, eliminate or add to the provisions of this Agreement to the extent necessary to provide for the subordination of such "class D" pass through certificates to the Certificates; provided that no such action described in this Section 9.01 shall materially adversely affect the interests of the Certificateholders. Section 9.02. Supplemental Agreements with Consent of Certificateholders. With the consent of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest of the Trust, by Act of said Certificateholders delivered to the Guarantor, the Company and the Trustee, the Guarantor and the Company may (with the consent of the Owner Trustees, if any, which consent shall not be unreasonably withheld), and the Trustee (subject to Section 9.03) shall, enter into an agreement or agreements supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement, the Deposit Agreement or the Liquidity Facility to the extent applicable to such Certificateholders or of modifying in any manner the rights and obligations of such Certificateholders under this Agreement, the Intercreditor Agreement, any Liquidity Facility, the Escrow Agreement, the Deposit Agreement or the Note Purchase Agreement; provided, however, that no such supplemental agreement shall, without the consent of the Certificateholder of each Outstanding Certificate affected thereby: (1) reduce in any manner the amount of, or delay the timing of, any receipt by the Trustee (or, with respect to the Deposits, the Certificateholders) of payments on the Equipment Notes held in the Trust or under the Deposit Agreement or distributions that are required to be made herein on any Certificate, or change any date of payment of any Certificate or change the place of payment where, or the coin or currency in which, any Certificate is payable, or impair the right to institute suit for the enforcement of any such payment or distribution on or after the Regular Distribution Date or Special Distribution Date applicable thereto; or (2) permit the disposition of any Equipment Note included in the Trust Property except as permitted by this Agreement, or otherwise deprive such Certificateholder of the benefit of the ownership of the Equipment Notes in the Trust; or (3) alter the priority of distributions specified in the Intercreditor Agreement; or (4) modify any of the provisions of this Section or Section 6.05, except to increase any such percentage or to provide that certain other provisions of this Agreement cannot be modified or waived without the consent of the Certificateholder of each Certificate affected thereby; or (5) adversely affect the status of any Trust as a grantor trust under Subpart E, Part I of Subchapter J of Chapter 1 of Subtitle A of the Internal Revenue Code of 1986, as amended, for U.S. federal income tax purposes. It shall not be necessary for any Act of Certificateholders under this Section to approve the particular form of any proposed supplemental agreement but it shall be sufficient if such Act shall approve the substance thereof. Section 9.03. Documents Affecting Immunity or Indemnity. If in the opinion of the Trustee any document required to be executed by it pursuant to the terms of Section 9.01 or 9.02 affects any interest, right, duty, immunity or indemnity in favor of the Trustee under this Agreement, the Trustee may in its discretion decline to execute such document. Section 9.04. Execution of Supplemental Agreements. In executing, or accepting the additional trusts created by, any supplemental agreement permitted by this Article or the modifications thereby of the trust created by this Agreement, the Trustee shall be entitled to receive, and shall be fully protected in relying upon, written advice of counsel or an Opinion of Counsel stating that the execution of such supplemental agreement is authorized or permitted by this Agreement. Section 9.05. Effect of Supplemental Agreements. Upon the execution of any supplemental agreement under this Article, this Agreement shall be modified in accordance therewith, and such supplemental agreement shall form a part of this Agreement for all purposes; and every Certificateholder theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. Section 9.06. Conformity with Trust Indenture Act. Every supplemental agreement executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act as then in effect. Section 9.07. Reference in Certificates to Supplemental Agreements. Certificates authenticated and delivered after the execution of any supplemental agreement pursuant to this Article may bear a notation in form approved by the Trustee as to any matter provided for in such supplemental agreement; and, in such case, suitable notation may be made upon Outstanding Certificates after proper presentation and demand. ARTICLE X AMENDMENTS TO INDENTURES AND NOTE DOCUMENTS Section 10.01. Amendments and Supplements to Indentures and Other Note Documents. In the event that the Trustee, as holder (or beneficial owner through the Subordination Agent) of any Equipment Note in trust for the benefit of the Certificateholders or as Controlling Party under the Intercreditor Agreement, receives (directly or indirectly through the Subordination Agent) a request for a consent to any amendment, modification, waiver or supplement under any Indenture, any other Note Document, any Equipment Note, the Note Purchase Agreement or any other related document, the Trustee shall forthwith send a notice of such proposed amendment, modification, waiver or supplement to each Certificateholder registered on the Register as of the date of such notice. The Trustee shall request from the Certificateholders a Direction as to (a) whether or not to take or refrain from taking (or direct the Subordination Agent to take or refrain from taking) any action which a holder of such Equipment Note has the option to direct, (b) whether or not to give or execute (or direct the Subordination Agent to give or execute) any waivers, consents, amendments, modifications or supplements as a holder of such Equipment Note or a Controlling Party and (c) how to vote (or direct the Subordination Agent to vote) any Equipment Note if a vote has been called for with respect thereto. Provided such a request for Certificateholder Direction shall have been made, in directing any action or casting any vote or giving any consent as the holder of any Equipment Note (or in directing the Subordination Agent in any of the foregoing), (i) other than as Controlling Party, the Trustee shall vote for or give consent to any such action with respect to such Equipment Note in the same proportion as that of (A) the aggregate face amounts of all Certificates actually voted in favor of or for giving consent to such action by such Direction of Certificateholders to (B) the aggregate face amount of all Outstanding Certificates and (ii) as Controlling Party, the Trustee shall vote as directed in such Certificateholder Direction by the Certificateholders evidencing a Fractional Undivided Interest aggregating not less than a majority in interest in the Trust. For purposes of the immediately preceding sentence, a Certificate shall have been "actually voted" if the Holder of such Certificate has delivered to the Trustee an instrument evidencing such Holder's consent to such Direction prior to two Business Days before the Trustee directs such action or casts such vote or gives such consent. Notwithstanding the foregoing, but subject to Section 6.04 and the Intercreditor Agreement, the Trustee may, in its own discretion and at its own direction, consent and notify the relevant Loan Trustee of such consent (or direct the Subordination Agent to consent and notify the Loan Trustee of such consent) to any amendment, modification, waiver or supplement under the relevant Indenture, any other Note Document, any Equipment Note, the Note Purchase Agreement or any other related document, if an Event of Default hereunder shall have occurred and be continuing, or if such amendment, modification, waiver or supplement will not materially adversely affect the interests of the Certificateholders. ARTICLE XI TERMINATION OF TRUSTS Section 11.01. Termination of the Trust. The respective obligations and responsibilities of the Company, the Guarantor and the Trustee with respect to the Trust shall terminate upon the distribution to all Holders of the Certificates and the Trustee of all amounts required to be distributed to them pursuant to this Agreement and the disposition of all property held as part of the Trust Property; provided, however, that in no event shall the Trust continue beyond one hundred ten (110) years following the date of the earliest execution of this Agreement. Notice of any termination, specifying the Regular Distribution Date (or Special Distribution Date, as the case may be) upon which the Certificateholders may surrender their Certificates to the Trustee for payment of the final distribution and cancellation, shall be mailed promptly by the Trustee to Certificateholders not earlier than the 60th day and not later than the 20th day next preceding such final distribution specifying (A) the Regular Distribution Date (or Special Distribution Date, as the case may be) upon which the proposed final payment of the Certificates will be made upon presentation and surrender of Certificates at the office or agency of the Trustee therein specified, (B) the amount of any such proposed final payment, and (C) that the Record Date otherwise applicable to such Regular Distribution Date (or Special Distribution Date, as the case may be) is not applicable, payments being made only upon presentation and surrender of the Certificates at the office or agency of the Trustee therein specified. The Trustee shall give such notice to the Registrar at the time such notice is given to Certificateholders. Upon presentation and surrender of the Certificates, the Trustee shall cause to be distributed to Certificateholders amounts distributable on such Regular Distribution Date (or Special Distribution Date, as the case may be) pursuant to Section 4.02. In the event that all of the Certificateholders shall not surrender their Certificates for cancellation within six months after the date specified in the above-mentioned written notice, the Trustee shall give a second written notice to the remaining Certificateholders to surrender their Certificates for cancellation and receive the final distribution with respect thereto. No additional interest shall accrue on the Certificates after the Regular Distribution Date (or Special Distribution Date, as the case may be). In the event that any money held by the Trustee for the payment of distributions on the Certificates shall remain unclaimed for two years (or such lesser time as the Trustee shall be satisfied, after sixty days' notice from the Company, is one month prior to the escheat period provided under applicable law) after the final distribution date with respect thereto, the Trustee shall pay to each Loan Trustee the appropriate amount of money relating to such Loan Trustee and shall give written notice thereof to the related Owner Trustees and the Company. ARTICLE XII MISCELLANEOUS PROVISIONS Section 12.01. Limitation on Rights of Certificateholders. The death or incapacity of any Certificateholder shall not operate to terminate this Agreement, or the Trust, nor entitle such Certificateholder's legal representatives or heirs to claim an accounting or to take any action or commence any proceeding in any court for a partition or winding up of the Trust, nor otherwise affect the rights, obligations, and liabilities of the parties hereto or any of them. Section 12.02. Liabilities of Certificateholders. Neither the existence of the Trust nor any provision in this Agreement is intended to or shall limit the liability the Certificateholders would otherwise incur if the Certificateholders owned Trust Property as co-owners, or incurred any obligations of the Trust, directly rather than through the Trust. Section 12.03. Certificates Nonassessable and Fully Paid. Subject to Section 12.02, Certificateholders shall not be personally liable for obligations of the Trust, the Fractional Undivided Interests represented by the Certificates shall be nonassessable for any losses or expenses of the Trust or for any reason whatsoever, and Certificates upon authentication thereof by the Trustee pursuant to Section 3.03 are and shall be deemed fully paid. No Certificateholder shall have any right (except as expressly provided herein) to vote or in any manner otherwise control the operation and management of the Trust Property, the Trust, or the obligations of the parties hereto, nor shall anything set forth herein, or contained in the terms of the Certificates, be construed so as to constitute the Certificateholders from time to time as partners or members of an association. Section 12.04. [Intentionally omitted]. Section 12.05. Notices. ------- (a) Unless otherwise specifically provided herein, all notices required under the terms and provisions of this Agreement shall be in English and in writing, and any such notice may be given by United States mail, courier service, telegram, telemessage, telecopy, telefax, cable or facsimile (confirmed by telephone or in writing in the case of notice by telegram, telemessage, telecopy, telefax, cable or facsimile) or any other customary means of communication, and any such notice shall be effective when delivered, or if mailed, three days after deposit in the United States mail with proper postage for ordinary mail prepaid, if to the Company or the Guarantor, to: American Trans Air, Inc. 7337 West Washington Street Indianapolis International Airport Indianapolis, Indiana 06927 Attention: Executive Vice President and Chief Financial Officer Facsimile: (317) 240-7087 if to the Trustee, to: Wilmington Trust Company Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 Attention: Corporate Trust Administration Facsimile: (302) 651-8882 (b) The Company, the Guarantor or the Trustee, by notice to the other, may designate additional or different addresses for subsequent notices or communications. (c) Any notice or communication to Certificateholders shall be mailed by first-class mail to the addresses for Certificateholders shown on the Register kept by the Registrar and to addresses filed with the Trustee. Failure so to mail a notice or communication or any defect in such notice or communication shall not affect its sufficiency with respect to other Certificateholders. (d) If a notice or communication is mailed in the manner provided above within the time prescribed, it is conclusively presumed to have been duly given, whether or not the addressee receives it. (e) If the Company mails a notice or communication to the Certificateholders, it shall mail a copy to the Trustee and to each Paying Agent at the same time. (f) Notwithstanding the foregoing, all communications or notices to the Trustee shall be deemed to be given only when received by a Responsible Officer of the Trustee. (g) The Trustee shall promptly furnish the Company with a copy of any demand, notice or written communication received by the Trustee hereunder from any Certificateholder, Owner Trustee or Loan Trustee. Section 12.06. Governing Law. THIS AGREEMENT HAS BEEN DELIVERED IN THE STATE OF NEW YORK AND THIS AGREEMENT AND THE CERTIFICATES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT-OF-LAW PRINCIPLES. Section 12.07. Severability of Provisions. If any one or more of the covenants, agreements, provisions, or terms of this Agreement shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions, or terms shall be deemed severable from the remaining covenants, agreements, provisions, or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement or the Trust or of the Certificates or the rights of the Certificateholders thereof. Section 12.08. [Intentionally omitted]. Section 12.09. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. Section 12.10. Successors and Assigns. All covenants, agreements, representations and warranties in this Agreement by the Trustee, the Guarantor and the Company shall bind and, to the extent permitted hereby, shall inure to the benefit of and be enforceable by their respective successors and assigns, whether so expressed or not. Section 12.11. Benefits of Agreement. Nothing in this Agreement or in the Certificates, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, and the Certificateholders, any benefit or any legal or equitable right, remedy or claim under this Agreement. Section 12.12. Legal Holidays. In any case where any Regular Distribution Date or Special Distribution Date relating to any Certificate shall not be a Business Day, then (notwithstanding any other provision of this Agreement) payment need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on such Regular Distribution Date or Special Distribution Date, and no interest shall accrue during the intervening period. Section 12.13. Counterparts. For the purpose of facilitating the execution of this Agreement and for other purposes, this Agreement may be executed simultaneously in any number of counterparts, each of which counterparts shall be deemed to be an original, and all of which counterparts shall constitute but one and the same instrument. Section 12.14. Communication by Certificateholders with Other Certificateholders. Certificateholders may communicate with other Certificateholders with respect to their rights under this Agreement or the Certificates pursuant to Section 3.12(b) of the Trust Indenture Act. The Company, the Guarantor, the Trustee and any and all other persons benefitted by this Agreement shall have the protection afforded by Section 312(c) of the Trust Indenture Act. Section 12.15. Intention of Parties. The parties hereto intend that the Trust be classified for U.S. federal income tax purposes as a grantor trust under Subpart E, Part I of Subchapter J of the Internal Revenue Code of 1986, as amended, and not as a trust or association taxable as a corporation or as a partnership. Each Certificateholder, by its acceptance of its Certificate or a beneficial interest therein, agrees to treat the Trust as a grantor trust for all U.S. federal, state and local income tax purposes. The powers granted and obligations undertaken pursuant to this Agreement shall be so construed so as to further such intent. IN WITNESS WHEREOF, the Guarantor, the Company and the Trustee have caused this Agreement to be duly executed by their respective officers, all as of the day and year first above written. AMTRAN, INC. By /s/ Kenneth K. Wolff ----------------------------- Title: Executive Vice President and Chief Financial Officer AMERICAN TRANS AIR, INC. / By /s/ Kenneth K. Wolff ----------------------------- Title: Chief Financial Officer WILMINGTON TRUST COMPANY, as Trustee By /s/ Patricia A. Evans ----------------------------- Title: Financial Services Officer Page EXHIBIT A FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH TRANSFERS PURSUANT TO REGULATION S [date] Wilmington Trust Company, not in its individual capacity but solely as Trustee Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 Attention: Corporate Trust Administration Re: American Trans Air 1997-1B-S Pass Through Trust (the "Trust"), ____% American Trans Air Pass Through Certificates Series 1997-1B-S (the "Certificates") Sirs: In connection with our proposed sale of $ Fractional Undivided Interest of the Certificates, we confirm that such sale has been effected pursuant to and in accordance with Regulation S under the Securities Act of 1933, as amended, and, accordingly, we represent that: (1) the offer of the Certificates was not made to a person in the United States; (2) either (a) at the time the buy order was originated, the transferee was outside the United States or we and any person acting on our behalf reasonably believed that the transferee was outside the United States or (b) the transaction was executed in, on or through the facilities of a designated off-shore securities market and neither we nor any person acting on our behalf knows that the transaction has been pre-arranged with a buyer in the United States; (3) no directed selling efforts have been made in the United States in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S, as applicable; and (4) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act. In addition, if the sale is made during a restricted period and the provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are applicable thereto, we confirm that such sale has been made in accordance with the applicable provisions of Rule 903(c)(3) or Rule 904(c)(1), as the case may be. You and American Trans Air, Inc. are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Terms used in this certificate have the meanings set forth in Regulation S. Very truly yours, [Name of Transferor] Authorized Signature EXHIBIT B FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH TRANSFERS TO NON-QIB ACCREDITED INVESTORS [date] Wilmington Trust Company, not in its individual capacity but solely as Trustee Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 Attention: Corporate Trust Administration Re: American Trans Air 1997-1B-S Pass-Through Trust (the "Trust"), ____% American Trans Air Pass Through Certificates Series 1997-1B-S (the "Certificates") Dear Sirs: In connection with our proposed purchase of $ aggregate principal amount of the Certificates, we confirm that: 1. We understand that any subsequent transfer of the Certificates is subject to certain restrictions and conditions set forth in the Pass Through Trust Agreement dated as of December __, 1997 relating to the Certificates (the "Pass Through Trust Agreement") and the undersigned agrees to be bound by, and not to resell, pledge or otherwise transfer the Certificates except in compliance with, such restrictions and conditions and the Securities Act of 1933, as amended (the "Securities Act"). 2. We are purchasing Certificates having an aggregate principal amount of not less than $100,000 and each account (if any) for which we are purchasing Certificates is purchasing Certificates having an aggregate principal amount of not less than $100,000. 3. We understand that the Certificates have not been registered under the Securities Act, and that the Certificates may not be offered or sold except as permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for which we are acting as hereinafter stated, that if we should sell any Certificate, we will do so only (A) in accordance with Rule 144A under the Securities Act to a "qualified institutional buyer" (as defined therein), (B) to an institutional "accredited investor" (as defined below) that, prior to such transfer, furnishes to you and American Trans Air, Inc., a signed letter substantially in the form of this letter, (C) outside the United States in accordance with Rule 904 of Regulation S under the Securities Act, (D) pursuant to the exemption from registration provided by Rule 144 under the Securities Act, or (E) pursuant to an effective registration statement under the Securities Act, and we further agree to provide to any person purchasing any of the Certificates from us a notice advising such purchaser that resales of the Notes are restricted as stated herein. We further understand that the Certificates purchased by us will bear a legend to the foregoing effect. 4. We understand that, on any proposed resale of any Certificates, we will be required to furnish to you and American Trans Air, Inc. such certifications, legal opinions and other information as you and American Trans Air, Inc. may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. We further understand that the Certificates purchased by us will bear a legend to the foregoing effect. 5. We are an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Certificates and we and any accounts for which we are acting are each able to bear the economic risk of our or its investment. 6. We are acquiring the Certificates purchased by us for our own account or for one or more accounts (each of which is an institutional "accredited investor") as to each of which we exercise sole investment discretion. You and American Trans Air, Inc. are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Very truly yours, [Name of Transferee] Authorized Signature EXHIBIT C FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT American Trans Air 1997-1[__] Pass Through Trust ASSIGNMENT AND ASSUMPTION AGREEMENT, dated ____________, 199_ (the "Agreement"), between Wilmington Trust Company, a Delaware banking corporation ("WTC"), not in its individual capacity except as expressly provided herein, but solely as trustee under the Pass Through Trust Agreement dated as of December __, 1997 (as amended, modified or otherwise supplemented from time to time, the "Pass Through Trust Agreement") in respect of the American Trans Air 1997-1B-S Pass Through Trust (the "Assignor"), and Wilmington Trust Company, a Delaware banking corporation, not in its individual capacity except as expressly provided herein, but solely as trustee under the Pass Through Trust Agreement dated as of December __, 1997 (the "New Pass Through Trust Agreement") in respect of the American Trans Air 1997-1B-S Pass Through Trust (the "Assignee"). W I T N E S S E T H: - - - - - - - - - - WHEREAS, the parties hereto desire to effect on the date hereof (the "Transfer Date") (a) the transfer by the Assignor to the Assignee of all of the right, title and interest of the Assignor in, under and with respect to, among other things, the Trust Property and each of the documents listed in Schedule I hereto (the "Scheduled Documents") and (b) the assumption by the Assignee of the obligations of the Assignor (i) under the Scheduled Documents and (ii) in respect of the Certificates issued under the Pass Through Trust Agreement; and WHEREAS, the Scheduled Documents permit such transfer upon satisfaction of certain conditions heretofore or concurrently herewith being complied with; NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements herein contained, the parties hereto do hereby agree as follows (capitalized terms used herein without definition having the meaning ascribed thereto in the Pass Through Trust Agreement): 1. Assignment. The Assignor does hereby sell, assign, convey, transfer and set over unto the Assignee as of the Transfer Date all of its present and future right, title and interest in, under and with respect to the Trust Property and the Scheduled Documents and each other contract, agreement, document or instrument relating to the Trust Property or the Scheduled Documents (such other contracts, agreements, documents or instruments, together with the Scheduled Documents, to be referred to as the "Assigned Documents"), and any proceeds therefrom, together with all documents and instruments evidencing any of such right, title and interest. 2. Assumption. The Assignee hereby assumes for the benefit of the Assignor and each of the parties listed in Schedule II hereto (collectively, the "Beneficiaries") all of the duties and obligations of the Assignor, whenever accrued, pursuant to the Assigned Documents and hereby confirms that it shall be deemed a party to each of the Assigned Documents to which the Assignor is a party and shall be bound by all the terms thereof (including the agreements and obligations of the Assignor set forth therein) as if therein named as the Assignor. Further, the Assignee hereby assumes for the benefit of the Assignor and the Beneficiaries all of the duties and obligations of the Assignor under the Outstanding Certificates and hereby confirms that the Certificates representing Fractional Undivided Interests under the Pass Through Trust Agreement shall be deemed for all purposes of the Pass Through Trust Agreement and the New Pass Through Trust Agreement to be certificates representing the same fractional undivided interests under the New Pass Through Trust Agreement equal to their respective beneficial interests in the trust created under the Pass Through Trust Agreement. 3. Effectiveness. This Agreement shall be effective upon the execution and delivery hereof by the parties hereto, and each Certificateholder, by its acceptance of its Certificate or a beneficial interest therein, agrees to be bound by the terms of this Agreement. 4. Payments. The Assignor hereby covenants and agrees to pay over to the Assignee, if and when received following the Transfer Date, any amounts (including any sums payable as interest in respect thereof) paid to or for the benefit of the Assignor that, under Section 1 hereof, belong to the Assignee. 5. Further Assurances. The Assignor shall, at any time and from time to time, upon the request of the Assignee, promptly and duly execute and deliver any and all such further instruments and documents and take such further action as the Assignee may reasonably request to obtain the full benefits of this Agreement and of the right and powers herein granted. The Assignor agrees to deliver the Global Certificates, and all Trust Property, if any, then in the physical possession of the Assignor, to the Assignee. 6. Representations and Warranties. (a) The Assignee represents and warrants to the Assignor and each of the Beneficiaries that: (i) it has all requisite power and authority and legal right to enter into and carry out the transactions contemplated hereby and to carry out and perform the obligations of the "Pass Through Trustee" under the Assigned Documents; (ii) on and as of the date hereof, the representations and warranties of the Assignee set forth in Section 7.14 of the New Pass Through Trust Agreement are true and correct. (b) The Assignor represents and warrants to the Assignee that: (i) it is duly incorporated, validly existing and in good standing under the laws of the State of Delaware and has the full trust power, authority and legal right under the laws of the State of Delaware and the United States pertaining to its trust and fiduciary powers to execute and deliver this Agreement; (ii) the execution and delivery by it of this Agreement and the performance by it of its obligations hereunder have been duly authorized by it and will not violate its articles of association or by-laws or the provisions of any indenture, mortgage, contract or other agreement to which it is a party or by which it is bound; and (iii) this Agreement constitutes the legal, valid and binding obligations of it enforceable against it in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity. 7. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK INCLUDING MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS. 8. Counterparts. This Agreement may be executed in any number of counterparts, all of which together shall constitute a single instrument. It shall not be necessary that any counterpart be signed by both parties so long as each party shall sign at least one counterpart. 9. Third Party Beneficiaries. The Assignee hereby agrees, for the benefit of the Beneficiaries, that its representations, warranties and covenants contained herein are also intended to be for the benefit of each Beneficiary, and each Beneficiary shall be deemed to be an express third party beneficiary with respect thereto, entitled to enforce directly and in its own name any rights or claims it may have against such party as such beneficiary. IN WITNESS WHEREOF, the parties hereto, through their respective officers thereunto duly authorized, have duly executed this Assignment as of the day and year first above written. ASSIGNOR: WILMINGTON TRUST COMPANY, not in its individual capacity except as expressly provided herein, but solely as trustee under the Pass Through Trust Agreement in respect of the American Trans Air 1997-1B-S Pass Through Trust By:___________________________ Title: ASSIGNEE: WILMINGTON TRUST COMPANY, not in its individual capacity except as expressly provided herein, but solely as trustee under the Pass Through Trust Agreement in respect of the American Trans Air 1997-1B-S Pass Through Trust By:__________________________ Title: Page C - 1 Schedule I Schedule of Assigned Documents (1) Intercreditor Agreement dated as of December 23, 1997 among the Trustee, the Other Trustees, the Liquidity Providers, the liquidity providers, if any, relating to the Certificates issued under (and as defined in) each of the Other Pass Through Trust Agreements and the Subordination Agent. (2) Escrow and Paying Agent Agreement (Class B) dated as of December 23, 1997 among the Escrow Agent, the Initial Purchasers, the Trustee and the Paying Agent. (3) Note Purchase Agreement dated as of December 23, 1997 among the Company, the Trustee, the Other Trustees, the Depositary, the Escrow Agent, the Paying Agent and the Subordination Agent. (4) Deposit Agreement (Class B) dated as of December 23, 1997 between the Escrow Agent and the Depositary. (5) Each of the Operative Documents (as defined in the Participation Agreement for each Aircraft) in effect as of the Transfer Date. Schedule II Schedule of Beneficiaries Wilmington Trust Company, not in its individual capacity but solely as Subordination Agent. Wilmington Trust Company, not in its individual capacity but solely as Paying Agent ING Bank, as Liquidity Provider Amtran, Inc. American Trans Air, Inc. Salomon Brothers Inc, as Initial Purchaser Furman Selz LLC, as Initial Purchaser First Security Bank, National Association, as Escrow Agent Each of the other parties to the Assigned Documents EXHIBIT D FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH TRANSFERS TO QIBs [date] Wilmington Trust Company, not in its individual capacity but solely as Trustee Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 Attention: Corporate Trust Administration Re: American Trans Air 1997-1B-S Pass Through Trust (the "Trust"), ____% American Trans Air Pass Through Certificates Series 1997-1B-S (the "Certificates") Sirs: In connection with our proposed sale of $ Fractional Undivided Interest of the Certificates, we confirm that without utilizing any general solicitation or general advertising that such Certificates are being transferred in compliance with the exemption from registration under the Securities Act of 1933, as amended, provided by Rule 144A thereunder. Date: [Name of Transferor ------------ ------------------- NOTE: The signature must correspond with the name as written upon the face of the within-mentioned Certificate in every particular, without alteration or any change whatsoever. Signature Guarantee: TO BE COMPLETED BY PURCHASER: The undersigned represents and warrants that it is purchasing the within-mentioned Certificate for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933, as amended, and is aware that the sale to it is being made in reliance on Rule 144A and has been advised of the applicable transfer restrictions relating to the Certificates and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Dated: ------------- NOTE: To be executed by an executive officer. EX-4.18 13 file013.txt AMTRAN, INC., 2000 10-K, EXHIBIT 4.18 EXECUTION COPY AMTRAN, INC. AMERICAN TRANS AIR, INC. and WILMINGTON TRUST COMPANY as Trustee PASS THROUGH TRUST AGREEMENT Dated as of December 23, 1997 American Trans Air 1997-1C-O Pass Through Trust 7.46% American Trans Air 1997-1C-O Pass Through Certificates TABLE OF CONTENTS ARTICLE I DEFINITIONS.........................................................3 Section 1.01. Definitions.............................................3 Section 1.02. COMPLIANCE CERTIFICATES AND OPINIONS...................13 Section 1.03. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.................14 Section 1.04. ACTS OF CERTIFICATEHOLDERS.............................14 ARTICLE II ORIGINAL ISSUANCE OF CERTIFICATES;................................16 Section 2.01. [Intentionally omitted]................................16 Section 2.02. ISSUANCE OF CERTIFICATES; ACQUISITION OF EQUIPMENT NOTES......................................................16 Section 2.03. WITHDRAWAL OF DEPOSITS................................17 Section 2.04. ACCEPTANCE BY TRUSTEE.................................17 Section 2.05. LIMITATION OF POWERS...................................17 ARTICLE III THE CERTIFICATES..................................................18 Section 3.01. TITLE, FORM, DENOMINATION AND EXECUTION OF CERTIFICATES...................................18 Section 3.02. RESTRICTIVE LEGENDS....................................19 Section 3.03. AUTHENTICATION OF CERTIFICATES.........................21 Section 3.04. TRANSFER AND EXCHANGE..................................21 Section 3.05. BOOK-ENTRY PROVISIONS FOR U.S. GLOBAL CERTIFICATE AND OFFSHORE GLOBAL CERTICIATES........22 Section 3.06. SPECIAL TRANSFER PROVISIONS............................23 Section 3.07. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES......26 Section 3.08. PERSONS DEEMED OWNERS..................................26 Section 3.09. CANCELLATION...........................................26 Section 3.10. LIMITATION OF LIABILITY FOR PAYMENTS...................26 Section 3.11. TEMPORARY CERTIFICATES.................................27 ARTICLE IV DISTRIBUTIONS; STATEMENTS TO......................................27 Section 4.01. CERTIFICATE ACCOUNT AND SPECIAL PAYMENTS ACCOUNT.......27 Section 4.02. DISTRIBUTIONS FROM CERTIFICATE ACCOUNT AND SPECIAL PAYMENTS ACCOUNT.....................................................28 Section 4.03. STATEMENTS TO CERTIFICATEHOLDERS.......................29 Section 4.04. INVESTMENT OF SPECIAL PAYMENT MONEYS...................31 ARTICLE V THE COMPANY........................................................31 Section 5.01. MAINTENANCE OF CORPORATE EXISTENCE.....................31 Section 5.02. CONSOLIDATION, MERGER, ETC.............................31 Section 5.03. RULE 144A(D)(4) INFORMATION...........................33 ARTICLE VI DEFAULT...........................................................33 Section 6.01. EVENTS OF DEFAULT......................................33 Section 6.02. INCIDENTS OF SALE OF EQUIPMENT NOTES...................34 Section 6.03. JUDICIAL PROCEEDINGS INSTITUTED BY TRUSTEE; TRUSTEE MAY BRING SUIT.......................................................34 Section 6.04. CONTROL BY CERTIFICATEHOLDERS..........................35 Section 6.05. WAIVER OF PAST DEFAULTS................................35 Section 6.06. RIGHT OF CERTIFICATEHOLDERS TO RECEIVE PAYMENTS NOT TO BE IMPAIRED.......................................................36 Section 6.07. CERTIFICATEHOLDERS MAY NOT BRING SUIT EXCEPT UNDER CERTAIN CONDITIONS...................................................36 Section 6.08. REMEDIES CUMULATIVE....................................37 Section 6.09. UNDERTAKING FOR COSTS..................................37 ARTICLE VII THE TRUSTEE......................................................37 Section 7.01. NOTICE OF DEFAULTS.....................................37 Section 7.02. CERTAIN RIGHTS OF TRUSTEE..............................37 Section 7.03. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF CERTIFICATES..................................39 Section 7.04. MAY HOLD CERTIFICATES..................................39 Section 7.05. MONEY HELD IN TRUST....................................39 Section 7.06. COMPENSATION AND REIMBURSEMENT.........................39 Section 7.07. CORPORATE TRUSTEE REQUIRED, ELIGIBILITY................41 Section 7.08. RESIGNATION AND REMOVAL: APPOINTMENT OF SUCCESSOR......41 Section 7.09. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.................43 Section 7.10. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS..........................................................43 Section 7.11. MAINTENANCE OF AGENCIES................................43 Section 7.12. MONEY FOR CERTIFICATE PAYMENTS TO BE HELD IN TRUST.....45 Section 7.13. REGISTRATION OF EQUIPMENT NOTES IN NAME OF SUBORDINATION AGENT..................................................45 Section 7.14. REPRESENTATIONS AND WARRANTIES OF TRUSTEE..............45 Section 7.15. WITHHOLDING TAXES, INFORMATION REPORTING...............46 Section 7.16. TRUSTEE'S LIENS........................................47 Section 7.17. PREFERENTIAL COLLECTION OF CLAIMS......................47 ARTICLE VIII CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE................47 Section 8.01. THE COMPANY TO FURNISH TRUSTEE WITH NAMES AND ADDRESSES OF CERTIFICATEHOLDERS......................................47 Section 8.02. PRESERVATION OF INFORMATION; COMMUNICATIONS TO CERTIFICATEHOLDERS...................................................47 Section 8.03. REPORTS BY TRUSTEE.....................................48 Section 8.04. REPORTS BY THE GUARANTOR AND COMPANY...................48 ARTICLE IX SUPPLEMENTAL AGREEMENTS...........................................49 Section 9.01. SUPPLEMENTAL AGREEMENTS WITHOUT CONSENT OF CERTIFICATEHOLDERS...................................................49 Section 9.02. SUPPLEMENTAL AGREEMENTS WITH CONSENT OF CERTIFICATEHOLDERS...................................................50 Section 9.03. DOCUMENTS AFFECTING IMMUNITY OR INDEMNITY..............51 Section 9.04. EXECUTION OF SUPPLEMENTAL AGREEMENTS...................51 Section 9.05. EFFECT OF SUPPLEMENTAL AGREEMENTS......................51 Section 9.06. CONFORMITY WITH TRUST INDENTURE ACT....................52 Section 9.07. REFERENCE IN CERTIFICATES TO SUPPLEMENTAL AGREEMENTS...52 ARTICLE X AMENDMENTS TO INDENTURES AND NOTE DOCUMENTS........................52 Section 10.01. AMENDMENTS AND SUPPLEMENTS TO INDENTURES AND OTHER NOTE DOCUMENTS.......................................................52 ARTICLE XI TERMINATION OF TRUSTS.............................................53 Section 11.01. TERMINATION OF THE TRUST..............................53 ARTICLE XII MISCELLANEOUS PROVISIONS.........................................56 Section 12.01. LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS............56 Section 12.02. LIABILITIES OF CERTIFICATEHOLDERS.....................56 Section 12.03. CERTIFICATES NONASSESSABLE AND FULLY PAID.............56 Section 12.04. [Intentionally omitted]...............................56 Section 12.05. NOTICES...............................................56 Section 12.06. GOVERNING LAW.........................................57 Section 12.07. SEVERABILITY OF PROVISIONS............................58 Section 12.08. [Intentionally omitted]...............................58 Section 12.09. EFFECT OF HEADINGS AND TABLE OF CONTENTS..............58 Section 12.10. SUCCESSORS AND ASSIGNS................................58 Section 12.11. BENEFITS OF AGREEMENT.................................58 Section 12.12. LEGAL HOLIDAYS........................................58 Section 12.13. COUNTERPARTS..........................................58 Section 12.14. COMMUNICATION BY CERTIFICATEHOLDERS WITH OTHER CERTIFICATEHOLDERS........................59 Section 12.15. INTENTION OF PARTIES..................................59 Exhibit A - Form of Certificate Exhibit B - Form of Certificate to be Delivered in Connection with Transfers Pursuant to Regulation S Exhibit C - Form of Certificate to be Delivered in Connection with Transfers to Non-QIB Accredited Investors Exhibit D - Form of Assignment and Assumption Agreement Exhibit E - Form ofCertificate to be Delivered in Connection with Transfers to QIBs This PASS THROUGH TRUST AGREEMENT, dated as of December 23, 1997, among AMTRAN, INC., an Indiana corporation (the "Guarantor"), AMERICAN TRANS AIR, INC., an Indiana corporation (the "Company"), and WILMINGTON TRUST COMPANY, a Delaware banking corporation, as Trustee, is made with respect to the formation of the American Trans Air 1997-1C-O Pass Through Trust, and the issuance of 7.46% American Trans Air 1997-1C-O Pass Through Certificates representing fractional undivided interests in the Trust. WITNESSETH: .........WHEREAS, the Company has obtained commitments from The Boeing Company for the delivery of certain Aircraft; .........WHEREAS, the Company intends to finance the acquisition of each such Aircraft either (i) through separate leveraged lease transactions in which the Company will lease such aircraft (collectively, the "LEASED AIRCRAFT") or (ii) through separate secured loan transactions in which the Company will own such Aircraft (collectively, the "OWNED AIRCRAFT"); .........WHEREAS, in the case of each Leased Aircraft, each Owner Trustee, acting on behalf of the corresponding Owner Participant, will issue pursuant to an Indenture, on a non-recourse basis, three series of Equipment Notes in order to finance a portion of the purchase price of each such Leased Aircraft; .........WHEREAS, in the case of each Owned Aircraft, the Company, will issue pursuant to an Indenture, on a recourse basis, three series of Equipment Notes to finance a portion of the purchase price of each such Owned Aircraft; .........WHEREAS, the Trustee, upon execution and delivery of this Agreement, hereby declares the creation of this Trust (the "1997-1C-O Trust") for the benefit of the Certificateholders, and the initial Certificateholders, as the grantors of the 1997-1C-O Trust, by their respective acceptances of the Certificates, join in the creation of this 1997-1C-O Trust with the Trustee; .........WHEREAS, except for those Certificates to which an Escrow Receipt has been affixed, all Certificates to be issued by the Trust will evidence fractional undivided interests in the Trust and will convey no rights, benefits or interests in respect of any property other than the Trust Property; .........WHEREAS, the Escrow Agent and the Initial Purchasers have contemporaneously herewith entered into an Escrow Agreement with the Escrow Paying Agent pursuant to which the Initial Purchasers have delivered to the Escrow Agent the proceeds from the sale of the Certificates and have irrevocably instructed the Escrow Agent to withdraw and pay funds from such proceeds upon request and proper certification by the Trustee to purchase Equipment Notes at the times at which the Aircraft are delivered as contemplated by the Note Purchase Agreement from time to time prior to the Delivery Period Termination Date (other than the delivery of an Aircraft on the Issuance Date, if applicable); .........WHEREAS, the Escrow Agent on behalf of the Certificateholders has contemporaneously herewith entered into a Deposit Agreement with the Depositary under which the Deposits referred to therein will be made and from which the Escrow Agent will withdraw funds to allow the Trustee to purchase Equipment Notes from time to time prior to the Delivery Period Termination Date (other than with respect to Equipment Notes relating to an Aircraft delivered on the Issuance Date, if applicable); .........WHEREAS, pursuant to the terms and conditions of this Agreement and the Note Purchase Agreement, upon or shortly following the delivery of an Aircraft (other than delivery of an Aircraft on or prior to the Issuance Date, if applicable), the Trustee on behalf of the Trust, using funds withdrawn pursuant to the Escrow Agreement, shall (subject to certain conditions) purchase an Equipment Note having the same interest rate as, and final maturity date not later than the final Regular Distribution Date of, the Certificates issued hereunder and shall hold such Equipment Note in trust for the benefit of the Certificateholders; .........WHEREAS, pursuant to the terms and conditions of this Agreement and the Note Purchase Agreement, upon the delivery of an Aircraft on the Issuance Date, if applicable, the Trustee on behalf of the Trust, using funds from the proceeds of the sale of the Certificates, shall (subject to certain conditions) purchase an Equipment Note having the same interest rate as, and final maturity date not later than the final Regular Distribution Date of, the Certificates issued hereunder and shall hold such Equipment Note in trust for the benefit of the Certificateholders; .........WHEREAS, all of the conditions and requirements necessary to make this Agreement, when duly executed and delivered, a valid, binding and legal instrument, enforceable in accordance with its terms and for the purposes herein expressed, have been done, performed and fulfilled, and the execution and delivery of this Agreement in the form and with the terms hereof have been in all respects duly authorized; and .........WHEREAS, to facilitate the sale of Equipment Notes to, and the purchase of Equipment Notes by, the Trustee on behalf of the 1997-1C-O Trust, (i) the Company as the "issuer", as such term is defined in and solely for purposes of the Securities Act of 1933, as amended, of the Certificates to be issued pursuant hereto, and as the "obligor", as such term is defined in and solely for purposes of the Trust Indenture Act of 1939, as amended, and (ii) the Guarantor have each duly authorized the execution and delivery of this Agreement with respect to all such Certificates and are undertaking to perform certain administrative and ministerial duties hereunder and are also undertaking to pay the fees and expenses of the Trustee; .........NOW, THEREFORE, in consideration of the mutual agreements herein contained, and of other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I DEFINITIONS .........Section 1.01. Definitions. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: (1) the terms used herein that are defined in this Article have the meanings assigned to them in this Article, and include the plural as well as the singular; (2) all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference herein, have the meanings assigned to them therein; (3) all references in this Agreement to designated "Articles", "Sections" and other subdivisions are to the designated Articles, Sections and other subdivisions of this Agreement; (4) the words "herein", "hereof' and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision; and (5) unless the context otherwise requires, whenever the words "including", "include" or "includes" are used herein, it shall be deemed to be followed by the phrase "without limitation". ACT: With respect to any Certificateholder has the meaning specified in Section 1.04. AFFILIATE: With respect to any specified Person, means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such Person. For the purposes of this definition, "control", when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms "controlling" and "controlled" have meanings correlative to the foregoing. AGENT MEMBERS: Has the meaning specified in Section 3.05(a). AIRCRAFT: means each of the Aircraft or Substitute Aircraft in respect of which a Participation Agreement is entered into in accordance with the Note Purchase Agreement. APPLICABLE DELIVERY DATE: Has the meaning specified in Section 2.01(b). APPLICABLE PARTICIPATION AGREEMENT: Has the meaning specified in Section 2.01(b). ASSIGNMENT AND ASSUMPTION AGREEMENT: Means the assignment and assumption agreement substantially in the form of Exhibit D hereto executed and delivered in accordance with Section 11.01. AUTHORIZED AGENT: Means any Paying Agent or Registrar for the Certificates. AVOIDABLE TAX: Has the meaning specified in Section 7.08(e) hereof. BOOK-ENTRY CERTIFICATES: With respect to the Certificates, means a beneficial interest in the Certificates, ownership and transfers of which shall be made through book entries as described in Section 3.04. BUSINESS DAY: Means any day other than a Saturday, a Sunday or a day on which commercial banks are required or authorized to close in Indianapolis, Indiana; New York, New York; or Phoenix, Arizona; and, so long as any such Certificate is outstanding, a city and state in which the Trustee or any related Loan Trustee maintains its Corporate Trust Office or receives and disburses funds. CEDEL: Means Cedel Bank societe anonyme. CERTIFICATE: Means any one of the certificates executed and authenticated by the Trustee, substantially in the form of Exhibit A hereto. CERTIFICATE ACCOUNT: Means the account or accounts created and maintained pursuant to Section 4.01(a). CERTIFICATEHOLDER OR HOLDER: Means the Person in whose name a Certificate is registered in the Register. CLEARING AGENCY: Means an organization registered as a "clearing agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as amended. CLEARING AGENCY PARTICIPANT: Means a broker, dealer, bank, other financial institution or other Person for whom from time to time a Clearing Agency effects, directly or indirectly, book-entry transfers and pledges of securities deposited with the Clearing Agency. COMPANY: Means American Trans Air, Inc., an Indiana corporation, or its successor in interest pursuant to Section 5.02. CONTROLLING PARTY: Means the Person entitled to act as such pursuant to the terms of the Intercreditor Agreement. CORPORATE TRUST OFFICE: With respect to the Trustee or any Loan Trustee, means the office of such trustee in the city at which at any particular time its corporate trust business shall be principally administered. CUT-OFF DATE: Means the earlier of (a) the Delivery Period Termination Date and (b) the date on which a Triggering Event occurs. DELIVERY DATE: Has the meaning specified in Section 1(b) of the Note Purchase Agreement. DELIVERY NOTICE: Has the meaning specified in Annex A to the Note Purchase Agreement. DELIVERY PERIOD TERMINATION DATE: Has the meaning specified in Annex A to the Note Purchase Agreement. DEPOSIT AGREEMENT: Means the Deposit Agreement (Class C) dated as of December 23, 1997 relating to the Certificates, between the Depositary and the Escrow Agent, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. DEPOSITARY: Means NBD Bank, National Association, a national banking association. DEPOSITS: Has the meaning specified in the Deposit Agreement. DIRECTION: Has the meaning specified in Section 1.04(c). DISTRIBUTION DATE: Means each Regular Distribution Date and each Special Distribution Date. DTC: Means The Depository Trust Company, its nominees and their respective successors. EQUIPMENT NOTE: Means the "Secured Certificates" as defined in the Indentures. ERISA: Means the Employee Retirement Income Security Act of 1974, as amended from time to time, or any successor federal statute. ESCROW AGENT: Means, initially, First Security Bank, National Association, and any replacement or successor therefor appointed in accordance with the Escrow Agreement. ESCROW AGREEMENT: Means the Escrow and Paying Agent Agreement (Class C) dated as of December 23, 1997 relating to the Certificates, among the Escrow Agent, the Escrow Paying Agent, the Trustee and the Initial Purchasers, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. ESCROW PAYING AGENT: Means the Person acting as paying agent under the Escrow Agreement. ESCROW RECEIPT: Means the receipt substantially in the form annexed to the Escrow Agreement representing a fractional undivided interest in the funds held in escrow thereunder. EUROCLEAR: Means the Euroclear System. EVENT OF DEFAULT: Means the occurrence of an Indenture Default under any Indenture pursuant to which Equipment Notes held by the Trust were issued. FINAL WITHDRAWAL: Has the meaning specified in the Escrow Agreement. FINAL WITHDRAWAL DATE: Has the meaning specified in the Escrow Agreement. FINAL WITHDRAWAL NOTICE: Has the meaning specified in Section 2.03. FRACTIONAL UNDIVIDED INTEREST: Means the fractional undivided interest in the Trust that is evidenced by a Certificate. GLOBAL CERTIFICATES: Has the meaning assigned to such term in Section 3.01. GUARANTOR: Means Amtran, Inc., an Indiana corporation, or its successor in interest. INDENTURE: Means each of the three separate trust indenture and security agreements relating to the Aircraft, each entered into pursuant to the related Participation Agreement, in each case as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. INDENTURE DEFAULT: With respect to any Indenture, means any Event of Default (as such term is defined in such Indenture). INITIAL PURCHASERS: Means Salomon Brothers Inc and Furman Selz LLC, collectively. INITIAL REGULAR DISTRIBUTION DATE: Means the first Regular Distribution Date on which a Scheduled Payment is to be made. INSTITUTIONAL ACCREDITED INVESTOR: Means an institutional investor that is an "accredited investor" within the meaning set forth in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act. INTERCREDITOR AGREEMENT: Means the Intercreditor Agreement dated December 23, 1997 among the Trustee, the Other Trustees, the Liquidity Provider, the liquidity providers, if any, relating to the Certificates issued under (and as defined in) the Other Pass Through Trust Agreements, and Wilmington Trust Company, as Subordination Agent thereunder, as amended, supplemented or otherwise modified from time to time in accordance with its terms. ISSUANCE DATE: Means the date of the issuance of the Certificates. LEASE: Means any lease between an Owner Trustee, as the lessor, and the Company, as the lessee, referred to in the related Indenture, as each such lease may be amended or supplemented in accordance with its respective terms; and LEASES means all such leases. LEASED AIRCRAFT: Has the meaning specified in the second recital to this Agreement. LETTER OF REPRESENTATIONS: Means the agreement dated the Issuance Date among the Company, the Trustee and the initial Clearing Agency. LIQUIDITY FACILITY: Means the Irrevocable Revolving Credit Agreement Class A Certificates dated December 23, 1997 relating to the Certificates between the Liquidity Provider and the Subordination Agent, as amended, replaced, supplemented or otherwise modified from time to time in accordance with its terms and the terms of the Intercreditor Agreement. LIQUIDITY PROVIDER: Means, initially, ING Bank, a Dutch bank, and any replacement or successor therefor appointed in accordance with the Liquidity Facility and the Intercreditor Agreement. LOAN TRUSTEE: With respect to any Equipment Note or the Indenture applicable thereto, means the bank or trust company designated as loan or indenture trustee under such Indenture; and any successor to such Loan Trustee as such trustee; and LOAN TRUSTEES means all of the Loan Trustees under the Indentures. NON-U.S. PERSON: Means a Person that is not a U.S. Person as defined in Regulation S. NOTE DOCUMENTS: With respect to any Equipment Note, means the related Indenture, Lease (if the related Aircraft is leased to the Company) and Participation Agreement. NOTE PURCHASE AGREEMENT: Means the Note Purchase Agreement dated as of December 23, 1997 among the Trustee, the Other Trustees, the Company, the Escrow Agent, the Escrow Paying Agent and the Subordination Agent, providing for, among other things, the purchase of Equipment Notes by the Trustee on behalf of the Trust, as the same may be amended, supplemented or otherwise modified from time to time, in accordance with its terms. NOTICE OF PURCHASE WITHDRAWAL: Has the meaning specified in the Deposit Agreement. OFFERING MEMORANDUM: Means the Offering Memorandum dated December 17, 1997 relating to the offering of the Certificates and the certificates issued under the Other Pass Through Trust Agreements. OFFICER'S CERTIFICATE: Means a certificate signed (a) in the case of the Guarantor or the Company, by (i) the President or any Executive Vice President or Senior Vice President of the Guarantor or the Company, respectively, signing alone or (ii) any Vice President of the Guarantor or the Company signing together with the Secretary, the Assistant Secretary, the Treasurer or any Assistant Treasurer of the Guarantor or the Company, respectively, or (b) in the case of the Trustee or an Owner Trustee or a Loan Trustee, a Responsible Officer of the Trustee or such Owner Trustee or such Loan Trustee, as the case may be. OFFSHORE GLOBAL CERTIFICATES: Has the meaning assigned to such term in Section 3.01. OFFSHORE PHYSICAL CERTIFICATES: Has the meaning assigned to such term in Section 3.01. OPINION OF COUNSEL: Means a written opinion of legal counsel who (a) in the case of counsel for the Guarantor or the Company, may be (i) a senior attorney in rank of the officers of the Guarantor or the Company a principal duty of which is furnishing advice as to legal matters or (ii) such other counsel designated by the Guarantor or the Company and reasonably acceptable to the Trustee and (b) in the case of any Owner Trustee or any Loan Trustee, may be such counsel as may be designated by any of them whether or not such counsel is an employee of any of them, and who shall be reasonably acceptable to the Trustee. OTHER PASS THROUGH TRUST AGREEMENT: Means (i) the American Trans Air 1997-1A-O Pass Through Trust Agreement relating to the American Trans Air 1997-1A-O Pass Through Trust, and (ii) the American Trans Air 1997-1B-O Pass Through Trust Agreement relating to the American Trans Air 1997-1B-O Pass Through Trust, each dated the date hereof; and OTHER PASS THROUGH TRUST AGREEMENTS means all such agreements. OTHER TRUSTEE: Means the trustee under each of the Other Pass Through Trust Agreements, and any successor or other trustee appointed as provided therein and Other Pass Through Trustees means both such trustees. OTHER TRUSTS: Means the American Trans Air 1997-1A-O Pass Through Trust and the American Trans Air 1997-1B-O Pass Through Trust. OUTSTANDING: With respect to Certificates, means, as of the date of determination, all Certificates theretofore authenticated and delivered under this Agreement, except: (i) Certificates theretofore canceled by the Registrar or delivered to the Trustee or the Registrar for cancellation; (ii) All of the Certificates if money in the full amount required to make the final distribution with respect thereto pursuant to Section 11.01 hereof has been theretofore deposited with the Trustee in trust for the Holders of such Certificates as provided in Section 4.01 pending distribution of such money to such Certificateholders pursuant to such final distribution payment; and (iii) Certificates in exchange for or in lieu of which other Certificates have been authenticated and delivered pursuant to this Agreement. OWNED AIRCRAFT: Has the meaning specified in the second recital to this Agreement. OWNER PARTICIPANT: With respect to any Equipment Note, means the "Owner Participant" as referred to in the Indenture pursuant to which such Equipment Note is issued and any permitted successor or assign of such Owner Participant; and Owner Participants at any time of determination means all of the Owner Participants thus referred to in the Indentures. OWNER TRUSTEE: With respect to any Equipment Note, means the "Owner Trustee", as referred to in the Indenture pursuant to which such Equipment Note is issued, not in its individual capacity but solely as trustee; and Owner Trustees means all of the Owner Trustees party to any of the respective Indentures. PARTICIPATION AGREEMENT: Means each Participation Agreement to be entered into by the Trustee and the Other Trustees pursuant to the Note Purchase Agreement, as the same may be amended, supplemented or otherwise modified in accordance with its terms; and PARTICIPATION AGREEMENTS means all such agreements. PAYING AGENT: Means the paying agent maintained and appointed for the Certificates pursuant to Section 7.11. PERMITTED INVESTMENTS: Means obligations of the United States of America or agencies or instrumentalities thereof for the payment of which the full faith and credit of the United States of America is pledged, maturing in not more than 60 days or such lesser time as is necessary for payment of any Special Payments on a Special Distribution Date. PERSON: Means any person, including any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization, or government or any agency or political subdivision thereof. PHYSICAL CERTIFICATES: Has the meaning specified in Section 3.01. POOL BALANCE: Means, as of any date, (i) the original aggregate face amount of the Certificates less (ii) the aggregate amount of all payments made in respect of such Certificates other than payments made in respect of interest or premium thereon or reimbursement of any costs or expenses incurred in connection therewith less (iii) the aggregate amount of unused Deposits distributed as a Final Withdrawal other than payments in respect of interest or premium thereon. The Pool Balance as of any Distribution Date shall be computed after giving effect to the payment of principal, if any, on the Equipment Notes or other Trust Property held in the Trust and the distribution thereof to be made on such Distribution Date and the distribution of the Final Withdrawal to be made on such Distribution Date. POOL FACTOR: Means, as of any date, the quotient (rounded to the seventh decimal place) computed by dividing (i) the Pool Balance as at such date by (ii) the original aggregate face amount of the Certificates. The Pool Factor as of any Distribution Date shall be computed after giving effect to the payment of principal, if any, on the Equipment Notes or other Trust Property and the distribution thereof to be made on such Distribution Date and the distribution of the Final Withdrawal to be made on such Distribution Date. PRIVATE PLACEMENT LEGEND: Has the meaning specified in Section 3.02. PTC EVENT OF DEFAULT: Means any failure to pay within 10 Business Days of the due date thereof: (i) the outstanding Pool Balance on June 15, 2009 or (ii) interest due on the Certificates on any Distribution Date (unless the Subordination Agent shall have made an Interest Drawing (as defined in the Intercreditor Agreement) or a withdrawal or withdrawals from a cash collateral account pursuant to Section 3.6(f) of the Intercreditor Agreement, with respect thereto in an amount sufficient to pay such interest and shall have distributed such amount to the Certificateholders). PURCHASE AGREEMENT: Means the Purchase Agreement dated December 17, 1997 among the Initial Purchasers, the Company and the Depositary, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. QIB: Means a qualified institutional buyer as defined in Rule 144A. RECORD DATE: Means (i) for Scheduled Payments to be distributed on any Regular Distribution Date, other than the final distribution, the 15th day (whether or not a Business Day) preceding such Regular Distribution Date, and (ii) for Special Payments to be distributed on any Special Distribution Date, other than the final distribution, the 15th day (whether or not a Business Day) preceding such Special Distribution Date. REGISTER and REGISTRAR: Mean the register maintained and the registrar appointed pursuant to Sections 3.04 and 7.11. REGULAR DISTRIBUTION DATE: With respect to distributions of Scheduled Payments in respect of the Certificates, means each date designated as such in this Agreement, until payment of all the Scheduled Payments to be made under the Equipment Notes held in the Trust has been made; PROVIDED, HOWEVER, that, if any such day shall not be a Business Day, the related distribution shall be made on the next succeeding Business Day without additional interest. REGULATION S RESTRICTED DATE: Means the date 40-days after the later of the commencement of the initial offering of the Certificates and the date of initial issuance thereof. RELATED PASS THROUGH TRUST AGREEMENT: Means the American Trans Air 1997-1C-S Pass Through Trust Agreement relating to the American Trans Air 1997-1C-S Pass Through Trust, dated the date hereof, entered into by the Company and the institution acting as trustee thereunder, which agreement becomes effective upon the execution and delivery of the Assignment and Assumption Agreement pursuant to Section 11.01. RELATED TRUST: Means the American Trans Air 1997-1C-S Pass Through Trust, formed under the Related Pass Through Trust Agreement. RELATED TRUSTEE: Means the trustee under the Related Pass Through Trust Agreement. REQUEST: Means a request by the Company setting forth the subject matter of the request accompanied by an Officer's Certificate and an Opinion of Counsel as provided in Section 1.02 of this Agreement. RESPONSIBLE OFFICER: With respect to the Trustee, any Loan Trustee and any Owner Trustee, means any officer in the Corporate Trust Division of the Trustee, Loan Trustee or Owner Trustee or any other officer customarily performing functions similar to those performed by the persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of his knowledge of and familiarity with a particular subject. RULE 144A: Means Rule 144A under the Securities Act and any successor regulation thereto. SCHEDULED PAYMENT: With respect to any Equipment Note, means any payment of principal and interest on such Equipment Note or any payment of interest on the Certificates with funds drawn under the Liquidity Facility (other than any such payment which is not in fact received by the Trustee or any Subordination Agent within five days of the date on which such payment is scheduled to be made) due from the obligor thereon which payment represents the installment of principal at the stated maturity of such installment of principal on such Equipment Note, the payment of regularly scheduled interest accrued on the unpaid principal amount of such Equipment Note, or both; PROVIDED that any payment of principal, premium, if any, or interest resulting from the redemption or purchase of any Equipment Note shall not constitute a Scheduled Payment. SEC: Means the Securities and Exchange Commission as from time to time constituted or created under the Securities Exchange Act of 1934, or, if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date. SECURITIES ACT: Means the United States Securities Act of 1933, as amended from time to time, or any successor thereto. SPECIAL DISTRIBUTION DATE: Means each date on which a Special Payment is to be distributed as specified in this Agreement; PROVIDED, HOWEVER, that, if any such day shall not be a Business Day, the related distribution shall be made on the next succeeding Business Day without additional interest. SPECIAL PAYMENT: Means any payment (other than a Scheduled Payment) in respect of, or any proceeds of, any Equipment Note or Trust Indenture Estate (as defined in each Indenture) or Special Redemption Premium (if applicable). SPECIAL PAYMENTS ACCOUNT: Means the account or accounts created and maintained pursuant to Section 4.01(b). SPECIAL REDEMPTION PREMIUM: Means the premium, if any, payable by the Company in respect of the Final Withdrawal pursuant to the Note Purchase Agreement. SUBORDINATION AGENT: Shall have the meaning specified therefor in the Intercreditor Agreement. SUBSTITUTE AIRCRAFT: Has the meaning specified in the Note Purchase Agreement. TRANSFER DATE: Has the meaning specified in Section 11.01. TRIGGERING EVENT: Shall have the meaning specified therefor in the Intercreditor Agreement. TRUST: Means the trust created by this Agreement, the estate of which consists of Trust Property. TRUST INDENTURE ACT: Except as otherwise provided in Section 9.06, means the Trust Indenture Act of 1939 as in force at the date as of which this Agreement was executed. TRUST PROPERTY: Means (i) the Equipment Notes held as the property of the Trust, all monies at any time paid thereon and all monies due and to become due thereunder, (ii) the rights of the Trust and the Trustee, on behalf of the Trust, under the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement and the Liquidity Facilities, including, without limitation, all monies receivable in respect of such rights, PROVIDED that rights with respect to the Deposits or under the Escrow Agreement, except for the right to direct withdrawals for the purchase of Equipment Notes to be held herein, will not constitute Trust Property, and (iii) funds from time to time deposited in the Certificate Account and the Special Payments Account and, subject to the Intercreditor Agreement, any proceeds from the sale by the Trustee pursuant to Article VI hereof of any such Equipment Note. TRUSTEE: Means Wilmington Trust Company, or its successor in interest, and any successor trustee appointed as provided herein. U.S. GLOBAL CERTIFICATE: Has the meaning specified in Section 3.01. U.S. PHYSICAL CERTIFICATES: Has the meaning specified in Section 3.01. Section 1.02. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any application or request by the Company, any Owner Trustee or any Loan Trustee to the Trustee to take any action under any provision of this Agreement, the Company, such Owner Trustee or such Loan Trustee, as the case may be, shall furnish to the Trustee an Officers' Certificate stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Agreement relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Agreement relating to such particular application or request, no additional certificate or opinion need be furnished. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Agreement (other than a certificate provided pursuant to Section 8.04(d)) shall include: (1) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions in this Agreement relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. Section 1.03. FORM OF DOCUMENTS DELIVERED TO TRUSTEE. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters and any such Person may certify or give an opinion as to such matters in one or several documents. Any Opinion of Counsel stated to be based on the opinion of other counsel shall be accompanied by a copy of such other opinion. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Agreement, they may, but need not, be consolidated and form one instrument. Section 1.04. ACTS OF CERTIFICATEHOLDERS. -------------------------- (a) Any direction, consent, waiver or other action provided by this Agreement to be given or taken by Certificateholders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Certificateholders in person or by an agent or proxy duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required pursuant to this Agreement, to the Company or any Loan Trustee. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Certificateholders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Agreement and conclusive in favor of the Trustee, the Company and any Loan Trustee, if made in the manner provided in this Section. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the certificate of any notary public or other officer of any jurisdiction authorized to take acknowledgments of deeds or administer oaths that the Person executing such instrument acknowledged to him the execution thereof, or by an affidavit of a witness to such execution sworn to before any such notary or such other officer and where such execution is by an officer of a corporation or association or a member of a partnership, on behalf of such corporation, association or partnership, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other reasonable manner which the Trustee deems sufficient. (c) In determining whether the Certificateholders of the requisite Fractional Undivided Interests of Certificates Outstanding have given any direction, consent or waiver (a "Direction"), under this Agreement, Certificates owned by the Company, the Guarantor, any Owner Trustee, any Owner Participant or any Affiliate of any such Person shall be disregarded and deemed not to be Outstanding for purposes of any such determination. In determining whether the Trustee shall be protected in relying upon any such Direction, only Certificates which the Trustee knows to be so owned shall be so disregarded. Notwithstanding the foregoing, (i) if any such Person owns 100% of the Certificates Outstanding, such Certificates shall not be so disregarded as aforesaid, and (ii) if any amount of Certificates so owned by any such Person have been pledged in good faith, such Certificates shall not be disregarded as aforesaid if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Certificates and that the pledgee is not the Company, the Guarantor, any Owner Trustee, any Owner Participant or any Affiliate of any such Person. (d) The Company may, at its option by delivery of an Officer's Certificate to the Trustee, set a record date to determine the Certificateholders entitled to give any consent, request, demand, authorization, direction, notice, waiver or other Act. Notwithstanding Section 316(c) of the Trust Indenture Act, such record date shall be the record date specified in such Officer's Certificate which shall be a date not more than 30 days prior to the first solicitation of Certificateholders in connection therewith. If such a record date is fixed, such consent request, demand, authorization, direction, notice, waiver or other Act may be given before or after such record date, but only the Certificateholders of record at the close of business on such record date shall be deemed to be Certificateholders for the purposes of determining whether Certificateholders of the requisite proportion of Outstanding Certificates have authorized or agreed or consented to such consent, request, demand, authorization, direction, notice, waiver or other Act, and for that purpose the Outstanding Certificates shall be computed as of such record date; PROVIDED that no such consent, request, demand, authorization, direction, notice, waiver or other Act by the Certificateholders on such record date shall be deemed effective unless it shall become effective pursuant to the provisions of this Agreement not later than one year after the record date. (e) Any direction, consent, waiver or other action by the Certificateholder of any Certificate shall bind the Certificateholder of every Certificate issued upon the transfer thereof or in exchange therefor or in lieu thereof, whether or not notation of such action is made upon such Certificate. (f) Except as otherwise provided in Section 1.04(c), Certificates owned by or pledged to any Person shall have an equal and proportionate benefit under the provisions of this Agreement, without preference, priority, or distinction as among all of the Certificates. ARTICLE II ORIGINAL ISSUANCE OF CERTIFICATES; ACQUISITION OF EQUIPMENT NOTES Section 2.01. [Intentionally omitted]. Section 2.02. ISSUANCE OF CERTIFICATES; ACQUISITION OF EQUIPMENT NOTES. -------------------------------------------------------- (a) On or prior to the Issuance Date of the Certificates, the Trustee shall execute and deliver the Intercreditor Agreement, the Escrow Agreement and the Note Purchase Agreement, each in the form delivered to the Trustee by the Company. Upon the oral or written request of the Company or the Company's counsel acting on behalf of the Company and the satisfaction of the closing conditions specified in the Purchase Agreement, the Trustee shall, execute, deliver and authenticate Certificates equalling in the aggregate the amount set forth, with respect to the Trust, in Schedule A to the Purchase Agreement, and evidencing the entire ownership interest in the Trust, which amount equals the maximum aggregate principal amount of Equipment Notes which may be purchased by the Trustee pursuant to the Note Purchase Agreement. (b) On or after the Issuance Date, the Company may deliver from time to time to the Trustee a Delivery Notice relating to one or more Aircraft. After receipt of a Delivery Notice and in any case no later than one Business Day prior to a Delivery Date as to which such Delivery Notice relates (the "APPLICABLE DELIVERY DATE") (or, if the Issuance Date is an Applicable Delivery Date, on the Issuance Date), the Trustee shall (as and when specified in the Delivery Notice) instruct the Escrow Agent to provide a Notice of Purchase Withdrawal to the Depositary requesting (i) the withdrawal of one or more Deposits on the Applicable Delivery Date in accordance with and to the extent permitted by the terms of the Escrow Agreement and the Deposit Agreement and (ii) the payment of all, or a portion, of such Deposit or Deposits, in an aggregate amount equal to the purchase price of the Equipment Notes relating to the Aircraft to be delivered on such Applicable Delivery Date, to or on behalf of the Owner Trustee or the Company, as the case may be, issuing such Equipment Notes, all as shall be described in the Delivery Notice; PROVIDED that, if the Issuance Date is an Applicable Delivery Date, such purchase price shall be paid from a portion of the proceeds of the sale of the Certificates. The Trustee shall (as and when specified in such Delivery Notice), subject to the conditions set forth in Sections 1 and 2 of the Note Purchase Agreement, enter into and perform its obligations under the Participation Agreement specified in such Delivery Notice (the "APPLICABLE PARTICIPATION AGREEMENT") and cause such certificates, documents and legal opinions relating to the Trustee to be duly delivered as required by the Applicable Participation Agreement. If at any time prior to the Applicable Delivery Date, the Trustee receives a notice of postponement pursuant to Section 1(d) or 1(e) of the Note Purchase Agreement, then the Trustee shall give the Depositary (with a copy to the Escrow Agent) a notice of cancellation of such Notice of Purchase Withdrawal relating to such Deposit or Deposits on such Applicable Delivery Date. Upon satisfaction of the conditions specified in the Note Purchase Agreement and the Applicable Participation Agreement, the Trustee shall purchase the applicable Equipment Notes with the proceeds of the withdrawals of one or more Deposits made on the Applicable Delivery Date in accordance with the terms of the Deposit Agreement and the Escrow Agreement (or, if the Issuance Date is the Applicable Delivery Date with respect to such Applicable Participation Agreement, from a portion of the proceeds of the sale of the Certificates). The purchase price of such Equipment Notes shall equal the principal amount of such Equipment Notes. Amounts withdrawn from such Deposit or Deposits in excess of the purchase price of the Equipment Notes or to the extent not applied on the Applicable Delivery Date to the purchase price of the Equipment Notes, shall be re-deposited by the Trustee with the Depositary on the Applicable Delivery Date in accordance with the terms of the Deposit Agreement. Section 2.03. WITHDRAWAL OF DEPOSITS. If any Deposits remain outstanding on the Business Day next succeeding the Cut-Off Date, (i) the Trustee shall give the Escrow Agent notice that the Trustee's obligation to purchase Equipment Notes under the Note Purchase Agreement has terminated and instruct the Escrow Agent to provide a notice of Final Withdrawal to the Depositary substantially in the form of Exhibit B to the Deposit Agreement (the "FINAL WITHDRAWAL NOTICE") and (ii) the Trustee will make a demand upon the Company under the Note Purchase Agreement for an amount equal to the Special Redemption Premium, such payment to be made on the Final Withdrawal Date. Section 2.04. ACCEPTANCE BY TRUSTEE. The Trustee, upon the execution and delivery of this Agreement, acknowledges its acceptance of all right, title, and interest in and to the Trust Property and declares that the Trustee holds and will hold such right, title, and interest for the benefit of all then present and future Certificateholders, upon the trusts herein set forth. By its payment for and acceptance of each Certificate issued to it under this Agreement, each initial Certificateholder as grantor of the Trust thereby joins in the creation and declaration of the Trust. Section 2.05. LIMITATION OF POWERS. The Trust is constituted solely for the purpose of making the investment in the Equipment Notes, and, except as set forth herein, the Trustee shall not be authorized or empowered to acquire any other investments or engage in any other activities and, in particular, the Trustee shall not be authorized or empowered to do anything that would cause such Trust to fail to qualify as a "grantor trust" for federal income tax purposes (including as subject to this restrictions acquiring the Aircraft (as defined in the respective related Indentures) by bidding such Equipment Notes or otherwise, or taking any action with respect to any such Aircraft once acquired). ARTICLE III THE CERTIFICATES Section 3.01. TITLE, FORM, DENOMINATION AND EXECUTION OF CERTIFICATES. ------------------------------------------------------- (a) The Certificates shall be known as the "7.46% 1997-1C-O Pass Through Certificates" of the Trust. Each Certificate will represent a fractional undivided interest in the Trust and shall be substantially in the form set forth as Exhibit A hereto, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Agreement and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such Certificates, as evidenced by their execution of the Certificates. Any portion of the text of any Certificate may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Certificate. At the Escrow Agent's request under the Escrow Agreement, the Trustee shall affix the corresponding Escrow Receipt to each Certificate. Any transfer or exchange of any Certificate shall also effect a transfer or exchange of the related Escrow Receipt. Prior to the Final Withdrawal Date, no transfer or exchange of any Certificate shall be permitted unless the corresponding Escrow Receipt is attached thereto and also is so transferred or exchanged. By acceptance of any Certificate to which an Escrow Receipt is attached, each Holder of such Certificate acknowledges and accepts the restrictions on transfer of the Escrow Receipt set forth herein and in the Escrow Agreement. (b) The Certificates shall be issued only in fully registered form without coupons and only in denominations of $100,000 or integral multiples of $1,000 in excess thereof, except that one Certificate may be issued in a denomination of less than $100,000. Each Certificate shall be dated the date of its authentication. The aggregate Fractional Undivided Interest of Certificates shall not at any time exceed $18,153,000. (c) Certificates offered and sold in reliance on Rule 144A shall be issued initially in the form of a single permanent global Certificate in registered form, substantially in the form set forth as Exhibit A hereto with such applicable legends as are provided for in clauses (a) and (b) of Section 3.02 (the "U.S. Global Certificate"), duly executed and authenticated by the Trustee as hereinafter provided. The U.S. Global Certificate will be registered in the name of a nominee for DTC and deposited with the Trustee, as custodian for DTC. The aggregate principal amount of the U.S. Global Certificate may from time to time be increased or decreased by adjustments made on the records of DTC or its nominee, or of the Trustee, as custodian for the DTC or its nominee, as hereinafter provided. (d) Certificates offered and sold in offshore transactions in reliance on Regulation S shall be issued in the form of a single global Certificate in registered form, substantially in the form set forth as Exhibit A hereto with such applicable legends as are provided for in clause (b) of Section 3.02 (the "Offshore Global Certificate") duly executed and authenticated by the Trustee as hereinafter provided. The Temporary Offshore Global Certificate will be registered in the name of a nominee of DTC for credit to the account of the Agent Members acting as depositories for Euroclear and Cedel and deposited with the Trustee as custodian for DTC. The U.S. Global Certificate and the Offshore Global Certificates are sometimes referred to as the "Global Certificates". (e) Certificates offered and sold to Institutional Accredited Investors shall be issued in the form of permanent certificated Certificates in registered form in substantially the form set forth as Exhibit A hereto with such applicable legends as are provided for in clauses (a) and (b) of Section 3.02 hereto (the "U.S. Physical Certificates"). Certificates issued pursuant to Section 3.05(b) in exchange for interests in any Offshore Global Certificate shall be in the form of permanent certificated Certificates in registered form substantially in the form set forth in Exhibit A (the "Offshore Physical Certificates"). The Offshore Physical Certificates and U.S. Physical Certificates are sometimes collectively herein referred to as the "Physical Certificates". (f) The definitive Certificates shall be in registered form and shall be typed, printed, lithographed or engraved or produced by any combination of these methods or may be produced in any other manner, all as determined by the officers executing such Certificates, as evidenced by their execution of such Certificates. Section 3.02. RESTRICTIVE LEGENDS. ------------------- (a) Subject to Section 3.06, each U.S. Global Certificate and each U.S. Physical Certificate shall bear the following legend (the "Private Placement Legend") on the face thereof: THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS CERTIFICATE IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT, WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY AMERICAN TRANS AIR, INC. ("ATA") OR AN AFFILIATE OF ATA, RESELL OR OTHERWISE TRANSFER THIS CERTIFICATE EXCEPT (A) TO ATA OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING $100,000 OR MORE AGGREGATE PRINCIPAL AMOUNT OF SUCH CERTIFICATES THAT, TAKES DELIVERY OF THIS CERTIFICATE IN DEFINITIVE FORM AND PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS CERTIFICATE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS CERTIFICATE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CASE THIS CERTIFICATE IS IN DEFINITIVE FORM IN CONNECTION WITH ANY TRANSFER OF THIS CERTIFICATE WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THE CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY ATA OR AN AFFILIATE OF ATA, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE PASS THROUGH TRUST AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS. (b) Each Global Certificate shall also bear the following legend on the face thereof: UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND 3.06 OF THE PASS THROUGH TRUST AGREEMENT REFERRED TO HEREIN. Section 3.03. AUTHENTICATION OF CERTIFICATES. ------------------------------ (a) The Trustee shall duly execute, authenticate and deliver Certificates in authorized denominations equalling in the aggregate the amount set forth, with respect to the Trust, in Schedule A to the Purchase Agreement, and evidencing the entire ownership interest of the Trust, which amount equals the maximum aggregate principal amount of Equipment Notes to be purchased by the Trustee pursuant to the Note Purchase Agreement. (b) No Certificate shall be entitled to any benefit under this Agreement or be valid or obligatory for any purpose, unless there appears on such Certificate a certificate of authentication substantially in the form provided for herein executed by the Trustee by the manual signature of one of its authorized signatories, and such certificate upon any Certificate shall be conclusive evidence, and the only evidence, that such Certificate has been duly authenticated and delivered hereunder. Section 3.04. TRANSFER AND EXCHANGE. --------------------- (a) The Trustee shall cause to be kept at the office or agency to be maintained by it in accordance with the provisions of Section 7.11 of this Agreement a register (the "Register") for the Certificates in which, subject to such reasonable regulations as it may prescribe, the Trustee shall provide for the registration of the Certificates and of transfers and exchanges of the Certificates as herein provided. The Trustee shall initially be the registrar (the "Registrar") for the purpose of registering the Certificates and transfers and exchanges of the Certificates as herein provided. A Certificateholder may transfer a Certificate by written application to the Registrar stating the name of the proposed transferee and otherwise complying with the terms of this Agreement, including providing a written certificate or other evidence of compliance with any restrictions on transfer. No such transfer shall be effected until, and such transferee shall succeed to the rights of a Certificateholder only upon, final acceptance and registration of the transfer by the Registrar in the Register. Prior to the registration of any transfer by a Certificateholder as provided herein, the Trustee shall treat the person in whose name the Certificate is registered as the owner thereof for all purposes, and the Trustee shall not be affected by notice to the contrary. Furthermore, DTC shall, by acceptance of a Global Certificate, agree that transfers of beneficial interests in such Global Certificate may be effected only through a book-entry system maintained by DTC (or its agent), and that ownership of a beneficial interest in the Certificate shall be required to be reflected in a book entry. When Certificates are presented to the Registrar with a request to register the transfer or to exchange them for an equal face amount of Certificates of other authorized denominations, the Registrar shall register the transfer or make the exchange as requested if its requirements for such transactions are met. To permit registrations of transfers and exchanges in accordance with the terms, conditions and restrictions hereof, the Trustee shall execute and authenticate Certificates at the Registrar's request. No service charge shall be made for any registration of transfer or exchange of the Certificates, but the Trustee may require payment by the transferor of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or other similar governmental charges payable upon exchanges pursuant to Section 3.11 or 9.07). Section 3.05. BOOK-ENTRY PROVISIONS FOR U.S. GLOBAL CERTIFICATE AND OFFSHORE GLOBAL (a) Members of, or participants in, DTC ("Agent Members") shall have no rights under this Agreement with respect to any Global Certificate held on their behalf by DTC, or the Trustee as its custodian, and DTC may be treated by the Trustee and any agent of the Trustee as the absolute owner of such Global Certificate for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Trustee or any agent of the Trustee from giving effect to any written certification, proxy or other authorization furnished by DTC or shall impair, as between DTC and its Agent Members, the operation of customary practices governing the exercise of the rights of a holder of any Certificate. Upon the issuance of any Global Certificate, the Registrar or its duly appointed agent shall record a nominee of DTC as the registered holder of such Global Certificate. (b) Transfers of any Global Certificate shall be limited to transfers of such Global Certificate in whole, but not in part, to nominees of DTC, its successor or such successor's nominees. Beneficial interests in the U.S. Global Certificate and any Offshore Global Certificate may be transferred in accordance with the rules and procedures of DTC and the provisions of Section 3.06. Beneficial interests in the U.S. Global Certificate or an Offshore Global Certificate shall be delivered to all beneficial owners in the form of U.S. Physical Certificates or Offshore Physical Certificates, as the case may be, if (i) the Company notifies the Trustee in writing that DTC is unwilling or unable to discharge properly its responsibilities as depositary for the U.S. Global Certificate or such Offshore Global Certificate, as the case may be, and the Company is unable to locate a qualified successor depositary within 90 days of such notice or (ii) after the occurrence of an Event of Default, beneficial owners of the U.S. Global Certificate or Offshore Global Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust, by Act of such Certificateholders delivered to the Company and the Trustee, advise the Company, the Trustee and DTC through its Clearing Agency Participants in writing that the continuation of a book-entry system through DTC is no longer in the best interests of the Certificateholders, then the Trustee shall notify all owners of beneficial interests in the U.S. Global Certificate or an Offshore Global Certificate, through DTC, of the occurrence of any such event and the availability of definitive Certificates. (c) Any beneficial interest in one of the Global Certificates that is transferred to a Person who takes delivery in the form of an interest in the other Global Certificate will, upon such transfer, cease to be an interest in such Global Certificate and become an interest in the other Global Certificate and, accordingly, will thereafter be subject to all transfer restrictions, if any, and other procedures applicable to beneficial interests in such other Global Certificate for as long as it remains such an interest. (d) [Intentionally omitted]. (e) In connection with the transfer of the entire U.S. Global Certificate or an entire Offshore Global Certificate to the beneficial owners thereof pursuant to paragraph (b) of this Section 3.05, such U.S. Global Certificate or Offshore Global Certificate, as the case may be, shall be deemed to be surrendered to the Trustee for cancellation, and the Trustee shall execute, authenticate and deliver, to each beneficial owner identified by DTC in exchange for its beneficial interest in such U.S. Global Certificate or Offshore Global Certificate, as the case may be, an equal aggregate principal amount of U.S. Physical Certificates or Offshore Physical Certificates, as the case may be, of authorized denominations. (f) Any U.S. Physical Certificate delivered in exchange for an interest in the U.S. Global Certificate pursuant to paragraph (b) of this Section 3.05 shall, except as otherwise provided by paragraph (f) of Section 3.06, bear the Private Placement Legend. (g) Any Offshore Physical Certificate delivered in exchange for an interest in an Offshore Global Certificate pursuant to paragraph (b) of this Section shall, except as otherwise provided by paragraph (f) of Section 3.06, bear the applicable legend regarding transfer restrictions set forth in Section 3.02(a). (h) The registered holder of the U.S. Global Certificate or any Offshore Global Certificate may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Agreement or the Certificates. Section 3.06. SPECIAL TRANSFER PROVISIONS. The following provisions shall apply to the Certificates: (a) TRANSFERS TO NON-QIB INSTITUTIONAL ACCREDITED INVESTORS. The following provisions shall apply with respect to the registration of any proposed transfer of a Certificate to any Institutional Accredited Investor which is not a QIB (excluding transfers to, or on or after the Regulation S Restricted Date, by Non-U.S. Persons): (i) The Registrar shall register the transfer of any Certificate, whether or not such Certificate bears the Private Placement Legend, if (x) the requested transfer is at least two years after the later of the original issue date of the Certificates and the last date on which such Certificate was held by the Company or any affiliate thereof or (y) the proposed transferee has delivered to the Registrar a letter substantially in the form of Exhibit C hereto and the aggregate principal amount of the Certificates being transferred is at least $100,000. (ii) If the proposed transferor is an Agent Member holding a beneficial interest in the U.S. Global Certificate or, at a date prior to the Regulation S Restricted Date, an Offshore Global Certificate, upon receipt by the Registrar of (x) the documents, if any, required by paragraph (i) and (y) instructions given in accordance with DTC's and the Registrar's procedures, the Registrar shall reflect on its books and records the date of the transfer and a decrease in the principal amount of such U.S. Global Certificate in an amount equal to the principal amount of the beneficial interest in such U.S. Global Certificate to be transferred, and the Company shall execute, and the Trustee shall authenticate and deliver to the transferor or at its direction, one or more U.S. Physical Certificates of like tenor and amount. (b) TRANSFERS TO QIBS. The following provisions shall apply with respect to the registration of any proposed transfer of a Certificate to a QIB (excluding Non-U.S. Persons): (i) If the Certificate to be transferred consists of U.S. Physical Certificates or an interest in any Offshore Global Certificate prior to the Regulation S Restricted Date, the Registrar shall register the transfer if such transfer is being made by a proposed transferor who has checked the box provided for on the form of U.S. Physical Certificate or delivered a certificate to the Trustee in the form of Exhibit E hereto stating, or has otherwise advised the Trustee and the Registrar in writing, that the sale has been made in compliance with the provisions of Rule 144A to a transferee who, in the case of a transfer of a U.S. Physical Certificate, has signed the certification provided for on the form of Certificate and, in the case of an Offshore Global Certificate transferred prior to the Regulation S Restricted Date, who has signed the certification provided for in Exhibit E hereto, stating, or has otherwise advised the Trustee and the Registrar in writing, that it is purchasing the Certificate for its own account or an account with respect to which it exercises sole investment discretion and that it, or the Person on whose behalf it is acting with respect to any such account, is a QIB within the meaning of Rule 144A, and is aware that the sale to it is being made in reliance on Rule 144A and has been advised of the applicable transfer restrictions relating to the Certificates and acknowledges that it has received such information regarding the Trust and/or the Company as it has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon its foregoing representations in order to claim the exemption from registration provided by Rule 144A. (ii) Upon receipt by the Registrar of the documents referred to in clause (i) above and instructions given in accordance with DTC's and the Registrar's procedures therefor, the Registrar shall reflect on its books and records the date of such transfer and an increase in the principal amount of the U.S. Global Certificate in an amount equal to the principal amount of the U.S. Physical Certificates or interests in the Offshore Global Certificate, as the case may be, being transferred, and the Trustee shall cancel such U.S. Physical Certificates or decrease the amount of such Offshore Global Certificate so transferred. (c) [Intentionally omitted]. (d) TRANSFERS OF INTERESTS IN THE OFFSHORE GLOBAL CERTIFICATE ON OR AFTER THE REGULATION S RESTRICTED DATE. The Registrar shall register any transfer of interests in the Offshore Global Certificate on or after the Regulation S Restricted Date without requiring any additional certification. (e) TRANSFERS TO NON-U.S. PERSONS AT ANY TIME. The following provisions shall apply with respect to any registration of any transfer of a Certificate to a Non-U.S. Person: (i) The Registrar shall register any proposed transfer of a U.S. Global Certificate or U.S. Physical Certificate to any Non-U.S. Person, upon receipt of a certificate substantially in the form of Exhibit B hereto from the proposed transferor. The Registrar shall promptly send a copy of such certificate to the Company. (ii) (A) Upon receipt by the Registrar of (x) the documents, if any, required by paragraph (c) and (y) instructions in accordance with DTC's and the Registrar's procedures, the Registrar shall reflect on its books and records the date of such transfer and shall cancel the Physical Certificate, if any, so transferred, or decrease the principal amount of any such U.S. Global Certificate in an amount equal to the principal amount of the beneficial interest in such U.S. Global Certificate to be transferred, and (B) upon receipt by the Registrar of instructions given in accordance with DTC's and the Registrar's procedures, the Registrar shall reflect on its books and records the date and an increase in the principal amount of the Offshore Global Certificate in an amount equal to the principal amount of the U.S. Physical Certificate or the U.S. Global Certificate, as the case may be, to be transferred, and the Trustee shall cancel the Physical Certificate, if any, so transferred or decrease the amount of such U.S. Global Certificate. (f) PRIVATE PLACEMENT LEGEND. Upon the transfer, exchange or replacement of Certificates not bearing the Private Placement Legend, the Registrar shall deliver Certificates that do not bear the Private Placement Legend. Upon the transfer, exchange or replacement of Certificates bearing the Private Placement Legend, the Registrar shall deliver only Certificates that bear the Private Placement Legend unless either (i) the circumstances contemplated by paragraph (a)(i)(x) or (e)(ii) of this Section 3.06 exist or (ii) there is delivered to the Registrar an Opinion of Counsel to the effect that neither such legend nor the related restrictions on transfer are required in order to maintain compliance with the provisions of the Securities Act. (g) GENERAL. By its acceptance of any Certificate bearing the Private Placement Legend, each Holder of such a Certificate acknowledges the restrictions on transfer of such Certificate set forth in this Agreement and agrees that it will transfer such Certificate only as provided in this Agreement. The Registrar shall not register a transfer of any Certificate unless such transfer complies with the restrictions on transfer of such Certificate set forth in this Agreement. In connection with any transfer of Certificates, each Certificateholder agrees by its acceptance of the Certificates to furnish the Registrar or the Trustee such certifications, legal opinions or other information as either of them may reasonably require to confirm that such transfer is being made pursuant to an exemption from, or a transaction not subject to, the registration requirements of the Securities Act; PROVIDED that the Registrar shall not be required to determine the sufficiency of any such certifications, legal opinions or other information. Until such time as no Certificates remain Outstanding, the Registrar shall retain copies of all letters, notices and other written communications received pursuant to Section 3.05 or this Section 3.06. The Trustee, if not the Registrar at such time, shall have the right to inspect and make copies of all such letters, notices or other written communications at any reasonable time upon the giving of reasonable written notice to the Registrar. Section 3.07. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES. If (a) any mutilated Certificate is surrendered to the Registrar, or the Registrar receives evidence to its satisfaction of the destruction, loss or theft of any Certificate, and (b) there is delivered to the Registrar and the Trustee such security, indemnity or bond, as may be required by them to save each of them harmless, then, in the absence of notice to the Registrar or the Trustee that such Certificate has been acquired by a bona fide purchaser, the Trustee shall execute, authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate or Certificates, in authorized denominations and of like Fractional Undivided Interest. In connection with the issuance of any new Certificate under this Section 3.07, the Trustee shall require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee and the Registrar) connected therewith. Any duplicate Certificate issued pursuant to this Section 3.07 shall constitute conclusive evidence of the appropriate Fractional Undivided Interest in the related Trust, as if originally issued, whether or not the lost stolen or destroyed Certificate shall be found at any time. Section 3.08. PERSONS DEEMED OWNERS. Prior to due presentation of a Certificate for registration of transfer, the Trustee, the Registrar, and any Paying Agent of the Trustee may treat the person in whose name any Certificate is registered as the owner of such Certificate for the purpose of receiving distributions pursuant to Section 4.02 and for all other purposes whatsoever, and neither the Trustee, the Registrar, nor any Paying Agent of the Trustee shall be affected by any notice to the contrary. Section 3.09. CANCELLATION. All Certificates surrendered for payment or transfer or exchange shall, if surrendered to any Person party hereto other than the Registrar, be delivered to the Registrar for cancellation. No Certificates shall be authenticated in lieu of or in exchange for any Certificates cancelled as provided in this Section, except as expressly permitted by this Agreement. All cancelled Certificates held by the Registrar shall be destroyed and a certification of their destruction delivered to the Trustee. Section 3.10. LIMITATION OF LIABILITY FOR PAYMENTS. All payments or distributions made to Certificateholders shall be made only from the Trust Property and only to the extent that the Trustee shall have sufficient income or proceeds from the Trust Property to make such payments in accordance with the terms of Article IV of this Agreement. Each Certificateholder, by its acceptance of a Certificate, agrees that it will look solely to the income and proceeds from the Trust Property to the extent available for distribution to such Certificateholder as provided in this Agreement. Section 3.11. TEMPORARY CERTIFICATES. Until definitive Certificates are ready for delivery, the Trustee shall authenticate temporary Certificates. Temporary Certificates shall be substantially in the form of definitive Certificates but may have insertions, substitutions, omissions and other variations determined to be appropriate by the officers executing the temporary Certificates, as evidenced by their execution of such temporary Certificates. If temporary Certificates are issued, the Trustee will cause definitive Certificates to be prepared without unreasonable delay. After the preparation of definitive Certificates, the temporary Certificates shall be exchangeable for definitive Certificates upon surrender of the temporary Certificates at the office or agency of the Trustee designated for such purpose pursuant to Section 7.11, without charge to the Certificateholder. Upon surrender for cancellation of any one or more temporary Certificates, the Trustee shall execute, authenticate and deliver in exchange therefor a like face amount of definitive Certificates of authorized denominations. Until so exchanged, the temporary Certificates shall be entitled to the same benefits under this Agreement as definitive Certificates. ARTICLE IV DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS Section 4.01. CERTIFICATE ACCOUNT AND SPECIAL PAYMENTS ACCOUNT. ------------------------------------------------ (a) The Trustee shall establish and maintain on behalf of the Certificateholders a Certificate Account as one or more non-interest-bearing accounts. The Trustee shall hold the Certificate Account in trust for the benefit of the Certificateholders, and shall make or permit withdrawals therefrom only as provided in this Agreement. On each day when a Scheduled Payment is made to the Trustee, the Trustee, upon receipt thereof, shall immediately deposit the aggregate amount of such Scheduled Payment into the Certificate Account. (b) The Trustee shall establish and maintain on behalf of the Certificateholders a Special Payments Account as one or more accounts, which shall be non-interest-bearing except as provided in Section 4.04. The Trustee shall hold the Special Payments Account in trust for the benefit of the Certificateholders, and shall make or permit withdrawals therefrom only as provided in this Agreement. On each day when one or more Special Payments are made to the Trustee, the Trustee, upon receipt thereof, shall immediately deposit the aggregate amount of such Special Payments into the Special Payments Account. (c) The Trustee shall cause the Subordination Agent to present to the Loan Trustee to which an Equipment Note relates such Equipment Note on the date of its stated final maturity or, in the case of any Equipment Note which is to be redeemed in whole pursuant to the relevant Indenture, on the applicable redemption date under such Indenture. Section 4.02. DISTRIBUTIONS FROM CERTIFICATE ACCOUNT AND SPECIAL PAYMENTS ACCOUNT. (a) On each Regular Distribution Date or as soon thereafter as the Trustee has confirmed receipt of the payment of the Scheduled Payments due on such date, the Trustee shall distribute out of the Certificate Account the entire amount deposited therein pursuant to Section 4.01 (a). There shall be so distributed to each Certificateholder of record on the Record Date with respect to such Regular Distribution Date (other than as provided in Section 11.01 concerning the final distribution), by check mailed to such Certificateholder at the address appearing in the Register, such Certificateholder's PRO RATA share (based on the aggregate Fractional Undivided Interest in the Trust held by such Certificateholder) of the aggregate amount in the Certificate Account, except that, with respect to Certificates registered on the Record Date in the name of the nominee of DTC (initially, such nominee to be Cede & Co.), such distribution shall be made by wire transfer in immediately available funds to the account designated by such nominee. (b) On each Special Distribution Date with respect to any Special Payment or as soon thereafter as the Trustee has confirmed receipt of any Special Payments due on the Equipment Notes or realized upon the sale of such Equipment Note, the Trustee shall distribute out of the Special Payments Account the entire amount deposited therein pursuant to Section 4.01(b) of such Special Payment. There shall be so distributed to each Certificateholder of record on the Record Date with respect to such Special Distribution Date (other than as provided in Section 11.01 concerning the final distribution), by check mailed to such Certificateholder at the address appearing in the Register, such Certificateholder's pro rata share (based on the aggregate Fractional Undivided Interest in the Trust held by such Certificateholder) of the aggregate amount in the Special Payments Account on account of such Special Payment, except that, with respect to Certificates registered on the Record Date in the name of the nominee of DTC (initially, such nominee to be Cede & Co.), such distribution shall be made by wire transfer in immediately available funds to the account designated by such nominee. (c) The Trustee shall, at the expense of the Company, cause notice of each Special Payment to be mailed to each Certificateholder at his address as it appears in the Register. In the event of redemption or purchase of Equipment Notes held in the Trust, such notice shall be mailed not less than 20 days prior to the date any such Special Payment is scheduled to be distributed. In the event the Company is required to pay a Special Redemption Premium to the Trustee under the Note Purchase Agreement, such notice shall be mailed, together with the notice by the Escrow Paying Agent under Section 2.06 of the Escrow Agreement, not less than 20 days prior to the Special Distribution Date for such amount, which Special Distribution Date shall be the Final Withdrawal Date. In the case of any other Special Payments, such notice shall be mailed as soon as practicable after the Trustee has confirmed that it has received funds for such Special Payment, stating the Special Distribution Date for such Special Payment which shall occur not less than 20 days after the date of such notice and as soon as practicable thereafter. Notices mailed by the Trustee shall set forth: (i) the Special Distribution Date and the Record Date therefor (except as otherwise provided in Section 11.01), (ii) the amount of the Special Payment for each $1,000 face amount Certificate and the amount thereof constituting principal, premium, if any, and interest, (iii) the reason for the Special Payment, and (iv) if the Special Distribution Date is the same date as a Regular Distribution Date for the Certificates, the total amount to be received on such date for each $1,000 face amount Certificate. If the amount of (i) premium, if any, payable upon the redemption or purchase of an Equipment Note or (ii) the Special Redemption Premium, if any, has not been calculated at the time that the Trustee mails notice of a Special Payment, it shall be sufficient if the notice sets forth the other amounts to be distributed and states that any premium received will also be distributed. If any redemption of the Equipment Notes held in the Trust is cancelled, the Trustee, as soon as possible after leasing thereof, shall cause notice thereof to be mailed to each Certificateholder at its address as it appears on the Register. Section 4.03. STATEMENTS TO CERTIFICATEHOLDERS. -------------------------------- (a) On each Regular Distribution Date and Special Distribution Date, the Trustee will include with each distribution to Certificateholders a statement, giving effect to such distribution to be made on such Regular Distribution Date or Special Distribution Date, as the case may be, setting forth the following information (in the case of a Special Payment, including any Special Redemption Premium, reflecting in part the information provided by the Escrow Paying Agent under the Escrow Agreement) (per a $1,000 face amount Certificate as to clauses (ii), (iii), (iv) and (v) below): (i) the aggregate amount of funds distributed on such Distribution Date hereunder and under the Escrow Agreement, indicating the amount allocable to each source; (ii) the amount of such distribution allocable to principal and the amount allocable to premium (including any Special Redemption Premium), if any; (iii) the amount of such distribution hereunder allocable to interest; (iv) the amount of such distribution under the Escrow Agreement allocable to interest on the Deposits; (v) the amount of such distribution under the Escrow Agreement allocable to the principal of the unused Deposits; and (vi) the Pool Balance and the Pool Factor. With respect to the Certificates registered in the name of a Clearing Agency or its nominee, on the record date prior to each Distribution Date, the Trustee will request from the Clearing Agency a securities position listing setting forth the names of all the Clearing Agency Participants reflected on the Clearing Agency's books as holding interests in the Certificates on such record date. On each Distribution Date, the Trustee will mail to each such Clearing Agency Participant the statement described above and will make available additional copies as requested by such Clearing Agency Participant for forwarding to holders of Certificates. (b) Within a reasonable period of time after the end of each calendar year but not later than the latest date permitted by law, the Trustee shall furnish to each Person who at any time during such calendar year was a Certificateholder of record a statement containing the sum of the amounts determined pursuant to clauses (a)(i) through (a)(v), inclusive, above with respect to the Trust for such calendar year or, in the event such Person was a Certificateholder of record during a portion of such calendar year, for the applicable portion of such year, and such other items as are readily available to the Trustee and which a Certificateholder shall reasonably request as necessary for the purpose of such Certificateholder's preparation of its federal income tax returns. With respect to Certificates registered in the name of a Clearing Agency or its nominee, such report and such other items shall be prepared on the basis of information supplied to the Trustee by the Clearing Agency Participants and shall be delivered by the Trustee to such Clearing Agency Participants to be available for forwarding by such Clearing Agency Participants. (c) Promptly following (i) the Delivery Period Termination Date, if there has been any change in the information set forth in clauses (x), (y) and (z) below from that set forth in pages 102 and 103 of the Offering Memorandum, and (ii) any early redemption or purchase of, or any default in the payment of principal or interest in respect of, any of the Equipment Notes held in the Trust, or any Final Withdrawal, the Trustee shall furnish to Certificateholders of record on such date a statement setting forth (x) the expected Pool Balances for each subsequent Regular Distribution Date following the Delivery Period Termination Date, (y) the related Pool Factors for such Regular Distribution Dates and (z) the expected principal distribution schedule of the Equipment Notes, in the aggregate, held as Trust Property at the date of such notice. With respect to the Certificates registered in the name of a Clearing Agency or its nominee, on the Delivery Period Termination Date, the Trustee will request from the Clearing Agency a securities position listing setting forth the names of all the Clearing Agency Participants reflected on the Clearing Agency's books as holding interests in the Certificates on such date. The Trustee will mail to each such Clearing Agency Participant the statement described above and will make available additional copies as requested by such Clearing Agency Participant for forwarding to holders of Certificates. Section 4.04. INVESTMENT OF SPECIAL PAYMENT MONEYS. Any money received by the Trustee pursuant to Section 4.01(b) representing a Special Payment which is not to be promptly distributed shall, to the extent practicable, be invested in Permitted Investments by the Trustee (and such Permitted Investments shall be registered in the name of the Trustee) as directed in writing by the Company pending distribution of such Special Payment pursuant to Section 4.02. Any investment made pursuant to this Section 4.04 shall be in such Permitted Investments having maturities not later than the date that such moneys are required to be used to make the payment required under Section 4.02 on the applicable Special Distribution Date and the Trustee shall hold any such Permitted Investments until maturity. The Trustee shall have no liability with respect to any investment made pursuant to this Section 4.04, other than by reason of the willful misconduct or negligence of the Trustee. All income and earnings from such investments shall be distributed on such Special Distribution Date as part of such Special Payment. ARTICLE V THE COMPANY Section 5.01. MAINTENANCE OF CORPORATE EXISTENCE. The Company, at its own cost and expense, will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence, rights and franchises, except as otherwise specifically permitted in Section 5.02; PROVIDED, HOWEVER, that the Company shall not be required to preserve any right or franchise if the Company shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company. Section 5.02. CONSOLIDATION, MERGER, ETC. The Company shall not consolidate with or merge into any other corporation or convey, transfer or lease substantially all of its assets as an entirety to any Person unless: (a) the corporation formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance, transfer or lease substantially all of the assets of the Company as an entirety shall be organized and validly existing under the laws of the United States of America or any state thereof or the District of Columbia and a "citizen of the United States" (as defined in Section 40102(a)(15) of Title 49 of the United States Code) holding an air carrier operating certificate issued by the Federal Aviation Administration, or any successor agency thereto (the "FAA"), pursuant to Chapter 447 of Title 49, United States Code, authorizing the operation in air transportation of aircraft capable of carrying 10 or more individuals or 6,000 pounds or more of cargo pursuant to Part 121 of the FAA's regulations (14 CFR Part 121); (b) the corporation formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance, transfer or lease substantially all of the assets of the Company as an entirety shall execute and deliver to the Trustee a duly authorized, valid, binding and enforceable agreement in form and substance reasonably satisfactory to the Trustee containing an assumption by such successor corporation or Person of the due and punctual performance and observance of each covenant and condition of the Note Documents, the Note Purchase Agreement, the Other Pass Through Trust Agreements and of this Agreement to be performed or observed by the Company; (c) immediately after giving effect to such transaction, no Event of Default applicable to the Certificates or event which is, or after notice or passage of time, or both, would be, such an Event of Default shall have occurred and be continuing; and (d) the Company shall have delivered to the Trustee an Officers' Certificate of the Company and an Opinion of Counsel of the Company (which may be the Company's General Counsel) reasonably satisfactory to the Trustee, each stating that such consolidation, merger, conveyance, transfer or lease and the assumption agreement mentioned in clause (b) above comply with this Section 5.02 and that all conditions precedent herein provided for relating to such transaction have been complied with. Upon any consolidation or merger, or any conveyance, transfer or lease of substantially all of the assets of the Company as an entirety in accordance with this Section 5.02, the successor corporation or Person formed by such consolidation or into which the Company is merged or to which such conveyance, offer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Agreement with the same effect as if such successor corporation or Person had been named as the Company herein. No such conveyance, transfer or lease of substantially all of the assets of the Company as an entirety shall have the effect of releasing the Company or any successor corporation or Person which shall theretofore have become such in the manner prescribed in this Section 5.02 from its liability in respect of this Agreement, the Note Purchase Agreement or any Note Document to which it is a party. Section 5.03. RULE 144A(D)(4) INFORMATION. So long as any of the Certificates are "restricted securities" within the meaning of Rule 144(a)(3) under the Securities Act, at any time when the Guarantor is neither subject to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), the Company and the Guarantor will provide to any holder of such restricted securities, or to any prospective purchaser of such restricted securities designated by a holder, upon the request of such holder or prospective purchaser, any information required to be delivered to holders and prospective purchasers of the Certificates pursuant to Rule 144A(d)(4) under the Securities Act. ARTICLE VI DEFAULT Section 6.01. EVENTS OF DEFAULT. ----------------- (a) EXERCISE OF REMEDIES. Upon the occurrence and during the continuation of any Indenture Default under any Indenture, the Trustee may, to the extent it is the Controlling Party at such time, direct the exercise of remedies as provided in the Intercreditor Agreement. (b) PURCHASE RIGHTS OF CERTIFICATEHOLDERS. At any time after the occurrence and during the continuation of a Triggering Event, each Certificateholder shall have the right (which shall not expire upon any purchase of the Class A Certificates pursuant to the Class B Trust Agreement) to purchase all, but not less than all, of the Class A Certificates and the Class B Certificates upon ten days' written notice to the Class A Trustee, the Class B Trustee and each other Certificateholder, PROVIDED that (A) if prior to the end of such ten-day period any other Certificateholder notifies such purchasing Certificateholder that such other Certificateholder wants to participate in such purchase, then such other Certificateholder may join with the purchasing Certificateholder to purchase all, but not less than all, of the Class A Certificates and the Class B Certificates pro rata based on the Fractional Undivided Interest in the Trust held by each such Certificateholder and (B) if prior to the end of such ten-day period any other Certificateholder fails to notify the purchasing Certificateholder of such other Certificateholder's desire to participate in such a purchase, then such other Certificateholder shall lose its right to purchase the Class A Certificates and the Class B Certificates pursuant to this Section 6.01(b). No such purchase of the Class A Certificates and the Class B Certificates shall be effective unless the purchaser shall certify to the Other Trustees of each such Class that contemporaneously with such purchase, such purchaser is purchasing, pursuant to the terms of this Agreement and the Other Pass Through Trust Agreements, the Class A Certificates and the Class B Certificates. Each payment of the purchase price of the Class A Certificates and the Class B Certificates as determined in the Other Pass Through Trust Agreements shall be made to an account or accounts designated by the Trustee under such Other Pass Through Trust Agreements and each such purchase shall be subject to the terms of this Section. The Class A Certificates and the Class B Certificates will be deemed to be purchased on the date payment of the purchase price is made notwithstanding the failure of the Certificateholders of either Class to deliver any Certificates (whether in the form of Physical Certificates or beneficial interests in Global Certificates) and, upon such a purchase, (i) the only rights of the Certificateholders will be to deliver the Class A Certificates or the Class B Certificates, as the case may be, to the purchaser and receive the purchase price for the Certificates and (ii) if the purchaser shall so request such Certificateholder will comply with all of the provisions of Section 3.04 of the Other Pass Through Trust Agreement for such Class to enable new Certificates to be issued to the purchaser in such denominations as it shall request. All charges and expenses in connection with the issuance of any such new Certificates shall be borne by the purchaser thereof. As used in this Section 6.01(b), the terms ""Class", "Class A Certificate", "Class A Trustee", "Class B Certificate", "Class B Trust Agreement" and "Class B Trustee" shall have the respective meanings assigned to such terms in the Intercreditor Agreement. Section 6.02. INCIDENTS OF SALE OF EQUIPMENT NOTES. Upon any sale of all or any part of the Equipment Notes made either under the power of sale given under this Agreement or otherwise for the enforcement of this Agreement, the following shall be applicable: (1) CERTIFICATEHOLDERS AND TRUSTEE MAY PURCHASE EQUIPMENT NOTES. Any Certificateholder, the Trustee in its individual or any other capacity or any other Person may bid for and purchase any of the Equipment Notes, and upon compliance with the terms of sale, may hold, retain, possess and dispose of such Equipment Notes in their own absolute right without further accountability. (2) RECEIPT OF TRUSTEE SHALL DISCHARGE PURCHASER. The receipt of the Trustee or of the officer making such sale shall be a sufficient discharge to any purchaser for his purchase money, and, after paying such purchase money and receiving such receipt, such purchaser or its personal representative or assigns shall not be obliged to see to the application of such purchase money, or be in any way answerable for any loss, misapplication or non-application thereof. (3) APPLICATION OF MONEYS RECEIVED UPON SALE. Any moneys collected by the Trustee upon any sale made either under the power of sale given by this Agreement or otherwise for the enforcement of this Agreement shall be applied as provided in Section 4.02. Section 6.03. JUDICIAL PROCEEDINGS INSTITUTED BY TRUSTEE; TRUSTEE MAY BRING SUIT. If there shall be a failure to make payment of the principal of, premium, if any, or interest on any Equipment Note, or if there shall be any failure to pay Rent (as defined in the relevant Lease) under any Lease when due and payable, then the Trustee, in its own name, and as trustee of an express trust, as holder of such Equipment Notes, to the extent permitted by and in accordance with the terms of the Intercreditor Agreement, the Note Purchase Agreement and the Note Documents (subject to the rights of the applicable Owner Trustee or Owner Participant to cure any such failure in accordance with Section 4.03 of the applicable Indenture), shall be entitled and empowered to institute any suits, actions or proceedings at law, in equity or otherwise, for the collection of the sums so due and unpaid on such Equipment Notes or under such Lease and may prosecute any such claim or proceeding to judgment or final decree with respect to the whole amount of any such sums so due and unpaid. Section 6.04. CONTROL BY CERTIFICATEHOLDERS. Subject to Section 6.03 and the Intercreditor Agreement, the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee with respect to the Trust or pursuant to the terms of the Intercreditor Agreement, or exercising any trust or power conferred on the Trustee under this Agreement or the Intercreditor Agreement, including any right of the Trustee as Controlling Party under the Intercreditor Agreement or as holder of the Equipment Notes, PROVIDED that: (1) such Direction shall not be in conflict with any rule of law or with this Agreement and would not involve the Trustee in personal liability or expense, (2) the Trustee shall not determine that the action so directed would be unjustly prejudicial to the Certificateholders not taking part in such Direction, and (3) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such Direction. Section 6.05. WAIVER OF PAST DEFAULTS. Subject to the Intercreditor Agreement, the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust (i) may on behalf of all of the Certificateholders waive any past Event of Default hereunder and its consequences or (ii) if the Trustee is the Controlling Party, may direct the Trustee to instruct the applicable Loan Trustee to waive any past Indenture Default under any Indenture and its consequences, and thereby annul any Direction given by such Certificateholders or the Trustee to such Loan Trustee with respect thereto, except a default: (1) in the deposit of any Scheduled Payment or Special Payment under Section 4.01 or in the distribution of any payment under Section 4.02 on the Certificates, or (2) in the payment of the principal of (premium, if any) or interest on the Equipment Notes, or (3) in respect of a covenant or provision hereof which under Article IX hereof cannot be modified or amended without the consent of each Certificateholder holding an Outstanding Certificate affected thereby. Upon any such waiver, such default shall cease to exist with respect to the Certificates and any Event of Default arising therefrom shall be deemed to have been cured for every purpose and any direction given by the Trustee on behalf of the Certificateholders to the relevant Loan Trustee shall be annulled with respect thereto; but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. Upon any such waiver, the Trustee shall vote the Equipment Notes issued under the relevant Indenture to waive the corresponding Indenture Default. Section 6.06. RIGHT OF CERTIFICATEHOLDERS TO RECEIVE PAYMENTS NOT TO BE IMPAIRED. Anything in this Agreement to the contrary notwithstanding, including, without limitation, Section 6.07 hereof, but subject to the Intercreditor Agreement, the right of any Certificateholder to receive distributions of payments required pursuant to Section 4.02 hereof on the Certificates when due, or to institute suit for the enforcement of any such payment on or after the applicable Regular Distribution Date or Special Distribution Date, shall not be impaired or affected without the consent of such Certificateholder. Section 6.07. CERTIFICATEHOLDERS MAY NOT BRING SUIT EXCEPT UNDER CERTAIN CONDITIONS. A Certificateholder shall not have the right to institute any suit, action or proceeding at law or in equity or otherwise with respect to this Agreement, for the appointment of a receiver or for the enforcement of any other remedy under this Agreement, unless: (1) such Certificateholder previously shall have given written notice to the Trustee of a continuing Event of Default; (2) Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than 25% of the Trust shall have requested the Trustee in writing to institute such action, suit or proceeding and shall have offered to the Trustee indemnity as provided in Section 7.02(e); (3) the Trustee shall have refused or neglected to institute any such action, suit or proceeding for 60 days after receipt of such notice, request and offer of indemnity; and (4) no Direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust. It is understood and intended that no one or more of the Certificateholders shall have any right in any manner whatever hereunder or under the Certificates to (i) surrender, impair, waive, affect, disturb or prejudice any property in the Trust Property or the lien of any Indenture on any property subject thereto, or the rights of the Certificateholders or the holders of the related Equipment Notes, (ii) obtain or seek to obtain priority over or preference to any other such Certificateholder or (iii) enforce any right under this Agreement, except in the manner herein provided and for the equal, ratable and common benefit of all the Certificateholders subject to the provisions of this Agreement. Section 6.08. REMEDIES CUMULATIVE. Every remedy given hereunder to the Trustee or to any of the Certificateholders shall not be exclusive of any other remedy or remedies, and every such remedy shall be cumulative and in addition to every other remedy given hereunder or now or hereafter given by statute, law, equity or otherwise. Section 6.09. UNDERTAKING FOR COSTS. In any suit for the enforcement of any right or remedy under this Agreement, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, a court may require any party litigant in such suit to file an undertaking to pay the costs of such suit, and may assess costs against any such party litigant, in the manner and to the extent provided in the Trust Indenture Act; PROVIDED that neither this Section nor the Trust Indenture Act shall be deemed to authorize any court to require such an undertaking or to make such an assessment in any suit instituted by the Company or the Guarantor. ARTICLE VII THE TRUSTEE Section 7.01. NOTICE OF DEFAULTS. As promptly as practicable after, and in any event within 90 days after the occurrence of any default (as such term is defined below) hereunder actually known to the Trustee, the Trustee shall transmit by mail to the Company, the related Owner Trustees, the related Loan Trustees and the Certificateholders in accordance with Section 313(c) of the Trust Indenture Act, notice of such default hereunder actually known to the Trustee, unless such default shall have been cured or waived; PROVIDED, HOWEVER, that, except in the case of a default in the payment of the principal of (premium, if any) or interest on any Equipment Note, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Trustee in good faith determine that the withholding of such notice is in the interests of the Certificateholders. For the purpose of this Section, the term "default" means any event that is, or after notice or lapse of time or both would become, an Event of Default. Section 7.02. CERTAIN RIGHTS OF TRUSTEE. Subject to the provisions of Section 315 of the Trust Indenture Act: (a) the Trustee may rely and shall be protected in acting or refraining from acting in reliance upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Request; (c) whenever in the administration of this Agreement or the Intercreditor Agreement the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate of the Company, any Owner Trustee or any Loan Trustee; (d) the Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Agreement or the Intercreditor Agreement at the request or direction of any of the Certificateholders pursuant to this Agreement or the Intercreditor Agreement unless such Certificateholders shall have offered to the Trustee reasonable security or indemnity against the cost, expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, or report, notice, request, direction, consent, order, bond, debenture or other paper or document; (g) the Trustee may execute any of the trusts or powers under this Agreement or the Intercreditor Agreement or perform any duties under this Agreement or the Intercreditor Agreement either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it under this Agreement or the Intercreditor Agreement; (h) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Agreement or the Intercreditor Agreement; (i) the Trustee shall not be required to expend or risk its own funds in the performance of any of its duties under this Agreement, or in the exercise of any of its rights or powers, if it shall have reason to believe that repayment of such funds or adequate indemnity against such risk is not reasonably assured to it; and (j) except during the continuance of an Event of Default, the Trustee undertakes and shall be responsible to perform only such duties as are specifically set forth herein and no implied covenants or obligations shall be read into this Agreement or be enforceable against Trustee. Section 7.03. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF CERTIFICATES. The recitals contained herein and in the Certificates, except the certificates of authentication, shall not be taken as the statements of the Trustee, and the Trustee assumes no responsibility for their correctness. Subject to Section 7.14, the Trustee makes no representations as to the validity or sufficiency of this Agreement, the Note Purchase Agreement, any Note Documents, any Participation Agreement or any Intercreditor Agreement, the Deposit Agreement, the Escrow Agreement and Equipment Notes or the Certificates, except that the Trustee hereby represents and warrants that this Agreement has been, and each Certificate, the Intercreditor Agreement, the Note Purchase Agreement, the Escrow Agreement and each Certificate will be, executed and delivered by one of its officers who is duly authorized to execute and deliver such document on its behalf. Section 7.04. MAY HOLD CERTIFICATES. The Trustee, any Paying Agent, Registrar or any of their Affiliates or any other agent, in their respective individual or any other capacity, may become the owner or pledgee of Certificates and subject to Sections 310(b) and 311 of the Trust Indenture Act, if applicable, may otherwise deal with the Company, the Guarantor, the Owner Trustees or the Loan Trustees with the same rights it would have if it were not Trustee, Paying Agent, Registrar or such other agent. Section 7.05. MONEY HELD IN TRUST. Money held by the Trustee or the Paying Agent in trust hereunder need not be segregated from other funds except to the extent required herein or by law and neither the Trustee nor the Paying Agent shall have any liability for interest upon any such moneys except as provided for herein. Section 7.06. COMPENSATION AND REIMBURSEMENT. The Company agrees: ------------------------------ (1) to pay, or cause to be paid, to the Trustee compensation (as set out in a separate fee agreement between the Trustee and the Company) for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (2) except as otherwise expressly provided herein to reimburse, or cause to be reimbursed, the Trustee upon its request for all reasonable out-of-pocket expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Agreement or the Intercreditor Agreement (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence, willful misconduct or bad faith or as may be incurred due to the Trustee's breach of its representations and warranties set forth in Section 7.14; (3) to indemnify, or cause to be indemnified, the Trustee for, and to hold it harmless against, any loss, liability or expense (other than for or with respect to any tax) incurred without negligence, willful misconduct or bad faith, on its part, arising out of or in connection with the acceptance or administration of this Trust, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder, except for any such loss, liability or expense incurred by reason of the Trustee's breach of its representations and warranties set forth in Section 7.14. The Trustee shall notify the Company and the Guarantor promptly of any claim for which it may seek indemnity. The Company and the Guarantor shall defend the claim and the Trustee shall cooperate in the defense. The Trustee may have separate counsel with the consent of the Company and the Guarantor and the Company and the Guarantor will pay the reasonable fees and expenses of such counsel. Neither the Company nor the Guarantor need pay for any settlement made without its consent; and (4) to indemnify, or cause to be indemnified, the Trustee, solely in its individual capacity, for, and to hold it harmless against, any tax (except to the extent the Trustee is reimbursed therefor pursuant to the next paragraph, provided that no indemnification shall be available with respect to any tax attributable to the Trustee's compensation for serving as such) incurred without negligence, willful misconduct or bad faith, on its part, arising out of or in connection with the acceptance or administration of this Trust, including any costs and expenses incurred in contesting the imposition of any such tax. The Trustee, in its individual capacity, shall notify the Company and the Guarantor promptly of any claim for any tax for which it may seek indemnity. The Trustee shall permit the Company and the Guarantor to contest the imposition of such tax and the Trustee, in its individual capacity, shall cooperate in the defense. The Trustee, in its individual capacity, may have separate counsel with the consent of the Company and the Guarantor and the Company and the Guarantor will pay the reasonable fees and expenses of such counsel. Neither the Company nor the Guarantor need pay for any taxes paid, in settlement or otherwise, without its consent. The Trustee shall be entitled to reimbursement from, and shall have a lien prior to the Certificates upon, the Trust Property for any tax incurred without negligence, bad faith or willful misconduct on its part, arising out of or in connection with the acceptance or administration of such Trust (other than any tax attributable to the Trustee's compensation for serving as such), including any costs and expenses incurred in contesting the imposition of any such tax. The Trustee shall notify the Company of any claim for any tax for which it may seek reimbursement. The Trustee shall cooperate in the contest by the Company of any such claim. If the Trustee reimburses itself from the Trust Property for any such tax it will within 30 days mail a brief report setting forth the amount of such tax and the circumstances thereof to all Certificateholders as their names and addresses appear in the Register. As security for the performance of the obligations of the Company under this Section the Trustee shall have a lien prior to the Certificates upon the Trust Property. Section 7.07. CORPORATE TRUSTEE REQUIRED, ELIGIBILITY . There shall at all times be a Trustee hereunder which shall be eligible to act as a trustee under Section 310(a) of the Trust Indenture Act and shall have a combined capital and surplus of at least $75,000,000 (or a combined capital and surplus in excess of $5,000,000 and the obligations of which, whether now in existence or hereafter incurred, are fully and unconditionally guaranteed by a corporation organized and doing business under the laws of the United States, any State or Territory thereof or of the District of Columbia that has a combined capital and surplus of at least $75,000,000). If such corporation publishes reports of conditions at least annually, pursuant to law or to the requirements of federal, state, territorial or District of Columbia supervising or examining authority, then for the purposes of this Section 7.07, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of conditions so published. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 7.07 to act as Trustee, the Trustee shall resign immediately as Trustee in the manner and with the effect specified in Section 7.08. Section 7.08. RESIGNATION AND REMOVAL: APPOINTMENT OF SUCCESSOR. ------------------------------------------------- (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee under Section 7.09. (b) The Trustee may resign at any time as trustee by giving written notice thereof to the Company, the Authorized Agents, the Owner Trustees and the Loan Trustees. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Company, the Authorized Agents, the Owner Trustees, the Loan Trustees and the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee. (c) The Trustee may be removed at any time by Act of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust delivered to the Trustee, the Company, the Owner Trustees and the Loan Trustees. (d) If at any time: (1) the Trustee shall fail to comply with Section 310 of the Trust Indenture Act after written request therefor by the Company or by any Certificateholder who has been a bona fide certificateholder for at least six months; or (2) the Trustee shall cease to be eligible under Section 7.07 and shall fail to resign after written request therefor by the Company or by any such Certificateholder; or (3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation; then, in any case, (i) the Company may remove the Trustee or (ii) any Certificateholder who has been a bona fide Certificateholder for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. (e) If a Responsible Officer of the Trustee shall obtain actual knowledge of an Avoidable Tax (as hereinafter defined) which has been or is likely to be asserted, the Trustee shall promptly notify the Company and shall, within 30 days of such notification, resign as Trustee hereunder unless within such 30-day period the Trustee shall have received notice that the Company has agreed to pay such tax. The Company shall promptly appoint a successor Trustee in a jurisdiction where there are no Avoidable Taxes. As used herein, an "Avoidable Tax" means a state or local tax: (i) upon (w) the Trust, (x) the Trust Property, (y) Certificateholders or (z) the Trustee for which the Trustee is entitled to seek reimbursement from the Trust Property, and (ii) which would be avoided if the Trustee were located in another state, or jurisdiction within a state, within the United States. A tax shall not be an Avoidable Tax if the Company or any Owner Trustee shall agree to pay, and shall pay, such tax. (f) If the Trustee shall resign, be removed or become incapable of acting as trustee or if a vacancy shall occur in the office of the Trustee for any cause, the Company shall promptly appoint a successor Trustee. If, within 90 days after such resignation, removal or incapability, or other occurrence of such vacancy, a successor Trustee shall be appointed by Act of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust delivered to the Company, the Owner Trustees, the Loan Trustee and the retiring Trustee, the successor Trustees so appointed shall, with the approval of the Company, which approval shall not be unreasonably withheld, forthwith upon its acceptance of such appointment, become the successor Trustee and supersede the successor Trustee appointed as provided above. If no successor Trustee shall have been so appointed as provided above and accepted appointment in the manner hereinafter provided, the resigning Trustee or any Certificateholder who has been a bona fide Certificateholder for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee. (g) The successor Trustee of a Trust shall give notice of the resignation and removal of the Trustee and appointment of the successor Trustee by mailing written notice of such event by first-class mail, postage prepaid, to the Certificateholders as their names and addresses appear in the Register. Each notice shall include the name of such successor Trustee and the address of its Corporate Trust Office. Section 7.09. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on request of the Company or the successor Trustee, such retiring Trustee shall execute and deliver an instrument transferring to such successor Trustee all such rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee, subject nevertheless to its lien, if any, provided for in Section 7.06. Upon request of any such successor Trustee, the Company, the retiring Trustee and such successor Trustee shall execute and deliver any and all instruments containing such provisions as shall be necessary or desirable to transfer and confirm to, and for more fully and certainly vesting in, such successor Trustee all such rights, powers and trusts. No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article. Section 7.10. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, PROVIDED such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Certificates shall have been executed or authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such execution or authentication and deliver the Certificates so executed or authenticated with the same effect as if such successor Trustee had itself executed or authenticated such Certificates. Section 7.11. MAINTENANCE OF AGENCIES. ----------------------- (a) There shall at all times be maintained an office or agency where Certificates may be presented or surrendered for registration of transfer or for exchange, and for payment thereof and where notices and demands to or upon the Trustee in respect of such Certificates may be served. Presentations and demands may be made and notices may be served at the Corporate Trust Office of the Trustee. (b) There shall at all times be a Registrar and a Paying Agent hereunder with respect to the Certificates. Each such Authorized Agent shall be a bank or trust company, shall be a corporation organized and doing business under the laws of the United States or any state, with a combined capital and surplus of at least $75,000,000, or a corporation having a combined capital and surplus in excess of $5,000,000 the obligations of which are guaranteed by a corporation organized and doing business under the laws of the United States or any state, with a combined capital and surplus of at least $75,000,000, and shall be authorized under such laws to exercise corporate trust powers, subject to supervision by federal or state authorities. The Trustee shall initially be the Paying Agent and, as provided in Section 3.04, Registrar hereunder with respect to the Certificates. Each Registrar shall furnish to the Trustee, at stated intervals of not more than six months, and at such other times as the Trustee may request in writing, a copy of the Register maintained by such Registrar. (c) Any corporation into which any Authorized Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, consolidation or conversion to which any Authorized Agent, shall be a party, or any corporation succeeding to the corporate trust business of any Authorized Agent, shall be the successor of such Authorized Agent hereunder, if such successor corporation is otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the parties hereto or such Authorized Agent or such successor corporation. (d) Any Authorized Agent may at any time resign by giving written notice of resignation to the Trustee, the Company, the Owner Trustees and the Loan Trustees. The Company may, and at the request of the Trustee shall, at any time terminate the agency of any Authorized Agent by giving written notice of termination to such Authorized Agent and to the Trustee. Upon the resignation or termination of an Authorized Agent or in case at any time any such Authorized Agent shall cease to be eligible under this Section (when in either case, no other Authorized Agent performing the functions of such Authorized Agent shall have been appointed), the Company shall promptly appoint one or more qualified successor Authorized Agents, reasonably satisfactory to the Trustee, to perform the functions of the Authorized Agent which has resigned or whose agency has been terminated or who shall have ceased to be eligible under this Section. The Company shall give written notice of any such appointment made by it to the Trustee, the Owner Trustees and the Loan Trustees; and in each case the Trustee shall mail notice of such appointment to all Certificateholders as their names and addresses appear on the Register. (e) The Company agrees to pay, or cause to be paid, from time to time to each Authorized Agent reasonable compensation for its services and to reimburse it for its reasonable expenses. Section 7.12. MONEY FOR CERTIFICATE PAYMENTS TO BE HELD IN TRUST. All moneys deposited with any Paying Agent for the purpose of any payment on Certificates shall be deposited and held in trust for the benefit of the Certificateholders entitled to such payment, subject to the provisions of this Section. Moneys so deposited and held in trust shall constitute a separate trust fund for the benefit of the Certificateholders with respect to which such money was deposited. The Trustee may at any time, for the purpose of obtaining the satisfaction and discharge of this Agreement or for any other purpose, direct any Paying Agent to pay to the Trustee all sums held in trust by such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by such Paying Agent and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. Section 7.13. REGISTRATION OF EQUIPMENT NOTES IN NAME OF SUBORDINATION AGENT. The Trustee agrees that all Equipment Notes to be purchased by the Trust shall be issued in the name of the Subordination Agent or its nominee and held by the Subordination Agent in trust for the benefit of the Certificateholders, or, if not so held, the Subordination Agent or its nominee shall be reflected as the owner of such Equipment Notes in the register of the issuer of such Equipment Notes. Section 7.14. REPRESENTATIONS AND WARRANTIES OF TRUSTEE. The Trustee hereby represents and warrants that: (a) the Trustee is a Delaware banking corporation organized and validly existing, and in good standing under the laws of the State of Delaware; (b) the Trustee has full power, authority and legal right to execute, deliver and perform this Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement and the Note Documents to which it is a party and has taken all necessary action to authorize the execution, delivery and performance by it of this Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement and the Note Documents to which it is a party; (c) the execution, delivery and performance by the Trustee of this Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement and the Note Documents to which it is a party (i) will not violate any provision of any United States federal law or the law of the State of Delaware governing the banking and trust powers of the Trustee or any order, writ, judgment, or decree of any court, arbitrator,or governmental authority applicable to the Trustee or any of its assets, (ii) will not violate any provision of the articles of association or by-laws of the Trustee, and (iii) will not violate any provision of, or constitute, with or without notice or lapse of time, a default under, or result in the creation or imposition of any lien on any properties included in the Trust Property pursuant to the provisions of, any mortgage, indenture, contract, agreement or other undertaking to which it is a party, which violation, default or lien could reasonably be expected to have an adverse effect on the Trustee's performance or ability to perform its duties hereunder or thereunder or on the transactions contemplated herein or therein; (d) the execution, delivery and performance by the Trustee of this Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement and the Note Documents to which it is a party will not require the authorization, consent, or approval of, the giving of notice to, the filing or registration with, or the taking of any other action in respect of, any governmental authority or agency of the United States or the State of Delaware regulating the banking and corporate trust activities of the Trustee; and (e) this Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement and the Note Documents to which it is a party have been duly executed and delivered by the Trustee and constitute the legal, valid, and binding agreements of the Trustee, enforceable against it in accordance with their respective terms, provided that enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and (ii) general principles of equity. Section 7.15. WITHHOLDING TAXES, INFORMATION REPORTING. (a) The Trustee, as trustee of the grantor trust created by this Agreement, shall exclude and withhold from each distribution of principal, premium, if any, and interest and other amounts due under this Agreement or under the Certificates any and all withholding taxes applicable thereto as required by law. The Trustee agrees to act as such withholding agent and, in connection therewith, whenever any taxes or similar charges are required to be withheld with respect to any amounts paid by or on behalf of the Trustee in respect of the Certificates, to withhold such amounts and timely pay the same to the authority in the name of and on behalf of the Certificateholders, that it will file any necessary withholding tax returns or statements when due, and that, as promptly as possible after the payment thereof, it will deliver to each such Certificateholder necessary documentation showing the payment thereof, together with such additional documentary evidence as such Certificateholders may reasonably request from time to time. The Trustee agrees to file any other information reports as it may be required to file under United States law. (b) The Trustee may satisfy certain of its obligations with respect to this Agreement by retaining, at the expense of the Company, a firm of independent public accountants (the "Accountants") which shall (i) be responsible for all tax filing requirements and (ii) perform the obligations of the Trustee in respect of tax filing requirements. The Trustee shall be deemed to have discharged its tax filing obligations under this Agreement upon its retention of the Accountants, and, if the Trustee shall have selected in the Accountants in good faith and without gross negligence, the Trustee shall not have any liability with respect to the default or misconduct of the Accountants. (c) The Trustee, at the request of the Company, will make such United States federal income tax elections as may be necessary to prevent the Trust from being classified for federal income tax purposes as an association taxable as a corporation. Section 7.16. TRUSTEE'S LIENS. The Trustee in its individual capacity agrees that it will at its own cost and expense promptly take any action as may be necessary to duly discharge and satisfy in full any mortgage, pledge, lien, charge, encumbrance, security interest or claim ("Trustee's Liens") on or with respect to the Trust Property which is attributable to the Trustee either (i) in its individual capacity and which is unrelated to the transactions contemplated by this Agreement, the Intercreditor Agreement, the Participation Agreements, the Note Purchase Agreement or the Note Documents, or (ii) as Trustee hereunder or in its individual capacity and which arises out of acts or omissions which are not contemplated by this Agreement. Section 7.17. PREFERENTIAL COLLECTION OF CLAIMS. The Trustee shall comply with Section 311(a) of the Trust Indenture Act, excluding any creditor relationship listed in Section 311(b) of the Trust Indenture Act. If the Trustee shall resign or be removed as Trustee, it shall be subject to Section 311(a) of the Trust Indenture Act to the extent provided therein. ARTICLE VIII CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE Section 8.01. THE COMPANY TO FURNISH TRUSTEE WITH NAMES AND ADDRESSES OF CERTIFICATEHOLDERS. The Company will furnish or cause to be furnished to the Trustee within 15 days after each Record Date with respect to a Scheduled Payment, and at such other times as the Trustee may request in writing, within 30 days after receipt by the Company of any such request, a list, in such form as the Trustee may reasonably require, of all information in the possession or control of the Company as to the names and addresses of the Certificateholders, in each case as of a date not more than 15 days prior to the time such list is furnished; PROVIDED, HOWEVER, that so long as the Trustee is the sole Registrar, no such list need be furnished; and provided FURTHER, HOWEVER, that no such list need be furnished for so long as a copy of the Register is being furnished to the Trustee pursuant to Section 7.11. Section 8.02. PRESERVATION OF INFORMATION; COMMUNICATIONS TO CERTIFICATEHOLDERS. The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Certificateholders contained in the most recent list furnished to the Trustee as provided in Section 7.11 or Section 8.01, as the case may be, and the names and addresses of Certificateholders received by the Trustee in its capacity as Registrar, if so acting. The Trustee may destroy any list furnished to it as provided in Section 7.11 or Section 8.01, as the case may be, upon receipt of a new list so furnished. Section 8.03. REPORTS BY TRUSTEE. Within 60 days after May 15 of each year commencing with the first full year following the issuance of the Certificates, the Trustee shall transmit to the Certificateholders, as provided in Section 313(c) of the Trust Indenture Act, a brief report dated as of such May 15, if required by Section 313(a) of the Trust Indenture Act. Section 8.04. REPORTS BY THE GUARANTOR AND COMPANY. The Guarantor and the Company each shall: (a) file with the Trustee, within 30 days after the Guarantor or the Company is required to file the same with the SEC, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may from time to time by rules and regulations prescribe) which the Guarantor or the Company is required to file with the SEC pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934, as amended; or, if the Guarantor or the Company is not required to file information, documents or reports pursuant to either of such sections, then to file with the Trustee and the SEC, in accordance with rules and regulations prescribed by the SEC, such of the supplementary and periodic information, documents and reports which may be required pursuant to section 13 of the Securities Exchange Act of 1934, as amended, in respect of a security listed and registered on a national securities exchange as may be prescribed in such rules and regulations; (b) file with the Trustee and the SEC, in accordance with the rules and regulations prescribed by the SEC, such additional information, documents and reports with respect to compliance by the Guarantor and the Company with the conditions and covenants of the Guarantor and the Company provided for in this Agreement, as may be required by such rules and regulations, including, in the case of annual reports, if required by such rules and regulations, certificates or opinions of independent public accountants, conforming to the requirements of Section 1.02; (c) transmit to all Certificateholders, in the manner and to the extent provided in Section 313(c) of the Trust Indenture Act, such summaries of any information, documents and reports required to be filed by the Guarantor and the Company pursuant to subsections (a) and (b) of this Section 8.04 as may be required by rules and regulations prescribed by the SEC; (d) furnish to the Trustee, not less often than annually, a brief certificate from the principal executive officer, principal financial officer or principal accounting officer as to his or her knowledge of the Guarantor's and the Company's compliance with all conditions and covenants under this Agreement (it being understood that for purposes of this paragraph (d), such compliance shall be determined without regard to any period of grace or requirement of notice provided under this Agreement); and (e) make available to any Certificateholder, upon request, the annual audited and quarterly unaudited financial statements of the Guarantor which are provided to the Trustee. ARTICLE IX SUPPLEMENTAL AGREEMENTS Section 9.01. SUPPLEMENTAL AGREEMENTS WITHOUT CONSENT OF CERTIFICATEHOLDERS. Without the consent of the Certificateholders, the Guarantor and the Company may, and the Trustee (subject to Section 9.03) shall, at any time and from time to time, enter into one or more agreements supplemental hereto or, if applicable, to the Indenture, the Lease, the Participation Agreement, Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement, the Deposit Agreement or the Liquidity Facility in form satisfactory to the Trustee, for any of the following purposes: (1) to evidence the succession of another corporation to the Company or the Guarantor and the assumption by any such successor of the covenants of the Company or the Guarantor contained herein or in each of the other related documents to which Company or the Guarantor is a party; or (2) to add to the covenants of the Guarantor or the Company for the benefit of the Certificateholders, or to surrender any right or power in this Agreement, the Note Purchase Agreement, the Intercreditor Agreement or any Liquidity Facility conferred upon the Guarantor or the Company; or (3) to correct or supplement any provision in this Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement, the Deposit Agreement or the Liquidity Facility which may be defective or inconsistent with any other provision herein or therein or to modify any other provisions with respect to matters or questions arising under this Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement, the Deposit Agreement or the Liquidity Facility, provided that any such action shall not adversely affect the interests of the Certificateholders; or to cure any ambiguity or correct any mistake in such documents, or as provided in the Intercreditor Agreement, to give effect to or provide for a Replacement Liquidity Facility (as defined in the Intercreditor Agreement); or (4) to comply with any requirement of the SEC, any applicable law, rules or regulations of any exchange or quotation system on which the Certificates are listed, or any regulatory body; or (5) to modify, eliminate or add to the provisions of this Agreement to such extent as shall be necessary to continue the qualification of this Agreement (including any supplemental agreement) under the Trust Indenture Act, or under any similar Federal statute hereafter enacted, and to add to this Agreement such other provisions as may be expressly permitted by the Trust Indenture Act, excluding, however, the provisions referred to in Section 316(a)(2) of the Trust Indenture Act as in effect at the date as of which this instrument was executed or any corresponding provision in any similar Federal statute hereafter enacted; or (6) to evidence and provide for the acceptance of appointment under this Agreement by the Trustee of a successor Trustee and to add to or change any of the provisions of this Agreement as shall be necessary to provide for or facilitate the administration of the Trust, pursuant to the requirements of Section 7.09; or (7) if with respect to any Owned Aircraft the Company issues "class D" pass through certificates, to modify, eliminate or add to the provisions of this Agreement to the extent necessary to provide for the subordination of such "class D" pass through certificates to the Certificates; PROVIDED that no such action described in this Section 9.01 shall materially adversely affect the interests of the Certificateholders. Section 9.02. SUPPLEMENTAL AGREEMENTS WITH CONSENT OF CERTIFICATEHOLDERS. With the consent of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest of the Trust, by Act of said Certificateholders delivered to the Guarantor, the Company and the Trustee, the Guarantor and the Company may (with the consent of the Owner Trustees, if any, which consent shall not be unreasonably withheld), and the Trustee (subject to Section 9.03) shall, enter into an agreement or agreements supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement, the Deposit Agreement or the Liquidity Facility to the extent applicable to such Certificateholders or of modifying in any manner the rights and obligations of such Certificateholders under this Agreement, the Intercreditor Agreement, any Liquidity Facility, the Escrow Agreement, the Deposit Agreement or the Note Purchase Agreement; PROVIDED, HOWEVER, that no such supplemental agreement shall, without the consent of the Certificateholder of each Outstanding Certificate affected thereby: (1) reduce in any manner the amount of, or delay the timing of, any receipt by the Trustee (or, with respect to the Deposits, the Certificateholders) of payments on the Equipment Notes held in the Trust or under the Deposit Agreement or distributions that are required to be made herein on any Certificate, or change any date of payment of any Certificate or change the place of payment where, or the coin or currency in which, any Certificate is payable, or impair the right to institute suit for the enforcement of any such payment or distribution on or after the Regular Distribution Date or Special Distribution Date applicable thereto; or (2) permit the disposition of any Equipment Note included in the Trust Property except as permitted by this Agreement, or otherwise deprive such Certificateholder of the benefit of the ownership of the Equipment Notes in the Trust; or (3) alter the priority of distributions specified in the Intercreditor Agreement; or (4) modify any of the provisions of this Section or Section 6.05, except to increase any such percentage or to provide that certain other provisions of this Agreement cannot be modified or waived without the consent of the Certificateholder of each Certificate affected thereby; or (5) adversely affect the status of any Trust as a grantor trust under Subpart E, Part I of Subchapter J of Chapter 1 of Subtitle A of the Internal Revenue Code of 1986, as amended, for U.S. federal income tax purposes. It shall not be necessary for any Act of Certificateholders under this Section to approve the particular form of any proposed supplemental agreement but it shall be sufficient if such Act shall approve the substance thereof. Section 9.03. DOCUMENTS AFFECTING IMMUNITY OR INDEMNITY. If in the opinion of the Trustee any document required to be executed by it pursuant to the terms of Section 9.01 or 9.02 affects any interest, right, duty, immunity or indemnity in favor of the Trustee under this Agreement, the Trustee may in its discretion decline to execute such document. Section 9.04. EXECUTION OF SUPPLEMENTAL AGREEMENTS. In executing, or accepting the additional trusts created by, any supplemental agreement permitted by this Article or the modifications thereby of the trust created by this Agreement, the Trustee shall be entitled to receive, and shall be fully protected in relying upon, written advice of counsel or an Opinion of Counsel stating that the execution of such supplemental agreement is authorized or permitted by this Agreement. Section 9.05. EFFECT OF SUPPLEMENTAL AGREEMENTS. Upon the execution of any supplemental agreement under this Article, this Agreement shall be modified in accordance therewith, and such supplemental agreement shall form a part of this Agreement for all purposes; and every Certificateholder theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. Section 9.06. CONFORMITY WITH TRUST INDENTURE ACT. Every supplemental agreement executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act as then in effect. Section 9.07. REFERENCE IN CERTIFICATES TO SUPPLEMENTAL AGREEMENTS. Certificates authenticated and delivered after the execution of any supplemental agreement pursuant to this Article may bear a notation in form approved by the Trustee as to any matter provided for in such supplemental agreement; and, in such case, suitable notation may be made upon Outstanding Certificates after proper presentation and demand. ARTICLE X AMENDMENTS TO INDENTURES AND NOTE DOCUMENTS Section 10.01. AMENDMENTS AND SUPPLEMENTS TO INDENTURES AND OTHER NOTE DOCUMENTS. In the event that the Trustee, as holder (or beneficial owner through the Subordination Agent) of any Equipment Note in trust for the benefit of the Certificateholders or as Controlling Party under the Intercreditor Agreement, receives (directly or indirectly through the Subordination Agent) a request for a consent to any amendment, modification, waiver or supplement under any Indenture, any other Note Document, any Equipment Note, the Note Purchase Agreement or any other related document, the Trustee shall forthwith send a notice of such proposed amendment, modification, waiver or supplement to each Certificateholder registered on the Register as of the date of such notice. The Trustee shall request from the Certificateholders a Direction as to (a) whether or not to take or refrain from taking (or direct the Subordination Agent to take or refrain from taking) any action which a holder of such Equipment Note has the option to direct, (b) whether or not to give or execute (or direct the Subordination Agent to give or execute) any waivers, consents, amendments, modifications or supplements as a holder of such Equipment Note or a Controlling Party and (c) how to vote (or direct the Subordination Agent to vote) any Equipment Note if a vote has been called for with respect thereto. Provided such a request for Certificateholder Direction shall have been made, in directing any action or casting any vote or giving any consent as the holder of any Equipment Note (or in directing the Subordination Agent in any of the foregoing), (i) other than as Controlling Party, the Trustee shall vote for or give consent to any such action with respect to such Equipment Note in the same proportion as that of (A) the aggregate face amounts of all Certificates actually voted in favor of or for giving consent to such action by such Direction of Certificateholders to (B) the aggregate face amount of all Outstanding Certificates and (ii) as Controlling Party, the Trustee shall vote as directed in such Certificateholder Direction by the Certificateholders evidencing a Fractional Undivided Interest aggregating not less than a majority in interest in the Trust. For purposes of the immediately preceding sentence, a Certificate shall have been "actually voted" if the Holder of such Certificate has delivered to the Trustee an instrument evidencing such Holder's consent to such Direction prior to two Business Days before the Trustee directs such action or casts such vote or gives such consent. Notwithstanding the foregoing, but subject to Section 6.04 and the Intercreditor Agreement, the Trustee may, in its own discretion and at its own direction, consent and notify the relevant Loan Trustee of such consent (or direct the Subordination Agent to consent and notify the Loan Trustee of such consent) to any amendment, modification, waiver or supplement under the relevant Indenture, any other Note Document, any Equipment Note, the Note Purchase Agreement or any other related document, if an Event of Default hereunder shall have occurred and be continuing, or if such amendment, modification, waiver or supplement will not materially adversely affect the interests of the Certificateholders. ARTICLE XI TERMINATION OF TRUSTS Section 11.01. TERMINATION OF THE TRUST. The respective obligations and responsibilities of the Company, the Guarantor and the Trustee with respect to the Trust shall terminate upon the earlier of (A) the completion of the assignment, transfer and discharge described in the first sentence of the immediately following paragraph and (B) distribution to all Holders of the Certificates and the Trustee of all amounts required to be distributed to them pursuant to this Agreement and the disposition of all property held as part of the Trust Property; PROVIDED, HOWEVER, that in no event shall the Trust continue beyond one hundred ten (110) years following the date of the earliest execution of this Agreement. Upon the earlier of (i) the first Business Day following January 31, 1999, or, if later, the fifth Business Day following the Delivery Period Termination Date and (ii) the fifth Business Day following the date on which a Triggering Event occurs (such date, the "Transfer Date"), or, if later the date on which all of the conditions set forth in the immediately following sentence have been satisfied, the Trustee is hereby directed (subject only to the immediately following sentence) to, and the Company shall direct the institution that will serve as the Related Trustee under the Related Pass Through Trust Agreement to, execute and deliver the Assignment and Assumption Agreement, pursuant to which the Trustee shall assign, transfer and deliver all of the Trustee's right, title and interest to the Trust Property to the Related Trustee under the Related Pass Through Trust Agreement. The Trustee and the Related Trustee shall execute and deliver the Assignment and Assumption Agreement upon the satisfaction of the following conditions: (i) The Trustee, the Related Trustee and each of the Rating Agencies (as defined in the Intercreditor Agreement) then rating the Certificates shall have received an Officer's Certificate and an Opinion of Counsel dated the date of the Assignment and Assumption Agreement and each satisfying the requirements of Section 1.02, which Opinion of Counsel shall be substantially to the effect set forth below and may be relied upon by the Beneficiaries (as defined in the Assignment and Assumption Agreement): (a) upon the execution and delivery thereof by the parties thereto in accordance with the terms of this Agreement and the Related Pass Through Trust Agreement, the Assignment and Assumption Agreement will constitute the valid and binding obligation of each of the parties thereto enforceable against each such party in accordance with its terms (subject to applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditor's rights generally and to general principles of equity); (b) upon the execution and delivery of the Assignment and Assumption Agreement in accordance with the terms of this Agreement and the Related Pass Through Trust Agreement, each of the Certificates then Outstanding will be entitled to the benefits of the Related Pass Through Trust Agreement; (c) the Related Trust is not required to be registered as an investment company under the Investment Company Act of 1940, as amended; (d) the Related Pass Through Trust Agreement constitutes the valid and binding obligation of the Company enforceable against the Company in accordance with its terms (subject to applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditor's rights generally and to general principles of equity); and (e) neither the execution and delivery of the Assignment and Assumption Agreement in accordance with the terms of this Agreement and the Related Pass Through Trust Agreement, nor the consummation by the parties thereto of the transactions contemplated to be consummated thereunder on the date thereof, will violate any law or governmental rule or regulation of the State of New York or the United States of America known to such counsel to be applicable to the transactions contemplated by the Assignment and Assumption Agreement. (ii) The Trustee and the Company shall have received (x) a copy of the articles of incorporation and bylaws of the Related Trustee certified as of the Transfer Date by the Secretary or Assistant Secretary of such institution and (y) a copy of the filing (including all attachments thereto) made by the institution serving as the Related Trustee with the Office of the Superintendent, State of New York Banking Department for the qualification of the Related Trustee under Section 131(3) of the New York Banking Law. Upon the execution of the Assignment and Assumption Agreement by the parties thereto, the Trust shall be terminated, the Certificateholders shall receive beneficial interests in the Related Trust in exchange for their interests in the Trust equal to their respective beneficial interests in the Trust, and the Outstanding Certificates representing Fractional Undivided Interests in the Trust shall be deemed for all purposes of this Agreement and the Related Pass Through Trust Agreement, without further signature or action of any party or Certificateholder, to be certificates representing the same fractional undivided interests in the Related Trust and its trust property. By acceptance of its Certificate, each Certificateholder consents to such assignment, transfer and delivery of the Trust Property to the trustee of the Related Trust upon the execution and delivery of the Assignment and Assumption Agreement. In connection with the occurrence of the event set forth in clause (B) above, notice of such termination, specifying the Regular Distribution Date (or Special Distribution Date, as the case may be) upon which the Certificateholders may surrender their Certificates to the Trustee for payment of the final distribution and cancellation, shall be mailed promptly, upon notice to the Trustee, by the Trustee to Certificateholders not earlier than the 60th day and not later than the 20th day next preceding such final distribution specifying (A) the Regular Distribution Date (or Special Distribution Date, as the case may be) upon which the proposed final payment of the Certificates will be made upon presentation and surrender of Certificates at the office or agency of the Trustee therein specified, (B) the amount of any such proposed final payment, and (C) that the Record Date otherwise applicable to such Regular Distribution Date (or Special Distribution Date, as the case may be) is not applicable, payments being made only upon presentation and surrender of the Certificates at the office or agency of the Trustee therein specified. The Trustee shall give such notice to the Registrar at the time such notice is given to Certificateholders. Upon presentation and surrender of the Certificates, the Trustee shall cause to be distributed to Certificateholders amounts distributable on such Regular Distribution Date (or Special Distribution Date, as the case may be) pursuant to Section 4.02. In the event that all of the Certificateholders shall not surrender their Certificates for cancellation within six months after the date specified in the above-mentioned written notice, the Trustee shall give a second written notice to the remaining Certificateholders to surrender their Certificates for cancellation and receive the final distribution with respect thereto. No additional interest shall accrue on the Certificates after the Regular Distribution Date (or Special Distribution Date, as the case may be). In the event that any money held by the Trustee for the payment of distributions on the Certificates shall remain unclaimed for two years (or such lesser time as the Trustee shall be satisfied, after sixty days' notice from the Company, is one month prior to the escheat period provided under applicable law) after the final distribution date with respect thereto, the Trustee shall pay to each Loan Trustee the appropriate amount of money relating to such Loan Trustee and shall give written notice thereof to the related Owner Trustees and the Company. ARTICLE XII MISCELLANEOUS PROVISIONS Section 12.01. LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS. The death or incapacity of any Certificateholder shall not operate to terminate this Agreement, or the Trust, nor entitle such Certificateholder's legal representatives or heirs to claim an accounting or to take any action or commence any proceeding in any court for a partition or winding up of the Trust, nor otherwise affect the rights, obligations, and liabilities of the parties hereto or any of them. Section 12.02. LIABILITIES OF CERTIFICATEHOLDERS. Neither the existence of the Trust nor any provision in this Agreement is intended to or shall limit the liability the Certificateholders would otherwise incur if the Certificateholders owned Trust Property as co-owners, or incurred any obligations of the Trust, directly rather than through the Trust. Section 12.03. CERTIFICATES NONASSESSABLE AND FULLY PAID. Subject to Section 12.02, Certificateholders shall not be personally liable for obligations of the Trust, the Fractional Undivided Interests represented by the Certificates shall be nonassessable for any losses or expenses of the Trust or for any reason whatsoever, and Certificates upon authentication thereof by the Trustee pursuant to Section 3.03 are and shall be deemed fully paid. No Certificateholder shall have any right (except as expressly provided herein) to vote or in any manner otherwise control the operation and management of the Trust Property, the Trust, or the obligations of the parties hereto, nor shall anything set forth herein, or contained in the terms of the Certificates, be construed so as to constitute the Certificateholders from time to time as partners or members of an association. Section 12.04. [Intentionally omitted]. Section 12.05. NOTICES. ------- (a) Unless otherwise specifically provided herein, all notices required under the terms and provisions of this Agreement shall be in English and in writing, and any such notice may be given by United States mail, courier service, telegram, telemessage, telecopy, telefax, cable or facsimile (confirmed by telephone or in writing in the case of notice by telegram, telemessage, telecopy, telefax, cable or facsimile) or any other customary means of communication, and any such notice shall be effective when delivered, or if mailed, three days after deposit in the United States mail with proper postage for ordinary mail prepaid, if to the Company or the Guarantor, to: American Trans Air, Inc. 7337 West Washington Street Indianapolis International Airport Indianapolis, Indiana 06927 ATTENTION: Executive Vice President and Chief Financial Officer ---------- FACSIMILE: (317) 240-7087 ---------- if to the Trustee, to: Wilmington Trust Company Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 ATTENTION: Corporate Trust Administration ---------- FACSIMILE: (302) 651-8882 ---------- (b) The Company, the Guarantor or the Trustee, by notice to the other, may designate additional or different addresses for subsequent notices or communications. (c) Any notice or communication to Certificateholders shall be mailed by first-class mail to the addresses for Certificateholders shown on the Register kept by the Registrar and to addresses filed with the Trustee. Failure so to mail a notice or communication or any defect in such notice or communication shall not affect its sufficiency with respect to other Certificateholders. (d) If a notice or communication is mailed in the manner provided above within the time prescribed, it is conclusively presumed to have been duly given, whether or not the addressee receives it. (e) If the Company mails a notice or communication to the Certificateholders, it shall mail a copy to the Trustee and to each Paying Agent at the same time. (f) Notwithstanding the foregoing, all communications or notices to the Trustee shall be deemed to be given only when received by a Responsible Officer of the Trustee. (g) The Trustee shall promptly furnish the Company with a copy of any demand, notice or written communication received by the Trustee hereunder from any Certificateholder, Owner Trustee or Loan Trustee. Section 12.06. GOVERNING LAW. THIS AGREEMENT HAS BEEN DELIVERED IN THE STATE OF DELAWARE AND THIS AGREEMENT AND THE CERTIFICATES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO CONFLICT-OF-LAW PRINCIPLES. Section 12.07. SEVERABILITY OF PROVISIONS. If any one or more of the covenants, agreements, provisions, or terms of this Agreement shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions, or terms shall be deemed severable from the remaining covenants, agreements, provisions, or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement or the Trust or of the Certificates or the rights of the Certificateholders thereof. Section 12.08. [Intentionally omitted]. Section 12.09. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. Section 12.10. SUCCESSORS AND ASSIGNS. All covenants, agreements, representations and warranties in this Agreement by the Trustee, the Guarantor and the Company shall bind and, to the extent permitted hereby, shall inure to the benefit of and be enforceable by their respective successors and assigns, whether so expressed or not. Section 12.11. BENEFITS OF AGREEMENT. Nothing in this Agreement or in the Certificates, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, and the Certificateholders, any benefit or any legal or equitable right, remedy or claim under this Agreement. Section 12.12. LEGAL HOLIDAYS. In any case where any Regular Distribution Date or Special Distribution Date relating to any Certificate shall not be a Business Day, then (notwithstanding any other provision of this Agreement) payment need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on such Regular Distribution Date or Special Distribution Date, and no interest shall accrue during the intervening period. Section 12.13. COUNTERPARTS. For the purpose of facilitating the execution of this Agreement and for other purposes, this Agreement may be executed simultaneously in any number of counterparts, each of which counterparts shall be deemed to be an original, and all of which counterparts shall constitute but one and the same instrument. Section 12.14. COMMUNICATION BY CERTIFICATEHOLDERS WITH OTHER CERTIFICATEHOLDERS. Certificateholders may communicate with other Certificateholders with respect to their rights under this Agreement or the Certificates pursuant to Section 3.12(b) of the Trust Indenture Act. The Company, the Guarantor, the Trustee and any and all other persons benefitted by this Agreement shall have the protection afforded by Section 312(c) of the Trust Indenture Act. Section 12.15. INTENTION OF PARTIES. The parties hereto intend that the Trust be classified for U.S. federal income tax purposes as a grantor trust under Subpart E, Part I of Subchapter J of the Internal Revenue Code of 1986, as amended, and not as a trust or association taxable as a corporation or as a partnership. Each Certificateholder, by its acceptance of its Certificate or a beneficial interest therein, agrees to treat the Trust as a grantor trust for all U.S. federal, state and local income tax purposes. The powers granted and obligations undertaken pursuant to this Agreement shall be so construed so as to further such intent. IN WITNESS WHEREOF, the Guarantor, the Company and the Trustee have caused this Agreement to be duly executed by their respective officers, all as of the day and year first above written. AMTRAN, INC. By /s/ Kenneth K. Wolff ----------------------------- Title: Executive Vice President and Chief Financial Officer AMERICAN TRANS AIR, INC. / By /s/ Kenneth K. Wolff ----------------------------- Title: Chief Financial Officer WILMINGTON TRUST COMPANY, as Trustee By /s/ Patricia A. Evans ----------------------------- Title: Financial Services Officer EXHIBIT A FORM OF CERTIFICATE [THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS CERTIFICATE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY AMERICAN TRANS AIR, INC., ("ATA") OR AN AFFILIATE OF ATA RESELL OR OTHERWISE TRANSFER THIS CERTIFICATE EXCEPT (A) TO ATA OR ANY SUBSIDIARY THEREOF,(B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING $100,000 OR MORE AGGREGATE PRINCIPAL AMOUNT OF SUCH CERTIFICATES THAT, TAKES DELIVERY OF THIS CERTIFICATE IN DEFINITIVE FORM AND PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS CERTIFICATE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS CERTIFICATE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CASE THIS CERTIFICATE IS IN DEFINITIVE FORM, IN CONNECTION WITH ANY TRANSFER OF THIS CERTIFICATE WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY ATA OR AN AFFILIATE OF ATA THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE PASS THROUGH TRUST AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS.]1 [UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND 3.06 OF THE PASS THROUGH TRUST AGREEMENT REFERRED TO HEREIN .]2 AMERICAN TRANS AIR, INC. 1997-1C-O PASS THROUGH TRUST Pass Through Certificate, Series 1997-1C-O Issuance Date: Final Legal Distribution Date: Evidencing a Fractional Undivided Interest in the 1997-1C-O Trust, the Property of Which Includes Certain Equipment Notes each secured by Aircraft leased to American Trans Air, Inc. Certificate No. $ Fractional Undivided Interest representing % of the --------- ------- ----- Trust per $1,000 of Reference Principal Amount THIS CERTIFIES THAT , for value received, is the registered owner of a Fractional Undivided Interest in the amount of Dollars ($ ) (the "Reference Principal Amount") in the American Trans Air 1997-1C-O Pass Through Trust (the "Trust") created by Wilmington Trust Company, not in its individual capacity but solely as trustee (the "Trustee"), pursuant to a Pass Through Trust Agreement dated as of December , 1997 (the "Agreement"), among the Trustee, Amtran, Inc., a corporation incorporated under Indiana law (the "Guarantor"), and American Trans Air, Inc., a corporation incorporated under Indiana law (the "Company"), a summary of certain of the pertinent provisions of which is set forth below. To the extent not otherwise defined herein, the capitalized terms used herein have the meanings assigned to them in the Agreement. This Certificate is one of the duly authorized Certificates designated as "Pass Through Certificates, Series 1997-1C-O" (herein called the "Certificates"). This Certificate is issued under and is subject to the terms, provisions, and conditions of the Agreement and the Intercreditor Agreement, to which agreements the Certificateholder of this Certificate by virtue of the acceptance hereof assents and by which such Certificateholder is bound. The property of the Trust includes certain Equipment Notes and all rights of the Trust to receive any payments under the Intercreditor Agreement and the Liquidity Facility (the "Trust Property"). Each issue of the Equipment Notes is secured by a security interest in The Aircraft leased to the Company. Each of the Certificates represents a fractional undivided interest in the Trust and the Trust Property, and has no rights, benefits or interest in respect of any assets or property other than the Trust Property. The undivided percentage interest in the Trust represented by each of this Certificate (as specified above) and the other Pass Through Certificates, Series 1997-1C-O, was determined on the basis of (x) the aggregate of the Reference Principal Amount of this Certificate (as specified above) and of the other Pass Through Certificates, Series 1997-1C-O and (y) the aggregate original principal amounts of the Equipment Notes constituting the Trust Property. Subject to and in accordance with the terms of the Agreement and the Intercreditor Agreement, from funds then available to the Trustee, there will be distributed on each January 15, April 15, July 15 and October 15 (a "Regular Distribution Date"), commencing January 15, 1998, to the Person in whose name this Certificate is registered at the close of business on the 15th day preceding the Regular Distribution Date, an amount in respect of the Scheduled Payments on the Equipment Notes due on such Regular Distribution Date, the receipt of which has been confirmed by the Trustee, equal to the product of the percentage interest in the Trust evidenced by this Certificate and an amount equal to the sum of such Scheduled Payments. Subject to and in accordance with the terms of the Agreement and the Intercreditor Agreement, in the event that Special Payments on the Equipment Notes are received by the Trustee, from funds then available to the Trustee, there shall be distributed on the applicable Special Distribution Date, to the Person in whose name this Certificate is registered at the close of business on the 15th day preceding the Special Distribution Date, an amount in respect of such Special Payments on the Equipment Notes, the receipt of which has been confirmed by the Trustee, equal to the product of the percentage interest in the Trust evidenced by this Certificate and an amount equal to the sum of such Special Payments so received. If a Regular Distribution Date or Special Distribution Date is not a Business Day, distribution shall be made on the immediately following Business Day with the same force and effect as if made on such Regular Distribution Date or Special Distribution Date and no interest shall accrue during the intervening period. The Trustee shall mail notice of each Special Payment and the Special Distribution Date therefor to the Certificateholder of this Certificate. Distributions on this Certificate will be made by the Trustee by check mailed to the Person entitled thereto, without the presentation or surrender of this Certificate or the making of any notation hereon. Except as otherwise provided in the Agreement and notwithstanding the above, the final distribution on this Certificate will be made after notice mailed by the Trustee of the pendency of such distribution and only upon presentation and surrender of this Certificate at the office or agency of the Trustee specified in such notice. The Certificates do not represent a direct obligation of, or an obligation guaranteed by, or an interest in, the Guarantor, the Company or the Trustee or any affiliate thereof. The Certificates are limited in right of payment, all as more specifically set forth on the face hereof and in the Agreement. All payments or distributions made to Certificateholders under the Agreement shall be made only from the Trust Property and only to the extent that the Trustee shall have sufficient income or proceeds from the Trust Property to make such payments in accordance with the terms of the Agreement. Each Certificateholder of this Certificate, by its acceptance hereof, agrees that it will look solely to the income and proceeds from the Trust Property to the extent available for distribution to such Certificateholder as provided in the Agreement. This Certificate does not purport to summarize the Agreement and reference is made to the Agreement for information with respect to the interests, rights, benefits, obligations, proceeds, and duties evidenced hereby. A copy of the Agreement may be examined during normal business hours at the principal office of the Trustee, and at such other places, if any, designated by the Trustee, by any Certificateholder upon request. The Agreement permits, with certain exceptions therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Certificateholders under the Agreement at any time by the Guarantor, the Company and the Trustee with the consent of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust. Any such consent by the Certificateholder of this Certificate shall be conclusive and binding on such Certificateholder and upon all future Certificateholders of this Certificate and of any Certificate issued upon the transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent is made upon this Certificate. The Agreement also permits the amendment thereof, in certain limited circumstances, without the consent of the Certificateholders of any of the Certificates. As provided in the Agreement and subject to certain limitations set forth, the transfer of this Certificate is registrable in the Register upon surrender of this Certificate for registration of transfer at the offices or agencies maintained by the Trustee in its capacity as Registrar, or by any successor Registrar duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Trustee and the Registrar, duly executed by the Certificateholder hereof or such Certificateholder's attorney duly authorized in writing, and thereupon one or more new Certificates of authorized denominations evidencing the same aggregate Fractional Undivided Interest in the Trust will be issued to the designated transferee or transferees. The Certificates are issuable only as registered Certificates without coupons in minimum denominations of $100,000 Fractional Undivided Interest and integral multiples of $1,000 in excess thereof except that one Certificate may be in a denomination of less than $100,000 that is not a multiple of $1,000. As provided in the Agreement and subject to certain limitations therein set forth, the Certificates are exchangeable for new Certificates of authorized denominations evidencing the same aggregate Fractional Undivided Interest in the Trust, as requested by the Certificateholder surrendering the same. No service charge will be made for any such registration of transfer or exchange, but the Trustee shall require payment of a sum sufficient to cover any tax or governmental charge payable in connection therewith. The Trustee, the Registrar, and any agent of the Trustee or the Registrar may treat the person in whose name this Certificate is registered as the owner hereof for all purposes, and neither the Trustee, the Registrar, nor any such agent shall be affected by any notice to the contrary. The obligations and responsibilities created by the Agreement and the Trust created thereby shall terminate upon the distribution to Certificateholders of all amounts required to be distributed to them pursuant to the Agreement and the disposition of all property held as part of the Trust Property. Any person acquiring or accepting this Certificate or an interest herein will, by such acquisition or acceptance, be deemed to have represented and warranted to and for the benefit of each Owner Participant and the Company that either: (i) the assets of an employee benefit plan subject to Title I of the Employment Retirement Income Security Act of 1974, as amended ("ERISA"), or of a plan subject to Section 4975 of the Internal Revenue Code of 1986, as amended (the "CODE"), have not been used to purchase this Certificate or interest herein are exempt from the prohibited transaction restrictions of ERISA and the Code pursuant to one or more prohibited transaction or statutory exemptions. THE AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES. Unless the certificate of authentication hereon has been executed by the Trustee, by manual signature, this Certificate shall not be entitled to any benefit under the Agreement or be valid for any purpose. IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed. AMERICAN TRANS AIR, INC. By: WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Trustee By: ----------------------------------------------------- Title: Dated: ---------- [FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION] This is one of the Certificates referred to in the within-mentioned Agreement. WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Trustee By: ------ Authorized Officer FORM OF TRANSFER NOTICE FOR VALUE RECEIVED the undersigned registered holder hereby sell(s), assign(s) and transfer(s) unto INSERT TAXPAYER IDENTIFICATION NO. - --------------------------------- please print or typewrite name and address including zip code of assignee the within Certificate and all rights thereunder, hereby irrevocably constituting and appointing attorney to transfer said Certificate on the books of the Trustee with full power of substitution in the premises. [THE FOLLOWING PROVISION TO BE INCLUDED ON ALL U.S. PHYSICAL CERTIFICATES] In connection with any transfer of this Certificate occurring prior to the date that is the earlier of the date of an effective Registration Statement or December __, 1999, the undersigned confirms that without utilizing any general solicitation or general advertising that: [CHECK ONE] [ ] (a) this Certificate is being transferred in compliance with the exemption from registration under the Securities Act of 1933, as amended, provided by Rule 144A thereunder. OR [ ] (b) this Certificate is being transferred other than in accordance with (a) above and documents are being furnished that comply with the conditions of transfer set forth in this Certificate and the Agreement. If neither of the foregoing boxes is checked, the Trustee or other Registrar shall not be obligated to register this Certificate in the name of any Person other than the Holder hereof unless and until the conditions to any such transfer of registration set forth herein and in Section 3.06 of the Agreement shall have been satisfied. Date: [NAME OF TRANSFEROR] ------------ -------------------- NOTE: The signature must correspond with the name as written upon the face of the within-mentioned instrument in every particular, without alteration or any change whatsoever. Signature Guarantee: TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED. The undersigned represents and warrants that it is purchasing this Certificate for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933, as amended, and is aware that the sale to it is being made in reliance on Rule 144A and has been advised of the applicable transfer restrictions relating to the Certificates and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. [Name of Transferee] Dated: ------------- NOTE: To be executed by an executive officer. EXHIBIT B FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH TRANSFERS PURSUANT TO REGULATION S [date] Wilmington Trust Company, not in its individual capacity but solely as Trustee Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 Attention: Corporate Trust Administration Re: American Trans Air 1997-1C-O Pass Through Trust (the "Trust"), ____% American Trans Air Pass Through Certificates Series 1997-1C-O (the "CERTIFICATES") - ----------------------------------------------------------------------------- Sirs: In connection with our proposed sale of $ Fractional Undivided Interest of the Certificates, we confirm that such sale has been effected pursuant to and in accordance with Regulation S under the Securities Act of 1933, as amended, and, accordingly, we represent that: (1) the offer of the Certificates was not made to a person in the United States; (2) either (a) at the time the buy order was originated, the transferee was outside the United States or we and any person acting on our behalf reasonably believed that the transferee was outside the United States or (b) the transaction was executed in, on or through the facilities of a designated off-shore securities market and neither we nor any person acting on our behalf knows that the transaction has been pre-arranged with a buyer in the United States; (3) no directed selling efforts have been made in the United States in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S, as applicable; and (4) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act. In addition, if the sale is made during a restricted period and the provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are applicable thereto, we confirm that such sale has been made in accordance with the applicable provisions of Rule 903(c)(3) or Rule 904(c)(1), as the case may be. You and American Trans Air, Inc. are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Terms used in this certificate have the meanings set forth in Regulation S. Very truly yours, [Name of Transferor] By: ------ Authorized Signature EXHIBIT C FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH TRANSFERS TO NON-QIB ACCREDITED INVESTORS [date] Wilmington Trust Company, not in its individual capacity but solely as Trustee Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 Attention: Corporate Trust Administration Re: American Trans Air 1997-1C-O Pass-Through Trust (the "Trust"), ____% American Trans Air Pass Through Certificates Series 1997-1C-O (THE "CERTIFICATES") - --------------------------------------------------------------------------- Dear Sirs: In connection with our proposed purchase of $ aggregate principal amount of the ----------- Certificates, we confirm that: 1. We understand that any subsequent transfer of the Certificates is subject to certain restrictions and conditions set forth in the Pass Through Trust Agreement dated as of December __, 1997 relating to the Certificates (the "Pass Through Trust Agreement") and the undersigned agrees to be bound by, and not to resell, pledge or otherwise transfer the Certificates except in compliance with, such restrictions and conditions and the Securities Act of 1933, as amended (the "Securities Act"). 2. We are purchasing Certificates having an aggregate principal amount of not less than $100,000 and each account (if any) for which we are purchasing Certificates is purchasing Certificates having an aggregate principal amount of not less than $100,000. 3. We understand that the Certificates have not been registered under the Securities Act, and that the Certificates may not be offered or sold except as permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for which we are acting as hereinafter stated, that if we should sell any Certificate, we will do so only (A) in accordance with Rule 144A under the Securities Act to a "qualified institutional buyer" (as defined therein), (B) to an institutional "accredited investor" (as defined below) that, prior to such transfer, furnishes to you and American Trans Air, Inc., a signed letter substantially in the form of this letter, (C) outside the United States in accordance with Rule 904 of Regulation S under the Securities Act, (D) pursuant to the exemption from registration provided by Rule 144 under the Securities Act, or (E) pursuant to an effective registration statement under the Securities Act, and we further agree to provide to any person purchasing any of the Certificates from us a notice advising such purchaser that resales of the Notes are restricted as stated herein. We further understand that the Certificates purchased by us will bear a legend to the foregoing effect. 4. We understand that, on any proposed resale of any Certificates, we will be required to furnish to you and American Trans Air, Inc. such certifications, legal opinions and other information as you and American Trans Air, Inc. may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. We further understand that the Certificates purchased by us will bear a legend to the foregoing effect. 5. We are an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Certificates and we and any accounts for which we are acting are each able to bear the economic risk of our or its investment. 6. We are acquiring the Certificates purchased by us for our own account or for one or more accounts (each of which is an institutional "accredited investor") as to each of which we exercise sole investment discretion. You and American Trans Air, Inc. are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Very truly yours, [Name of Transferee] By: ------ Authorized Signature EXHIBIT D FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT American Trans Air 1997-1[__] Pass Through Trust ASSIGNMENT AND ASSUMPTION AGREEMENT, dated ____________, 199_ (the "AGREEMENT"), between Wilmington Trust Company, a Delaware banking corporation ("WTC"), not in its individual capacity except as expressly provided herein, but solely as trustee under the Pass Through Trust Agreement dated as of December __, 1997 (as amended, modified or otherwise supplemented from time to time, the "PASS THROUGH TRUST AGREEMENT") in respect of the American Trans Air 1997-1C-O Pass Through Trust (the "ASSIGNOR"), and Wilmington Trust Company, a Delaware banking corporation, not in its individual capacity except as expressly provided herein, but solely as trustee under the Pass Through Trust Agreement dated as of December __, 1997 (the "NEW PASS THROUGH TRUST AGREEMENT") in respect of the American Trans Air 1997-1C-S Pass Through Trust (the "ASSIGNEE"). W I T N E S S E T H: - - - - - - - - - - WHEREAS, the parties hereto desire to effect on the date hereof (the "TRANSFER DATE") (a) the transfer by the Assignor to the Assignee of all of the right, title and interest of the Assignor in, under and with respect to, among other things, the Trust Property and each of the documents listed in Schedule I hereto (the "SCHEDULED DOCUMENTS") and (b) the assumption by the Assignee of the obligations of the Assignor (i) under the Scheduled Documents and (ii) in respect of the Certificates issued under the Pass Through Trust Agreement; and WHEREAS, the Scheduled Documents permit such transfer upon satisfaction of certain conditions heretofore or concurrently herewith being complied with; NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements herein contained, the parties hereto do hereby agree as follows (capitalized terms used herein without definition having the meaning ascribed thereto in the Pass Through Trust Agreement): 1. ASSIGNMENT. The Assignor does hereby sell, assign, convey, transfer and set over unto the Assignee as of the Transfer Date all of its present and future right, title and interest in, under and with respect to the Trust Property and the Scheduled Documents and each other contract, agreement, document or instrument relating to the Trust Property or the Scheduled Documents (such other contracts, agreements, documents or instruments, together with the Scheduled Documents, to be referred to as the "ASSIGNED DOCUMENTS"), and any proceeds therefrom, together with all documents and instruments evidencing any of such right, title and interest. 2. ASSUMPTION. The Assignee hereby assumes for the benefit of the Assignor and each of the parties listed in Schedule II hereto (collectively, the "BENEFICIARIES") all of the duties and obligations of the Assignor, whenever accrued, pursuant to the Assigned Documents and hereby confirms that it shall be deemed a party to each of the Assigned Documents to which the Assignor is a party and shall be bound by all the terms thereof (including the agreements and obligations of the Assignor set forth therein) as if therein named as the Assignor. Further, the Assignee hereby assumes for the benefit of the Assignor and the Beneficiaries all of the duties and obligations of the Assignor under the Outstanding Certificates and hereby confirms that the Certificates representing Fractional Undivided Interests under the Pass Through Trust Agreement shall be deemed for all purposes of the Pass Through Trust Agreement and the New Pass Through Trust Agreement to be certificates representing the same fractional undivided interests under the New Pass Through Trust Agreement equal to their respective beneficial interests in the trust created under the Pass Through Trust Agreement. 3. EFFECTIVENESS. This Agreement shall be effective upon the execution and delivery hereof by the parties hereto, and each Certificateholder, by its acceptance of its Certificate or a beneficial interest therein, agrees to be bound by the terms of this Agreement. 4. PAYMENTS. The Assignor hereby covenants and agrees to pay over to the Assignee, if and when received following the Transfer Date, any amounts (including any sums payable as interest in respect thereof) paid to or for the benefit of the Assignor that, under Section 1 hereof, belong to the Assignee. 5. FURTHER ASSURANCES. The Assignor shall, at any time and from time to time, upon the request of the Assignee, promptly and duly execute and deliver any and all such further instruments and documents and take such further action as the Assignee may reasonably request to obtain the full benefits of this Agreement and of the right and powers herein granted. The Assignor agrees to deliver the Global Certificates, and all Trust Property, if any, then in the physical possession of the Assignor, to the Assignee. 6. REPRESENTATIONS AND WARRANTIES. (a) The Assignee represents and warrants to the Assignor and each of the Beneficiaries that: (i) it has all requisite power and authority and legal right to enter into and carry out the transactions contemplated hereby and to carry out and perform the obligations of the "Pass Through Trustee" under the Assigned Documents; (ii) on and as of the date hereof, the representations and warranties of the Assignee set forth in Section 7.14 of the New Pass Through Trust Agreement are true and correct. (b) The Assignor represents and warrants to the Assignee that: (i) it is duly incorporated, validly existing and in good standing under the laws of the State of Delaware and has the full trust power, authority and legal right under the laws of the State of Delaware and the United States pertaining to its trust and fiduciary powers to execute and deliver this Agreement; (ii) the execution and delivery by it of this Agreement and the performance by it of its obligations hereunder have been duly authorized by it and will not violate its articles of association or by-laws or the provisions of any indenture, mortgage, contract or other agreement to which it is a party or by which it is bound; and (iii) this Agreement constitutes the legal, valid and binding obligations of it enforceable against it in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity. 7. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK INCLUDING MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS. 8. COUNTERPARTS. This Agreement may be executed in any number of counterparts, all of which together shall constitute a single instrument. It shall not be necessary that any counterpart be signed by both parties so long as each party shall sign at least one counterpart. 9. THIRD PARTY BENEFICIARIES. The Assignee hereby agrees, for the benefit of the Beneficiaries, that its representations, warranties and covenants contained herein are also intended to be for the benefit of each Beneficiary, and each Beneficiary shall be deemed to be an express third party beneficiary with respect thereto, entitled to enforce directly and in its own name any rights or claims it may have against such party as such beneficiary. IN WITNESS WHEREOF, the parties hereto, through their respective officers thereunto duly authorized, have duly executed this Assignment as of the day and year first above written. ASSIGNOR: WILMINGTON TRUST COMPANY, not in its individual capacity except as expressly provided herein, but solely as trustee under the Pass Through Trust Agreement in respect of the American Trans Air 1997-1C-O Pass Through Trust By:___________________________ Title: ASSIGNEE: WILMINGTON TRUST COMPANY, not in its individual capacity except as expressly provided herein, but solely as trustee under the Pass Through Trust Agreement in respect of the American Trans Air 1997-1C-S Pass Through Trust By:__________________________ Title: Schedule I Schedule of Assigned Documents (1) Intercreditor Agreement dated as of December 23, 1997 among the Trustee, the Other Trustees, the Liquidity Providers, the liquidity providers, if any, relating to the Certificates issued under (and as defined in) each of the Other Pass Through Trust Agreements and the Subordination Agent. (2) Escrow and Paying Agent Agreement (Class C) dated as of December 23, 1997 among the Escrow Agent, the Initial Purchasers, the Trustee and the Paying Agent. (3) Note Purchase Agreement dated as of December 23, 1997 among the Company, the Trustee, the Other Trustees, the Depositary, the Escrow Agent, the Paying Agent and the Subordination Agent. (4) Deposit Agreement (Class C) dated as of December 23, 1997 between the Escrow Agent and the Depositary. (5) Each of the Operative Documents (as defined in the Participation Agreement for each Aircraft) in effect as of the Transfer Date. Schedule II Schedule of Beneficiaries Wilmington Trust Company, not in its individual capacity but solely as Subordination Agent. Wilmington Trust Company, not in its individual capacity but solely as Paying Agent ING Bank, as Liquidity Provider Amtran, Inc. American Trans Air, Inc. Salomon Brothers Inc, as Initial Purchaser Furman Selz LLC, as Initial Purchaser First Security Bank, National Association, as Escrow Agent Each of the other parties to the Assigned Documents EXHIBIT E FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH TRANSFERS TO QIBs [date] Wilmington Trust Company, not in its individual capacity but solely as Trustee Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 Attention: Corporate Trust Administration Re: American Trans Air 1997-1C-O Pass Through Trust (the "Trust"), ____% American Trans Air Pass Through Certificates Series 1997-1C-O (the "CERTIFICATES") - -------------------------------------------------------------------------------- Sirs: In connection with our proposed sale of $ Fractional Undivided Interest of the Certificates, we confirm that without utilizing any general solicitation or general advertising that such Certificates are being transferred in compliance with the exemption from registration under the Securities Act of 1933, as amended, provided by Rule 144A thereunder. Date: [NAME OF TRANSFEROR ------------ ------------------- NOTE: The signature must correspond with the name as written upon the face of the within-mentioned Certificate in every particular, without alteration or any change whatsoever. Signature Guarantee: TO BE COMPLETED BY PURCHASER: The undersigned represents and warrants that it is purchasing the within-mentioned Certificate for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933, as amended, and is aware that the sale to it is being made in reliance on Rule 144A and has been advised of the applicable transfer restrictions relating to the Certificates and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Dated: ------------- [Name of Transferee] NOTE: To be executed by an executive officer. 1Not to be included on the face of the Offshore Global Certificate or any Offshore Physical Certificates. 2To be included on the face of each Global Certificate. EX-4.19 14 file014.txt AMTRAN, INC., 2000 10-K, EXHIBIT 4.19 EXECUTION COPY AMTRAN, INC. AMERICAN TRANS AIR, INC. and WILMINGTON TRUST COMPANY as Trustee PASS THROUGH TRUST AGREEMENT Dated as of December 23, 1997 American Trans Air 1997-1C-S Pass Through Trust 7.46% American Trans Air 1997-1C-S Pass Through Certificates TABLE OF CONTENTS ARTICLE I DEFINITIONS.........................................................2 Section 1.01. Definitions.............................................2 Section 1.02. COMPLIANCE CERTIFICATES AND OPINIONS...................12 Section 1.03. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.................13 Section 1.04. ACTS OF CERTIFICATEHOLDERS.............................13 ARTICLE II ACQUISITION OF TRUST PROPERTY.....................................15 Section 2.01. [Intentionally omitted]................................15 Section 2.02. ACQUISITION OF TRUST PROPERTY..........................15 Section 2.03. ACCEPTANCE BY TRUSTEE.................................16 Section 2.04. LIMITATION OF POWERS...................................16 ARTICLE III THE CERTIFICATES..................................................16 Section 3.01. TITLE, FORM, DENOMINATION AND EXECUTION OF Section 3.02. RESTRICTIVE LEGENDS....................................18 CERTIFICATES.........................................................16 Section 3.03. AUTHENTICATION OF CERTIFICATES.........................19 Section 3.04. TRANSFER AND EXCHANGE..................................19 Section 3.05. BOOK-ENTRY PROVISIONS FOR U.S. GLOBAL CERTIFICATE AND OFFSHORE GLOBAL CERTIFICATES.......20 Section 3.06. SPECIAL TRANSFER PROVISIONS............................22 Section 3.07. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES......24 Section 3.08. PERSONS DEEMED OWNERS..................................25 Section 3.09. CANCELLATION...........................................25 Section 3.10. LIMITATION OF LIABILITY FOR PAYMENTS...................25 Section 3.11. TEMPORARY CERTIFICATES.................................25 ARTICLE IV DISTRIBUTIONS; STATEMENTS TO......................................26 Section 4.01. CERTIFICATE ACCOUNT AND SPECIAL PAYMENTS ACCOUNT.......26 Section 4.02. DISTRIBUTIONS FROM CERTIFICATE ACCOUNT AND SPECIAL PAYMENTS ACCOUNT.....................................................26 Section 4.03. STATEMENTS TO CERTIFICATEHOLDERS.......................28 Section 4.04. INVESTMENT OF SPECIAL PAYMENT MONEYS...................29 ARTICLE V THE COMPANY........................................................30 Section 5.01. MAINTENANCE OF CORPORATE EXISTENCE.....................30 Section 5.02. CONSOLIDATION, MERGER, ETC.............................30 Section 5.03. RULE 144A(D)(4) INFORMATION...........................31 ARTICLE VI DEFAULT...........................................................31 Section 6.01. EVENTS OF DEFAULT......................................31 Section 6.02. INCIDENTS OF SALE OF EQUIPMENT NOTES...................32 Section 6.03. JUDICIAL PROCEEDINGS INSTITUTED BY TRUSTEE; TRUSTEE MAY BRING SUIT.......................................................33 Section 6.04. CONTROL BY CERTIFICATEHOLDERS..........................33 Section 6.05. WAIVER OF PAST DEFAULTS................................33 Section 6.06. RIGHT OF CERTIFICATEHOLDERS TO RECEIVE PAYMENTS NOT TO BE IMPAIRED.......................................................34 Section 6.07. CERTIFICATEHOLDERS MAY NOT BRING SUIT EXCEPT UNDER CERTAIN CONDITIONS...................................................34 Section 6.08. REMEDIES CUMULATIVE....................................35 Section 6.09. UNDERTAKING FOR COSTS..................................35 ARTICLE VII THE TRUSTEE......................................................35 Section 7.01. NOTICE OF DEFAULTS.....................................35 Section 7.02. CERTAIN RIGHTS OF TRUSTEE..............................36 Section 7.03. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF CERTIFICATES.........................................................37 Section 7.04. MAY HOLD CERTIFICATES..................................37 Section 7.05. MONEY HELD IN TRUST....................................37 Section 7.06. COMPENSATION AND REIMBURSEMENT.........................38 Section 7.07. CORPORATE TRUSTEE REQUIRED, ELIGIBILITY................39 Section 7.08. RESIGNATION AND REMOVAL: APPOINTMENT OF SUCCESSOR......39 Section 7.09. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.................41 Section 7.10. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS..........................................................41 Section 7.11. MAINTENANCE OF AGENCIES................................42 Section 7.12. MONEY FOR CERTIFICATE PAYMENTS TO BE HELD IN TRUST.....43 Section 7.13. REGISTRATION OF EQUIPMENT NOTES IN NAME OF SUBORDINATION AGENT..................................................43 Section 7.14. REPRESENTATIONS AND WARRANTIES OF TRUSTEE..............43 Section 7.15. WITHHOLDING TAXES, INFORMATION REPORTING...............44 Section 7.16. TRUSTEE'S LIENS........................................45 Section 7.17. PREFERENTIAL COLLECTION OF CLAIMS......................45 ARTICLE VIII CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE................45 Section 8.01. THE COMPANY TO FURNISH TRUSTEE WITH NAMES AND ADDRESSES OF CERTIFICATEHOLDERS......................................45 Section 8.02. PRESERVATION OF INFORMATION; COMMUNICATIONS TO CERTIFICATEHOLDERS...................................................46 Section 8.03. REPORTS BY TRUSTEE.....................................46 Section 8.04. REPORTS BY THE GUARANTOR AND COMPANY...................46 ARTICLE IX SUPPLEMENTAL AGREEMENTS...........................................47 Section 9.01. SUPPLEMENTAL AGREEMENTS WITHOUT CONSENT OF CERTIFICATEHOLDERS............................................................47 Section 9.02. SUPPLEMENTAL AGREEMENTS WITH CONSENT OF CERTIFICATEHOLDERS............................................................48 Section 9.03. DOCUMENTS AFFECTING IMMUNITY OR INDEMNITY.......................49 Section 9.04. EXECUTION OF SUPPLEMENTAL AGREEMENTS...................49 Section 9.05. EFFECT OF SUPPLEMENTAL AGREEMENTS......................50 Section 9.06. CONFORMITY WITH TRUST INDENTURE ACT....................50 Section 9.07. REFERENCE IN CERTIFICATES TO SUPPLEMENTAL AGREEMENTS...50 ARTICLE X AMENDMENTS TO INDENTURES AND NOTE DOCUMENTS........................50 Section 10.01. AMENDMENTS AND SUPPLEMENTS TO INDENTURES AND OTHER NOTE DOCUMENTS.................................................50 ARTICLE XI TERMINATION OF TRUSTS.............................................51 Section 11.01. TERMINATION OF THE TRUST..............................51 ARTICLE XII MISCELLANEOUS PROVISIONS.........................................52 Section 12.01. LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS............52 Section 12.02. LIABILITIES OF CERTIFICATEHOLDERS.....................52 Section 12.03. CERTIFICATES NONASSESSABLE AND FULLY PAID.............52 Section 12.04. [Intentionally omitted]...............................52 Section 12.05. NOTICES...............................................53 Section 12.06. GOVERNING LAW.........................................54 Section 12.07. SEVERABILITY OF PROVISIONS............................54 Section 12.08. [Intentionally omitted]...............................54 Section 12.09. EFFECT OF HEADINGS AND TABLE OF CONTENTS..............54 Section 12.10. SUCCESSORS AND ASSIGNS................................54 Section 12.11. BENEFITS OF AGREEMENT.................................54 Section 12.12. LEGAL HOLIDAYS........................................54 Section 12.13. COUNTERPARTS..........................................54 Section 12.14. COMMUNICATION BY CERTIFICATEHOLDERS WITH OTHER CERTIFICATEHOLDERS...................................................55 Section 12.15. INTENTION OF PARTIES..................................55 Exhibit A - Form of Certificate to be Delivered in Connection with Transfers Pursuant to Regulation S Exhibit B - Form of Certificate to be Delivered in Connection with Transfers to Non-QIB Accredited Investors Exhibit C - Form of Assignment and Assumption Agreement Exhibit D - Form of Certificate to be Delivered in Connection with Transfers to QIBs .........This PASS THROUGH TRUST AGREEMENT, dated as of December 23, 1997, among AMTRAN, INC., an Indiana corporation (the "Guarantor"), AMERICAN TRANS AIR, INC., an Indiana corporation (the "Company"), and WILMINGTON TRUST COMPANY, a Delaware banking corporation, as Trustee, is made with respect to the formation of the American Trans Air 1997-1C-S Pass Through Trust, and the issuance of 7.46% American Trans Air 1997-1C-S Pass Through Certificates representing fractional undivided interests in the Trust. WITNESSETH: .........WHEREAS, the Company has obtained commitments from The Boeing Company for the delivery of certain Aircraft; .........WHEREAS, as of the Transfer Date (as defined below) the Company will have financed the acquisition of all or a portion of such Aircraft either (i) through separate leveraged leases transactions in which the Company leases such aircraft (collectively, the "LEASED AIRCRAFT") or (ii) through separate secured loan transactions in which the Company owns such Aircraft (collectively, the "OWNED AIRCRAFT"); .........WHEREAS, as of the Transfer Date (as defined below) in the case of each Leased Aircraft, each Owner Trustee, acting on behalf of the corresponding Owner Participant, will have issued pursuant to an Indenture, on a non-recourse basis, three series of Equipment Notes in order to finance a portion of the purchase price of each such Leased Aircraft; .........WHEREAS, as of the Transfer Date (as defined below) in the case of each Owned Aircraft, the Company will have issued pursuant to an Indenture, on a recourse basis, three series of Equipment Notes to finance a portion of the purchase price of each such Owned Aircraft; .........WHEREAS, as of the Transfer Date, the Related Trustee will assign, transfer and deliver all of such trustee's right, title and interest to the trust property held by the Related Trustee to the Trustee pursuant to the Assignment and Assumption Agreement (as defined below); .........WHEREAS, the Trustee, effectively only, but automatically upon execution and delivery of this Assignment and Assumption Agreement, will be deemed to have declared the creation of this Trust (the "1997-1C-S Trust") for the benefit of the Certificateholders, and each Holder of Certificates outstanding as of the Transfer Date, as the grantors of the 1997-1C-S Trust, by their respective acceptances of the Certificates, will join in the creation of this 1997-1C-S Trust with the Trustee; .........WHEREAS, except for those Certificates to which an Escrow Receipt (as defined below) has been affixed, all Certificates deemed issued by the Trust will evidence fractional undivided interests in the Trust and will convey no rights, benefits or interests in respect of any property other than the Trust Property; .........WHEREAS, the Company as the "issuer", as such term is defined in and solely for purposes of the Securities Act of 1933, as amended, of the Certificates to be issued pursuant hereto, and as the "obligor", as such term is defined in and solely for purposes of the Trust Indenture Act of 1939, as amended, and (ii) the Guarantor have each duly authorized the execution, delivery and effectiveness of this Agreement with respect to all such Certificates and are undertaking to perform certain administrative and ministerial duties hereunder and are also undertaking to pay the fees and expenses of the Trustee; and .........WHEREAS, upon the execution and delivery of the Assignment and Assumption Agreement, all of the conditions and requirements necessary to make this Agreement a valid, binding and legal instrument, enforceable in accordance with its terms and for the purposes herein expressed, will have been done, performed and fulfilled, and the execution and delivery of this Agreement in the form and with the terms hereof will have been in all respects duly authorized; .........NOW, THEREFORE, in consideration of the mutual agreements herein contained, and of other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I DEFINITIONS .........Section 1.01. Definitions. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: (1) the terms used herein that are defined in this Article have the meanings assigned to them in this Article, and include the plural as well as the singular; (2) all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference herein, have the meanings assigned to them therein; (3) all references in this Agreement to designated "Articles", "Sections" and other subdivisions are to the designated Articles, Sections and other subdivisions of this Agreement; (4) the words "herein", "hereof' and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision; and (5) unless the context otherwise requires, whenever the words "including", "include" or "includes" are used herein, it shall be deemed to be followed by the phrase "without limitation". ACT: With respect to any Certificateholder has the meaning specified in Section 1.04. AFFILIATE: With respect to any specified Person, means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such Person. For the purposes of this definition, "control", when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms "controlling" and "controlled" have meanings correlative to the foregoing. AGENT MEMBERS: Has the meaning specified in Section 3.05(a). AIRCRAFT: means each of the Aircraft or Substitute Aircraft in respect of which a Participation Agreement is entered into in accordance with the Note Purchase Agreement. ASSIGNMENT AND ASSUMPTION AGREEMENT: Means the assignment and assumption agreement substantially in the form of Exhibit D to the Related Pass Through Trust Agreement executed and delivered in accordance with Section 11.01 thereto. AUTHORIZED AGENT: Means any Paying Agent or Registrar for the Certificates. AVOIDABLE TAX: Has the meaning specified in Section 7.08(e) hereof. BOOK-ENTRY CERTIFICATES: With respect to the Certificates, means a beneficial interest in the Certificates, ownership and transfers of which shall be made through book entries as described in Section 3.04. BUSINESS DAY: Means any day other than a Saturday, a Sunday or a day on which commercial banks are required or authorized to close in Indianapolis, Indiana; New York, New York; or Phoenix, Arizona; and, so long as any such Certificate is outstanding, a city and state in which the Trustee or any related Loan Trustee maintains its Corporate Trust Office or receives and disburses funds. CEDEL: Means Cedel Bank societe anonyme. CERTIFICATE: Means any one of the certificates issued by the Related Trust and that are "Outstanding" (as defined in the Related Pass Through Trust Agreement) as of the Transfer Date (the "Transfer Date Certificates") and any such certificate issued in Exchange thereafter or replacement thereof pursuant to this Agreement. CERTIFICATE ACCOUNT: Means the account or accounts created and maintained pursuant to Section CERTIFICATEHOLDER OR HOLDER: Means the Person in whose name a Certificate is registered in the Register. CLEARING AGENCY: Means an organization registered as a "clearing agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as amended. CLEARING AGENCY PARTICIPANT: Means a broker, dealer, bank, other financial institution or other Person for whom from time to time a Clearing Agency effects, directly or indirectly, book-entry transfers and pledges of securities deposited with the Clearing Agency. COMPANY: Means American Trans Air, Inc., an Indiana corporation, or its successor in interest pursuant to Section 5.02. CONTROLLING PARTY: Means the Person entitled to act as such pursuant to the terms of the Intercreditor Agreement. CORPORATE TRUST OFFICE: With respect to the Trustee or any Loan Trustee, means the office of such trustee in the city at which at any particular time its corporate trust business shall be principally administered. DELIVERY PERIOD TERMINATION DATE: Has the meaning specified in Annex A to the Note Purchase Agreement. DEPOSIT AGREEMENT: Means the Deposit Agreement (Class C) dated as of December 23, 1997 relating to the Certificates, between the Depositary and the Escrow Agent, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. DEPOSITARY: Means NBD Bank, National Association, a national banking association. DEPOSITS: Has the meaning specified in the Deposit Agreement. DIRECTION: Has the meaning specified in Section 1.04(c). DISTRIBUTION DATE: Means each Regular Distribution Date and each Special Distribution Date. DTC: Means The Depository Trust Company, its nominees and their respective successors. EQUIPMENT NOTE: Means the "Secured Certificates" as defined in the Indentures. ERISA: Means the Employee Retirement Income Security Act of 1974, as amended from time to time, or any successor federal statute. ESCROW AGENT: Means, initially, First Security Bank, National Association, and any replacement or successor therefor appointed in accordance with the Escrow Agreement. ESCROW AGREEMENT: Means the Escrow and Paying Agent Agreement (Class C) dated as of December 23, 1997 relating to the Certificates, among the Escrow Agent, the Escrow Paying Agent, the Related Trustee (and after the Transfer Date, the Trustee) and the Initial Purchasers, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. ESCROW PAYING AGENT: Means the Person acting as paying agent under the Escrow Agreement. ESCROW RECEIPT: Means the receipt substantially in the form annexed to the Escrow Agreement representing a fractional undivided interest in the funds held in escrow thereunder. EUROCLEAR: Means the Euroclear System. EVENT OF DEFAULT: Means the occurrence of an Indenture Default under any Indenture pursuant to which Equipment Notes held by the Trust were issued. FINAL WITHDRAWAL: Has the meaning specified in the Escrow Agreement. FINAL WITHDRAWAL DATE: Has the meaning specified in the Escrow Agreement. FRACTIONAL UNDIVIDED INTEREST: Means the fractional undivided interest in the Trust that is evidenced by a Certificate. GLOBAL CERTIFICATES: Has the meaning assigned to such term in Section 3.01. GUARANTOR: Means Amtran, Inc., an Indiana corporation, or its successor in interest. INDENTURE: Means each of the three separate trust indenture and security agreements relating to the Aircraft, each entered into pursuant to the related Participation Agreement, in each case as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. INDENTURE DEFAULT: With respect to any Indenture, means any Event of Default (as such term is defined in such Indenture). INITIAL PURCHASERS: Means Salomon Brothers Inc and Furman Selz LLC, collectively. INITIAL REGULAR DISTRIBUTION DATE: Means the first Regular Distribution Date on which a Scheduled Payment is to be made. INSTITUTIONAL ACCREDITED INVESTOR: Means an institutional investor that is an "accredited investor" within the meaning set forth in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act. INTERCREDITOR AGREEMENT: Means the Intercreditor Agreement dated December 23, 1997 among the Related Trustee (and after the Transfer Date, the Trustee), the Related Other Trustees (and after the Transfer Date, the Other Trustees) the Liquidity Provider, the liquidity providers, if any, relating to the Certificates issued under (and as defined in) the Related Other Pass Through Trust Agreements, and Wilmington Trust Company, as Subordination Agent thereunder, as amended, supplemented or otherwise modified from time to time in accordance with its terms. ISSUANCE DATE: Means the date of the issuance of the Certificates. LEASE: Means any lease between an Owner Trustee, as the lessor, and the Company, as the lessee, referred to in the related Indenture, as each such lease may be amended or supplemented in accordance with its respective terms; and LEASES means all such leases. LEASED AIRCRAFT: Has the meaning specified in the second recital to this Agreement. LETTER OF REPRESENTATIONS: Means the agreement dated the Issuance Date among the Company, the Trustee and the initial Clearing Agency. LIQUIDITY FACILITY: Means the Irrevocable Revolving Credit Agreement Class A Certificates dated December 23, 1997 relating to the Certificates between the Liquidity Provider and the Subordination Agent, as amended, replaced, supplemented or otherwise modified from time to time in accordance with its terms and the terms of the Intercreditor Agreement. LIQUIDITY PROVIDER: Means, initially, ING Bank, a Dutch bank, and any replacement or successor therefor appointed in accordance with the Liquidity Facility and the Intercreditor Agreement. LOAN TRUSTEE: With respect to any Equipment Note or the Indenture applicable thereto, means the bank or trust company designated as loan or indenture trustee under such Indenture; and any successor to such Loan Trustee as such trustee; and LOAN TRUSTEES means all of the Loan Trustees under the Indentures. NON-U.S. PERSON: Means a Person that is not a U.S. Person as defined in Regulation S. NOTE DOCUMENTS: With respect to any Equipment Note, means the related Indenture, Lease (if the related Aircraft is leased to the Company) and Participation Agreement. NOTE PURCHASE AGREEMENT: Means the Note Purchase Agreement dated as of December 23, 1997 among the Related Trustee (and after the Transfer Date, the Trustee), the Related Other Trustees (and after the Transfer Date, the Other Trustees) the Company, the Escrow Agent, the Escrow Paying Agent and the Subordination Agent, as the same may be amended, supplemented or otherwise modified from time to time, in accordance with its terms. OFFERING MEMORANDUM: Means the Offering Memorandum dated December 17, 1997 relating to the offering of the Certificates and the certificates issued under the Related Other Pass Through Trust Agreements. OFFICER'S CERTIFICATE: Means a certificate signed (a) in the case of the Guarantor or the Company, by (i) the President or any Executive Vice President or Senior Vice President of the Guarantor or the Company, respectively, signing alone or (ii) any Vice President of the Guarantor or the Company signing together with the Secretary, the Assistant Secretary, the Treasurer or any Assistant Treasurer of the Guarantor or the Company, respectively, or (b) in the case of the Trustee or an Owner Trustee or a Loan Trustee, a Responsible Officer of the Trustee or such Owner Trustee or such Loan Trustee, as the case may be. OFFSHORE GLOBAL CERTIFICATES: Has the meaning assigned to such term in Section 3.01. OFFSHORE PHYSICAL CERTIFICATES: Has the meaning assigned to such term in Section 3.01. OPINION OF COUNSEL: Means a written opinion of legal counsel who (a) in the case of counsel for the Guarantor or the Company, may be (i) a senior attorney in rank of the officers of the Guarantor or the Company a principal duty of which is furnishing advice as to legal matters or (ii) such other counsel designated by the Guarantor or the Company and reasonably acceptable to the Trustee and (b) in the case of any Owner Trustee or any Loan Trustee, may be such counsel as may be designated by any of them whether or not such counsel is an employee of any of them, and who shall be reasonably acceptable to the Trustee. OTHER PASS THROUGH TRUST AGREEMENT: Means (i) the American Trans Air 1997-1A-S Pass Through Trust Agreement relating to the American Trans Air 1997-1A-S Pass Through Trust, and (ii) the American Trans Air 1997-1B-S Pass Through Trust Agreement relating to the American Trans Air 1997-1B-S Pass Through Trust, each dated the date hereof; and OTHER PASS THROUGH TRUST AGREEMENTS means all such agreements. OTHER TRUSTEE: Means the trustee under each of the Other Pass Through Trust Agreements, and any successor or other trustee appointed as provided therein and Other Pass Through Trustees means both such trustees. OTHER TRUSTS: Means the American Trans Air 1997-1B-S Pass Through Trust and the American Trans Air 1997-1C-S Pass Through Trust. OUTSTANDING: With respect to Certificates, means, as of the date of determination, all Transfer Date Certificates, and all other Certificates theretofore authenticated and delivered under this Agreement, in each case except: (i) Certificates theretofore canceled by the Registrar or delivered to the Trustee or the Registrar for cancellation; (ii) All of the Certificates if money in the full amount required to make the final distribution with respect thereto pursuant to Section 11.01 hereof has been theretofore deposited with the Trustee in trust for the Holders of such Certificates as provided in Section 4.01 pending distribution of such money to such Certificateholders pursuant to such final distribution payment; and (iii) Certificates in exchange for or in lieu of which other Certificates have been authenticated and delivered pursuant to this Agreement. OWNED AIRCRAFT: Has the meaning specified in the second recital to this Agreement. OWNER PARTICIPANT: With respect to any Equipment Note, means the "Owner Participant" as referred to in the Indenture pursuant to which such Equipment Note is issued and any permitted successor or assign of such Owner Participant; and Owner Participants at any time of determination means all of the Owner Participants thus referred to in the Indentures. OWNER TRUSTEE: With respect to any Equipment Note, means the "Owner Trustee", as referred to in the Indenture pursuant to which such Equipment Note is issued, not in its individual capacity but solely as trustee; and Owner Trustees means all of the Owner Trustees party to any of the respective Indentures. PARTICIPATION AGREEMENT: Means each Participation Agreement to be entered into by the Related Trustee and the Related Other Trustees pursuant to the Note Purchase Agreement, as the same may be amended, supplemented or otherwise modified in accordance with its terms; and PARTICIPATION AGREEMENTS means all such agreements. PAYING AGENT: Means the paying agent maintained and appointed for the Certificates pursuant to Section 7.11. PERMITTED INVESTMENTS: Means obligations of the United States of America or agencies or instrumentalities thereof for the payment of which the full faith and credit of the United States of America is pledged, maturing in not more than 60 days or such lesser time as is necessary for payment of any Special Payments on a Special Distribution Date. PERSON: Means any person, including any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization, or government or any agency or political subdivision thereof. PHYSICAL CERTIFICATES: Has the meaning specified in Section 3.01. POOL BALANCE: Means, as of any date, (i) the original aggregate face amount of the "Certificates" as defined in the Related Pass Through Trust Agreement less (ii) the aggregate amount of all payments made in respect of such Certificates other than payments made in respect of interest or premium thereon or reimbursement of any costs or expenses incurred in connection therewith less (iii) the aggregate amount of unused Deposits distributed as a Final Withdrawal other than payments in respect of interest or premium thereon. The Pool Balance as of any Distribution Date shall be computed after giving effect to the payment of principal, if any, on the Equipment Notes or other Trust Property held in the Trust and the distribution thereof to be made on such Distribution Date and the distribution of the Final Withdrawal to be made on such Distribution Date. POOL FACTOR: Means, as of any date, the quotient (rounded to the seventh decimal place) computed by dividing (i) the Pool Balance as at such date by (ii) the original aggregate face amount of the "Certificates" as defined in the Related Pass Through Trust Agreement. The Pool Factor as of any Distribution Date shall be computed after giving effect to the payment of principal, if any, on the Equipment Notes or other Trust Property and the distribution thereof to be made on such Distribution Date and the distribution of the Final Withdrawal to be made on such Distribution Date. PRIVATE PLACEMENT LEGEND: Has the meaning specified in Section 3.02. PTC EVENT OF DEFAULT: Means any failure to pay within 10 Business Days of the due date thereof: (i) the outstanding Pool Balance on June 15, 2009 or (ii) interest due on the Certificates on any Distribution Date (unless the Subordination Agent shall have made an Interest Drawing (as defined in the Intercreditor Agreement) or a withdrawal or withdrawals from a cash collateral account pursuant to Section 3.6(f) of the Intercreditor Agreement, with respect thereto in an amount sufficient to pay such interest and shall have distributed such amount to the Certificateholders). PURCHASE AGREEMENT: Means the Purchase Agreement dated December 17, 1997 among the Initial Purchasers, the Company and the Depositary, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. QIB: Means a qualified institutional buyer as defined in Rule 144A. RECORD DATE: Means (i) for Scheduled Payments to be distributed on any Regular Distribution Date, other than the final distribution, the 15th day (whether or not a Business Day) preceding such Regular Distribution Date, and (ii) for Special Payments to be distributed on any Special Distribution Date, other than the final distribution, the 15th day (whether or not a Business Day) preceding such Special Distribution Date. REGISTER and REGISTRAR: Mean the register maintained and the registrar appointed pursuant to Sections 3.04 and 7.11. REGULAR DISTRIBUTION DATE: With respect to distributions of Scheduled Payments in respect of the Certificates, means each date designated as such in this Agreement, until payment of all the Scheduled Payments to be made under the Equipment Notes held in the Trust has been made; PROVIDED, HOWEVER, that, if any such day shall not be a Business Day, the related distribution shall be made on the next succeeding Business Day without additional interest. REGULATION S RESTRICTED DATE: Means the date 40 days after the later of the commencement of the initial offering of the Certificates and the date of initial issuance thereof. RELATED OTHER PASS THROUGH TRUST AGREEMENTS: Means the "Other Pass Through Trust Agreements" as defined in the Related Pass Through Trust Agreement. RELATED OTHER TRUSTS: Means the "Other Trustees" as defined in the Related Pass Through Trust Agreement. RELATED OTHER TRUSTS: Means the "Other Trusts" as defined in the Related Pass Through Trust Agreement. RELATED PASS THROUGH TRUST AGREEMENT: Means the American Trans Air 1997-1A-O Pass Through Trust Agreement relating to the American Trans Air 1997-1A-O Pass Through Trust, dated as of December 23, 1997, between the Company and the institution acting as trustee thereunder, as amended, supplemented or otherwise modified from time to time in accordance with its terms. RELATED TRUST: Means the American Trans Air 1997-1C-O Pass Through Trust, formed under the Related Pass Through Trust Agreement. RELATED TRUSTEE: Means the institution serving the trustee under the Related Pass Through Trust Agreement. REQUEST: Means a request by the Company setting forth the subject matter of the request accompanied by an Officer's Certificate and an Opinion of Counsel as provided in Section 1.02 of this Agreement. RESPONSIBLE OFFICER: With respect to the Trustee, any Loan Trustee and any Owner Trustee, means any officer in the Corporate Trust Division of the Trustee, Loan Trustee or Owner Trustee or any other officer customarily performing functions similar to those performed by the persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of his knowledge of and familiarity with a particular subject. RULE 144A: Means Rule 144A under the Securities Act and any successor regulation thereto. SCHEDULED PAYMENT: With respect to any Equipment Note, means any payment of principal and interest on such Equipment Note or any payment of interest on the Certificates with funds drawn under the Liquidity Facility (other than any such payment which is not in fact received by the Trustee or any Subordination Agent within five days of the date on which such payment is scheduled to be made) due from the obligor thereon which payment represents the installment of principal at the stated maturity of such installment of principal on such Equipment Note, the payment of regularly scheduled interest accrued on the unpaid principal amount of such Equipment Note, or both; PROVIDED that any payment of principal, premium, if any, or interest resulting from the redemption or purchase of any Equipment Note shall not constitute a Scheduled Payment. SEC: Means the Securities and Exchange Commission as from time to time constituted or created under the Securities Exchange Act of 1934, or, if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date. SECURITIES ACT: Means the United States Securities Act of 1933, as amended from time to time, or any successor thereto. SPECIAL DISTRIBUTION DATE: Means each date on which a Special Payment is to be distributed as specified in this Agreement; PROVIDED, HOWEVER, that, if any such day shall not be a Business Day, the related distribution shall be made on the next succeeding Business Day without additional interest. SPECIAL PAYMENT: Means any payment (other than a Scheduled Payment) in respect of, or any proceeds of, any Equipment Note or Trust Indenture Estate (as defined in each Indenture) or Special Redemption Premium (if applicable). SPECIAL PAYMENTS ACCOUNT: Means the account or accounts created and maintained pursuant to Section 4.01(b). SPECIAL REDEMPTION PREMIUM: Means the premium, if any, payable by the Company in respect of the Final Withdrawal pursuant to the Note Purchase Agreement. SUBORDINATION AGENT: Shall have the meaning specified therefor in the Intercreditor Agreement. SUBSTITUTE AIRCRAFT: Has the meaning specified in the Note Purchase Agreement. TRANSFER DATE: Means the moment of execution and delivery of the Assignment and Assumption Agreement by each of the parties thereto. TRANSFER DATE CERTIFICATES: Has the meaning specified in the definition of "Certificates". TRUST: Means the trust created by this Agreement, the estate of which consists of Trust Property. TRUST INDENTURE ACT: Except as otherwise provided in Section 9.06, means the Trust Indenture Act of 1939 as in force at the date as of which this Agreement was executed. TRUST PROPERTY: Means (i) the Equipment Notes held as the property of the Trust, all monies at any time paid thereon and all monies due and to become due thereunder, (ii) the rights of the Trust and the Trustee, on behalf of the Trust, under the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement and the Liquidity Facilities, including, without limitation, all monies receivable in respect of such rights, PROVIDED that rights with respect to the Deposits or under the Escrow Agreement will not constitute Trust Property, and (iii) funds from time to time deposited in the Certificate Account and the Special Payments Account and, subject to the Intercreditor Agreement, any proceeds from the sale by the Trustee pursuant to Article VI hereof of any such Equipment Note. TRUSTEE: Means Wilmington Trust Company, or its successor in interest, and any successor trustee appointed as provided herein. U.S. GLOBAL CERTIFICATE: Has the meaning specified in Section 3.01. U.S. PHYSICAL CERTIFICATES: Has the meaning specified in Section 3.01. Section 1.02. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any application or request by the Company, any Owner Trustee or any Loan Trustee to the Trustee to take any action under any provision of this Agreement, the Company, such Owner Trustee or such Loan Trustee, as the case may be, shall furnish to the Trustee an Officers' Certificate stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Agreement relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Agreement relating to such particular application or request, no additional certificate or opinion need be furnished. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Agreement (other than a certificate provided pursuant to Section 8.04(d)) shall include: (1) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions in this Agreement relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. Section 1.03. FORM OF DOCUMENTS DELIVERED TO TRUSTEE. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters and any such Person may certify or give an opinion as to such matters in one or several documents. Any Opinion of Counsel stated to be based on the opinion of other counsel shall be accompanied by a copy of such other opinion. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Agreement, they may, but need not, be consolidated and form one instrument. Section 1.04. ACTS OF CERTIFICATEHOLDERS. (a) Any direction, consent, waiver or other action provided by this Agreement to be given or taken by Certificateholders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Certificateholders in person or by an agent or proxy duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required pursuant to this Agreement, to the Company or any Loan Trustee. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Certificateholders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Agreement and conclusive in favor of the Trustee, the Company and any Loan Trustee, if made in the manner provided in this Section. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the certificate of any notary public or other officer of any jurisdiction authorized to take acknowledgments of deeds or administer oaths that the Person executing such instrument acknowledged to him the execution thereof, or by an affidavit of a witness to such execution sworn to before any such notary or such other officer and where such execution is by an officer of a corporation or association or a member of a partnership, on behalf of such corporation, association or partnership, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other reasonable manner which the Trustee deems sufficient. (c) In determining whether the Certificateholders of the requisite Fractional Undivided Interests of Certificates Outstanding have given any direction, consent or waiver (a "Direction"), under this Agreement, Certificates owned by the Company, the Guarantor, any Owner Trustee, any Owner Participant or any Affiliate of any such Person shall be disregarded and deemed not to be Outstanding for purposes of any such determination. In determining whether the Trustee shall be protected in relying upon any such Direction, only Certificates which the Trustee knows to be so owned shall be so disregarded. Notwithstanding the foregoing, (i) if any such Person owns 100% of the Certificates Outstanding, such Certificates shall not be so disregarded as aforesaid, and (ii) if any amount of Certificates so owned by any such Person have been pledged in good faith, such Certificates shall not be disregarded as aforesaid if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Certificates and that the pledgee is not the Company, the Guarantor, any Owner Trustee, any Owner Participant or any Affiliate of any such Person. (d) The Company may, at its option by delivery of an Officer's Certificate to the Trustee, set a record date to determine the Certificateholders entitled to give any consent, request, demand, authorization, direction, notice, waiver or other Act. Notwithstanding Section 316(c) of the Trust Indenture Act, such record date shall be the record date specified in such Officer's Certificate which shall be a date not more than 30 days prior to the first solicitation of Certificateholders in connection therewith. If such a record date is fixed, such consent request, demand, authorization, direction, notice, waiver or other Act may be given before or after such record date, but only the Certificateholders of record at the close of business on such record date shall be deemed to be Certificateholders for the purposes of determining whether Certificateholders of the requisite proportion of Outstanding Certificates have authorized or agreed or consented to such consent, request, demand, authorization, direction, notice, waiver or other Act, and for that purpose the Outstanding Certificates shall be computed as of such record date; PROVIDED that no such consent, request, demand, authorization, direction, notice, waiver or other Act by the Certificateholders on such record date shall be deemed effective unless it shall become effective pursuant to the provisions of this Agreement not later than one year after the record date. (e) Any direction, consent, waiver or other action by the Certificateholder of any Certificate shall bind the Certificateholder of every Certificate issued upon the transfer thereof or in exchange therefor or in lieu thereof, whether or not notation of such action is made upon such Certificate. (f) Except as otherwise provided in Section 1.04(c), Certificates owned by or pledged to any Person shall have an equal and proportionate benefit under the provisions of this Agreement, without preference, priority, or distinction as among all of the Certificates. ARTICLE II ACQUISITION OF TRUST PROPERTY Section 2.01. [Intentionally omitted]. Section 2.02. ACQUISITION OF TRUST PROPERTY. The Trustee is hereby irrevocably authorized and directed to execute and deliver the Assignment and Assumption Agreement on the date specified in Section 11.01 of the Related Pass Through Trust Agreement, subject only to the satisfaction of the conditions to such execution set forth in said Section 11.01. This Agreement (except only for the immediately preceding sentence hereof, which is effective upon execution and delivery hereof) shall become effective upon the execution and delivery of the Assignment and Assumption Agreement by the Trustee and the Related Trustee, automatically and without any further signature or action on the part of the Company and the Trustee, and shall thereupon constitute the legal, valid and binding obligation of the parties hereto enforceable against each of the parties hereto in accordance with its terms. Upon such execution and delivery of the Assignment and Assumption Agreement, the Related Trust shall be terminated, the Certificateholders shall receive beneficial interests in the Trust in exchange for their interests in the Related Trust equal to their respective beneficial interests in the Related Trust and the "Outstanding" (as defined in the Related Pass Through Trust Agreement) pass through certificates representing fractional undivided interests in the Related Trust shall be deemed for all purposes of this Agreement and the Related Pass Through Trust Agreement, without further signature or action of any party or Certificateholder, to be Certificates representing the same Fractional Undivided Interests in the Trust and the Trust Property. By acceptance of its Certificate, each Certificateholder consents to and ratifies such assignment, transfer and delivery of the trust property of the Related Trust to the Trustee upon the execution and delivery of the Assignment and Assumption Agreement. Section 2.03. ACCEPTANCE BY TRUSTEE. The Trustee, upon the execution and delivery of the Assignment and Assumption Agreement, acknowledges its acceptance of all right, title, and interest in and to the Trust Property and declares that the Trustee holds and will hold such right, title, and interest for the benefit of all then present and future Certificateholders, upon the trusts herein set forth. By the acceptance of each Certificate issued to it under the Related Pass Through Trust Agreement and deemed issued under this Agreement, each Holder of any such Certificate as grantor of the Trust thereby joins in the creation and declaration of the Trust. Section 2.04. LIMITATION OF POWERS. The Trust is constituted solely for the purpose of making the investment in the Equipment Notes, and, except as set forth herein, the Trustee shall not be authorized or empowered to acquire any other investments or engage in any other activities and, in particular, the Trustee shall not be authorized or empowered to do anything that would cause such Trust to fail to qualify as a "grantor trust" for federal income tax purposes (including as subject to this restrictions acquiring the Aircraft (as defined in the respective related Indentures) by bidding such Equipment Notes or otherwise, or taking any action with respect to any such Aircraft once acquired). ARTICLE III THE CERTIFICATES Section 3.01. TITLE, FORM, DENOMINATION AND EXECUTION OF CERTIFICATES. ------------------------------------------------------- (a) The Certificates shall be known as the "7.46% 1997-1C-S Pass Through Certificates" of the Trust. Each Certificate will represent a fractional undivided interest in the Trust and shall be substantially in the form set forth as Exhibit A to the Related Pass Through Trust Agreement, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by the Related Pass Through Trust Agreement or this Agreement, as the case may be, or as the Trustee may deem appropriate to reflect the fact that the Certificates are being issued hereunder as opposed to the Related Pass Through Trust Agreement, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such Certificates, as evidenced by their execution of the Certificates. Any portion of the text of any Certificate may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Certificate. At the Escrow Agent's request under the Escrow Agreement, the Trustee shall affix the corresponding Escrow Receipt to any Certificate issued hereunder. Any transfer or exchange of any Certificate shall also effect a transfer or exchange of the related Escrow Receipt. Prior to the Final Withdrawal Date, no transfer or exchange of any Certificate shall be permitted unless the corresponding Escrow Receipt is attached thereto and also is so transferred or exchanged. By acceptance of any Certificate to which an Escrow Receipt is attached, each Holder of such Certificate acknowledges and accepts the restrictions on transfer of the Escrow Receipt set forth herein and in the Escrow Agreement. (b) The Certificates shall be issued only in fully registered form without coupons and only in denominations of $100,000 or integral multiples of $1,000 in excess thereof, except that one Certificate may be issued in a denomination of less than $100,000. Each Certificate shall be dated the date of its authentication. The aggregate Fractional Undivided Interest of Certificates shall not at any time exceed $18,153,000. (c) Certificates offered and sold in reliance on Rule 144A shall be issued initially in the form of a single permanent global Certificate in registered form, substantially in the form set forth as Exhibit A to the Related Pass Through Trust Agreement with such applicable legends as are provided for in clauses (a) and (b) of Section 3.02 (the "U.S. Global Certificate"). The U.S. Global Certificate will be registered in the name of a nominee for DTC and deposited with the Trustee, as custodian for DTC. The aggregate principal amount of the U.S. Global Certificate may from time to time be increased or decreased by adjustments made on the records of DTC or its nominee, or of the Trustee, as custodian for the DTC or its nominee, as hereinafter provided. (d) Certificates offered and sold in offshore transactions in reliance on Regulation S shall be issued in the form of a single global Certificate in registered form, substantially in the form set forth as Exhibit A to the Related Pass Through Trust Agreement with such applicable legends as are provided for in clause (b) of Section 3.02 (the "Offshore Global Certificate"). The Temporary Offshore Global Certificate will be registered in the name of a nominee of DTC for credit to the account of the Agent Members acting as depositories for Euroclear and Cedel and deposited with the Trustee as custodian for DTC. The U.S. Global Certificate and the Offshore Global Certificates are sometimes referred to as the "Global Certificates". (e) Certificates offered and sold to Institutional Accredited Investors shall be issued in the form of permanent certificated Certificates in registered form in substantially the form set forth as Exhibit A to the Related Pass Through Trust Agreement with such applicable legends as are provided for in clauses (a) and (b) of Section 3.02 hereto (the "U.S. Physical Certificates"). Certificates issued pursuant to Section 3.05(b) in exchange for interests in any Offshore Global Certificate shall be in the form of permanent certificated Certificates in registered form substantially in the form set forth in Exhibit A (the "Offshore Physical Certificates"). The Offshore Physical Certificates and U.S. Physical Certificates are sometimes collectively herein referred to as the "Physical Certificates". (f) The definitive Certificates shall be in registered form and shall be typed, printed, lithographed or engraved or produced by any combination of these methods or may be produced in any other manner, all as determined by the officers executing such Certificates, as evidenced by their execution of such Certificates. Section 3.02. RESTRICTIVE LEGENDS. ------------------- (a) Subject to Section 3.06, each U.S. Global Certificate and each U.S. Physical Certificate shall bear the following legend (the "Private Placement Legend") on the face thereof: THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS CERTIFICATE IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT, WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY AMERICAN TRANS AIR, INC. ("ATA") OR AN AFFILIATE OF ATA, RESELL OR OTHERWISE TRANSFER THIS CERTIFICATE EXCEPT (A) TO ATA OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING $100,000 OR MORE AGGREGATE PRINCIPAL AMOUNT OF SUCH CERTIFICATES THAT, TAKES DELIVERY OF THIS CERTIFICATE IN DEFINITIVE FORM AND PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS CERTIFICATE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS CERTIFICATE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CASE THIS CERTIFICATE IS IN DEFINITIVE FORM IN CONNECTION WITH ANY TRANSFER OF THIS CERTIFICATE WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THE CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY ATA OR AN AFFILIATE OF ATA, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE PASS THROUGH TRUST AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS. (b) Each Global Certificate shall also bear the following legend on the face thereof: UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND 3.06 OF THE PASS THROUGH TRUST AGREEMENT REFERRED TO HEREIN. Section 3.03. AUTHENTICATION OF CERTIFICATES. No Certificate shall be entitled to any benefit under this Agreement or be valid or obligatory for any purpose, unless there appears on such Certificate a certificate of authentication substantially in the form provided for herein executed by the Trustee by the manual signature of one of its authorized signatories, and such certificate upon any Certificate shall be conclusive evidence, and the only evidence, that such Certificate has been duly authenticated and delivered hereunder. Section 3.04. TRANSFER AND EXCHANGE. --------------------- (a) The Trustee shall cause to be kept at the office or agency to be maintained by it in accordance with the provisions of Section 7.11 of this Agreement a register (the "Register") for the Certificates in which, subject to such reasonable regulations as it may prescribe, the Trustee shall provide for the registration of the Certificates and of transfers and exchanges of the Certificates as herein provided. The Trustee shall initially be the registrar (the "Registrar") for the purpose of registering the Certificates and transfers and exchanges of the Certificates as herein provided. A Certificateholder may transfer a Certificate by written application to the Registrar stating the name of the proposed transferee and otherwise complying with the terms of this Agreement, including providing a written certificate or other evidence of compliance with any restrictions on transfer. No such transfer shall be effected until, and such transferee shall succeed to the rights of a Certificateholder only upon, final acceptance and registration of the transfer by the Registrar in the Register. Prior to the registration of any transfer by a Certificateholder as provided herein, the Trustee shall treat the person in whose name the Certificate is registered as the owner thereof for all purposes, and the Trustee shall not be affected by notice to the contrary. Furthermore, DTC shall, by acceptance of a Global Certificate, agree that transfers of beneficial interests in such Global Certificate may be effected only through a book-entry system maintained by DTC (or its agent), and that ownership of a beneficial interest in the Certificate shall be required to be reflected in a book entry. When Certificates are presented to the Registrar with a request to register the transfer or to exchange them for an equal face amount of Certificates of other authorized denominations, the Registrar shall register the transfer or make the exchange as requested if its requirements for such transactions are met. To permit registrations of transfers and exchanges in accordance with the terms, conditions and restrictions hereof, the Trustee shall execute and authenticate Certificates at the Registrar's request. No service charge shall be made for any registration of transfer or exchange of the Certificates, but the Trustee may require payment by the transferor of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or other similar governmental charges payable upon exchanges pursuant to Section 3.11 or 9.07). Section 3.05. BOOK-ENTRY PROVISIONS FOR U.S. GLOBAL CERTIFICATE AND OFFSHORE GLOBAL CERTIFICATES. (a) Members of, or participants in, DTC ("Agent Members") shall have no rights under this Agreement with respect to any Global Certificate held on their behalf by DTC, or the Trustee as its custodian, and DTC may be treated by the Trustee and any agent of the Trustee as the absolute owner of such Global Certificate for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Trustee or any agent of the Trustee from giving effect to any written certification, proxy or other authorization furnished by DTC or shall impair, as between DTC and its Agent Members, the operation of customary practices governing the exercise of the rights of a holder of any Certificate. Upon the issuance of any Global Certificate, the Registrar or its duly appointed agent shall record a nominee of DTC as the registered holder of such Global Certificate. (b) Transfers of any Global Certificate shall be limited to transfers of such Global Certificate in whole, but not in part, to nominees of DTC, its successor or such successor's nominees. Beneficial interests in the U.S. Global Certificate and any Offshore Global Certificate may be transferred in accordance with the rules and procedures of DTC and the provisions of Section 3.06. Beneficial interests in the U.S. Global Certificate or an Offshore Global Certificate shall be (or, under the Related Pass Through Trust Agreement, may have been) delivered to all beneficial owners in the form of U.S. Physical Certificates or Offshore Physical Certificates, as the case may be, if (i) the Company notifies the Trustee in writing that DTC is unwilling or unable to discharge properly its responsibilities as depositary for the U.S. Global Certificate or such Offshore Global Certificate, as the case may be, and the Company is unable to locate a qualified successor depositary within 90 days of such notice or (ii) after the occurrence of an Event of Default, beneficial owners of the U.S. Global Certificate or Offshore Global Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust, by Act of such Certificateholders delivered to the Company and the Trustee, advise the Company, the Trustee and DTC through its Clearing Agency Participants in writing that the continuation of a book-entry system through DTC is no longer in the best interests of the Certificateholders, then the Trustee shall notify all owners of beneficial interests in the U.S. Global Certificate or an Offshore Global Certificate, through DTC, of the occurrence of any such event and the availability of definitive Certificates. (c) Any beneficial interest in one of the Global Certificates that is transferred to a Person who takes delivery in the form of an interest in the other Global Certificate will, upon such transfer, cease to be an interest in such Global Certificate and become an interest in the other Global Certificate and, accordingly, will thereafter be subject to all transfer restrictions, if any, and other procedures applicable to beneficial interests in such other Global Certificate for as long as it remains such an interest. (d) [Intentionally omitted]. (e) In connection with the transfer of the entire U.S. Global Certificate or an entire Offshore Global Certificate to the beneficial owners thereof pursuant to paragraph (b) of this Section 3.05, such U.S. Global Certificate or Offshore Global Certificate, as the case may be, shall be deemed to be surrendered to the Trustee for cancellation, and the Trustee shall execute, authenticate and deliver, to each beneficial owner identified by DTC in exchange for its beneficial interest in such U.S. Global Certificate or Offshore Global Certificate, as the case may be, an equal aggregate principal amount of U.S. Physical Certificates or Offshore Physical Certificates, as the case may be, of authorized denominations. (f) Any U.S. Physical Certificate delivered in exchange for an interest in the U.S. Global Certificate pursuant to paragraph (b) of this Section 3.05 shall, except as otherwise provided by paragraph (f) of Section 3.06, bear the Private Placement Legend. (g) Any Offshore Physical Certificate delivered in exchange for an interest in an Offshore Global Certificate pursuant to paragraph (b) of this Section shall, except as otherwise provided by paragraph (f) of Section 3.06, bear the applicable legend regarding transfer restrictions set forth in Section 3.02(a). (h) The registered holder of the U.S. Global Certificate or any Offshore Global Certificate may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Agreement or the Certificates. Section 3.06. SPECIAL TRANSFER PROVISIONS. The following provisions shall apply to the Certificates: (a) TRANSFERS TO NON-QIB INSTITUTIONAL ACCREDITED INVESTORS. The following provisions shall apply with respect to the registration of any proposed transfer of a Certificate to any Institutional Accredited Investor which is not a QIB (excluding transfers to, or on or after the Regulation S Restricted Date, by Non-U.S. Persons): (i) The Registrar shall register the transfer of any Certificate, whether or not such Certificate bears the Private Placement Legend, if (x) the requested transfer is at least two years after the later of the original issue date of the Certificates and the last date on which such Certificate was held by the Company or any affiliate thereof or (y) the proposed transferee has delivered to the Registrar a letter substantially in the form of Exhibit B hereto and the aggregate principal amount of the Certificates being transferred is at least $100,000. (ii) If the proposed transferor is an Agent Member holding a beneficial interest in the U.S. Global Certificate or, at a date prior to the Regulation S Restricted Date, an Offshore Global Certificate, upon receipt by the Registrar of (x) the documents, if any, required by paragraph (i) and (y) instructions given in accordance with DTC's and the Registrar's procedures, the Registrar shall reflect on its books and records the date of the transfer and a decrease in the principal amount of such U.S. Global Certificate in an amount equal to the principal amount of the beneficial interest in such U.S. Global Certificate to be transferred, and the Company shall execute, and the Trustee shall authenticate and deliver to the transferor or at its direction, one or more U.S. Physical Certificates of like tenor and amount. (b) TRANSFERS TO QIBS. The following provisions shall apply with respect to the registration of any proposed transfer of a Certificate to a QIB (excluding Non-U.S. Persons): (i) If the Certificate to be transferred consists of U.S. Physical Certificates or an interest in any Offshore Global Certificate prior to the Regulation S Restricted Date, the Registrar shall register the transfer if such transfer is being made by a proposed transferor who has checked the box provided for on the form of U.S. Physical Certificate or delivered a certificate to the Trustee in the form of Exhibit E hereto stating, or has otherwise advised the Trustee and the Registrar in writing, that the sale has been made in compliance with the provisions of Rule 144A to a transferee who, in the case of a transfer of a U.S. Physical Certificate, has signed the certification provided for on the form of Certificate and, in the case of an Offshore Global Certificate transferred prior to the Regulation S Restricted Date, who has signed the certification provided for in Exhibit E hereto, stating, or has otherwise advised the Trustee and the Registrar in writing, that it is purchasing the Certificate for its own account or an account with respect to which it exercises sole investment discretion and that it, or the Person on whose behalf it is acting with respect to any such account, is a QIB within the meaning of Rule 144A, and is aware that the sale to it is being made in reliance on Rule 144A and has been advised of the applicable transfer restrictions relating to the Certificates and acknowledges that it has received such information regarding the Trust and/or the Company as it has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon its foregoing representations in order to claim the exemption from registration provided by Rule 144A. (ii) Upon receipt by the Registrar of the documents referred to in clause (i) above and instructions given in accordance with DTC's and the Registrar's procedures therefor, the Registrar shall reflect on its books and records the date of such transfer and an increase in the principal amount of the U.S. Global Certificate in an amount equal to the principal amount of the U.S. Physical Certificates or interests in the Offshore Global Certificate, as the case may be, being transferred, and the Trustee shall cancel such U.S. Physical Certificates or decrease the amount of such Offshore Global Certificate so transferred. (c) [Intentionally omitted]. (d) TRANSFERS OF INTERESTS IN THE OFFSHORE GLOBAL CERTIFICATE ON OR AFTER THE REGULATION S RESTRICTED DATE. The Registrar shall register any transfer of interests in the Offshore Global Certificate on or after the Regulation S Restricted Date without requiring any additional certification. (e) TRANSFERS TO NON-U.S. PERSONS AT ANY TIME. The following provisions shall apply with respect to any registration of any transfer of a Certificate to a Non-U.S. Person: (i) The Registrar shall register any proposed transfer of a U.S. Global Certificate or U.S. Physical Certificate to any Non-U.S. Person, upon receipt of a certificate substantially in the form of Exhibit A hereto from the proposed transferor. The Registrar shall promptly send a copy of such certificate to the Company. (ii) (A) Upon receipt by the Registrar of (x) the documents, if any, required by paragraph (c) and (y) instructions in accordance with DTC's and the Registrar's procedures, the Registrar shall reflect on its books and records the date of such transfer and shall cancel the Physical Certificate, if any, so transferred, or decrease the principal amount of any such U.S. Global Certificate in an amount equal to the principal amount of the beneficial interest in such U.S. Global Certificate to be transferred, and (B) upon receipt by the Registrar of instructions given in accordance with DTC's and the Registrar's procedures, the Registrar shall reflect on its books and records the date and an increase in the principal amount of the Offshore Global Certificate in an amount equal to the principal amount of the U.S. Physical Certificate or the U.S. Global Certificate, as the case may be, to be transferred, and the Trustee shall cancel the Physical Certificate, if any, so transferred or decrease the amount of such U.S. Global Certificate. (f) PRIVATE PLACEMENT LEGEND. Upon the transfer, exchange or replacement of Certificates not bearing the Private Placement Legend, the Registrar shall deliver Certificates that do not bear the Private Placement Legend. Upon the transfer, exchange or replacement of Certificates bearing the Private Placement Legend, the Registrar shall deliver only Certificates that bear the Private Placement Legend unless either (i) the circumstances contemplated by paragraph (a)(i)(x) or (e)(ii) of this Section 3.06 exist or (ii) there is delivered to the Registrar an Opinion of Counsel to the effect that neither such legend nor the related restrictions on transfer are required in order to maintain compliance with the provisions of the Securities Act. (g) GENERAL. By its acceptance of any Certificate bearing the Private Placement Legend, each Holder of such a Certificate acknowledges the restrictions on transfer of such Certificate set forth in this Agreement and agrees that it will transfer such Certificate only as provided in this Agreement. The Registrar shall not register a transfer of any Certificate unless such transfer complies with the restrictions on transfer of such Certificate set forth in this Agreement. In connection with any transfer of Certificates, each Certificateholder agrees by its acceptance of the Certificates to furnish the Registrar or the Trustee such certifications, legal opinions or other information as either of them may reasonably require to confirm that such transfer is being made pursuant to an exemption from, or a transaction not subject to, the registration requirements of the Securities Act; PROVIDED that the Registrar shall not be required to determine the sufficiency of any such certifications, legal opinions or other information. Until such time as no Certificates remain Outstanding, the Registrar shall retain copies of all letters, notices and other written communications received pursuant to Section 3.05 or this Section 3.06. The Trustee, if not the Registrar at such time, shall have the right to inspect and make copies of all such letters, notices or other written communications at any reasonable time upon the giving of reasonable written notice to the Registrar. Section 3.07. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES. If (a) any mutilated Certificate is surrendered to the Registrar, or the Registrar receives evidence to its satisfaction of the destruction, loss or theft of any Certificate, and (b) there is delivered to the Registrar and the Trustee such security, indemnity or bond, as may be required by them to save each of them harmless, then, in the absence of notice to the Registrar or the Trustee that such Certificate has been acquired by a bona fide purchaser, the Trustee shall execute, authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate or Certificates, in authorized denominations and of like Fractional Undivided Interest. In connection with the issuance of any new Certificate under this Section 3.07, the Trustee shall require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee and the Registrar) connected therewith. Any duplicate Certificate issued pursuant to this Section 3.07 shall constitute conclusive evidence of the appropriate Fractional Undivided Interest in the related Trust, as if originally issued, whether or not the lost stolen or destroyed Certificate shall be found at any time. Section 3.08. PERSONS DEEMED OWNERS. Prior to due presentation of a Certificate for registration of transfer, the Trustee, the Registrar, and any Paying Agent of the Trustee may treat the person in whose name any Certificate is registered as the owner of such Certificate for the purpose of receiving distributions pursuant to Section 4.02 and for all other purposes whatsoever, and neither the Trustee, the Registrar, nor any Paying Agent of the Trustee shall be affected by any notice to the contrary. Section 3.09. CANCELLATION. All Certificates surrendered for payment or transfer or exchange shall, if surrendered to any Person party hereto other than the Registrar, be delivered to the Registrar for cancellation. No Certificates shall be authenticated in lieu of or in exchange for any Certificates cancelled as provided in this Section, except as expressly permitted by this Agreement. All cancelled Certificates held by the Registrar shall be destroyed and a certification of their destruction delivered to the Trustee. Section 3.10. LIMITATION OF LIABILITY FOR PAYMENTS. All payments or distributions made to Certificateholders shall be made only from the Trust Property and only to the extent that the Trustee shall have sufficient income or proceeds from the Trust Property to make such payments in accordance with the terms of Article IV of this Agreement. Each Certificateholder, by its acceptance of a Certificate, agrees that it will look solely to the income and proceeds from the Trust Property to the extent available for distribution to such Certificateholder as provided in this Agreement. Section 3.11. TEMPORARY CERTIFICATES. Until definitive Certificates are ready for delivery, the Trustee shall authenticate temporary Certificates. Temporary Certificates shall be substantially in the form of definitive Certificates but may have insertions, substitutions, omissions and other variations determined to be appropriate by the officers executing the temporary Certificates, as evidenced by their execution of such temporary Certificates. If temporary Certificates are issued, the Trustee will cause definitive Certificates to be prepared without unreasonable delay. After the preparation of definitive Certificates, the temporary Certificates shall be exchangeable for definitive Certificates upon surrender of the temporary Certificates at the office or agency of the Trustee designated for such purpose pursuant to Section 7.11, without charge to the Certificateholder. Upon surrender for cancellation of any one or more temporary Certificates, the Trustee shall execute, authenticate and deliver in exchange therefor a like face amount of definitive Certificates of authorized denominations. Until so exchanged, the temporary Certificates shall be entitled to the same benefits under this Agreement as definitive Certificates. ARTICLE IV DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS Section 4.01. CERTIFICATE ACCOUNT AND SPECIAL PAYMENTS ACCOUNT. ------------------------------------------------ (a) The Trustee shall establish and maintain on behalf of the Certificateholders a Certificate Account as one or more non-interest-bearing accounts. The Trustee shall hold the Certificate Account in trust for the benefit of the Certificateholders, and shall make or permit withdrawals therefrom only as provided in this Agreement. On each day when a Scheduled Payment is made to the Trustee, the Trustee, upon receipt thereof, shall immediately deposit the aggregate amount of such Scheduled Payment into the Certificate Account. (b) The Trustee shall establish and maintain on behalf of the Certificateholders a Special Payments Account as one or more accounts, which shall be non-interest-bearing except as provided in Section 4.04. The Trustee shall hold the Special Payments Account in trust for the benefit of the Certificateholders, and shall make or permit withdrawals therefrom only as provided in this Agreement. On each day when one or more Special Payments are made to the Trustee, the Trustee, upon receipt thereof, shall immediately deposit the aggregate amount of such Special Payments into the Special Payments Account. (c) The Trustee shall cause the Subordination Agent to present to the Loan Trustee to which an Equipment Note relates such Equipment Note on the date of its stated final maturity or, in the case of any Equipment Note which is to be redeemed in whole pursuant to the relevant Indenture, on the applicable redemption date under such Indenture. Section 4.02.DISTRIBUTIONS FROM CERTIFICATE ACCOUNT AND SPECIAL PAYMENTS ACCOUNT. (a) On each Regular Distribution Date or as soon thereafter as the Trustee has confirmed receipt of the payment of the Scheduled Payments due on such date, the Trustee shall distribute out of the Certificate Account the entire amount deposited therein pursuant to Section 4.01 (a). There shall be so distributed to each Certificateholder of record on the Record Date with respect to such Regular Distribution Date (other than as provided in Section 11.01 concerning the final distribution), by check mailed to such Certificateholder at the address appearing in the Register, such Certificateholder's PRO RATA share (based on the aggregate Fractional Undivided Interest in the Trust held by such Certificateholder) of the aggregate amount in the Certificate Account, except that, with respect to Certificates registered on the Record Date in the name of the nominee of DTC (initially, such nominee to be Cede & Co.), such distribution shall be made by wire transfer in immediately available funds to the account designated by such nominee. (b) On each Special Distribution Date with respect to any Special Payment or as soon thereafter as the Trustee has confirmed receipt of any Special Payments due on the Equipment Notes or realized upon the sale of such Equipment Note, the Trustee shall distribute out of the Special Payments Account the entire amount deposited therein pursuant to Section 4.01(b) of such Special Payment. There shall be so distributed to each Certificateholder of record on the Record Date with respect to such Special Distribution Date (other than as provided in Section 11.01 concerning the final distribution), by check mailed to such Certificateholder at the address appearing in the Register, such Certificateholder's pro rata share (based on the aggregate Fractional Undivided Interest in the Trust held by such Certificateholder) of the aggregate amount in the Special Payments Account on account of such Special Payment, except that, with respect to Certificates registered on the Record Date in the name of the nominee of DTC (initially, such nominee to be Cede & Co.), such distribution shall be made by wire transfer in immediately available funds to the account designated by such nominee. (c) The Trustee shall, at the expense of the Company, cause notice of each Special Payment to be mailed to each Certificateholder at his address as it appears in the Register. In the event of redemption or purchase of Equipment Notes held in the Trust, such notice shall be mailed not less than 20 days prior to the date any such Special Payment is scheduled to be distributed. In the event the Company is required to pay a Special Redemption Premium to the Trustee under the Note Purchase Agreement, such notice shall be mailed, together with the notice by the Escrow Paying Agent under Section 2.06 of the Escrow Agreement, not less than 20 days prior to the Special Distribution Date for such amount, which Special Distribution Date shall be the Final Withdrawal Date. In the case of any other Special Payments, such notice shall be mailed as soon as practicable after the Trustee has confirmed that it has received funds for such Special Payment, stating the Special Distribution Date for such Special Payment which shall occur not less than 20 days after the date of such notice and as soon as practicable thereafter. Notices mailed by the Trustee shall set forth: (i) the Special Distribution Date and the Record Date therefor (except as otherwise provided in Section 11.01), (ii) the amount of the Special Payment for each $1,000 face amount Certificate and the amount thereof constituting principal, premium, if any, and interest, (iii) the reason for the Special Payment, and (iv) if the Special Distribution Date is the same date as a Regular Distribution Date for the Certificates, the total amount to be received on such date for each $1,000 face amount Certificate. If the amount of (i) premium, if any, payable upon the redemption or purchase of an Equipment Note or (ii) the Special Redemption Premium, if any, has not been calculated at the time that the Trustee mails notice of a Special Payment, it shall be sufficient if the notice sets forth the other amounts to be distributed and states that any premium received will also be distributed. If any redemption of the Equipment Notes held in the Trust is cancelled, the Trustee, as soon as possible after leasing thereof, shall cause notice thereof to be mailed to each Certificateholder at its address as it appears on the Register. Section 4.03. STATEMENTS TO CERTIFICATEHOLDERS. -------------------------------- (a) On each Regular Distribution Date and Special Distribution Date, the Trustee will include with each distribution to Certificateholders a statement, giving effect to such distribution to be made on such Regular Distribution Date or Special Distribution Date, as the case may be, setting forth the following information (in the case of a Special Payment, including any Special Redemption Premium, reflecting in part the information provided by the Escrow Paying Agent under the Escrow Agreement) (per a $1,000 face amount Certificate as to clauses (ii), (iii), (iv) and (v) below): (i) the aggregate amount of funds distributed on such Distribution Date hereunder and under the Escrow Agreement, indicating the amount allocable to each source; (ii) the amount of such distribution allocable to principal and the amount allocable to premium (including any Special Redemption Premium), if any; (iii) the amount of such distribution hereunder allocable to interest; (iv) the amount of such distribution under the Escrow Agreement allocable to interest on the Deposits; (v) the amount of such distribution under the Escrow Agreement allocable to the principal of the unused Deposits; and (vi) the Pool Balance and the Pool Factor. With respect to the Certificates registered in the name of a Clearing Agency or its nominee, on the record date prior to each Distribution Date, the Trustee will request from the Clearing Agency a securities position listing setting forth the names of all the Clearing Agency Participants reflected on the Clearing Agency's books as holding interests in the Certificates on such record date. On each Distribution Date, the Trustee will mail to each such Clearing Agency Participant the statement described above and will make available additional copies as requested by such Clearing Agency Participant for forwarding to holders of Certificates. (b) Within a reasonable period of time after the end of each calendar year but not later than the latest date permitted by law, the Trustee shall furnish to each Person who at any time during such calendar year was a Certificateholder of record a statement containing the sum of the amounts determined pursuant to clauses (a)(i) through (a)(v), inclusive, above with respect to the Trust for such calendar year or, in the event such Person was a Certificateholder of record during a portion of such calendar year, for the applicable portion of such year, and such other items as are readily available to the Trustee and which a Certificateholder shall reasonably request as necessary for the purpose of such Certificateholder's preparation of its federal income tax returns. With respect to Certificates registered in the name of a Clearing Agency or its nominee, such report and such other items shall be prepared on the basis of information supplied to the Trustee by the Clearing Agency Participants and shall be delivered by the Trustee to such Clearing Agency Participants to be available for forwarding by such Clearing Agency Participants. (c) Promptly following (i) the Transfer Date, if there has been any change in the information set forth in clauses (x), (y) and (z) below from that set forth in pages 102 and 103 of the Offering Memorandum, and (ii) any early redemption or purchase of, or any default in the payment of principal or interest in respect of, any of the Equipment Notes held in the Trust, or any Final Withdrawal, the Trustee shall furnish to Certificateholders of record on such date a statement setting forth (x) the expected Pool Balances for each subsequent Regular Distribution Date following the Delivery Period Termination Date, (y) the related Pool Factors for such Regular Distribution Dates and (z) the expected principal distribution schedule of the Equipment Notes, in the aggregate, held as Trust Property at the date of such notice. With respect to the Certificates registered in the name of a Clearing Agency or its nominee, on the Transfer Date, the Trustee will request from the Clearing Agency a securities position listing setting forth the names of all the Clearing Agency Participants reflected on the Clearing Agency's books as holding interests in the "Certificates" (as defined in the Related Pass Through Trust Agreement) on the Delivery Period Termination Date. The Trustee will mail to each such Clearing Agency Participant the statement described above and will make available additional copies as requested by such Clearing Agency Participant for forwarding to holders of Certificates. Section 4.04. INVESTMENT OF SPECIAL PAYMENT MONEYS. Any money received by the Trustee pursuant to Section 4.01(b) representing a Special Payment which is not to be promptly distributed shall, to the extent practicable, be invested in Permitted Investments by the Trustee (and such Permitted Investments shall be registered in the name of the Trustee) as directed in writing by the Company pending distribution of such Special Payment pursuant to Section 4.02. Any investment made pursuant to this Section 4.04 shall be in such Permitted Investments having maturities not later than the date that such moneys are required to be used to make the payment required under Section 4.02 on the applicable Special Distribution Date and the Trustee shall hold any such Permitted Investments until maturity. The Trustee shall have no liability with respect to any investment made pursuant to this Section 4.04, other than by reason of the willful misconduct or negligence of the Trustee. All income and earnings from such investments shall be distributed on such Special Distribution Date as part of such Special Payment. ARTICLE V THE COMPANY Section 5.01. MAINTENANCE OF CORPORATE EXISTENCE. The Company, at its own cost and expense, will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence, rights and franchises, except as otherwise specifically permitted in Section 5.02; PROVIDED, HOWEVER, that the Company shall not be required to preserve any right or franchise if the Company shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company. Section 5.02. CONSOLIDATION, MERGER, ETC. The Company shall not consolidate with or merge into any other corporation or convey, transfer or lease substantially all of its assets as an entirety to any Person unless: (a) the corporation formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance, transfer or lease substantially all of the assets of the Company as an entirety shall be organized and validly existing under the laws of the United States of America or any state thereof or the District of Columbia and a "citizen of the United States" (as defined in Section 40102(a)(15) of Title 49 of the United States Code) holding an air carrier operating certificate issued by the Federal Aviation Administration, or any successor agency thereto (the "FAA"), pursuant to Chapter 447 of Title 49, United States Code, authorizing the operation in air transportation of aircraft capable of carrying 10 or more individuals or 6,000 pounds or more of cargo pursuant to Part 121 of the FAA's regulations (14 CFR Part 121); (b) the corporation formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance, transfer or lease substantially all of the assets of the Company as an entirety shall execute and deliver to the Trustee a duly authorized, valid, binding and enforceable agreement in form and substance reasonably satisfactory to the Trustee containing an assumption by such successor corporation or Person of the due and punctual performance and observance of each covenant and condition of the Note Documents, the Note Purchase Agreement, the Other Pass Through Trust Agreements and of this Agreement to be performed or observed by the Company; (c) immediately after giving effect to such transaction, no Event of Default applicable to the Certificates or event which is, or after notice or passage of time, or both, would be, such an Event of Default shall have occurred and be continuing; and (d) the Company shall have delivered to the Trustee an Officers' Certificate of the Company and an Opinion of Counsel of the Company (which may be the Company's General Counsel) reasonably satisfactory to the Trustee, each stating that such consolidation, merger, conveyance, transfer or lease and the assumption agreement mentioned in clause (b) above comply with this Section 5.02 and that all conditions precedent herein provided for relating to such transaction have been complied with. Upon any consolidation or merger, or any conveyance, transfer or lease of substantially all of the assets of the Company as an entirety in accordance with this Section 5.02, the successor corporation or Person formed by such consolidation or into which the Company is merged or to which such conveyance, offer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Agreement with the same effect as if such successor corporation or Person had been named as the Company herein. No such conveyance, transfer or lease of substantially all of the assets of the Company as an entirety shall have the effect of releasing the Company or any successor corporation or Person which shall theretofore have become such in the manner prescribed in this Section 5.02 from its liability in respect of this Agreement, the Note Purchase Agreement or any Note Document to which it is a party. Section 5.03. RULE 144A(D)(4) INFORMATION. So long as any of the Certificates are "restricted securities" within the meaning of Rule 144(a)(3) under the Securities Act, at any time when the Guarantor is neither subject to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), the Company and the Guarantor will provide to any holder of such restricted securities, or to any prospective purchaser of such restricted securities designated by a holder, upon the request of such holder or prospective purchaser, any information required to be delivered to holders and prospective purchasers of the Certificates pursuant to Rule 144A(d)(4) under the Securities Act. ARTICLE VI DEFAULT Section 6.01. EVENTS OF DEFAULT. ----------------- (a) EXERCISE OF REMEDIES. Upon the occurrence and during the continuation of any Indenture Default under any Indenture, the Trustee may, to the extent it is the Controlling Party at such time, direct the exercise of remedies as provided in the Intercreditor Agreement. (b) PURCHASE RIGHTS OF CERTIFICATEHOLDERS. At any time after the occurrence and during the continuation of a Triggering Event, each Certificateholder shall have the right (which shall not expire upon any purchase of the Class A Certificates pursuant to the Class B Trust Agreement) to purchase all, but not less than all, of the Class A Certificates and the Class B Certificates upon ten days' written notice to the Class A Trustee, the Class B Trustee and each other Certificateholder, PROVIDED that (A) if prior to the end of such ten-day period any other Certificateholder notifies such purchasing Certificateholder that such other Certificateholder wants to participate in such purchase, then such other Certificateholder may join with the purchasing Certificateholder to purchase all, but not less than all, of the Class A Certificates and the Class B Certificates pro rata based on the Fractional Undivided Interest in the Trust held by each such Certificateholder and (B) if prior to the end of such ten-day period any other Certificateholder fails to notify the purchasing Certificateholder of such other Certificateholder's desire to participate in such a purchase, then such other Certificateholder shall lose its right to purchase the Class A Certificates and the Class B Certificates pursuant to this Section 6.01(b). No such purchase of the Class A Certificates and the Class B Certificates shall be effective unless the purchaser shall certify to the Other Trustees of each such Class that contemporaneously with such purchase, such purchaser is purchasing, pursuant to the terms of this Agreement and the Other Pass Through Trust Agreements, the Class A Certificates and the Class B Certificates. Each payment of the purchase price of the Class A Certificates and the Class B Certificates as determined in the Other Pass Through Trust Agreements shall be made to an account or accounts designated by the Trustee under such Other Pass Through Trust Agreements and each such purchase shall be subject to the terms of this Section. The Class A Certificates and the Class B Certificates will be deemed to be purchased on the date payment of the purchase price is made notwithstanding the failure of the Certificateholders of either Class to deliver any Certificates (whether in the form of Physical Certificates or beneficial interests in Global Certificates) and, upon such a purchase, (i) the only rights of the Certificateholders will be to deliver the Class A Certificates or the Class B Certificates, as the case may be, to the purchaser and receive the purchase price for the Certificates and (ii) if the purchaser shall so request such Certificateholder will comply with all of the provisions of Section 3.04 of the Other Pass Through Trust Agreement for such Class to enable new Certificates to be issued to the purchaser in such denominations as it shall request. All charges and expenses in connection with the issuance of any such new Certificates shall be borne by the purchaser thereof. As used in this Section 6.01(b), the terms ""Class", "Class A Certificate", "Class A Trustee", "Class B Certificate", "Class B Trust Agreement" and "Class B Trustee" shall have the respective meanings assigned to such terms in the Intercreditor Agreement. Section 6.02. INCIDENTS OF SALE OF EQUIPMENT NOTES. Upon any sale of all or any part of the Equipment Notes made either under the power of sale given under this Agreement or otherwise for the enforcement of this Agreement, the following shall be applicable: (1) CERTIFICATEHOLDERS AND TRUSTEE MAY PURCHASE EQUIPMENT NOTES. Any Certificateholder, the Trustee in its individual or any other capacity or any other Person may bid for and purchase any of the Equipment Notes, and upon compliance with the terms of sale, may hold, retain, possess and dispose of such Equipment Notes in their own absolute right without further accountability. (2) RECEIPT OF TRUSTEE SHALL DISCHARGE PURCHASER. The receipt of the Trustee or of the officer making such sale shall be a sufficient discharge to any purchaser for his purchase money, and, after paying such purchase money and receiving such receipt, such purchaser or its personal representative or assigns shall not be obliged to see to the application of such purchase money, or be in any way answerable for any loss, misapplication or non-application thereof. (3) APPLICATION OF MONEYS RECEIVED UPON SALE. Any moneys collected by the Trustee upon any sale made either under the power of sale given by this Agreement or otherwise for the enforcement of this Agreement shall be applied as provided in Section 4.02. Section 6.03. JUDICIAL PROCEEDINGS INSTITUTED BY TRUSTEE; TRUSTEE MAY BRING SUIT. If there shall be a failure to make payment of the principal of, premium, if any, or interest on any Equipment Note, or if there shall be any failure to pay Rent (as defined in the relevant Lease) under any Lease when due and payable, then the Trustee, in its own name, and as trustee of an express trust, as holder of such Equipment Notes, to the extent permitted by and in accordance with the terms of the Intercreditor Agreement, the Note Purchase Agreement and the Note Documents (subject to the rights of the applicable Owner Trustee or Owner Participant to cure any such failure in accordance with Section 4.03 of the applicable Indenture), shall be entitled and empowered to institute any suits, actions or proceedings at law, in equity or otherwise, for the collection of the sums so due and unpaid on such Equipment Notes or under such Lease and may prosecute any such claim or proceeding to judgment or final decree with respect to the whole amount of any such sums so due and unpaid. Section 6.04. CONTROL BY CERTIFICATEHOLDERS. Subject to Section 6.03 and the Intercreditor Agreement, the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee with respect to the Trust or pursuant to the terms of the Intercreditor Agreement, or exercising any trust or power conferred on the Trustee under this Agreement or the Intercreditor Agreement, including any right of the Trustee as Controlling Party under the Intercreditor Agreement or as holder of the Equipment Notes, PROVIDED that: (1) such Direction shall not be in conflict with any rule of law or with this Agreement and would not involve the Trustee in personal liability or expense, (2) the Trustee shall not determine that the action so directed would be unjustly prejudicial to the Certificateholders not taking part in such Direction, and (3) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such Direction. Section 6.05. WAIVER OF PAST DEFAULTS. Subject to the Intercreditor Agreement, the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust (i) may on behalf of all of the Certificateholders waive any past Event of Default hereunder and its consequences or (ii) if the Trustee is the Controlling Party, may direct the Trustee to instruct the applicable Loan Trustee to waive any past Indenture Default under any Indenture and its consequences, and thereby annul any Direction given by such Certificateholders or the Trustee to such Loan Trustee with respect thereto, except a default: (1) in the deposit of any Scheduled Payment or Special Payment under Section 4.01 or in the distribution of any payment under Section 4.02 on the Certificates, or (2) in the payment of the principal of (premium, if any) or interest on the Equipment Notes, or (3) in respect of a covenant or provision hereof which under Article IX hereof cannot be modified or amended without the consent of each Certificateholder holding an Outstanding Certificate affected thereby. Upon any such waiver, such default shall cease to exist with respect to the Certificates and any Event of Default arising therefrom shall be deemed to have been cured for every purpose and any direction given by the Trustee on behalf of the Certificateholders to the relevant Loan Trustee shall be annulled with respect thereto; but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. Upon any such waiver, the Trustee shall vote the Equipment Notes issued under the relevant Indenture to waive the corresponding Indenture Default. Section 6.06. RIGHT OF CERTIFICATEHOLDERS TO RECEIVE PAYMENTS NOT TO BE IMPAIRED. Anything in this Agreement to the contrary notwithstanding, including, without limitation, Section 6.07 hereof, but subject to the Intercreditor Agreement, the right of any Certificateholder to receive distributions of payments required pursuant to Section 4.02 hereof on the Certificates when due, or to institute suit for the enforcement of any such payment on or after the applicable Regular Distribution Date or Special Distribution Date, shall not be impaired or affected without the consent of such Certificateholder. Section 6.07. CERTIFICATEHOLDERS MAY NOT BRING SUIT EXCEPT UNDER CERTAIN CONDITIONS. A Certificateholder shall not have the right to institute any suit, action or proceeding at law or in equity or otherwise with respect to this Agreement, for the appointment of a receiver or for the enforcement of any other remedy under this Agreement, unless: (1) such Certificateholder previously shall have given written notice to the Trustee of a continuing Event of Default; (2) Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than 25% of the Trust shall have requested the Trustee in writing to institute such action, suit or proceeding and shall have offered to the Trustee indemnity as provided in Section 7.02(e); (3) the Trustee shall have refused or neglected to institute any such action, suit or proceeding for 60 days after receipt of such notice, request and offer of indemnity; and (4) no Direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust. It is understood and intended that no one or more of the Certificateholders shall have any right in any manner whatever hereunder or under the Certificates to (i) surrender, impair, waive, affect, disturb or prejudice any property in the Trust Property or the lien of any Indenture on any property subject thereto, or the rights of the Certificateholders or the holders of the related Equipment Notes, (ii) obtain or seek to obtain priority over or preference to any other such Certificateholder or (iii) enforce any right under this Agreement, except in the manner herein provided and for the equal, ratable and common benefit of all the Certificateholders subject to the provisions of this Agreement. Section 6.08. REMEDIES CUMULATIVE. Every remedy given hereunder to the Trustee or to any of the Certificateholders shall not be exclusive of any other remedy or remedies, and every such remedy shall be cumulative and in addition to every other remedy given hereunder or now or hereafter given by statute, law, equity or otherwise. Section 6.09. UNDERTAKING FOR COSTS. In any suit for the enforcement of any right or remedy under this Agreement, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, a court may require any party litigant in such suit to file an undertaking to pay the costs of such suit, and may assess costs against any such party litigant, in the manner and to the extent provided in the Trust Indenture Act; PROVIDED that neither this Section nor the Trust Indenture Act shall be deemed to authorize any court to require such an undertaking or to make such an assessment in any suit instituted by the Company or the Guarantor. ARTICLE VII THE TRUSTEE Section 7.01. NOTICE OF DEFAULTS. As promptly as practicable after, and in any event within 90 days after the occurrence of any default (as such term is defined below) hereunder actually known to the Trustee, the Trustee shall transmit by mail to the Company, the related Owner Trustees, the related Loan Trustees and the Certificateholders in accordance with Section 313(c) of the Trust Indenture Act, notice of such default hereunder actually known to the Trustee, unless such default shall have been cured or waived; PROVIDED, HOWEVER, that, except in the case of a default in the payment of the principal of (premium, if any) or interest on any Equipment Note, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Trustee in good faith determine that the withholding of such notice is in the interests of the Certificateholders. For the purpose of this Section, the term "default" means any event that is, or after notice or lapse of time or both would become, an Event of Default. Section 7.02. CERTAIN RIGHTS OF TRUSTEE. Subject to the provisions of Section 315 of the Trust Indenture Act: (a) the Trustee may rely and shall be protected in acting or refraining from acting in reliance upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Request; (c) whenever in the administration of this Agreement or the Intercreditor Agreement the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate of the Company, any Owner Trustee or any Loan Trustee; (d) the Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Agreement or the Intercreditor Agreement at the request or direction of any of the Certificateholders pursuant to this Agreement or the Intercreditor Agreement unless such Certificateholders shall have offered to the Trustee reasonable security or indemnity against the cost, expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, or report, notice, request, direction, consent, order, bond, debenture or other paper or document; (g) the Trustee may execute any of the trusts or powers under this Agreement or the Intercreditor Agreement or perform any duties under this Agreement or the Intercreditor Agreement either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it under this Agreement or the Intercreditor Agreement; (h) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Agreement or the Intercreditor Agreement; (i) the Trustee shall not be required to expend or risk its own funds in the performance of any of its duties under this Agreement, or in the exercise of any of its rights or powers, if it shall have reason to believe that repayment of such funds or adequate indemnity against such risk is not reasonably assured to it; and (j) except during the continuance of an Event of Default, the Trustee undertakes and shall be responsible to perform only such duties as are specifically set forth herein and no implied covenants or obligations shall be read into this Agreement or be enforceable against Trustee. Section 7.03. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF CERTIFICATES. The recitals contained herein and in the Certificates, except the certificates of authentication, shall not be taken as the statements of the Trustee, and the Trustee assumes no responsibility for their correctness. Subject to Section 7.14, the Trustee makes no representations as to the validity or sufficiency of this Agreement, the Note Purchase Agreement, any Note Documents, any Participation Agreement or any Intercreditor Agreement, the Deposit Agreement, the Escrow Agreement and Equipment Notes or the Certificates, except that the Trustee hereby represents and warrants that this Agreement has been, and each Certificate, the Intercreditor Agreement, the Note Purchase Agreement, the Escrow Agreement and each Certificate will be, executed and delivered by one of its officers who is duly authorized to execute and deliver such document on its behalf. Section 7.04. MAY HOLD CERTIFICATES. The Trustee, any Paying Agent, Registrar or any of their Affiliates or any other agent, in their respective individual or any other capacity, may become the owner or pledgee of Certificates and subject to Sections 310(b) and 311 of the Trust Indenture Act, if applicable, may otherwise deal with the Company, the Guarantor, the Owner Trustees or the Loan Trustees with the same rights it would have if it were not Trustee, Paying Agent, Registrar or such other agent. Section 7.05. MONEY HELD IN TRUST. Money held by the Trustee or the Paying Agent in trust hereunder need not be segregated from other funds except to the extent required herein or by law and neither the Trustee nor the Paying Agent shall have any liability for interest upon any such moneys except as provided for herein. Section 7.06. COMPENSATION AND REIMBURSEMENT. The Company agrees: ------------------------------ (1) to pay, or cause to be paid, to the Trustee compensation (as set out in a separate fee agreement between the Trustee and the Company) for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (2) except as otherwise expressly provided herein to reimburse, or cause to be reimbursed, the Trustee upon its request for all reasonable out-of-pocket expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Agreement or the Intercreditor Agreement (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence, willful misconduct or bad faith or as may be incurred due to the Trustee's breach of its representations and warranties set forth in Section 7.14; (3) to indemnify, or cause to be indemnified, the Trustee for, and to hold it harmless against, any loss, liability or expense (other than for or with respect to any tax) incurred without negligence, willful misconduct or bad faith, on its part, arising out of or in connection with the acceptance or administration of this Trust, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder, except for any such loss, liability or expense incurred by reason of the Trustee's breach of its representations and warranties set forth in Section 7.14. The Trustee shall notify the Company and the Guarantor promptly of any claim for which it may seek indemnity. The Company and the Guarantor shall defend the claim and the Trustee shall cooperate in the defense. The Trustee may have separate counsel with the consent of the Company and the Guarantor and the Company and the Guarantor will pay the reasonable fees and expenses of such counsel. Neither the Company nor the Guarantor need pay for any settlement made without its consent; and (4) to indemnify, or cause to be indemnified, the Trustee, solely in its individual capacity, for, and to hold it harmless against, any tax (except to the extent the Trustee is reimbursed therefor pursuant to the next paragraph, provided that no indemnification shall be available with respect to any tax attributable to the Trustee's compensation for serving as such) incurred without negligence, willful misconduct or bad faith, on its part, arising out of or in connection with the acceptance or administration of this Trust, including any costs and expenses incurred in contesting the imposition of any such tax. The Trustee, in its individual capacity, shall notify the Company and the Guarantor promptly of any claim for any tax for which it may seek indemnity. The Trustee shall permit the Company and the Guarantor to contest the imposition of such tax and the Trustee, in its individual capacity, shall cooperate in the defense. The Trustee, in its individual capacity, may have separate counsel with the consent of the Company and the Guarantor and the Company and the Guarantor will pay the reasonable fees and expenses of such counsel. Neither the Company nor the Guarantor need pay for any taxes paid, in settlement or otherwise, without its consent. The Trustee shall be entitled to reimbursement from, and shall have a lien prior to the Certificates upon, the Trust Property for any tax incurred without negligence, bad faith or willful misconduct on its part, arising out of or in connection with the acceptance or administration of such Trust (other than any tax attributable to the Trustee's compensation for serving as such), including any costs and expenses incurred in contesting the imposition of any such tax. The Trustee shall notify the Company of any claim for any tax for which it may seek reimbursement. The Trustee shall cooperate in the contest by the Company of any such claim. If the Trustee reimburses itself from the Trust Property for any such tax it will within 30 days mail a brief report setting forth the amount of such tax and the circumstances thereof to all Certificateholders as their names and addresses appear in the Register. As security for the performance of the obligations of the Company under this Section the Trustee shall have a lien prior to the Certificates upon the Trust Property. Section 7.07. CORPORATE TRUSTEE REQUIRED, ELIGIBILITY . There shall at all times be a Trustee hereunder which shall be eligible to act as a trustee under Section 310(a) of the Trust Indenture Act and shall have a combined capital and surplus of at least $75,000,000 (or a combined capital and surplus in excess of $5,000,000 and the obligations of which, whether now in existence or hereafter incurred, are fully and unconditionally guaranteed by a corporation organized and doing business under the laws of the United States, any State or Territory thereof or of the District of Columbia that has a combined capital and surplus of at least $75,000,000). If such corporation publishes reports of conditions at least annually, pursuant to law or to the requirements of federal, state, territorial or District of Columbia supervising or examining authority, then for the purposes of this Section 7.07, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of conditions so published. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 7.07 to act as Trustee, the Trustee shall resign immediately as Trustee in the manner and with the effect specified in Section 7.08. Section 7.08. RESIGNATION AND REMOVAL: APPOINTMENT OF SUCCESSOR. ------------------------------------------------- (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee under Section 7.09. (b) The Trustee may resign at any time as trustee by giving written notice thereof to the Company, the Authorized Agents, the Owner Trustees and the Loan Trustees. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Company, the Authorized Agents, the Owner Trustees, the Loan Trustees and the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee. (c) The Trustee may be removed at any time by Act of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust delivered to the Trustee, the Company, the Owner Trustees and the Loan Trustees. (d) If at any time: (1) the Trustee shall fail to comply with Section 310 of the Trust Indenture Act after written request therefor by the Company or by any Certificateholder who has been a bona fide certificateholder for at least six months; or (2) the Trustee shall cease to be eligible under Section 7.07 and shall fail to resign after written request therefor by the Company or by any such Certificateholder; or (3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation; then, in any case, (i) the Company may remove the Trustee or (ii) any Certificateholder who has been a bona fide Certificateholder for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. (e) If a Responsible Officer of the Trustee shall obtain actual knowledge of an Avoidable Tax (as hereinafter defined) which has been or is likely to be asserted, the Trustee shall promptly notify the Company and shall, within 30 days of such notification, resign as Trustee hereunder unless within such 30-day period the Trustee shall have received notice that the Company has agreed to pay such tax. The Company shall promptly appoint a successor Trustee in a jurisdiction where there are no Avoidable Taxes. As used herein, an "Avoidable Tax" means a state or local tax: (i) upon (w) the Trust, (x) the Trust Property, (y) Certificateholders or (z) the Trustee for which the Trustee is entitled to seek reimbursement from the Trust Property, and (ii) which would be avoided if the Trustee were located in another state, or jurisdiction within a state, within the United States. A tax shall not be an Avoidable Tax if the Company or any Owner Trustee shall agree to pay, and shall pay, such tax. (f) If the Trustee shall resign, be removed or become incapable of acting as trustee or if a vacancy shall occur in the office of the Trustee for any cause, the Company shall promptly appoint a successor Trustee. If, within 90 days after such resignation, removal or incapability, or other occurrence of such vacancy, a successor Trustee shall be appointed by Act of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust delivered to the Company, the Owner Trustees, the Loan Trustee and the retiring Trustee, the successor Trustees so appointed shall, with the approval of the Company, which approval shall not be unreasonably withheld, forthwith upon its acceptance of such appointment, become the successor Trustee and supersede the successor Trustee appointed as provided above. If no successor Trustee shall have been so appointed as provided above and accepted appointment in the manner hereinafter provided, the resigning Trustee or any Certificateholder who has been a bona fide Certificateholder for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee. (g) The successor Trustee of a Trust shall give notice of the resignation and removal of the Trustee and appointment of the successor Trustee by mailing written notice of such event by first-class mail, postage prepaid, to the Certificateholders as their names and addresses appear in the Register. Each notice shall include the name of such successor Trustee and the address of its Corporate Trust Office. Section 7.09. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on request of the Company or the successor Trustee, such retiring Trustee shall execute and deliver an instrument transferring to such successor Trustee all such rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee, subject nevertheless to its lien, if any, provided for in Section 7.06. Upon request of any such successor Trustee, the Company, the retiring Trustee and such successor Trustee shall execute and deliver any and all instruments containing such provisions as shall be necessary or desirable to transfer and confirm to, and for more fully and certainly vesting in, such successor Trustee all such rights, powers and trusts. No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article. Section 7.10. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, PROVIDED such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Certificates shall have been executed or authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such execution or authentication and deliver the Certificates so executed or authenticated with the same effect as if such successor Trustee had itself executed or authenticated such Certificates. Section 7.11. MAINTENANCE OF AGENCIES. ----------------------- (a) There shall at all times be maintained an office or agency where Certificates may be presented or surrendered for registration of transfer or for exchange, and for payment thereof and where notices and demands to or upon the Trustee in respect of such Certificates may be served. Presentations and demands may be made and notices may be served at the Corporate Trust Office of the Trustee. (b) There shall at all times be a Registrar and a Paying Agent hereunder with respect to the Certificates. Each such Authorized Agent shall be a bank or trust company, shall be a corporation organized and doing business under the laws of the United States or any state, with a combined capital and surplus of at least $75,000,000, or a corporation having a combined capital and surplus in excess of $5,000,000 the obligations of which are guaranteed by a corporation organized and doing business under the laws of the United States or any state, with a combined capital and surplus of at least $75,000,000, and shall be authorized under such laws to exercise corporate trust powers, subject to supervision by federal or state authorities. The Trustee shall initially be the Paying Agent and, as provided in Section 3.04, Registrar hereunder with respect to the Certificates. Each Registrar shall furnish to the Trustee, at stated intervals of not more than six months, and at such other times as the Trustee may request in writing, a copy of the Register maintained by such Registrar. (c) Any corporation into which any Authorized Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, consolidation or conversion to which any Authorized Agent, shall be a party, or any corporation succeeding to the corporate trust business of any Authorized Agent, shall be the successor of such Authorized Agent hereunder, if such successor corporation is otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the parties hereto or such Authorized Agent or such successor corporation. (d) Any Authorized Agent may at any time resign by giving written notice of resignation to the Trustee, the Company, the Owner Trustees and the Loan Trustees. The Company may, and at the request of the Trustee shall, at any time terminate the agency of any Authorized Agent by giving written notice of termination to such Authorized Agent and to the Trustee. Upon the resignation or termination of an Authorized Agent or in case at any time any such Authorized Agent shall cease to be eligible under this Section (when in either case, no other Authorized Agent performing the functions of such Authorized Agent shall have been appointed), the Company shall promptly appoint one or more qualified successor Authorized Agents, reasonably satisfactory to the Trustee, to perform the functions of the Authorized Agent which has resigned or whose agency has been terminated or who shall have ceased to be eligible under this Section. The Company shall give written notice of any such appointment made by it to the Trustee, the Owner Trustees and the Loan Trustees; and in each case the Trustee shall mail notice of such appointment to all Certificateholders as their names and addresses appear on the Register. (e) The Company agrees to pay, or cause to be paid, from time to time to each Authorized Agent reasonable compensation for its services and to reimburse it for its reasonable expenses. Section 7.12. MONEY FOR CERTIFICATE PAYMENTS TO BE HELD IN TRUST. All moneys deposited with any Paying Agent for the purpose of any payment on Certificates shall be deposited and held in trust for the benefit of the Certificateholders entitled to such payment, subject to the provisions of this Section. Moneys so deposited and held in trust shall constitute a separate trust fund for the benefit of the Certificateholders with respect to which such money was deposited. The Trustee may at any time, for the purpose of obtaining the satisfaction and discharge of this Agreement or for any other purpose, direct any Paying Agent to pay to the Trustee all sums held in trust by such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by such Paying Agent and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. Section 7.13. REGISTRATION OF EQUIPMENT NOTES IN NAME OF SUBORDINATION AGENT. The Trustee agrees that all Equipment Notes to be purchased by the Trust shall be issued in the name of the Subordination Agent or its nominee and held by the Subordination Agent in trust for the benefit of the Certificateholders, or, if not so held, the Subordination Agent or its nominee shall be reflected as the owner of such Equipment Notes in the register of the issuer of such Equipment Notes. Section 7.14. REPRESENTATIONS AND WARRANTIES OF TRUSTEE. The Trustee hereby represents and warrants on the Transfer Date that: (a) the Trustee is a Delaware banking corporation organized and validly existing, and in good standing under the laws of the State of Delaware; (b) the Trustee has full power, authority and legal right to receive the Trust Property assigned by the Related Trustee, assume the obligations under, and perform, the Assignment and Assumption Agreement, this Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement and the Note Documents to which it is a party and has taken all necessary action to authorize such receipt, assumption and performance by it of the Assignment and Assumption Agreement, this Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement and the Note Documents to which it is a party; (c) the receipt of the Trust Property under the Assignment and Assumption Agreement and the performance by the Trustee of the Assignment and Assumption Agreement, this Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement and the Note Documents to which it is a party (i) will not violate any provision of any United States federal law or the law of the State of Delaware governing the banking and trust powers of the Trustee or any order, writ, judgment, or decree of any court, arbitrator,or governmental authority applicable to the Trustee or any of its assets, (ii) will not violate any provision of the articles of association or by-laws of the Trustee, and (iii) will not violate any provision of, or constitute, with or without notice or lapse of time, a default under, or result in the creation or imposition of any lien on any properties included in the Trust Property pursuant to the provisions of, any mortgage, indenture, contract, agreement or other undertaking to which it is a party, which violation, default or lien could reasonably be expected to have an adverse effect on the Trustee's performance or ability to perform its duties hereunder or thereunder or on the transactions contemplated herein or therein; (d) the receipt of the Trust Property under the Assignment and Assumption Agreement and the performance by the Trustee of the Assignment and Assumption Agreement, this Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement and the Note Documents to which it is a party will not require the authorization, consent, or approval of, the giving of notice to, the filing or registration with, or the taking of any other action in respect of, any governmental authority or agency of the United States or the State of Delaware regulating the banking and corporate trust activities of the Trustee; and (e) the Assignment and Assumption Agreement has been duly executed and delivered by the Trustee and this Agreement, the Assignment and Assumption Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement and the Note Documents to which it is a party have been duly executed and delivered by the Trustee and constitute the legal, valid, and binding agreements of the Trustee, enforceable against it in accordance with their respective terms, provided that enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and (ii) general principles of equity. Section 7.15. WITHHOLDING TAXES, INFORMATION REPORTING. (a) The Trustee, as trustee of the grantor trust created by this Agreement, shall exclude and withhold from each distribution of principal, premium, if any, and interest and other amounts due under this Agreement or under the Certificates any and all withholding taxes applicable thereto as required by law. The Trustee agrees to act as such withholding agent and, in connection therewith, whenever any taxes or similar charges are required to be withheld with respect to any amounts paid by or on behalf of the Trustee in respect of the Certificates, to withhold such amounts and timely pay the same to the authority in the name of and on behalf of the Certificateholders, that it will file any necessary withholding tax returns or statements when due, and that, as promptly as possible after the payment thereof, it will deliver to each such Certificateholder necessary documentation showing the payment thereof, together with such additional documentary evidence as such Certificateholders may reasonably request from time to time. The Trustee agrees to file any other information reports as it may be required to file under United States law. (b) The Trustee may satisfy certain of its obligations with respect to this Agreement by retaining, at the expense of the Company, a firm of independent public accountants (the "Accountants") which shall (i) be responsible for all tax filing requirements and (ii) perform the obligations of the Trustee in respect of tax filing requirements. The Trustee shall be deemed to have discharged its tax filing obligations under this Agreement upon its retention of the Accountants, and, if the Trustee shall have selected in the Accountants in good faith and without gross negligence, the Trustee shall not have any liability with respect to the default or misconduct of the Accountants. (c) The Trustee, at the request of the Company, will make such United States federal income tax elections as may be necessary to prevent the Trust from being classified for federal income tax purposes as an association taxable as a corporation. Section 7.16. TRUSTEE'S LIENS. The Trustee in its individual capacity agrees that it will at its own cost and expense promptly take any action as may be necessary to duly discharge and satisfy in full any mortgage, pledge, lien, charge, encumbrance, security interest or claim ("Trustee's Liens") on or with respect to the Trust Property which is attributable to the Trustee either (i) in its individual capacity and which is unrelated to the transactions contemplated by this Agreement, the Intercreditor Agreement, the Participation Agreements, the Note Purchase Agreement or the Note Documents, or (ii) as Trustee hereunder or in its individual capacity and which arises out of acts or omissions which are not contemplated by this Agreement. Section 7.17. PREFERENTIAL COLLECTION OF CLAIMS. The Trustee shall comply with Section 311(a) of the Trust Indenture Act, excluding any creditor relationship listed in Section 311(b) of the Trust Indenture Act. If the Trustee shall resign or be removed as Trustee, it shall be subject to Section 311(a) of the Trust Indenture Act to the extent provided therein. ARTICLE VIII CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE Section 8.01. THE COMPANY TO FURNISH TRUSTEE WITH NAMES AND ADDRESSES OF CERTIFICATEHOLDERS. The Company will furnish or cause to be furnished to the Trustee within 15 days after each Record Date with respect to a Scheduled Payment, and at such other times as the Trustee may request in writing, within 30 days after receipt by the Company of any such request, a list, in such form as the Trustee may reasonably require, of all information in the possession or control of the Company as to the names and addresses of the Certificateholders, in each case as of a date not more than 15 days prior to the time such list is furnished; PROVIDED, HOWEVER, that so long as the Trustee is the sole Registrar, no such list need be furnished; and provided FURTHER, HOWEVER, that no such list need be furnished for so long as a copy of the Register is being furnished to the Trustee pursuant to Section 7.11. Section 8.02. PRESERVATION OF INFORMATION; COMMUNICATIONS TO CERTIFICATEHOLDERS. The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Certificateholders contained in the most recent list furnished to the Trustee as provided in Section 7.11 or Section 8.01, as the case may be, and the names and addresses of Certificateholders received by the Trustee in its capacity as Registrar, if so acting. The Trustee may destroy any list furnished to it as provided in Section 7.11 or Section 8.01, as the case may be, upon receipt of a new list so furnished. Section 8.03. REPORTS BY TRUSTEE. Within 60 days after May 15 of each year commencing with the first full year following the date hereof, the Trustee shall transmit to the Certificateholders, as provided in Section 313(c) of the Trust Indenture Act, a brief report dated as of such May 15, if required by Section 313(a) of the Trust Indenture Act. Section 8.04. REPORTS BY THE GUARANTOR AND COMPANY. The Guarantor and the Company each shall: (a) file with the Trustee, within 30 days after the Guarantor or the Company is required to file the same with the SEC, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may from time to time by rules and regulations prescribe) which the Guarantor or the Company is required to file with the SEC pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934, as amended; or, if the Guarantor or the Company is not required to file information, documents or reports pursuant to either of such sections, then to file with the Trustee and the SEC, in accordance with rules and regulations prescribed by the SEC, such of the supplementary and periodic information, documents and reports which may be required pursuant to section 13 of the Securities Exchange Act of 1934, as amended, in respect of a security listed and registered on a national securities exchange as may be prescribed in such rules and regulations; (b) file with the Trustee and the SEC, in accordance with the rules and regulations prescribed by the SEC, such additional information, documents and reports with respect to compliance by the Guarantor and the Company with the conditions and covenants of the Guarantor and the Company provided for in this Agreement, as may be required by such rules and regulations, including, in the case of annual reports, if required by such rules and regulations, certificates or opinions of independent public accountants, conforming to the requirements of Section 1.02; (c) transmit to all Certificateholders, in the manner and to the extent provided in Section 313(c) of the Trust Indenture Act, such summaries of any information, documents and reports required to be filed by the Guarantor and the Company pursuant to subsections (a) and (b) of this Section 8.04 as may be required by rules and regulations prescribed by the SEC; (d) furnish to the Trustee, not less often than annually, a brief certificate from the principal executive officer, principal financial officer or principal accounting officer as to his or her knowledge of the Guarantor's and the Company's compliance with all conditions and covenants under this Agreement (it being understood that for purposes of this paragraph (d), such compliance shall be determined without regard to any period of grace or requirement of notice provided under this Agreement); and (e) make available to any Certificateholder, upon request, the annual audited and quarterly unaudited financial statements of the Guarantor which are provided to the Trustee. ARTICLE IX SUPPLEMENTAL AGREEMENTS Section 9.01. SUPPLEMENTAL AGREEMENTS WITHOUT CONSENT OF CERTIFICATEHOLDERS. Without the consent of the Certificateholders, the Guarantor and the Company may, and the Trustee (subject to Section 9.03) shall, at any time and from time to time, enter into one or more agreements supplemental hereto or, if applicable, to the Indenture, the Lease, the Participation Agreement, Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement, the Deposit Agreement or the Liquidity Facility in form satisfactory to the Trustee, for any of the following purposes: (1) to evidence the succession of another corporation to the Company or the Guarantor and the assumption by any such successor of the covenants of the Company or the Guarantor contained herein or in each of the other related documents to which Company or the Guarantor is a party; or (2) to add to the covenants of the Guarantor or the Company for the benefit of the Certificateholders, or to surrender any right or power in this Agreement, the Note Purchase Agreement, the Intercreditor Agreement or any Liquidity Facility conferred upon the Guarantor or the Company; or (3) to correct or supplement any provision in this Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement, the Deposit Agreement or the Liquidity Facility which may be defective or inconsistent with any other provision herein or therein or to modify any other provisions with respect to matters or questions arising under this Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement, the Deposit Agreement or the Liquidity Facility, provided that any such action shall not adversely affect the interests of the Certificateholders; or to cure any ambiguity or correct any mistake in such documents, or as provided in the Intercreditor Agreement, to give effect to or provide for a Replacement Liquidity Facility (as defined in the Intercreditor Agreement); or (4) to comply with any requirement of the SEC, any applicable law, rules or regulations of any exchange or quotation system on which the Certificates are listed, or any regulatory body; or (5) to modify, eliminate or add to the provisions of this Agreement to such extent as shall be necessary to continue the qualification of this Agreement (including any supplemental agreement) under the Trust Indenture Act, or under any similar Federal statute hereafter enacted, and to add to this Agreement such other provisions as may be expressly permitted by the Trust Indenture Act, excluding, however, the provisions referred to in Section 316(a)(2) of the Trust Indenture Act as in effect at the date as of which this instrument was executed or any corresponding provision in any similar Federal statute hereafter enacted; or (6) to evidence and provide for the acceptance of appointment under this Agreement by the Trustee of a successor Trustee and to add to or change any of the provisions of this Agreement as shall be necessary to provide for or facilitate the administration of the Trust, pursuant to the requirements of Section 7.09; or (7) if with respect to any Owned Aircraft the Company issues "class D" pass through certificates, to modify, eliminate or add to the provisions of this Agreement to the extent necessary to provide for the subordination of such "class D" pass through certificates to the Certificates; PROVIDED that no such action described in this Section 9.01 shall materially adversely affect the interests of the Certificateholders. Section 9.02. SUPPLEMENTAL AGREEMENTS WITH CONSENT OF CERTIFICATEHOLDERS. With the consent of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest of the Trust, by Act of said Certificateholders delivered to the Guarantor, the Company and the Trustee, the Guarantor and the Company may (with the consent of the Owner Trustees, if any, which consent shall not be unreasonably withheld), and the Trustee (subject to Section 9.03) shall, enter into an agreement or agreements supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement, the Deposit Agreement or the Liquidity Facility to the extent applicable to such Certificateholders or of modifying in any manner the rights and obligations of such Certificateholders under this Agreement, the Intercreditor Agreement, any Liquidity Facility, the Escrow Agreement, the Deposit Agreement or the Note Purchase Agreement; PROVIDED, HOWEVER, that no such supplemental agreement shall, without the consent of the Certificateholder of each Outstanding Certificate affected thereby: (1) reduce in any manner the amount of, or delay the timing of, any receipt by the Trustee (or, with respect to the Deposits, the Certificateholders) of payments on the Equipment Notes held in the Trust or under the Deposit Agreement or distributions that are required to be made herein on any Certificate, or change any date of payment of any Certificate or change the place of payment where, or the coin or currency in which, any Certificate is payable, or impair the right to institute suit for the enforcement of any such payment or distribution on or after the Regular Distribution Date or Special Distribution Date applicable thereto; or (2) permit the disposition of any Equipment Note included in the Trust Property except as permitted by this Agreement, or otherwise deprive such Certificateholder of the benefit of the ownership of the Equipment Notes in the Trust; or (3) alter the priority of distributions specified in the Intercreditor Agreement; or (4) modify any of the provisions of this Section or Section 6.05, except to increase any such percentage or to provide that certain other provisions of this Agreement cannot be modified or waived without the consent of the Certificateholder of each Certificate affected thereby; or (5) adversely affect the status of any Trust as a grantor trust under Subpart E, Part I of Subchapter J of Chapter 1 of Subtitle A of the Internal Revenue Code of 1986, as amended, for U.S. federal income tax purposes. It shall not be necessary for any Act of Certificateholders under this Section to approve the particular form of any proposed supplemental agreement but it shall be sufficient if such Act shall approve the substance thereof. Section 9.03. DOCUMENTS AFFECTING IMMUNITY OR INDEMNITY. If in the opinion of the Trustee any document required to be executed by it pursuant to the terms of Section 9.01 or 9.02 affects any interest, right, duty, immunity or indemnity in favor of the Trustee under this Agreement, the Trustee may in its discretion decline to execute such document. Section 9.04. EXECUTION OF SUPPLEMENTAL AGREEMENTS. In executing, or accepting the additional trusts created by, any supplemental agreement permitted by this Article or the modifications thereby of the trust created by this Agreement, the Trustee shall be entitled to receive, and shall be fully protected in relying upon, written advice of counsel or an Opinion of Counsel stating that the execution of such supplemental agreement is authorized or permitted by this Agreement. Section 9.05. EFFECT OF SUPPLEMENTAL AGREEMENTS. Upon the execution of any supplemental agreement under this Article, this Agreement shall be modified in accordance therewith, and such supplemental agreement shall form a part of this Agreement for all purposes; and every Certificateholder theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. Section 9.06. CONFORMITY WITH TRUST INDENTURE ACT. Every supplemental agreement executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act as then in effect. Section 9.07. REFERENCE IN CERTIFICATES TO SUPPLEMENTAL AGREEMENTS. Certificates authenticated and delivered after the execution of any supplemental agreement pursuant to this Article may bear a notation in form approved by the Trustee as to any matter provided for in such supplemental agreement; and, in such case, suitable notation may be made upon Outstanding Certificates after proper presentation and demand. ARTICLE X AMENDMENTS TO INDENTURES AND NOTE DOCUMENTS Section 10.01. AMENDMENTS AND SUPPLEMENTS TO INDENTURES AND OTHER NOTE DOCUMENTS. In the event that the Trustee, as holder (or beneficial owner through the Subordination Agent) of any Equipment Note in trust for the benefit of the Certificateholders or as Controlling Party under the Intercreditor Agreement, receives (directly or indirectly through the Subordination Agent) a request for a consent to any amendment, modification, waiver or supplement under any Indenture, any other Note Document, any Equipment Note, the Note Purchase Agreement or any other related document, the Trustee shall forthwith send a notice of such proposed amendment, modification, waiver or supplement to each Certificateholder registered on the Register as of the date of such notice. The Trustee shall request from the Certificateholders a Direction as to (a) whether or not to take or refrain from taking (or direct the Subordination Agent to take or refrain from taking) any action which a holder of such Equipment Note has the option to direct, (b) whether or not to give or execute (or direct the Subordination Agent to give or execute) any waivers, consents, amendments, modifications or supplements as a holder of such Equipment Note or a Controlling Party and (c) how to vote (or direct the Subordination Agent to vote) any Equipment Note if a vote has been called for with respect thereto. Provided such a request for Certificateholder Direction shall have been made, in directing any action or casting any vote or giving any consent as the holder of any Equipment Note (or in directing the Subordination Agent in any of the foregoing), (i) other than as Controlling Party, the Trustee shall vote for or give consent to any such action with respect to such Equipment Note in the same proportion as that of (A) the aggregate face amounts of all Certificates actually voted in favor of or for giving consent to such action by such Direction of Certificateholders to (B) the aggregate face amount of all Outstanding Certificates and (ii) as Controlling Party, the Trustee shall vote as directed in such Certificateholder Direction by the Certificateholders evidencing a Fractional Undivided Interest aggregating not less than a majority in interest in the Trust. For purposes of the immediately preceding sentence, a Certificate shall have been "actually voted" if the Holder of such Certificate has delivered to the Trustee an instrument evidencing such Holder's consent to such Direction prior to two Business Days before the Trustee directs such action or casts such vote or gives such consent. Notwithstanding the foregoing, but subject to Section 6.04 and the Intercreditor Agreement, the Trustee may, in its own discretion and at its own direction, consent and notify the relevant Loan Trustee of such consent (or direct the Subordination Agent to consent and notify the Loan Trustee of such consent) to any amendment, modification, waiver or supplement under the relevant Indenture, any other Note Document, any Equipment Note, the Note Purchase Agreement or any other related document, if an Event of Default hereunder shall have occurred and be continuing, or if such amendment, modification, waiver or supplement will not materially adversely affect the interests of the Certificateholders. ARTICLE XI TERMINATION OF TRUSTS Section 11.01. TERMINATION OF THE TRUST. The respective obligations and responsibilities of the Company, the Guarantor and the Trustee with respect to the Trust shall terminate upon the distribution to all Holders of the Certificates and the Trustee of all amounts required to be distributed to them pursuant to this Agreement and the disposition of all property held as part of the Trust Property; PROVIDED, HOWEVER, that in no event shall the Trust continue beyond one hundred ten (110) years following the date of the earliest execution of this Agreement. Notice of any termination, specifying the Regular Distribution Date (or Special Distribution Date, as the case may be) upon which the Certificateholders may surrender their Certificates to the Trustee for payment of the final distribution and cancellation, shall be mailed promptly by the Trustee to Certificateholders not earlier than the 60th day and not later than the 20th day next preceding such final distribution specifying (A) the Regular Distribution Date (or Special Distribution Date, as the case may be) upon which the proposed final payment of the Certificates will be made upon presentation and surrender of Certificates at the office or agency of the Trustee therein specified, (B) the amount of any such proposed final payment, and (C) that the Record Date otherwise applicable to such Regular Distribution Date (or Special Distribution Date, as the case may be) is not applicable, payments being made only upon presentation and surrender of the Certificates at the office or agency of the Trustee therein specified. The Trustee shall give such notice to the Registrar at the time such notice is given to Certificateholders. Upon presentation and surrender of the Certificates, the Trustee shall cause to be distributed to Certificateholders amounts distributable on such Regular Distribution Date (or Special Distribution Date, as the case may be) pursuant to Section 4.02. In the event that all of the Certificateholders shall not surrender their Certificates for cancellation within six months after the date specified in the above-mentioned written notice, the Trustee shall give a second written notice to the remaining Certificateholders to surrender their Certificates for cancellation and receive the final distribution with respect thereto. No additional interest shall accrue on the Certificates after the Regular Distribution Date (or Special Distribution Date, as the case may be). In the event that any money held by the Trustee for the payment of distributions on the Certificates shall remain unclaimed for two years (or such lesser time as the Trustee shall be satisfied, after sixty days' notice from the Company, is one month prior to the escheat period provided under applicable law) after the final distribution date with respect thereto, the Trustee shall pay to each Loan Trustee the appropriate amount of money relating to such Loan Trustee and shall give written notice thereof to the related Owner Trustees and the Company. ARTICLE XII MISCELLANEOUS PROVISIONS Section 12.01. LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS. The death or incapacity of any Certificateholder shall not operate to terminate this Agreement, or the Trust, nor entitle such Certificateholder's legal representatives or heirs to claim an accounting or to take any action or commence any proceeding in any court for a partition or winding up of the Trust, nor otherwise affect the rights, obligations, and liabilities of the parties hereto or any of them. Section 12.02. LIABILITIES OF CERTIFICATEHOLDERS. Neither the existence of the Trust nor any provision in this Agreement is intended to or shall limit the liability the Certificateholders would otherwise incur if the Certificateholders owned Trust Property as co-owners, or incurred any obligations of the Trust, directly rather than through the Trust. Section 12.03. CERTIFICATES NONASSESSABLE AND FULLY PAID. Subject to Section 12.02, Certificateholders shall not be personally liable for obligations of the Trust, the Fractional Undivided Interests represented by the Certificates shall be nonassessable for any losses or expenses of the Trust or for any reason whatsoever, and Certificates upon authentication thereof by the Trustee pursuant to Section 3.03 are and shall be deemed fully paid. No Certificateholder shall have any right (except as expressly provided herein) to vote or in any manner otherwise control the operation and management of the Trust Property, the Trust, or the obligations of the parties hereto, nor shall anything set forth herein, or contained in the terms of the Certificates, be construed so as to constitute the Certificateholders from time to time as partners or members of an association. Section 12.04. [Intentionally omitted]. Section 12.05. NOTICES. ------- (a) Unless otherwise specifically provided herein, all notices required under the terms and provisions of this Agreement shall be in English and in writing, and any such notice may be given by United States mail, courier service, telegram, telemessage, telecopy, telefax, cable or facsimile (confirmed by telephone or in writing in the case of notice by telegram, telemessage, telecopy, telefax, cable or facsimile) or any other customary means of communication, and any such notice shall be effective when delivered, or if mailed, three days after deposit in the United States mail with proper postage for ordinary mail prepaid, if to the Company or the Guarantor, to: American Trans Air, Inc. 7337 West Washington Street Indianapolis International Airport Indianapolis, Indiana 06927 ATTENTION: Executive Vice President and Chief Financial Officer ---------- FACSIMILE: (317) 240-7087 ---------- if to the Trustee, to: Wilmington Trust Company Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 ATTENTION: Corporate Trust Administration ---------- FACSIMILE: (302) 651-8882 ---------- (b) The Company, the Guarantor or the Trustee, by notice to the other, may designate additional or different addresses for subsequent notices or communications. (c) Any notice or communication to Certificateholders shall be mailed by first-class mail to the addresses for Certificateholders shown on the Register kept by the Registrar and to addresses filed with the Trustee. Failure so to mail a notice or communication or any defect in such notice or communication shall not affect its sufficiency with respect to other Certificateholders. (d) If a notice or communication is mailed in the manner provided above within the time prescribed, it is conclusively presumed to have been duly given, whether or not the addressee receives it. (e) If the Company mails a notice or communication to the Certificateholders, it shall mail a copy to the Trustee and to each Paying Agent at the same time. (f) Notwithstanding the foregoing, all communications or notices to the Trustee shall be deemed to be given only when received by a Responsible Officer of the Trustee. (g) The Trustee shall promptly furnish the Company with a copy of any demand, notice or written communication received by the Trustee hereunder from any Certificateholder, Owner Trustee or Loan Trustee. Section 12.06. GOVERNING LAW. THIS AGREEMENT HAS BEEN DELIVERED IN THE STATE OF NEW YORK AND THIS AGREEMENT AND THE CERTIFICATES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT-OF-LAW PRINCIPLES. Section 12.07. SEVERABILITY OF PROVISIONS. If any one or more of the covenants, agreements, provisions, or terms of this Agreement shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions, or terms shall be deemed severable from the remaining covenants, agreements, provisions, or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement or the Trust or of the Certificates or the rights of the Certificateholders thereof. Section 12.08. [Intentionally omitted]. Section 12.09. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. Section 12.10. SUCCESSORS AND ASSIGNS. All covenants, agreements, representations and warranties in this Agreement by the Trustee, the Guarantor and the Company shall bind and, to the extent permitted hereby, shall inure to the benefit of and be enforceable by their respective successors and assigns, whether so expressed or not. Section 12.11. BENEFITS OF AGREEMENT. Nothing in this Agreement or in the Certificates, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, and the Certificateholders, any benefit or any legal or equitable right, remedy or claim under this Agreement. Section 12.12. LEGAL HOLIDAYS. In any case where any Regular Distribution Date or Special Distribution Date relating to any Certificate shall not be a Business Day, then (notwithstanding any other provision of this Agreement) payment need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on such Regular Distribution Date or Special Distribution Date, and no interest shall accrue during the intervening period. Section 12.13. COUNTERPARTS. For the purpose of facilitating the execution of this Agreement and for other purposes, this Agreement may be executed simultaneously in any number of counterparts, each of which counterparts shall be deemed to be an original, and all of which counterparts shall constitute but one and the same instrument. Section 12.14. COMMUNICATION BY CERTIFICATEHOLDERS WITH OTHER CERTIFICATEHOLDERS. Certificateholders may communicate with other Certificateholders with respect to their rights under this Agreement or the Certificates pursuant to Section 3.12(b) of the Trust Indenture Act. The Company, the Guarantor, the Trustee and any and all other persons benefitted by this Agreement shall have the protection afforded by Section 312(c) of the Trust Indenture Act. Section 12.15. INTENTION OF PARTIES. The parties hereto intend that the Trust be classified for U.S. federal income tax purposes as a grantor trust under Subpart E, Part I of Subchapter J of the Internal Revenue Code of 1986, as amended, and not as a trust or association taxable as a corporation or as a partnership. Each Certificateholder, by its acceptance of its Certificate or a beneficial interest therein, agrees to treat the Trust as a grantor trust for all U.S. federal, state and local income tax purposes. The powers granted and obligations undertaken pursuant to this Agreement shall be so construed so as to further such intent. IN WITNESS WHEREOF, the Guarantor, the Company and the Trustee have caused this Agreement to be duly executed by their respective officers, all as of the day and year first above written. AMTRAN, INC. By /s/ Kenneth K. Wolff ----------------------------- Title: Executive Vice President and Chief Financial Officer AMERICAN TRANS AIR, INC. / By /s/ Kenneth K. Wolff ----------------------------- Title: Chief Financial Officer WILMINGTON TRUST COMPANY, as Trustee By /s/ Patricia A. Evans ----------------------------- Title: Financial Services Officer EXHIBIT A FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH TRANSFERS PURSUANT TO REGULATION S [date] Wilmington Trust Company, not in its individual capacity but solely as Trustee Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 Attention: Corporate Trust Administration Re: American Trans Air 1997-1C-S Pass Through Trust (the "Trust"), ____% American Trans Air Pass Through Certificates Series 1997-1C-S (the "CERTIFICATES") - -------------------------------------------------------------------------------- Sirs: In connection with our proposed sale of $ Fractional Undivided Interest of the Certificates, we confirm that such sale has been effected pursuant to and in accordance with Regulation S under the Securities Act of 1933, as amended, and, accordingly, we represent that: (1) the offer of the Certificates was not made to a person in the United States; (2) either (a) at the time the buy order was originated, the transferee was outside the United States or we and any person acting on our behalf reasonably believed that the transferee was outside the United States or (b) the transaction was executed in, on or through the facilities of a designated off-shore securities market and neither we nor any person acting on our behalf knows that the transaction has been pre-arranged with a buyer in the United States; (3) no directed selling efforts have been made in the United States in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S, as applicable; and (4) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act. In addition, if the sale is made during a restricted period and the provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are applicable thereto, we confirm that such sale has been made in accordance with the applicable provisions of Rule 903(c)(3) or Rule 904(c)(1), as the case may be. You and American Trans Air, Inc. are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Terms used in this certificate have the meanings set forth in Regulation S. Very truly yours, [Name of Transferor] By: ------ Authorized Signature EXHIBIT B FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH TRANSFERS TO NON-QIB ACCREDITED INVESTORS [date] Wilmington Trust Company, not in its individual capacity but solely as Trustee Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 Attention: Corporate Trust Administration Re: American Trans Air 1997-1C-S Pass-Through Trust (the "Trust"), ____% American Trans Air Pass Through Certificates Series 1997-1C-S (THE "CERTIFICATES") - --------------------------------------------------------------------------- Dear Sirs: In connection with our proposed purchase of $ aggregate principal amount of the ----------- Certificates, we confirm that: 1. We understand that any subsequent transfer of the Certificates is subject to certain restrictions and conditions set forth in the Pass Through Trust Agreement dated as of December __, 1997 relating to the Certificates (the "Pass Through Trust Agreement") and the undersigned agrees to be bound by, and not to resell, pledge or otherwise transfer the Certificates except in compliance with, such restrictions and conditions and the Securities Act of 1933, as amended (the "Securities Act"). 2. We are purchasing Certificates having an aggregate principal amount of not less than $100,000 and each account (if any) for which we are purchasing Certificates is purchasing Certificates having an aggregate principal amount of not less than $100,000. 3. We understand that the Certificates have not been registered under the Securities Act, and that the Certificates may not be offered or sold except as permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for which we are acting as hereinafter stated, that if we should sell any Certificate, we will do so only (A) in accordance with Rule 144A under the Securities Act to a "qualified institutional buyer" (as defined therein), (B) to an institutional "accredited investor" (as defined below) that, prior to such transfer, furnishes to you and American Trans Air, Inc., a signed letter substantially in the form of this letter, (C) outside the United States in accordance with Rule 904 of Regulation S under the Securities Act, (D) pursuant to the exemption from registration provided by Rule 144 under the Securities Act, or (E) pursuant to an effective registration statement under the Securities Act, and we further agree to provide to any person purchasing any of the Certificates from us a notice advising such purchaser that resales of the Notes are restricted as stated herein. We further understand that the Certificates purchased by us will bear a legend to the foregoing effect. 4. We understand that, on any proposed resale of any Certificates, we will be required to furnish to you and American Trans Air, Inc. such certifications, legal opinions and other information as you and American Trans Air, Inc. may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. We further understand that the Certificates purchased by us will bear a legend to the foregoing effect. 5. We are an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Certificates and we and any accounts for which we are acting are each able to bear the economic risk of our or its investment. 6. We are acquiring the Certificates purchased by us for our own account or for one or more accounts (each of which is an institutional "accredited investor") as to each of which we exercise sole investment discretion. You and American Trans Air, Inc. are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Very truly yours, [Name of Transferee] By: ------ Authorized Signature EXHIBIT C FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT American Trans Air 1997-1[__] Pass Through Trust ASSIGNMENT AND ASSUMPTION AGREEMENT, dated ____________, 199_ (the "AGREEMENT"), between Wilmington Trust Company, a Delaware banking corporation ("WTC"), not in its individual capacity except as expressly provided herein, but solely as trustee under the Pass Through Trust Agreement dated as of December __, 1997 (as amended, modified or otherwise supplemented from time to time, the "PASS THROUGH TRUST AGREEMENT") in respect of the American Trans Air 1997-1C-S Pass Through Trust (the "ASSIGNOR"), and Wilmington Trust Company, a Delaware banking corporation, not in its individual capacity except as expressly provided herein, but solely as trustee under the Pass Through Trust Agreement dated as of December __, 1997 (the "NEW PASS THROUGH TRUST AGREEMENT") in respect of the American Trans Air 1997-1C-S Pass Through Trust (the "ASSIGNEE"). W I T N E S S E T H: - - - - - - - - - - WHEREAS, the parties hereto desire to effect on the date hereof (the "TRANSFER DATE") (a) the transfer by the Assignor to the Assignee of all of the right, title and interest of the Assignor in, under and with respect to, among other things, the Trust Property and each of the documents listed in Schedule I hereto (the "SCHEDULED DOCUMENTS") and (b) the assumption by the Assignee of the obligations of the Assignor (i) under the Scheduled Documents and (ii) in respect of the Certificates issued under the Pass Through Trust Agreement; and WHEREAS, the Scheduled Documents permit such transfer upon satisfaction of certain conditions heretofore or concurrently herewith being complied with; NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements herein contained, the parties hereto do hereby agree as follows (capitalized terms used herein without definition having the meaning ascribed thereto in the Pass Through Trust Agreement): 1. ASSIGNMENT. The Assignor does hereby sell, assign, convey, transfer and set over unto the Assignee as of the Transfer Date all of its present and future right, title and interest in, under and with respect to the Trust Property and the Scheduled Documents and each other contract, agreement, document or instrument relating to the Trust Property or the Scheduled Documents (such other contracts, agreements, documents or instruments, together with the Scheduled Documents, to be referred to as the "ASSIGNED DOCUMENTS"), and any proceeds therefrom, together with all documents and instruments evidencing any of such right, title and interest. 2. ASSUMPTION. The Assignee hereby assumes for the benefit of the Assignor and each of the parties listed in Schedule II hereto (collectively, the "BENEFICIARIES") all of the duties and obligations of the Assignor, whenever accrued, pursuant to the Assigned Documents and hereby confirms that it shall be deemed a party to each of the Assigned Documents to which the Assignor is a party and shall be bound by all the terms thereof (including the agreements and obligations of the Assignor set forth therein) as if therein named as the Assignor. Further, the Assignee hereby assumes for the benefit of the Assignor and the Beneficiaries all of the duties and obligations of the Assignor under the Outstanding Certificates and hereby confirms that the Certificates representing Fractional Undivided Interests under the Pass Through Trust Agreement shall be deemed for all purposes of the Pass Through Trust Agreement and the New Pass Through Trust Agreement to be certificates representing the same fractional undivided interests under the New Pass Through Trust Agreement equal to their respective beneficial interests in the trust created under the Pass Through Trust Agreement. 3. EFFECTIVENESS. This Agreement shall be effective upon the execution and delivery hereof by the parties hereto, and each Certificateholder, by its acceptance of its Certificate or a beneficial interest therein, agrees to be bound by the terms of this Agreement. 4. PAYMENTS. The Assignor hereby covenants and agrees to pay over to the Assignee, if and when received following the Transfer Date, any amounts (including any sums payable as interest in respect thereof) paid to or for the benefit of the Assignor that, under Section 1 hereof, belong to the Assignee. 5. FURTHER ASSURANCES. The Assignor shall, at any time and from time to time, upon the request of the Assignee, promptly and duly execute and deliver any and all such further instruments and documents and take such further action as the Assignee may reasonably request to obtain the full benefits of this Agreement and of the right and powers herein granted. The Assignor agrees to deliver the Global Certificates, and all Trust Property, if any, then in the physical possession of the Assignor, to the Assignee. 6. REPRESENTATIONS AND WARRANTIES. (a) The Assignee represents and warrants to the Assignor and each of the Beneficiaries that: (i) it has all requisite power and authority and legal right to enter into and carry out the transactions contemplated hereby and to carry out and perform the obligations of the "Pass Through Trustee" under the Assigned Documents; (ii) on and as of the date hereof, the representations and warranties of the Assignee set forth in Section 7.14 of the New Pass Through Trust Agreement are true and correct. (b) The Assignor represents and warrants to the Assignee that: (i) it is duly incorporated, validly existing and in good standing under the laws of the State of Delaware and has the full trust power, authority and legal right under the laws of the State of Delaware and the United States pertaining to its trust and fiduciary powers to execute and deliver this Agreement; (ii) the execution and delivery by it of this Agreement and the performance by it of its obligations hereunder have been duly authorized by it and will not violate its articles of association or by-laws or the provisions of any indenture, mortgage, contract or other agreement to which it is a party or by which it is bound; and (iii) this Agreement constitutes the legal, valid and binding obligations of it enforceable against it in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity. 7. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK INCLUDING MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS. 8. COUNTERPARTS. This Agreement may be executed in any number of counterparts, all of which together shall constitute a single instrument. It shall not be necessary that any counterpart be signed by both parties so long as each party shall sign at least one counterpart. 9. THIRD PARTY BENEFICIARIES. The Assignee hereby agrees, for the benefit of the Beneficiaries, that its representations, warranties and covenants contained herein are also intended to be for the benefit of each Beneficiary, and each Beneficiary shall be deemed to be an express third party beneficiary with respect thereto, entitled to enforce directly and in its own name any rights or claims it may have against such party as such beneficiary. IN WITNESS WHEREOF, the parties hereto, through their respective officers thereunto duly authorized, have duly executed this Assignment as of the day and year first above written. ASSIGNOR: WILMINGTON TRUST COMPANY, not in its individual capacity except as expressly provided herein, but solely as trustee under the Pass Through Trust Agreement in respect of the American Trans Air 1997-1C-S Pass Through Trust By:________________________ Title: ASSIGNEE: WILMINGTON TRUST COMPANY, not in its individual capacity except as expressly provided herein, but solely as trustee under the Pass Through Trust Agreement in respect of the American Trans Air 1997-1C-S Pass Through Trust By:________________________ Title: Schedule I Schedule of Assigned Documents (1) Intercreditor Agreement dated as of December 23, 1997 among the Trustee, the Other Trustees, the Liquidity Providers, the liquidity providers, if any, relating to the Certificates issued under (and as defined in) each of the Other Pass Through Trust Agreements and the Subordination Agent. (2) Escrow and Paying Agent Agreement (Class C) dated as of December 23, 1997 among the Escrow Agent, the Initial Purchasers, the Trustee and the Paying Agent. (3) Note Purchase Agreement dated as of December 23, 1997 among the Company, the Trustee, the Other Trustees, the Depositary, the Escrow Agent, the Paying Agent and the Subordination Agent. (4) Deposit Agreement (Class C) dated as of December 23, 1997 between the Escrow Agent and the Depositary. (5) Each of the Operative Documents (as defined in the Participation Agreement for each Aircraft) in effect as of the Transfer Date. Schedule II Schedule of Beneficiaries Wilmington Trust Company, not in its individual capacity but solely as Subordination Agent. Wilmington Trust Company, not in its individual capacity but solely as Paying Agent ING Bank, as Liquidity Provider Amtran, Inc. American Trans Air, Inc. Salomon Brothers Inc, as Initial Purchaser Furman Selz LLC, as Initial Purchaser First Security Bank, National Association, as Escrow Agent Each of the other parties to the Assigned Documents EXHIBIT D FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH TRANSFERS TO QIBs [date] Wilmington Trust Company, not in its individual capacity but solely as Trustee Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 Attention: Corporate Trust Administration Re: American Trans Air 1997-1C-S Pass Through Trust (the "Trust"), ____% American Trans Air Pass Through Certificates Series 1997-1C-S (the "CERTIFICATES") - -------------------------------------------------------------------------------- Sirs: In connection with our proposed sale of $ Fractional Undivided Interest of the Certificates, we confirm that without utilizing any general solicitation or general advertising that such Certificates are being transferred in compliance with the exemption from registration under the Securities Act of 1933, as amended, provided by Rule 144A thereunder. Date: [NAME OF TRANSFEROR ------------ ------------------- NOTE: The signature must correspond with the name as written upon the face of the within-mentioned Certificate in every particular, without alteration or any change whatsoever. Signature Guarantee: TO BE COMPLETED BY PURCHASER: The undersigned represents and warrants that it is purchasing the within-mentioned Certificate for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933, as amended, and is aware that the sale to it is being made in reliance on Rule 144A and has been advised of the applicable transfer restrictions relating to the Certificates and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Dated: ------------- [Name of Transferee] NOTE: To be executed by an executive officer. EX-10.5 15 file017.txt AMTRAN, INC., 2000 10-K, EXHIBIT 10.5 AIRCRAFT GENERAL TERMS AGREEMENT AGTA-AAT between THE BOEING COMPANY and American Trans Air, Inc. TABLE OF CONTENTS PAGE ARTICLES NUMBER -------- ------ 1. Subject Matter of Sale 1 2. Price, Taxes and Payment 1 3. Regulatory Requirements and Certificates 3 4. Detail Specification; Changes 4 5. Representatives, Inspection, Demonstration Flights, Test Data and Performance Guarantee Compliance 4 6. Delivery 5 7. Excusable Delay 5 8. Risk Allocation/Insurance 7 9. Assignment, Resale or Lease 8 10. Termination for Certain Events 9 11. Notices 10 12. Miscellaneous 10 EXHIBITS A Buyer Furnished Equipment Provisions Document B Customer Support Document C Product Assurance Document APPENDICES I Insurance Certificate II Purchase Agreement Assignment III Post-Delivery Sale Notice IV Post-Delivery Lease Notice V Purchaser's/Lessee's Agreement VI Owner Appointment of Agent - Warranties VII Contractor Confidentiality Agreement AIRCRAFT GENERAL TERMS AGREEMENT NUMBER AGTA-AAT between The Boeing Company and American Trans Air, Inc. Relating to BOEING AIRCRAFT This Aircraft General Terms Agreement Number AGTA-AAT (AGTA) between The Boeing Company, including its wholly-owned subsidiary McDonnell Douglas Corporation, (Boeing) and American Trans Air, Inc. (Customer) will apply to all Boeing aircraft contracted for purchase from Boeing by Customer after the effective date of this AGTA. Article 1. Subject Matter of Sale. ---------------------- 1.1 Aircraft. Boeing will manufacture and sell to Customer and Customer will purchase from Boeing aircraft under purchase agreements that incorporate the terms and conditions of this AGTA. 1.2 Buyer Furnished Equipment. Exhibit A, Buyer Furnished Equipment Provisions Document to the AGTA, contains the obligations of Customer and Boeing with respect to equipment purchased and provided by Customer, which Boeing will receive, inspect, store, and install in an aircraft before delivery to Customer. This equipment is defined as Buyer Furnished Equipment (BFE). 1.3 Customer Support. Exhibit B, Customer Support Document to the AGTA, contains the obligations of Boeing relating to Materials (as defined in Part 3 thereof), training, services, and other things in support of aircraft. 1.4 Product Assurance. Exhibit C, Product Assurance Document to the AGTA, contains the obligations of Boeing and the suppliers of equipment installed in each aircraft at delivery relating to warranties, patent indemnities, software copyright indemnities, and service life policies. Article 2. Price, Taxes, and Payment. ------------------------- 2.1 Price. ----- 2.1.1 Airframe Price is defined as the price of the airframe for a specific model of aircraft described in a purchase agreement. (For Models 717-200, 737-600, 737-700, 737-800 and 737-900, the Airframe Price includes the engine price at its basic thrust level.) 2.1.2 Optional Features Prices are defined as the prices for optional features selected by Customer for a specific model of aircraft described in a purchase agreement. 2.1.3 Engine Price is defined as the price set by the engine manufacturer for a specific engine to be installed on the model of aircraft described in a purchase agreement (not applicable to Models 717-200, 737-600, 737-700, 737-800 and 737-900). 2.1.4 Aircraft Basic Price is defined as the sum of the Airframe Price, Optional Features Prices, and the Engine Price, if applicable. 2.1.5 Escalation Adjustment is defined as the price adjustment to the Airframe Price (which includes the basic engine price for Models 717-200, 737-600, 737-700 737-800 and 737-900) and the Optional Features Prices resulting from the calculation using the economic price formula contained in the Airframe Escalation Adjustment to the applicable purchase agreement. The price adjustment to the Engine Price for all other models of aircraft will be calculated using the economic price formula in the Engine Escalation Adjustment to the applicable purchase agreement. 2.1.6 Advance Payment Base Price is defined as the estimated price of an aircraft rounded to the nearest thousand dollars, as of the date of signing a purchase agreement, for the scheduled month of delivery of such aircraft using commercial forecasts of the Escalation Adjustment. 2.1.7 Aircraft Price is defined as the total amount Customer is to pay for an aircraft at the time of delivery, which is the sum of the Aircraft Basic Price, the Escalation Adjustment, and other price adjustments made pursuant to the purchase agreement. 2.2 Taxes. ----- 2.2.1 Taxes. Taxes are defined as all taxes, fees, charges, or duties and any interest, penalties, fines, or other additions to tax, including, but not limited to sales, use, value added, gross receipts, stamp, excise, transfer, and similar taxes imposed by any domestic or foreign taxing authority, arising out of or in connection with the performance of the applicable purchase agreement or the sale, delivery, transfer, or storage of any aircraft, BFE, or other things furnished under the applicable purchase agreement. Except for U.S. federal or California State income taxes imposed on Boeing or Boeing's assignee, and Washington State business and occupation taxes imposed on Boeing or Boeing's assignee, Customer will be responsible for and pay all Taxes. Customer is responsible for filing all tax returns, reports, declarations and payment of any taxes related to or imposed on BFE. 2.2.2 Reimbursement of Boeing. Customer will promptly reimburse Boeing on demand, net of additional taxes thereon, for any Taxes that are imposed on and paid by Boeing or that Boeing is responsible for collecting. 2.3 Payment. ------- 2.3.1 Advance Payment Schedule. Customer will make advance payments to Boeing for each aircraft in the amounts and on the dates indicated in the schedule set forth in the applicable purchase agreement. 2.3.2 Payment at Delivery. Customer will pay any unpaid balance of the Aircraft Price at the time of delivery of each aircraft. 2.3.3 Form of Payment. Customer will make all payments to Boeing by unconditional wire transfer of immediately available funds in United States Dollars in a bank account in the United States designated by Boeing. 2.3.4 Monetary and Government Regulations. Customer is responsible for complying with all monetary control regulations and for obtaining necessary governmental authorizations related to payments. Article 3. Regulatory Requirements and Certificates. ---------------------------------------- 3.1 Certificates. Boeing will manufacture each aircraft to conform to the appropriate Type Certificate issued by the United States Federal Aviation Administration (FAA) for the specific model of aircraft and will obtain from the FAA and furnish to Customer at delivery of each aircraft either a Standard Airworthiness Certificate or an Export Certificate of Airworthiness issued pursuant to Part 21 of the Federal Aviation Regulations. 3.2 FAA or Applicable Regulatory Authority Manufacturer Changes. 3.2.1 A Manufacturer Change is defined as any change to an aircraft, data relating to an aircraft, or testing of an aircraft required by the FAA to obtain a Standard Airworthiness Certificate, or by the country of import and/or registration to obtain an Export Certificate of Airworthiness. 3.2.2 Boeing will bear the cost of incorporating all Manufacturer Changes into the aircraft: (i) resulting from requirements issued by the FAA prior to the date of the Type Certificate for the applicable aircraft; (ii) resulting from requirements issued by the FAA prior to the date of the applicable purchase agreement; and (iii) for any aircraft delivered during the 18 month period immediately following the date of the applicable purchase agreement (regardless of when the requirement for such change was issued by the FAA). 3.2.3 Customer will pay Boeing's charge for incorporating all other Manufacturer Changes into the aircraft, including all changes for validation of an aircraft required by any governmental agency of the country of import and/or registration. 3.3 FAA Operator Changes. -------------------- 3.3.1 An Operator Change is defined as a change in equipment that is required by Federal Aviation Regulations which (i) is generally applicable to transport category aircraft to be used in United States certified air carriage and (ii) the required compliance date is on or before the scheduled delivery month of the aircraft. 3.3.2 Boeing will deliver each aircraft with Operator Changes incorporated or, at Boeing's option, with suitable provisions for the incorporation of such Operator Changes, and Customer will pay Boeing's applicable charges. 3.4 Export License. If an export license is required by United States law or regulation for any aircraft or any other things delivered under the purchase agreement, it is Customer's obligation to obtain such license. If requested, Boeing will assist Customer in applying for any such export license. Customer will furnish any required supporting documents. Article 4. Detail Specification; Changes. ----------------------------- 4.1 Configuration Changes. The Detail Specification is defined as the Boeing document that describes the configuration of each aircraft purchased by Customer. The Detail Specification for each aircraft may be amended (i) by Boeing to reflect the incorporation of Manufacturer Changes and Operator Changes or (ii) by the agreement of the parties. In either case the amendment will describe the particular changes to be made and any effect on design, performance, weight, balance, scheduled delivery month, Aircraft Basic Price, Aircraft Price, and/or Advance Payment Base Price. 4.2 Development Changes. Development Changes are defined as changes to aircraft that do not affect the Aircraft Price or scheduled delivery month, and do not adversely affect guaranteed weight, guaranteed performance, or compliance with the interchangeability or replaceability requirements set forth in the applicable Detail Specification. Boeing may, at its option, incorporate Development Changes into the Detail Specification and into an aircraft prior to delivery to Customer. 4.3 Notices. Boeing will promptly notify Customer of any amendments to a Detail Specification. Article 5. Representatives, Inspection, Demonstration Flights, Test Data and Performance Guarantee Compliance. 5.1 Office Space. Twelve months before delivery of the first aircraft purchased, and continuing until the delivery of the last aircraft on firm order, Boeing will furnish, free of charge, suitable office space and equipment for the accommodation of up to three representatives of Customer in or conveniently located near the assembly plant. 5.2 Inspection. Customer's representatives may inspect each aircraft at any reasonable time, provided such inspection does not interfere with Boeing's performance. 5.3 Demonstration Flights. Prior to delivery, Boeing will fly each aircraft up to 4 hours to demonstrate to Customer the function of the aircraft and its equipment using Boeing's production flight test procedures. Customer may designate up to five representatives to participate as observers. 5.4 Test Data; Performance Guarantee Compliance. Performance Guarantees are defined as the written guarantees in a purchase agreement regarding the operational performance of an aircraft. Boeing will furnish to Customer flight test data obtained on an aircraft of the same model to evidence compliance with the Performance Guarantees. Performance Guarantees will be met if reasonable engineering interpretations and calculations based on the flight test data establish that the particular aircraft being delivered under the applicable purchase agreement would, if actually flown, comply with the guarantees. 5.5 Special Aircraft Test Requirements. Boeing may use an aircraft for flight and ground tests prior to delivery, without reduction in the Aircraft Price, if the tests are considered necessary by Boeing (i) to obtain or maintain the Type Certificate or Certificate of Airworthiness for the aircraft or (ii) to evaluate potential improvements that may be offered for production or retrofit incorporation. Article 6. Delivery. -------- 6.1 Notices of Delivery Dates. Boeing will notify Customer of the approximate delivery date of each aircraft at least 30 days before the scheduled month of delivery and again at least 14 days before the scheduled delivery date. 6.2 Place of Delivery. Each aircraft will be delivered at a facility selected by Boeingin the same state as the primary assembly plant for the aircraft. 6.3 Bill of Sale. At delivery of an aircraft, Boeing will provide Customer a bill of sale conveying good title, free of encumbrances. 6.4 Delay. If Customer delays acceptance of an aircraft beyond the scheduled delivery date, Customer will reimburse Boeing for all costs incurred by Boeing as a result of the delay. Article 7. Excusable Delay. --------------- 7.1 General. Boeing will not be liable for any delay in the scheduled delivery month of an aircraft or other performance under a purchase agreement caused by (i) acts of God; (ii) war or armed hostilities; (iii) government acts or priorities; (iv) fires, floods, or earthquakes; (v) strikes or labor troubles causing cessation, slowdown, or interruption of work; (vi) inability, after due and timely diligence, to procure materials, systems, accessories, equipment or parts; or (vii) any other cause to the extent such cause is beyond Boeing's control and not occasioned by Boeing's fault or negligence. A delay resulting from any such cause is defined as an Excusable Delay. 7.2 Notice. Boeing will give written notice to Customer (i) of a delay as soon as Boeing concludes that an aircraft will be delayed beyond the scheduled delivery month due to an Excusable Delay and, when known, (ii) of a revised delivery month based on Boeing's appraisal of the facts. 7.3 Delay in Delivery of Twelve Months or Less. If the revised delivery month is 12 months or less after the scheduled delivery month, Customer will accept such aircraft when tendered for delivery, subject to the following: 7.3.1 The calculation of the Escalation Adjustment will be based on the previously scheduled delivery month. 7.3.2 The advance payment schedule will be adjusted to reflect the revised delivery month. 7.3.3 All other provisions of the applicable purchase agreement, including the BFE on-dock dates for the delayed aircraft, are unaffected by an Excusable Delay. 7.4 Delay in Delivery of More Than Twelve Months. If the revised delivery month is more than 12 months after the scheduled delivery month, either party may terminate the applicable purchase agreement with respect to such aircraft within 30 days of the notice. If either party does not terminate the applicable purchase agreement with respect to such aircraft, all terms and conditions of the applicable purchase agreement will remain in effect. 7.5 Aircraft Damaged Beyond Repair. If an aircraft is destroyed or damaged beyond repair for any reason before delivery, Boeing will give written notice to Customer specifying the earliest month possible, consistent with Boeing's other contractual commitments and production capabilities, in which Boeing can deliver a replacement. Customer will have 30 days from receipt of such notice to elect to have Boeing manufacture a replacement aircraft under the same terms and conditions of purchase, except that the calculation of the Escalation Adjustment will be based upon the scheduled delivery month in effect immediately prior to the date of such notice, or, failing such election, the applicable purchase agreement will terminate with respect to such aircraft. Boeing will not be obligated to manufacture a replacement aircraft if reactivation of the production line for the specific model of aircraft would be required. 7.6 Termination. Termination under this Article will discharge all obligations and liabilities of Boeing and Customer with respect to any aircraft and all related undelivered Materials (as defined in Exhibit B, Customer Support Document), training, services, and other things terminated under the applicable purchase agreement, except that Boeing will return to Customer, without interest, an amount equal to all advance payments paid by Customer for the aircraft. If Customer terminates the applicable purchase agreement as to any aircraft, Boeing may elect, by written notice to Customer within 30 days, to purchase from Customer any BFE related to the aircraft at the invoice prices paid, or contracted to be paid, by Customer. 7.7 Exclusive Rights. The termination rights in this Article are in substitution for all other rights of termination or any claim arising by operation of law due to delays in performance covered by this Article. Article 8. Risk Allocation/Insurance. ------------------------- 8.1 Title and Risk with Boeing. -------------------------- 8.1.1 Boeing's Indemnification of Customer. Until transfer of title to an aircraft to Customer, Boeing will indemnify and hold harmless Customer and Customer's observers from and against all claims and liabilities, including all expenses and attorneys' fees incident thereto or incident to establishing the right to indemnification, for injury to or death of any person(s), including employees of Boeing but not employees of Customer, or for loss of or damage to any property, including an aircraft, arising out of or in any way related to the operation of an aircraft during all demonstration and test flights conducted under the provisions of the applicable purchase agreement, whether or not arising in tort or occasioned by the negligence of Customer or any of Customer's observers. 8.1.2 Definition of Customer. For the purposes of this Article, "Customer" is defined as American Trans Air, Inc., its divisions, subsidiaries, affiliates, the assignees of each, and their respective directors, officers, employees, and agents. 8.2 Insurance. --------- 8.2.1 Insurance Requirements. Customer will purchase and maintain insurance acceptable to Boeing and will provide a certificate of such insurance that names Boeing as an additional insured for any and all claims and liabilities for injury to or death of any person or persons, including employees of Customer but not employees of Boeing, or for loss of or damage to any property, including any aircraft, arising out of or in any way relating to Materials, training, services, or other things provided under Exhibit B of the AGTA, which will be incorporated by reference into the applicable purchase agreement, whether or not arising in tort or occasioned by the negligence of Boeing, except with respect to legal liability to persons or parties other than Customer or Customer's assignees arising out of an accident caused solely by a product defect in an aircraft. Customer will provide such certificate of insurance at least thirty (30) days prior to the scheduled delivery of the first aircraft under a purchase agreement. The insurance certificate will reference each aircraft delivered to Customer pursuant to each applicable purchase agreement. Annual renewal certificates will be submitted to Boeing before the expiration of the policy periods. The form of the insurance certificate, attached as Appendix I, states the terms, limits, provisions, and coverages required by this Article 8.2.1. The failure of Boeing to demand compliance with this 8.2.1 in any year will not in any way relieve Customer of its obligations hereunder nor constitute a waiver by Boeing of these obligations. 8.2.2 Noncompliance with Insurance Requirements. If Customer fails to comply with any of the insurance requirements of Article 8.2.1 or if any of the insurers fails to pay a claim covered by the insurance or otherwise fails to meet any of insurer's obligations required by Appendix I, Customer will provide the same protection to Boeing as that required by Article 8.2.1 above. 8.2.3 Definition of Boeing. For purposes of this article, "Boeing" is defined as The Boeing Company, its divisions, subsidiaries, affiliates, assignees of each, and their respective directors, officers, employees, and agents. Article 9. Assignment, Resale, or Lease. ---------------------------- 9.1 Assignment. This AGTA and each applicable purchase agreement are for the benefit of the parties and their respective successors and assigns. No rights or duties of either party may be assigned or delegated, or contracted to be assigned or delegated, without the prior written consent of the other party, except: 9.1.1 Either party may assign its interest to a corporation that (i) results from any merger, reorganization, or acquisition of such party and (ii) acquires substantially all the assets of such party; 9.1.2 Boeing may assign its rights to receive money; and 9.1.3 Boeing may assign any of its rights and duties to any wholly-owned subsidiary of Boeing. 9.1.4 Boeing may assign any of its rights and duties with respect to Part 1, Articles 1, 2, 4 and 5 of Exhibit B, Customer Support Document to the AGTA, to FlightSafety Boeing Training International L.L.C. 9.2 Transfer by Customer at Delivery. Boeing will take any requested action reasonably required for the purpose of causing an aircraft, at time of delivery, to be subject to an equipment trust, conditional sale, lien, or other arrangement for Customer to finance the aircraft. However, no such action will require Boeing to divest itself of title to or possession of the aircraft until delivery of and payment for the aircraft. A sample form of assignment acceptable to Boeing is attached as Appendix II. 9.3 Sale or Lease by Customer After Delivery. If, following delivery of an aircraft, Customer sells or leases the aircraft (including any sale and lease-back for financing purposes), all of Customer's rights with respect to the aircraft under the applicable purchase agreement will inure to the benefit of the purchaser or lessee of such aircraft, effective upon Boeing's receipt of the written agreement of the purchaser or lessee, in a form satisfactory to Boeing, to comply with all applicable terms and conditions of the applicable purchase agreement. Sample forms of agreement acceptable to Boeing are attached as Appendices III and IV. 9.4 Notice of Sale or Lease After Delivery. Customer will give notice to Boeing as soon as practicable of the sale or lease of an aircraft, including in the notice the name of the entity or entities with title and/or possession of such aircraft. 9.5 Exculpatory Clause in Post-Delivery Sale or Lease. If, following the delivery of an aircraft, Customer sells or leases such aircraft and obtains from the transferee any form of exculpatory clause protecting Customer from liability for loss of or damage to the aircraft, and/or related incidental or consequential damages, including without limitation loss of use, revenue, or profit, Customer shall obtain for Boeing the purchaser's or lessee's written agreement to be bound by terms and conditions substantially as set forth in Appendix V. This Article 9.5 applies only if purchaser or lessee has not provided to Boeing the written agreement described in Article 9.3 above. 9.6 Appointment of Agent - Warranty Claims. If, following delivery of an aircraft, Customer appoints an agent to act directly with Boeing for the administration of claims relating to the warranties under the applicable purchase agreement, Boeing will deal with the agent for that purpose, effective upon Boeing's receipt of the agent's written agreement, in a form satisfactory to Boeing, to comply with all applicable terms and conditions of the applicable purchase agreement. A sample form of agreement acceptable to Boeing is attached as Appendix VI. 9.7 No Increase in Boeing Liability. No action taken by Customer or Boeing relating to the resale or lease of an aircraft or the assignment of Customer's rights under the applicable purchase agreement will subject Boeing to any liability beyond that in the applicable purchase agreement or modify in any way Boeing's obligations under the applicable purchase agreement. Article 10. Termination of Purchase Agreements for Certain Events. ----------------------------------------------------- 10.1 Termination. If either party (i) ceases doing business as a going concern, or suspends all or substantially all its business operations, or makes an assignment for the benefit of creditors, or generally does not pay its debts as they become due, or admits in writing its inability to pay its debts; or (ii) petitions for or acquiesces in the appointment of any receiver, trustee or similar officer to liquidate or conserve its business or any substantial part of its assets; commences any legal proceeding such as bankruptcy, reorganization, readjustment of debt, dissolution, or liquidation available for the relief of financially distressed debtors; or becomes the object of any such proceeding, unless the proceeding is dismissed or stayed within a reasonable period, not to exceed 60 days, the other party may terminate any purchase agreement with respect to any undelivered aircraft, Materials, training, services, and other things by giving written notice of termination. 10.2 Repayment of Advance Payments. If Customer terminates the applicable purchase agreement under this Article, Boeing will repay to Customer, without interest, an amount equal to any advance payments received by Boeing from Customer with respect to undelivered aircraft. Article 11. Notices. ------- All notices required by this AGTA or by any applicable purchase agreement will be in English, will be effective on the date of receipt, and will be transmitted by any customary means of written communication, addressed as follows: Customer: American Trans Air, Inc. 7337 West Washington Street Indianapolis, IN 46231 U.S.A. Attention: Treasurer Boeing: Boeing Commercial Airplane Group P.O. Box 3707 Seattle, Washington 98124-2207 U.S.A. Attention: Vice President - Contracts Mail Code 21-34 Article 12. Miscellaneous. ------------- 12.1 Government Approval. Boeing and Customer will assist each other in obtaining any governmental consents or approvals required to effect certification and sale of aircraft under the applicable purchase agreement. 12.2 Headings. Article and paragraph headings used in this AGTA and in any purchase agreement are for convenient reference only and are not intended to affect the interpretation of this AGTA or any purchase agreement. 12.3 GOVERNING LAW. THIS AGTA AND ANY PURCHASE AGREEMENT WILL BE INTERPRETED UNDER AND GOVERNED BY THE LAWS OF THE STATE OF WASHINGTON, U.S.A., EXCEPT THAT WASHINGTON'S CHOICE OF LAW RULES SHALL NOT BE INVOKED FOR THE PURPOSE OF APPLYING THE LAW OF ANOTHER JURISDICTION. 12.4 Waiver/Severability. Failure by either party to enforce any provision of this AGTA or any purchase agreement will not be construed as a waiver. If any provision of this AGTA or any provision of any purchase agreement are held unlawful or otherwise ineffective by a court of competent jurisdiction, the remainder of the AGTA or the applicable purchase agreement will remain in effect. 12.5 Survival of Obligations. The Articles and Exhibits of this AGTA including but not limited to those relating to insurance, DISCLAIMER AND RELEASE and the EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES will survive termination or cancellation of any purchase agreement or part thereof. 12.6 AGTA Changes. The intent of the AGTA is to simplify the standard contracting process for terms and conditions which are related to the sale and purchase of all Boeing aircraft. This AGTA has been mutually agreed to by the parties as of the date indicated below. From time to time the parties may elect, by mutual agreement to update, or modify the existing articles as written. If such changes are made, any existing executed Purchase Agreement(s) will be governed by the terms and conditions of the Revision level of the AGTA in effect based on the date of the executed Purchase Agreement. DATED AS OF June 30, 2000 -------------- AMERICAN TRANS AIR, INC. THE BOEING COMPANY By: /s/ Kenneth K. Wolff By: /s/ R. C. Nelson ------------------------------- -------------------- Its: Executive Vice President & CFO Its: Attorney-In-Fact ------------------------------- --------------------- EXHIBIT A to AIRCRAFT GENERAL TERMS AGREEMENT AGTA-AAT between THE BOEING COMPANY and American Trans Air, Inc. BUYER FURNISHED equipment provisions document BUYER FURNISHED EQUIPMENT PROVISIONS DOCUMENT 1. General. ------- Certain equipment to be installed in the Aircraft is furnished to Boeing by Customer at Customer's expense. This equipment is designated "Buyer Furnished Equipment" (BFE) and is listed in the Detail Specification. Boeing will provide to Customer a BFE Requirements On-Dock/Inventory Document (BFE Document) or an electronically transmitted BFE Report which may be periodically revised, setting forth the items, quantities, on-dock dates and shipping instructions relating to the in sequence installation of BFE as described in the applicable Supplemental Exhibit to this Exhibit A in a purchase agreement at the time of aircraft purchase. 2. Supplier Selection. ------------------ Customer will: 2.1 Select and notify Boeing of the suppliers of BFE items by those dates appearing in Supplemental Exhibit BFE1to the applicable purchase agreement at the time of aircraft purchase. 2.2 Meet with Boeing and such selected BFE suppliers promptly after such selection to: 2.2.1 complete BFE configuration design requirements for such BFE; and 2.2.2 confirm technical data submittal requirements for BFE certification. 3. Customer's Obligations. ---------------------- Customer will: 3.1 comply with and cause the supplier to comply with the provisions of the BFE Document or BFE Report; 3.1.1 deliver technical data (in English) to Boeing as required to support installation and FAA certification in accordance with the schedule provided by Boeing or as mutually agreed upon during the BFE meeting referred to above; 3.1.2 deliver BFE including production and/or flight training spares and BFE Aircraft Software to Boeing in accordance with the quantities and schedule provided therein; and 3.1.3 assure that all BFE Aircraft Software is delivered in compliance with Boeing's then-current Standards for Loadable Systems; 3.1.4 assure that all BFE parts are delivered to Boeing with appropriate quality assurance documentation; 3.2 authorize Boeing to discuss all details of the BFE directly with the BFE suppliers; 3.3 authorize Boeing to conduct or delegate to the supplier quality source inspection and supplier hardware acceptance of BFE at the supplier location; 3.3.1 require supplier's contractual compliance to Boeing defined quality assurance requirements, source inspection programs and supplier delegation programs, including availability of adequate facilities for Boeing resident personnel; and 3.3.2 assure that all BFE supplier's quality systems are approved to Boeing's then current standards for such systems ; 3.4 obtain from supplier a non-exclusive, perpetual, royalty-free, irrevocable license for Boeing to copy BFE Aircraft Software. The license is needed to enable Boeing to load the software copies in (i) the aircraft's mass storage device (MSD), (ii) media (e.g., diskettes, CD-ROMs, etc.), (iii) the BFE hardware and/or (iv) an intermediate device or other media to facilitate copying of the BFE Aircraft Software into the aircraft's MSD, BFE hardware and/or media, including media as Boeing may deliver to Customer with the aircraft; 3.5 grant Boeing a license, extending the same rights set forth in paragraph 3.4 above, to copy: a) BFE Aircraft Software and data Customer has modified and/or b) other software and data Customer has added to the BFE Aircraft Software; 3.6 provide necessary field service representation at Boeing's facilities to support Boeing on all issues related to the installation and certification of BFE; 3.7 deal directly with all BFE suppliers to obtain overhaul data, provisioning data, related product support documentation and any warranty provisions applicable to the BFE; 3.8 work closely with Boeing and the BFE suppliers to resolve any difficulties, including defective equipment, that arise; 3.9 be responsible for modifying, adjusting and/or calibrating BFE as required for FAA approval and for all related expenses; 3.10 assure that a proprietary information agreement is in place between Boeing and BFE suppliers prior to Boeing providing any documentation to such suppliers, 3.11 warrant that the BFE will comply with all applicable FARs and the U.S. Food and Drug Administration (FDA) sanitation requirements for installation and use in the Aircraft at the time of delivery. Customer will be responsible for supplying any data and adjusting, calibrating, re-testing or updating such BFE and data to the extent necessary to obtain applicable FAA and FDA approval and shall bear the resulting expenses. 3.12 warrant that the BFE will meet the requirements of the Detail Specification; and 3.13 be responsible for providing equipment which is FAA certifiable at time of Aircraft delivery, or for obtaining waivers from the applicable regulatory agency for non-FAA certifiable equipment. 4. Boeing's Obligations. -------------------- Other than as set forth below, Boeing will provide for the installation of and install the BFE and obtain certification of the Aircraft with the BFE installed. 5. Nonperformance by Customer. -------------------------- If Customer's nonperformance of obligations in this Exhibit or in the BFE Document causes a delay in the delivery of the Aircraft or causes Boeing to perform out-of-sequence or additional work, Customer will reimburse Boeing for all resulting expenses and be deemed to have agreed to any such delay in Aircraft delivery. In addition Boeing will have the right to: 5.1 provide and install specified equipment or suitable alternate equipment and increase the price of the Aircraft accordingly; and/or 5.2 deliver the Aircraft to Customer without the BFE installed. 6. Return of Equipment. ------------------- BFE not installed in the Aircraft will be returned to Customer in accordance with Customer's instructions and at Customer's expense. 7. Title and Risk of Loss. ---------------------- 7.1 With respect to Aircraft manufactured in the State of Washington, title to and risk of loss of BFE provided for such Aircraft will at all times remain with Customer or other owner. Boeing will have only such liability for BFE as a bailee for mutual benefit would have, but will not be liable for loss of use. 7.2 With respect to Aircraft manufactured in the State of California, Customer agrees to sell and Boeing agrees to purchase each item of BFE concurrently with its delivery to Boeing. A reasonable shipset price for the BFE shall be established with Customer. Customer and Boeing agree that the Aircraft Price will be increased by the amount of said shipset price and such amount will be included on Boeing's invoice at time of Aircraft delivery. Boeing's payment for the purchase of each shipset of BFE from Customer will be made at the time of delivery of the Aircraft in which the BFE is installed. 8. Interchange of BFE To properly maintain Boeing's production flow and to preserve Boeing's delivery commitments, Boeing reserves the right, if necessary, due to equipment shortages or failures, to interchange new items of BFE acquired from or for Customer with new items of the same part numbers acquired from or for other customers of Boeing. Used BFE acquired from Customer or from other customers of Boeing will not be interchanged. 9. Indemnification of Boeing. ------------------------- Customer hereby indemnifies and holds harmless Boeing from and against all claims and liabilities, including costs and expenses (including attorneys' fees) incident thereto or incident to successfully establishing the right to indemnification, for injury to or death of any person or persons, including employees of Customer but not employees of Boeing, or for loss of or damage to any property, including any Aircraft, arising out of or in any way connected with any nonconformance or defect in any BFE and whether or not arising in tort or occasioned by the negligence of Boeing. This indemnity will not apply with respect to any nonconformance or defect caused solely by Boeing's installation of the BFE. 10. Patent Indemnity. ---------------- Customer hereby indemnifies and holds harmless Boeing from and against all claims, suits, actions, liabilities, damages and costs arising out of any actual or alleged infringement of any patent or other intellectual property rights by BFE or arising out of the installation, sale or use of BFE by Boeing. 11. Definitions. ----------- For the purposes of the above indemnities, the term "Boeing" includes The Boeing Company, its divisions, subsidiaries and affiliates, the assignees of each, and their directors, officers, employees and agents. EXHIBIT B to AIRCRAFT GENERAL TERMS AGREEMENT AGTA-AAT between THE BOEING COMPANY and American Trans Air, Inc. CUSTOMER SUPPORT DOCUMENT This document contains: Part 1: Maintenance and Flight Training Programs; Operations Engineering Support Part 2: Field Services and Engineering Support Services Part 3: Technical Information and Materials Part 4: Alleviation or Cessation of Performance Part 5: Protection of Proprietary Information and Proprietary Materials CUSTOMER SUPPORT DOCUMENT PART 1: BOEING MAINTENANCE AND FLIGHT TRAINING PROGRAMS; OPERATIONS ENGINEERING SUPPORT 1. Boeing Training Programs. ------------------------ 1.1 Boeing will provide maintenance training and flight training programs to support the introduction of a specific model of aircraft into service. The training programs will consist of general and specialized courses and will be described in a Supplemental Exhibit to the applicable purchase agreement. 1.2 Boeing will conduct all training at Boeing's primary training facility for the model of aircraft purchased unless otherwise agreed. 1.3 All training will be presented in the English language. If translation is required, Customer will provide interpreters. 1.4 Customer will be responsible for all expenses of Customer's personnel. Boeing will transport Customer's personnel between their local lodging and Boeing's training facility. 2. Training Planning Conferences. ----------------------------- Customer and Boeing will conduct planning conferences approximately 12 months before the scheduled delivery month of the first aircraft of a model to define and schedule the maintenance and flight training programs. 3. Operations Engineering Support. ------------------------------ 3.1 As long as an aircraft purchased by Customer from Boeing is operated by Customer in scheduled revenue service, Boeing will provide operations engineering support. Such support will include: 3.1.1 assistance with the analysis and preparation of performance data to be used in establishing operating practices and policies for Customer's operation of aircraft; 3.1.2 assistance with interpretation of the minimum equipment list, the definition of the configuration deviation list and the analysis of individual aircraft performance; 3.1.3 assistance with solving operational problems associated with delivery and route-proving flights; 3.1.4 information regarding significant service items relating to aircraft performance or flight operations; and 3.1.5 if requested by Customer, Boeing will provide operations engineering support during an aircraft ferry flight. 4. Training at a Facility Other Than Boeing's. ------------------------------------------ If requested by Customer, Boeing will conduct the classroom portions of the maintenance and flight training (except for the Performance Engineer training courses) at a mutually acceptable alternate training site, subject to the following conditions: 4.1 Customer will provide acceptable classroom space, simulators (as necessary for flight training) and training equipment required to present the courses; 4.2 Customer will pay Boeing's then-current per diem charge for each Boeing instructor for each day, or fraction thereof, that the instructor is away from their home location , including travel time; 4.3 Customer will reimburse Boeing for the actual costs of round-trip transportation for Boeing's instructors and the shipping costs of training Materials between the primary training facility and the alternate training site; 4.4 Customer will be responsible for all taxes, fees, duties, licenses, permits and similar expenses incurred by Boeing and its employees as a result of Boeing's providing training at the alternate site or incurred as a result of Boeing providing revenue service training; and 4.5 Those portions of training that require the use of training devices not available at the alternate site will be conducted at Boeing's facility or at some other alternate site. 5. General Terms and Conditions. ---------------------------- 5.1 Boeing flight instructor personnel will not be required to work more than 5 days per week, or more than 8 hours in any one 24-hour period, of which not more than 5 hours per 8-hour workday will be spent in actual flying. These foregoing restrictions will not apply to ferry assistance or revenue service training services, which will be governed by FAA rules and regulations. 5.2 Normal Line Maintenance is defined as line maintenance that Boeing might reasonably be expected to furnish for flight crew training at Boeing's facility, and will include ground support and aircraft storage in the open, but will not include provision of spare parts. Boeing will provide Normal Line Maintenance services for any aircraft while the aircraft is used for flight crew training at Boeing's facility in accordance with the Boeing Maintenance Plan (Boeing document D6-82076) and the Repair Station Operation and Inspection Manual (Boeing document D6-25470). Customer will provide such services if flight crew training is conducted elsewhere. Regardless of the location of such training, Customer will be responsible for providing all maintenance items (other than those included in Normal Line Maintenance) required during the training, including, but not limited to, fuel, oil, landing fees and spare parts. 5.3 If the training is based at Boeing's facility, and the aircraft is damaged during such training, Boeing will make all necessary repairs to the aircraft as promptly as possible. Customer will pay Boeing's reasonable charge, including the price of parts and materials, for making the repairs. If Boeing's estimated labor charge for the repair exceeds $25,000, Boeing and Customer will enter into an agreement for additional services before beginning the repair work. 5.4 If the flight training is based at Boeing's facility, several airports in surrounding states may be used, at Boeing's option. Unless otherwise agreed in the flight training planning conference, it will be Customer's responsibility to make arrangements for the use of such airports. 5.5 If Boeing agrees to make arrangements on behalf of Customer for the use of airports for flight training, Boeing will pay on Customer's behalf any landing fees charged by any airport used in conjunction with the flight training. At least 30 days before flight training, Customer will provide Boeing an open purchase order against which Boeing will invoice Customer for any landing fees Boeing paid on Customer's behalf. The invoice will be submitted to Customer approximately 60 days after flight training is completed, when all landing fee charges have been received and verified. Customer will pay to Boeing within 30 days of the date of the invoice. 5.6 If requested by Boeing, in order to provide the flight training or ferry flight assistance, Customer will make available to Boeing an aircraft after delivery to familiarize Boeing instructor or ferry flight crew personnel with such aircraft. If flight of the aircraft is required for any Boeing instructor or ferry flight crew member to maintain an FAA license for flight proficiency or landing currency, Boeing will be responsible for the costs of fuel, oil, landing fees and spare parts attributable to that portion of the flight. 5.7 If any part of the training described in paragraph 1.1 of this Exhibit is not used by Customer within 12 months after the delivery of the last aircraft under the relevant purchase agreement, Boeing will not be obligated to provide such training. CUSTOMER SUPPORT DOCUMENT PART 2: FIELD AND ENGINEERING SUPPORT SERVICES 1. Field Service Representation. ---------------------------- Boeing will furnish field service representation to advise Customer with respect to the maintenance and operation of an aircraft (Field Service Representatives). 1.1 Field Service representation will be available at or near Customer's main maintenance or engineering facility beginning before the scheduled delivery month of the first aircraft and ending 12 months after delivery of the last aircraft covered by a specific purchase agreement. 1.2 Customer will provide, at no charge to Boeing, suitable furnished office space and office equipment at the location where Boeing is providing Field Service Representatives. As required, Customer will assist each Field Service Representative with visas, work permits, customs, mail handling, identification passes and formal introduction to local airport authorities. 1.3 Boeing Field Service Representatives are assigned to various airports around the world. Whenever Customer's aircraft are operating through any such airport, the services of Boeing's Field Service Representatives are available to Customer. 2. Engineering Support Services. ---------------------------- Boeing will, if requested by Customer, provide technical advisory assistance for any aircraft and Boeing Product (as defined in Part I of Exhibit C). Technical advisory assistance, provided from the Seattle area or at a base designated by Customer as appropriate, will include: 2.1 Operational Problem Support. If Customer experiences operational problems with an aircraft, Boeing will analyze the information provided by Customer to determine the probable nature and cause of the problem and to suggest possible solutions. 2.2 Schedule Reliability Support. If Customer is not satisfied with the schedule reliability of a specific model of aircraft, Boeing will analyze information provided by Customer to determine the nature and cause of the problem and to suggest possible solutions. 2.3 Maintenance Cost Reduction Support. If Customer is concerned that actual maintenance costs of a specific model of aircraft are excessive, Boeing will analyze information provided by Customer to determine the nature and cause of the problem and to suggest possible solutions. 2.4 Aircraft Structural Repair Support. If Customer is designing structural repairs and desires Boeing's support, Boeing will analyze and comment on Customer's engineering releases relating to structural repairs not covered by Boeing's Structural Repair Manual. 2.5 Aircraft Modification Support. If Customer is designing aircraft modifications and requests Boeing's support, Boeing will analyze and comment on Customer's engineering proposals for changes in, or replacement of, systems, parts, accessories or equipment manufactured to Boeing's detailed design. Boeing will not analyze or comment on any major structural change unless Customer's request for such analysis and comment includes complete detailed drawings, substantiating information (including any information required by applicable government agencies), all stress or other appropriate analyses, and a specific statement from Customer of the substance of the review and the response requested. 2.6 Facilities, Ground Equipment and Maintenance Planning Support. Boeing will, at Customer's request, evaluate Customer's technical facilities, tools and equipment for servicing and maintaining aircraft, to recommend changes where necessary and to assist in the formulation of an initial maintenance plan for the introduction of the aircraft into service. 2.7 Post-Delivery Service Support. Boeing will, at Customer's request, perform work on an aircraft after delivery but prior to the initial departure flight or upon the return of the aircraft to Boeing's facility prior to completion of that flight. In that event the following provisions will apply. 2.7.1 Boeing may rely upon the commitment authority of the Customer's personnel requesting the work. 2.7.2 As title and risk of loss has passed to Customer, the insurance provisions of Article 8.2 of the AGTA apply. 2.7.3 The provisions of the Boeing Warranty in Part 2 of Exhibit C of this AGTA apply. 2.7.4 Customer will pay Boeing for requested work not covered by the Boeing Warranty, if any. 2.7.5 The DISCLAIMER AND RELEASE and EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES provisions in Article 11 of Part 2 of Exhibit C of this AGTA apply. 2.8 Additional Services. Boeing may, at Customer's request, provide additional services for an aircraft after delivery, which may include, but not be limited to, retrofit kit changes (kits and/or information), training, flight services, maintenance and repair of aircraft. Such additional services will be subject to a mutually acceptable price, schedule and scope of work. The DISCLAIMER AND RELEASE and the EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES provisions in Article 11 of Part 2 of Exhibit C of this AGTA and the insurance provisions in Article 8.2 of this AGTA will apply to any such work. Title to and risk of loss of any such aircraft will always remain with Customer. CUSTOMER SUPPORT DOCUMENT PART 3: TECHNICAL INFORMATION AND MATERIALS 1. General. ------- Materials are defined as any and all items that are created by Boeing or a third party, which are provided directly or indirectly from Boeing and serve primarily to contain, convey or embody information. Materials may include either tangible embodiments (for example, documents or drawings), or intangible embodiments (for example, software and other electronic forms) of information but excludes Aircraft Software. Aircraft Software is defined as software that is installed on and used in the operation of the aircraft. Boeing will furnish to Customer certain Materials to support the maintenance and operation of the aircraft at no additional charge to Customer, except as otherwise provided herein. Such Materials will, if applicable, be prepared generally in accordance with Air Transport Association of America (ATA) Specification No. 100, entitled "Specification for Manufacturers' Technical Data". Materials will be in English and in the units of measure used by Boeing to manufacture an aircraft. Digitally-produced Materials will, if applicable, be prepared generally in accordance with ATA Specification No. 2100, dated January 1994, "Digital Data Standards for Aircraft Support." 2. Materials Planning Conferences. ------------------------------ Customer and Boeing will conduct planning conferences approximately 12 months before the scheduled delivery month of the first aircraft of a model in order to mutually determine the proper format and quantity of Materials to be furnished to Customer in support of the aircraft. When available, Customer may select one Boeing digital format as the delivery medium. Should a Boeing digital format not be chosen, Customer may select a reasonable quantity of printed and 16mm microfilm formats, with the exception of the Illustrated Parts Catalog, which will be provided in one selected format only. 3. Information and Materials - Incremental Increase. ------------------------------------------------ Until one year after the month of delivery of the last aircraft covered by a specific purchase agreement, Customer may annually request in writing a reasonable increase in the quantity of Materials with the exception of microfilm master copies, digital formats, and others for which a specified number of copies are provided. Boeing will provide the additional quantity at no additional charge beginning with the next normal revision cycle. Customer may request a decrease in revision quantities at any time. 4. Advance Representative Copies. ----------------------------- All advance representative copies of Materials will be selected by Boeing from available sources. Such advance copies will be for advance planning purposes only. 5. Customized Materials. -------------------- All customized Materials will reflect the configuration of each aircraft as delivered. 6. Revisions. --------- 6.1 Revision Service. Boeing will provide revisions free of charge to certain Materials to be identified in the planning conference conducted for a specific model of aircraft, reflecting changes developed by Boeing, as long as Customer operates an aircraft of that model. 6.2 Revisions Based on Boeing Service Bulletin Incorporation. If Boeing receives written notice that Customer intends to incorporate, or has incorporated, any Boeing service bulletin in an aircraft, Boeing will at no charge issue revisions to Materials with revision service reflecting the effects of such incorporation into such aircraft. 7. Supplier Technical Data. ----------------------- 7.1 For supplier-manufactured programmed airborne avionics components and equipment classified as Seller Furnished Equipment (SFE) or Seller Purchased Equipment (SPE) or Buyer Designated Equipment (BDE) which contain computer software designed and developed in accordance with Radio Technical Commission for Aeronautics Document No. RTCA/DO-178 dated January 1982, No. RTCA/DO-178A dated March 1985, or later as available, Boeing will request that each supplier of the components and equipment make software documentation available to Customer. 7.2 The provisions of this Article will not be applicable to items of BFE. 7.3 Boeing will furnish to Customer a document identifying the terms and conditions of the product support agreements between Boeing and its suppliers requiring the suppliers to fulfill Customer's requirements for information and services in support of the specific model of aircraft. 8. Buyer Furnished Equipment Data. ------------------------------ Boeing will incorporate BFE information into the customized Materials providing Customer makes the information available to Boeing at least nine months prior to the scheduled delivery month of Customer's first aircraft of a specific model. Customer agrees to furnish the information in Boeing standard digital format if Materials are to be delivered in Boeing standard digital format. 9. Materials Shipping Charges. -------------------------- Boeing will pay the reasonable transportation costs of the Materials. Customer is responsible for any customs clearance charges, duties, and taxes. 10. Customer's Shipping Address. --------------------------- The Materials furnished to Customer hereunder are to be sent to a single address to be specified. Customer will promptly notify Boeing of any change to the address. CUSTOMER SUPPORT DOCUMENT PART 4: ALLEVIATION OR CESSATION OF PERFORMANCE Boeing will not be required to provide any Materials, services, training or other things at a facility designated by Customer if any of the following conditions exist: 1. a labor stoppage or dispute in progress involving Customer; 2. wars or warlike operations, riots or insurrections in the country where the facility is located; 3. any condition at the facility which, in the opinion of Boeing, is detrimental to the general health, welfare or safety of its personnel or their families; 4. the United States Government refuses permission to Boeing personnel or their families to enter into the country where the facility is located, or recommends that Boeing personnel or their families leave the country; or 5. the United States Government refuses permission to Boeing to deliver Materials, services, training or other things to the country where the facility is located. After the location of Boeing personnel at the facility, Boeing further reserves the right, upon the occurrence of any of such events, to immediately and without prior notice to Customer relocate its personnel and their families. CUSTOMER SUPPORT DOCUMENT PART 5: PROTECTION OF PROPRIETARY INFORMATION AND PROPRIETARY MATERIALS 1. General. ------- All Materials provided by Boeing to Customer and not covered by a Boeing CSGTA or other agreement between Boeing and Customer defining Customer's right to use and disclose the Materials and included information will be covered by, and subject to the terms of this AGTA. Title to all Materials containing, conveying or embodying confidential, proprietary or trade secret information (Proprietary Information) belonging to Boeing or a third party (Proprietary Materials), will at all times remain with Boeing or such third party. Customer will treat all Proprietary Materials and all Proprietary Information in confidence and use and disclose the same only as specifically authorized in this AGTA. 2. License Grant. ------------- Boeing grants to Customer a worldwide, non-exclusive, non-transferable license to use and disclose Proprietary Materials in accordance with the terms and conditions of this AGTA. Customer is authorized to make copies of Materials (except for Materials bearing the copyright legend of a third party), and all copies of Proprietary Materials will belong to Boeing and be treated as Proprietary Materials under this AGTA. Customer will preserve all proprietary legends, and all copyright notices on all Materials and insure the inclusion of those legends and notices on all copies. 3. Use of Proprietary Materials and Proprietary Information. -------------------------------------------------------- Customer is authorized to use Proprietary Materials and Proprietary Information for the purpose of: (a) operation, maintenance, repair, or modification of Customer's aircraft for which the Proprietary Materials and Proprietary Information have been specified by Boeing and (b) development and manufacture of training devices and maintenance tools for use by Customer. 4. Providing of Proprietary Materials to Contractors. ------------------------------------------------- Customer is authorized to provide Proprietary Materials to Customer's contractors for the sole purpose of maintenance, repair, or modification of Customer's aircraft for which the Proprietary Materials have been specified by Boeing. In addition, Customer may provide Proprietary Materials to Customer's contractors for the sole purpose of developing and manufacturing training devices and maintenance tools for Customer's use. Before providing Proprietary Materials to its contractor, Customer will first obtain a written agreement from the contractor by which the contractor agrees (a) to use the Proprietary Materials only on behalf of Customer, (b) to be bound by all of the restrictions and limitations of this Part 5, and (c) that Boeing is a third party beneficiary under the written agreement. Customer agrees to provide copies of all such written agreements to Boeing upon request and be liable to Boeing for any breach of those agreements by a contractor. A sample agreement acceptable to Boeing is attached as Appendix VII. 5. Providing of Proprietary Materials and Proprietary Information to Regulatory Agencies. - ----------------------------------------------------------------------------- When and to the extent required by a government regulatory agency having jurisdiction over Customer or an aircraft, Customer is authorized to provide Proprietary Materials and to disclose Proprietary Information to the agency for use in connection with Customer's operation, maintenance, repair, or modification of such aircraft. Customer agrees to take all reasonable steps to prevent the agency from making any distribution, disclosure, or additional use of the Proprietary Materials and Proprietary Information provided or disclosed. Customer further agrees to notify Boeing immediately upon learning of any (a) distribution, disclosure, or additional use by the agency, (b) request to the agency for distribution, disclosure, or additional use, or (c) intention on the part of the agency to distribute, disclose, or make additional use of Proprietary Materials or Proprietary Information. EXHIBIT C to AIRCRAFT GENERAL TERMS AGREEMENT AGTA-AAT between THE BOEING COMPANY and American Trans Air, Inc. PRODUCT ASSURANCE DOCUMENT This document contains: Part 1: Exhibit C Definitions Part 2: Boeing Warranty Part 3: Boeing Service Life Policy Part 4: Supplier Warranty Commitment Part 5: Boeing Interface Commitment Part 6: Boeing Indemnities against Patent and Copyright Infringement PRODUCT ASSURANCE DOCUMENT PART 1: EXHIBIT C DEFINITIONS Authorized Agent - Agent appointed by Customer to perform corrections and to administer warranties (see Appendix VI to the AGTA for a form acceptable to Boeing). Average Direct Hourly Labor Rate - the average hourly rate (excluding all fringe benefits, premium-time allowances, social charges, business taxes and the like) paid by Customer to its Direct Labor employees. Boeing Product - any system, accessory, equipment, part or Aircraft Software that is manufactured by Boeing or manufactured to Boeing's detailed design with Boeing's authorization. Correct - to repair, modify, provide modification kits or replace with a new product. Correction - a repair, a modification, a modification kit or replacement with a new product. Corrected Boeing Product - a Boeing Product which is free of defect as a result of a Correction. Direct Labor - Labor spent by Customer's direct labor employees to remove, disassemble, modify, repair, inspect and bench test a defective Boeing Product, and to reassemble, reinstall a Corrected Boeing Product and perform final inspection. Direct Materials - Items such as parts, gaskets, grease, sealant and adhesives, installed or consumed in performing a Correction, excluding allowances for administration, overhead, taxes, customs duties and the like. Source Control Drawing (SCD) - a Boeing document defining specifications for certain Supplier Products. Supplier - the manufacturer of a Supplier Product. Supplier Product - any system, accessory, equipment, part or Aircraft Software that is not manufactured to Boeing's detailed design. This includes but is not limited to parts manufactured to a SCD, all standards, and other parts obtained from non-Boeing sources. PRODUCT ASSURANCE DOCUMENT PART 2: BOEING WARRANTY 1. Applicability. ------------- This warranty applies to all Boeing Products. Warranties applicable to Supplier Products are in Part 4. Warranties applicable to engines will be provided by Supplemental Exhibits to individual purchase agreements. 2. Warranty. -------- 2.1 Coverage. Boeing warrants that at the time of delivery: (i) the aircraft will conform to the Detail Specification except for portions stated to be estimates, approximations or design objectives; (ii) all Boeing Products will be free from defects in material, process of manufacture and workmanship, including the workmanship utilized to install Supplier Products, engines and BFE, and; (iii) all Boeing Products will be free from defects in design, including selection of materials and the process of manufacture, in view of the state of the art at the time of design 2.2 Exceptions. The following conditions do not constitute a defect under this warranty: (i) conditions resulting from normal wear and tear; (ii) conditions resulting from acts or omissions of Customer; and (iii) conditions resulting from failure to properly service and maintain a Boeing Product . 3. Warranty Periods. 3.1 Warranty. The warranty period begins on the date of aircraft or Boeing Product delivery and ends: (i) after 48 months for Boeing aircraft models 777-200, -300 or 737-600, -700, -800, or new aircraft models designed and manufactured with similar, new technology; or, (ii) after 36 months for any other Boeing aircraft model. 3.2 Warranty on Corrected Boeing Products. The warranty period applicable to a Corrected Boeing Product, including the workmanship to Correct and install, resulting from a defect in material or workmanship is the remainder of the initial warranty period for the defective Boeing Product it replaced. The warranty period for a Corrected Boeing Product resulting from a defect in design is 18 months or the remainder of the initial warranty period, whichever is longer. The 18 month period begins on the date of delivery of the Corrected Boeing Product or date of delivery of the kit or kits furnished to Correct the Boeing Product. 3.3 Survival of Warranties. All warranty periods are stated above. The Performance Guarantees will not survive delivery of the aircraft. 4. Remedies. -------- 4.1 Correction Options. Customer may, at its option, either perform a Correction of a defective Boeing Product or return the Boeing Product to Boeing for Correction. 4.2 Warranty Labor Rate. If Customer or its Authorized Agent Corrects a defective Boeing Product, Boeing will reimburse Customer for Direct Labor Hours at Customer's established Warranty Labor Rate. Customer's established Warranty Labor Rate will be the greater of the standard labor rate or 150% of Customer's Average Direct Hourly Labor Rate. The standard labor rate paid by Boeing to its customers is established and published annually. Prior to or concurrently with submittal of Customer's first claim for Direct Labor reimbursement, Customer may notify Boeing of Customer's then-current Average Direct Hourly Labor Rate, and thereafter notify Boeing of any material change in such rate. Boeing will require information from Customer to substantiate such rates. 4.3 Warranty Inspections. In addition to the remedies to Correct defects in Boeing Products, Boeing will reimburse Customer for the cost of Direct Labor to perform certain inspections of the aircraft to determine the occurrence of a condition Boeing has identified as a covered defect, provided: 4.3.1 the inspections are recommended by a service bulletin or service letter issued by Boeing during the warranty period; and 4.3.2 such reimbursement will not apply to any inspections performed after a Correction is available to Customer. 4.4 Credit Memorandum Reimbursement. Boeing will make all reimbursements by credit memoranda which may be applied toward the purchase of Boeing goods and services. 4.5 Maximum Reimbursement. Unless previously agreed, the maximum reimbursement for Direct Labor and Direct Materials used to Correct a defective Boeing Product will not exceed 65% of Boeing's then-current sales price for a new replacement Boeing Product. 5. Discovery and Notice. -------------------- 5.1 For a claim to be valid: (i) the defect must be discovered during the warranty period; and (ii) Boeing Warranty must receive written notice of the discovery no later than 90 days after expiration of the warranty period. The notice must include sufficient information to substantiate the claim. 5.2 Receipt of Customer's or its Authorized Agent's notice of the discovery of a defect secures Customer's rights to remedies under this Exhibit C, even though a Correction is performed after the expiration of the warranty period. 5.3 Once Customer has given valid notice of the discovery of a defect, a claim should be submitted as soon as practicable after performance of the Correction. 5.4 Boeing may release service bulletins or service letters advising Customer of the availability of certain warranty remedies. When such advice is provided, Customer will be deemed to have fulfilled the requirements for discovery of the defect and submittal of notice under this Exhibit C as of the date specified in the service bulletin or service letter. 6. Filing a Claim. -------------- 6.1 Authority to File. Claims may be filed by Customer or its Authorized Agent. Appointment of an Authorized Agent will only be effective upon Boeing's receipt of the Authorized Agent's express written agreement, in a form satisfactory to Boeing, to be bound by and to comply with all applicable terms and conditions of this Aircraft General Terms Agreement. 6.2 Claim Information. ----------------- 6.2.1 Claimant is responsible for providing sufficient information to substantiate Customer's rights to remedies under this Exhibit C. Boeing may reject a claim for lack of sufficient information. At a minimum, such information must include: (i) identity of claimant; (ii) serial or block number of the aircraft on which the defective Boeing Product was delivered; (iii) part number and nomenclature of the defective Boeing Product; (iv) purchase order number and date of delivery of the defective spare part (v) description and substantiation of the defect; (vi) date the defect was discovered; (vii) date the Correction was completed; (viii) the total flight hours or cycles accrued; (ix) an itemized account of direct labor hours expended in performing the Correction; and (x) an itemized account of any direct materials incorporated in the Correction. 6.2.2 Additional information may be required based on the nature of the defect and the remedies requested. 6.3 Boeing Claim Processing. ----------------------- 6.3.1 Any claim for a Boeing Product returned by Customer or its Authorized Agent to Boeing for Correction must accompany the Boeing Product. Any claim not associated with the return of a Boeing Product must be signed and submitted in writing directly by Customer or its Authorized Agent to Boeing Warranty. 6.3.2 Boeing will promptly review the claim and will give notification of claim approval or rejection. If the claim is rejected, Boeing will provide a written explanation. 7. Corrections Performed by Customer or Its Authorized Agent. --------------------------------------------------------- 7.1 Facilities Requirements. Provided Customer, its Authorized Agent or its third party contractor, as appropriate, are certified by the appropriate Civil Aviation Authority or Federal Aviation Authority, Customer or its Authorized Agent may, at its option, Correct defective Boeing Products at its facilities, or may subcontract Corrections to a third party contractor. 7.2 Technical Requirements. All Corrections done by Customer, its Authorized Agent or a third party contractor must be performed in accordance with Boeing's applicable service manuals, bulletins or other written instructions, using parts and materials furnished or approved by Boeing. 7.3 Reimbursement. ------------- 7.3.1 Boeing will reimburse Customer's reasonable costs of Direct Materials and Direct Labor (excluding time expended for overhaul) at Customer's Warranty Labor Rate to Correct a defective Boeing Product. Claims for reimbursement must contain sufficient information to substantiate Direct Labor hours expended and Direct Materials consumed. Customer or its Authorized Agent may be required to produce invoices for materials. 7.3.2 Reimbursement for Direct Labor hours to perform Corrections stated in a service bulletin will be based on the labor estimates in the service bulletin. 7.3.3 Boeing will reimburse Customer's freight charges associated with a Correction of a defect on a Boeing Product performed by its Authorized Agent or a third party contractor. 7.4 Disposition of Defective Boeing Products Beyond Economical Repair. 7.4.1 A defective Boeing Product found to be beyond economical repair (see Para. 4.5 Maximum Reimbursement) will be retained for a period of 60 days from the date Boeing receives Customer's claim. During the 60 day period, Boeing may request return of such Boeing Products for inspection and confirmation of a defect. 7.4.2 After the 60 day period, a defective Boeing Product with a value of U.S. $2000 or less may be scrapped without notification to Boeing. If such Boeing Product has a value greater than U.S. $2000, Customer must obtain confirmation of unrepairability by Boeing's on-site Customer Services Representative prior to scrapping. Confirmation may be in the form of the Representative's signature on Customer's claim or through direct communication between the Representative and Boeing Warranty. 8. Corrections Performed by Boeing. ------------------------------- 8.1 Freight Charges. Customer or its Authorized Agent will pay shipping charges to return a Boeing Product to Boeing. Boeing will reimburse Customer or its Authorized Agent for the charge for any item determined to be defective under this Aircraft General Terms Agreement. Boeing will pay shipping charges to return the Corrected Boeing Product. 8.2 Customer Instructions. The documentation shipped with the returned defective Boeing Product may include specific technical instructions for additional work to be performed on the Boeing Product. The absence of such instructions will evidence Customer's authorization for Boeing to perform all necessary Corrections and work required to return the Boeing Product to a serviceable condition. 8.3 Correction Time Objectives. -------------------------- 8.3.1 Boeing's objective for making Corrections is 10 working days for avionics and electronic Boeing Products, 30 working days for Corrections of other Boeing Products performed at Boeing's facilities, and 40 working days for Corrections of other Boeing Products performed at a Boeing subcontractor's facilities. The objectives are measured from the date Boeing receives the defective Boeing Product and a valid claim to the date Boeing ships the Correction. 8.3.2 If Customer has a critical parts shortage because Boeing has exceeded a Correction time objective and Customer has procured spare Boeing Products for the defective Boeing Product in quantities shown in Boeing's Recommended Spare Parts List (RSPL) or Spares Planning and Requirements Evaluation Model (M-SPARE), then Boeing will either expedite the Correction or provide an interchangeable Boeing Product on a no charge loan or lease basis until the Corrected Boeing Product is returned. 8.4 Title Transfer and Risk of Loss. ------------------------------- 8.4.1 Title to and risk of loss of any Boeing Product returned to Boeing will at all times remain with Customer or any other title holder of such Boeing Product. While Boeing has possession of the returned Boeing Product, Boeing will have only such liabilities as a bailee for mutual benefit would have, but will not be liable for loss of use. 8.4.2 If a Correction requires shipment of a new Boeing Product, then at the time Boeing ships the new Boeing Product, title to and risk of loss for the returned Boeing Product will pass to Boeing, and title to and risk of loss for the new Boeing Product will pass to Customer. 9. Returning an Aircraft. --------------------- 9.1 Conditions. An aircraft may be returned to Boeing's facilities for Correction only if: (i) Boeing and Customer agree a covered defect exists; (ii) Customer lacks access to adequate facilities, equipment or qualified personnel to perform the Correction; and (iii) it is not practical, in Boeing's estimation, to dispatch Boeing personnel to perform the Correction at a remote site. 9.2 Correction Costs. Boeing will perform the Correction at no charge to Customer. Subject to the conditions of Article 9.1, Boeing will reimburse Customer for the costs of fuel, oil and landing fees incurred in ferrying the aircraft to Boeing and back to Customer's facilities. Customer will minimize the length of both flights. 9.3 Separate Agreement. Boeing and Customer will enter into a separate agreement covering return of the aircraft and performance of the Correction. Authorization by Customer for Boeing to perform additional work that is not part of the Correction must be received within 24 hours of Boeing's request. If such authorization is not received within 24 hours, Customer will be invoiced for work performed by Boeing that is not part of the Correction. 10. Insurance. --------- The provisions of Article 8.2 "Insurance", of this AGTA, will apply to any work performed by Boeing in accordance with Customer's specific technical instructions, to the extent any legal liability of Boeing is based upon the content of such instructions. 11. Disclaimer and Release; Exclusion of Liabilities. ------------------------------------------------ 11.1 DISCLAIMER AND RELEASE. THE WARRANTIES, OBLIGATIONS AND LIABILITIES OF BOEING AND THE REMEDIES OF CUSTOMER IN THIS EXHIBIT C ARE EXCLUSIVE AND IN SUBSTITUTION FOR, AND CUSTOMER HEREBY WAIVES, RELEASES AND RENOUNCES, ALL OTHER WARRANTIES, OBLIGATIONS AND LIABILITIES OF BOEING AND ALL OTHER RIGHTS, CLAIMS AND REMEDIES OF CUSTOMER AGAINST BOEING, EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE, WITH RESPECT TO ANY NONCONFORMANCE OR DEFECT IN ANY AIRCRAFT, MATERIALS, TRAINING, SERVICES OR OTHER THING PROVIDED UNDER THIS AGTA AND THE APPLICABLE PURCHASE AGREEMENT, INCLUDING, BUT NOT LIMITED TO: (A) ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS; (B) ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE; (C) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY IN TORT, WHETHER OR NOT ARISING FROM THE NEGLIGENCE OF BOEING; AND (D) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY FOR LOSS OF OR DAMAGE TO ANY AIRCRAFT. 11.2 EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES. BOEING WILL HAVE NO OBLIGATION OR LIABILITY, WHETHER ARISING IN CONTRACT (INCLUDING WARRANTY), TORT, WHETHER OR NOT ARISING FROM THE NEGLIGENCE OF BOEING, OR OTHERWISE, FOR LOSS OF USE, REVENUE OR PROFIT, OR FOR ANY OTHER INCIDENTAL OR CONSEQUENTIAL DAMAGES WITH RESPECT TO ANY NONCONFORMANCE OR DEFECT IN ANY AIRCRAFT, MATERIALS, TRAINING, SERVICES OR OTHER THING PROVIDED UNDER THIS AGTA AND THE APPLICABLE PURCHASE AGREEMENT. 11.3 Definitions. For the purpose of this Article, "BOEING" or "Boeing" is defined as The Boeing Company, its divisions, subsidiaries, affiliates, the assignees of each, and their respective directors, officers, employees and agents. PRODUCT ASSURANCE DOCUMENT PART 3: BOEING SERVICE LIFE POLICY 1. Definitions. ----------- SLP Component - any of the primary structural elements (excluding industry standard parts) of the landing gear, wing, fuselage, vertical or horizontal stabilizer listed in the applicable purchase agreement for a specific model of aircraft that is installed in the aircraft at time of delivery or is purchased from Boeing by Customer as a spare part. The detailed SLP Component listing will be in Supplemental Exhibit SLP1 to each Purchase Agreement. 2. Service Life Policy. ------------------- 2.1 SLP Commitment. If a failure or defect is discovered in a SLP Component within the time periods specified in Article 2.2 below, Boeing will, at a price calculated pursuant to Article 3 below, Correct the SLP Component. 2.2 SLP Policy Periods. ------------------ 2.2.1 The policy period for SLP Components initially installed on an aircraft is 12 years after the date of delivery of the aircraft. 2.2.2 The policy period for SLP Components purchased from Boeing by Customer as spare parts is 12 years from delivery of such SLP Component or 12 years from the date of delivery of the last aircraft produced by Boeing of a specific model, whichever first expires. 3. Price. ----- The price that Customer will pay for the Correction of a defective or failed SLP Component will be calculated pursuant to the following formula: P = CT --- 144 where: P = price to Customer for the replacement part C = SLP Component sales price at time of Correction T = total age in months of the defective or failed SLP Component from the date of delivery to Customer to the date of discovery of such condition. 4. Conditions. ---------- Boeing's obligations under this Policy are conditioned upon the following: 4.1 Customer must notify Boeing in writing of the defect or failure within three months after it is discovered. 4.2 Customer must provide reasonable evidence that the claimed defect or failure is covered by this Policy and if requested by Boeing, that such defect or failure was not the result of (i) a defect or failure in a component not covered by this Policy, (ii) an extrinsic force, (iii) an act or omission of Customer, or (iv) operation or maintenance contrary to applicable governmental regulations or Boeing's instructions. 4.3 If return of a defective or failed SLP Component is practicable and requested by Boeing, Customer will return such SLP Component to Boeing at Boeing's expense. 4.4 Customer's rights and remedies under this Policy are limited to the receipt of a Correction at prices calculated pursuant to Article 3 above. 5. Disclaimer and Release; Exclusion of Liabilities. ------------------------------------------------ This Part 3 and the rights and remedies of Customer and the obligations of Boeing are subject to the DISCLAIMER AND RELEASE and EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES provisions of Article 11 of Part 2 of this Exhibit C. PRODUCT ASSURANCE DOCUMENT PART 4: SUPPLIER WARRANTY COMMITMENT 1. Supplier Warranties and Supplier Patent and Copyright Indemnities. ----------------------------------------------------------------- Boeing will use diligent efforts to obtain warranties and indemnities against patent and copyright infringement enforceable by Customer from Suppliers of Supplier Products (except for BFE and engines) installed on the aircraft at the time of delivery that were selected and purchased by Boeing, but not manufactured to Boeing's detailed design. Boeing will furnish copies of the warranties and patent and copyright indemnities to Customer contained in Supplier Product Support and Product Assurance Agreements, prior to the scheduled delivery month of the first aircraft under the initial purchase agreement to the AGTA. 2. Boeing Assistance in Administration of Supplier Warranties. ---------------------------------------------------------- Customer will be responsible for submitting warranty claims directly to Suppliers; however, if Customer experiences problems enforcing any Supplier warranty obtained by Boeing for Customer, Boeing will conduct an investigation of the problem and assist Customer in the resolution of those claims. 3. Boeing Support in Event of Supplier Default. ------------------------------------------- 3.1 If the Supplier defaults in the performance of a material obligation under its warranty, and Customer provides evidence to Boeing that a default has occurred, then Boeing will furnish the equivalent warranty terms as provided by the defaulting Supplier. 3.2 At Boeing's request, Customer will assign to Boeing, and Boeing will be subrogated to, its rights against the Supplier provided by the Supplier warranty. PRODUCT ASSURANCE DOCUMENT PART 5: BOEING INTERFACE COMMITMENT 1. Interface Problems. ------------------ An Interface Problem is defined as a technical problem in the operation of an aircraft or its systems experienced by Customer, the cause of which is not readily identifiable by Customer but which Customer believes to be attributable to either the design characteristics of the aircraft or its systems or the workmanship used in the installation of Supplier Products. In the event Customer experiences an Interface Problem, Boeing will, without additional charge to Customer, promptly conduct an investigation and analysis to determine the cause or causes of the Interface Problem. Boeing will promptly advise Customer at the conclusion of its investigation of Boeing's opinion as to the causes of the Interface Problem and Boeing's recommendation as to corrective action. 2. Boeing Responsibility. --------------------- If Boeing determines that the Interface Problem is primarily attributable to the design or installation of any Boeing Product, Boeing will Correct the design or workmanship to the extent of any then-existing obligations of Boeing under the provisions of the applicable Boeing Warranty or Boeing Service Life Policy. 3. Supplier Responsibility. ----------------------- If Boeing determines that the Interface Problem is primarily attributable to the design or installation of a Supplier Product, Boeing will assist Customer in processing a warranty claim against the Supplier. 4. Joint Responsibility. -------------------- If Boeing determines that the Interface Problem is partially attributable to the design or installation of a Boeing Product and partially to the design or installation of a Supplier Product, Boeing will seek a solution to the Interface Problem through the cooperative efforts of Boeing and the Supplier and will promptly advise Customer of the resulting corrective actions and recommendations. 5. General. ------- Customer will, if requested by Boeing, assign to Boeing any of its rights against any supplier as Boeing may require to fulfill its obligations hereunder. 6. Disclaimer and Release; Exclusion of Liabilities. ------------------------------------------------ This Part 5 and the rights and remedies of Customer and the obligations of Boeing herein are subject to the DISCLAIMER AND RELEASE and EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES provisions of Article 11 of Part 2 of this Exhibit C. PRODUCT ASSURANCE DOCUMENT PART 6: BOEING INDEMNITIES AGAINST PATENT AND COPYRIGHT INFRINGEMENT 1. Indemnity Against Patent Infringement. ------------------------------------- Boeing will defend and indemnify Customer with respect to all claims, suits and liabilities arising out of any actual or alleged patent infringement through Customer's use, lease or resale of any aircraft or any Boeing Product installed on an aircraft at delivery. 2. Indemnity Against Copyright Infringement. ---------------------------------------- Boeing will defend and indemnify Customer with respect to all claims, suits and liabilities arising out of any actual or alleged copyright infringement through Customer's use, lease or resale of any Boeing created Materials and Aircraft Software installed on an aircraft at delivery. 3. Exceptions, Limitations and Conditions. -------------------------------------- 3.1 Boeing's obligation to indemnify Customer for patent infringement will extend only to infringements in countries which, at the time of the infringement, were party to and fully bound by either (a) Article 27 of the Chicago Convention on International Civil Aviation of December 7, 1944, or (b) the International Convention for the Protection of Industrial Property (Paris Convention). 3.2 Boeing's obligation to indemnify Customer for copyright infringement is limited to infringements in countries which, at the time of the infringement, are members of The Berne Union and recognize computer software as a "work" under The Berne Convention. 3.3 The indemnities provided under this Part 6 will not apply to any (i) BFE, (ii) engines, (iii) Supplier Product (iv) Boeing Product used other than for its intended purpose, or (v) Aircraft Software not created by Boeing. 3.4 Customer must deliver written notice to Boeing (i) within 10 days after Customer first receives notice of any suit or other formal action against Customer and (ii) within 20 days after Customer first receives any other allegation or written claim of infringement covered by this Part 6. 3.5 At any time, Boeing will have the right at its option and expense to: (i) negotiate with any party claiming infringement, (ii) assume or control the defense of any infringement allegation, claim, suit or formal action, (iii) intervene in any infringement suit or formal action , and/or (iv) attempt to resolve any claim of infringement by replacing an allegedly infringing Boeing Product or Aircraft Software with a noninfringing equivalent. 3.6 Customer will promptly furnish to Boeing all information, records and assistance within Customer's possession or control which Boeing considers relevant or material to any alleged infringement covered by this Part 6. 3.7 Except as required by a final judgment entered against Customer by a court of competent jurisdiction from which no appeals can be or have been filed, Customer will obtain Boeing's written approval prior to paying, committing to pay, assuming any obligation or making any material concession relative to any infringement covered by these indemnities. 3.8 Boeing will have no obligation or liability under this Part 6 for loss of use, revenue or profit, or for any other incidental or consequential damages. The obligations of Boeing and remedies of Customer in this Part 6 are exclusive and in substitution for, and Customer hereby waives, releases and renounces all other indemnities, obligations and liabilities of Boeing and all other rights, claims and remedies of Customer against Boeing, express or implied, arising by law or otherwise, with respect to any actual or alleged patent, copyright OR OTHER INTELLECTUAL PROPERTY infringement or the like by any aircraft, AIRCRAFT SOFTWARE, MATERIALS, TRAINING, SERVICES or other thing provided under this AGTA and the applicaBLE PURCHASE AGREEMENT. 3.9 For the purposes of this Part 6, "BOEING or Boeing" is defined as The Boeing Company, its divisions, subsidiaries, affiliates, the assignees of each and their respective directors, officers, employees and agents. SAMPLE Insurance Certificate ================================================================================ BROKER'S LETTERHEAD ================================================================================ [ date ] Certificate of Insurance ISSUED TO: The Boeing Company Post Office Box 3707 Mail Stop 13-57 Seattle, Washington 98124 Attn: Manager - Aviation Insurance for Vice President - Employee Benefits, Insurance and Taxes CC: Boeing Commercial Airplane Group P.O. Box 3707 Mail Stop 21-34 Seattle, Washington 98124-2207 U.S.A. Attn: Vice President - Contracts NAMED INSURED: American Trans Air, Inc. We hereby certify that in our capacity as Brokers to the Named Insured, the following described insurance is in force on this date: Insurer Policy No. Participation POLICY PERIOD: From [date and time of inception of the Policy(ies)] to [date and time of expiration]. GEOGRAPHICAL LIMITS: Worldwide (however, as respects "Aircraft Hull War and Allied Perils" Insurance, as agreed by Boeing). AIRCRAFT INSURED: All Boeing manufactured aircraft owned or operated by the Named Insured which are the subject of the following purchase agreement(s), entered into between The Boeing Company and _________________ (hereinafter "Aircraft"): Purchase Agreement No. ____ dated ______ Purchase Agreement No. ____ dated ______ COVERAGES: 1.Aircraft "all risks" Hull (Ground and Flight) 2.Aircraft Hull War and Allied Perils (as per LSW 555, or its successor wording) 3.Airline Liability Including, but not limited to, Bodily Injury, Property Damage, Aircraft Liability, Liability War Risks, Passenger Legal Liability, Premises/Operations Liability, Completed Operations/Products Liability, Baggage Legal Liability (checked and unchecked), Cargo Legal Liability, Contractual Liability and Personal Injury. The above-referenced Airline Liability insurance coverage is subject to War and Other Perils Exclusion Clause (AV48B) but all sections, other than section (b) are reinstated as per AV52C, or their successor endorsements. LIMITS OF LIABILITY: To the fullest extent of the Policy limits that the Named Insured carries from the time of delivery of the first Aircraft under the first Purchase Agreement listed under "Aircraft Insured" and thereafter at the inception of each policy period, but in any event no less than the following: Combined Single Limit Bodily Injury and Property Damage: U.S.$ any one occurrence each Aircraft (with aggregates as applicable). (717-200) US$300,000,000 (737-500/600) US$350,000,000 (737-300/700) US$400,000,000 (737-400) US$450,000,000 (737-800) US$500,000,000 (757-200) US$525,000,000 (757-300) US$550,000,000 (767-200) US$550,000,000 (767-300) US$700,000,000 (767-400ERX) US$750,000,000 (777-200X) US$750,000,000 (MD-11) US$800,000,000 (777-200/300) US$800,000,000 (777-300X) US$900,000,000 (747-400) US$900,000,000 (In regard to all other models and/or derivatives, to be specified by Boeing). (In regard to Personal Injury coverage, limits are US$25,000,000 any one offense/aggregate.) DEDUCTIBLES / SELF-INSURANCE Any deductible and/or self-insurance amount (other than standard market deductibles) are to be disclosed and agreed by Boeing. SPECIAL PROVISIONS APPLICABLE TO BOEING: It is certified that Insurers are aware of the terms and conditions of AGTA-AAT and the following purchase agreements: PA ______ dated _______ PA ______ dated _______ PA ______ dated _______ Each Aircraft manufactured by Boeing which is delivered to the Insured pursuant to the applicable purchase agreement during the period of effectivity of the policies represented by this Certificate will be covered to the extent specified herein. Insurers have agreed to the following: A. In regard to Aircraft "all risks" Hull Insurance and Aircraft Hull War and Allied Perils Insurance, Insurers agree to waive all rights of subrogation or recourse against Boeing in accordance with AGTA-AAT which was incorporated by reference into the applicable purchase agreement. B. In regard to Airline Liability Insurance, Insurers agree: (1) To include Boeing as an additional insured in accordance with Customer's undertaking in Article 8.2.1 of AGTA-AAT which was incorporated by reference into the applicable purchase agreement. (2) To provide that such insurance will be primary and not contributory nor excess with respect to any other insurance available for the protection of Boeing; (3) To provide that with respect to the interests of Boeing, such insurance shall not be invalidated or minimized by any action or inaction, omission or misrepresentation by the Insured or any other person or party (other than Boeing) regardless of any breach or violation of any warranty, declaration or condition contained in such policies; (4) To provide that all provisions of the insurance coverages referenced above, except the limits of liability, will operate to give each Insured or additional insured the same protection as if there were a separate Policy issued to each. C. In regard to all of the above referenced policies: (1) Boeing will not be responsible for payment, set-off, or assessment of any kind or any premiums in connection with the policies, endorsements or coverages described herein; (2) If a policy is canceled for any reason whatsoever, or any substantial change is made in the coverage which affects the interests of Boeing or if a policy is allowed to lapse for nonpayment of premium, such cancellation, change or lapse shall not be effective as to Boeing for thirty (30) days (in the case of war risk and allied perils coverage seven (7) days after sending, or such other period as may from time to time be customarily obtainable in the industry) after receipt by Boeing of written notice from the Insurers or the authorized representatives or Broker of such cancellation, change or lapse; and (3) For the purposes of the Certificate, "Boeing" is defined as The Boeing Company, its divisions, subsidiaries, affiliates, the assignees of each and their respective directors, officers, employees and agents. Subject to the terms, conditions, limitations and exclusions of the relative policies. (signature) --------- (typed name) (title) SAMPLE Purchase Agreement Assignment THIS PURCHASE AGREEMENT ASSIGNMENT (Assignment) dated as of ________ 20__ between American Trans Air, Inc., a company organized under the laws of ________________ (Assignor) and ________________________, a company organized under the laws of ________________ (Assignee). Capitalized terms used herein without definition will have the same meaning as in the Boeing Purchase Agreement. Assignor and The Boeing Company, a Delaware corporation (Boeing), are parties to the Boeing Purchase Agreement, providing, among other things, for the sale by Boeing to Assignor of certain aircraft, engines and related equipment, including the Aircraft. Assignee wishes to acquire the Aircraft and certain rights and interests under the Boeing Purchase Agreement and Assignor, on the following terms and conditions, is willing to assign to Assignee certain of Assignor's rights and interests under the Boeing Purchase Agreement. Assignee is willing to accept such assignment. It is agreed as follows: 1. For all purposes of this Assignment, the following terms will have the following meanings: Aircraft -- one Boeing Model ______ aircraft, bearing manufacturer's serial number _______, together with all engines and parts installed on such aircraft on the Delivery Date. Boeing -- Boeing shall include Boeing Sales Corporation (a wholly-owned subsidiary of Boeing), a Guam corporation, and its successors and assigns. Boeing Purchase Agreement -- Purchase Agreement No. ________ dated as of ____________ between Boeing and Assignor, as amended, but excluding ______________, providing, among other things, for the sale by Boeing to Assignor of the Aircraft, as said agreement may be further amended to the extent permitted by its terms. The Purchase Agreement incorporated by reference Aircraft General Terms Agreement AGTA/____ (AGTA). Delivery Date -- the date on which the Aircraft is delivered by Boeing to Assignee pursuant to and subject to the terms and conditions of the Boeing Purchase Agreement and this Assignment. 2. Assignor does hereby assign to Assignee all of its rights and interests in and to the Boeing Purchase Agreement, as and to the extent that the same relate to the Aircraft and the purchase and operation thereof, except as and to the extent expressly reserved below, including, without limitation, in such assignment: [TO BE COMPLETED BY THE PARTIES.] {EXAMPLES (a) the right upon valid tender to purchase the Aircraft pursuant to the Boeing Purchase Agreement subject to the terms and conditions thereof and the right to take title to the Aircraft and to be named the "Buyer" in the bill of sale for the Aircraft; (b) the right to accept delivery of the Aircraft; (c) all claims for damages arising as a result of any default under the Boeing Purchase Agreement in respect of the Aircraft; (d) all warranty and indemnity provisions contained in the Boeing Purchase Agreement, and all claims arising thereunder, in respect of the Aircraft; and (e) any and all rights of Assignor to compel performance of the terms of the Boeing Purchase Agreement in respect of the Aircraft.} Reserving exclusively to Assignor, however: {EXAMPLES (i) all Assignor's rights and interests in and to the Boeing Purchase Agreement as and to the extent the same relates to aircraft other than the Aircraft, or to any other matters not directly pertaining to the Aircraft; (ii) all Assignor's rights and interests in or arising out of any advance or other payments or deposits made by Assignor in respect of the Aircraft under the Boeing Purchase Agreement and any amounts credited or to be credited or paid or to be paid by Boeing in respect of the Aircraft; (iii) the right to obtain services, training, information and demonstration and test flights pursuant to the Boeing Purchase Agreement; and (iv) the right to maintain plant representatives at Boeing's plant pursuant to the Boeing Purchase Agreement.} Assignee hereby accepts such assignment. 3. Notwithstanding the foregoing, so long as no event of default or termination under [specify document] has occurred and is continuing, Assignee hereby authorizes Assignor, to the exclusion of Assignee, to exercise in Assignor's name all rights and powers of Customer under the Boeing Purchase Agreement in respect of the Aircraft. 4. For all purposes of this Assignment, Boeing will not be deemed to have knowledge of or need recognize the occurrence, continuance or the discontinuance of any event of default or termination under [specify document] unless and until Boeing receives from Assignee written notice thereof, addressed to its Vice President - Contracts, Boeing Commercial Airplane Group at P.O. Box 3707, Seattle, Washington 98124, if by mail, or to 32-9430 Answerback BOEINGREN RNTN, if by telex. Until such notice has been given, Boeing will be entitled to deal solely and exclusively with Assignor. Thereafter, until Assignee has provided Boeing written notice that any such events no longer continue, Boeing will be entitled to deal solely and exclusively with Assignee. Boeing may act with acquittance and conclusively rely on any such notice. 5. It is expressly agreed that, anything herein contained to the contrary notwithstanding: (a) prior to the Delivery Date Assignor will perform its obligations with respect to the Aircraft to be performed by it on or before such delivery, (b) Assignor will at all times remain liable to Boeing under the Boeing Purchase Agreement to perform all obligations of Customer thereunder to the same extent as if this Assignment had not been executed, and (c) the exercise by Assignee of any of the assigned rights will not release Assignor from any of its obligations to Boeing under the Boeing Purchase Agreement, except to the extent that such exercise constitutes performance of such obligations. 6. Notwithstanding anything contained in this Assignment to the contrary (but without in any way releasing Assignor from any of its obligations under the Boeing Purchase Agreement), Assignee confirms for the benefit of Boeing that, insofar as the provisions of the Boeing Purchase Agreement relate to the Aircraft, in exercising any rights under the Boeing Purchase Agreement, or in making any claim with respect to the Aircraft or other things (including, without limitation, Material, training and services) delivered or to be delivered pursuant to the Boeing Purchase Agreement, the terms and conditions of the Boeing Purchase Agreement, including, without limitation, the DISCLAIMER AND RELEASE and EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES in Article 11 of Part 2 of Exhibit C to the Aircraft General Terms Agreement which was incorporated by reference into the Boeing Purchase Agreement and the insurance provisions in Article 8.2 of the Aircraft General Terms Agreement which was incorporated by reference into the Boeing Purchase Agreement therein, will apply to and be binding on Assignee to the same extent as if Assignee had been the original "Customer" thereunder. Assignee further agrees, expressly for the benefit of Boeing, upon the written request of Boeing, Assignee will promptly execute and deliver such further assurances and documents and take such further action as Boeing may reasonably request in order to obtain the full benefits of Assignee's agreements in this paragraph. 7. Nothing contained herein will subject Boeing to any liability to which it would not otherwise be subject under the Boeing Purchase Agreement or modify in any respect the contract rights of Boeing thereunder, or require Boeing to divest itself of title to or possession of the Aircraft or other things until delivery thereof and payment therefor as provided therein. 8. Notwithstanding anything in this Assignment to the contrary, after receipt of notice of any event of default or termination under [specify document], Boeing will continue to owe to Assignor moneys in payment of claims made or obligations arising before such notice, which moneys may be subject to rights of set-off available to Boeing under applicable law. Similarly, after receipt of notice that such event of default or termination no longer continues, Boeing will continue to owe to Assignee moneys in payment of claims made or obligations arising before such notice, which moneys may be subject to rights of set-off available to Boeing under applicable law. 9. Effective at any time after an event of default has occurred, and for so long as such event of default is continuing, Assignor does hereby constitute Assignee, Assignor's true and lawful attorney, irrevocably, with full power (in the name of Assignor or otherwise) to ask, require, demand, receive, and give acquittance for any and all moneys and claims for moneys due and to become due under or arising out of the Boeing Purchase Agreement in respect of the Aircraft, to the extent assigned by this Assignment. 10. Assignee agrees, expressly for the benefit of Boeing and Assignor that it will not disclose, directly or indirectly, any terms of the Boeing Purchase Agreement; provided, that Assignee may disclose any such information (a) to its special counsel and public accountants, (b) as required by applicable law to be disclosed or to the extent that Assignee may have received a subpoena or other written demand under color of legal right for such information, but it will first, as soon as practicable upon receipt of such requirement or demand, furnish an explanation of the basis thereof to Boeing, and will afford Boeing reasonable opportunity, to obtain a protective order or other reasonably satisfactory assurance of confidential treatment for the information required to be disclosed, and (c) to any bona fide potential purchaser or lessee of the Aircraft. Any disclosure pursuant to (a) and (c) above will be subject to execution of a confidentiality agreement substantially similar to this paragraph 10. 11. This Assignment may be executed by the parties in separate counterparts, each of which when so executed and delivered will be an original, but all such counterparts will together constitute but one and the same instrument. 12. This Assignment will be governed by, and construed in accordance with, the laws of [----------------------]. - -------------------------- -------------------------- as Assignor as Assignee By _______________________ By _______________________ Name: Name: Title: Title: [If the Assignment is further assigned by Assignee in connection with a financing, the following language needs to be included.] Attest: The undersigned, as [Indenture Trustee/Agent for the benefit of the Loan Participants/Mortgagee] and as assignee of, and holder of a security interest in, the estate, right, and interest of the Assignee in and to the foregoing Purchase Agreement Assignment and the Purchase Agreement pursuant to the terms of a certain [Trust Indenture/Mortgage] dated as of _____________, agrees to the terms of the foregoing Purchase Agreement Assignment and agrees that its rights and remedies under such [Trust Indenture/Mortgage] shall be subject to the terms and conditions of the foregoing Purchase Agreement Assignment, including, without limitation, paragraph 6. [Name of Entity], -------------- as Indenture Trustee/Agent By:____________________________ Name: Title: 6 CONSENT AND AGREEMENT OF THE BOEING COMPANY THE BOEING COMPANY, a Delaware corporation (Boeing), hereby acknowledges notice of and consents to the foregoing Purchase Agreement Assignment (Assignment). Boeing confirms to Assignee that: all representations, warranties, indemnities and agreements of Boeing under the Boeing Purchase Agreement with respect to the Aircraft will, subject to the terms and conditions thereof and of the Assignment, inure to the benefit of Assignee to the same extent as if Assignee were originally named "Customer" therein. This Consent and Agreement will be governed by, and construed in accordance with, the law of the State of Washington, excluding the conflict of laws principles thereof. Dated as of ____________________, 20___. THE BOEING COMPANY By ________________________ Name: Title: Attorney-in-Fact Aircraft Manufacturer's Serial Number(s) ____________ SAMPLE Post-Delivery Sale Notice Boeing Commercial Airplane Group P.O. Box 3707 Seattle, Washington 98124-2207 Attention: Vice President - Contracts Mail Stop 21-34 Ladies and Gentlemen: In connection with the sale by American Trans Air, Inc. (Seller) to ________________ (Purchaser) of the aircraft identified below, reference is made to Purchase Agreement No. _____ dated as of ___________, 20__, between The Boeing Company (Boeing) and Seller (the Purchase Agreement) under which Seller purchased certain Boeing Model ________ aircraft, including the aircraft bearing Manufacturer's Serial No.(s) ______________________ (the Aircraft). The Purchase Agreement incorporated by reference Aircraft General Terms Agreement AGTA-AAT (AGTA). Capitalized terms used herein without definition will have the same meaning as in the Purchase Agreement. Seller has sold the Aircraft, including in that sale the transfer to Purchaser of all remaining rights related to the Aircraft under the Purchase Agreement. To accomplish this transfer of rights, as authorized by the provisions of the Purchase Agreement: (1) Purchaser acknowledges it has reviewed the Purchase Agreement and agrees to be bound by and comply with all applicable terms and conditions of the Purchase Agreement, including, without limitation, the DISCLAIMER AND RELEASE and EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES in Article 11 of Part 2 of Exhibit C to the AGTA and the insurance provisions in Article 8.2 of the AGTA. Purchaser further agrees upon the written request of Boeing, to promptly execute and deliver such further assurances and documents and take such further action as Boeing may reasonably request in order to obtain the full benefits of Purchaser's agreements in this paragraph; and (2) Seller will remain responsible for any payments due Boeing as a result of obligations relating to the Aircraft incurred by Seller to Boeing prior to the effective date of this letter. We request that Boeing acknowledge receipt of this letter and confirm the transfer of rights set forth above by signing the acknowledgment and forwarding one copy of this letter to each of the undersigned. Very truly yours, American Trans Air, Inc. Purchaser By By ----------------------------------- Its Its ----------------------------------- Dated Dated ------------------------------- Receipt of the above letter is acknowledged and transfer of rights under the Purchase Agreement with respect to the Aircraft is confirmed, effective as of this date. THE BOEING COMPANY By ----------------------------------- Its Attorney-in-Fact ----------------------------------- Dated ------------------------------- Aircraft Manufacturer's Serial Number ____________ SAMPLE Post-Delivery Lease Notice Boeing Commercial Airplane Group P.O. Box 3707 Seattle, Washington 98124-2207 Attention: Vice President - Contracts Mail Stop 21-34 Ladies and Gentlemen: In connection with the lease by American Trans Air, Inc. (Lessor) to ___________ (Lessee) of the aircraft identified below, reference is made to Purchase Agreement No. ____ dated as of ________, 20__, between The Boeing Company (Boeing) and Lessor (the Purchase Agreement) under which Lessor purchased certain Boeing Model _______ aircraft, including the aircraft bearing Manufacturer's Serial No.(s) ___________________ (the Aircraft). The Purchase Agreement incorporated by reference Aircraft General Terms Agreement AGTA-AAT (AGTA). Capitalized terms used herein without definition will have the same meaning as in the Purchase Agreement. Lessor has leased the Aircraft, including in that lease the transfer to Lessee of all remaining rights related to the Aircraft under the Purchase Agreement. To accomplish this transfer of rights, as authorized by the provisions of the Purchase Agreement: (1) Lessor authorizes Lessee to exercise, to the exclusion of Lessor, all rights and powers of Lessor with respect to the remaining rights related to the Aircraft under the Purchase Agreement. This authorization will continue until Boeing receives written notice from Lessor to the contrary, addressed to Vice President - Contracts, Mail Stop 21-34, Boeing Commercial Airplane Group, P.O. Box 3707, Seattle, Washington 98124-2207. Until Boeing receives such notice, Boeing is entitled to deal exclusively with Lessee with respect to the Aircraft under the Purchase Agreement. With respect to the rights and obligations of Lessor under the Purchase Agreement, all actions taken or agreements entered into by Lessee during the period prior to Boeing's receipt of this notice are final and binding on Lessor. Further, any payments made by Boeing as a result of claims made by Lessee will be made to the credit of Lessee. (2) Lessee accepts the authorization above, acknowledges it has reviewed the Purchase Agreement and agrees to be bound by and comply with all applicable terms and conditions of the Purchase Agreement including, without limitation, the DISCLAIMER AND RELEASE and EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES in Article 11 of Part 2 of Exhibit C AGTA and the insurance provisions in Article 8.2 of the AGTA. Lessee further agrees, upon the written request of Boeing, to promptly execute and deliver such further assurances and documents and take such further action as Boeing may reasonably request in order to obtain the full benefits of Lessee's agreements in this paragraph. (3) Lessor will remain responsible for any payments due Boeing as a result of obligations relating to the Aircraft incurred by Lessor to Boeing prior to the effective date of this Notice. We request that Boeing acknowledges receipt of this letter and confirm the transfer of rights set forth above by signing the acknowledgment and forwarding one copy of this letter to each of the undersigned. Very truly yours, American Trans Air, Inc. Lessee By By ----------------------------------- Its Its ----------------------------------- Dated Dated ------------------------------- Receipt of the above letter is acknowledged and transfer of rights under the Purchase Agreement with respect to the Aircraft is confirmed, effective as of this date. THE BOEING COMPANY By ----------------------------------- Its ----------------------------------- Dated ------------------------------- Aircraft Manufacturer's Serial Number ____________ SAMPLE Purchaser's/Lessee's Agreement Boeing Commercial Airplane Group P. O. Box 3707 Seattle, Washington 98124-2207 Attention Vice President - Contracts Mail Stop 21-34 Ladies and Gentlemen: In connection with the sale/lease by American Trans Air, Inc. (Seller/Lessor) to _______________________ (Purchaser/Lessee) of the aircraft identified below, reference is made to the following documents: (i) Purchase Agreement No. _____ dated as of ___________, 20__, between The Boeing Company (Boeing) and Seller/Lessor (the Purchase Agreement) under which Seller/Lessor purchased certain Boeing Model ________ aircraft, including the aircraft bearing Manufacturer's Serial No.(s) ______________________ (the Aircraft); and (ii) Aircraft Sale/Lease Agreement dated as of ___________, 20__, between Seller/Lessor and Purchaser/Lessee (the Aircraft Agreement) under which Seller/Lessor is selling/leasing the Aircraft. Capitalized terms used herein without definition will have the same meaning as in the Aircraft Agreement. 1. Seller/Lessor has sold/leased the Aircraft under the Aircraft Agreement, including therein a form of exculpatory clause protecting Seller/Lessor from liability for loss of or damage to the aircraft, and/or related incidental or consequential damages, including without limitation loss of use, revenue or profit. 2. Disclaimer and Release; Exclusion of Liabilities 2.1 In accordance with Seller/Lessor's obligation under Article 9.5 of AGTA-AAT which was incorporated by reference into the Purchase Agreement, Purchaser/Lessee hereby agrees that: 2.2 DISCLAIMER AND RELEASE. IN CONSIDERATION OF THE SALE/LEASE OF THE AIRCRAFT, PURCHASER/LESSEE HEREBY WAIVES, RELEASES AND RENOUNCES ALL WARRANTIES, OBLIGATIONS AND LIABILITIES OF BOEING AND ALL OTHER RIGHTS, CLAIMS AND REMEDIES OF PURCHASER/LESSEE AGAINST BOEING, EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE, WITH RESPECT TO ANY NONCONFORMANCE OR DEFECT IN ANY AIRCRAFT, BOEING PRODUCT, MATERIALS, TRAINING, SERVICES OR OTHER THING PROVIDED UNDER THE AIRCRAFT AGREEMENT, INCLUDING, BUT NOT LIMITED TO: (A) ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS; (B) ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE; (C) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY IN TORT, WHETHER OR NOT ARISING FROM THE NEGLIGENCE OF BOEING; AND (D) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY FOR LOSS OF OR DAMAGE TO ANY AIRCRAFT. 2.3 EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES. BOEING WILL HAVE NO OBLIGATION OR LIABILITY, WHETHER ARISING IN CONTRACT (INCLUDING WARRANTY), TORT, WHETHER OR NOT ARISING FROM THE NEGLIGENCE OF BOEING, OR OTHERWISE, FOR LOSS OF USE, REVENUE OR PROFIT, OR FOR ANY OTHER INCIDENTAL OR CONSEQUENTIAL DAMAGES WITH RESPECT TO ANY NONCONFORMANCE OR DEFECT IN ANY AIRCRAFT, MATERIALS, TRAINING, SERVICES OR OTHER THING PROVIDED UNDER THE AIRCRAFT AGREEMENT. 2.4 Definitions. For the purpose of this paragraph 2, "BOEING" or "Boeing" is defined as The Boeing Company, its divisions, subsidiaries, affiliates, the assignees of each, and their respective directors, officers, employees and agents. American Trans Air, Inc. (Seller/Lessor) Purchaser/Lessee By By ----------------------------------- Its Its ----------------------------------- Dated Dated ------------------------------- SAMPLE Owner Appointment of Agent - Warranties Boeing Commercial Airplane Group P.O. Box 3707 Seattle, Washington 98124-2207 Attention: Vice President - Contracts Mail Stop 21-34 Ladies and Gentlemen: 1. Reference is made to Purchase Agreement No. ____ dated as of __________, 20__, between The Boeing Company (Boeing) and American Trans Air, Inc. (Customer) (the Purchase Agreement), under which Customer purchased certain Boeing Model ________ aircraft including the aircraft bearing Manufacturer's Serial No.(s) _____________ (the Aircraft). The Purchase Agreement incorporated by reference Aircraft General Terms Agreement AGTA-AAT (AGTA). Capitalized terms used herein without definition will have the same meaning as in the Purchase Agreement. To accomplish the appointment of an agent, Customer confirms: A. Customer has appointed ____________________ as agent (Agent) to act directly with Boeing with respect to the remaining warranties under the Purchase Agreement and requests Boeing to treat Agent as Customer for the administration of claims with respect to such warranties; provided however, Customer remains liable to Boeing to perform the obligations of Customer under the Purchase Agreement. B. Boeing may continue to deal exclusively with Agent concerning the matters described herein unless and until Boeing receives written notice from Customer to the contrary, addressed to Vice President - Contracts, Mail Stop 21-34, Boeing Commercial Airplane Group, P.O. Box 3707, Seattle, Washington 98124-2207, U.S.A. With respect to the rights and obligations of Customer under the Purchase Agreement, all actions taken by Agent or agreements entered into by Agent during the period prior to Boeing's receipt of such notice are final and binding on Customer. Further, any payments made by Boeing as a result of claims made by Agent will be made to the credit of Agent unless otherwise specified when each claim is submitted. C. Customer will remain responsible for any payments due Boeing as a result of obligations relating to the Aircraft incurred by Customer to Boeing prior to the effective date of this Notice. We request that Boeing acknowledge receipt of this letter and confirm the appointment of Agent as stated above by signing the acknowledgment and forwarding one copy of this letter to each of the undersigned. Very truly yours, American Trans Air, Inc. By ------------------------------- AGENT'S AGREEMENT Agent accepts the appointment as stated above, acknowledges it has reviewed the Purchase Agreement and agrees that, in exercising any rights or making any claims thereunder, Agent will be bound by and comply with all applicable terms and conditions of the Purchase Agreement including, without limitation, the DISCLAIMER AND RELEASE and EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES in Article 11 of Part 2 of Exhibit C to the AGTA. Agent further agrees, upon the written request of Boeing, to promptly execute and deliver such further assurances and documents and take such further action as Boeing may reasonably request in order to obtain the full benefits of the warranties under the Purchase Agreement. Very truly yours, Agent By ------------------------------- Its ------------------------------- Dated --------------------------- Receipt of the above letter is acknowledged and the appointment of Agent with respect to the above-described rights under the Purchase Agreement is confirmed, effective as of this date. THE BOEING COMPANY By ------------------------------- Its ------------------------------- Dated --------------------------- Aircraft Manufacturer's Serial Number __________ SAMPLE Contractor Confidentiality Agreement Boeing Commercial Airplane Group P.O. Box 3707 Seattle, Washington 98124-2207 Attention: Vice President - Contracts Mail Stop 21-34 Ladies and Gentlemen: This Agreement is entered into between ____________________ (Contractor) and American Trans Air, Inc. (Customer) and will be effective as of the date stated below. In connection with Customer's provision to Contractor of certain Materials, Proprietary Materials and Proprietary Information, reference is made to Purchase Agreement No. _____ dated as of _______ , 20___ between The Boeing Company (Boeing) and Customer. Capitalized terms used herein without definition will have the same meaning as in the Purchase Agreement. Boeing has agreed to permit Customer to make certain Materials, Proprietary Materials and Proprietary Information relating to Customer's Boeing Model ________ aircraft, Manufacturer's Serial Number ______, Registration No. ________ (the Aircraft) available to Contractor in connection with Customer's contract with Contractor (the Contract) to maintain/repair/modify the Aircraft. As a condition of receiving the Proprietary Materials and Proprietary Information, Contractor agrees as follows: 1. For purposes of this Agreement: "Aircraft Software" means software that is installed and used in the operation of an Aircraft. "Materials" are defined as any and all items that are created by Boeing or a third party, which are provided directly or indirectly from Boeing and serve primarily to contain, convey or embody information. Materials may include either tangible embodiments (for example, documents or drawings), or intangible embodiments (for example, software and other electronic forms) of information but excludes Aircraft Software. "Proprietary Information" means any and all proprietary, confidential and/or trade secret information owned by Boeing or a Third Party which is contained, conveyed or embodied in Proprietary Materials. "Proprietary Materials" means Materials that contain, convey, or embody Proprietary Information. "Third Party" means anyone other than Boeing, Customer and Contractor. 2. Boeing has authorized Customer to grant to Contractor a worldwide, non-exclusive, personal and nontransferable license to use Proprietary Materials and Proprietary Information, owned by Boeing, internally in connection with performance of the Contract or as may otherwise be authorized by Boeing in writing. Contractor will keep confidential and protect from disclosure to any person, entity or government agency, including any person or entity affiliated with Contractor, all Proprietary Materials and Proprietary Information. Individual copies of all Materials are provided to Contractor subject to copyrights therein, and all such copyrights are retained by Boeing or, in some cases, by Third Parties. Contractor is authorized to make copies of Materials (except for Materials bearing the copyright legend of a Third Party) provided, however, Contractor preserves the restrictive legends and proprietary notices on all copies. All copies of Proprietary Materials will belong to Boeing and be treated as Proprietary Materials under this Agreement. 3. Contractor specifically agrees not to use Proprietary Materials or Proprietary Information in connection with the manufacture or sale of any part or design. Unless otherwise agreed with Boeing in writing, Proprietary Materials and Proprietary Information may be used by Contractor only for work on the Aircraft for which such Proprietary Materials have been specified by Boeing. Customer and Contractor recognize and agree that they are responsible for ascertaining and ensuring that all Materials are appropriate for the use to which they are put. 4. Contractor will not attempt to gain access to information by reverse engineering, decompiling, or disassembling any portion of any software provided to Contractor pursuant to this Agreement. 5. Upon Boeing's request at any time, Contractor will promptly return to Boeing (or, at Boeing's option, destroy) all Proprietary Materials, together with all copies thereof and will certify to Boeing that all such Proprietary Materials and copies have been so returned or destroyed. 6. To the extent required by a government regulatory agency having jurisdiction over Contractor, Customer or the Aircraft, Contractor is authorized to provide Proprietary Materials and disclose Proprietary Information to the agency for the agency's use in connection with Contractor's, authorized use of such Proprietary Materials and/or Proprietary Information in connection with Contractor's maintenance, repair, or modification of the Aircraft. Contractor agrees to take reasonable steps to prevent such agency from making any distribution or disclosure, or additional use of the Proprietary Materials and Proprietary Information so provided or disclosed. Contractor further agrees to promptly notify Boeing upon learning of any (i) distribution, disclosure, or additional use by such agency, (ii) request to such agency for distribution, disclosure, or additional use, or (iii) intention on the part of such agency to distribute, disclose, or make additional use of the Proprietary Materials or Proprietary Information. 7. Boeing is a third-party beneficiary under this Agreement, and Boeing may enforce any and all of the provisions of the Agreement directly against Contractor. Contractor hereby submits to the jurisdiction of the Washington state courts and the United States District Court for the Western District of Washington with regard to any claims Boeing may make under this Agreement. It is agreed that Washington law (excluding Washington's conflict-of-law principles) governs this Agreement. 8. No disclosure or physical transfer by Boeing or Customer to Contractor, of any Proprietary Materials or Proprietary Information covered by this Agreement will be construed as granting a license, other than as expressly set forth in this Agreement or any ownership right in any patent, patent application, copyright or proprietary information. 9. The provisions of this Agreement will apply notwithstanding any markings or legends, or the absence thereof, on any Proprietary Materials. 10. This Agreement is the entire agreement of the parties regarding the ownership and treatment of Proprietary Materials and Proprietary Information, and no modification of this Agreement will be effective as against Boeing unless in writing signed by authorized representatives of Contractor, Customer and Boeing. 11. Failure by either party to enforce any of the provisions of this Agreement will not be construed as a waiver of such provisions. If any of the provision of this Agreement is held unlawful or otherwise ineffective by a court of competent jurisdiction, the remainder of the Agreement will remain in full force. ACCEPTED AND AGREED TO this Date: _____________________, 20___ American Trans Air, Inc. Contractor By By ----------------------------------- Its Its ----------------------------------- PURCHASE AGREEMENT NUMBER 2262 between THE BOEING COMPANY and American Trans Air, Inc. Relating to Boeing Model 737-83N Aircraft TABLE OF CONTENTS SA ARTICLES NUMBER 1. Quantity, Model and Description 2. Delivery Schedule 3. Price 4. Payment 5. Miscellaneous TABLE 1. Aircraft Information Table EXHIBIT A. Aircraft Configuration B. Aircraft Delivery Requirements and Responsibilities SUPPLEMENTAL EXHIBITS AE1. Escalation Adjustment/Airframe and Optional Features BFE1. BFE Variables CS1. Customer Support Variables (Confidential Material Omitted) SLP1. Service Life Policy Components SA LETTER AGREEMENTS NUMBER 2262-01 Demonstration Flight Waiver 2262-02 Spares Intial provisioning (Confidential Material Omitted) Purchase Agreement No. 2262 between The Boeing Company and American Trans Air, Inc. ------------------------------ This Purchase Agreement No. 2262 dated as of between The Boeing Company (Boeing) and American Trans Air, Inc. (Customer) relating to the purchase and sale of Model 737-83N aircraft incorporates the terms and conditions of the Aircraft General Terms Agreement dated as of between the parties, identified as AGTA-AAT (AGTA). Article 1. Quantity, Model and Description. ------------------------------- The aircraft to be delivered to Customer will be designated as Model 737-83N aircraft (the Aircraft). Boeing will manufacture and sell to Customer Aircraft conforming to the configuration described in Exhibit A, which is part of this Purchase Agreement, in the quantities listed in Table 1 to the Purchase Agreement. Article 2. Delivery Schedule. ----------------- The scheduled months of delivery of the Aircraft are listed in the attached Table 1, which is part of this Purchase Agreement. Exhibit B, which is part of this Purchase Agreement, describes certain responsibilities for both Customer and Boeing in order to accomplish the delivery of the Aircraft. Article 3. Price. ----- 3.1 Aircraft Basic Price. The Aircraft Basic Price is listed in Table 1 in subject to escalation dollars. 3.2 Advance Payment Base Prices. The Advance Payment Base Prices listed in Table 1 were calculated utilizing the latest escalation factors available to Boeing on the date of this Purchase Agreement projected to the month of scheduled delivery. Article 4. Payment. ------- 4.1 Boeing acknowledges receipt of a deposit in the amount shown in Table 1 for each Aircraft (Deposit). 4.2 The standard advance payment schedule for the Model 737-83N aircraft requires Customer to make certain advance payments, expressed in a percentage of the Advance Payment Base Price of each Aircraft beginning with a payment of 1%, less the Deposit, on the effective date of the Purchase Agreement for the Aircraft. Additional advance payments for each aircraft are due on the first business day of the months listed in the attached Table 1. 4.3 For any Aircraft whose scheduled month of delivery is less than 24 months from the date of this Purchase Agreement, the total amount of advance payments due for payment upon signing of this Purchase Agreement will include all advance payments which are past due in accordance with the standard advance payment schedule set forth in paragraph 4.2 above. 4.4 Customer will pay the balance of the Aircraft Price of each Aircraft at delivery. Article 5. Miscellaneous. ------------- 5.1 Aircraft Information Table. Table 1 consolidates information contained in Articles 1, 2, 3 and 4 with respect to (i) quantity of Aircraft, (ii) applicable Detail Specification, (iii) month and year of scheduled deliveries, (iv) Aircraft Basic Price, (v) applicable escalation factors and (vi) Advance Payment Base Prices and advance payments and their schedules. 5.2 Escalation Adjustment/Airframe and Optional Features. Supplemental Exhibit AE1 contains the applicable airframe and optional features escalation formula. 5.3 Buyer Furnished Equipment Variables. Supplemental Exhibit BFE1 contains vendor selection dates, on dock dates and other variables applicable to the Aircraft. 5.4 Customer Support Variables. Supplemental Exhibit CS1 contains the variable information applicable to information, training services and other things furnished by Boeing in support of the Aircraft. 5.5 Engine Escalation Variables. Supplemental Exhibit EE1 contains the applicable engine escalation formula, the engine warranty and the engine patent indemnity for the Aircraft. 5.6 Service Life Policy Component Variables. Supplemental Exhibit SLP1 lists the airframe and landing gear components covered by the Service Life Policy for the Aircraft. 5.7 Negotiated Agreement; Entire Agreement. This Purchase Agreement, including the provisions of Article 8.2 of the AGTA relating to insurance, and Article 11 of Part 2 of Exhibit C of the AGTA relating to DISCLAIMER AND RELEASE and EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES, has been the subject of discussion and negotiation and is understood by the parties; the Aircraft Price and other agreements of the parties stated in this Purchase Agreement were arrived at in consideration of such provisions. This Purchase Agreement, including the AGTA, contains the entire agreement between the parties and supersedes all previous proposals, understandings, commitments or representations whatsoever, oral or written, and may be changed only in writing signed by authorized representatives of the parties. DATED AS OF June 30, 2000 -------------- American Trans Air, Inc. THE BOEING COMPANY By /s/ Kenneth K. Wolff By /s/ R.C. Nelson ------------------------------- --------------------- Its: Executive Vice President & CFO Its: Attorney-In-Fact -------------------------------- --------------------- Table 1 to Purchase Agreement No. 2262 Aircraft Delivery, Description, Price and Advance Payments (Confidential Material Omitted) AIRCRAFT CONFIGURATION between THE BOEING COMPANY and American Trans Air, Inc. Exhibit A to Purchase Agreement Number 2262 AIRCRAFT CONFIGURATION Dated ___________________ relating to BOEING MODEL 737-83N AIRCRAFT The Detail Specification is Boeing Detail Specification D019A001-B dated as of November 11, 1998. Such Detail Specification will be amended to incorporate the Options listed herein, including the effects on Manufacturer's Empty Weight (MEW) and Operating Empty Weight (OEW). As soon as practicable but in no case later than delivery of the first Aircraft, Boeing will furnish to Buyer copies of the Detail Specification, which copies will reflect such Options. The Aircraft Basic Price reflects and includes all effects of such Options, except such Aircraft Basic Price does not include the price effects of any Buyer Furnished Equipment or Seller Purchased Equipment. OPTION TITLE PRICE PER PRICE PER AIRCRAFT AIRCRAFT ($1999 STE) ($1999 STE) (Confidential Material Omitted) AIRCRAFT DELIVERY REQUIREMENTS AND RESPONSIBILITIES between THE BOEING COMPANY and American Trans Air, Inc. Exhibit B to Purchase Agreement Number 2262 AIRCRAFT DELIVERY REQUIREMENTS AND RESPONSIBILITIES relating to BOEING MODEL 737-83N AIRCRAFT Both Boeing and Customer have certain documentation and approval responsibilities at various times during the construction cycle of Customer's Aircraft that are critical to making the delivery of each Aircraft a positive experience for both parties. This Exhibit B documents those responsibilities and indicates recommended completion deadlines for the actions to be accomplished. 1. GOVERNMENT DOCUMENTATION REQUIREMENTS. ------------------------------------- Certain actions are required to be taken by Customer in advance of the scheduled delivery month of each Aircraft with respect to obtaining certain government issued documentation. 1.1 Airworthiness and Registration Documents. ---------------------------------------- Not later than 6 months prior to delivery of each Aircraft, Customer will notify Boeing of the registration number to be painted on the side of the Aircraft. In addition, and not later than 3 months prior to delivery of each Aircraft, Customer will, by letter to the regulatory authority having jurisdiction, authorize the temporary use of such registration numbers by Boeing during the pre-delivery testing of the Aircraft. Customer is responsible for furnishing any Temporary or Permanent Registration Certificates required by any governmental authority having jurisdiction to be displayed aboard the Aircraft after delivery. 1.2 Certificate of Sanitary Construction. 1.2.1 U.S. Registered Aircraft. Boeing will obtain from the UnitedStates Public Health Service, a United States Certificate of Sanitary Construction to be displayed aboard each Aircraft after delivery to Customer. 1.2.2 Non-U.S. Registered Aircraft. If Customer requires a UnitedStates Certificate of Sanitary Construction at the time of delivery of the Aircraft, Customer will give written notice thereof to Boeing at least 3 months prior to delivery. Boeing will then use its reasonable best efforts to obtain the Certificate from the United States Public Health Service and present it to Customer at the time of Aircraft delivery. 1.3 Customs Documentation. 1.3.1 Import Documentation. If the Aircraft is intended to be exported from the United States, Customer must notify Boeing not later than 3 months prior to delivery of each Aircraft of any documentation required by the customs authorities or by any other agency of the country of import. 1.3.2 General Declaration - U.S. If the Aircraft is intended to be exported from the United States, Boeing will prepare Customs Form 7507, General Declaration, for execution by U.S. Customs immediately prior to the ferry flight of the Aircraft. For this purpose, Customer will furnish to Boeing not later than 20 days prior to delivery a complete crew and passenger list and a complete ferry flight itinerary, including point of exit from the United States for the Aircraft. If Customer intends, during the ferry flight of an Aircraft, to land at a U.S. airport after clearing Customs at delivery, Customer must notify Boeing not later than 20 days prior to delivery of such intention. If Boeing receives such notification, Boeing will provide to Customer the documents constituting a Customs permit to proceed, allowing such Aircraft to depart after any such landing. Sufficient copies of completed Form 7507, along with passenger manifest, will be furnished Customer to cover U.S. stops scheduled for the ferry flight. 1.3.3 Export Declaration - U.S. If the Aircraft is intended to beexported from the United States, Boeing will prepare Form 7525V and, immediately prior to the ferry flight, will submit such Form to U.S. Customs in Seattle in order to obtain clearance for the departure of the Aircraft, including any cargo, from the United States. U.S. Customs will deliver the Export Declaration to the U.S. Department of Commerce after export. 2. Insurance CertificateS. ---------------------- Unless provided earlier, Customer will provide to Boeing not later than 30 days prior to delivery of the first Aircraft, a copy of the requisite annual insurance certificate in accordance with the requirements of Article 8 of the AGTA. 3 NOTICE OF FLYAWAY CONFIGURATION. ------------------------------- Not later than 20 days prior to delivery of the Aircraft, Customer will provide to Boeing a configuration letter stating the requested "flyaway configuration" of the Aircraft for its ferry flight. This configuration letter should include: (i) the name of the company which is to furnish fuel for the ferry flight and any scheduled post-delivery flight training, the method of payment for such fuel, and fuel load for the ferry flight; (ii) the cargo to be loaded and where it is to be stowed on board the Aircraft, the address where cargo is to be shipped after flyaway and notification of any hazardous materials requiring special handling; (iii) any BFE equipment to be removed prior to flyaway and returned to Boeing BFE stores for installation on Customer's subsequent Aircraft; (iv) a complete list of names and citizenship of each crew member and non-revenue passenger who will be aboard the ferry flight; and (v) a complete ferry flight itinerary. 4. DELIVERY ACTIONS BY BOEING. -------------------------- 4.1 Schedule of Inspections. All FAA, Boeing, Customer and, if required,Customs Bureau inspections will be scheduled by Boeing for completion prior to delivery or departure of the Aircraft. Customer will be informed of such schedules. 4.2 Schedule of Demonstration Flights. All FAA and Customer demonstration flights will be scheduled by Boeing for completion prior to delivery of the Aircraft. 4.3 Schedule for Customer's Flight Crew. Boeing will inform Customer of the date that a flight crew is required for acceptance routines associated with delivery of the Aircraft. 4.4 Fuel Provided by Boeing. Boeing will provide to Customer, without charge, the amount of fuel shown in U.S. gallons in the table below for the model of Aircraft being delivered and full capacity of engine oil at the time of delivery or prior to the ferry flight of the Aircraft. Aircraft Model Fuel Provided - -------------- ------------- 737 1,000 747 4,000 757 1,600 767 2,000 777 3,000 4.5 Flight Crew and Passenger Consumables. Boeing will provide reasonable quantities of food, coat hangers, towels, toilet tissue, drinking cups and soap for the first segment of the ferry flight for the Aircraft. 4.6 Delivery Papers, Documents and Data. Boeing will have available at the time of delivery of the Aircraft certain delivery papers, documents and data for execution and delivery. If title for the Aircraft will be transferred to Customer through a Boeing sales subsidiary and if the Aircraft will be registered with the FAA, Boeing will pre-position in Oklahoma City, Oklahoma, for filing with the FAA at the time of delivery of the Aircraft an executed original Form 8050-2, Aircraft Bill of Sale, indicating transfer of title to the Aircraft from Boeing's sales subsidiary to Customer. 4.7 Delegation of Authority. If specifically requested in advance by Customer, Boeing will present a certified copy of a Resolution of Boeing's Board of Directors, designating and authorizing certain persons to act on its behalf in connection with delivery of the Aircraft. 5. DELIVERY ACTIONS BY CUSTOMER. ---------------------------- 5.1 Aircraft Radio Station License. At delivery Customer will provide its Aircraft Radio Station License to be placed on board the Aircraft following delivery. 5.2. Aircraft Flight Log. At delivery Customer will provide the Aircraft Flight Log for the Aircraft. 5.3 Delegation of Authority. Customer will present to Boeing at delivery of the Aircraft an original or certified copy of Customer's Delegation of Authority designating and authorizing certain persons to act on its behalf in connection with delivery of the specified Aircraft. ESCALATION ADJUSTMENT AIRFRAME AND OPTIONAL FEATURES between THE BOEING COMPANY and America Trans Air, inc. Supplemental Exhibit AE1 to Purchase Agreement Number 2262 (For Model 717-200, 737-600, 737-700, 737-800 and 737-900 the Airframe Price Includes the Engine Price at its basic thrust level.) 1. Formula. ------- Airframe and Optional Features price adjustments (Airframe Price Adjustment) are used to allow prices to be stated in current year dollars at the signing of this Purchase Agreement and to adjust the amount to be paid by Customer at delivery for the effects of economic fluctuation. The Airframe Price Adjustment will be determined at the time of Aircraft delivery in accordance with the following formula: Pa = (P+B)(L + M) - P Where: Pa = Airframe Price Adjustment. (For Model 717-200, 737-600, 737-700, 737-800 and 737-900, the Airframe Price includes the Engine Price at its basic thrust level.) L = .65 x ( ECI ----- ECIb )where ECIb is the base year index (as set forth in Table 1 of this Purchase Agreement) M = .35 x ( ICI ----- ICIb )where ICIb is the base year index (as set forth in Table 1 of this Purchase Agreement) P = Airframe Price plus Optional Features Price (as set forth in Table 1 of this Purchase Agreement). B = 0.005 x (N/12) x (P) where N is the calendar month and year of scheduled Aircraft delivery minus the calendar month and year of the Base Price Year, both as shown in Table 1 of this Purchase Agreement. ECI is a value determined using the U.S. Department of Labor, Bureau of Labor Statistics "Employment Cost Index for workers in aerospace manufacturing - Wages and Salaries" (ECI code 3721W), calculated by establishing a three-month arithmetic average value (expressed as a decimal and rounded to the nearest tenth) using the values for the fifth, sixth and seventh months prior to the month of scheduled delivery of the applicable Aircraft. As the Employment Cost Index values are only released on a quarterly basis, the value released for the month of March will be used for the months of January and February; the value for June used for April and May; the value for September used for July and August; and the value for December used for October and November. ICI is a value determined using the U.S. Department of Labor, Bureau of Labor Statistics "Producer Prices and Price Index - Industrial Commodities Index ", calculated as a 3-month arithmetic average of the released monthly values (expressed as a decimal and rounded to the nearest tenth) using the values for the 5th, 6th and 7th months prior to the month of scheduled delivery of the applicable Aircraft. As an example, for an Aircraft scheduled to be delivered in the month of January, the months June, July and August of the preceding year will be utilized in determining the value of ECI and ICI. Note: i. In determining the values of L and M, all calculations and resulting values will be expressed as a decimal rounded to the nearest ten-thousandth. ii. .65 is the numeric ratio attributed to labor in the Airframe Price Adjustment formula. iii. .35 is the numeric ratio attributed to materials in the Airframe Price Adjustment formula. Iv. The denominators (base year indices) are the actual average values reported by the U.S. Department of Labor, Bureau of Labor Statistics (base year June 1989 = 100). The applicable base year and corresponding denominator is provided by Boeing in Table 1 of this Purchase Agreement. iv. The final value of Pa will be rounded to the nearest dollar. vi. The Airframe Price Adjustment will not be made if it will result in a decrease in the Aircraft Basic Price. 2. Values to be Utilized in the Event of Unavailability. ----------------------------------------------------- 2.1 If the Bureau of Labor Statistics substantially revises the methodology used for the determination of the values to be used to determine the ECI and ICI values (in contrast to benchmark adjustments or other corrections of previously released values), or for any reason has not released values needed to determine the applicable Airframe Price Adjustment, the parties will, prior to the delivery of any such Aircraft, select a substitute from other Bureau of Labor Statistics data or similar data reported by non-governmental organizations. Such substitute will result in the same adjustment, insofar as possible, as would have been calculated utilizing the original values adjusted for fluctuation during the applicable time period. However, if within 24 months after delivery of the Aircraft, the Bureau of Labor Statistics should resume releasing values for the months needed to determine the Airframe Price Adjustment, such values will be used to determine any increase or decrease in the Airframe Price Adjustment for the Aircraft from that determined at the time of delivery of the Aircraft. 2.2 Notwithstanding Article 2.1 above, if prior to the scheduled delivery month of an Aircraft the Bureau of Labor Statistics changes the base year for determination of the ECI and ICI values as defined above, such re-based values will be incorporated in the Airframe Price Adjustment calculation. 2.3 In the event escalation provisions are made non-enforceable or otherwise rendered void by any agency of the United States Government, the parties agree, to the extent they may lawfully do so, to equitably adjust the Aircraft Price of any affected Aircraft to reflect an allowance for increases or decreases in labor compensation and material costs occurring since February of the price base year shown in the Purchase Agreement which is consistent with the applicable provisions of paragraph 1 of this Supplemental Exhibit AE1. 2.4 If within 12 months of Aircraft delivery, the published index values are revised due to an acknowledged error by the Bureau of Labor Statistics, the Airframe Price Adjustment will be re-calculated using the revised index values (this does not include those values noted as preliminary by the Bureau of Labor Statistics). A credit memorandum or supplemental invoice will be issued for the Airframe Price Adjustment difference. Interest charges will not apply for the period of original invoice to issuance of credit memorandum or supplemental invoice. Note: i. The values released by the Bureau of Labor Statistics and available to Boeing 30 days prior to the scheduled delivery month of an Aircraft will be used to determine the ECI and ICI values for the applicable months (including those noted as preliminary by the Bureau of Labor Statistics) to calculate the Airframe Price Adjustment for the Aircraft invoice at the time of delivery. The values will be considered final and no Aircraft Price Adjustments will be made after Aircraft delivery for any subsequent changes in published Index values, subject always to paragraph 2.4 above. ii. The maximum number of digits to the right of the decimal after rounding utilized in any part of the Airframe Price Adjustment equation will be 4, where rounding of the fourth digit will be increased to the next highest digit when the 5th digit is equal to 5 or greater. BUYER FURNISHED EQUIPMENT VARIABLES between THE BOEING COMPANY and American Trans Air, Inc. Supplemental Exhibit BFE1 to Purchase Agreement Number 2262 BUYER FURNISHED EQUIPMENT VARIABLES relating to BOEING MODEL 737-83N AIRCRAFT This Supplemental Exhibit BFE1 contains vendor selection dates, on-dock dates and other variables applicable to the Aircraft. 1. Supplier Selection. Customer will: 1.1 Select and notify Boeing of the suppliers and part numbers of the following BFE items by the following dates: Galley System Complete Galley Inserts Complete Seats (passenger) Complete Overhead & Audio System Complete Miscellaneous Emergency Equipment Complete Cargo Handling Systems* August 8, 2000 * For a previously certified system. 2. On-dock Dates On or before August 2000, Boeing will provide to Customer a BFE Requirements On-Dock/Inventory Document (BFE Document) or an electronically transmitted BFE Report which may be periodically revised, setting forth the items, quantities, on-dock dates and shipping instructions relating to the in-sequence installation of BFE. For planning purposes, a preliminary BFE on-dock schedule is set forth below: Preliminary On-Dock Dates Aircraft Delivery (Confidential Material Omitted) Aircraft Delivery (Confidential Material Omitted) Aircraft Delivery (Confidential Material Omitted) Preliminary On-Dock Dates (Continued) Aircraft Delivery (Confidential Material Omitted) CUSTOMER SUPPORT VARIABLES between THE BOEING COMPANY and American Trans Air, Inc. Supplemental Exhibit CS1 to Purchase Agreement Number 2262 CUSTOMER SUPPORT VARIABLES relating to BOEING MODEL 737-83N AIRCRAFT Customer and Boeing will conduct planning conferences approximately 12 months before delivery of the first Aircraft, or as otherwise agreed, to develop and schedule a customized Customer Support Program to be furnished by Boeing in support of the Aircraft. The customized Customer Services Program will be based upon and equivalent to the entitlements summarized below. 1. MAINTENANCE TRAINING. -------------------- 1.1 Airplane General Familiarization Course; 1 class of 24 students; 1.2 Mechanical/Power Plant Systems Course; 2 classes of 15 students; 1.3 Electrical Systems Course; 2 classes of 15 students; 1.4 Avionics Systems Course; 2 classes of 15 students; 1.5 Corrosion Prevention & Control Course; 1 class of 10 students; 1.6 Aircraft Rigging Course; 1 class of 6 students; 1.7 Composite Repair for Technicians - Basic; 1 class of 8 students; 1.8 Training materials will be provided to each student. In addition, one set of training materials used in Boeing's training program, including visual aids, Computer Based Training Courseware, instrument panel wall charts, text/graphics, video programs, etc. will be provided for use in Customer's own training program. 2. FLIGHT TRAINING. --------------- 2.1 Transition training for 8 flight crews (16 pilots) in 2 classes; The training will consist of ground school (utilizing computer based training), fixed base simulator, full flight simulator and actual aircraft training on Customer's Aircraft. 2.2 Flight Dispatcher training; 2 classes of 6 students; 2.3 Flight Attendant training; 2 classes of 12 students; 2.4 Performance Engineer training in Boeing's regularly scheduled courses; schedules are published twice yearly. 2.5 Training materials will be provided to each student. In addition, one set of training materials as used in Boeing's training program, including visual aids, Computer Based Training Courseware, instrument panel wall charts, text/graphics, video programs, Flight Attendant Manuals, etc. will be provided for use in Customer's own training program. 2.6 Additional Flight Operations Services: a. Boeing flight crew personnel to assist in ferrying the first aircraft to Customer's main base; b. Instructor pilots for 90 calendar days for revenue service training assistance; c. An instructor pilot to visit Customer 6 months after revenue service training to review Customer's flight crew operations for a 2 week period. 3. PLANNING ASSISTANCE. ------------------- 3.1 MAINTENANCE AND GROUND OPERATIONS. --------------------------------- Upon request, Boeing will visit Customer's main base to evaluate aircraft maintenance facilities, develop recommendations and assist in maintenance planning. 3.2 SPARES. ------ a) RECOMMENDED SPARES PARTS LIST (RSPL) ------------------------------------ customized RSPL, data and documents will be provided to identify spare parts required for Customer's support program. b) ILLUSTRATED PARTS CATALOG (IPC) ------------------------------- A customized IPC in accordance with ATA 100 will be provided. c) PROVISIONING TRAINING Provisioning training will be provided for Customer's personnel at Boeing's facilities, where documentation and technical expertise are available. Training is focused on the initial provisioning process and calculations reflected in the Boeing RSPL. d) SPARES PROVISIONING CONFERENCE A provisioning conference will be conducted, normally at Boeing's facilities where technical data and personnel are available. 4: TECHNICAL DATA AND DOCUMENTS 4.1. FLIGHT OPERATIONS. ----------------- Airplane Flight Manual Operations Manual Quick Reference Handbook Weight and Balance Manual Dispatch Deviation Procedures Guide Flight Crew Training Manual Performance Engineer's Manual Jet Transport Performance Methods FMC Supplemental Data Document Operational Performance Software Fault Reporting Manual ETOPS Guide Vol. III Flight Planning and Performance Manual 4.2. MAINTENANCE. ----------- Aircraft Maintenance Manual Wiring Diagram Manual Systems Schematics Manual Connector Part Number Options Document Structural Repair Manual Overhaul/Component Maintenance Manual Standard Overhaul Practices Manual Standard Wiring Practices Manual Non-Destructive Test Manual Service Bulletins and Index Corrosion Prevention Manual Fault Isolation Manual Fuel Measuring Stick Calibration Document Power Plant Buildup Manual Central Maintenance Computer System Reporting Table In Service Activity Report All Operator Letters Service Letters Structural Item Interim Advisory Maintenance Tips Combined Index 4.3. MAINTENANCE PLANNING. -------------------- Maintenance Planning Data Document Maintenance Planning Data Tasks Masterfile Maintenance Task Cards and Index Maintenance Inspection Intervals Report ETOPS Guide Vol. II Configuration Maintenance and Procedures for Extended Range Operations 4.4. SPARES. ------ Illustrated Parts Catalog Standards Books 4.5. FACILITIES AND EQUIPMENT PLANNING. --------------------------------- Facilities and Equipment Planning Document Special Tool and Ground Handling Equipment Drawings and Index Supplementary Tooling Documentation Illustrated Tool and Equipment List/Manual Aircraft Recovery Document Airplane Characteristics for Airport Planning Document Airplane Rescue and Fire Fighting Document Engine Handling Document ETOPS Guide Vol. I 4.6. SUPPLIER TECHNICAL DATA. ----------------------- Service Bulletins Ground Support Equipment Data Provisioning Information Component Maintenance/Overhaul Manuals and Index Publications Index Product Support Supplier Directory (Confidential Letter Omitted) SERVICE LIFE POLICY COMPONENTS between THE BOEING COMPANY and American Trans Air, Inc. Supplemental Exhibit SLP1 to Purchase Agreement Number 2262 SERVICE LIFE POLICY COMPONENTS relating to BOEING MODEL 737 AIRCRAFT This is the listing of SLP Components for the Aircraft which relate to Part 3, Boeing Service Life Policy of Exhibit C, Product Assurance Document to the AGTA and is a part of Purchase Agreement No. 2262. 1. Wing. ---- (a) Upper and lower skins and stiffeners between the forward and rear wing spars. (b) Wing spar webs, chords and stiffeners. (c) Inspar wing ribs. (d) Inspar splice plates and fittings. (e) Main landing gear support structure. (f) Wing center section floor beams, lower beams and spanwise beams, but not the seat tracks attached to floor beams. (g) Engine strut support fittings attached directly to wing primary structure. (h) Wing-to-body structural attachments. (i) Support structure in the wing for spoilers and spoiler actuators; for aileron hinges and reaction links; and for leading edge devices and trailing edge flaps. (j) Trailing edge flap tracks and carriages. (k) Aileron leading edge device and trailing edge flap internal, fixed attachment and actuator support structure. 2. Body. ---- (a) External surface skins and doublers, longitudinal stiffeners, longerons and circumferential rings and frames between the forward pressure bulkhead and the vertical stabilizer rear spar bulkhead and structural support and enclosure for the APU but excluding all system components and related installation and connecting devices, insulation, lining, and decorative panels and related installation and connecting devices. (b) Window and windshield structure but excluding the windows and windshields. (c) Fixed attachment structure of the passenger doors, cargo doors and emergency exits, excluding door mechanisms and movable hinge components. Sills and frames around the body openings for the passenger doors, cargo doors and emergency exits, excluding scuff plates and pressure seals. (d) Nose wheel well structure, including the wheel well walls, pressure deck, bulkheads, and gear support structure. (e) Main gear wheel well structure including pressure deck and landing gear beam support structure. (f) Floor beams and support posts in the control cab and passenger cabin area, but excluding seat tracks. (g) Forward and aft pressure bulkheads. (h) Keel structure between the wing front spar bulkhead and the main gear wheel well aft bulkhead including splices. (i) Wing front and rear spar support bulkheads, and vertical and horizontal stabilizer front and rear spar support bulkheads including terminal fittings but excluding all system components and related installation and connecting devices, insulation, lining, decorative panels and related installation and connecting devices. (j) Support structure in the body for the stabilizer pivot and stabilizer screw. 3. Vertical Stabilizer. ------------------- (a) External skins between front and rear spars. (b) Front, rear and auxiliary spar chords, webs and stiffeners and attachment fittings. (c) Inspar ribs. (d) Rudder hinges and supporting ribs, excluding bearings. (e) Support structure in the vertical stabilizer for rudder hinges, reaction links and actuators. (f) Rudder internal, fixed attachment and actuator support structure. 4. Horizontal Stabilizer. --------------------- (a) External skins between front and rear spars. (b) Front and rear spar chords, webs and stiffeners. (c) Inspar ribs. (d) Stabilizer center section including hinge and screw support structure. (e) Support structure in the horizontal stabilizer for the elevator hinges, reaction links and actuators. (f) Elevator internal, fixed attachment and actuator support structure. 5. Engine Strut. ------------ (a) Strut external surface skin and doublers and stiffeners. (b) Internal strut chords, frames and bulkheads. (c) Strut to wing fittings and diagonal brace. (d) Engine mount support fittings attached directly to strut structure and including the engine-mounted support fittings. 6. Main Landing Gear. ----------------- (a) Outer cylinder. (b) Inner cylinder, including axles. (c) Upper and lower side struts, including spindles, universals and reaction links. (d) Drag strut. (e) Bell crank. (f) Orifice support tube. (g) Trunnion link. (h) Downlock links including spindles and universals. (i) Torsion links. (j) Actuator beam, support link and beam arm. 7. Nose Landing Gear. ----------------- (a) Outer cylinder. (b) Inner cylinder, including axles. (c) Orifice support tube. (d) Upper and lower drag strut, including lock links. (e) Steering plates and steering collars. (f) Torsion links. NOTE: The Service Life Policy does not cover any bearings, bolts, bushings, clamps, brackets, actuating mechanisms or latching mechanisms used in or on the Covered Components. American Trans Air, Inc. 7337 West Washington St. Indianapolis International Airport Indianapolis, Indiana 46231 Subject: Demonstration Flight Waiver Reference: Purchase Agreement 2262 (the Purchase Agreement) between The Boeing Company (Boeing) and American Trans Air, Inc. (Customer) relating to Model 737-83N aircraft (the Aircraft) This Letter Agreement amends and supplements the Purchase Agreement. All terms used but not defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement. Definition of Terms: Correction Costs: Customer's direct labor costs and the cost of any material required to correct a Flight Discrepancy where direct labor costs are equal to the warranty labor rate in effect between the parties at the time such labor is expended. Flight Discrepancy: A failure or malfunction of an Aircraft, or the accessories, equipment or parts installed on the Aircraft which results from a defect in the Aircraft, Boeing Product, engine or Supplier Product or a nonconformance to the Detail Specification for the Aircraft. The AGTA provides that each aircraft will be test flown prior to delivery for the purpose of demonstrating the functioning of such Aircraft and its equipment to Customer; however, Customer may elect to waive this test flight. For each test flight waived, Boeing agrees to provide Customer an amount of jet fuel at delivery that, including the standard fuel entitlement, totals the following amount of fuel: --------------- ------------------------------------------------- Aircraft Model Total Fuel Entitlement (U.S. Gallons) --------------- ------------------------------------------------- --------------- ------------------------------------------------- 737 Full tanks (approx. 5,300 to 6,800, depending on model) --------------- ------------------------------------------------- --------------- ------------------------------------------------- 747 26,000 --------------- ------------------------------------------------- --------------- ------------------------------------------------- 757 9,600 --------------- ------------------------------------------------- --------------- ------------------------------------------------- 767 11,000 --------------- ------------------------------------------------- --------------- ------------------------------------------------- 777 10,300 --------------- ------------------------------------------------- Further, Boeing agrees to reimburse Customer for any Correction Costs incurred as a result of the discovery of a Flight Discrepancy during the first flight of the aircraft by Customer following delivery to the extent such Correction Costs are not covered under a warranty provided by Boeing, the engine manufacturer or any of Boeing's suppliers. Should a Flight Discrepancy be detected by Customer which requires the return of the Aircraft to Boeing's facilities at Seattle, Washington, so that Boeing may correct such Flight Discrepancy, Boeing and Customer agree that title to and risk of loss of such Aircraft will remain with Customer. In addition, it is agreed that Boeing will have responsibility for the Aircraft while it is on the ground at Boeing's facilities in Seattle, Washington, as is chargeable by law to a bailee for mutual benefit, but Boeing shall not be chargeable for loss of use. To be reimbursed for Correction Costs, Customer shall submit a written itemized statement describing any flight discrepancies and indicating the Correction Cost incurred by Customer for each discrepancy. This request must be submitted to Boeing's Contracts Regional Director at Renton, Washington, within ninety (90) days after the first flight by Customer. Very truly yours, THE BOEING COMPANY By /s/ R.C. Nelson ------------------------------------------ Its: Attorney-In-Fact -------------------------------------- ACCEPTED AND AGREED TO this Date: June 30 ,2000 ------------------------------- AMERICAN TRANS AIR, INC. By /s/ Kenneth K. Wolff ------------------------------------------ Its: Executive Vice President & CFO ------------------------------------------ American Trans Air, Inc. 7337 West Washington St. Indianapolis International Airport Indianapolis, Indiana 46231 Subject: Spares Initial Provisioning Reference: Purchase Agreement 2262 (the Purchase Agreement) between The Boeing Company (Boeing) and American Trans Air, Inc. (Customer) relating to Model 737-83N aircraft (the Aircraft) This Letter Agreement is entered into on the date below, and amends and supplements the Purchase Agreement. All terms used but not defined in this Letter Agreement have the same meaning as in the Purchase Agreement. 1. Applicability. ------------- This letter will apply to initial provisioning for the Model 737-83N Aircraft purchased by Customer under the Purchase Agreement. 2. Initial Provisioning Meeting. ---------------------------- Boeing will conduct an initial provisioning meeting (Initial Provisioning Meeting) with Customer to establish mutually agreeable procedures to accomplish Customer's initial provisioning of spare parts for the Aircraft. The parties will agree, during the Initial Provisioning Meeting on the operational data to be provided by Customer for Boeing's use in preparing its quantity recommendations for initial provisioning of spare parts for the Aircraft, exclusive of special tools, ground support equipment, engines and engine parts (Provisioning Items). Such operational data to be provided by Customer will be the data described in Chapter 6 of Boeing Manual D6-81834, entitled "Spares Provisioning Products Guide" (Boeing Spares Provisioning Products Guide) which will be furnished to Customer prior to the Initial Provisioning Meeting. The parties will also agree on the provisioning documentation to be provided by Boeing as described in Boeing Spares Provisioning Products Guide (such data will be hereinafter referred to collectively as the "Provisioning Data"). Boeing will provide instruction in the use of the initial provisioning documentation. This instruction will be provided in conjunction with the Initial Provisioning Meeting. In addition, the parties will discuss spares ordering procedures and other matters related to the provisioning for the Aircraft. The time and location for such Initial Provisioning Meeting will be mutually agreed upon between the parties; however, Boeing and Customer will use their best efforts to convene such meeting within 30 days after execution of the Purchase Agreement. 3. Initial Provisioning Documentation. ---------------------------------- 3.1 Provisioning Data. Boeing will furnish Provisioning Data to Customer on or about August 25, 2000. The Provisioning Data will be as complete as possible and will cover Provisioning Items selected by Boeing for review by Customer for initial provisioning for the Aircraft. The Provisioning Data will set forth the prices for Provisioning Items which are Boeing Spare Parts and such prices will be firm and remain in effect until the date or dates set forth below in Paragraph 4.1, Boeing Spare Parts, by which orders must be placed with Boeing. Boeing will, from time to time, until a date approximately 90 days following delivery of the last Aircraft or until the delivery configuration of each of the Aircraft is reflected in the Provisioning Data, whichever is later, furnish to Customer revisions to the Provisioning Data. 3.2 Provisioning IPC. Boeing will, on or about August 18, 2000, furnish to Customer a Boeing Illustrated Parts Catalog (IPC), hereinafter referred to as the "Provisioning IPC". The Provisioning IPC will be as complete as possible and will cover Provisioning Items selected by Boeing for review by Customer for initial provisioning for the Aircraft. Boeing will, from time to time, until a date approximately 90 days following delivery of the last Aircraft, or until the delivery configuration of each of the Aircraft is reflected in the Provisioning IPC, whichever is later, furnish to Customer revisions to the Provisioning IPC. 3.3 Buyer Furnished Equipment (BFE) Provisioning Data. ------------------------------------------------- 3.3.1 Boeing's Responsibility. Boeing will include BFE end items in the Provisioning Data and Provisioning IPC for BFE installed on Customer's Aircraft provided such equipment has been installed on other Aircraft by Boeing and Boeing has data on the BFE. 3.3.2 Customer's Responsibility. Customer will be responsible for ensuring BFE data is provided to Boeing by the BFE supplier in a format acceptable to Boeing for BFE not covered by 3.3.1 above. If the data is not provided to Boeing in a timely manner and in a format acceptable to Boeing, such BFE equipment will not be included in Boeing's Provisioning Data or IPC. 3.4 Other Data. Boeing will submit to Customer listings of Raw Materials,Standard Parts and Bulk Materials to be used by Customer in the maintenance and repair of the Aircraft. 4. Purchase from Boeing of Spare Parts as Initial Provisioning for the Aircraft. 4.1 Boeing Spare Parts. Customer will place orders for Provisioning Items by November 17, 2000; provided, however, that in those instances where Boeing submits any revision to the Provisioning Data, Customer will place orders for Boeing Spare Parts covered by such revision within 60 days following the date of such submittal. At Customer's request, Boeing will process "controlled shipments" by shipping full or partial quantities of an order on a schedule specified by Customer, provided the final shipment is made no later than 24 months after receipt of the order. 4.2 Supplier Provisioning Items. Customer may place orders with Boeing for Provisioning Items which are manufactured by suppliers or to their detailed design and are covered by the Provisioning Data as initial provisioning for the Aircraft. The price to Customer for any such supplier Provisioning Item will be 112% of the supplier's quoted price to Boeing therefor. If Customer elects to purchase such supplier Provisioning Items from Boeing, Customer will place its orders therefor in accordance with the provisions of Paragraph 4.1, Boeing Spare Parts. 4.3 Ground Support Equipment and Special Tools. Customer may place orders with Boeing for ground support equipment (GSE) and special tools manufactured by suppliers which Customer determines it will initially require for maintenance, overhaul and servicing of the Aircraft and/or engines. The price to Customer for such GSE or special tools will be one hundred twelve percent (112%) of the supplier's quoted price to Boeing therefor. If Customer elects to purchase such GSE and special tools from Boeing, Customer will place its orders therefor by the date set forth in Paragraph 4.1, Boeing Spare Parts or such later date as the parties may mutually agree. 4.4 Spare Engines and Engine Spare Parts. Customer may place orders with Boeing for spare engines and/or engine spare parts which Customer determines it will initially require for support of the Aircraft or for maintenance and overhaul of the engines. The price to Customer for such spare engines or such engine spare parts, will be 105% of the engine manufacturer's quoted price to Boeing for the engine, and 112% of the engine manufacturer's quoted price to Boeing for the engine spare parts. If Customer elects to purchase such spare engines or engine spare parts through Boeing, Customer will place its orders on a date to be mutually agreed upon during the Initial Provisioning Meeting. 4.5 QEC Kits. Boeing will, on or about June 30, 2000, furnish to Customer a listing of all components which could be included in the Quick Engine Change (QEC) kits which may be purchased by Customer from Boeing. Customer agrees to review such listing and indicate by marking on one copy of such listing those components that Customer desires included in its QEC kits. Customer will return such marked copy to Boeing within 30 days after Customer's receipt of such listing. Within 30 days after Boeing's receipt of such marked copy, Boeing will republish such listing to reflect only those components selected by Customer and will provide copies of such republished listing to Customer. Boeing will from time to time furnish revisions to such republished listing until a date approximately 90 days after delivery of the last QEC kit ordered by Customer for the Aircraft. Boeing will furnish to Customer as soon as practicable a statement setting forth a firm price for the QEC kit configuration selected by Customer. Customer agrees to place orders with Boeing for the QEC kits for the Aircraft by August 25, 2000. 4.6 Payment for Provisioning Items. The payment provisions of the Customer Services General Terms Agreement (CSGTA) between Boeing and Customer will be applicable to Provisioning Items ordered by Customer from Boeing for the Aircraft. 5. Delivery. -------- Boeing will, insofar as reasonably possible, deliver to Customer the Spare Parts ordered by Customer in accordance with the provisions of this letter on dates reasonably calculated to conform to Customer's anticipated needs in view of the scheduled deliveries of the Aircraft. Customer and Boeing will agree upon the date to begin delivery of the Provisioning Spare Parts ordered in accordance with this letter. Where appropriate, Boeing will arrange for shipment of such Spare Parts, which are manufactured by suppliers, directly to Customer from the applicable supplier's facility. The routing and method of shipment for initial deliveries and all subsequent deliveries of such Spare Parts will be as mutually agreed between Boeing and Customer. 6. Substitution for Obsolete Spare Parts. ------------------------------------- 6.1 Obligation to Substitute. In the event that, prior to delivery of the first Aircraft pursuant to the Purchase Agreement, any Spare Part purchased by Customer from Boeing in accordance with this letter is rendered obsolete or unusable due to the redesign of the Aircraft or of any accessory, equipment or part therefor, (other than a redesign at Customer's request), Boeing will deliver to Customer new and usable Spare Parts in substitution for such obsolete or unusable Spare Parts and Customer will return the obsolete or unusable Spare Parts to Boeing. Boeing will credit Customer's account with Boeing with the price paid by Customer for any such obsolete or unusable Spare Part and will invoice Customer for the purchase price of any such substitute Spare Part delivered to Customer. 6.2 Delivery of Obsolete Spare Parts and Substitutes Therefor. Obsolete or unusable Spare Parts returned by Customer pursuant to this Item will be delivered to Boeing at its Seattle Distribution Center, or such other destination as Boeing may reasonably designate. Spare Parts substituted for such returned obsolete or unusable Spare Parts will be delivered to Customer at Boeing's Seattle Distribution Center, or such other Boeing shipping point as Boeing may reasonably designate. Boeing will pay the freight charges for the shipment from Customer to Boeing of any such obsolete or unusable Spare Part and for the shipment from Boeing to Customer of any such substitute Spare Part. 7. Repurchase of Provisioning Items. -------------------------------- 7.1 Obligation to Repurchase. During a period commencing 1 year after delivery of the first Aircraft under the Purchase Agreement, and ending 5 years after such delivery, Boeing will, upon receipt of Customer's written request and subject to the exceptions in Paragraph 7.2, Exceptions, repurchase unused and undamaged Provisioning Items which (i) were recommended by Boeing in the Provisioning Data as initial provisioning for the Aircraft, (ii) were purchased by Customer from Boeing, and (iii) are surplus to Customer's needs. 7.2 Exceptions. Boeing will not be obligated under Paragraph 7.1, Obligation to Repurchase, to repurchase any of the following: (i) quantities of Provisioning Items in excess of those quantities recommended by Boeing in the Provisioning Data for the Aircraft, (ii) QEC Kits, Bulk Material Kits, Raw Material Kits, Service Bulletin Kits, Standards Kits and components thereof (except those components listed separately in the Provisioning Data), (iii) Provisioning Items for which an order was received by Boeing more than 5 months after delivery of the last Aircraft, (iv) Provisioning Items which have become obsolete or have been replaced by other Provisioning Items as a result of (a) Customer's modification of the Aircraft or (b) design improvements by Boeing or the supplier (other than Provisioning Items which have become obsolete because of a defect in design if such defect has not been remedied by an offer by Boeing or the supplier to provide no charge retrofit kits or replacement parts which correct such defect), and (v) Provisioning Items which become excess as a result of a change in Customer's operating parameters, provided to Boeing pursuant to the Initial Provisioning meeting in Paragraph 2, which were the basis of Boeing's initial provisioning recommendations for the Aircraft. 7.3 Notification and Format. Customer will notify Boeing, in writing, when Customer desires to return Provisioning Items which Customer's review indicates are eligible for repurchase by Boeing under the provisions of this Repurchase of Provisioning Items paragraph. Customer's notification will include a detailed summary, in part number sequence, of the Provisioning Items Customer desires to return. Such summary will be in the form of listings, tapes, diskettes or other media as may be mutually agreed between Boeing and Customer, and will include part number, nomenclature, purchase order number, purchase order date and quantity to be returned. Within 5 business days after receipt of Customer's notification, Boeing will advise Customer, in writing, when Boeing's review of such summary will be completed. 7.4 Review and Acceptance by Boeing. Upon completion of Boeing's review of any detailed summary submitted by Customer pursuant to Paragraph 7.3, Boeing will issue to Customer a Material Return Authorization (MRA) for those Provisioning Items Boeing agrees are eligible for repurchase in accordance with this Repurchase of Provisioning Items paragraph. Boeing will advise Customer of the reason that any spare part included in Customer's detailed summary is not eligible for return. Boeing's MRA will state the date by which Provisioning Items listed in the MRA must be redelivered to Boeing and Customer will arrange for shipment of such Provisioning Items accordingly. 7.5 Price and Payment. The price of each Provisioning Item repurchased by Boeing pursuant to this Repurchase of Provisioning Items paragraph will be an amount equal to 100% of the original invoice price thereof. In the case of Provisioning Items manufactured by a supplier which were purchased pursuant to Paragraph 4, Purchase from Boeing of Spare Parts as Initial Provisioning for the Aircraft, hereof the repurchase price will not include Boeing's 12% handling charge. Boeing will pay the repurchase price by issuing a credit memorandum in favor of Customer which may be applied against amounts due Boeing for the purchase of aircraft, Spare Parts, services or data. 7.6 Delivery of Provisioning Items. Provisioning Items repurchased by Boeing pursuant to this Repurchase of Provisioning Items paragraph will be delivered to Boeing F.O.B. at its Seattle Distribution Center, or such other destination as Boeing may reasonably designate. Customer will pay the freight charges for the shipment from Customer to Boeing of any such Provisioning Items. 8. Obsolete Spare Parts and Surplus Provisioning Items - Title and Risk of Loss. Title to and risk of loss of any obsolete or unusable Spare Parts returned to Boeing pursuant to Paragraph 6, Substitution for Obsolete Spare Parts, will pass to Boeing upon delivery thereof to Boeing. Title to and risk of loss of any Spare Part substituted for an obsolete or unusable Spare Part pursuant to Paragraph 6, Substitution for Obsolete Spare Parts, will pass to Customer upon delivery thereof to Customer. Title to and risk of loss of any Provisioning Item repurchased by Boeing pursuant to Paragraph 7, Repurchase of Provisioning Items, will pass to Boeing upon delivery thereof to Boeing. With respect to the obsolete or unusable Spare Parts which may be returned to Boeing and the Spare Parts substituted therefor, pursuant to Paragraph 6, and the Provisioning Items which may be repurchased by Boeing, pursuant to Paragraph 7, the party which has risk of loss of any such Spare Part or Provisioning Item will have the responsibility of providing any insurance coverage for it desired by such party. 9. Supplier Support. ---------------- Boeing has entered, or anticipates entering, into product support agreements with suppliers (Boeing Suppliers) of major system components manufactured by such Suppliers to be installed on the Aircraft (Supplier Components). Such product support agreements commit, or are expected to commit, the Boeing Suppliers to provide to Boeing's customers and/or such customer's designees support services with respect to the Supplier Components which can be reasonably expected to be required during the course of normal operation. This support includes but is not limited to shelf-stock of certain spare parts, emergency spare parts, timely delivery of spare parts, and technical data related to the Supplier Components. Copies of such product support agreements will be provided to Customer on or about September 22, 2000, in Boeing Document D6-56115, Volumes 1 and 2. In the event Customer has used due diligence in attempting to resolve any difficulty arising in normal business transactions between Customer and a Boeing Supplier with respect to product support for a Supplier Component manufactured by such Supplier and if such difficulty remains unresolved, Boeing will, if requested by Customer, assist Customer in resolving such difficulty. Assistance will be provided by the Customer Supplier Services organization. 10. Termination for Excusable Delay. ------------------------------- In the event of termination of the Purchase Agreement with respect to any Aircraft pursuant to Article 7 of the AGTA, such termination will, if Customer so requests by written notice received by Boeing within 15 days after such termination, also discharge and terminate all obligations and liabilities of the parties as to any Spare Parts which Customer had ordered pursuant to the provisions of this letter as initial provisioning for such Aircraft and which are undelivered on the date Boeing receives such written notice. Very truly yours, THE BOEING COMPANY By /s/ R.C. Nelson ------------------------------------------ Its Attorney-In-Fact -------------------------------------- ACCEPTED AND AGREED TO this Date: June 30 , 2000 ------------------------------- AMERICAN TRANS AIR, INC. By /s/ Kenneth K. Wolff ------------------------------------------ Its Executive Vice President & CFO ------------------------------------------ (Confidential Letter Omitted) (Confidential Letter Omitted) (Confidential Letter Omitted) PURCHASE AGREEMENT NUMBER 2285 between THE BOEING COMPANY and American Trans Air, Inc. Relating to Boeing Model 757-33N Aircraft TABLE OF CONTENTS SA ARTICLES NUMBER 1. Quantity, Model and Description 2. Delivery Schedule 3. Price 4. Payment 5. Miscellaneous TABLE 1. Aircraft Information Table EXHIBIT A. Aircraft Configuration B. Aircraft Delivery Requirements and Responsibilities SUPPLEMENTAL EXHIBITS AE1. Escalation Adjustment/Airframe and Optional Features BFE1. BFE Variables CS1. Customer Support Variables (CONFIDENTIAL MATERIAL OMITTED) SLP1. Service Life Policy Components LETTER AGREEMENTS 2285-01 Demonstration Flight Waiver 2285-02 Spares Intial provisioning 2285-03 Flight Crew Training Spare Parts Support (CONFIDENTIAL MATERIAL OMITTED) Purchase Agreement No. 2285 between The Boeing Company and American Trans Air, Inc. ------------------------------ This Purchase Agreement No. 2285 dated as of etween The Boeing Company (BOEING) and American Trans Air, Inc.CUSTOMER)relating to the purchase and sale of Model 757-33N aircraft incorporates the terms and conditions of the Aircraft General Terms Agreement dated as of -------- between the parties, identified as AGTA-AAT (AGTA). Article 1. QUANTITY, MODEL AND DESCRIPTION. ------------------------------- The aircraft to be delivered to Customer will be designated as Model 757-33N aircraft (the AIRCRAFT). Boeing will manufacture and sell to Customer Aircraft conforming to the configuration described in Exhibit A, which is part of this Purchase Agreement, in the quantities listed in Table 1 to the Purchase Agreement. Article 2. DELIVERY SCHEDULE. ----------------- The scheduled months of delivery of the Aircraft are listed in the attached Table 1, which is part of this Purchase Agreement. Exhibit B, which is part of this Purchase Agreement, describes certain responsibilities for both Customer and Boeing in order to accomplish the delivery of the Aircraft. Article 3. PRICE. ----- 3.1 AIRCRAFT BASIC PRICE. The Aircraft Basic Price is listed in Table 1 in subject to escalation dollars. 3.2 ADVANCE PAYMENT BASE PRICES. The Advance Payment Base Prices listed in Table 1 were calculated utilizing the latest escalation factors available to Boeing on the date of this Purchase Agreement projected to the month of scheduled delivery. 3.3 Boeing has not yet established the Aircraft Basic Price for Aircraft scheduled to be delivered after December 31, 2004. The prices listed in Table 1 for such Aircraft are only to provide Customer with an estimate of the applicable Advance Payment Base Prices. Accordingly, the Aircraft Basic Price for such Aircraft will be the sum of the Airframe Price, Optional Features Prices and the Engine Price first published by Boeing for the same model of aircraft and engines to be delivered after December 31, 2004. Article 4. PAYMENT. ------- 4.1 Boeing acknowledges receipt of a deposit in the amount shown in Table 1 for each Aircraft (DEPOSIT). 4.2 The standard advance payment schedule for the Model 757-33N aircraft requires Customer to make certain advance payments, expressed in a percentage of the Advance Payment Base Price of each Aircraft beginning with a payment of 1%, less the Deposit, on the effective date of the Purchase Agreement for the Aircraft. Additional advance payments for each aircraft are due on the first business day of the months listed in the attached Table 1. 4.3 For any Aircraft whose scheduled month of delivery is less than 24 months from the date of this Purchase Agreement, the total amount of advance payments due for payment upon signing of this Purchase Agreement will include all advance payments which are past due in accordance with the standard advance payment schedule set forth in paragraph 4.2 above. 4.4 Customer will pay the balance of the Aircraft Price of each Aircraft at delivery. Article 5. MISCELLANEOUS. ------------- 5.1 AIRCRAFT INFORMATION TABLE. Table 1 consolidates information contained in Articles 1, 2, 3 and 4 with respect to (i) quantity of Aircraft, (ii) applicable Detail Specification, (iii) month and year of scheduled deliveries, (iv) Aircraft Basic Price, (v) applicable escalation factors and (vi) Advance Payment Base Prices and advance payments and their schedules. 5.2 ESCALATION ADJUSTMENT/AIRFRAME AND OPTIONAL FEATURES. Supplemental Exhibit AE1contains the applicable airframe and optional features escalation formula. 5.3 BUYER FURNISHED EQUIPMENT VARIABLES. Supplemental Exhibit BFE1 contains vendor selection dates, on dock dates and other variables applicable to the Aircraft. 5.4 CUSTOMER SUPPORT VARIABLES. Supplemental Exhibit CS1 contains the variable information applicable to information, training services and other things furnished by Boeing in support of the Aircraft. 5.5 ENGINE ESCALATION VARIABLES. Supplemental Exhibit EE1 contains the applicable engine escalation formula, the engine warranty and the engine patent indemnity for the Aircraft. 5.6 SERVICE LIFE POLICY COMPONENT VARIABLES. Supplemental Exhibit SLP1 lists the airframe and landing gear components covered by the Service Life Policy for the Aircraft. 5.7 NEGOTIATED AGREEMENT; ENTIRE AGREEMENT. This Purchase Agreement, including the provisions of Article 8.2 of the AGTA relating to insurance, and Article 11 of Part 2 of Exhibit C of the AGTA relating to DISCLAIMER AND RELEASE and EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES, has been the subject of discussion and negotiation and is understood by the parties; the Aircraft Price and other agreements of the parties stated in this Purchase Agreement were arrived at in consideration of such provisions. This Purchase Agreement, including the AGTA, contains the entire agreement between the parties and supersedes all previous proposals, understandings, commitments or representations whatsoever, oral or written, and may be changed only in writing signed by authorized representatives of the parties. DATED AS OF June 30 , 2000 ------------------------------ American Trans Air, Inc. THE BOEING COMPANY By /s/ Kenneth K. Wolff By /s/ R.C. Nelson ---------------------------------------- ------------------------- Its Executive Vice President & CFO Its ATTORNEY-IN-FACT --------------------------------------- ------------------------- Table 1 to Purchase Agreement No. 2285 Aircraft Delivery, Description, Price and Advance Payments (Confidential Material Omitted) AIRCRAFT CONFIGURATION between THE BOEING COMPANY and American Trans Air, Inc. Exhibit A to Purchase Agreement Number 2285 AIRCRAFT CONFIGURATION Dated ___________________ relating to BOEING MODEL 757-33N AIRCRAFT The Detail Specification is Boeing Detail Specification D019N001-A dated as of August 7, 1998. Such Detail Specification will be amended to incorporate the Options listed herein, including the effects on Manufacturer's Empty Weight (MEW) and Operating Empty Weight (OEW). As soon as practicable but in no case later than delivery of the first Aircraft, Boeing will furnish to Buyer copies of the Detail Specification, which copies will reflect such Options. The Aircraft Basic Price reflects and includes all effects of such Options, except such Aircraft Basic Price does not include the price effects of any Buyer Furnished Equipment or Seller Purchased Equipment. OPTION TITLE PRICE PER AIRCRAFT ($1999 STE) (Confidential Material Omitted) AIRCRAFT DELIVERY REQUIREMENTS AND RESPONSIBILITIES between THE BOEING COMPANY and American Trans Air, Inc. Exhibit B to Purchase Agreement Number 2285 AIRCRAFT DELIVERY REQUIREMENTS AND RESPONSIBILITIES relating to BOEING MODEL 757-33N AIRCRAFT Both Boeing and Customer have certain documentation and approval responsibilities at various times during the construction cycle of Customer's Aircraft that are critical to making the delivery of each Aircraft a positive experience for both parties. This Exhibit B documents those responsibilities and indicates recommended completion deadlines for the actions to be accomplished. 1. GOVERNMENT DOCUMENTATION REQUIREMENTS. ------------------------------------- Certain actions are required to be taken by Customer in advance of the scheduled delivery month of each Aircraft with respect to obtaining certain government issued documentation. 1.1 AIRWORTHINESS AND REGISTRATION DOCUMENTS. ---------------------------------------- Not later than 6 MONTHS PRIOR TO DELIVERY of each Aircraft, Customer will notify Boeing of the registration number to be painted on the side of the Aircraft. In addition, and not later than 3 MONTHS PRIOR TO DELIVERY of each Aircraft, Customer will, by letter to the regulatory authority having jurisdiction, authorize the temporary use of such registration numbers by Boeing during the pre-delivery testing of the Aircraft. Customer is responsible for furnishing any Temporary or Permanent Registration Certificates required by any governmental authority having jurisdiction to be displayed aboard the Aircraft after delivery. 1.2 CERTIFICATE OF SANITARY CONSTRUCTION. ------------------------------------ 1.2.1 U.S. REGISTERED AIRCRAFT. Boeing will obtain from the United States Public Health Service, a United States Certificate of Sanitary Construction to be displayed aboard each Aircraft after delivery to Customer. 1.2.2 NON-U.S. REGISTERED AIRCRAFT. If Customer requires a United States Certificate of Sanitary Construction at the time of delivery of the Aircraft, Customer will give written notice thereof to Boeing at least 3 MONTHS PRIOR TO DELIVERY. Boeing will then use its reasonable best efforts to obtain the Certificate from the United States Public Health Service and present it to Customer at the time of Aircraft delivery. 1.3 CUSTOMS DOCUMENTATION. 1.3.1 IMPORT DOCUMENTATION. If the Aircraft is intended to be exported from the United States, Customer must notify Boeing not later than 3 MONTHS PRIOR TO DELIVERY of each Aircraft of any documentation required by the customs authorities or by any other agency of the country of import. 1.3.2 GENERAL DECLARATION - U.S. If the Aircraft is intended to be exported from the United States, Boeing will prepare Customs Form 7507, General Declaration, for execution by U.S. Customs immediately prior to the ferry flight of the Aircraft. For this purpose, Customer will furnish to Boeing not later than 20 DAYS PRIOR TO DELIVERY a complete crew and passenger list and a complete ferry flight itinerary, including point of exit from the United States for the Aircraft. If Customer intends, during the ferry flight of an Aircraft, to land at a U.S. airport after clearing Customs at delivery, Customer must notify Boeing not later than 20 DAYS PRIOR TO DELIVERY of such intention. If Boeing receives such notification, Boeing will provide to Customer the documents constituting a Customs permit to proceed, allowing such Aircraft to depart after any such landing. Sufficient copies of completed Form 7507, along with passenger manifest, will be furnished Customer to cover U.S. stops scheduled for the ferry flight. 1.3.3 EXPORT DECLARATION - U.S. If the Aircraft is intended to be exported from the United States, Boeing will prepare Form 7525V and, IMMEDIATELY PRIOR TO THE FERRY FLIGHT, will submit such Form to U.S. Customs in Seattle in order to obtain clearance for the departure of the Aircraft, including any cargo, from the United States. U.S. Customs will deliver the Export Declaration to the U.S. Department of Commerce after export. 2. INSURANCE CERTIFICATES. ---------------------- Unless provided earlier, Customer will provide to Boeing not later than 30 DAYS PRIOR TO DELIVERY of the first Aircraft, a copy of the requisite annual insurance certificate in accordance with the requirements of Article 8 of the AGTA. 3 NOTICE OF FLYAWAY CONFIGURATION. ------------------------------- Not later than 20 DAYS PRIOR TO DELIVERY of the Aircraft, Customer will provide to Boeing a configuration letter stating the requested "flyaway configuration" of the Aircraft for its ferry flight. This configuration letter should include: (i) the name of the company which is to furnish fuel for the ferry flight and any scheduled post-delivery flight training, the method of payment for such fuel, and fuel load for the ferry flight; (ii) the cargo to be loaded and where it is to be stowed on board the Aircraft, the address where cargo is to be shipped after flyaway and notification of any hazardous materials requiring special handling; (iii) any BFE equipment to be removed prior to flyaway and returned to Boeing BFE stores for installation on Customer's subsequent Aircraft; (iv) a complete list of names and citizenship of each crew member and non-revenue passenger who will be aboard the ferry flight; and (v) a complete ferry flight itinerary. 4. DELIVERY ACTIONS BY BOEING. -------------------------- 4.1 SCHEDULE OF INSPECTIONS. All FAA, Boeing, Customer and, if required, U.S. Customs Bureau inspections will be scheduled by Boeing for completion prior to delivery or departure of the Aircraft. Customer will be informed of such schedules. 4.2 SCHEDULE OF DEMONSTRATION FLIGHTS. All FAA and Customer demonstration flights will be scheduled by Boeing for completion prior to delivery of the Aircraft. 4.3 SCHEDULE FOR CUSTOMER'S FLIGHT CREW. Boeing will inform Customer of the date that a flight crew is required for acceptance routines associated with delivery of the Aircraft. 4.4 FUEL PROVIDED BY BOEING. Boeing will provide to Customer, without charge, the amount of fuel shown in U.S. gallons in the table below for the model of Aircraft being delivered and full capacity of engine oil at the time of delivery or prior to the ferry flight of the Aircraft. AIRCRAFT MODEL FUEL PROVIDED - -------------- ------------- 737 1,000 747 4,000 757 1,600 767 2,000 777 3,000 4.5 FLIGHT CREW AND PASSENGER CONSUMABLES. Boeing will provide reasonable quantities of food, coat hangers, towels, toilet tissue, drinking cups and soap for the first segment of the ferry flight for the Aircraft. 4.6 DELIVERY PAPERS, DOCUMENTS AND DATA. Boeing will have available at the time of delivery of the Aircraft certain delivery papers, documents and data for execution and delivery. If title for the Aircraft will be transferred to Customer through a Boeing sales subsidiary and if the Aircraft will be registered with the FAA, Boeing will pre-position in Oklahoma City, Oklahoma, for filing with the FAA at the time of delivery of the Aircraft an executed original Form 8050-2, Aircraft Bill of Sale, indicating transfer of title to the Aircraft from Boeing's sales subsidiary to Customer. 4.7 DELEGATION OF AUTHORITY. If specifically requested in advance by Customer, Boeing will present a certified copy of a Resolution of Boeing's Board of Directors, designating and authorizing certain persons to act on its behalf in connection with delivery of the Aircraft. 5. DELIVERY ACTIONS BY CUSTOMER. ---------------------------- 5.1 AIRCRAFT RADIO STATION LICENSE. At delivery Customer will provide its Aircraft Radio Station License to be placed on board the Aircraft following delivery. 5.2. AIRCRAFT FLIGHT LOG. At delivery Customer will provide the Aircraft Flight Log for the Aircraft. 5.3 DELEGATION OF AUTHORITY. Customer will present to Boeing at delivery of the Aircraft an original or certified copy of Customer's Delegation of Authority designating and authorizing certain persons to act on its behalf in connection with delivery of the specified Aircraft. ESCALATION ADJUSTMENT AIRFRAME AND OPTIONAL FEATURES between THE BOEING COMPANY and America Trans Air, inc. Supplemental Exhibit AE1 to Purchase Agreement Number 2285 (FOR MODEL 717-200, 737-600, 737-700, 737-800 AND 737-900 THE AIRFRAME PRICE INCLUDES THE ENGINE PRICE AT ITS BASIC THRUST LEVEL.) 1. FORMULA. ------- Airframe and Optional Features price adjustments (Airframe Price Adjustment) are used to allow prices to be stated in current year dollars at the signing of this Purchase Agreement and to adjust the amount to be paid by Customer at delivery for the effects of economic fluctuation. The Airframe Price Adjustment will be determined at the time of Aircraft delivery in accordance with the following formula: Pa = (P+B)(L + M) - P Where: Pa = Airframe Price Adjustment. (For Model 717-200, 737-600, 737-700, 737-800 and 737-900, the Airframe Price includes the Engine Price at its basic thrust level.) L = .65 x ( ECI ----- ECIb )where ECIb is the base year index (as set forth in Table 1 of this Purchase Agreement) M = .35 x ( ICI ----- ICIb )where ICIb is the base year index (as set forth in Table 1 of this Purchase Agreement) P = Airframe Price plus Optional Features Price (as set forth in Table 1 of this Purchase Agreement). B = 0.005 x (N/12) x (P)where N is the calendar month and year of scheduled Aircraft delivery minus the calendar month and year of the Base Price Year, both as shown in Table 1 of this Purchase Agreement. ECI is a value determined using the U.S. Department of Labor, Bureau of Labor Statistics "Employment Cost Index for workers in aerospace manufacturing - Wages and Salaries" (ECI code 3721W), calculated by establishing a three-month arithmetic average value (expressed as a decimal and rounded to the nearest tenth) using the values for the fifth, sixth and seventh months prior to the month of scheduled delivery of the applicable Aircraft. As the Employment Cost Index values are only released on a quarterly basis, the value released for the month of March will be used for the months of January and February; the value for June used for April and May; the value for September used for July and August; and the value for December used for October and November. ICI is a value determined using the U.S. Department of Labor, Bureau of Labor Statistics "Producer Prices and Price Index - Industrial Commodities Index ", calculated as a 3-month arithmetic average of the released monthly values (expressed as a decimal and rounded to the nearest tenth) using the values for the 5th, 6th and 7th months prior to the month of scheduled delivery of the applicable Aircraft. As an example, for an Aircraft scheduled to be delivered in the month of January, the months June, July and August of the preceding year will be utilized in determining the value of ECI and ICI. Note: i. In determining the values of L and M, all calculations and resulting values will be expressed as a decimal rounded to the nearest ten-thousandth. ii. .65 is the numeric ratio attributed to labor in the Airframe Price Adjustment formula. iii. .35 is the numeric ratio attributed to materials in the Airframe Price Adjustment formula. Iv. The denominators (base year indices) are the actual average values reported by the U.S. Department of Labor, Bureau of Labor Statistics (base year June 1989 = 100). The applicable base year and corresponding denominator is provided by Boeing in Table 1 of this Purchase Agreement. iv. The final value of Pa will be rounded to the nearest dollar. vi. The Airframe Price Adjustment will not be made if it will result in a decrease in the Aircraft Basic Price. 2. VALUES TO BE UTILIZED IN THE EVENT OF UNAVAILABILITY. ----------------------------------------------------- 2.1 If the Bureau of Labor Statistics substantially revises the methodology used for the determination of the values to be used to determine the ECI and ICI values (in contrast to benchmark adjustments or other corrections of previously released values), or for any reason has not released values needed to determine the applicable Airframe Price Adjustment, the parties will, prior to the delivery of any such Aircraft, select a substitute from other Bureau of Labor Statistics data or similar data reported by non-governmental organizations. Such substitute will result in the same adjustment, insofar as possible, as would have been calculated utilizing the original values adjusted for fluctuation during the applicable time period. However, if within 24 months after delivery of the Aircraft, the Bureau of Labor Statistics should resume releasing values for the months needed to determine the Airframe Price Adjustment, such values will be used to determine any increase or decrease in the Airframe Price Adjustment for the Aircraft from that determined at the time of delivery of the Aircraft. 2.2 Notwithstanding Article 2.1 above, if prior to the scheduled delivery month of an Aircraft the Bureau of Labor Statistics changes the base year for determination of the ECI and ICI values as defined above, such re-based values will be incorporated in the Airframe Price Adjustment calculation. 2.3 In the event escalation provisions are made non-enforceable or otherwise rendered void by any agency of the United States Government, the parties agree, to the extent they may lawfully do so, to equitably adjust the Aircraft Price of any affected Aircraft to reflect an allowance for increases or decreases in labor compensation and material costs occurring since February of the price base year shown in the Purchase Agreement which is consistent with the applicable provisions of paragraph 1 of this Supplemental Exhibit AE1. 2.4 If within 12 months of Aircraft delivery, the published index values are revised due to an acknowledged error by the Bureau of Labor Statistics, the Airframe Price Adjustment will be re-calculated using the revised index values (this does not include those values noted as preliminary by the Bureau of Labor Statistics). A credit memorandum or supplemental invoice will be issued for the Airframe Price Adjustment difference. Interest charges will not apply for the period of original invoice to issuance of credit memorandum or supplemental invoice. NOTE: i. The values released by the Bureau of Labor Statistics and available to Boeing 30 days prior to the scheduled delivery month of an Aircraft will be used to determine the ECI and ICI values for the applicable months (including those noted as preliminary by the Bureau of Labor Statistics) to calculate the Airframe Price Adjustment for the Aircraft invoice at the time of delivery. The values will be considered final and no Aircraft Price Adjustments will be made after Aircraft delivery for any subsequent changes in published Index values, subject always to paragraph 2.4 above. ii. The maximum number of digits to the right of the decimal after rounding utilized in any part of the Airframe Price Adjustment equation will be 4, where rounding of the fourth digit will be increased to the next highest digit when the 5th digit is equal to 5 or greater. BUYER FURNISHED EQUIPMENT VARIABLES between THE BOEING COMPANY and American Trans Air, Inc. Supplemental Exhibit BFE1 to Purchase Agreement Number 2285 BUYER FURNISHED EQUIPMENT VARIABLES relating to BOEING MODEL 757-33N AIRCRAFT This Supplemental Exhibit BFE1 contains vendor selection dates, on-dock dates and other variables applicable to the Aircraft. 1. SUPPLIER SELECTION. ------------------ Customer will: 1.1 Select and notify Boeing of the suppliers and part numbers of the following BFE items by the following dates: Galley System JULY 24, 2000 Galley Inserts JULY 24, 2000 Seats (passenger) COMPLETE Overhead & Audio System COMPLETE Miscellaneous Emergency Equipment JULY 24, 2000 Cargo Handling Systems* COMPLETE * For a previously certified system 2. ON-DOCK DATES On or before October, 2000, Boeing will provide to Customer a BFE Requirements On-Dock/Inventory Document (BFE Document) or an electronically transmitted BFE Report which may be periodically revised, setting forth the items, quantities, on-dock dates and shipping instructions relating to the in-sequence installation of BFE. For planning purposes, a preliminary BFE on-dock schedule is set forth below: PRELIMINARY ON-DOCK DATES - -------------------------------------------------------------------------------- AIRCRAFT DELIVERY - -------------------------------------------------------------------------------- (CONFIDENTIAL MATERIAL OMITTED) - -------------------------------------------------------------------------------- AIRCRAFT DELIVERY - -------------------------------------------------------------------------------- (CONFIDENTIAL MATERIAL OMITTED) ------------------------------------------------------------------------------- CUSTOMER SUPPORT VARIABLES between THE BOEING COMPANY and American Trans Air, Inc. Supplemental Exhibit CS1 to Purchase Agreement Number 2285 CUSTOMER SUPPORT VARIABLES relating to BOEING MODEL 757-33N AIRCRAFT Customer currently operates an aircraft of the same model as the Aircraft. Upon Customer's request, Boeing will develop and schedule a customized Customer Support Program to be furnished in support of the Aircraft. The customized program will be based upon and equivalent to the entitlements summarized below. 1. MAINTENANCE TRAINING. -------------------- 1.1 Maintenance Training Minor Model Differences Course, if required, covering operational, structural or systems differences between Customer's newly-purchased Aircraft and an aircraft of the same model currently operated by Customer; 1 class of 15 students; 1.2 Training materials, if applicable, will be provided to each student. In addition, one set of training materials as used in Boeing's training program, including visual aids, text and graphics will be provided for use in Customer's own training program. 2. FLIGHT TRAINING. --------------- Boeing will provide, if required, one classroom course to acquaint up to 15 students with operational, systems and performance differences between Customer's newly-purchased Aircraft and an aircraft of the same model currently operated by Customer. Any training materials used in Flight Training, if required, will be provided for use in Customer's own training program. 3. PLANNING ASSISTANCE. ------------------- 3.1 MAINTENANCE AND GROUND OPERATIONS. --------------------------------- Upon request, Boeing will provide planning assistance regarding Minor Model Differences requirements for facilities, tools and equipment. 3.2 SPARES. ------ Boeing will revise, as applicable, the customized Recommended Spares Parts List (RSPL) and Illustrated Parts Catalog (IPC). 4. TECHNICAL DATA AND DOCUMENTS. ---------------------------- Boeing will revise, as applicable, technical data and documents provided with previously delivered aircraft. (CONFIDENTIAL LETTER OMITTED) SERVICE LIFE POLICY COMPONENTS between THE BOEING COMPANY and American Trans Air, Inc. Supplemental Exhibit SLP1 to Purchase Agreement Number 2285 SERVICE LIFE POLICY COMPONENTS relating to BOEING MODEL 757 AIRCRAFT This is the listing of Covered Components for the Aircraft which relate to Part 3, BOEING SERVICE LIFE POLICY of Exhibit C, PRODUCT ASSURANCE DOCUMENT to the AGTA and is a part of Purchase Agreement No. 2285. 1. WING. ---- (a) Upper and lower skins and stiffeners between the forward and rear wing spars. (b) Wing spar webs, chords, and stiffeners. (c) Inspar wing ribs. (d) Inspar splice plates and fittings. (e) Main landing gear support structure. (f) Wing center section lower beams, spanwise beams and floor beams, but not the seat tracks attached to the beams. (g) Wing-to-body structural attachments. (h) Engine strut support fittings attached directly to wing primary structure. (i) Support structure in the wing for spoilers and spoiler actuators; for aileron hinges and reaction links; and for leading edge devices and trailing edge flaps. (j) Trailing edge flap tracks and carriages. (k) Aileron leading edge device and trailing edge flap internal, fixed attachment and actuator support structure. 2. BODY. ---- (a) External surface skins and doublers, longitudinal stiffeners, longerons and circumferential rings and frames between the forward pressure bulkhead and the vertical stabilizer rear spar bulkhead, and structural support and enclosure for the APU but excluding all system components and related installation and connecting devices, insulation, lining, and decorative panels and related installation and connecting devices. (b) Window and windshield structure but excluding the windows and windshields. (c) Fixed attachment structure of the passenger doors, cargo doors and emergency exits, excluding door mechanisms and movable hinge components. Sills and frames around the body openings for the passenger doors, cargo doors and emergency exits, excluding scuff plates and pressure seals. (d) Nose wheel well structure, including the wheel well walls, pressure deck, forward and aft bulkheads, and the gear support structure. (e) Main gear wheel well structure including pressure deck, bulkheads and landing gear beam support structure. (f) Floor beams and support posts in the control cab and passenger cabin area, but excluding seat tracks. (g) Forward and aft pressure bulkheads. (h) Keel structure between the wing front spar bulkhead and the main gear wheel well aft bulkhead, including splices. (i) Wing front and rear spar support bulkheads, and vertical and horizontal stabilizer front and rear spar support bulkheads including terminal fittings but excluding all system components and related installation and connecting devices, insulation, lining, decorative panels, and related installation and connecting devices. (j) Support structure in the body for the stabilizer pivot and stabilizer screw. 3. VERTICAL STABILIZER. ------------------- (a) External skins between front and rear spars. (b) Front, rear and auxiliary spar chords, webs, and stiffeners, and attachment fittings between vertical stabilizer and body. (c) Inspar ribs. (d) Support structure in the vertical stabilizer for rudder hinges, reaction links and actuator. (e) Rudder internal, fixed attachment and actuator support structure. (f) Rudder hinges and supporting ribs, excluding bearings. 4. HORIZONTAL STABILIZER. --------------------- (a) External skins between front and rear spars. (b) Front, rear and auxiliary spar chords, webs, and stiffeners. (c) Inspar ribs. (d) Stabilizer center splice fittings, pivot and screw support structure. (e) Support structure in the horizontal stabilizer for the elevator hinges, reaction links and actuators. (f) Elevator internal, fixed attachment and actuator support structure. 5. ENGINE STRUT. ------------ (a) Strut external surface skin and doublers and stiffeners. (b) Internal strut chords, frames and bulkheads. (c) Strut to wing fittings and diagonal brace. (d) Engine mount support fittings attached directly to strut structure. (e) For Aircraft equipped with Pratt & Whitney engines only, the engine mounted support fittings. 6. MAIN LANDING GEAR. ----------------- (a) Outer cylinder. (b) Inner cylinder. (c) Upper and lower side struts, including spindles and universals. (d) Drag strut. (e) Side strut reaction link. (f) Side strut support link. (g) Downlock links including spindles and universals. (h) Orifice plate. (i) Trunnion link. (j) Truck beam. (k) Axles. (l) Torsion links. (m) Stabilizer link. 7. NOSE LANDING GEAR. ----------------- (a) Outer cylinder. (b) Inner cylinder. (c) Upper and lower drag strut, including lock links. (d) Axles. (e) Torsion links. (f) Steering plates and steering collar. (g) Orifice plate. NOTE: The Service Life Policy does not cover any bearings, bolts, bushings, clamps, brackets, actuating mechanisms or latching mechanisms used in or on the Covered Components. American Trans Air, Inc. 7337 West Washington St. Indianapolis International Airport Indianapolis, Indiana 46231 Subject: Demonstration Flight Waiver Reference: Purchase Agreement 2285 (the Purchase Agreement) between The Boeing Company (Boeing) and American Trans Air, Inc. (Customer) relating to Model 757-33N aircraft (the Aircraft) This Letter Agreement amends and supplements the Purchase Agreement. All terms used but not defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement. DEFINITION OF TERMS: CORRECTION COSTS: Customer's direct labor costs and the cost of any material required to correct a Flight Discrepancy where direct labor costs are equal to the warranty labor rate in effect between the parties at the time such labor is expended. FLIGHT DISCREPANCY: A failure or malfunction of an Aircraft, or the accessories, equipment or parts installed on the Aircraft which results from a defect in the Aircraft, Boeing Product, engine or Supplier Product or a nonconformance to the Detail Specification for the Aircraft. The AGTA provides that each aircraft will be test flown prior to delivery for the purpose of demonstrating the functioning of such Aircraft and its equipment to Customer; however, Customer may elect to waive this test flight. For each test flight waived, Boeing agrees to provide Customer an amount of jet fuel at delivery that, including the standard fuel entitlement, totals the following amount of fuel: ---------------------- ----------------------------------------------- AIRCRAFT MODEL TOTAL FUEL ENTITLEMENT (U.S. GALLONS) ---------------------- ----------------------------------------------- ---------------------- ----------------------------------------------- 737 Full tanks (approx. 5,300 to 6,800, depending on model) ---------------------- ----------------------------------------------- ---------------------- ----------------------------------------------- 747 26,000 ---------------------- ----------------------------------------------- ---------------------- ----------------------------------------------- 757 9,600 ---------------------- ----------------------------------------------- ---------------------- ----------------------------------------------- 767 11,000 ---------------------- ----------------------------------------------- ---------------------- ----------------------------------------------- 777 10,300 ---------------------- ----------------------------------------------- Further, Boeing agrees to reimburse Customer for any Correction Costs incurred as a result of the discovery of a Flight Discrepancy during the first flight of the aircraft by Customer following delivery to the extent such Correction Costs are not covered under a warranty provided by Boeing, the engine manufacturer or any of Boeing's suppliers. Should a Flight Discrepancy be detected by Customer which requires the return of the Aircraft to Boeing's facilities at Seattle, Washington, so that Boeing may correct such Flight Discrepancy, Boeing and Customer agree that title to and risk of loss of such Aircraft will remain with Customer. In addition, it is agreed that Boeing will have responsibility for the Aircraft while it is on the ground at Boeing's facilities in Seattle, Washington, as is chargeable by law to a bailee for mutual benefit, but Boeing shall not be chargeable for loss of use. To be reimbursed for Correction Costs, Customer shall submit a written itemized statement describing any flight discrepancies and indicating the Correction Cost incurred by Customer for each discrepancy. This request must be submitted to Boeing's Contracts Regional Director at Renton, Washington, within ninety (90) days after the first flight by Customer. Very truly yours, THE BOEING COMPANY By /s/ R.C. Nelson ------------------------------------------ Its ATTORNEY-IN-FACT -------------------------------------- ACCEPTED AND AGREED TO this Date: June 30 , 2000 ------------------------------- AMERICAN TRANS AIR, INC. By /s/ Kenneth K. Wolff ------------------------------------------ Its Executive Vice President & CFO ------------------------------------------ 2285-02 American Trans Air, Inc. 7337 West Washington St. Indianapolis International Airport Indianapolis, Indiana 46231 Subject: Spares Initial Provisioning Reference: Purchase Agreement 2285 (the Purchase Agreement) between The Boeing Company (Boeing) and American Trans Air, Inc. (Customer) relating to Model 757-33N aircraft (the Aircraft) This Letter Agreement is entered into on the date below, and amends and supplements the Purchase Agreement. All terms used but not defined in this Letter Agreement have the same meaning as in the Purchase Agreement. 1. APPLICABILITY. ------------- This letter will apply to initial provisioning for the Model 757-33N Aircraft purchased by Customer under the Purchase Agreement. 2. INITIAL PROVISIONING MEETING. ---------------------------- Boeing will conduct an initial provisioning meeting (Initial Provisioning Meeting) with Customer to establish mutually agreeable procedures to accomplish Customer's initial provisioning of spare parts for the Aircraft. The parties will agree, during the Initial Provisioning Meeting on the operational data to be provided by Customer for Boeing's use in preparing its quantity recommendations for initial provisioning of spare parts for the Aircraft, exclusive of special tools, ground support equipment, engines and engine parts (Provisioning Items). Such operational data to be provided by Customer will be the data described in Chapter 6 of Boeing Manual D6-81834, entitled "Spares Provisioning Products Guide" (Boeing Spares Provisioning Products Guide) which will be furnished to Customer prior to the Initial Provisioning Meeting. The parties will also agree on the provisioning documentation to be provided by Boeing as described in Boeing Spares Provisioning Products Guide (such data will be hereinafter referred to collectively as the "Provisioning Data"). Boeing will provide instruction in the use of the initial provisioning documentation. This instruction will be provided in conjunction with the Initial Provisioning Meeting. In addition, the parties will discuss spares ordering procedures and other matters related to the provisioning for the Aircraft. The time and location for such Initial Provisioning Meeting will be mutually agreed upon between the parties; however, Boeing and Customer will use their best efforts to convene such meeting within 30 days after execution of the Purchase Agreement. 3. INITIAL PROVISIONING DOCUMENTATION. ---------------------------------- 3.1 PROVISIONING DATA. Boeing will furnish Provisioning Data to Customer on or about August 25, 2000. The Provisioning Data will be as complete as possible and will cover Provisioning Items selected by Boeing for review by Customer for initial provisioning for the Aircraft. The Provisioning Data will set forth the prices for Provisioning Items which are Boeing Spare Parts and such prices will be firm and remain in effect until the date or dates set forth below in Paragraph 4.1, BOEING SPARE PARTS, by which orders must be placed with Boeing. Boeing will, from time to time, until a date approximately 90 days following delivery of the last Aircraft or until the delivery configuration of each of the Aircraft is reflected in the Provisioning Data, whichever is later, furnish to Customer revisions to the Provisioning Data. 3.2 PROVISIONING IPC. Boeing will, on or about August 18, 2000; furnish to Customer a Boeing Illustrated Parts Catalog (IPC), hereinafter referred to as the "Provisioning IPC". The Provisioning IPC will be as complete as possible and will cover Provisioning Items selected by Boeing for review by Customer for initial provisioning for the Aircraft. Boeing will, from time to time, until a date approximately 90 days following delivery of the last Aircraft, or until the delivery configuration of each of the Aircraft is reflected in the Provisioning IPC, whichever is later, furnish to Customer revisions to the Provisioning IPC. 3.3 BUYER FURNISHED EQUIPMENT (BFE) PROVISIONING DATA. ------------------------------------------------- 3.3.1 BOEING'S RESPONSIBILITY. Boeing will include BFE end -items in the Provisioning Data and Provisioning IPC for BFE installed on Customer's Aircraft provided such equipment has been installed on other Aircraft by Boeing and Boeing has data on the BFE. 3.3.2 CUSTOMER'S RESPONSIBILITY. Customer will be responsible for ensuring BFE data is provided to Boeing by the BFE supplier in a format acceptable to Boeing for BFE not covered by 3.3.1 above. If the data is not provided to Boeing in a timely manner and in a format acceptable to Boeing, such BFE equipment will not be included in Boeing's Provisioning Data or IPC. 3.4 OTHER DATA. Boeing will submit to Customer listings of Raw Materials, Standard Parts and Bulk Materials to be used by Customer in the maintenance and repair of the Aircraft. 4. PURCHASE FROM BOEING OF SPARE PARTS AS INITIAL PROVISIONING FOR THE AIRCRAFT. ---------------------------------------------- ----------------------------- 4.1 BOEING SPARE PARTS. Customer will place orders for Provisioning Items by November 17, 2000, provided, however, that in those instances where Boeing submits any revision to the Provisioning Data, Customer will place orders for Boeing Spare Parts covered by such revision within 60 days following the date of such submittal. At Customer's request, Boeing will process "controlled shipments" by shipping full or partial quantities of an order on a schedule specified by Customer, provided the final shipment is made no later than 24 months after receipt of the order. 4.2 SUPPLIER PROVISIONING ITEMS. Customer may place orders with Boeing for Provisioning Items which are manufactured by suppliers or to their detailed design and are covered by the Provisioning Data as initial provisioning for the Aircraft. The price to Customer for any such supplier Provisioning Item will be 112% of the supplier's quoted price to Boeing therefor. If Customer elects to purchase such supplier Provisioning Items from Boeing, Customer will place its orders therefor in accordance with the provisions of Paragraph 4.1, BOEING SPARE PARTS. 4.3 GROUND SUPPORT EQUIPMENT AND SPECIAL TOOLS. Customer may place orders with Boeing for ground support equipment (GSE) and special tools manufactured by suppliers which Customer determines it will initially require for maintenance, overhaul and servicing of the Aircraft and/or engines. The price to Customer for such GSE or special tools will be one hundred twelve percent (112%) of the supplier's quoted price to Boeing therefor. If Customer elects to purchase such GSE and special tools from Boeing, Customer will place its orders therefor by the date set forth in Paragraph 4.1, BOEING SPARE PARTS or such later date as the parties may mutually agree. 4.4 SPARE ENGINES AND ENGINE SPARE PARTS. Customer may place orders with Boeing for spare engines and/or engine spare parts which Customer determines it will initially require for support of the Aircraft or for maintenance and overhaul of the engines. The price to Customer for such spare engines or such engine spare parts, will be 105% of the engine manufacturer's quoted price to Boeing for the engine, and 112% of the engine manufacturer's quoted price to Boeing for the engine spare parts. If Customer elects to purchase such spare engines or engine spare parts through Boeing, Customer will place its orders on a date to be mutually agreed upon during the Initial Provisioning Meeting. 4.5 QEC KITS. Boeing will, on or about June 30, 2000, furnish to Customer a listing of all components which could be included in the Quick Engine Change (QEC) kits which may be purchased by Customer from Boeing. Customer agrees to review such listing and indicate by marking on one copy of such listing those components that Customer desires included in its QEC kits. Customer will return such marked copy to Boeing within 30 days after Customer's receipt of such listing. Within 30 days after Boeing's receipt of such marked copy, Boeing will republish such listing to reflect only those components selected by Customer and will provide copies of such republished listing to Customer. Boeing will from time to time furnish revisions to such republished listing until a date approximately 90 days after delivery of the last QEC kit ordered by Customer for the Aircraft. Boeing will furnish to Customer as soon as practicable a statement setting forth a firm price for the QEC kit configuration selected by Customer. Customer agrees to place orders with Boeing for the QEC kits for the Aircraft by August 25, 2000. 4.6 PAYMENT FOR PROVISIONING ITEMS. The payment provisions of the Customer Services General Terms Agreement (CSGTA) between Boeing and Customer will be applicable to Provisioning Items ordered by Customer from Boeing for the Aircraft. 5. DELIVERY. -------- Boeing will, insofar as reasonably possible, deliver to Customer the Spare Parts ordered by Customer in accordance with the provisions of this letter on dates reasonably calculated to conform to Customer's anticipated needs in view of the scheduled deliveries of the Aircraft. Customer and Boeing will agree upon the date to begin delivery of the Provisioning Spare Parts ordered in accordance with this letter. Where appropriate, Boeing will arrange for shipment of such Spare Parts, which are manufactured by suppliers, directly to Customer from the applicable supplier's facility. The routing and method of shipment for initial deliveries and all subsequent deliveries of such Spare Parts will be as mutually agreed between Boeing and Customer. 6. SUBSTITUTION FOR OBSOLETE SPARE PARTS. ------------------------------------- 6.1 OBLIGATION TO SUBSTITUTE. In the event that, prior to delivery of the first Aircraft pursuant to the Purchase Agreement, any Spare Part purchased by Customer from Boeing in accordance with this letter is rendered obsolete or unusable due to the redesign of the Aircraft or of any accessory, equipment or part therefor, (other than a redesign at Customer's request), Boeing will deliver to Customer new and usable Spare Parts in substitution for such obsolete or unusable Spare Parts and Customer will return the obsolete or unusable Spare Parts to Boeing. Boeing will credit Customer's account with Boeing with the price paid by Customer for any such obsolete or unusable Spare Part and will invoice Customer for the purchase price of any such substitute Spare Part delivered to Customer. 6.2 DELIVERY OF OBSOLETE SPARE PARTS AND SUBSTITUTES THEREFOR. Obsolete or unusable Spare Parts returned by Customer pursuant to this Item will be delivered to Boeing at its Seattle Distribution Center, or such other destination as Boeing may reasonably designate. Spare Parts substituted for such returned obsolete or unusable Spare Parts will be delivered to Customer at Boeing's Seattle Distribution Center, or such other Boeing shipping point as Boeing may reasonably designate. Boeing will pay the freight charges for the shipment from Customer to Boeing of any such obsolete or unusable Spare Part and for the shipment from Boeing to Customer of any such substitute Spare Part. 7. REPURCHASE OF PROVISIONING ITEMS. -------------------------------- 7.1 OBLIGATION TO REPURCHASE. During a period commencing 1 year after delivery of the first Aircraft under the Purchase Agreement, and ending 5 years after such delivery, Boeing will, upon receipt of Customer's written request and subject to the exceptions in Paragraph 7.2, EXCEPTIONS, repurchase unused and undamaged Provisioning Items which (i) were recommended by Boeing in the Provisioning Data as initial provisioning for the Aircraft, (ii) were purchased by Customer from Boeing, and (iii) are surplus to Customer's needs. 7.2 EXCEPTIONS. Boeing will not be obligated under Paragraph 7.1, OBLIGATION TO REPURCHASE, to repurchase any of the following: (i) quantities of Provisioning Items in excess of those quantities recommended by Boeing in the Provisioning Data for the Aircraft, (ii) QEC Kits, Bulk Material Kits, Raw Material Kits, Service Bulletin Kits, Standards Kits and components thereof (except those components listed separately in the Provisioning Data), (iii) Provisioning Items for which an order was received by Boeing more than 5 months after delivery of the last Aircraft, (iv) Provisioning Items which have become obsolete or have been replaced by other Provisioning Items as a result of (a) Customer's modification of the Aircraft or (b) design improvements by Boeing or the supplier (other than Provisioning Items which have become obsolete because of a defect in design if such defect has not been remedied by an offer by Boeing or the supplier to provide no charge retrofit kits or replacement parts which correct such defect), and (v) Provisioning Items which become excess as a result of a change in Customer's operating parameters, provided to Boeing pursuant to the Initial Provisioning meeting in Paragraph 2, which were the basis of Boeing's initial provisioning recommendations for the Aircraft. 7.3 NOTIFICATION AND FORMAT. Customer will notify Boeing, in writing, when Customer desires to return Provisioning Items which Customer's review indicates are eligible for repurchase by Boeing under the provisions of this Repurchase of Provisioning Items paragraph. Customer's notification will include a detailed summary, in part number sequence, of the Provisioning Items Customer desires to return. Such summary will be in the form of listings, tapes, diskettes or other media as may be mutually agreed between Boeing and Customer, and will include part number, nomenclature, purchase order number, purchase order date and quantity to be returned. Within 5 business days after receipt of Customer's notification, Boeing will advise Customer, in writing, when Boeing's review of such summary will be completed. 7.4 REVIEW AND ACCEPTANCE BY BOEING. Upon completion of Boeing's review of any detailed summary submitted by Customer pursuant to Paragraph 7.3, Boeing will issue to Customer a Material Return Authorization (MRA) for those Provisioning Items Boeing agrees are eligible for repurchase in accordance with this Repurchase of Provisioning Items paragraph. Boeing will advise Customer of the reason that any spare part included in Customer's detailed summary is not eligible for return. Boeing's MRA will state the date by which Provisioning Items listed in the MRA must be redelivered to Boeing and Customer will arrange for shipment of such Provisioning Items accordingly. 7.5 PRICE AND PAYMENT. The price of each Provisioning Item repurchased by Boeing pursuant to this Repurchase of Provisioning Items paragraph will be an amount equal to 100% of the original invoice price thereof. In the case of Provisioning Items manufactured by a supplier which were purchased pursuant to Paragraph 4, PURCHASE FROM BOEING OF SPARE PARTS AS INITIAL PROVISIONING FOR THE AIRCRAFT, hereof the repurchase price will not include Boeing's 12% handling charge. Boeing will pay the repurchase price by issuing a credit memorandum in favor of Customer which may be applied against amounts due Boeing for the purchase of aircraft, Spare Parts, services or data. 7.6 DELIVERY OF PROVISIONING ITEMS. Provisioning Items repurchased by Boeing pursuant to this Repurchase of Provisioning Items paragraph will be delivered to Boeing F.O.B. at its Seattle Distribution Center, or such other destination as Boeing may reasonably designate. Customer will pay the freight charges for the shipment from Customer to Boeing of any such Provisioning Items. 8. OBSOLETE SPARE PARTS AND SURPLUS PROVISIONING ITEMS - TITLE AND RISK OF LOSS. ---------------------------------------------------------------------------- Title to and risk of loss of any obsolete or unusable Spare Parts returned to Boeing pursuant to Paragraph 6, SUBSTITUTION FOR OBSOLETE SPARE PARTS, will pass to Boeing upon delivery thereof to Boeing. Title to and risk of loss of any Spare Part substituted for an obsolete or unusable Spare Part pursuant to Paragraph 6, SUBSTITUTION FOR OBSOLETE SPARE PARTS, will pass to Customer upon delivery thereof to Customer. Title to and risk of loss of any Provisioning Item repurchased by Boeing pursuant to Paragraph 7, REPURCHASE OF PROVISIONING ITEMS, will pass to Boeing upon delivery thereof to Boeing. With respect to the obsolete or unusable Spare Parts which may be returned to Boeing and the Spare Parts substituted therefor, pursuant to Paragraph 6, and the Provisioning Items which may be repurchased by Boeing, pursuant to Paragraph 7, the party which has risk of loss of any such Spare Part or Provisioning Item will have the responsibility of providing any insurance coverage for it desired by such party. 9. SUPPLIER SUPPORT. ---------------- Boeing has entered, or anticipates entering, into product support agreements with suppliers (Boeing Suppliers) of major system components manufactured by such Suppliers to be installed on the Aircraft (Supplier Components). Such product support agreements commit, or are expected to commit, the Boeing Suppliers to provide to Boeing's customers and/or such customer's designees support services with respect to the Supplier Components which can be reasonably expected to be required during the course of normal operation. This support includes but is not limited to shelf-stock of certain spare parts, emergency spare parts, timely delivery of spare parts, and technical data related to the Supplier Components. Copies of such product support agreements will be provided to Customer on or about September 22, 2000, in Boeing Document D6-56115, Volumes 1 and 2. In the event Customer has used due diligence in attempting to resolve any difficulty arising in normal business transactions between Customer and a Boeing Supplier with respect to product support for a Supplier Component manufactured by such Supplier and if such difficulty remains unresolved, Boeing will, if requested by Customer, assist Customer in resolving such difficulty. Assistance will be provided by the Customer Supplier Services organization. 10. TERMINATION FOR EXCUSABLE DELAY. ------------------------------- In the event of termination of the Purchase Agreement with respect to any Aircraft pursuant to Article 7 of the AGTA, such termination will, if Customer so requests by written notice received by Boeing within 15 days after such termination, also discharge and terminate all obligations and liabilities of the parties as to any Spare Parts which Customer had ordered pursuant to the provisions of this letter as initial provisioning for such Aircraft and which are undelivered on the date Boeing receives such written notice. Very truly yours, THE BOEING COMPANY By /s/ R.C. Nelson ------------------------------------------ Its ATTORNEY-IN-FACT -------------------------------------- ACCEPTED AND AGREED TO this Date: June 30 , 2000 ------------------------------- AMERICAN TRANS AIR, INC. By /s/ Kenneth K. Wolff ------------------------------------------ Its Executive Vice President & CFO ------------------------------------------ 2285-03 American Trans Air, Inc. 7337 West Washington St. Indianapolis International Airport Indianapolis, Indiana 46231 Subject: Flight Crew Training Spare Parts Support Reference: Purchase Agreement 2285 (the Purchase Agreement) between The Boeing Company (Boeing) and American Trans Air, Inc. (Customer) relating to Model 757-33N aircraft (the Aircraft) This Letter Agreement is entered into on the date below, and amends and supplements the Agreement. All terms used but not defined in this Letter Agreement have the same meaning as in the Agreement. DEFINITION OF TERMS: FLIGHT CREW TRAINING: Flight training conducted by Boeing and occurring immediately following delivery of the Aircraft. REMOVED PARTS: Parts removed from an Aircraft during Flight Crew Training. REPLACEMENT PARTS: Parts taken from Boeing inventory and installed in an Aircraft because no Standby Parts are available. STANDBY PARTS: Parts which are owned by Customer and located at Customer's designated storage area at Boeing to support Flight Crew Training. TRAINING AIRCRAFT: The Aircraft delivered to Customer and used for Flight Crew Training. 1. PROVISIONING OF SPARE PARTS To support Flight Crew Training, Boeing agrees to provide normal line maintenance and expendable spare parts at no charge on the Training Aircraft; and Customer agrees to provide Standby Parts for the Training Aircraft. The Standby Parts list, including part numbers, exact quantities and on-dock dates, will be established during the provisioning meeting. If parts other than those discussed above fail on the Training Aircraft during Flight Crew Training, Boeing will attempt to provide Replacement Parts for those failed parts. If Boeing is unable to provide Replacement Parts, Customer will be responsible for providing those parts. 2. DISPOSITION OF REMOVED PARTS With respect to Removed Parts, Boeing may: (i) repair such Removed Parts, at no charge to Customer, and either retain such parts as Standby Spare Parts or return the Removed Parts to Customer, at Customer expense; (ii) return the Removed Parts to Customer at Customer's expense; or (iii) return the Removed Parts to the manufacturer for repair or replacement under such manufacturer's warranty. Upon Boeing's receipt of the repaired Removed Parts or their replacements, Boeing may retain such Removed Parts or their replacements as Standby Parts or return such Removed Parts or their replacements to Customer, at Customer's expense. Any Removed Parts returned to Customer, or replacements, will be accomplished in accordance with any written instructions from Customer received by Boeing prior to such return. 3. REDELIVERY OF STANDBY PARTS Standby Parts not installed in the Training Aircraft will be redelivered to Customer on board the last aircraft used for Flight Crew Training. 4. NON-PERFORMANCE BY CUSTOMER If Customer's non-performance of obligations in this Letter Agreement causes a delay in the Flight Crew Training, Customer will be deemed to have agreed to any such delay in Flight Crew Training. In addition, Boeing will have the right to: (i) purchase Standby Spare Parts and invoice Customer for the price of such Parts and for any necessary adjustment and calibration of such Parts; (ii) cancel or reschedule the Flight Crew Training. (iii) invoice Customer for any expenses, including but not limited to ground handling expenses, maintenance costs and storage costs, that are directly attributable to the delay in the Flight Crew Training. 5. CUSTOMER WARRANTY Customer warrants that the Standby Parts will meet the requirements of the Detail Specification and be in a condition to pass Boeing's receiving inspection and functional test, and if not in a new condition, will have an attached FAA Serviceable Parts Tag. 6. TITLE AND RISK OF LOSS Title to and risk of loss of any Standby Parts or Removed Parts will remain with Customer. Boeing will have only such liability for Standby Parts and Removed Parts as a bailee for mutual benefit would have, but will not be liable for loss of use. For Replacement Parts, title will transfer to Customer at the time such part is installed on the Training Aircraft. Very truly yours, THE BOEING COMPANY By /s/ R.C. Nelson -------------------------------- Its ATTORNEY-IN-FACT -------------------------------- ACCEPTED AND AGREED TO this Date: June 30 , 2000 ---------------------- AMERICAN TRANS AIR, INC. By /s/ Kenneth K. Wolff -------------------------------- Its Executive Vice President & CFO -------------------------------- (CONFIDENTIAL LETTER OMITTED) (CONFIDENTIAL LETTER OMITTED) (CONFIDENTIAL LETTER OMITTED) (CONFIDENTIAL LETTER OMITTED) (CONFIDENTIAL LETTER OMITTED) (CONFIDENTIAL LETTER OMITTED) EX-10.6(A) 16 file062.txt AMTRAN, INC., 2000 10-K, EXHIBIT 10.6(A) AIRCRAFT LEASE AGREEMENT Dated as of September 5, 2000 BETWEEN AMERICAN TRANS AIR, INC. as LESSEE and INTERNATIONAL LEASE FINANCE CORPORATION as LESSOR ------------------------------------------------------------------------------- Aircraft Make and Model: New Boeing 737-800 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Aircraft Manufacturer's Serial Number: 30675 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Aircraft Registration Mark: Per Estoppel and Acceptance Certificate ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Make and Model of Engines: CFM56-7B-27 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Serial Numbers of Engines: Per Estoppel and Acceptance Certificate ------------------------------------------------------------------------------- NEW BOEING 737-800 AIRCRAFT NO. 2 TABLE OF CONTENTS ARTICLE 1 SUMMARY OF TRANSACTION.........................................2 1.1 Description of Aircraft........................................2 1.2 Scheduled Delivery Date and Location...........................2 1.3 Lease Term.....................................................2 1.4 Security Deposit...............................................2 1.5 Transaction Fee................................................2 1.6 Rent During Lease Term.........................................2 1.7 Country of Aircraft Registration...............................4 1.8 Maintenance Program............................................4 1.9 Agreed Value of Aircraft.......................................4 1.10 LESSOR's Bank Account..........................................4 ARTICLE 2 DEFINITIONS....................................................5 2.1 General Definitions............................................5 2.2 Specific Definitions...........................................9 ARTICLE 3 PLACE AND DATE OF DELIVERY....................................11 3.1 Place of Delivery.............................................11 3.2 Scheduled Delivery Date.......................................11 3.3 Delivery subject to Manufacturer Delivery.....................11 3.4 No LESSOR Liability...........................................11 3.5 Total Loss of Aircraft prior to Delivery......................11 3.6 Cancellation for Delay........................................11 ARTICLE 4 LEASE TERM....................................................12 4.1 Lease Term....................................................12 4.2 "Expiration Date".............................................12 4.3 "Termination Date"............................................12 ARTICLE 5 SECURITY DEPOSIT, TRANSACTION FEE, RENT AND OTHER PAYMENTS......................................................13 5.1 Security Deposit..............................................13 5.2 Transaction Fee...............................................14 5.3 Rent..........................................................14 5.4 LESSOR's Bank Account.........................................15 5.5 Default Interest..............................................16 5.6 No Deductions or Withholdings.................................16 5.7 Value Added Taxes.............................................16 5.8 Net Lease.....................................................17 5.9 LESSOR Performance of LESSEE Obligation.......................18 5.10 Consideration for Rent and other Amounts......................18 ARTICLE 6 INVOLVEMENT WITH AIRCRAFT MANUFACTURER........................19 6.1 LESSEE Selection of Aircraft..................................19 6.2 Agency Agreement..............................................19 6.3 Procurement of BFE............................................19 6.4 Assignment of Training........................................19 6.5 LESSEE Inspection of Aircraft.................................19 6.6 Aircraft at Delivery..........................................19 6.7 Delivery of the Aircraft to LESSEE............................20 6.8 LESSEE Acceptance of Aircraft.................................20 ARTICLE 7 PRE-DELIVERY, DELIVERY AND POST-DELIVERY DOCUMENTARY AND OTHER REQUIREMENTS............................21 7.1 Pre-Delivery Requirements.....................................21 7.2 Delivery Requirements.........................................22 7.3 Post-Delivery Requirements....................................23 ARTICLE 8 DISCLAIMERS...................................................24 8.1 "As Is, Where Is".............................................24 8.2 Waiver of Warranty of Description.............................24 8.3 LESSEE Waiver.................................................25 8.4 Conclusive Proof..............................................25 8.5 No LESSOR Liability for Losses................................25 8.6 No Liability to Repair or Replace.............................25 8.7 No Waiver.....................................................26 ARTICLE 9 MANUFACTURERS' AND VENDORS' WARRANTIES........................27 9.1 Warranties....................................................27 9.2 Reassignment..................................................27 ARTICLE 10 OPERATION OF AIRCRAFT.........................................28 10.1 Costs of Operation............................................28 10.2 Compliance with Laws..........................................28 10.3 Training......................................................28 10.4 No Violation of Insurance Policies............................28 10.5 Flight Charges................................................29 ARTICLE 11 SUBLEASES.....................................................30 11.1 No Sublease without LESSOR Consent............................30 11.2 LESSOR Costs..................................................30 11.3 Any Approved Sublease.........................................30 11.4 Assignment of Sublease........................................30 11.5 Continued Responsibility of LESSEE............................30 ARTICLE 12 MAINTENANCE AND USE OF AIRCRAFT...............................31 12.1 General Obligation............................................31 12.2 Specific Obligations..........................................31 12.3 Replacement of Parts..........................................32 12.4 Removal of Engines............................................33 12.5 Pooling of Engines and Parts..................................34 12.6 Installation of Engines on other aircraft.....................34 12.7 Modifications.................................................35 12.8 Performance of Work by Third Parties..........................36 12.9 Reporting Requirements........................................36 12.10 Information Regarding Maintenance Program.....................36 12.11 LESSOR Rights to Inspect Aircraft.............................36 ARTICLE 13 TITLE AND REGISTRATION........................................37 13.1 Title to the Aircraft During Lease Term.......................37 13.2 Registration of Aircraft......................................37 13.3 Filing of this Lease..........................................37 13.4 Evidence of Registration and Filings..........................37 ARTICLE 14 IDENTIFICATION PLATES.........................................38 14.1 Airframe Identification Plates................................38 14.2 Engine Identification Plates..................................38 ARTICLE 15 TAXES.........................................................39 15.1 General Obligation of LESSEE..................................39 15.2 Exceptions to Indemnity.......................................39 15.3 After-Tax Basis...............................................40 15.4 Claims and Contests...........................................40 15.5 Refunds.......................................................41 15.6 Cooperation in Filing Tax Returns.............................41 ARTICLE 16 INDEMNITIES...................................................42 16.1 General Indemnity.............................................42 16.2 Exceptions to General Indemnities.............................43 16.3 After-Tax Basis...............................................44 16.4 Timing of Payment.............................................44 16.5 Subrogation...................................................44 16.6 Notice........................................................44 16.7 Refunds.......................................................44 16.8 Defense of Claims.............................................45 16.9 Survival of Obligation........................................45 ARTICLE 17 INSURANCE.....................................................46 17.1 Categories of Insurance.......................................46 17.2 Insurance for Indemnities.....................................46 17.3 Insurance required by Manufacturer............................46 17.4 Renewal.......................................................46 17.5 Assignment of Rights by LESSOR................................46 17.6 Deductibles...................................................46 17.7 Other Insurance...............................................47 17.8 Information...................................................47 17.9 Currency......................................................47 17.10 Grounding of Aircraft.........................................47 17.11 Failure to Insure.............................................47 17.12 Limit on Hull in favor of LESSEE..............................47 17.13 Marketplace Limitations.......................................48 ARTICLE 18 LOSS, DAMAGE AND REQUISITION..................................49 18.1 Definitions...................................................49 18.2 Notice of Total Loss..........................................50 18.3 Total Loss of Aircraft or Airframe............................50 18.4 Surviving Engine(s)...........................................51 18.5 Total Loss of Engine and not Airframe.........................51 18.6 Other Loss or Damage..........................................52 18.7 Copy of Insurance Policy......................................53 18.8 Government Requisition........................................53 18.9 Conveyance to LESSEE..........................................53 ARTICLE 19 CRAF PROGRAM..................................................54 19.1 Dedication to CRAF............................................54 19.2 Notice to LESSOR..............................................54 19.3 Requisition of Engine.........................................54 19.4 Government Indemnification....................................54 19.5 No Geographic Limits..........................................54 19.6 Notice of Default.............................................55 19.7 Receipt of Payments...........................................55 ARTICLE 20 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE...........56 20.1 Representations and Warranties................................56 20.2 Covenants.....................................................58 ARTICLE 21 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSOR...........61 21.1 Representations and Warranties................................61 21.2 Covenant of Quiet Enjoyment...................................62 ARTICLE 22 FINANCIAL AND RELATED INFORMATION.............................63 ARTICLE 23 RETURN OF AIRCRAFT............................................64 23.1 Date of Return................................................64 23.2 Technical Report..............................................64 23.3 Return Location...............................................64 23.4 Full Aircraft Documentation Review............................64 23.5 Aircraft Inspection...........................................64 23.6 Certificate of Airworthiness Matters..........................65 23.7 General Condition of Aircraft at Return.......................66 23.8 Checks Prior to Return........................................69 23.9 Part Lives....................................................72 23.10 Export and Deregistration of Aircraft.........................74 23.11 LESSEE's Continuing Obligations...............................75 23.12 Airport and Navigation Charges................................75 23.13 Return Acceptance Certificate.................................76 23.14 Indemnities and Insurance.....................................76 ARTICLE 24 ASSIGNMENT....................................................77 24.1 No Assignment by LESSEE.......................................77 24.2 Sale or Assignment by LESSOR..................................77 24.3 LESSOR's Lender...............................................79 24.4 LESSEE Cooperation............................................79 24.5 Protections...................................................79 ARTICLE 25 DEFAULT OF LESSEE.............................................80 25.1 LESSEE Notice to LESSOR.......................................80 25.2 Events of Default.............................................80 25.3 LESSOR's General Rights.......................................82 25.4 Deregistration and Export of Aircraft.........................83 25.5 LESSEE Liability for Damages..................................83 25.6 Waiver of Default.............................................84 25.7 Present Value of Payments.....................................84 25.8 Use of "Termination Date".....................................84 ARTICLE 26 NOTICES.......................................................85 26.1 Manner of Sending Notices.....................................85 26.2 Notice Information............................................85 ARTICLE 27 GOVERNING LAW AND JURISDICTION................................86 27.1 California Law................................................86 27.2 Non-Exclusive Jurisdiction in California......................86 27.3 Service of Process............................................86 27.4 Prevailing Party in Dispute...................................86 27.5 Waiver........................................................86 ARTICLE 28 MISCELLANEOUS.................................................87 28.1 Press Releases................................................87 28.2 LESSOR Performance for LESSEE.................................87 28.3 LESSOR's Payment Obligations..................................87 28.4 Application of Payments.......................................87 28.5 Usury Laws....................................................87 28.6 Delegation by LESSOR..........................................87 28.7 Confidentiality...............................................88 28.8 Rights of Parties.............................................88 28.9 Further Assurances............................................88 28.10 Use of Word "including".......................................88 28.11 Headings......................................................88 28.12 Invalidity of any Provision...................................88 28.13 Negotiation...................................................88 28.14 Time is of the Essence........................................89 28.15 Amendments in Writing.........................................89 28.16 Counterparts..................................................89 28.17 Delivery of Documents by Fax..................................89 28.18 Entire Agreement..............................................89 EXHIBIT A AIRCRAFT DESCRIPTION..........................................91 EXHIBIT B AGENCY AGREEMENT..............................................92 EXHIBIT C CERTIFICATE OF INSURANCE......................................96 EXHIBIT D BROKERS' LETTER OF UNDERTAKING...............................102 EXHIBIT E ESTOPPEL AND ACCEPTANCE CERTIFICATE..........................104 EXHIBIT F OPINION OF COUNSEL...........................................111 EXHIBIT G ASSIGNMENT OF RIGHTS (AIRFRAME)..............................114 EXHIBIT H ASSIGNMENT OF RIGHTS (ENGINES)...............................119 EXHIBIT I RETURN ACCEPTANCE RECEIPT....................................123 EXHIBIT J MONTHLY REPORT...............................................134 EXHIBIT K AIRCRAFT DOCUMENTATION.......................................138 EXHIBIT L TECHNICAL EVALUATION REPORT..................................140 AIRCRAFT LEASE AGREEMENT THIS AIRCRAFT LEASE AGREEMENT is made and entered into as of September 5, 2000. BETWEEN: AMERICAN TRANS AIR, INC., a Indiana corporation whose address and principal place of business is at 7337 West Washington Street, Indianapolis International Airport, Indianapolis, Indiana 46231, United States of America ("LESSEE") and INTERNATIONAL LEASE FINANCE CORPORATION, a California corporation whose address and principal place of business is at 1999 Avenue of the Stars, 39th Floor, Los Angeles, California 90067, United States of America ("LESSOR"). The subject matter of this Lease is one (1) new Boeing 737-800 aircraft. In consideration of and subject to the mutual covenants, terms and conditions contained in this Lease, LESSOR hereby agrees to lease to LESSEE and LESSEE hereby agrees to lease from LESSOR the aircraft and the parties further agree as follows: ARTICLE 1 SUMMARY OF TRANSACTION The information in this Article 1 is a summary of the lease transaction between LESSEE and LESSOR. It is set forth for the convenience of the parties only and will not be deemed in any way to amend, detract from or simplify the other provisions of this Lease. 1.1 DESCRIPTION OF AIRCRAFT One new Boeing 737-800 aircraft 1.2 SCHEDULED DELIVERY DATE AND LOCATION In the month of (CONFIDENTIAL MATERIAL OMITTED) at Seattle, Washington 1.3 LEASE TERM 15 years 1.4 SECURITY DEPOSIT (CONFIDENTIAL MATERIAL OMITTED) 1.5 TRANSACTION FEE (CONFIDENTIAL MATERIAL OMITTED) 1.6 RENT DURING LEASE TERM Payable monthly in advance and equal to the sum of: (a The following amounts for the following years of the Lease Term: LEASE PERIOD MONTHLY RENTAL AMOUNT* (CONFIDENTIAL MATERIAL OMITTED) *The above base rent is expressed in January 1999 U.S.Dollars and will increase in the following amounts for the following periods: PERIOD ESCALATION FACTOR (CONFIDENTIAL MATERIAL OMITTED) 1.7 COUNTRY OF AIRCRAFT REGISTRATION U.S. 1.8 MAINTENANCE PROGRAM LESSEE's Maintenance Program 1.9 AGREED VALUE OF AIRCRAFT (CONFIDENTIAL MATERIAL OMITTED) The Agreed Value is expressed in March 2001 U.S. Dollars and will increase in accordance with Manufacturer's announced escalation rate from March 1, 2001 to the Delivery Date. On each annual renewal date of LESSEE's insurance policy commencing on the renewal date following the first anniversary of the Lease Term, the Agreed Value will decrease by two percent (2.0%) of the then existing Agreed Value. 1.10 LESSOR'S BANK ACCOUNT (Confidential Material Omitted) ARTICLE 2 DEFINITIONS Except where the context otherwise requires, the following words have the following meanings for all purposes of this Lease. The definitions are equally applicable to the singular and plural forms of the words. Any agreement defined below includes each amendment, modification, supplement and waiver thereto in effect from time to time. 2.1 GENERAL DEFINITIONS. "ACT" means the Federal Aviation Act of 1958, as amended from time to time, or any successor act thereto. "AIRCRAFT" means the Airframe, two (2) Engines, Parts and Aircraft Documentation, collectively. As the context requires, "Aircraft" may also mean the Airframe, any Engine, any Part, the Aircraft Documentation or any part thereof individually. For example, in the context of return to LESSOR the term "Aircraft" means the Airframe, Engines, Parts and Aircraft Documentation collectively, yet in the context of LESSEE not creating any Security Interests other than Permitted Liens on the Aircraft, the term "Aircraft" means any of the Airframe, any Engine, any Part or the Aircraft Documentation individually. "AIRCRAFT DOCUMENTATION" means all (a) log books, Aircraft records, manuals and other documents provided to LESSEE in connection with the Aircraft, (b) documents listed in Exhibits E and K and (c) any other documents required to be maintained during the Lease Term by the Aviation Authority, LESSEE's Maintenance Program and this Lease. "AIRFRAME" means the airframe listed in the Estoppel and Acceptance Certificate executed at Delivery together with all Parts relating thereto (except Engines or engines). "AIRWORTHINESS DIRECTIVES" or "ADS" means all airworthiness directives (or equivalent) of the FAA and the Aviation Authority applicable to the Aircraft. "APU" means the auxiliary power unit of the Aircraft. "AVIATION AUTHORITY" means the FAA or any Government Entity which under the Laws of the U.S. from time to time has control over civil aviation or the registration, airworthiness or operation of aircraft in the U.S. If the Aircraft is registered in a country other than the U.S., "Aviation Authority" means the agency which regulates civil aviation in such other country. "AVIATION DOCUMENTS" means any or all of the following which at any time may be obtainable from the Aviation Authority: (a) if required, a temporary certificate of airworthiness from the Aviation Authority allowing the Aircraft to be flown after Delivery to the State of Registration, (b) an application for registration of the Aircraft with the appropriate authority in the State of Registration, (c) the certificate of registration for the Aircraft issued by the State of Registration, (d) a full certificate of airworthiness for the Aircraft specifying transport category (passenger), (e) an air transport license, (f) an air operator's certificate, (g) such recordation of LESSOR's title to the Aircraft and interest in this Lease as may be available in the State of Registration and (h) all such other authorizations, approvals, consents and certificates in the State of Registration as may be required to enable LESSEE lawfully to operate the Aircraft. "BANKRUPTCY CODE" means The Bankruptcy Reform Act of 1978 (11 U.S.C. ss.ss. 101-1330), as amended or supplemented from time to time, and any successor statute, and all of the rules and regulations issued or promulgated in connection therewith. "BASIC ENGINE" means those units and components of the Engine which are used to induce and convert fuel/air mixture into thrust/power; to transmit power to the fan and accessory drives; to supplement the function of other defined systems external to the Engine; and to control and direct the flow of internal lubrication, plus all essential accessories as supplied by the Engine manufacturer. The nacelle, installed components related to the Aircraft systems, thrust reversers, QEC and the primary flight nozzle are excluded. "BFE" means any equipment which is to be provided by the purchaser of the Aircraft (whether actually provided by LESSOR as buyer-furnished equipment or Manufacturer as seller-purchased equipment). "BUSINESS DAY" means a day other than a Saturday or Sunday on which the banks in Indianapolis, Indiana and in the city where LESSOR's Bank is located are open for the transaction of business of the type required by this Lease. "CREDITOR" means any lessor, owner, bank, lender, mortgagee or other Person which is the owner of or has any interest in an aircraft engine or aircraft operated by LESSEE. "CREDITOR AGREEMENT" means the applicable agreement between a Creditor and LESSEE or between Creditors pursuant to which such Creditor owns, leases or has an interest in either an aircraft operated by LESSEE on which an Engine may be installed or in an aircraft engine which may be installed on the Airframe. "DEFAULT" means any event which, upon the giving of notice, the lapse of time and/or a relevant determination, would constitute an Event of Default. "DELIVERY" means the delivery of the Aircraft from LESSOR to LESSEE pursuant to Articles 3 and 6. "DELIVERY DATE" means the date on which Delivery takes place. "DOLLARS" and "$" means the lawful currency of the U.S. "ENGINE" means (a) each of the engines listed on the Estoppel and Acceptance Certificate; or (b) any replacement engine acquired by LESSOR and leased to LESSEE pursuant to Article 18.5 following a Total Loss of an Engine; including in each case all Parts installed in or on any of such engines at Delivery (or substituted, renewed or replacement Parts in accordance with this Lease) so long as title thereto is or remains vested in LESSOR in accordance with the terms of Article 12.3. "EVENT OF DEFAULT" means any of the events referred to in Article 25.2. "FAA" means the Federal Aviation Administration of the Department of Transportation or any successor thereto under the Laws of the U.S. "FARS" means the U.S. Federal Aviation Regulations embodied in Title 14 of the U.S. Code of Federal Regulations, as amended from time to time, or any successor regulations thereto. "GENEVA CONVENTION" means the Convention on the International Recognition of Rights in Aircraft signed in Geneva, Switzerland on June 19, 1948. "GOVERNMENT ENTITY" means any (a) national, state or local government, (b) board, commission, department, division, instrumentality, court, agency or political subdivision thereof and (c) association, organization or institution of which any of the entities listed in (a) or (b) is a member or to whose jurisdiction any such entity is subject. "LANDING GEAR" means the installed main and nose landing gear, components and their associated actuators, side braces and parts. "LAW" means any (a) statute, decree, constitution, regulation, order or any directive of any Government Entity, (b) treaty, pact, compact or other agreement to which any Government Entity is a signatory or party and (c) judicial or administrative interpretation or application of any of the foregoing. "LEASE" means this Aircraft Lease Agreement, together with all Exhibits hereto. "LESSOR'S LIEN" means any Security Interest created by LESSOR, or arising from a claim against LESSOR completely unrelated to this Lease or the other Operative Documents. "MAINTENANCE PROGRAM" means LESSEE's maintenance program as approved by the Aviation Authority or such other maintenance program as LESSOR may, in its discretion, accept in writing. "MANUFACTURER" means The Boeing Company, a Delaware corporation. "MPD" means the Maintenance Planning Document published by Manufacturer and applicable to the Aircraft. "OVERHAUL" means the full reconditioning of the Aircraft, an Engine, APU, Landing Gear, module or Part, as the case may be, in which such equipment has been fully disassembled; cleaned; thoroughly inspected; and returned to the highest standard specified by the applicable manufacturer's manual. "PART" means the APU, any part, component, appliance, system module, engine module, accessory, material, instrument, communications equipment, furnishing, LESSEE-furnished or LESSOR-purchased equipment or other item of equipment (other than complete Engines or engines) for the time being installed in or attached to the Airframe or any Engine or which, having been removed from the Airframe or any Engine, remains the property of LESSOR. "PERMITTED INSTITUTION" means any Person (other than a commercial air carrier, a commercial aircraft operator, a freight forwarder, or an affiliate of any of the foregoing), with either: (a) a combined capital and surplus or net worth of at least; or (b) have a credit rating on the majority of its unsecured debt which is at least equal to BBB or its equivalent from Standard and Poor's Rating Group, a division of The McGraw-Hill Companies, Inc. or Moody's Investors Service, Inc. "PERMITTED LIEN" means (a) LESSOR's Liens; (b) Security Interests arising in the ordinary course of LESSEE's business for Taxes either not yet due and payable or, if due and payable, being contested in good faith in accordance with Article 15.4; (c) materialmen's, mechanics', workmen's, repairmen's, employees' liens or similar Security Interests arising by operation of Law after the Delivery Date in the ordinary course of LESSEE's business for amounts which are either not yet due or are being contested in good faith by appropriate proceedings (and for which adequate reserves have been made or, when required in order to pursue such proceedings, an adequate bond has been provided) so long as such proceedings do not involve any material danger of sale, forfeiture or loss of the Aircraft; (d) the rights of LESSOR and any LESSOR's Lender and the rights of LESSEE under this Lease and the other Operative Documents; (e) the rights of others under agreements or arrangements to the extent permitted by Articles 10 and 11.5; and (f) any Security Interest against which LESSEE causes to be provided a bond in such amount and under such terms and conditions as are reasonably satisfactory to LESSOR. "PERSON" means any individual, firm, partnership, joint venture, trust, corporation, limited liability company, Government Entity, committee, department, authority or any body, incorporated or unincorporated, whether having distinct legal personality or not. "PRIME RATE" means the rate of interest from time to time announced by Bank of America Illinois in Chicago, Illinois as its prime commercial lending rate. "SECURITY INTEREST" means any encumbrance or security interest, however and wherever created or arising including (without prejudice to the generality of the foregoing) any right of ownership, security, mortgage, pledge, charge, encumbrance, lease, lien, statutory or other right in rem, hypothecation, title retention, attachment, levy, claim or right of possession or detention. "STATE OF REGISTRATION" means the U.S. or such other country or state of registration of the Aircraft as LESSOR may, in its absolute discretion, approve in writing. "U.S." means the United States of America. "U.S. AIR CARRIER" means any U.S. air carrier who is a Citizen of the U.S. holding an air carrier operating certificate issued by the Secretary of Transportation pursuant to chapter 447 of the Act for aircraft capable of carrying 10 or more individuals or 6000 pounds or more of cargo, and as to whom there is in force an air carrier operating certificate issued pursuant to FAR Part 121, or who may operate as an air carrier by certification or otherwise under any successor or substitute provisions therefor or in the absence thereof. 2.2 SPECIFIC DEFINITIONS. The following terms are defined in the Articles referenced below: TERMS ARTICLE Agreed Value 18.1 CRAF Program 19.1 CRAF Program Requisition 19.1 Period Default Interest 5.5 Delivery Location 3.1 Expenses 16.1 Expiration Date 4.3 Indemnities 16.1 Lease Term 4.1 LESSEE Customization 5.3.1 Costs LESSOR's Assignee 24.2.1 LESSOR's Bank 5.4 LESSOR's Lender 24.3 Manufacturer's Escalation 5.3.1 Rate Modifications 12.7.2 Net Total Loss Proceeds 18.1 Operative Documents 20.1.3 Rent 5.3.1 Return Check 23.8.1 Scheduled Delivery Date 3.2 Security Deposit 5.1.1 Taxes 15.1 Termination Date 4.3 Total Loss 18.1 Total Loss Date 18.1 Total Loss Proceeds 18.1 Transaction Fee 5.2 ARTICLE 3 PLACE AND DATE OF DELIVERY 3.1 PLACE OF DELIVERY. LESSOR will deliver the Aircraft to LESSEE at Manufacturer's facility at Seattle, Washington or such other place as may be agreed in writing between the parties (the "DELIVERY LOCATION"). 3.2 SCHEDULED DELIVERY DATE. As of the date of this Lease, delivery of the Aircraft from Manufacturer to LESSOR is scheduled to occur in the month of (CONFIDENTIAL MATERIAL OMITTED). LESSOR will not agree to reschedule such delivery without LESSEE's prior written consent. LESSOR will notify LESSEE from time to time and in a timely manner of the exact date on which LESSOR expects such delivery to take place (the "SCHEDULED DELIVERY DATE"). 3.3 DELIVERY SUBJECT TO MANUFACTURER DELIVERY. LESSOR and LESSEE expressly acknowledge that Delivery of the Aircraft to LESSEE is subject to and conditioned upon, and is to occur simultaneously with, delivery of the Aircraft by Manufacturer to LESSOR. 3.4 NO LESSOR LIABILITY. LESSOR will not be liable for any loss or expense, or any loss of profit, arising from any delay or failure in Delivery to LESSEE unless such delay or failure arises as a consequence of the willful misconduct of LESSOR, and in no event will LESSOR be liable for any delay or failure which is caused by any breach or delay on the part of Manufacturer or any BFE supplier. 3.5 TOTAL LOSS OF AIRCRAFT PRIOR TO DELIVERY. If a Total Loss of the Aircraft occurs prior to Delivery, neither party will have any further liability to the other except that LESSOR will return to LESSEE the Security Deposit in accordance with Article 5.1.3 and any prepaid Rent. 3.6 CANCELLATION FOR DELAY. Promptly after LESSOR becomes aware that in Manufacturer's opinion a delay will cause Delivery to be delayed beyond (CONFIDENTIAL MATERIAL OMITTED) LESSOR will notify LESSEE. By written notice given within ten (10) Business Days after LESSEE's receipt of such LESSOR notice, either party may by written notice to the other party terminate this Lease and this Lease will terminate on the date of receipt of such notice. In the event of such termination, neither party will have any further liability to the other party except that LESSOR will return to LESSEE the Security Deposit in accordance with Article 5.1.3 and any prepaid Rent. If neither party gives notice of termination within such ten (10) Business Days, both parties lose all right to terminate under this Article 3.6 unless otherwise agreed in writing by the parties. ARTICLE 4 LEASE TERM 4.1 LEASE TERM. The term of leasing of the Aircraft will commence on the Delivery Date and continue for a term of fifteen (15) years ("LEASE TERM"). 4.2 "EXPIRATION DATE". "EXPIRATION DATE" means the date on which LESSEE is required to redeliver the Aircraft to LESSOR in the condition required by this Lease on the last day of the Lease Term. 4.3 "TERMINATION DATE". This Lease may in fact terminate on any of the dates set forth below: (a the Expiration Date, provided LESSEE returns the Aircraft to LESSOR on the Expiration Date in the condition required by Article 23; or (b a date earlier than the Expiration Date, if: (i there is a Total Loss of the Aircraft prior to Delivery pursuant to Article 3.5; (ii cancellation of this Lease occurs pursuant to Article 3.6; (iii there is a Total Loss of the Aircraft and payment is made to LESSOR in accordance with Article 18.3; or (iv an Event of Default occurs and LESSOR repossesses the Aircraft or otherwise terminates this Lease pursuant to Article 25.3. (c a date later than the Expiration Date, if: (i an Event of Default occurs hereunder by LESSEE returning the Aircraft in the condition required by this Lease after the Expiration Date; or (ii an Event of Default occurs and LESSOR repossesses the Aircraft or otherwise terminates this Lease pursuant to Article 25.3. The "TERMINATION DATE" is the date on which this Lease terminates because one of the above has occurred. ARTICLE 5 SECURITY DEPOSIT, TRANSACTION FEE, RENT AND OTHER PAYMENTS 5.1 SECURITY DEPOSIT. 5.1.1 (CONFIDENTIAL MATERIAL OMITTED) 5.1.2 The Security Deposit may be commingled with LESSOR's general funds and any interest earned on such Security Deposit will be for LESSOR's account. If the Security Deposit is reduced below the required amount by application to meet LESSEE's unperformed obligations under this Lease, LESSEE will replenish the Security Deposit within ten (10) days after LESSOR's demand therefor. The Security Deposit will serve as security for the performance by LESSEE of its obligations under this Lease and any other agreements between LESSEE and LESSOR relating to aircraft, engines, aircraft equipment or the extension of credit and may be applied by LESSOR upon the occurrence of a Default or Event of Default hereunder or of a default by LESSEE under any such other agreements. 5.1.3 Upon termination of this Lease in accordance with Article 4.3 other than if an Event of Default has occurred and is continuing, LESSOR will return to LESSEE the amount of the Security Deposit then held by LESSOR (so long as no default by LESSEE exists under any other agreement between LESSEE and LESSOR relating to aircraft, engines or aircraft equipment or the extension of credit by LESSOR to LESSEE), without interest, less an amount determined by LESSOR to be a reasonable estimate of the costs, if any, which LESSOR will incur to remedy any unperformed obligations of LESSEE under this Lease, including the correction of any discrepancies from the required condition of the Aircraft on return of the Aircraft. 5.2 TRANSACTION FEE. Within two (2) Business Days after execution of this Lease, LESSEE will pay LESSOR a nonrefundable transaction fee (CONFIDENTIAL MATERIAL OMITTED) 5.3 RENT. 5.3.1 LESSEE will pay LESSOR the following amounts monthly in advance as rent for the Aircraft (the "RENT"): (a The following amounts for the following years of the Lease Term: LEASE PERIOD MONTHLY RENTAL AMOUNT* ------------ --------------------- (CONFIDENTIAL MATERIAL OMITTED) *The above base rent is expressed in January 1999 U.S. dollars and will increase in the following amounts for the following periods (the "MANUFACTURER'S ESCALATION RATE"): PERIOD ESCALATION FACTOR ------------ --------------------- (CONFIDENTIAL MATERIAL OMITTED) Any increases to the above base Rent during the Lease Term will be calculated immediately prior to Delivery. 5.3.2 The first payment of Rent during the Lease Term will be paid prior to the Scheduled Delivery Date. Each subsequent payment of Rent will be due monthly thereafter no later than the same day of the month as the Delivery Date of the Aircraft except that, if such day is not a Business Day, the Rent will be due on the immediately preceding Business Day. If Delivery occurred on the 29th, 30th or 31st of the month and in any given month during the Lease Term there is no such corresponding date, Rent will be payable on the last Business Day of such month. 5.4 LESSOR'S BANK ACCOUNT. The Security Deposit, Transaction Fee, Rent and any other payment due under this Lease will be paid by wire transfer of immediately available U.S. Dollar funds to LESSOR's bank account at: (CONFIDENTIAL MATERIAL OMITTED) or to such other bank account in the U.S. as LESSOR may from time to time designate by written notice ("LESSOR'S BANK"). When it is stated in this Lease that an installment of the Security Deposit, the monthly Rent or any other payment is due or must be paid or made by LESSEE by a specific date, then such payment actually must be received by LESSOR's Bank on or before such specific date, even if, in order for such payment to be received by LESSOR's Bank by such specific date, LESSEE must initiate the wire transfer prior to such specific date. 5.5 DEFAULT INTEREST. If LESSOR's Bank does not receive the Rent or any other amount on or before the specific date when due, LESSOR will suffer loss and damage the exact nature and amount of which are difficult or impossible to ascertain. LESSEE will pay LESSOR as supplemental Rent (by way of agreed compensation and not as a penalty) interest on any due and unpaid amounts payable by LESSEE under this Lease. Interest will be calculated at a per annum rate (based on a 360 day year) which is equal to three percent (3%) plus the Prime Rate in effect on the date on which the amount was originally due for the period from the date the amount originally was due through the date the amount actually is received at LESSOR's Bank or, in the case of LESSOR's performance of LESSEE's obligations hereunder, from the date of payment by LESSOR through the date of LESSEE's repayment to LESSOR ("DEFAULT INTEREST"). Default Interest will accrue on a day-to-day basis and be compounded monthly. 5.6 NO DEDUCTIONS OR WITHHOLDINGS. All payments by LESSEE under this Lease, including the Security Deposit, Transaction Fee, Rent, Default Interest, fees, indemnities or any other item, will be made in full without any deduction or withholding whether in respect of set-off, counterclaim, duties, or Taxes (as defined in Article 15) imposed in the State of Registration or any jurisdiction from which such payments are made unless LESSEE is prohibited by Law from doing so, in which event LESSEE will gross up the payment amount such that the net payment received by LESSOR after any deduction or withholding equals the amounts called for under this Lease. LESSEE's requirement to pay the amounts required by this Article 5.6 is subject to the exceptions provided in Article 15.2. 5.7 VALUE ADDED TAXES. The Rent and other amounts payable by LESSEE under this Lease are exclusive of any value added tax, turnover tax or similar tax or duty. 5.8 NET LEASE. 5.8.1 This Lease is a net lease and LESSEE's obligation to pay Rent and make other payments in accordance with this Lease will be absolute and unconditional under any and all circumstances and regardless of other events, including the following: (a) any right of set-off, counterclaim, recoupment, defense or other right (including any right of reimbursement) which LESSEE may have against LESSOR, Manufacturer, the Engine manufacturer or any other person for any reason, including any claim LESSEE may have for the foregoing; (b) unavailability or interruption in use of the Aircraft for any reason, including a requisition thereof or any prohibition or interference with or other restriction against LESSEE's use, operation or possession of the Aircraft (whether by Law or otherwise), any defect in title, airworthiness, merchantability, fitness for any purpose, condition, design, specification or operation of any kind or nature of the Aircraft, the ineligibility of the Aircraft for any particular use or trade or for registration under the Laws of any jurisdiction or Total Loss of the Aircraft; (c) insolvency, bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, liquidation, receivership, administration or similar proceedings by or against LESSOR, LESSEE, Manufacturer, the Engine manufacturer or any other Person; (d) invalidity or unenforceability or lack of due authorization of or other defect in this Lease; (e) failure or delay on the part of any party to perform its obligations under this Lease; or (f) any other circumstance which but for this provision would or might have the effect of terminating or in any other way affecting any obligation of LESSEE hereunder. 5.8.2 Nothing in Article 5.8 will be construed to limit LESSEE's rights and remedies in the event of LESSOR's breach of its warranty of quiet enjoyment set forth in Article 21.2 or to limit LESSEE's rights and remedies to pursue in a court of law any claim it may have against LESSOR or any other Person. 5.9 LESSOR PERFORMANCE OF LESSEE OBLIGATION. If LESSEE fails to make any payment under this Lease to a third party in connection with the Aircraft or fails to perform any other obligation required under this Lease, LESSOR may (but is not required to) at its election and without waiver of its rights perform such obligation and/or pay such amount. Within five (5) Business Days after written notice to LESSEE of the amount paid by LESSOR on behalf of LESSEE, LESSEE will repay such amount to LESSOR together with Default Interest. Such payment to LESSOR will constitute additional Rent payable by LESSEE to LESSOR hereunder. Any payment, performance or compliance by LESSOR of a LESSEE obligation hereunder will not affect the occurrence or continuance of a Default or Event of Default, as the case may be. 5.10 CONSIDERATION FOR RENT AND OTHER AMOUNTS. The amount of the Rent and other payments contained herein are in consideration of LESSEE's waiver of warranties and indemnities set forth in Articles 8 and 16, respectively, and the other provisions of this Lease. ARTICLE 6 INVOLVEMENT WITH AIRCRAFT MANUFACTURER 6.1 LESSEE SELECTION OF AIRCRAFT. LESSEE ACKNOWLEDGES THAT THE DESCRIPTION OF THE AIRCRAFT SET FORTH IN THIS LEASE IS BASED UPON INFORMATION SUPPLIED BY MANUFACTURER. LESSEE COVENANTS TO LESSOR THAT LESSEE HAS USED ITS OWN JUDGMENT IN SELECTING THE AIRCRAFT AND HAS DONE SO BASED ON ITS SIZE, DESIGN AND TYPE. LESSEE ACKNOWLEDGES THAT LESSOR IS NOT A MANUFACTURER, REPAIRER OR SERVICING AGENT OF THE AIRCRAFT. 6.2 AGENCY AGREEMENT. Certain obligations remain to be performed by LESSOR in connection with the manufacture, fabrication and completion of the Aircraft by Manufacturer which will be performed by LESSEE (as provided in the Agency Agreement). LESSEE will act as LESSOR's agent with respect to some of these matters pursuant to the terms of an Agency Agreement to be entered into between LESSEE and LESSOR in the form set forth in Exhibit B. 6.3 PROCUREMENT OF BFE. LESSEE's and LESSOR's technical representatives will meet and determine which of LESSEE or LESSOR will provide specific items of BFE. Such BFE will then be provided to Manufacturer by LESSEE or LESSOR, as applicable, within the time frames required by Manufacturer. 6.4 ASSIGNMENT OF TRAINING. LESSOR hereby assigns to LESSEE all rights to training to which LESSOR is entitled as a result of LESSOR's purchase of the Aircraft and lease of the Aircraft to LESSEE. If LESSEE fails to take Delivery of the Aircraft when tendered in accordance with Article 6.7, LESSEE will immediately pay to LESSOR an amount equal to the Dollar value of such training based on what the training would have cost LESSEE had LESSEE purchased such training directly from Manufacturer. 6.5 LESSEE INSPECTION OF AIRCRAFT. During the course of final assembly of the Aircraft, and at Delivery, LESSEE will have its own representative present to inspect the Aircraft and to ensure its conformity with LESSEE's needs and the terms of this Lease. LESSEE will have ground inspection and acceptance flight rights with respect to the Aircraft. LESSEE acknowledges that, as between LESSEE and LESSOR, in accepting the Aircraft LESSEE is relying on its own inspection and knowledge of the Aircraft in determining whether the Aircraft meets the requirements of this Lease. 6.6 AIRCRAFT AT DELIVERY. At Delivery, the Aircraft will be as set forth in Exhibit A, as such description may be modified by any change requests agreed to among LESSEE, LESSOR and Manufacturer (which will be reflected in amendment(s) to this Lease). In the event of any discrepancies, LESSEE and LESSOR will cooperate in good faith with one another and with Manufacturer and Engine manufacturer, as applicable, in order to arrive at a mutually acceptable resolution of any such discrepancies. 6.7 DELIVERY OF THE AIRCRAFT TO LESSEE. Subject to LESSEE having performed all of the conditions precedent to Delivery set forth herein, immediately following delivery of the Aircraft from Manufacturer to LESSOR, LESSOR will deliver the Aircraft to LESSEE at the Delivery Location. Provided that the Aircraft is in the condition required by Article 6.6, upon the tender of the Aircraft by LESSOR to LESSEE, LESSEE will accept the Aircraft and the date of tender by LESSOR to LESSEE will be deemed to be the Delivery Date for all purposes under this Lease, including, but not limited to, the commencement of LESSEE's obligation to pay Rent hereunder. 6.8 LESSEE ACCEPTANCE OF AIRCRAFT. If LESSEE fails to (a) comply with its obligations set forth in Article 6.2, (b) comply with the conditions contained in Articles 7.1 and 7.2 so as to allow Delivery to take place immediately following delivery of the Aircraft by Manufacturer to LESSOR or (c) take delivery of the Aircraft when properly tendered for delivery by LESSOR in the condition required hereunder, LESSEE will indemnify LESSOR for all costs and expenses incurred by LESSOR as a result thereof including (but without limitation) any payments other than the purchase price which LESSOR becomes obliged to make to Manufacturer. ARTICLE 7 PRE-DELIVERY, DELIVERY AND POST-DELIVERY DOCUMENTARY AND OTHER REQUIREMENTS 7.1 PRE-DELIVERY REQUIREMENTS. LESSEE will do each of the following prior to the Scheduled Delivery Date of the Aircraft within the time frames set forth below: 7.1.1 Within one (1) month after execution of this Lease, LESSEE will deliver to LESSOR each of the following: (a) copies of resolutions of the Board of Directors of LESSEE or other written evidence of appropriate corporate action, duly certifying and authorizing the lease of the Aircraft hereunder and the execution, delivery and performance of this Lease, together with an incumbency certificate as to the person or persons authorized to execute and deliver documents on behalf of LESSEE hereunder; and (b) an opinion of counsel in the form and substance of Exhibit F. 7.1.2 At least three (3) days prior to the Scheduled Delivery Date, LESSEE will have delivered to LESSOR a Certificate of Insurance and Brokers' Letter of Undertaking in the form and substance of Exhibits C and D, respectively, from LESSEE's insurance brokers evidencing insurance of the Aircraft in accordance with this Lease from the Delivery Date. 7.1.3 At least three (3) Business Days prior to the Scheduled Delivery Date, LESSEE will do each of the following: (a) provide LESSOR with a copy of such Aviation Documents as may be available prior to the Scheduled Delivery Date; (b) provide LESSOR with a power of attorney empowering LESSEE's representative, who may be an officer or employee of LESSEE, to accept the Aircraft on behalf of LESSEE; and (c) provide LESSOR with such other documents as LESSOR may reasonably request. 7.1.4 Prior to the Scheduled Delivery Date, LESSEE will pay LESSOR the first monthly installment of Rent in accordance with Article 5.3.2. 7.2 DELIVERY REQUIREMENTS. On the Delivery Date of the Aircraft, each of the following will occur: 7.2.1 LESSEE will execute and deliver to LESSOR an Estoppel and Acceptance Certificate in the form of Exhibit E covering the Aircraft and effective as of the Delivery Date. 7.2.2 If not previously done, LESSEE and LESSOR will sign an amendment or supplement to Exhibit A evidencing all agreed-to changes to the specification of the Aircraft. 7.2.3 LESSEE will deliver a certificate signed on behalf of LESSEE by an officer of LESSEE stating all of the following: (a) the representations and warranties contained in Article 20 are true and accurate on and as of the Delivery Date as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date); (b) no Default has occurred and is continuing or will result from LESSEE's lease of the Aircraft hereunder; and (c) none of the Creditor Agreements contains terms which provide or contemplate that any Creditor will obtain any right, title or interest in an Engine which is installed on another aircraft (or, if this is not the case, such certificate will identify the parties, the aircraft and the Creditor Agreements for which this statement is untrue). 7.2.4 LESSEE's counsel will deliver opinions confirming the matters set forth in the opinion of counsel described in Article 7.1 and advising that all filing and other requirements have been met or concurrently are being met. 7.2.5 If any Creditor Agreement provides or contemplates that such Creditor will obtain any right, title or interest in an Engine which is installed on such Creditor's aircraft, LESSEE will deliver to LESSOR an engines cooperation agreement in form and substance acceptable to LESSOR which is executed by LESSEE and LESSEE's Creditors (as defined therein). 7.2.6 LESSOR will deliver to LESSEE an assignment of Manufacturer and Engine manufacturer rights in the form and substance of Exhibits G and H, respectively, and concurrently therewith LESSOR, to the extent it has not previously done so, will be deemed to have assigned all training, product assurance and product support applicable to the owner or operator of the Aircraft to LESSEE during the Lease Term. 7.3 POST-DELIVERY REQUIREMENTS. 7.3.1 Promptly after Delivery, LESSEE will do each of the following: (a) provide LESSOR with copies of all Aviation Documents not previously delivered; and (b) provide LESSOR with a follow-up opinion of counsel advising that the Aircraft has been registered in the State of Registration and that all necessary filings have been made. ARTICLE 8 DISCLAIMERS LESSOR HAS COMMITTED TO LESSEE THAT ON THE DELIVERY DATE THE AIRCRAFT WILL BE IN THE CONDITION REQUIRED BY ARTICLE 6. SUCH COMMITMENT OR COVENANT ON THE PART OF LESSOR EXPIRES AND THE DISCLAIMERS SET FORTH IN THIS ARTICLE 8 APPLY UPON LESSEE'S ACCEPTANCE OF THE AIRCRAFT AND EXECUTION OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATE. AFTER SUCH TIME, THEN AS BETWEEN LESSOR AND LESSEE: 8.1 "AS IS, WHERE IS". LESSEE AGREES THAT IT IS LEASING THE AIRCRAFT "AS IS, WHERE IS". LESSEE UNCONDITIONALLY ACKNOWLEDGES AND AGREES THAT NEITHER LESSOR NOR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES OR REPRESENTATIVES HAVE MADE OR WILL BE DEEMED TO HAVE MADE ANY TERM, CONDITION, REPRESENTATION, WARRANTY OR COVENANT EXPRESS OR IMPLIED (WHETHER STATUTORY OR OTHERWISE) AS TO (a) THE CAPACITY, AGE, AIRWORTHINESS, VALUE, QUALITY, DURABILITY, CONFORMITY TO THE PROVISIONS OF THIS LEASE, DESCRIPTION, CONDITION (WHETHER OF THE AIRCRAFT, ANY ENGINE, ANY PART THEREOF OR THE AIRCRAFT DOCUMENTATION), DESIGN, WORKMANSHIP, MATERIALS, MANUFACTURE, CONSTRUCTION, OPERATION, DESCRIPTION, STATE, MERCHANTABILITY, PERFORMANCE, FITNESS FOR ANY PARTICULAR USE OR PURPOSE (INCLUDING THE ABILITY TO OPERATE OR REGISTER THE AIRCRAFT OR USE THE AIRCRAFT DOCUMENTATION IN ANY OR ALL JURISDICTIONS) OR SUITABILITY OF THE AIRCRAFT OR ANY PART THEREOF, OR THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, KNOWN OR UNKNOWN, APPARENT OR CONCEALED, EXTERIOR OR INTERIOR, (b) THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK, COPYRIGHT OR OTHER INTELLECTUAL PROPERTY RIGHTS, (c) ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE OR (d) EXCEPT AS SET FORTH IN ARTICLE 21.1, ANY OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY PART THEREOF, ALL OF WHICH ARE HEREBY EXPRESSLY EXCLUDED AND EXTINGUISHED. 8.2 WAIVER OF WARRANTY OF DESCRIPTION. IN CONSIDERATION OF (a) LESSEE'S RIGHTS HEREUNDER TO INSPECT THE AIRCRAFT AND (b) LESSOR'S ASSIGNMENT TO LESSEE OF ANY EXISTING AND ASSIGNABLE WARRANTIES OF MANUFACTURER AND THE ENGINE MANUFACTURER, LESSEE HEREBY AGREES THAT ITS ACCEPTANCE OF THE AIRCRAFT AT DELIVERY AND ITS EXECUTION AND DELIVERY OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATE CONSTITUTE LESSEE'S WAIVER OF THE WARRANTY OF DESCRIPTION, ANY CLAIMS LESSEE MAY HAVE AGAINST LESSOR BASED UPON THE FAILURE OF THE AIRCRAFT TO CONFORM WITH SUCH DESCRIPTION AND ANY AND ALL RIGHTS IT MAY HAVE TO THE REMEDIES SET FORTH IN SECTIONS 10508 THROUGH 10522 OF THE CALIFORNIA COMMERCIAL CODE. EVEN IF AT ANY TIME THE FAILURE OF THE AIRCRAFT TO CONFORM TO SUCH DESCRIPTION SUBSTANTIALLY IMPAIRS THE VALUE AND UTILITY OF THE AIRCRAFT AND EITHER (i) LESSEE ACCEPTED THE AIRCRAFT BASED ON A REASONABLE ASSUMPTION THAT THE NONCONFORMITY WOULD BE CURED AND IT WAS NOT SEASONABLY CURED OR (ii) LESSEE ACCEPTED THE AIRCRAFT WITHOUT DISCOVERING THE NONCONFORMITY BUT LESSEE'S ACCEPTANCE OF THE AIRCRAFT WAS REASONABLY INDUCED EITHER BY LESSOR'S ASSURANCES OR BY THE DIFFICULTY OF DISCOVERING ANY DEFECT PRIOR TO ACCEPTANCE, LESSEE AGREES NOT TO LOOK TO LESSOR FOR DAMAGES OR RELIEF ARISING OUT OF THE FAILURE OF THE AIRCRAFT TO CONFORM TO SUCH DESCRIPTION. 8.3 LESSEE WAIVER. LESSEE hereby waives as between itself and LESSOR and agrees not to seek to establish or enforce any rights and remedies, express or implied (whether statutory or otherwise) against LESSOR or the Aircraft relating to any of the matters mentioned in Articles 8.1 or 8.2. 8.4 CONCLUSIVE PROOF. DELIVERY BY LESSEE TO LESSOR OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATE WILL BE CONCLUSIVE PROOF AS BETWEEN LESSOR AND LESSEE THAT LESSEE'S TECHNICAL EXPERTS HAVE EXAMINED AND INVESTIGATED THE AIRCRAFT AND ENGINES AND (a) EACH IS AIRWORTHY AND IN GOOD WORKING ORDER AND REPAIR AND (b) THE AIRCRAFT AND ENGINES AND THE AIRCRAFT DOCUMENTATION ARE WITHOUT DEFECT (WHETHER OR NOT DISCOVERABLE AT DELIVERY) AND IN EVERY WAY SATISFACTORY TO LESSEE. 8.5 NO LESSOR LIABILITY FOR LOSSES. LESSEE agrees that LESSOR will not be liable to LESSEE, any sublessee or any Person, whether in contract or tort and however arising, for any cost, loss or damage (consequential or otherwise) arising out of the condition of the Aircraft, whether or not due in whole or in part to an act or omission or the active or passive negligence of LESSOR. 8.6 NO LIABILITY TO REPAIR OR REPLACE. LESSOR will not be liable for any expense in repairing or replacing any item of the Aircraft or be liable to supply another aircraft or any item in lieu of the Aircraft or any Part thereof if the same is lost, confiscated, damaged, destroyed or otherwise rendered unfit for use. 8.7 NO WAIVER. Nothing in this Article 8 or elsewhere in this Lease will be deemed to be a waiver by LESSEE of any rights it may have against Manufacturer, the Engine manufacturer or any other Person. ARTICLE 9 MANUFACTURERS' AND VENDORS' WARRANTIES 9.1 WARRANTIES. As set forth in Article 7.2.6, at Delivery LESSOR will assign to LESSEE for the duration of the Lease Term the benefit of all warranties and indemnities given to LESSOR by Manufacturer and the Engine manufacturer. Effective on the Delivery Date, all other vendor warranties with respect to the Aircraft are hereby assigned by LESSOR to LESSEE. 9.2 REASSIGNMENT. On the Termination Date, the benefit of any warranty assigned by LESSOR to LESSEE pursuant to Article 7.2.6 will be reassigned automatically to LESSOR or its designee. ARTICLE 10 OPERATION OF AIRCRAFT 10.1 COSTS OF OPERATION. As between LESSEE and LESSOR, LESSEE will pay all costs incurred in the operation of the Aircraft during the Lease Term, for profit or otherwise, including the costs of flight crews, cabin personnel, fuel, oil, lubricants, maintenance, insurance, storage, landing and navigation fees, airport charges, passenger service and any and all other expenses of any kind or nature, directly or indirectly, in connection with or related to the use, movement and operation of the Aircraft. The obligations, covenants and liabilities of LESSEE under this paragraph arising prior to return of the Aircraft to LESSOR will continue in full force and effect, notwithstanding the termination of this Lease or expiration of the Lease Term. 10.2 COMPLIANCE WITH LAWS. LESSEE agrees throughout the Lease Term that all use of the Aircraft will be in accordance with applicable Laws of the State of Registration and of any country, state, territory or municipality into or over which LESSEE may operate. LESSEE will not employ, suffer or cause the Aircraft to be used in any business which is forbidden by Law or in any manner which may render it liable to condemnation, destruction, seizure, or confiscation by any authority. LESSEE will not permit the Aircraft to fly to any airport or country if so doing would cause LESSEE to be in violation of any Law applicable to LESSEE or the Aircraft. The foregoing provisions in this Article 10.2 shall not prohibit any violation of Law (a) during a good-faith contest of the validity, application, or alleged violation thereof in any reasonable manner so long as there is no material danger of sale, forfeiture, or loss of the Aircraft (however, this good faith exception shall not apply in the case of a mandatory grounding order, the good faith contest of which does not permit LESSEE to operate the Aircraft during such contest), and which does not extend beyond the end of the Lease Term if the pendency of such contest would adversely affect the Aircraft or the remarketing thereof in any material respect; and (b) for minor or non-recurring violations (with the understanding that minor violations may cease to be minor if recurring) that LESSEE is diligently trying to rectify which do not render the Aircraft liable to any risk of condemnation, destruction, seizure, or confiscation by any Government Entity. 10.3 TRAINING. LESSEE will not use the Aircraft for testing or for training of flight crew members other than LESSEE crew members and will not use the Aircraft for training any more than it utilizes for training the other aircraft in its fleet. 10.4 NO VIOLATION OF INSURANCE POLICIES. LESSEE will not use or permit the Aircraft to be used in any manner or for any purpose which is not covered by the insurance policies LESSEE is required to carry and maintain as set forth in this Lease. LESSEE will not carry any goods of any description that would invalidate or limit such policies or do any other act or permit to be done anything which could reasonably be expected to invalidate or limit any such insurance policy. 10.5 FLIGHT CHARGES. 10.5.1 LESSEE will pay promptly when due all enroute navigation charges, navigation service charges and all other charges payable by LESSEE for the use of or for services provided at any airport, whether in respect of the Aircraft or any other aircraft of LESSEE, and will indemnify and hold LESSOR harmless in respect of the same. This indemnity will continue in full force and effect notwithstanding the termination or expiration of the Lease Term for any reason or the return of the Aircraft. 10.5.2 If requested by LESSOR, LESSEE will provide LESSOR with a list of the airports to which LESSEE regularly operates the Aircraft or its other aircraft. LESSEE hereby authorizes Eurocontrol or another aviation authority or airport or creditor claiming rights on the Aircraft to confirm the status of LESSEE's payments to such creditor for the Aircraft and its other aircraft, as and when requested by LESSOR. ARTICLE 11 SUBLEASES 11.1 NO SUBLEASE WITHOUT LESSOR CONSENT. LESSEE WILL NOT SUBLEASE OR PART WITH POSSESSION OF THE AIRCRAFT (EXCEPT FOR MAINTENANCE AND REPAIR) AT ANY TIME WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR (NOT TO BE UNREASONABLY WITHHELD) AND IN ACCORDANCE WITH SUCH REQUIREMENTS AS MAY FROM TIME TO TIME BE AGREED IN WRITING BETWEEN LESSOR AND LESSEE. The wet leasing of the Aircraft during the Lease Term (in which LESSEE and its crews retain operational control of the Aircraft) will not be considered a sublease of the Aircraft. 11.2 LESSOR COSTS. LESSEE will indemnify LESSOR on demand for all out-of-pocket expenses (including legal fees) incurred in connection with LESSOR's assessment of the subleasing proposal (whether or not LESSOR's consent to such sublease is ultimately given) and implementation of the sublease. 11.3 ANY APPROVED SUBLEASE. Any sublease approved by LESSOR will be for a term no greater than the remaining Lease Term and contain provisions consistent with this Lease protecting LESSOR's title to the Aircraft, providing appropriate LESSOR indemnities, regarding the maintenance and repair standards for the Aircraft, concerning the insurances which will be carried by the sublessee and the circumstances which constitute a Total Loss of the Aircraft. Any such sublease will be subject and subordinate to this Lease. In its sole discretion, LESSOR may require an opinion of counsel in connection with such sublease, including LESSOR's right to repossess the Aircraft in the event of an Event of Default hereunder or under the sublease. LESSEE will not amend the terms of any approved sublease without the prior written consent of LESSOR, which will not be unreasonably withheld. 11.4 ASSIGNMENT OF SUBLEASE. Any approved sublease will be assigned to LESSOR as security. LESSEE will deliver the original counterpart of the sublease to LESSOR and make any filings necessary to protect LESSOR's security interest. 11.5 CONTINUED RESPONSIBILITY OF LESSEE. LESSEE will continue to be responsible for performance of its obligations under this Lease during any period of sublease. ARTICLE 12 MAINTENANCE AND USE OF AIRCRAFT 12.1 GENERAL OBLIGATION. 12.1.1 During the Lease Term and until the Aircraft is returned to LESSOR, LESSEE alone has the obligation, at its expense, to maintain and repair the Aircraft, Engines and all of the Parts (a) in accordance with the Maintenance Program, (b) in accordance with the rules and regulations of the Aviation Authority, (c) in accordance with Manufacturer's type design, (d) in accordance with any other regulations or requirements necessary in order to maintain a valid Certificate of Airworthiness for the Aircraft and meet the requirements at all times during the Lease Term and upon return of the Aircraft to LESSOR for issuance of a Standard Certificate of Airworthiness for transport category aircraft issued by the Aviation Authority (except during those periods when the Aircraft is undergoing maintenance or repairs as required or permitted by this Lease) and (e) in the same manner and with the same care as used by LESSEE or its sublessee with respect to similar aircraft and engines operated by LESSEE or its sublessee and without in any way discriminating against the Aircraft. 12.1.2 LESSEE will maintain and repair the Engines in the same manner and in the equivalent time frame to its other engines and LESSEE will not discriminate against any of the Engines in respect of the repair and maintenance. 12.1.3 LESSEE will not enter into any Engine maintenance cost per flight hour, power-by-the-hour or similar agreement with Engine manufacturer or any other Engine maintenance facility or organization without LESSOR's prior written consent. 12.2 SPECIFIC OBLIGATIONS. Without limiting Article 12.1, LESSEE agrees that such maintenance and repairs will include but will not be limited to each of the following specific items: (a) performance in accordance with the Maintenance Program of all routine and non-routine maintenance work; (b) incorporation in the Aircraft of all Airworthiness Directives; (c) incorporation in the Aircraft of all service bulletins of Manufacturer, the Engine manufacturer and other vendors which LESSEE schedules to adopt within the Lease Term for the rest of its Boeing 737-800 aircraft fleet. It is the intent of the parties that the Aircraft will not be discriminated from the rest of LESSEE's fleet in service bulletin compliance (including method of compliance) or other maintenance matters. LESSEE will not discriminate against the Engines with respect to Overhaul build standards and life-limited part replacements; (d) incorporation in the Maintenance Program for the Aircraft of a corrosion prevention and control program; (e) maintaining in English and keeping in an up-to-date status the records and historical documents set forth in Attachment 1 of Exhibit I; (f) maintaining historical records, in English, for on condition, condition-monitored, hard time and life-limited Parts (including tags from the manufacturer of such Part or a repair facility which evidence that such Part is new or overhauled and establish authenticity, total time in service and time since overhaul for such Part), the hours and cycles the Aircraft and Engines operate and all maintenance and repairs performed on the Aircraft; and (g) properly documenting all repairs, Modifications and alterations and the addition, removal or replacement of equipment, systems or components in accordance with the rules and regulations of the Aviation Authority and reflecting such items in the Aircraft Documentation. In addition, all repairs to the Aircraft will be accomplished in accordance with Manufacturer's Structural Repair Manual (or FAA-approved data supported by FAA Form 8110-3 or equivalent). All Modifications and alterations will also be accomplished in accordance with FAA-approved data supported by FAA Form 8110-3 or equivalent. 12.3 REPLACEMENT OF PARTS. 12.3.1 LESSEE, at its own cost and expense, will promptly replace all Parts which may from time to time become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or rendered unfit or beyond economical repair (BER) for any reason. In the ordinary course of maintenance, service, repair, overhaul or testing, LESSEE may remove any Part provided that LESSEE replaces such Part as promptly as practicable. All replacement Parts will (a) be free and clear of all Security Interests (except Permitted Liens) of any kind or description, (b) be in airworthy condition and of at least equivalent model, service bulletin and modification status and have a value and utility at least equal to the Parts replaced, assuming such replaced Parts were in the condition and repair required to be maintained by the terms hereof and (c) have a current "serviceable tag" of the manufacturer or maintenance facility providing such items to LESSEE, indicating that such Parts are new, serviceable or Overhauled. So long as a substitution meets the requirements of the Maintenance Program and Aviation Authority, LESSEE may substitute for any Part a part that does not meet the requirements of the foregoing sentence if a complying Part cannot be procured or installed within the available groundtime of the Aircraft and as soon as practicable the noncomplying part is removed and replaced by a complying Part. 12.3.2 All Parts removed from the Airframe or any Engine will remain the property of LESSOR and subject to this Lease no matter where located, until such time as such Parts have been replaced by Parts (which have been incorporated or installed in or attached to the Airframe or such Engine) which meet the requirements for replacement Parts specified above and title to such replacement Parts has passed to LESSOR under the Laws of the State of Registration and LEX SITUS. To the extent permitted by the Laws of the State of --- ----- Registration and the LEX SITUS it is the intent of LESSOR and LESSEE that without further --- ----- act and immediately upon any replacement Part becoming incorporated, installed or attached to the Airframe or an Engine as above provided, (a) title to the removed Part will thereupon vest in LESSEE, free and clear of all rights of LESSOR, (b) title to the replacement Part will thereupon vest in LESSOR free and clear of all rights of LESSEE and (c) such replacement Part will become subject to this Lease and be deemed to be a Part hereunder to the same extent as the Parts originally incorporated or installed in or attached to the Airframe or such Engine. 12.4 REMOVAL OF ENGINES. 12.4.1 If an Engine is removed for testing, service, repair, maintenance, Overhaul work, alterations or modifications, title to such Engine will remain vested in LESSOR. 12.4.2 LESSEE will be entitled to remove any of the Engines from the Aircraft and install another engine or engines on the Aircraft, provided that LESSEE complies with each of the following obligations: (a) the insurance requirements set forth in Article 17 and Exhibit C are in place; (b) LESSEE ensures that the identification plates referred to in Article 14 are not removed from any Engine upon such Engine being detached from the Aircraft; and (c) title to the Engine remains with LESSOR free from all Security Interests (except Permitted Liens) regardless of the location of the Engine or its attachment to or detachment from the Aircraft. 12.5 POOLING OF ENGINES AND PARTS. With LESSOR's prior written consent, not to be unreasonably withheld, LESSEE may subject the Engines and Parts to normal interchange or pooling agreements with responsible commercial air carriers customary in the airline industry and entered into by LESSEE in the ordinary course of its business with respect to its Boeing 737-800 fleet generally, so long as (a) in the case of pooling of an Engine, such Engine is returned to LESSEE within two (2) months, (b) no transfer of title to the Engine occurs, (c) all other terms of this Lease continue to be observed with respect to the Engines or Parts, including but not limited to Articles 8, 10, 12, 13, 14, 15, 16, 17 and 18 and (d) LESSEE continues to be fully responsible to LESSOR for the performance of all of its obligations hereunder. 12.6 INSTALLATION OF ENGINES ON OTHER AIRCRAFT. Any Engine removed from the Aircraft may be installed on another airframe in LESSEE's fleet which utilizes engines of the same type as the Engine only if one of the situations described in this Article 12.6 exists: 12.6.1 LESSEE or LESSOR has title to such other aircraft free and clear of all Security Interests (except Permitted Liens). 12.6.2 LESSEE, LESSOR and all of the Creditors of LESSEE of such aircraft enter into an engines cooperation agreement in form and substance acceptable to LESSOR in which each party agrees to recognize one another's rights in the engines. LESSEE will reimburse LESSOR and LESSOR's Lender for their reasonable attorneys' fees and costs in negotiating and finalizing engine cooperation agreement arrangements with LESSEE and its Creditors. 12.6.3 Such other aircraft is subject to a Creditor Agreement (but no other Security Interests except Permitted Liens) which by its terms expressly or effectively states that such Creditor and its successors and assigns will not acquire any right, title or interest in any Engine by reason of such Engine being installed on such aircraft. LESSEE hereby agrees that if LESSOR's title to an Engine is in fact impaired under any such Creditor Agreement, such impairment will be a Total Loss of such Engine and the provisions of Article 18.5 will apply. To the extent another Creditor Agreement contains such provisions, then LESSOR hereby agrees for the benefit of the Creditor of such Creditor Agreement that neither LESSOR nor its successors or assigns will acquire or claim any right, title or interest in any engine in which LESSEE or another Creditor has an interest as a result of such engine being installed on the Airframe. 12.7 MODIFICATIONS. 12.7.1 No modification, alteration, addition or removal to the Aircraft ("MODIFICATION") expected to cost over Five Hundred Thousand U.S. Dollars (US$500,000) or deviation from the Aircraft's original type design or configuration will be made without the prior written consent of LESSOR, which consent will not be unreasonably withheld. "Modifications" do not include Airworthiness Directives or Manufacturer's recommended service bulletins, for which LESSOR's consent is not required. 12.7.2 LESSOR may review LESSEE's proposed designs, plans, engineering drawings and diagrams, and flight and maintenance manual revisions for any proposed Modification. If requested by LESSOR, LESSEE will furnish LESSOR (at LESSEE's expense) with such documents in final form and any other documents required by Law, as a result of such Modification. All Modifications incorporated on the Aircraft will be properly documented in the Aircraft Documentation and be fully approved by the Aviation Authority. 12.7.3 Notwithstanding any other provision of this Lease, no Modification will be made which has the effect of decreasing the utility or value of the Aircraft. 12.7.4 No Modification will be made by LESSEE if an Event of Default exists and is continuing hereunder. 12.7.5 Unless otherwise agreed by LESSOR in writing, all non-severable or structural Modifications will forthwith become a part of the Aircraft and LESSEE relinquishes to LESSOR all rights and title thereto. However, all severable Modifications will remain the property of LESSEE or the third-party owner and, at LESSOR's request and LESSEE's cost, will be removed from the Aircraft prior to return of the Aircraft, with LESSEE restoring the Aircraft to the condition it was in prior to the Modification. Notwithstanding the foregoing, no such removal will be permitted without LESSOR's permission after the occurrence of an Event of Default hereunder and immediately upon the occurrence of an Event of Default hereunder, without the requirement of any further act or notice, all right, title and interest in such Modifications will immediately vest in LESSOR. 12.7.6 LESSOR will bear no liability for the cost of Modifications of the Aircraft whether in the event of grounding or suspensions of certification, or for any other cause. 12.8 PERFORMANCE OF WORK BY THIRD PARTIES. Whenever maintenance and repair work on the Aircraft or Engines will be regularly performed by a Person other than LESSEE, such Person will be an FAA-authorized repair station. 12.9 REPORTING REQUIREMENTS. 12.9.1 Commencing with a report furnished ten (10) days after the end of the calendar month in which Delivery occurs, LESSEE will furnish to LESSOR a Monthly Report in English in the form attached hereto as Exhibit J. Each Monthly Report will be furnished within ten (10) days after the end of each calendar month, except that the Monthly Report pertaining to the last month (or any portion thereof) of the Lease Term will be furnished to LESSOR on the Termination Date. 12.9.2 On each anniversary of the Delivery Date, LESSEE will provide LESSOR with a Technical Evaluation Report for the Aircraft in the form and substance of Exhibit L, as revised. 12.10 INFORMATION REGARDING MAINTENANCE PROGRAM. LESSEE will provide LESSOR with a copy of or information regarding the Maintenance Program for the Aircraft, as requested by LESSOR. 12.11 LESSOR RIGHTS TO INSPECT AIRCRAFT. On reasonable notice, LESSOR and/or its authorized agents or representatives will have the right to inspect the Aircraft and Aircraft Documentation. LESSOR agrees that such requests will be coordinated with LESSEE so as to cause the minimum practical disturbance to LESSEE's operation or its personnel. LESSEE agrees to cooperate with LESSOR in making the Aircraft and Aircraft Documentation available to such authorized technical teams. No such inspection shall include opening panels, bays, or the like (although LESSOR may observe those that are then open), or disassembling any item. LESSOR will have no duty to make any such inspection and will not incur any liability or obligation by reason of (and LESSEE's indemnity obligations pursuant to Article 16 will apply notwithstanding) not making any such inspection or by reason of any reports it receives or any reviews it may make of the Aircraft records. ARTICLE 13 TITLE AND REGISTRATION 13.1 TITLE TO THE AIRCRAFT DURING LEASE TERM. Title to the Aircraft will be and remain vested in LESSOR. LESSOR and LESSEE intend this Lease to be a "true lease". LESSEE will have no right, title or interest in the Aircraft except as provided in this Lease. 13.2 REGISTRATION OF AIRCRAFT. LESSEE at its sole cost and expense will (a) register and maintain registration of the Aircraft in the name of LESSOR at the register of aircraft in the State of Registration and (b) from time to time take all other steps then required by Law (including the Geneva Convention if applicable) or by practice, custom or understanding or as LESSOR may reasonably request to protect and perfect LESSOR's interest in the Aircraft and this Lease in the State of Registration or in any other jurisdictions in or over which LESSEE may operate the Aircraft. 13.3 FILING OF THIS LEASE. To the extent permitted by Law and in accordance with the requirements of the Law from time to time, LESSEE at its sole cost and expense will cause this Lease to be kept, filed, recorded and refiled or rerecorded in the State of Registration and in any other offices necessary to protect LESSOR's rights hereunder. 13.4 EVIDENCE OF REGISTRATION AND FILINGS. As LESSOR may reasonably request from time to time, LESSEE will furnish to LESSOR an opinion of counsel or other evidence reasonably satisfactory to LESSOR of the registrations and filings required hereunder. ARTICLE 14 IDENTIFICATION PLATES LESSOR will affix and LESSEE will at all times maintain on the Airframe and each Engine the identification plates containing the following legends or any other legend reasonably requested by LESSOR in writing: 14.1 AIRFRAME IDENTIFICATION PLATES. Location: One to be affixed to the Aircraft structure above the forward entry door adjacent to and not less prominent than that of Manufacturer's data plate and another in a prominent place on the flight deck. Size: No smaller than 4" x 6". Legend: "THIS AIRCRAFT IS OWNED BY INTERNATIONAL LEASE FINANCE CORPORATION. MANUFACTURER'S SERIAL NO: 30675 OWNER'S ADDRESS: INTERNATIONAL LEASE FINANCE CORPORATION 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States of America Fax: (310) 788-1990" 14.2 ENGINE IDENTIFICATION PLATES. Location: The legend on the plate must be visible. Size: No smaller than 2" x 6". "THIS ENGINE IS OWNED BY INTERNATIONAL LEASE FINANCE CORPORATION, LOS ANGELES, CALIFORNIA, USA." ARTICLE 15 TAXES 15.1 GENERAL OBLIGATION OF LESSEE. Except as set forth in Article 15.2, LESSEE agrees to pay promptly when due, and to indemnify and hold harmless LESSOR on a full indemnity basis from, all license and registration fees and all taxes, fees, levies, imposts, duties, charges or withholdings of any nature whatsoever (including without limitation any value added, franchise, transfer, sales, gross receipts, use, business, occupation, excise, personal property, real property, stamp or other tax) together with any assessments, penalties, fines, additions to tax or interest thereon, however or wherever imposed (whether imposed upon LESSEE, LESSOR, on all or part of the Aircraft, the Engines or otherwise), by any Government Entity or taxing authority in the U.S., any State thereof, or any foreign country or by any international taxing authority, upon or with respect to, based upon or measured by any of the following (collectively, "TAXES"): (a) the Aircraft, the Engines or any Parts. (b) the use, operation or maintenance of the Aircraft or carriage of passengers or freight during the Lease Term. (c) this Lease, the payments due hereunder and the terms and conditions hereof. (d) the return of the Aircraft to LESSOR or other use or disposition of the Aircraft by LESSEE. 15.2 EXCEPTIONS TO INDEMNITY. The indemnity provided in Article 15.1 does not extend to any of the following Taxes: (a) Imposed by the U.S. (including without limitation any taxes collected by withholding) or any state or local government or governmental subdivision or state or local taxing authority in the U.S. (including any possession or territory of the U.S.) or by any foreign government, taxing authority or governmental subdivision of a foreign country which are based on, or measured by, the receipts, gross or net income, capital, net worth, franchises, excess profits, or conduct of business (including minimum taxes, withholding taxes and taxes on or measured by any items of tax preference) of LESSOR, except to the extent that such Tax would not have been imposed on or payable by LESSOR but for the location, use, registration or operation of the Aircraft or any part thereof, or any place of business or any activity of LESSEE in the jurisdiction imposing such Tax. (b) Imposed as a result of LESSOR's transfer, mortgage, pledge, financing or other disposition by LESSOR of all or a portion of its interest in the Aircraft or this Lease except a transfer or sale resulting from an exercise of remedies pursuant to Article 25.3 hereunder or in connection with a termination of the Lease pursuant to Article 18 hereof. (c) Attributable to the period prior to the Delivery Date or after return of the Aircraft to LESSOR in accordance with this Lease. (d) Attributable to LESSOR's gross negligence, willful misconduct or breach of this Lease. 15.3 AFTER-TAX BASIS. The amount which LESSEE is required to pay with respect to any Taxes indemnified against under Article 15.1 is an amount sufficient to restore LESSOR on an after-tax basis to the same position LESSOR would have been in had such Taxes not been incurred. 15.4 CLAIMS AND CONTESTS. If a written claim is received by LESSOR for Taxes, which claim, if sustained, would require the payment of an indemnity by LESSEE pursuant to this Article 15, LESSOR shall notify LESSEE of such claim within thirty (30) days after its receipt, provided that failure to provide such notice within thirty (30) days will not relieve LESSEE of any indemnification obligation pursuant to this Article 15 if such failure does not preclude LESSEE from exercising its contest rights hereunder. Payments due from LESSEE to LESSOR pursuant to this Article 15 shall be made directly to LESSOR within thirty (30) days of written demand by LESSOR to LESSEE. If requested by LESSEE in writing, LESSOR shall upon receipt of indemnity reasonably satisfactory to it and at the expense of LESSEE (including, without limitation, all reasonable costs, expenses, legal and accountants' fees, and disbursements, penalties, interest incurred in contesting such claim, and additions to tax) in good faith, in the name of LESSOR or, if requested by LESSEE, in the name of LESSEE (or permit LESSEE, if desired by LESSEE, to contest in the name of LESSEE) if permissible under applicable laws, the validity, applicability or amount of such Taxes by (i) resisting payment thereof if practicable only if adequate reserves have been made for such Taxes or, if required, an adequate bond has been posted, (ii) paying the same under protest, if protest shall be necessary and proper, (iii) if payment shall be made, using reasonable efforts to obtain a refund thereof in appropriate administrative and judicial proceedings, and (iv) taking such other action as is reasonably requested by LESSEE from time to time including not paying such Taxes only if adequate reserves have been made for such Taxes or, if required, an adequate bond has been posted. LESSOR shall determine the method of any contest and (in good faith consultation with LESSEE) control the conduct thereof. Notwithstanding anything contained in this Article 15.4, LESSOR will not be required to contest, or to continue to contest, the validity, applicability or amount of any Tax (or portion thereof) (x) if such contest would result in any material risk of criminal penalties or any material risk of sale, forfeiture or loss of the Aircraft, (y) if an Event of Default has occurred and is continuing, or (z) in the case of a contest of a Tax reflected on a return of LESSOR with other taxes of LESSOR that are not indemnified by the LESSEE hereunder, if LESSEE shall not have furnished an opinion of independent tax counsel selected by the LESSEE, and reasonably satisfactory to LESSOR, that a reasonable basis exists for such contest. If LESSOR shall obtain a refund of all or any part of such Taxes for which an indemnity was paid by LESSEE, LESSOR shall pay LESSEE the amount of such refund; PROVIDED, HOWEVER, that such amount shall not be payable before such time as LESSEE shall have made all payments or indemnities to LESSOR then due under this Article 15 and under the Lease or while an Event of Default shall have occurred and be continuing. If in addition to such refund LESSOR shall receive an amount representing interest on the amount of such refund, LESSEE shall be paid that proportion of such interest which is fairly attributable to Taxes paid with an indemnity payment by LESSEE prior to the receipt of such refund or interest and increased by any taxes saved by reason of the deductibility of such payment by LESSOR. LESSEE shall not be deemed to be in default under any of the indemnification provisions under this Article 15 so long as it or LESSOR shall diligently prosecute such contest and LESSEE has indemnified LESSOR to LESSOR's reasonable satisfaction. In case any report or return is required to be made with respect to any obligation of LESSEE under this Article 15.4 or arising out of this Article 15.4, LESSEE will either timely make such report or return in such manner as will show the ownership of the Aircraft in LESSOR, and will as soon as possible send a copy of such report or return to LESSOR, or will notify LESSOR of such requirement and prepare and deliver such report or return to LESSOR in such manner as shall be satisfactory to LESSOR. 15.5 REFUNDS. Upon receipt by LESSOR of a refund of all or any part of any Taxes (including any deductions or withholdings referred to in Article 15.1) which LESSEE has paid, LESSOR will pay to LESSEE the net amount of such Taxes refunded. 15.6 COOPERATION IN FILING TAX RETURNS. LESSEE and LESSOR will cooperate with one another in providing information which may be reasonably required to fulfill each party's tax filing requirements and any audit information request arising from such filing. ARTICLE 16 INDEMNITIES 16.1 GENERAL INDEMNITY. Except as set forth in Article 16.2, LESSEE agrees to indemnify and hold harmless LESSOR and its officers, directors, employees, agents and shareholders (individually an "INDEMNITEE" and collectively "INDEMNITEES") from any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs, disbursements and expenses (including legal fees, costs and related expenses) of every kind and nature, whether or not any of the transactions contemplated by this Lease are consummated (collectively "EXPENSES"), which are imposed on, incurred by or asserted against any Indemnitee and which are in any way relating to, based on or arising out of any of the following: (a) this Lease or any transactions contemplated hereby; (b) the operation, possession, use, non-use, control, leasing, subleasing, maintenance, storage, overhaul, testing, inspections or acceptance flights at return of the Aircraft, any Engine or any Part during the Lease Term by LESSEE, any sublessee or any other Person, whether or not the same is in compliance with the terms of this Lease, including without limitation claims for death, personal injury, property damage, other loss or harm to any Person and claims relating to any Laws, including without limitation environmental control, noise and pollution laws, rules or regulations; (c) the manufacture, design, acceptance, rejection, delivery, return, sale in connection with an Event of Default, import, export, condition, repair, modification, servicing, rebuilding, enforcement of warranties whether in LESSOR's or LESSEE's name, customer and product support provided by Manufacturer and other vendors, airworthiness, registration, reregistration, performance, sublease, merchantability, fitness for use, substitution or replacement of the Aircraft, Engine or any Part under this Lease or other transfer of use or possession of the Aircraft, Engine or any Part, including under a pooling or interchange arrangement, including without limitation latent and other defects, whether or not discoverable and patent, trademark or copyright infringement; (d) any non-compliance by LESSEE with any term of this Lease or the falsity or inaccuracy of any representation or warranty of LESSEE set forth herein; (e) the prevention or attempt to prevent the arrest, confiscation, seizure, taking in execution, impounding, forfeiture or detention of the Aircraft, or in securing the release of the Aircraft; or (f) as a consequence of any Default in payment by LESSEE of any sum to be paid by LESSEE when due under this Lease or any other Default by LESSEE in the due and punctual performance of its obligations under this Lease. The foregoing indemnity by LESSEE is intended to include and cover any Expense to which an Indemnitee may be subject (in contract, tort, strict liability or under any other theory) regardless of the negligence, active or passive or any other type, of such Indemnitee, so long as such Expense does not fall within any of the exceptions listed in Article 16.2. 16.2 EXCEPTIONS TO GENERAL INDEMNITIES. The indemnity provided for in Article 16.1 will not extend to Expenses of any Indemnitee to the extent resulting from or arising out of any of the following: (a) Expenses which have resulted from the willful misconduct of such Indemnitee; (b) Expenses which LESSEE and LESSOR mutually agree or, absent mutual agreement, are judicially determined to be attributable to acts or events which occur after the Termination Date and return of the Aircraft to LESSOR in the condition required hereunder, but in any such case only to the extent not attributable to acts or omissions of LESSEE; (c) Expenses representing Taxes, it being acknowledged that the terms of Article 15 apply exclusively to LESSEE's indemnity obligations with respect to Taxes; (d) Expenses due to the breach by LESSOR of its covenant of quiet enjoyment pursuant to Article 21.2 (except to the extent covered by LESSEE's insurances); (e) Expenses which arise in connection with the transfer by LESSOR of any interest in the Aircraft or this Lease, except for any transfer in connection with any Event of Default or a Total Loss of the Aircraft or an Engine. (f) Expenses which are solely attributable to the representation or warranty of LESSOR contained in or made pursuant to any Operative Document being untrue; (g) Expenses which are solely related to the failure of such Indemnitees to perform or observe any agreement, covenant, or condition on its part to be performed or observed in any Operative Document; (h) Expenses which are solely an ordinary and usual internal customary operating expense; or (i) Expenses which are solely related to a breach of Article 21.1.6, or (j) Expenses which are solely related to a LESSOR's Lien. 16.3 AFTER-TAX BASIS. The amount which LESSEE will be required to pay with respect to any Expense indemnified against under Article 16.1 will be an amount sufficient to restore the Indemnitee, on an after-tax basis, to the same position such Indemnitee would have been in had such Expense not been incurred. 16.4 TIMING OF PAYMENT. It is the intent of the parties that each Indemnitee will have the right to indemnification for Expenses hereunder as soon as a claim is made and as soon as an Expense is incurred, whether or not such claim is meritorious and whether or not liability is established (but subject to Articles 16.2 and 16.8). LESSEE will pay an Indemnitee for Expenses pursuant to this Article 16 within ten (10) days after receipt of a written demand therefor from such Indemnitee accompanied by a written statement describing in reasonable detail the basis for such indemnity (but not before payment is due from such Indemnitee). 16.5 SUBROGATION. Upon the payment in full of any indemnity pursuant to this Article 16 by LESSEE, LESSEE will be subrogated to any right of the Indemnitee in respect of the matter against which such indemnity has been made. 16.6 NOTICE. Each Indemnitee and LESSEE will give prompt written notice one to the other of any liability of which such party has knowledge for which LESSEE is, or may be, liable under Article 16.1; provided, however, that failure to give such notice will not terminate any of the rights of Indemnitees under this Article 16 except to the extent that LESSEE has been materially prejudiced by the failure to provide such notice. 16.7 REFUNDS. If any Indemnitee obtains a recovery of all or any part of any amount which LESSEE has paid to such Indemnitee, such Indemnitee will pay to LESSEE the net amount recovered by such Indemnitee. 16.8 DEFENSE OF CLAIMS. (a) LESSEE and its insurers will have the right (in each such case at LESSEE's sole expense) to investigate or, provided that LESSEE or its insurers have not reserved the right to dispute liability with respect to any insurance policies pursuant to which coverage is sought, defend or compromise any claim covered by insurance for which indemnification is sought pursuant to Article 16.1 and each Indemnitee will cooperate with LESSEE or its insurers with respect thereto. If LESSEE or its insurers are retaining attorneys to handle such claim, such counsel must be reasonably satisfactory to the Indemnitees. If not, the Indemnitees will have the right to retain counsel of their choice at LESSEE's expense. (b) Unless LESSOR agrees in writing otherwise, no settlement of any claim hereunder may require LESSOR to agree to any remedy apart from the payment of money damages (for which such payment of money damages LESSEE will in any event indemnify the Indemnitees). (c) In no event shall any Indemnitee enter into a settlement or other compromise with respect to any Expense without LESSEE's prior written consent (which shall not be unreasonably withheld or delayed), unless such Indemnitee waives its right to be indemnified with respect to such Expense under this Article 16. (d) To the extent that any Expense indemnified by LESSEE hereunder may be covered by insurance maintained by LESSEE, at LESSEE's expense, each Indemnitee agrees to cooperate with the insurers in the exercise of their rights to investigate, defend, or compromise that Expense as may be required to retain the benefits of the insurance for that Expense. (e) If an Indemnitee is not a party to this Lease, LESSEE may require that Indemnitee to agree in writing to the terms of this Article 16 before making any payment to such Indemnitee under this Article 16. 16.9 SURVIVAL OF OBLIGATION. Notwithstanding anything in this Lease to the contrary, the provisions of this Article 16 will survive the Termination Date and continue in full force and effect notwithstanding any breach by LESSOR or LESSEE of the terms of this Lease, the termination of the lease of the Aircraft to LESSEE under this Lease or the repudiation by LESSOR or LESSEE of this Lease. ARTICLE 17 INSURANCE 17.1 CATEGORIES OF INSURANCE. Throughout the Lease Term and until the Termination Date LESSEE will, at its own expense, effect and maintain in full force and effect the types of insurance and amounts of insurance (including deductibles) described in Exhibit C through such brokers and with such insurers favorably regarded in the airline industry. 17.2 INSURANCE FOR INDEMNITIES. The insurance referred to in Article 17.1 will in each case include and insure (to the extent of the risks covered by the policies) the indemnity provisions of Article 16 and LESSEE will maintain such insurance of the indemnities for a minimum of two (2) years following the Termination Date. 17.3 INSURANCE REQUIRED BY MANUFACTURER. During the Lease Term, LESSEE will carry the insurance required by Manufacturer in connection with LESSOR's assignment of Manufacturer's warranties and product support to LESSEE. 17.4 RENEWAL. Not less than two (2) Business Days before the expiration or termination date of any insurance required hereunder, LESSEE will provide LESSOR with fax confirmation from LESSEE's insurance brokers that renewed certificates of insurance evidencing the renewal or replacement of such insurance and complying with Exhibit C will be issued on the termination date of the prior certificate. Within seven (7) days after such renewal, LESSEE will furnish its brokers' certificates of insurance to LESSOR. 17.5 ASSIGNMENT OF RIGHTS BY LESSOR. If LESSOR assigns all or any of its rights under this Lease as permitted by this Lease or otherwise disposes of any interest in the Aircraft to any other Person, LESSEE will, upon request, procure that (to the extent of the assignment or disposition) such Person hereunder be added as loss payee and/or additional assured in the policies effected hereunder and enjoy the same rights and insurance enjoyed by LESSOR under such policies. To the extent of its retained interest or as provided in Article 24.2.1, LESSOR will nevertheless continue to be covered by such policies. 17.6 DEDUCTIBLES. If there is a material adverse change in the financial condition of LESSEE which LESSOR reasonably believes will not enable LESSEE to pay the deductible upon the occurrence of a partial loss of the Aircraft or an Engine, then LESSOR may require LESSEE at LESSEE's expense to lower its deductibles on the insurance maintained hereunder to a level which is available on commercially reasonable terms in the insurance market. 17.7 OTHER INSURANCE. LESSOR may from time to time by notice to LESSEE require LESSEE at LESSEE's expense to effect such other insurance or such variations to the terms of the existing insurance as may then be customary in the airline industry for aircraft of the same type as the Aircraft and at the time commonly available in the insurance market. 17.8 INFORMATION. LESSEE will provide LESSOR with any information reasonably requested by LESSOR from time to time concerning the insurance maintained with respect to the Aircraft or in connection with any claim being made or proposed to be made thereunder. 17.9 CURRENCY. All proceeds of insurance pursuant to this Lease will be payable in Dollars except as may be otherwise agreed by LESSOR. 17.10 GROUNDING OF AIRCRAFT. If at any time any of the insurance required pursuant to this Lease will cease to be in full force and effect, LESSEE will forthwith ground the Aircraft and keep the Aircraft grounded until such time as such insurance is in full force and effect again. 17.11 FAILURE TO INSURE. If at any time LESSEE fails to maintain insurance in compliance with this Article 17, LESSOR will be entitled but not bound to do any of the following (without prejudice to any other rights which it may have under this Lease by reason of such failure): (a) to pay any premiums due or to effect or maintain substitute insurance or otherwise remedy such failure in any reasonable manner (and LESSEE will upon demand reimburse LESSOR in full for any amount so expended in that connection); or (b) at any time while such failure is continuing, to require the Aircraft to remain at any airport or (as the case may be), proceed to and remain at any airport designated by LESSOR. 17.12 LIMIT ON HULL IN FAVOR OF LESSEE. LESSEE may carry hull all risks or hull war and allied perils on the Aircraft in excess of the Agreed Value (which Agreed Value is payable to LESSOR) only to the extent such excess insurance which would be payable to LESSEE in the event of a Total Loss does not exceed fifteen percent (15%) of the Agreed Value and only to the extent that such additional insurance will not prejudice the insurances required herein or the recovery by LESSOR thereunder. LESSEE agrees that it will not create or permit to exist any liens or encumbrances over the insurances, or its interest therein, except as constituted by this Lease. 17.13 MARKETPLACE LIMITATIONS. The insurance required by this Lease may be subject to any limitations generally prevailing in the airline insurance marketplace at the time (e.g., AVN67B). ARTICLE 18 LOSS, DAMAGE AND REQUISITION Throughout the Lease Term and until the Termination Date, LESSEE will bear all risk of loss, theft, damage and destruction to the Aircraft. 18.1 DEFINITIONS. In this Article 18: "AGREED VALUE" (CONFIDENTIAL MATERIAL OMITTED) The Agreed Value is set forth in March 2001 U.S. Dollars and will be increased in accordance with Manufacturer's announced escalation rate from March 1, 2001 to the Delivery Date. On each annual renewal date of LESSEE's insurance policy commencing on the renewal date following the first anniversary of the Lease Term, the Agreed Value will decrease by two percent (2.0%) of the then-existing Agreed Value. "NET TOTAL LOSS PROCEEDS" means the Total Loss Proceeds actually received by LESSOR following a Total Loss, less any legal and other out-of-pocket expenses or duties incurred by LESSOR in connection with the collection of such proceeds. "TOTAL LOSS" means any of the following in relation to the Aircraft, Airframe or any Engine and "TOTAL LOSS DATE" means the date set forth in parenthesis after each Total Loss: (a) destruction, damage beyond repair or being rendered permanently unfit for normal use for any reason (the date such event occurs or, if not known, the date on which the Aircraft, Airframe or Engine was last heard of); (b) actual, constructive, compromised, arranged or agreed total loss (the earlier of the date on which the loss is agreed or compromised by the insurers or thirty (30) days after the date of notice to LESSEE's brokers or insurers claiming such total loss); (c) requisition of title, confiscation, forfeiture or any compulsory acquisition of title or other similar event (the date on which the same takes effect); (d) sequestration, detention, seizure or any similar event for more than one hundred eighty (180) consecutive days (the earlier of the date on which insurers make payment on the basis of a total loss or the date of expiration of such period); (e) requisition for use for more than one hundred eighty (180) consecutive days, except as set forth in Article 18.8 (the earlier of the date on which the insurers make payment on the basis of a total loss or the date of expiration of such period); (f) in the case of an Engine, the event described in Article 12.6.3 (the date on which the same takes effect); "TOTAL LOSS PROCEEDS" means the proceeds of any insurance or any compensation or similar payment arising in respect of a Total Loss. 18.2 NOTICE OF TOTAL LOSS. LESSEE will notify LESSOR in writing within two (2) Business Days after a Total Loss Date of the Aircraft, Airframe or any Engine. 18.3 TOTAL LOSS OF AIRCRAFT OR AIRFRAME. If the Total Loss of the Aircraft or Airframe occurs during the Lease Term, the following will occur: 18.3.1 After the Total Loss Date and until receipt by LESSOR of the Agreed Value and all other amounts then due under this Lease, LESSEE will continue to pay Rent and the parties will perform all of their other obligations under this Lease. 18.3.2 On the date which is the earlier of the following dates: (a) the date on which the Total Loss Proceeds of the Aircraft or the Airframe are paid by LESSEE's insurance underwriters or brokers and (b) the date which falls sixty (60) days after the Total Loss Date, LESSEE will pay to LESSOR an amount equal to the sum of: (a) the Agreed Value and (b) all other amounts then due and payable under this Lease, less an amount equal to the Net Total Loss Proceeds received by LESSOR by such date. 18.3.3 LESSOR will apply the Net Total Loss Proceeds and any amounts received from LESSEE pursuant to Article 18.3.2 as follows: (a) first, in discharge of any unpaid Rent and any other amounts accrued and unpaid up to the date of LESSOR's receipt of the Agreed Value; (b) second, in discharge of the Agreed Value; and (c) third, payment of the balance, if any, to LESSEE. 18.3.4 Upon receipt by LESSOR of all monies payable by LESSEE in Article 18.3, provided no Default has occurred and is continuing, this Lease will terminate except for LESSEE's obligations under Articles 10.5, 15 and 16 which survive the Termination Date and the Security Deposit will be returned to LESSEE in accordance with Article 5.3.1. FOR AVOIDANCE OF DOUBT, THE AGREED VALUE OF THE AIRCRAFT WILL BE PAYABLE TO LESSOR PURSUANT TO THIS ARTICLE 18.3 IF A TOTAL LOSS OF THE AIRFRAME OCCURS EVEN IF THERE HAS NOT BEEN A TOTAL LOSS OF AN ENGINE OR ENGINES. 18.4 SURVIVING ENGINE(S). If a Total Loss of the Airframe occurs and there has not been a Total Loss of an Engine or Engines, then provided no Default has occurred and is continuing, at the request of LESSEE (subject to agreement of relevant insurers) and on receipt of all monies due under Article 18.3 and payment by LESSEE of all airport, navigation and other charges on the Aircraft, LESSOR will transfer all of its right, title and interest in the surviving Engine(s) to LESSEE, but without any responsibility, condition or warranty on the part of LESSOR other than as to freedom from any LESSOR's Lien. 18.5 TOTAL LOSS OF ENGINE AND NOT AIRFRAME. 18.5.1 Upon a Total Loss of any Engine not installed on the Airframe or a Total Loss of an Engine installed on the Airframe not involving a Total Loss of the Airframe, LESSEE will replace such Engine as soon as reasonably possible by duly conveying to LESSOR title to another engine (a) free and clear of all Security Interests (except Permitted Liens) of any kind or description, (b) in airworthy condition and of the same or improved model, service bulletin and modification status and having a value and utility at least equal to the Engine which sustained the Total Loss, and (c) not older (by reference to serial number or manufacture date) than three (3) years older than the oldest of the two Engines delivered by LESSOR to LESSEE with the Aircraft on the Delivery Date. Such replacement engine will be an Engine as defined herein and the Engine which sustained such Total Loss will cease to be an Engine. 18.5.2 LESSEE agrees at its own expense to take such action as LESSOR may reasonably request in order that any such replacement Engine becomes the property of LESSOR and is leased hereunder on the same terms as the destroyed Engine. LESSEE's obligation to pay Rent will continue in full force and effect, but an amount equal to the Net Total Loss Proceeds received by LESSOR with respect to such destroyed Engine will, subject to LESSOR's right to deduct therefrom any amounts then due and payable by LESSEE under this Lease, be paid to LESSEE. 18.6 OTHER LOSS OR DAMAGE. 18.6.1 If the Aircraft or any Part thereof suffers loss or damage not constituting a Total Loss of the Aircraft or the Airframe or any Engine, all the obligations of LESSEE under this Lease (including payment of Rent) will continue in full force. 18.6.2 In the event of any loss or damage to the Aircraft or Airframe which does not constitute a Total Loss of the Aircraft or the Airframe, or any loss or damage to an Engine which does not constitute a Total Loss of such Engine, LESSEE will at its sole cost and expense fully repair the Aircraft or Engine in order that the Aircraft or Engine is placed in an airworthy condition and substantially the same condition as it was prior to such loss or damage. All repairs will be performed in accordance with sound airline procedures. LESSEE will notify LESSOR forthwith of any loss, theft or damage to the Aircraft for which the cost of repairs is estimated to exceed Seven Hundred Fifty Thousand U.S. Dollars (US$750,000), together with LESSEE's proposal for carrying out the repair. In the event that LESSOR does not agree with LESSEE's proposals for repair, LESSOR will so notify LESSEE within two (2) Business Days after its receipt of such proposal. LESSEE and LESSOR will then consult with Manufacturer and LESSEE and LESSOR agree to accept as conclusive, and be bound by, Manufacturer's directions or recommendations as to the manner in which to carry out such repairs. If Manufacturer declines to give directions or recommendations, LESSEE will carry out the repairs in accordance with the directions of LESSOR. 18.6.3 To the extent that LESSOR has received insurance proceeds from LESSEE's insurers with respect to any loss or damage, LESSOR will (subject to LESSOR's right to deduct therefrom any amounts then due and payable by LESSEE under this Lease and submission by LESSEE of reasonable documentation confirming the completion of the repairs in accordance with the requirements of this Lease) pay to LESSEE insurance proceeds received by LESSOR as and when such repair work is performed on the Aircraft. 18.7 COPY OF INSURANCE POLICY. Promptly after LESSOR's request following the occurrence of a partial loss or Total Loss of the Aircraft or an Engine, LESSEE will provide LESSOR with a copy of LESSEE's insurance policy. 18.8 GOVERNMENT REQUISITION. If the Aircraft, Airframe or any Engine is requisitioned for use by any Government Entity, LESSEE will promptly notify LESSOR of such requisition. All of LESSEE's obligations hereunder will continue as if such requisition had not occurred. Except if a Default or an Event of Default has occurred and is continuing, all payments received by LESSOR or LESSEE from such Government Entity will be paid over to or retained by LESSEE. 18.9 CONVEYANCE TO LESSEE. Upon compliance by LESSEE with the applicable terms of Article 18.3 or 18.5, LESSOR will transfer to LESSEE the Airframe or Engine(s), as applicable, with respect to which such Total Loss. ARTICLE 19 CRAF PROGRAM 19.1 DEDICATION TO CRAF. LESSEE may transfer possession of the Airframe or any Engine to the United States of America or any instrumentality or agency thereof as part of the Civil Reserve Air Fleet Program authorized under 10 U.S.C. ss. 9511 ET SEQ. (or any substantially similar program) ("CRAF PROGRAM") for a period which includes (collectively, the "CRAF PROGRAM REQUISITION PERIOD") the entire period of requisition under the CRAF Program. If the CRAF Program Requisition Period extends beyond the Expiration Date provided by this Lease, then the Lease will be deemed to continue for six (6) months after the end of the CRAF Program Requisition Period at a monthly rental rate equal to the monthly rental rate during the Lease Term. If such extension extends beyond the Lease Term, then LESSEE will provide LESSOR with written notice of the proposed redelivery by the earlier of six (6) months prior to the proposed redelivery date or five (5) Business Days after the date of receipt of the actual notice given to LESSEE by the government prior to the government's redelivery date and LESSEE will return the Aircraft to LESSOR in the condition required by Article 23 on LESSEE's proposed redelivery date set forth in such notice. 19.2 NOTICE TO LESSOR. LESSEE will promptly notify LESSOR in writing in the event of the requisition for use of the Aircraft under CRAF activation by the U.S. Government. All of LESSEE's obligations under this Lease will continue to the same extent as if such requisition had not occurred. 19.3 REQUISITION OF ENGINE. If there is a requisition for use of any Engine (but not the Airframe) by the U.S. Government in connection with the CRAF Program, LESSEE will replace such Engine by complying with the terms of Article 18.5 hereof. 19.4 GOVERNMENT INDEMNIFICATION. Any provisions of this Lease to the contrary notwithstanding, if there is a requisition for use of the Aircraft pursuant to the CRAF Program and/or CRAF activation, LESSOR agrees that LESSEE's insurances described in Exhibit C may be supplemented by insurances provided under Title XIII of the Act, and/or U.S. Government indemnification (which Title XIII insurances and indemnification will be in amounts not less than those established in Exhibit C); provided, however, that LESSEE will remain responsible for full compliance with all the provisions of this Lease, including Articles 14 and 16, to the extent Title XIII and/or the U.S. Government indemnification do not satisfy LESSEE's obligations under this Lease. 19.5 NO GEOGRAPHIC LIMITS. If there is a requisition for use of the Aircraft pursuant to the CRAF Program and/or CRAF activation, there will be no limitation on the geographic area in which the Aircraft may be operated so long as, taken as a whole, LESSEE's insurance, the Title XIII insurance and/or the indemnification provided by the U.S. Government fully cover (without any geographic exclusions) LESSEE's Exhibit C insurance requirements. 19.6 NOTICE OF DEFAULT. If an Event of Default occurs under this Lease and LESSOR elects to pursue its remedies under Article 25.3(e) to terminate this Lease and repossess the Aircraft, LESSOR will so notify the U.S. Government by sending a written communication as follows: Headquarters Air Mobility Command AMC Contracting Office -- XOKA Scott Air Force Base, Illinois 62225-5007 19.7 RECEIPT OF PAYMENTS. Subject to the following sentence, all payments received by LESSOR or LESSEE from such Government Entity in connection with the requisition of the Aircraft under the CRAF Program will be paid over to or retained by LESSEE. If a Default has occurred and is continuing, all payments received by LESSEE or LESSOR from such Government Entity in connection with the requisition of the Aircraft under the CRAF Program may be used by LESSOR to satisfy any obligations owing by LESSEE. ARTICLE 20 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE 20.1 REPRESENTATIONS AND WARRANTIES. LESSEE represents and warrants the following to LESSOR as of the date of execution of this Lease and as of the Delivery Date: 20.1.1 CORPORATE STATUS. LESSEE is a corporation duly incorporated, validly existing and in good standing under the Laws of Indiana (or, on the Delivery Date, the state of its incorporation). It has the corporate power and authority to carry on its business as presently conducted and to perform its obligations hereunder. 20.1.2 GOVERNMENTAL APPROVALS. No authorization, approval, consent, license or order of, or registration with, or the giving of notice to the Aviation Authority or any other Government Entity is required for the valid authorization, execution, delivery and performance by LESSEE of this Lease, except as will have been duly effected as of the Delivery Date. 20.1.3 BINDING. LESSEE's Board of Directors has authorized LESSEE to enter into this Lease, any Side Letters hereto and any other documentation in connection with the leasing of the Aircraft from LESSOR (collectively, the "OPERATIVE DOCUMENTS") and perform its obligations under the Operative Documents. This Lease and the other Operative Documents have been duly executed and delivered by LESSEE and represent the valid, binding and enforceable obligations of LESSEE except as enforceability may be limited by bankruptcy, insolvency, reorganization or other Laws of general application affecting the enforcement of creditors' rights. When executed by LESSEE at Delivery, the same will apply to the Estoppel and Acceptance Certificate. 20.1.4 NO BREACH. The execution and delivery of the Operative Documents, the consummation by LESSEE of the transactions contemplated herein and compliance by LESSEE with the terms and provisions hereof do not and will not contravene any Law applicable to LESSEE, or result in any breach of or constitute any default under or result in the creation of any Security Interest upon any property of LESSEE, pursuant to any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which LESSEE is a party or by which LESSEE or its properties or assets may be bound or affected. When executed by LESSEE at Delivery, the same will apply to the Estoppel and Acceptance Certificate. 20.1.5 FILINGS. Except for any filing or recording that may be required by the FARs, no filing or recording of any instrument or document (including the filing of any financial statement) is necessary under the Laws of the State of Registration in order for this Lease to constitute a valid and perfected lease of record relating to the Aircraft. 20.1.6 LICENSES. LESSEE holds all licenses, certificates and permits from applicable Government Entities in the U.S. for the conduct of its business as a certificated air carrier and performance of its obligations under this Lease. 20.1.7 NO SUITS. There are no suits, arbitrations or other proceedings pending or threatened before any court or administrative agency against LESSEE which are reasonably likely to be determined adversely and, if adversely determined, would have a material adverse effect on the business, assets or condition (financial or otherwise) of LESSEE or its ability to perform under this Lease, except as described in the filings provided to LESSOR pursuant to Article 22. 20.1.8 GENERAL OBLIGATIONS. The obligations of LESSEE under this Lease are direct, general and unconditional obligations of LESSEE and rank or will rank at least PARI PASSU with all other present and future unsecured and unsubordinated obligations (including contingent obligations) of LESSEE, with the exception of such obligations as are mandatorily preferred by law and not by reason of any encumbrance. 20.1.9 NO SOVEREIGN IMMUNITY. LESSEE, under the Laws of the U.S. or of any other jurisdiction affecting LESSEE, is subject to private commercial law and suit. Neither LESSEE nor its properties or assets is entitled to sovereign immunity under any such Laws. LESSEE's performance of its obligations hereunder constitute commercial acts done for commercial purposes. 20.1.10 TAX RETURNS. All necessary federal and state income tax returns have been delivered by LESSEE to all relevant taxation authorities in the U.S. or any state thereof and LESSEE is not in default in the payment of any taxes due and payable as shown on any such returns or on any assessment received by LESSEE. 20.1.11 NO MATERIAL ADVERSE EFFECT. LESSEE is not in default under any agreement to which it is a party or by which it may be bound which would have a material adverse effect on its business, assets or condition. 20.1.12 NO DEFAULT UNDER THIS LEASE. At the time of execution of this Lease, no Default has occurred and is continuing and the financial statements provided to LESSOR pursuant to Article 22 fairly present the financial condition of LESSEE. 20.2 COVENANTS. LESSEE covenants to LESSOR that it will comply with the following throughout the entire Lease Term: 20.2.1 LICENSING. LESSEE will hold all licenses, certificates and permits from applicable Government Entities in the U.S. for the conduct of its business as a certificated air carrier and performance of its obligations under this Lease. LESSEE will advise LESSOR promptly in the event any such licenses, certificates or permits are cancelled, terminated, revoked or not renewed. 20.2.2 SOVEREIGN IMMUNITY. LESSEE, under the Laws of the U.S. or of any other jurisdiction affecting LESSEE, will continue to be subject to private commercial law and suit. Neither LESSEE nor its properties or assets will be entitled to sovereign immunity under any such Laws. LESSEE's performance of its obligations hereunder will constitute commercial acts done for commercial purposes. LESSEE will advise LESSOR promptly of any change in the foregoing. 20.2.3 INFORMATION ABOUT SUITS. LESSEE will promptly give to LESSOR a notice in writing of any suit, arbitration or proceeding against LESSEE before any court, administrative agency or Government Entity which is reasonably likely to be determined adversely and, if adversely determined, would materially adversely affect LESSEE's financial condition, affairs, operations or its ability to perform under this Lease. 20.2.4 MERGER OF LESSEE. (a) LESSEE shall not consolidate with or merge into any other Person under circumstances in which LESSEE is not the surviving corporation, or convey, transfer, or lease in one or more transactions all or substantially all of its assets to any other Person, unless: (i) such Person is organized, existing, and in good standing under the Laws of the U.S., any state of the U.S., or the District of Columbia, and, upon consummation of such transaction, such Person will be a U.S. Air Carrier; (ii) such Person executes and delivers to LESSOR a duly authorized, legal, valid, binding and enforceable agreement, reasonably satisfactory in form and substance to LESSOR, containing an effective assumption by such Person of the due and punctual performance and observance of each covenant, agreement and condition in the Operative Documents to be performed or observed by LESSEE; (iii) such Person makes such filings and recordings with the FAA pursuant to the Act as shall be necessary to evidence such consolidation or merger; (iv) LESSEE furnishes LESSOR an opinion of counsel reasonably satisfactory to LESSOR to the effect that such consolidation or merger has satisfied at the closing of such consolidation or merger items (i), (ii) and (iii) above; (v) immediately after giving effect to such consolidation or merger, no Default or Event of Default exists; (vi) unless LESSOR otherwise consents, immediately after giving effect to such consolidation or merger, such Person will have a tangible net worth of not less than sixty-five percent (65%) of the LESSEE's tangible net worth immediately prior to such merger; and (vii) upon such merger becoming effective, LESSOR will enjoy the same degree of protection under ss. 1110 of the Bankruptcy Code with respect to the Aircraft as LESSOR enjoyed prior to such merger. (b) Upon any such consolidation or merger of LESSEE with or into, or the conveyance, transfer, or lease by LESSEE of all or substantially all of its assets to, any Person in accordance with this Article 20.2.4, such Person will succeed to, and be substituted for, and may exercise every right and power of, LESSEE under the Operative Documents with the same effect as if such Person had been named as "LESSEE" therein. No such consolidation, merger, conveyance, transfer, or lease shall have the effect of releasing LESSEE or such Person from any of LESSEE's obligations, liabilities, covenants, or undertakings under this Lease. 20.2.5 RESTRICTION ON RELINQUISHMENT OF POSSESSION. LESSEE will not, without the prior consent of LESSOR, deliver, transfer or relinquish possession of the Aircraft except in accordance with Articles 11 and 12. 20.2.6 NO SECURITY INTERESTS. LESSEE will not create or agree to or permit to arise any Security Interest (other than Permitted Liens) on or with respect to the Aircraft, title thereto or any interest therein. LESSEE will forthwith, at its own expense, take all action as may be necessary to discharge or remove any such Security Interest if it exists at any time. LESSEE will within five (5) Business Days after becoming aware of the existence of any such Security Interest give written notice thereof to LESSOR. 20.2.7 REPRESENTATIONS TO OTHER PARTIES. LESSEE will not represent or hold out LESSOR as carrying goods or passengers on the Aircraft or as being in any way connected or associated with any operation of the Aircraft. ARTICLE 21 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSOR 21.1 REPRESENTATIONS AND WARRANTIES. LESSOR represents and warrants the following to LESSEE as of the date of execution of the Lease and as of the Delivery Date and ALL OTHER WARRANTIES, EXPRESS OR IMPLIED HAVE BEEN WAIVED IN ACCORDANCE WITH ARTICLE 8: 21.1.1 CORPORATE STATUS. LESSOR is a corporation duly incorporated, validly existing and in good standing under the Laws of the State of California. It has the corporate power and authority to carry on its business as presently conducted and to perform its obligations hereunder. 21.1.2 GOVERNMENTAL APPROVALS. No authorization, approval, consent, license or order of, or registration with, or the giving of notice to any U.S. Government Entity is required for the valid authorization, execution, delivery and performance by LESSOR of this Lease. 21.1.3 BINDING. This Lease and the other Operative Documents have been duly authorized, executed and delivered by LESSOR and represent the valid, enforceable and binding obligations of LESSOR except as enforceability may be limited by bankruptcy, insolvency, reorganization or other Laws of general application affecting the enforcement of creditors' rights. 21.1.4 NO BREACH. The execution and delivery of the Operative Documents, the consummation by LESSOR of the transactions contemplated herein and compliance by LESSOR with the terms and provisions hereof do not and will not contravene any Law applicable to LESSOR, or result in any breach of or constitute any default under any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which LESSOR is a party or by which LESSOR or its properties or assets may be bound or affected. 21.1.5 TITLE TO AIRCRAFT. On the Delivery Date LESSOR will have good and valid title to the Aircraft. 21.1.6 CITIZENSHIP. LESSOR is a "citizen of the United States" within the meaning of 49 U.S. Code 40102(a)(15). 21.1.7 INVESTMENT BY LESSOR. LESSOR is acquiring its interest in the Aircraft for its own account from its corporate funds, for investment and not with a view to any resale or distribution thereof that would require registration under the Securities Act of 1933; PROVIDED, HOWEVER, that subject to the transfer restrictions in Article 24.2, its disposition of its interest in the Aircraft shall at all times be within its control. 21.2 COVENANT OF QUIET ENJOYMENT. So long as no Event of Default has occurred and is continuing hereunder, LESSOR covenants that neither LESSOR nor any person lawfully claiming through LESSOR will interfere with LESSEE's quiet, peaceful use and enjoyment of the Aircraft. ARTICLE 22 FINANCIAL AND RELATED INFORMATION LESSEE agrees to furnish each of the following to LESSOR: (a) within sixty (60) days after the end of each fiscal quarter of LESSEE, the unaudited consolidated financial statements (including a balance sheet and profit and loss statement) prepared for such quarter in accordance with generally accepted accounting principles in the U.S.; (b) within one hundred twenty (120) days after the end of each fiscal year of LESSEE, the audited consolidated financial statements (including a balance sheet and profit and loss statement) prepared as of the close of such fiscal year in accordance with generally accepted accounting principles in the U.S. LESSEE's chief financial officer will also provide a certificate of LESSEE stating that, to such officer's knowledge, no Default exists under this Lease (or if, to such officer's knowledge, a Default does exist, identifying it); (c) promptly after distribution, all reports and financial statements which Amtran, Inc. sends or makes generally available to its stockholders or creditors; and (d) from time to time, such other reasonable information as LESSOR or LESSOR's Lender may reasonably request concerning the location, condition, use and operation of the Aircraft or the financial condition of LESSEE. ARTICLE 23 RETURN OF AIRCRAFT 23.1 DATE OF RETURN. LESSEE is obligated to return the Aircraft, Engines Parts and Aircraft Documentation to LESSOR on the Expiration Date, unless a Total Loss of the Aircraft occurred prior to the Expiration Date and this Lease was terminated early in accordance with Article 18.3. If LESSEE is in Default hereunder by failing to return the Aircraft on the Expiration Date or if an Event of Default occurs prior to the Expiration Date and LESSOR repossesses the Aircraft, the return requirements set forth in this Article 23 nonetheless must be met on the date the Aircraft is actually returned to LESSOR or repossessed by LESSOR. 23.2 TECHNICAL REPORT. Six (6) months prior to the Expiration Date (and in an updated form at return of the Aircraft), LESSEE will provide LESSOR with a Technical Evaluation Report in the form and substance of Exhibit L, as revised, and, in addition upon LESSOR's request, will make copies available of (a) drawings of the interior configuration of the Aircraft both as it presently exists and as it will exist at return, (b) an Airworthiness Directive status list, (c) a service bulletin incorporation list, (d) rotable tracked, hard-time and life-limited component listings, (e) a list of LESSEE-initiated modifications and alterations, (f) interior material burn certificates, (g) the Aircraft Maintenance Program, (h) the complete workscope for the checks, inspections and other work to be performed prior to return, (i) a list of all no-charge service bulletin kits with respect to the Aircraft which were ordered by LESSEE from Manufacturer or Engine manufacturer, (j) current Engine disk sheets and a description of the last shop visit for each Engine and (k) any other data which is reasonably requested by LESSOR. 23.3 RETURN LOCATION. LESSEE at its expense will return the Aircraft, Engines, Parts and Aircraft Documentation to LESSOR at Indianapolis International Airport, Indianapolis, Indiana or to such other airport as may be mutually agreed to by LESSEE and LESSOR. 23.4 FULL AIRCRAFT DOCUMENTATION REVIEW. For the period commencing at least ten (10) Business Days prior to the proposed redelivery date and continuing until the date on which the Aircraft is returned to LESSOR in the condition required by this Lease, LESSEE will provide for the review of LESSOR and/or its representative all of the Aircraft records and historical documents described in Exhibit K in one central room at the Aircraft return location. 23.5 AIRCRAFT INSPECTION. 23.5.1 During the maintenance checks performed immediately prior to the proposed redelivery and at the actual return of the Aircraft, LESSOR and/or its representatives will have an opportunity to conduct a full systems functional and operational inspection of the Aircraft (and other types of reasonable inspections based upon the Aircraft type, age, use and other known factors with respect to the Aircraft) and a full inspection of the Aircraft Documentation (including records and manuals), all to LESSOR's satisfaction. The inspection will occur during the Return Check when the panels, bays or the like are open and certain Parts are disassembled. LESSOR may inspect such opened panels, bays or the like and the disassembled Parts so long as LESSOR does not disrupt the Return Check or cause such Return Check to be extended beyond the anticipated completion date of such Return Check. Any deficiencies from the Aircraft return condition requirements set forth in this Article 23 will be corrected by LESSEE at its cost prior to the acceptance flight described in Article 23.5.2. 23.5.2 Immediately prior to the proposed redelivery of the Aircraft, LESSEE will carry out for LESSOR and/or LESSOR's representatives an Aircraft acceptance flight in accordance with Manufacturer's standard flight operation check flight procedures or, if agreed to in writing by LESSOR, in accordance with an airline acceptance flight procedure, either of which will be for the duration necessary to perform such check flight procedures but in any event not less than two (2) hours. Flight costs and fuel will be furnished by and at the expense of LESSEE. Any deficiencies from the Aircraft return condition requirements set forth in this Article 23 will be corrected by LESSEE at its cost prior to return of the Aircraft. 23.5.3 To the extent that the ground inspection and acceptance flight extend beyond the Expiration Date, the Lease Term will be deemed to have been automatically extended and the obligations of LESSEE hereunder (including Article 23.11.3) will continue on a day-to-day basis until the Aircraft is accepted by LESSOR executing the Return Acceptance Receipt in the form of Exhibit I. 23.6 CERTIFICATE OF AIRWORTHINESS MATTERS. 23.6.1 The Aircraft will possess a current Certificate of Airworthiness issued by the Aviation Authority (although this Certificate of Airworthiness may later be substituted by the Export Certificate of Airworthiness or equivalent if requested by LESSOR pursuant to Article 23.10). The Aircraft at return must be in the condition required in order to meet the requirements of a U.S. Standard Certificate of Airworthiness for transport category aircraft issued by the FAA in accordance with FAR Part 21 and, in addition, to meet the operating requirements of FAR Part 121. 23.6.2 LESSEE at its cost will demonstrate that the Aircraft meets the requirements for issuance of the U.S. Standard Certificate of Airworthiness for transport category aircraft specified in Article 23.6.1 by delivering to LESSOR an actual U.S. Standard Certificate of Airworthiness. If there is a dispute in regards to the condition of the Aircraft or the Aircraft Documentation, then LESSEE will provide LESSOR with a letter acceptable to LESSOR signed by an FAA Designated Airworthiness Representative (DAR) or another Person acceptable to LESSOR stating that the DAR or such Person has inspected the Aircraft and Aircraft Documentation (including records and manuals) and has found that the Aircraft meets the requirements for issuance of a U.S. Standard Certificate of Airworthiness for transport category aircraft in accordance with FAR Part 21 and, in addition, meets the operating requirements of FAR Part 121. 23.6.3 If the Aircraft is to be registered in a country other than in the U.S. after return from LESSEE, LESSOR may in its sole discretion waive the requirements of Article 23.6.2 and instead require that LESSEE at its expense (to the extent such expense is no greater than that which LESSEE would have incurred pursuant to Articles 23.6.1 and 23.6.2, with any additional expenses being for LESSOR's account) put the Aircraft in a condition to meet the requirements for issuance of a Certificate of Airworthiness of the Aviation Authority of the next country of register. 23.7 GENERAL CONDITION OF AIRCRAFT AT RETURN. 23.7.1 The Aircraft, Engines and Parts will have been maintained and repaired in accordance with the Maintenance Program, the rules and regulations of the Aviation Authority and this Lease. 23.7.2 Aircraft Documentation (including records and manuals) will have been maintained in an up-to-date status, in accordance with the rules and regulations of the Aviation Authority and the FAA and this Lease and in a form necessary in order to meet the requirements of Article 23.6.2. The records and historical documents set forth in Attachment 1 of Exhibit I will be in English. 23.7.3 The Aircraft will be in the same working order and condition as at Delivery (subject to the other provisions of this Article 23, reasonable wear and tear from normal flight operations excepted), with all pilot discrepancies and deferred maintenance items cleared on a terminating action basis. 23.7.4 The Aircraft will be airworthy (conform to type design and be in a condition for safe operation), with all Aircraft equipment, components and systems operating in accordance with their intended use and within limits approved by the Manufacturer, Aviation Authority and FAA. 23.7.5 The Aircraft interior (including cabin and windows) and exterior will be clean and all compartments will be reasonably free of foreign objects, dirt, grease, fluids, stains, grime, cracks, tears and rips (with the exception of normal wear and tear) and ready to be placed into immediate commercial airline operations. 23.7.6 No special or unique Manufacturer, Engine manufacturer or Aviation Authority inspection or check requirements which are specific to the Aircraft or Engines (as opposed to all aircraft or engines of their types) will exist with respect to the Airframe, Engines and Aircraft equipment, components and systems. 23.7.7 All repairs, modifications and alterations to the Aircraft will have been accomplished in accordance with Manufacturer's Structural Repair Manual (or FAA-approved data supported by FAA Form 8110-3) for the Aircraft. 23.7.8 The Aircraft will be returned with LESSOR's Engines installed and with the same equipment as at Delivery, subject only to those replacements, additions and Modifications permitted under this Lease. LESSEE will inform LESSOR of whether LESSEE will be able to redeliver the Engines with the Aircraft and the proposed replacement engines that LESSEE wants to provide LESSOR in place of the Engines. LESSEE will provide LESSOR with whatever data, records and information that LESSOR reasonably requests in order to evaluate the proposed replacement engines. In the event that LESSEE is unable to return either of the Engines in the conditions required by this Article 23, then LESSEE may provide a replacement engine (a "REPLACEMENT ENGINE") for such Engine to LESSOR by duly conveying to LESSOR as owner hereunder title to another engine of the same manufacturer and of the same or an improved model as the Engine being replaced and suitable for installation and use on the Aircraft, which engine shall be free and clear of all Security Interests, and shall be no more than three (3) years older by reference to serial number than the replaced Engine and have a modification status, value and utility at least equal to the Engine which such Replacement Engine is replacing on the Aircraft assuming that such Engine which such Replacement Engine is replacing was then of the value, utility, condition, and airworthiness required to be maintained by the terms of this Lease. Such Replacement Engine, after approval and acceptance by LESSOR, shall be deemed an "Engine" as defined herein for all purposes hereunder. LESSEE agrees to take such action as LESSOR may reasonably request in order that such Replacement Engine shall be duly and properly titled in the name of LESSOR. Prior to or at the time of any such conveyance, LESSEE, at its own expense, will promptly: (a) furnish LESSOR with a warranty bill of sale, in form and substance satisfactory to LESSOR, with respect to such Replacement Engine, (b) furnish LESSOR with such evidence of title to such Replacement Engine as reasonably requested by LESSOR, and (c) furnish LESSOR with an opinion of LESSEE's counsel to the effect that title to such Replacement Engine has been duly conveyed to LESSOR free and clear of all Security Interests of any kind or nature and that such exchange qualifies for tax free treatment under the Internal Revenue Code of 1986, as amended. Upon full compliance with this Article, LESSOR shall transfer to LESSEE all of LESSOR's right, title and interest, on an "AS-IS", "WHERE-IS" basis in and to the Engine being replaced by such Replacement Engine, without recourse or warranty, express or implied, except that LESSOR has good and marketable title to such Engine and such Engine shall be free and clear of LESSOR's Liens. 23.7.9 All Airworthiness Directives which are issued prior to the date of return of the Aircraft and require compliance (either by means of repetitive inspections, modifications or terminating action) prior to return of the Aircraft to LESSOR or within one (1) year after the Termination Date will have been complied with on the Aircraft on a terminating action basis at LESSEE's cost. Airworthiness Directives which do not have a terminating action will be accomplished at the highest level of inspection or modification possible. If, after using best efforts, LESSEE is unable to acquire the material, parts or components necessary to accomplish such Airworthiness Directive, LESSEE will pay to LESSOR upon return of the Aircraft the estimated cost of terminating such Airworthiness Directive. If the estimated cost cannot be mutually agreed upon by LESSEE and LESSOR, LESSEE and LESSOR will each obtain an estimate from a reputable FAA-approved maintenance facility (unaffiliated with LESSEE or LESSOR) and the estimated cost will be the average of the two estimates. 23.7.10 The Aircraft will be in compliance with the Corrosion Prevention and Control Program (CPCP) specified in LESSEE's Maintenance Program. 23.7.11 If any waivers, deviations, dispensations, alternate means of compliance, extensions or carry-overs with respect to maintenance or operating requirements, repairs or Airworthiness Directives are granted by the Aviation Authority or permitted by the Maintenance Program, LESSEE at its sole cost and expense will nonetheless perform such maintenance or operating requirements, repairs or Airworthiness Directives as if such waivers, deviations, dispensations, alternate means of compliance, or extensions or carry-overs did not exist. 23.7.12 The Aircraft will be free from any Security Interest except LESSOR's Liens and no circumstance will have so arisen whereby the Aircraft is or could become subject to any Security Interest or right of detention or sale in favor of the Aviation Authority, any airport authority, or any other authority. 23.7.13 All no-charge vendor and Manufacturer's service bulletin kits received by LESSEE for the Aircraft but not installed thereon will be on board the Aircraft as cargo. At LESSOR's request, any other service bulletin kit which LESSEE paid for will also be delivered to LESSOR on board the Aircraft, but LESSOR will reimburse LESSEE for its actual out-of-pocket costs for such kit, unless LESSEE purchased such kit as part of its implementation of a service bulletin on its fleet of aircraft of the same type as the Aircraft but had not yet installed such kit on the Aircraft, in which case such kit will be furnished free of charge to LESSOR. 23.7.14 The Aircraft will be free of any leaks and any damage resulting therefrom. All repairs will have been performed on a permanent basis in accordance with the applicable manufacturer's instructions. 23.7.15 The Aircraft fluid reservoirs (including oil, oxygen, hydraulic and water) will be serviced to full and the waste tank serviced in accordance with Manufacturer's instructions. (Fuel tanks will be at least as full as at Delivery.) 23.8 CHECKS PRIOR TO RETURN. Immediately prior to return of the Aircraft to LESSOR, LESSEE at its expense will do each of the following: 23.8.1 Have performed, and completed, by an FAA-approved repair station, all maintenance tasks specified in LESSEE's Maintenance Program and the MPD which (a) are necessary to clear the Aircraft of all such tasks for eighteen (18) months, five thousand (5,000) hours, and three thousand (3,000) cycles from the date of return of the Aircraft, and (b) are required to be performed at lesser intervals than eighteen (18) months, five thousand (5,000) hours or three thousand (3,000) cycles (all such work collectively referred to as the "RETURN CHECK"). If a maintenance task is specific to LESSEE's Maintenance Program and not required or recommended to be performed by the MPD, then LESSEE will not be required to perform such maintenance task so long as the Return Check is performed in such a manner that clears the Aircraft of all maintenance tasks in accordance with the requirements of the preceding sentence. As part of the Return Check, all non-routine tasks generated as a result of the performance of the work included in the Return Check and any other discrepancies revealed during the Return Check must also be performed in accordance with the FAA approved procedures. LESSEE will also weigh the Aircraft. LESSEE agrees to perform during the Return Check any other work reasonably required by LESSOR (and not otherwise required under this Lease) and LESSOR will, promptly upon receipt of an invoice from LESSEE, reimburse LESSEE for such work at LESSEE's preferred customer rates. 23.8.2 Have the Aircraft in compliance with Corrosion Prevention and Control Program (CPCP) as specified in the MPD and LESSEE's Maintenance Program. 23.8.3 Remove LESSEE's exterior markings, including all exterior paint, by stripping (or, at LESSOR's option, pneumatically scuff/sanding) the paint from the fuselage, empennage, wings and Engine cowlings, and clean, reseal, refinish, prepare (including application of alodine or another corrosion inhibitor) and prime the surfaces to be painted, all in accordance with Manufacturer's and paint manufacturer's recommendations. LESSEE will then repaint the fuselage, empennage, wings and Engine cowlings in the colors and logo specified by LESSOR ; PROVIDED, HOWEVER, that LESSEE will be responsible for only paying the amount that it would cost to strip or scuff/sand (whichever is performed on the Aircraft at return) and properly paint the Aircraft in LESSEE's colors and logo and LESSOR will be responsible for the excess cost to paint the Aircraft in the next lessee's colors and logo. Such painting will be accomplished in such a manner as to result in a uniformly smooth and cosmetically acceptable aerodynamic surface. All external placards, signs and markings will be properly attached, free from damage, clean and legible. 23.8.4 Clean the exterior and interior of the Aircraft. 23.8.5 If reasonably required by LESSOR, apply touch up to paint to the interior of the Aircraft, including flight deck, and replace any missing or broken placards. 23.8.6 In accordance with Article 23.7.7, permanently repair damage to the Aircraft that exceeds Manufacturer's limits and replace any non-flush structural patch repairs installed on the Aircraft with flush-type repairs, so long as the Manufacturer or the Manufacturer's Structural Repair Manual permits flush-type repairs on the portion of the Aircraft where the non-flush structural repairs were made. 23.8.7 With LESSOR or its representatives present, perform a full and complete hot and cold section videotape borescope on each Engine and its modules in accordance with the Engine manufacturer's maintenance manual. 23.8.8 If the Engine historical and technical records and/or condition trend monitoring data of any Engine (including the APU) indicate an acceleration in the rate of deterioration in the performance of an Engine, LESSEE will correct, to LESSOR's satisfaction, such conditions which are determined to be causing such accelerated rate of deterioration. 23.8.9 With LESSOR or its representatives present, accomplish a maximum power assurance run on the Engines. LESSEE will evaluate the Engine performance and record the Engine maximum power assurance test conditions and results on the Return Acceptance Receipt. 23.8.10 LESSEE will provide evidence to LESSOR's satisfaction that the Engine historical and technical records, borescope inspection, trend monitoring and other checks specified in Article 23.8.9 do not reveal any condition which would cause the Engines or any module to be unserviceable, beyond serviceable limits or serviceable with an increased frequency of inspection or with calendar time, flight hour or flight cycle restrictions under the Engine manufacturer's maintenance manual. LESSEE will correct any discrepancies in accordance with the guidelines set out by the Engine manufacturer which may be discovered during such inspection. 23.8.11 In the event the Engine historical and technical records, borescope inspection, trend monitoring and other checks specified in Article 23.8.9 result in a dispute regarding the conformity of an Engine with the requirements of this Article 23, LESSEE and LESSOR will consult with Engine manufacturer and follow Engine manufacturer's recommendations (including the accomplishment of an Engine test cell operational check) with regard to determining if such Engine complies with the requirements of this Article 23 and the manner in which any discrepancies from the requirements of this Article 23 will be rectified. 23.9 PART LIVES. At return, the condition of the Aircraft will be as follows: (CONFIDENTIAL MATERIAL OMITTED) 23.10 EXPORT AND DEREGISTRATION OF AIRCRAFT. At LESSOR's request, LESSEE at its cost will (a) provide an Export Certificate of Airworthiness or its equivalent from the State of Registration so that the Aircraft can be exported to the country designated by LESSOR, (b) assist with deregistration of the Aircraft from the register of aircraft in the State of Registration, (c) assist with arranging for prompt confirmation of such deregistration to be sent by the registry in the State of Registration to the next country of registration and (d) perform any other acts reasonably required by LESSOR in connection with the foregoing. If any Aircraft work which LESSEE is not otherwise required to perform hereunder, including engineering, is required in order to obtain such Export Certificate of Airworthiness, LESSEE will perform such work and LESSOR will reimburse LESSEE for such work at LESSEE's preferred customer rates. 23.11 LESSEE'S CONTINUING OBLIGATIONS. In the event that LESSEE does not return the Aircraft to LESSOR on the Expiration Date and in the condition required by this Article 23 for any reason (whether or not the reason is within LESSEE's control): 23.11.1 the obligations of LESSEE under this Lease will continue in full force and effect on a day-to-day basis until such return. This will not be considered a waiver of LESSEE's Event of Default or any right of LESSOR hereunder. 23.11.2 Until such return, the Agreed Value will be an amount equal to the Agreed Value on the day the Aircraft should have been returned to LESSOR pursuant to this Lease. 23.11.3 LESSEE will fully indemnify LESSOR on demand for all losses (including consequential damages), liabilities, actions, proceedings, costs and expenses thereby suffered or incurred by LESSOR and, in addition, if a delay in return of the Aircraft was due to reasons within LESSEE's reasonable control, then until such time as the Aircraft is redelivered to LESSOR and put into the condition required by this Article 23, instead of paying the Rent specified in Article 5.3, LESSEE will pay twice the amount of Rent for each day from the scheduled Expiration Date until the Termination Date (the monthly Rent payable under Article 5.3.1 will be prorated based on the actual number of days in the applicable month). Payment will be made upon presentation of LESSOR's invoice. 23.11.4 LESSOR may elect, in its sole and absolute discretion, to accept the return of the Aircraft prior to the Aircraft being put in the condition required by this Article 23 and thereafter have any such non-conformance corrected at such time as LESSOR may deem appropriate (but within ninety (90) days following the return of the Aircraft) and at commercial rates then-charged by the Person selected by LESSOR to perform such correction. Any direct expenses incurred by LESSOR for such correction will become additional Rent payable by LESSEE within fifteen (15) days following the submission of a written statement by LESSOR to LESSEE, identifying the items corrected and setting forth the expense of such corrections. LESSEE's obligation to pay such supplemental Rent will survive the Termination Date. 23.12 AIRPORT AND NAVIGATION CHARGES. LESSEE will ensure that at return of the Aircraft any and all airport, navigation and other charges which give rise or may if unpaid give rise to any lien, right of detention, right of sale or other Security Interest in relation to the Aircraft, Engine or any Part have been paid and discharged in full and will at LESSOR's request produce evidence thereof satisfactory to LESSOR. 23.13 RETURN ACCEPTANCE CERTIFICATE. Upon return of the Aircraft in accordance with the terms of this Lease, LESSEE will prepare and execute two (2) Return Acceptance Certificates in the form and substance of Exhibit I and LESSOR will countersign and return one such Return Acceptance Certificate to LESSEE. In addition, LESSEE and LESSOR will execute a Lease Termination for filing with the FAA evidencing termination of this Lease. 23.14 INDEMNITIES AND INSURANCE. The indemnities and insurance requirements set forth in Articles 16 and 17, respectively, will apply to Indemnitees and LESSOR's representatives during return of the Aircraft, including the ground inspection and acceptance flight. With respect to the acceptance flight, LESSOR's representatives will receive the same protections as LESSOR on LESSEE's Aviation and Airline General Third Party Liability Insurance. ARTICLE 24 ASSIGNMENT 24.1 NO ASSIGNMENT BY LESSEE. EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED BY THE TERMS OF THIS LEASE, NO ASSIGNMENT, NOVATION, TRANSFER, MORTGAGE OR OTHER CHARGE MAY BE MADE BY LESSEE OF ANY OF ITS RIGHTS WITH RESPECT TO THE AIRCRAFT, ENGINE OR PART OF THIS LEASE. 24.2 SALE OR ASSIGNMENT BY LESSOR. 24.2.1 Subject to LESSEE's rights pursuant to this Lease, LESSOR may at any time and without LESSEE's consent sell, assign or transfer its rights, interest and obligations hereunder or with respect to the Aircraft to a third party ("LESSOR'S ASSIGNEE"), but only if: (a) LESSOR's Assignee has full power, authority, and legal right to execute, deliver, and perform the obligations of LESSOR under the Operative Documents and provides reasonably satisfactory evidence of such power and authority to LESSEE; (b) LESSOR's Assignee enters into one or more legal, valid, binding and enforceable agreements effective to confirm that LESSOR's Assignee agrees to be bound by all the terms of, and to undertake all of the obligations arising after such transfer of LESSOR in, the Operative Documents, and in which it makes representations and warranties substantially the same as those in Article 21.1 of this Lease; (c) upon such transfer LESSEE shall not be obligated to pay any greater amount or incur any greater obligation (other than indemnifying additional indemnitees, insuring additional insureds and other minor ministerial matters) than that which it would have been obliged to pay or incur under the Operative Documents if no transfer or assignment had taken place, and upon such transfer the terms and conditions of the Operative Documents insofar as they relate to the rights and obligations of LESSEE are not altered; (d) LESSOR shall cause LESSOR's Assignee to deliver to LESSEE an opinion of counsel reasonably satisfactory to LESSEE to the effect that such agreement or agreements referred to in clause (2) and, if applicable, clause (6) are legal, binding, and enforceable in accordance with its or their terms, subject to the typical exceptions. (e) the transfer shall relate to LESSOR's entire interest as owner or lessor; (f) LESSOR's Assignee is a citizen of the United States under 49 U.S. Code ss.40102(a)(15) (such status to be determined without considering FAR ss.47.9 or any other provision that may restrict LESSEE's use or operation of the Aircraft), or shall use a voting powers trust or similar arrangement in order to hold an interest in the Aircraft such that the Aircraft can be registered in the U.S. (without considering FAR ss.47.9 or any other provision that may restrict LESSEE's use or operation of the Aircraft); (g) LESSOR's Assignee is a single Person and is either (i) a Permitted Institution, or (ii) or an affiliate of a Permitted Institution, if such affiliate's obligations under the Operative Documents are guaranteed by such Permitted Institution pursuant to a written guaranty, in form and substance reasonably satisfactory to LESSEE; and (h) LESSOR shall give written notice to LESSEE at least five (5) days before any such transfer, specifying the name and address of the proposed LESSOR's Assignee, and providing reasonably satisfactory evidence that the proposed LESSOR's Assignee meets the requirements described in Article 24.2.1(g)(i) or (ii). For a period of two (2) years after such sale or assignment and at LESSEE's cost, LESSEE will continue to name LESSOR as an additional insured under the Aviation and Airline General Third Party Liability Insurance required pursuant to Article 17 and Exhibit C. 24.2.2 The term "LESSOR" as used in this Lease means the lessor of the Aircraft at the time in question. In the event of the sale of the Aircraft and transfer of LESSOR's rights and obligations under this Lease, LESSOR's Assignee will become "LESSOR" of the Aircraft under this Lease and the transferring party (the prior "LESSOR") will be relieved of all liability to LESSEE under this Lease for obligations arising on and after the date the Aircraft is sold. LESSEE will acknowledge and accept LESSOR's Assignee as the new "LESSOR" under this Lease and will look solely to LESSOR's Assignee for the performance of all LESSOR obligations and covenants under this Lease arising on and after the Aircraft sale date. 24.3 LESSOR'S LENDER. Subject to LESSEE's rights pursuant to this Lease, LESSOR may at any time and without LESSEE's consent grant security interests over the Aircraft and assign the benefit of this Lease to a lender ("LESSOR'S LENDER") as security for LESSOR's obligations to LESSOR's Lender. Accordingly, if LESSOR's Lender requires, as a condition to providing financing, any nonsubstantive modification of this Lease, LESSEE agrees to enter into an agreement so modifying this Lease. 24.4 LESSEE COOPERATION. On request by LESSOR, LESSOR's Assignee or LESSOR's Lender, LESSEE will execute all such documents (such as a lease assignment agreement) as LESSOR, LESSOR's Assignee or LESSOR's Lender may reasonably require to confirm LESSEE's obligations under this Lease and obtain LESSEE's acknowledgment that to the best of LESSEE's knowledge, LESSOR is not in breach of this Lease. LESSEE will provide all other reasonable assistance and cooperation to LESSOR, LESSOR's Assignee and LESSOR's Lender in connection with any such sale or assignment or the perfection and maintenance of any such security interest, at LESSOR's cost, including making all necessary filings and registrations in the State of Registration and providing all opinions of counsel with respect to matters reasonably requested by LESSOR, LESSOR's Lender or LESSOR's Assignee. LESSOR will reimburse LESSEE for its reasonable out-of-pocket costs in reviewing documents required by LESSOR or LESSOR's Lender. 24.5 PROTECTIONS. 24.5.1 LESSOR will obtain for the benefit of LESSEE an acknowledgment from any LESSOR's Assignee or LESSOR's Lender that, so long as no Event of Default has occurred and is continuing hereunder, such Person will not interfere with LESSEE's quiet, peaceful use and enjoyment of the Aircraft. 24.5.2 Wherever the term "LESSOR" is used in this Lease in relation to any of the provisions relating to disclaimer, title and registration, indemnity and insurance contained in Articles 8, 13, 16 and 17, respectively, or with respect to Article 20.2.7, the term "LESSOR" will be deemed to include LESSOR's Assignee and LESSOR's Lender, if applicable. For avoidance of doubt, in the event of LESSOR's sale or financing of the Aircraft, the disclaimer and indemnity provisions contained in Articles 8 and 16 will continue to be applicable after the sale or assignment to International Lease Finance Corporation, as well as being applicable to LESSOR's Assignee and LESSOR's Lender. ARTICLE 25 DEFAULT OF LESSEE 25.1 LESSEE NOTICE TO LESSOR. LESSEE will promptly notify LESSOR if LESSEE becomes aware of the occurrence of any Default. 25.2 EVENTS OF DEFAULT. The occurrence of any of the following will constitute an Event of Default and material breach of this Lease by LESSEE: (a) LESSEE fails to take delivery of the Aircraft when obligated to do so under the terms of this Lease; (b) LESSEE fails to make a Rent or other payment due hereunder in the manner and by the date provided herein and fails to make such payment within five (5) Business Days after its receipt of notice that such payment is due; (c) LESSEE fails to obtain or maintain the insurance required by Article 17; (d) LESSEE fails to return the Aircraft to LESSOR on the Expiration Date in accordance with Article 23; (e) LESSEE fails to observe or perform any of its other obligations hereunder and fails to cure the same within thirty (30) days after written notice thereof to LESSEE; provided, that LESSEE will have up to a total of sixty (60) days to cure such failure so long as it uses diligent efforts to do so; (f) any representation or warranty of LESSEE herein proves to have been untrue in any material respect when made; provided, that, if the effect of such falsity is curable, LESSEE shall have thirty (30) days after LESSEE has knowledge that the representation or warranty is untrue; (g) the registration of the Aircraft is cancelled other than as a result of an act or omission of LESSOR; (h) LESSEE abandons the Aircraft or Engines; (i) LESSEE or an approved sublessee no longer has unencumbered control (other than Permitted Liens) or possession of the Aircraft or Engines, except as otherwise permitted by this Lease; (j) LESSEE temporarily or permanently discontinues business or (except as permitted by Article 20.2.4) sells or otherwise disposes of all or substantially all of its assets; (k) a material adverse change occurs in the financial condition of LESSEE; (l) LESSEE no longer possesses the licenses, certificates and permits required for the conduct of its business as a certificated air carrier in the U.S.; (m) LESSEE (i) suspends payment on its debts or other obligations generally, (ii) is unable to or admits its inability to pay its debts or other obligations generally as they fall due, (iii) is adjudicated or becomes bankrupt or insolvent or (iv) enters into any composition or other arrangement for the benefit of its creditors generally; (n) any proceedings, resolutions, filings or other steps are instituted with respect to LESSEE relating to the bankruptcy, liquidation, reorganization or protection from creditors of LESSEE or at least half of LESSEE's property. If instituted by LESSEE, the same will be an immediate Event of Default. If instituted by another Person, the same will be an Event of Default if not dismissed, remedied or relinquished within sixty (60) days; (o) any order, judgment or decree is entered by any court of competent jurisdiction appointing a receiver, trustee or liquidator of LESSEE or at least half of its property, or if at least half of LESSEE's property is to be sequestered. If instituted by or done with the consent of LESSEE, the same will be an immediate Event of Default. If instituted by another Person, the same will be an Event of Default if not dismissed, stayed, remedied or relinquished within sixty (60) days; PROVIDED, HOWEVER, that if such proceeding is stayed, then such proceeding will become an immediate Event of Default if such stay is removed or terminates and the proceeding is not dismissed, remedied or relinquished when such stay is removed or terminates. (p) any indebtedness for borrowed moneys or a guarantee or similar obligation owed by LESSEE with an unpaid balance of CONFIDENTIAL MATERIAL OMITTED is declared due before its stated maturity or LESSEE is in default of payment obligations CONFIDENTIAL MATERIAL OMITTED under any other purchase agreement, lease, conditional sale agreement or other agreement pursuant to which LESSEE has possession of any aircraft; (q) Eurocontrol has notified LESSOR that there are unpaid Eurocontrol charges due from LESSEE (unless such charges are being contested in good faith and by appropriate proceedings, an adequate bond has been provided and such proceedings do not involve any danger of the detention, interference with the use or operation, sale, forfeiture or loss of the Aircraft) and such charges remain outstanding for a period of thirty (30) days from the date of Eurocontrol's notice to LESSOR provided that such thirty (30) day grace period will not apply if there is a danger of detention, interference with the use or operation, sale, forfeiture or loss of the Aircraft; or (r) LESSEE is in default under any other lease or agreement between LESSEE and LESSOR and the same is not cured within its specified cure period. 25.3 LESSOR'S GENERAL RIGHTS. Upon the occurrence of any Event of Default, LESSOR may do all or any of the following at its option (in addition to such other rights and remedies which LESSOR may have by statute or otherwise but subject to any requirements of applicable Law): (a) terminate this Lease by giving written notice to LESSEE; (b) require that LESSEE immediately move the Aircraft to an airport or other location designated by LESSOR; (c) for LESSEE's account, do anything that may reasonably be required to cure any default and recover from LESSEE all reasonable costs, including legal fees and expenses incurred in doing so and Default Interest; (d) proceed as appropriate to enforce performance of this Lease and to recover any damages for the breach hereof, including the amounts specified in Article 25.5; (e) terminate this Lease by taking possession of the Aircraft or by serving notice requiring LESSEE to return the Aircraft to LESSOR at the location specified by LESSOR. If LESSOR takes possession of the Aircraft, it may enter upon LESSEE's premises where the Aircraft is located without liability. Upon repossession of the Aircraft, LESSOR will then be entitled to sell, lease or otherwise deal with the Aircraft as if this Lease had never been made. LESSOR will be entitled to the full benefit of its bargain with LESSEE; or (f) apply all or any portion of the Security Deposit and any other security deposits held by LESSOR pursuant to any other agreements between LESSOR and LESSEE to any amounts due. 25.4 DEREGISTRATION AND EXPORT OF AIRCRAFT. If an Event of Default has occurred and is continuing, LESSOR may take all steps necessary to deregister the Aircraft in and export the Aircraft from the State of Registration. 25.5 LESSEE LIABILITY FOR DAMAGES. If an Event of Default occurs, in addition to all other remedies available at law or in equity, LESSOR has the right to recover from LESSEE and LESSEE will pay LESSOR within two (2) Business Days after LESSOR's written demand, all of the following: (a) all amounts which are then due and unpaid hereunder and which become due prior to the earlier of LESSOR's recovery of possession of the Aircraft or LESSEE making an effective tender thereof; (b) any losses suffered by LESSOR because of LESSOR's inability to place the Aircraft on lease with another lessee or to otherwise utilize the Aircraft on financial terms as favorable to LESSOR as the terms hereof or, if LESSOR elects to dispose of the Aircraft, the funds arising from a sale or other disposition of the Aircraft are not as profitable to LESSOR as leasing the Aircraft in accordance with the terms hereof would have been (and LESSOR will be entitled to accelerate any and all Rent which would have been due from the date of LESSOR's recovery or repossession of the Aircraft through the Expiration Date); (c) all costs associated with LESSOR's exercise of its remedies hereunder, including but not limited to repossession costs, legal fees, Aircraft storage costs, Aircraft re-lease or sale costs and LESSOR's internal costs and expenses (including the cost of personnel time calculated based upon the compensation paid to the individuals involved on an annual basis and a general LESSOR overhead allocation); (d) any amount of principal, interest, fees or other sums paid or payable on account of funds borrowed in order to carry any unpaid amount; (e) any loss, premium, penalty or expense which may be incurred in repaying funds raised to finance the Aircraft or in unwinding any financial instrument relating in whole or in part to LESSOR's financing of the Aircraft; (f) any loss, cost, expense or liability sustained by LESSOR due to LESSEE's failure to redeliver the Aircraft in the condition required by this Lease; and (g) any other loss, damage, expense, cost or liability which LESSOR suffers or incurs as a result of the Event of Default and/or termination of this Lease, including an amount sufficient to fully compensate LESSOR for any loss of or damage to LESSOR's residual interest in the Aircraft caused by LESSEE's default. 25.6 WAIVER OF DEFAULT. By written notice to LESSEE, LESSOR may at its election waive any Default or Event of Default and its consequences and rescind and annul any prior notice of termination of this Lease. The respective rights of the parties will then be as they would have been had no Default or Event of Default occurred and no such notice been given. 25.7 PRESENT VALUE OF PAYMENTS. In calculating LESSOR's damages hereunder, upon an Event of Default all Rent and other amounts which would have been due hereunder during the Lease Term if an Event of Default had not occurred will be calculated on a present value basis using a discounting rate of six percent (6%) per annum discounted to the earlier of the date on which LESSOR obtains possession of the Aircraft or LESSEE makes an effective tender thereof. 25.8 USE OF "TERMINATION DATE". For avoidance of doubt, it is agreed that if this Lease terminates and the Aircraft is repossessed by LESSOR due to an Event of Default, then, notwithstanding the use of the term "Termination Date" in this Lease, the period of the Lease Term and the "Expiration Date" will be utilized in calculating the damages to which LESSOR is entitled pursuant to Article 25.5. For example, it is agreed and understood that LESSOR is entitled to receive from LESSEE the Rent and the benefit of LESSEE's insurance and maintenance of the Aircraft until expiration of the Lease Term. ARTICLE 26 NOTICES 26.1 MANNER OF SENDING NOTICES. Any notice, request or information required or permissible under this Lease will be in writing and in English. Notices will be delivered in person or sent by fax, letter (mailed airmail, certified and return receipt requested), or by expedited delivery addressed to the parties as set forth in Article 26.2. In the case of a fax, notice will be deemed received upon actual receipt (and the date of actual receipt will be deemed to be the date set forth on the confirmation of receipt produced by the sender's fax machine immediately after the fax is sent). In the case of a notice sent by expedited delivery, notice will be deemed received on the date of delivery set forth in the records of the Person which accomplished the delivery. If any notice is sent by more than one of the above listed methods, notice will be deemed received on the earliest possible date in accordance with the above provisions. 26.2 NOTICE INFORMATION. Notices will be sent: If to LESSOR: INTERNATIONAL LEASE FINANCE CORPORATION 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067, U.S.A. Attention: Legal Department Fax: 310-788-1990 Telephone: 310-788-1999 If to LESSEE: AMERICAN TRANS AIR, INC. 7337 West Washington Street Indianapolis International Airport Indianapolis, Indiana 46231 United States of America Attention: Ken Wolff Executive Vice President and Chief Financial Officer Fax: 317-240-7091 Telephone: 317-247-4000 or to such other places and numbers as either party directs in writing to the other party. ARTICLE 27 GOVERNING LAW AND JURISDICTION 27.1 CALIFORNIA LAW. This Lease is being delivered in the State of California and will in all respects be governed by and construed in accordance with the Laws of the State of California (notwithstanding the conflict Laws of the State of California). 27.2 NON-EXCLUSIVE JURISDICTION IN CALIFORNIA. As permitted by Section 410.40 of the California Code of Civil Procedure, the parties hereby irrevocably submit to the non-exclusive jurisdiction of the Federal District Court for the Central District of California and the State of California Superior or Municipal Court in Los Angeles, California. Nothing herein will prevent either party from bringing suit in any other appropriate jurisdiction. 27.3 SERVICE OF PROCESS. The parties hereby consent to the service of process (a) out of any of the courts referred to above, (b) in accordance with Section 415.40 of the California Code of Civil Procedure by mailing copies of the summons and complaint to the person to be served by certified or registered mail to the address set forth in Article 26.2, postage prepaid, return receipt requested or (c) in accordance with the Hague Convention, if applicable. 27.4 PREVAILING PARTY IN DISPUTE. If any legal action or other proceeding is brought in connection with or arises out of any provisions in this Lease, the prevailing party will be entitled to recover reasonable attorneys' fees and other costs incurred in such action or proceedings. The prevailing party will also, to the extent permissible by Law, be entitled to receive pre- and post-judgment Default Interest. 27.5 WAIVER. LESSEE AND LESSOR HEREBY WAIVE THE RIGHT TO A TRIAL BY JURY. LESSEE AND LESSOR HEREBY IRREVOCABLY WAIVE ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATED TO THIS LEASE BROUGHT IN ANY OF THE COURTS REFERRED TO IN ARTICLE 27.2, AND HEREBY FURTHER IRREVOCABLY WAIVE ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. ARTICLE 28 MISCELLANEOUS 28.1 PRESS RELEASES. The parties will give copies to one another, in advance if possible, of all news, articles and other releases provided to the public media regarding this Lease. 28.2 LESSOR PERFORMANCE FOR LESSEE. The exercise by LESSOR of its remedy of performing a LESSEE obligation hereunder is not a waiver of and will not relieve LESSEE from the performance of such obligation at any subsequent time or from the performance of any of its other obligations hereunder. 28.3 LESSOR'S PAYMENT OBLIGATIONS. Any obligation of LESSOR under this Lease to pay or release any amount to LESSEE is conditioned upon (a) all amounts then due and payable by LESSEE to LESSOR under this Lease or under any other agreement between LESSOR and LESSEE having been paid in full and (b) no Default or Event of Default having occurred and continuing hereunder at the time such payment or release of payment is payable to LESSEE. 28.4 APPLICATION OF PAYMENTS. Any amounts paid or recovered in respect of LESSEE liabilities hereunder may be applied to Rent, Default Interest, fees or any other amount due hereunder in such proportions, order and manner as LESSOR determines. 28.5 USURY LAWS. The parties intend to contract in strict compliance with the usury Laws of the State of California and, to the extent applicable, the U.S. Notwithstanding anything to the contrary in the Operative Documents, LESSEE will not be obligated to pay Default Interest or other interest in excess of the maximum non-usurious interest rate, as in effect from time to time, which may by applicable Law be charged, contracted for, reserved, received or collected by LESSOR in connection with the Operative Documents. During any period of time in which the then-applicable highest lawful rate is lower than the Default Interest rate, Default Interest will accrue and be payable at such highest lawful rate; however, if at later times such highest lawful rate is greater than the Default Interest rate, then LESSEE will pay Default Interest at the highest lawful rate until the Default Interest which is paid by LESSEE equals the amount of interest that would have been payable in accordance with the interest rate set forth in Article 5.5. 28.6 DELEGATION BY LESSOR. LESSOR may delegate to any Person(s) all or any of the rights, powers or discretion vested in it by this Lease and any such delegation may be made upon such terms and conditions as LESSOR in its absolute discretion thinks fit. 28.7 CONFIDENTIALITY. The Operative Documents and all non-public information obtained by either party about the other are confidential and are between LESSOR and LESSEE only and will not be disclosed by a party to third parties (other than to such party's auditors or legal advisors or as required in connection with any filings of this Lease in accordance with Article 13) without the prior written consent of the other party. If disclosure is required as a result of applicable Law, LESSEE and LESSOR will cooperate with one another to obtain confidential treatment as to the commercial terms and other material provisions of this Lease. 28.8 RIGHTS OF PARTIES. The rights of the parties hereunder are cumulative, not exclusive, may be exercised as often as each party considers appropriate and are in addition to its rights under general Law. The rights of one party against the other party are not capable of being waived or amended except by an express waiver or amendment in writing. Any failure to exercise or any delay in exercising any of such rights will not operate as a waiver or amendment of that or any other such right any defective or partial exercise of any such rights will not preclude any other or further exercise of that or any other such right and no act or course of conduct or negotiation on a party's part or on its behalf will in any way preclude such party from exercising any such right or constitute a suspension or any amendment of any such right. 28.9 FURTHER ASSURANCES. Each party agrees from time to time to do and perform such other and further acts and execute and deliver any and all such other instruments as may be required by Law, reasonably requested by the auditors of the other party or requested by the other party to establish, maintain or protect the rights and remedies of the requesting party or to carry out and effect the intent and purpose of this Lease. 28.10 USE OF WORD "INCLUDING". The term "INCLUDING" is used herein without limitation. 28.11 HEADINGS. All article and paragraph headings and captions are purely for convenience and will not affect the interpretation of this Lease. Any reference to a specific article, paragraph or section will be interpreted as a reference to such article, paragraph or section of this Lease. 28.12 INVALIDITY OF ANY PROVISION. If any of the provisions of this Lease become invalid, illegal or unenforceable in any respect under any Law, the validity, legality and enforceability of the remaining provisions will not in any way be affected or impaired. 28.13 NEGOTIATION. The terms of this Lease are agreed by LESSOR from its principal place of business in Los Angeles, California. 28.14 TIME IS OF THE ESSENCE. Time is of the essence in the performance of all obligations of the parties under this Lease and, consequently, all time limitations set forth in the provisions of this Lease will be strictly observed. 28.15 AMENDMENTS IN WRITING. The provisions of this Lease may only be amended or modified by a writing executed by LESSOR and LESSEE. 28.16 COUNTERPARTS. This Lease may be executed in any number of identical counterparts, each of which will be deemed to be an original, and all of which together will be deemed to be one and the same instrument when each party has signed and delivered one such counterpart to the other party. 28.17 DELIVERY OF DOCUMENTS BY FAX. Delivery of an executed counterpart of this Lease or of any other documents in connection with this Lease by fax will be deemed as effective as delivery of an originally executed counterpart. Any party delivering an executed counterpart of this Lease or other document by fax will also deliver an originally executed counterpart, but the failure of any party to deliver an originally executed counterpart of this Lease or such other document will not affect the validity or effectiveness of this Lease or such other document. 28.18 ENTIRE AGREEMENT. The Operative Documents constitute the entire agreement between the parties in relation to the leasing of the Aircraft by LESSOR to LESSEE and supersede all previous proposals, agreements and other written and oral communications in relation hereto. The parties acknowledge that there have been no representations, warranties, promises, guarantees or agreements, express or implied, except as set forth herein and in the other Operative Documents. IN WITNESS WHEREOF, LESSEE and LESSOR have caused this Lease to be executed by their respective officers as of September 5, 2000. INTERNATIONAL LEASE FINANCE AMERICAN TRANS AIR, INC. CORPORATION By: /s/ Grant Levy By: /s/ Kenneth K. Wolff Its: Vice President Its: Executive Vice President & CFO EXHIBIT A AIRCRAFT DESCRIPTION Aircraft Manufacturer and Model: Boeing 737-800 Specification: Seating Configuration: Manufacturer's Serial Number: 30675 Registration Mark: ____ Engine Manufacturer and Model: CFM56-7B-27 Engine Serial Numbers: _______ and ________ Engine Thrust Rating: 27,300 pounds Maximum Gross Takeoff Weight: 160,000 pounds EXHIBIT B AGENCY AGREEMENT (Limited Authority) Relating to Boeing 737-800 Aircraft THIS AGENCY AGREEMENT ("AGREEMENT") is made and entered into as of ____________________. BETWEEN: AMERICAN TRANS AIR, INC., a Indiana corporation whose address and principal place of business is at 7337 West Washington Street, Indianapolis International Airport, Indianapolis, Indiana 46231, United States of America ("AGENT") and INTERNATIONAL LEASE FINANCE CORPORATION, a California corporation, whose address and principal place of business is at 1999 Avenue of the Stars, 39th Floor, Los Angeles, California 90067, U.S.A. ("BUYER"). RECITAL The Boeing Company ("MANUFACTURER") and Buyer have entered into Purchase Agreement 2241, dated as of July 30, 1999 (such purchase agreement as may be amended in accordance with the provisions thereof is hereinafter referred to as the "PURCHASE AGREEMENT") under which Manufacturer has agreed to manufacture and sell and Buyer has agreed to purchase certain Boeing 737-800 aircraft. Buyer has agreed to lease one (1) of such aircraft bearing manufacturer's serial number 30675 (the "AIRCRAFT") to the Agent pursuant to an Aircraft Lease Agreement between Buyer and Agent dated as of September 5, 2000 (the "LEASE"). The Agent is engaged in business as a commercial air carrier and intends to lease the Aircraft from Buyer, and Buyer is desirous of utilizing the expertise of the Agent as Buyer's agent in all matters to which the Purchase Agreement relates with respect to the Aircraft except certain items as indicated below, and the Agent, as Buyer's agent, is willing to make such expertise available to Buyer. Accordingly, the parties agree as follows: 1. Buyer hereby appoints the Agent as Buyer's sole and exclusive agent with authority to perform the following, on behalf of Buyer, as the Agent may in its discretion determine to be necessary or desirable: (a) monitor Manufacturer's production, testing and delivery of the Aircraft in accordance with the Purchase Agreement and (b) do all such other things permitted by the Purchase Agreement related to the technical and engineering aspects of Manufacturer's production of the Aircraft, except Buyer limits Agent's authority to perform on behalf of Buyer on any defect that occurs during manufacture that is considered significant in nature by Buyer as measured by the criteria set forth below. Buyer retains the sole authority to perform on any defect meeting such criteria. (i) Deviations from the drawing configuration that could affect future modifications, maintenance, repair or overhaul of the Aircraft; (ii) Defects that are obvious appearance items; (iii) Rework that requires stress concurrence to satisfy Manufacturer's Material Review Board (MRB) requirements; (iv) A high quantity of defects normally considered minor on a singular basis; (v) Major rework requiring extensive repair or modification, E.G. replacement of ---- skin panels, extensive use of oversize fasteners, repair of damaged areas and significant structural modifications; (vi) Rework that affects the aerodynamic drag coefficient of the Aircraft; or (vii) Rework that involves areas known to be sensitive to Buyer. 2. Notwithstanding anything in the provisions of paragraph 1, nothing in this Agreement will confer authority upon or otherwise permit the Agent: (a) to exercise any power of termination under the Purchase Agreement or (b) to make any payments due from Buyer to Manufacturer or to receive on behalf of Buyer any payments due from Manufacturer under the Purchase Agreement, or to alter any of the terms and conditions of the Purchase Agreement or the Detail Specifications of the Aircraft. 3. Buyer will not revoke the appointment of and authority granted under this Agreement to the Agent unless a termination of the Purchase Agreement or Lease has occurred with respect to the Aircraft or the Agent has failed to perform a material obligation under this Agreement. Notice of any such revocation will be provided in accordance with the provisions of Article 14 of the Purchase Agreement and given to both Manufacturer and the Agent. 4. Manufacturer acknowledges the appointment of the Agent for the purpose set forth hereunder and Manufacturer and Buyer agree that due performance by Manufacturer or Agent of an obligation under the Purchase Agreement will constitute due satisfaction of such obligation by such party and Buyer agrees to be bound by the acts of the Agent. 5. Buyer and Agent agree to identify the technical organization and/or person(s) with the limited authority to act for Agent during production of the Aircraft. Buyer will, if possible, provide such identification to Manufacturer in writing, along with office space requirements for Agent, if required, prior to or at the time of Manufacturer's acknowledgment of this Agreement. 6. Nothing in this Agreement will subject Manufacturer to any liability under the Purchase Agreement which it would not otherwise be subject to, or modify Manufacturer's rights thereunder, or require Manufacturer to divest itself of title to or possession of Aircraft or any other property which is subject to the Purchase Agreement until payment therefor and delivery thereof in accordance with the Purchase Agreement. 7. None of the parties hereto will be entitled to assign to any third party any of their rights under this Agreement. 8. The Agent will not delegate to any third party the performance of the obligations imposed on it by this Agreement or appoint a sub-agent. 9. References to Manufacturer in this Agreement will include any wholly-owned subsidiary of Manufacturer to which Manufacturer assigns any of its rights and obligations under the Purchase Agreement pursuant to the terms and conditions thereof. 10. This Agreement will be governed by the laws of the State of California; however, the Purchase Agreement shall remain governed by the laws of the State of Washington. This Agreement has been executed by the parties hereto as of the day and year first above written. INTERNATIONAL LEASE FINANCE CORPORATION AMERICAN TRANS AIR, INC. By: By: Its: Its: The Boeing Company acknowledges the appointment of AMERICAN TRANS AIR, INC. as agent of International Lease Finance Corporation in connection with the above referenced Aircraft as set forth in this Agreement. THE BOEING COMPANY By: Its: EXHIBIT C CERTIFICATE OF INSURANCE [Refer to Aircraft Lease Agreement dated as of September 5, 2000 between LESSEE and LESSOR (the "Lease"). If applicable, insurance certificates from both the insurers and reinsurers will be provided. If there is a LESSOR's Lender, include references to it where appropriate after references to LESSOR.] To: INTERNATIONAL LEASE FINANCE CORPORATION ("LESSOR") ------ 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States Re: AMERICAN TRANS AIR, INC. ("LESSEE") Boeing 737-800 Manufacturer's Serial No.: 30675 Registration Mark: ____ (the "AIRCRAFT") The following security has subscribed to the insurance and/or reinsurance policies: [LIST COMPANIES & PERCENTAGES] THIS IS TO CERTIFY THAT, as Insurance Brokers, we have effected Fleet Insurance in respect of aircraft owned or operated by LESSEE (including the Aircraft), and that insurance in respect of the Aircraft is as specified below. AIRCRAFT HULL ALL RISKS COVERING: All risks of physical loss or damage to the Aircraft from any cause (subject only to the exclusions as specified below), for an Agreed Value of Aircraft in the amount of [list amount calculated in accordance with Article 18.1] DEDUCTIBLES: (CONFIDENTIAL MATERIAL OMITTED) each and every loss (or such lesser amount as generally applicable to the rest of LESSEE's 737-800 fleet). Not applicable to Total Loss/Constructive Total Loss or Arranged Total Loss GEOGRAPHICAL COVERAGE: Worldwide [subject to customary exclusions] AVIATION AND AIRLINE GENERAL THIRD PARTY LIABILITY COVERING: Aircraft Third Party, Passenger, Baggage, Cargo and Mail Liability and Airline General Third Party Liability (including Premises, Hangarkeepers and Products Liability) for combined single limit of not less than (CONFIDENTIAL MATERIAL OMITTED) (or such higher amount as LESSEE may carry generally on other 737-800 aircraft in its fleet) any one accident/occurrence (but in the aggregate in relation to Products Liability), extended to cover LESSEE's liability under the Lease to the extent of the risks covered by the policy including war and allied perils under Extended Coverage Endorsement as per AVN 52 subject only to exclusions as specified below GEOGRAPHICAL LIMITS: Worldwide [subject to customary exclusions] HULL WAR AND ALLIED PERILS COVERING: Hull War Risks as per LSW555.B, but including (a) confiscation or requisition (including by State of Registration and state where airline is domiciled), (b) hijacking or other unlawful seizure or wrongful exercise of control of the Aircraft or crew in flight (including any attempt at such seizure or control) and including "All Risks" Continuation Clause and Extortion Risks (including expenses) and covering claims excluded from Hull All Risks Policy while Aircraft outside Assured's control by reason of perils insured under this policy, for an Agreed Value of Aircraft in the amount of [list amount calculated in accordance with Article 18.1] DEDUCTIBLE: No deductible GEOGRAPHICAL LIMITS: Worldwide AIRCRAFT SPARES ALL RISKS INSURANCE COVERING: All risks of physical loss or damage to Aircraft Parts or spares or Engines at all times when removed from the Aircraft from whatever cause, subject only to the exclusions specified below, including the risks set down in AVN 48B other than paragraphs (a) and (b) thereof (but including paragraph (a) in respect of transit risks) for limits of not less than: CONFIDENTIAL MATERIAL OMITTED and covering: With respect to an Engine, an agreed value (CONFIDENTIAL MATERIAL OMITTED) or, with LESSOR's written concurrence, replacement cost With respect to Parts, replacement cost DEDUCTIBLE: (CONFIDENTIAL MATERIAL OMITTED) GEOGRAPHICAL COVERAGE: Worldwide INSURANCE REQUIRED BY MANUFACTURER LESSEE will carry the insurance required by Manufacturer in connection with LESSOR's assignment of Manufacturer's warranties and product support to LESSEE CONTRACTUAL INDEMNITY To the extent of the risks covered by the policies, LESSEE has insurance coverage for the indemnities agreed to by LESSEE pursuant to Article 16 of the Lease, subject to AVN67B or equivalent PERIOD OF COVERAGE (ALL POLICIES) From the Delivery Date of Aircraft to [END OF POLICY PERIOD] It is further certified that LESSOR has an interest in respect of the Aircraft under the Lease. Accordingly, with respect to losses occurring during the period from the Effective Date until the expiry of the Insurance or until the expiry or agreed termination of the Lease or until the obligations under the Lease are terminated by any action of the Insured or LESSOR and in consideration of the Additional Premium it is confirmed that the Insurance afforded by the Policy is in full force and effect and it is further agreed that the following provisions are specifically endorsed to the Policy. 1. UNDER THE HULL (ALL RISKS AND HULL WAR AND ALLIED RISKS) AND AIRCRAFT SPARES INSURANCES (a) In respect of any claim on the Aircraft that becomes payable on the basis of a Total Loss, payment of any settlement will be made to, or to the order of LESSOR as sole loss payee, up to the Agreed Value. With respect to repairable damage to an Aircraft or Engine, LESSOR will receive all insurance proceeds in excess of CONFIDENTIAL MATERIAL OMITTED provided that upon receipt by the insurance broker of written notice of a material default on the part of LESSEE (and until notice that it has been cured), all insurance proceeds which otherwise would be payable to LESSEE will be made directly to LESSOR. In respect of any other claim, payment of any settlement (net of any relevant policy deductible) will be made with such party(ies) as may be necessary to repair the Aircraft unless otherwise agreed after consultation between the Insurers and the Insured and, where necessary under the terms of the Lease, LESSOR. Such payments will only be made provided they are in compliance with all applicable laws and regulations. (b) Insurers agree on a 50/50 settlement in terms of AVS 103. (c) Insurers have no right to replace the Aircraft on a Total Loss (arranged, constructive or otherwise). (d) Insurers confirm that under the insurance policies, if the Insured installs an engine owned by a third party on the Aircraft, either (i) the hull insurance will automatically increase to such higher amount as is necessary in order to satisfy both LESSOR's requirement to receive the Agreed Value in the event of a Total Loss, Constructive Total Loss or Arranged Total Loss and the amount required by the third party engine owner, or (ii) separate additional insurance on such engine will attach in order to satisfy separately the requirements of the Insured to such third party engine owner. 2. UNDER THE LEGAL LIABILITY INSURANCE (a) Subject to the provisions of this Endorsement, the Insurance will operate in all respects as if a separate Policy had been issued covering each party insured hereunder, but this provision will not operate to include any claim arising howsoever in respect of loss or damage to the Aircraft insured under the Hull or Spares Insurance of the Insured. Notwithstanding the foregoing the total liability of Insurers in respect of any and all Insureds will not exceed the limits of liability stated in the Policy. (b) The Insurance provided hereunder will be primary and without right of contribution from any other insurance which may be available to LESSOR. 3. UNDER ALL INSURANCES (a) LESSOR, its successors and assigns, and (with respect to Aviation and Airline General Third Party Liability only) its directors, officers and employees for their respective rights and interests, are included as Additional Insureds. (b) The cover afforded to LESSOR by the Policy in accordance with this Endorsement will 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 Policy. (c) LESSOR will have no responsibility for premium and insurers will waive any right of set-off or counterclaim against LESSOR except in respect of outstanding premium in respect of the Aircraft, provided that Insurer may only set-off for premiums against the proceeds of the hull insurance for outstanding premiums in connection with hull all risks and hull war and allied perils insurance. (d) Upon payment of any loss or claim to or on behalf of LESSOR, Insurers will to the extent and in respect of such payment be thereupon subrogated to all legal and equitable rights of LESSOR indemnified hereby (but not against LESSOR). Insurers will not exercise such rights without the consent of those indemnified, such consent not to be unreasonably withheld. At the expense of Insurers LESSOR will do all things reasonably necessary to assist the Insurers to exercise said rights. (e) Except in respect of any provision for Cancellation or Automatic Termination specified in the Policy or any endorsement thereof, cover provided by this Endorsement may only be cancelled or materially altered in a manner adverse to LESSOR by the giving of not less than thirty (30) days notice in writing to LESSOR. Notice will be deemed to commence from the date such notice is given by the Insurers. Such notice will NOT, however, be given at normal expiry date of the Policy or any endorsement. 4. EXCEPT AS SPECIFICALLY VARIED OR PROVIDED BY THE TERMS OF THIS CERTIFICATE (a) LESSOR IS COVERED BY THE POLICY SUBJECT TO ALL TERMS, CONDITIONS, LIMITATIONS,WARRANTIES, EXCLUSIONS AND CANCELLATION PROVISIONS THEREOF. (b) THE POLICY WILL NOT BE VARIED BY ANY PROVISIONS CONTAINED IN THE LEASE WHICH PURPORT TO SERVE AS AN ENDORSEMENT OR AMENDMENT TO THE POLICY. SUBJECT (save as specifically stated in this Certificate) to policy terms, conditions, limitations and exclusions. Yours faithfully, [BROKERS] EXHIBIT D BROKERS' LETTER OF UNDERTAKING To: INTERNATIONAL LEASE FINANCE CORPORATION 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States Date: Our Ref: Re: AMERICAN TRANS AIR, INC. ("LESSEE") ------ Boeing 737-800 Manufacturer's Serial No.: ____ Registration Mark: ____ (the "AIRCRAFT") Dear Sirs: We confirm that insurance has been effected for the account of [LESSEE] (the "OPERATOR") covering all aircraft owned or operated by them, including the above-referenced aircraft (the "Aircraft"). [Also confirm, if applicable, the amount of any hull all risks or hull war and allied perils on the Aircraft which LESSEE is carrying in excess of the Agreed Value (which excess insurance would be payable to LESSEE). Such excess insurance may not exceed ten percent (10%) of the Agreed Value.] Pursuant to instructions received from the Operator and in consideration of your approving the arrangement of the Operator's "Fleet Policy" (under which the above-referenced Aircraft is insured) through the intermediary of ourselves as Brokers in connection with the insurance (the "INSURANCE") mentioned in our Certificate of Insurance (Reference No. [ ] dated [ ] and attached hereto), we undertake as follows: 1. In relation to the Hull and War Risks Insurance to hold to your order the insurance Slips or Contracts and any Policies which may be issued or any policies substituted (with your consent) therefor (but only insofar as the same relate to the Aircraft only) and the benefit of the Hull and War Risks Insurance thereunder, but subject to our requirements to operate the Fleet Policy insofar as it relates to any other aircraft insured thereunder. 2. To advise you of any of the following: (a) If any insurer cancels or gives notice of cancellation of any of the Insurance at least thirty (30) days (or such lesser period as may be available in the case of War and Allied Perils) before such cancellation is to take effect in respect of the Aircraft. (b) Of any act or omission or of any event (including non-payment of premium) of which we have knowledge or are notified and which might invalidate or render unenforceable in whole or in part any of the Insurance, insofar as the same relate to the Aircraft. (c) If we do not receive instructions to renew all or any of the Insurance at least thirty (30) days prior to their expiration. (d) If any of the Insurance are not renewed on the same terms (save as to premium and period of cover and as you might otherwise have notified us to be acceptable to you) seven (7) days prior to expiry thereof. The above undertakings are given subject to our continuing appointment for the time being as Insurance Brokers to the Operator. We also undertake to advise you if we cease to be Insurance Brokers to the Operator. Yours faithfully, EXHIBIT E ESTOPPEL AND ACCEPTANCE CERTIFICATE AMERICAN TRANS AIR, INC. ("LESSEE"), a corporation organized under the laws of Indiana does hereby represent, acknowledge, warrant and agree as follows: 1. LESSEE and INTERNATIONAL LEASE FINANCE CORPORATION, as LESSOR, have entered into an Aircraft Lease Agreement dated as of September 5, 2000 (hereinafter referred to as the "LEASE"). Words used herein with capital letters and not otherwise defined will have the meanings set forth in the Lease. 2. LESSEE has this ____ day of __________, ____ (Time: __________) at ____________________ received from LESSOR possession of: (a) One (1) Boeing 737-800 aircraft bearing Manufacturer's serial number ____ and U.S. registration mark ____, together with two (2) CFM56-7B-27 engines bearing manufacturer's serial numbers _______ and ________ (each of which has 750 or more rated take-off horsepower), all in airworthy condition. (b) All Aircraft Documentation, including the usual and customary manuals, logbooks, flight records and historical information regarding the Aircraft, Engines and Parts. 3. All of the foregoing has been delivered and accepted on the date set forth above to LESSEE's full satisfaction and pursuant to the terms and provisions of the Lease. 4. The Agreed Value of the Aircraft is US$_______________. 5. The amount of fuel on board at Delivery is __________ (circle one) pounds/kilos (________ gallons). 6. The Aircraft, Engines, Parts and Aircraft Documentation as described in the Lease have been fully examined by LESSEE and have been received in a condition fully satisfactory to LESSEE and in full conformity with the Lease in every respect. 7. The Lease is in full force and effect, LESSEE has no claims, offsets, deductions or set-off of any kind or nature in connection with the Lease, except for any claims against LESSOR set forth on the attached List of Discrepancies. 8. LESSOR's Lender may rely upon all of the foregoing in granting substantial financial accommodations to LESSOR and LESSEE understands and agrees that any funds being advanced by LESSOR's Lender will be made in reliance upon the foregoing. 9. LESSEE has obtained all required permits, authorizations, licenses and fees of the State of Registration or any Government Entity thereof necessary in order for LESSEE to operate the Aircraft as permitted by the terms of the Lease. Dated on the date set forth above AMERICAN TRANS AIR, INC. By: Title: ATTACHMENTS: 1. List of Aircraft Documentation 2. List of Loose Equipment 3. List of Discrepancies ATTACHMENT 1 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE LIST OF AIRCRAFT DOCUMENTATION MANUALS 1. FAA Approved Flight Manual 2. Airplane Flight Operation Manual 3. Aircraft Recover Manual 4. Quick Reference Handbook (QRH) 5. Weight and Balance Manual 6. Aircraft Fueling Manual 7. Aircraft Maintenance Manual (MM) 8. Aircraft Maintenance Manual Supplement 9. Ramp Maintenance Manual (RMM) 10. Cargo Loading Manual 11. Fault Reporting Manual (FRM) 12. Fault Isolation Manual (FIM) 13. Illustrated Parts Catalog (IPC) 14. Life Limited Parts Manual 15. Structural Repair Manual (SRM) 16. Master Minimum Equipment List 17. Wiring Diagram Manual (WD) 18. Wiring Practices Manual 19. System Schematics Manual 20. B.I.T.E. Manual 21. Non-Destructive Test Manual 22. Corrosion Prevention Manual 23. Component Maintenance Manual 24. APU Log Book 25. Engine Maintenance Manual 26. Engine Log Book 27. Engine Illustrated Parts Catalog 28. Engine Data Submittal Book 29. Engine Overhaul Manual 30. Power Plant Build-up Manual AIRCRAFT RECORDS AND HISTORICAL DOCUMENTS 1. Copies of original Certificates delivered by Boeing: a. Airworthiness Certificate for Export b. Radio installation conformity certificate c. Noise limitation certificate 2. Copies of original Documents delivered by Boeing: a. Airworthiness Directive Compliance list b. Aircraft inspection report c. Aircraft Readiness Log d. Weighing report 3. Copies of current Certificates: a. Airworthiness Certificate b. Noise limitation c. Radio license d. Interior material burn certificates e. Certificate of Export f. Aircraft deregistration confirmation e. Aircraft Registration 4. Letters signed and stamped by Quality Assurance: a. Current aircraft hours and cycles b. Current engines hours and cycles c. Accident and Incident report d. Summary of Maintenance Program e. AD compliance during the lease term 5. Aircraft log books and Aircraft readiness log. 6. Aircraft Hard Time (HT) inspection status. 7. One year forecast for HT inspection. 8. Aircraft Modification status, including service bulletins. 9. Last weighing report prior to redelivery. 10. AD compliance report with original signoffs. 11. Routine and non-routine job cards of the last "C" and "D" checks. 12. Past year pilots and maintenance discrepancies. 13. Major and Minor structural repairs with applicable approvals. 14. Compass Swing report of the last three years. 15. Cabin Configuration drawing (LOPA). 16. Emergency equipment location drawing. 17. Last X-RAYs ENGINES RECORDS 1. Last test cell run reports. 2. Life Limited Parts status and traceability. 3. AD compliance report with original signoffs. 4. Engine Modification/service bulletin/inspection report and applicableforms. 5. Last heavy maintenance records for each module. 6. Engine log books. 7. Engine removal history. 8. Past year trend monitoring reports. 9. Historical borescope reports. 10. Engine component report. APU RECORDS 1. APU status (FH, FC, limits). 2. Life limited Part status and traceability. 3. AD compliance with original signoffs. 4. Modification status. 5. Last heavy maintenance documents. 6. APU log books. 7. Last test cell report. COMPONENT RECORDS 1. Aircraft component inventory. 2. Hard time component inventory. 3. All serviceable tags. 4. Landing Gear status with last overhaul and life limited Part status. 5. AD compliance with original signoffs. 6. Modification status. ATTACHMENT 2 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE LIST OF LOOSE EQUIPMENT ATTACHMENT 3 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE LIST OF DISCREPANCIES EXHIBIT F OPINION OF COUNSEL TO BE GIVEN BY INDEPENDENT OUTSIDE COUNSEL OF LESSEE OR OTHER LAWYERS ACCEPTABLE TO LESSOR To: International Lease Finance Corporation 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States Gentlemen: This opinion is furnished to you pursuant to Article 7 of the Aircraft Lease Agreement dated as of September 5, 2000 (the "LEASE") between AMERICAN TRANS AIR, INC. ("LESSEE") and INTERNATIONAL LEASE FINANCE CORPORATION ("LESSOR"). Defined terms in this opinion are used herein as defined in the Lease. I have acted as counsel for LESSEE in connection with the preparation, execution and delivery of the Lease. In that connection I have examined: (a) The Lease and Estoppel and Acceptance Certificate; (b) The charter of LESSEE and all amendments thereto (the "CHARTER"); and (c) Such other documents, agreements and instruments, and such treaties, laws, rules, regulations, decrees and the like, as I have deemed necessary as a basis for the opinions hereinafter expressed. [ (d) All of the agreements and any amendments thereto between LESSEE and all other lessors and lenders of LESSEE covering other aircraft operated by LESSEE on which the Engines can be installed.] Based upon the foregoing and having regard for legal considerations which I deem relevant, I am of the opinion that: 1. LESSEE is a corporation duly incorporated, validly existing and in good standing under the Laws of Indiana. It has the corporate power and authority to carry on its business as presently conducted and to perform its obligations under the Lease. 2. No authorization, approval, consent, license or order of, or registration with, or the giving of notice to the Aviation Authority or any other regulatory body or authority is required for the valid authorization, execution, delivery and performance by LESSEE of the Lease. 3. The Lease and the Estoppel and Acceptance Certificate have each been duly authorized, executed and delivered by LESSEE. Each such instrument is a valid, enforceable and binding obligation of LESSEE except as enforceability may be limited by bankruptcy, insolvency, reorganization or other Laws of general application affecting the enforcement of creditors' rights. 4. The execution and delivery of the Lease and the Estoppel and Acceptance Certificate, the consummation by LESSEE of the transactions contemplated therein and compliance by LESSEE with the terms and provisions thereof do not contravene any Law applicable to LESSEE, or result in any breach of or constitute any default under or result in the creation of any lien, charge or encumbrance upon any property of LESSEE, under any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which LESSEE is a party or by which LESSEE or its properties or assets is bound. 5. Except for any filing or recording that may be required with the [NAME OF AIRCRAFT REGISTER] and except for [DESCRIBE SUCH OTHER FILINGS OR RECORDINGS], no filing or recording of any instrument or document (including the filing of any financial statement) is necessary under the laws of the U.S. in order for the Lease to constitute a valid and perfected lease of record relating to the Aircraft, it being understood that such counsel expresses no opinion as to the nature of LESSOR's title to the Aircraft on the Delivery Date. 6. LESSEE holds all licenses, certificates and permits from applicable governmental authorities in the U.S. necessary for the conduct of its business as a certificated air carrier and performance of its obligations under the Lease. 7. To my knowledge, there are no suits or proceedings pending or threatened against LESSEE before any Government Entity against or affecting LESSEE which are reasonably likely to be adversely determined and, if adversely determined, would have a material adverse effect on the financial condition or business of LESSEE or its ability to perform under the Lease, except as described in the filings provided to LESSOR pursuant to Article 22. 8. The obligations of LESSEE under the Lease are direct, general and unconditional obligations of LESSEE and rank or will rank at least PARI PASSU with all other present and future unsecured and unsubordinated obligations (including contingent obligations) of LESSEE, with the exception of such obligations as are mandatorily preferred by law. 9. LESSEE, under the laws of the U.S. or of any other jurisdiction affecting LESSEE, is subject to private commercial law and suit. Neither LESSEE nor its properties or assets have the right of immunity from suit or execution on the grounds of sovereignty in such jurisdictions and the performance by LESSEE of its obligations under the Lease constitute commercial acts done for commercial purposes. 10. There is no applicable usury or interest limitation Law in Indiana which may restrict the recovery of payments in accordance with the Lease. 11. LESSOR will not violate any Law or become liable to any tax in Indiana or the U.S. by reason of entering into or performing its obligations under the Lease and it is not necessary to establish a place of business in Indiana in order to enforce any provisions of the Lease. Very truly yours, EXHIBIT G ASSIGNMENT OF RIGHTS (AIRFRAME) [DATE] Boeing Commercial Airplane Group P.O. Box 3707 Seattle, Washington 98124-2207 Attention: Vice President-Contracts Mail Code 21-34 Subject: Full Assignment of Rights and Obligations - International Lease Finance Corporation as Lessor and AMERICAN TRANS AIR, INC. as Lessee of Model Boeing 737-800 aircraft bearing manufacturer's serial number 30675 Ladies and Gentlemen: In connection with International Lease Finance Corporation's lease to AMERICAN TRANS AIR, INC. ("Lessee") of a Boeing aircraft (more fully described below), reference is made to the following documents: A. Purchase Agreement 2241, dated as of July 30, 1999, between The Boeing Company ("Boeing") and International Lease Finance Corporation ("ILFC") (the "Boeing Agreement") under which ILFC purchased a certain Boeing Model 737-800 aircraft bearing manufacturer's serial number 30675 (the "Aircraft"). B. Aircraft Lease Agreement (the "Lease") for the Aircraft dated as of September 5, 2000 between ILFC and Lessee. Capitalized terms used herein without definition will have the same meaning as in the Boeing Agreement. In connection with ILFC's lease of the Aircraft under the Lease, ILFC is transferring to Lessee certain rights of ILFC related to the Aircraft under the Boeing Agreement. To accomplish this transfer of rights, as authorized by the provisions of the Boeing Agreement: 1. Lessee acknowledges that it has received copies of the following specific provisions of the Boeing Agreement applicable to the Aircraft and agrees to be bound by and comply with all the terms, conditions, and limitations contained in such provisions, including without limitation the disclaimer and release, exclusion of liabilities, indemnity and insurance provisions thereof: Boeing Agreement Article 6 - Excusable Delay 6.1 General Article 10 - Assignment, Resale or Lease 10.1 Assignment 10.3 Sale by Buyer after Delivery 10.4 Lease by Buyer after Delivery 10.5 No Increase in Boeing Liability 10.6 Exculpatory or Indemnity Clause in Post-delivery Sale or Lease Article 12 - Product Assurance; Disclaimer and Release; Exclusion of Liabilities; Customer Support; Indemnification and Insurance (in its entirety) Article 14 - Contractual Notices and Requests Article 15 - Miscellaneous 15.4 Governing Law Exhibit B - Product Assurance Document Part A Boeing Warrant Part B Warranty Repairs and Modifications by Buyer Part C Boeing Service Life Policy Part D Boeing Indemnity Against Patent Infringement Part D-1 Boeing Indemnity Against Copyright Infringement Part E Supplier Warranties and Patent Indemnities Part G Boeing Interface Commitment Part H General Exhibit C-1 - Customer Support Document Part B Boeing Customer Support Services Part D Technical Data and Documents Part E Buyer's Indemnification of Boeing and Insurance Part F Alleviation or Cessation of Performance Exhibit E - Buyer Furnished Equipment Provisions Document Paragraph 8 Indemnification of Boeing Paragraph 9 Patent Indemnity Paragraph 10 Definitions Letter Agreement No. 1830-3 - Seller Purchased Equipment Paragraph 6 Buyer's Indemnification of Boeing 2. Lessee recognizes that Boeing's obligation to provide training, support and services to Lessee pursuant to Exhibit C of the Boeing Agreement is conditioned on the receipt by Boeing of evidence of compliance by Lessee with the insurance requirements set forth in paragraph 2 of Part E of Exhibit C or in such other form as may be satisfactory to Boeing, prior to the commencement of such training, support and services. 3. ILFC reserves to itself all rights, claims and interests it may have under the Boeing Agreement not expressly assigned to Lessee hereunder. ILFC will remain responsible to Boeing for any amounts with respect to the Aircraft owed to Boeing under the Boeing Agreement prior to the effective date of this letter, including any amounts owed by ILFC to Boeing under the specific articles and paragraphs of the Boeing Agreement referenced in paragraph 1 above based upon events or incidents relating to the Aircraft occurring prior to the effective date of this letter. 4. ILFC hereby assigns to Lessee the sole authority to exercise in Lessee's name all rights and powers of ILFC with respect to the Aircraft under the specific portions of the Boeing Agreement referenced in paragraph 1 above. Such authorization will continue until Boeing receives from ILFC written notice that the Lease has been cancelled or terminated, addressed to Boeing's Vice President, Contracts, P.O. Box 3707, MC 21-34, Seattle, Washington 98124-2207, U.S.A. Until Boeing receives such notice, Boeing will be entitled to deal exclusively with Lessee with respect to the Aircraft under the specific portions of the Boeing Agreement referenced in paragraph 1 above and, with respect to the rights, powers, duties or obligations under such portions of the Boeing Agreement, any and all actions taken by Lessee or agreements entered into by Lessee during the period prior to Boeing's receipt of such notice will be final and binding on ILFC. 5. Lessee hereby accepts the authorization set forth in paragraph 4 above and agrees to be bound by and to comply with all the terms, conditions and limitations of the portion of the Boeing Agreement referenced in paragraph 1 above. 6. This Assignment may be signed by the parties hereto in separate counterparts, each of which when executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. 7. This Assignment shall be governed by, and construed in accordance with,the laws of the State of Washington, including all matters of construction, validity and performance. We request that Boeing, upon receipt of this letter, acknowledge receipt thereof and the transfer of rights set forth above by signing the acknowledgment and forwarding one copy of this letter to each of the undersigned. IN WITNESS WHEREOF, the parties hereto have caused this Assignment Agreement to be duly executed as of the dates written below. INTERNATIONAL LEASE FINANCE AMERICAN TRANS AIR, INC., as Lessee CORPORATION, as Lessor and Buyer Grant Levy By: /s/ Grant Levy By: Its: Its: BOEING ACKNOWLEDGMENT AND CONSENT TO ASSIGNMENT Receipt of the above letter is acknowledged and transfer of certain rights as described above under the Boeing Agreement is confirmed, effective as of this date. THE BOEING COMPANY By: Its: Date: EXHIBIT H ASSIGNMENT OF RIGHTS (ENGINES) [DATE] CFM INTERNATIONAL, INC. 1 Neumann Way, F-17 Cincinnati, Ohio 45215 Attention: Commercial Contracts - Warranty Assignment Administrator Dear Warranty Assignment Administrator: Reference is hereby made to that Consent to Assignment made as of April 29, 1988 (the "CONSENT TO ASSIGNMENT"), by and between CFM INTERNATIONAL, INC. ("CFMI") and INTERNATIONAL LEASE FINANCE CORPORATION ("ILFC"). Terms defined in the Consent to Assignment are used herein with the same meaning as in the Consent to Assignment. As of ________________ ___, ______, ILFC has assigned all of its rights and interest in, to and under the Engine Warranties to AMERICAN TRANS AIR, INC. ("ASSIGNEE") in connection with its lease to Assignee of a Boeing 737-800 aircraft (the "AIRCRAFT") together with two (2) CFMI Model CFM56-7B-27 engines bearing Manufacturer's Serial Numbers _______ and ________ (the "ENGINES") as of the date each such Engine was delivered to Assignee. Such assignment shall be effective from such date until ILFC notifies CFMI that the Lease has been cancelled or terminated. The Assignee has accepted such assignment and all the limitations and liabilities pertaining to the Engine Warranties as stated in the provisions of the GTA listed in Schedule 2 to the Consent to Assignment. A copy of the aforesaid assignment is attached hereto. Very truly yours, INTERNATIONAL LEASE FINANCE CORPORATION By: Title: cc: Ruben M. Cabrera Director, Commercial Contracts ASSIGNMENT OF WARRANTIES [DATE] In consideration of AMERICAN TRANS AIR, INC. ("LESSEE") leasing from International Lease Finance Corporation ("ILFC") one (1) Boeing 737-800 aircraft together with two (2) CFMI Model CFM56-7B-27 engines bearing manufacturer's serial numbers _______ and ________, it is hereby agreed as follows: 1. ILFC hereby assigns and transfers to Lessee all of ILFC's respective rights and interest in and to and in and under the Engine Warranties set forth in and subject to the limitations and liabilities set forth in Exhibit B Warranty, Section X (the "ENGINE WARRANTIES") of CFM International, Inc. - ILFC General Terms Agreement No. 6-3987 dated 22 June 1984 (the "GTA") during the term of such leases so long as Lessee is not in default thereunder. 2. Lessee hereby accepts such assignment including all the limitations and liabilities pertaining to said Engine Warranties as stated in the provisions of Exhibit B Warranty, Section X of the GTA. 3. This Agreement shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors and assigns to the extent permitted by the GTA and hereunder. 4. This Agreement shall be governed by and construed in accordance with the laws of the State of California. 5. This Agreement may be executed in any number of counterparts, each of which when executed and delivered is an original but all of which taken together constitute one and the same instrument and any party may execute this Agreement by signing any counterpart. IN WITNESS WHEREOF, the authorized representative of the parties hereto have executed this Agreement as of the day and year first above written. For and on behalf of For and on behalf of INTERNATIONAL LEASE FINANCE AMERICAN TRANS AIR, INC. CORPORATION By: By: Its: Its: EXHIBIT I RETURN ACCEPTANCE RECEIPT Date: _________________ ___, ____ 1. AMERICAN TRANS AIR, INC., as LESSEE, and INTERNATIONAL LEASE FINANCE CORPORATION, as LESSOR, have entered into an Aircraft Lease Agreement dated as of September 5, 2000 (the "LEASE"). Words used herein with capital letters and not otherwise defined will have the meanings set forth in the Lease. 2. LESSOR has this ____ day of __________, ____ (Time: __________) at ____________________ received from LESSEE possession of: (a) One (1) Boeing 737-800 Aircraft bearing Manufacturer's serial number ____, together with two (2) CFM56-7B-27 engines bearing manufacturer's serial numbers _______ and ________, and all Parts attached thereto and thereon in an airworthy condition and (b) All Aircraft Documentation, including the usual and customary manuals, logbooks, flight records and historical information regarding the Aircraft, Engines and Parts, as listed in the Document Receipt attached hereto. 3. The Airframe, Engines and Parts had the following hours/cycles at return: (a) AIRFRAME: Total hours: _______________ Total Landings: _______________ (b) ENGINES: POSITION SERIAL NO. TOTAL HOURS TOTAL CYCLES HRS/CYCLES SINCE LAST SHOP VISIT Time Remaining to Next LIFE LIMITED PART REMOVAL PART NAME HOURS CYCLES MSN MSN (c) APU: MSN __________ Total hours: __________ ______ hours/ ______ cycles since last Overhaul ______ hours/ ______ cycles remaining on APU life-limited Parts (d) LANDING GEARS: POSITION SERIAL NO. Total Hrs/Cycles since Date of last HRS/CYCLES LAST OVERHAUL OVERHAUL Nose Right Main Left Main (e) FUEL ON BOARD AT RETURN: ______ (circle one) pounds/kilos (______ gallons) 4. Other technical information regarding the Aircraft and its components are correctly set forth on the Technical Evaluation Report (in the form of Exhibit L) attached hereto. 5. The above specified aircraft, engines and documentation are hereby accepted by LESSOR subject to correction by LESSEE (or procurement by LESSEE at LESSEE's cost) as soon as reasonably possible of the discrepancies specified in Attachment 2 hereto. 6. Subject to the following paragraph, the leasing of the Aircraft by LESSOR to LESSEE pursuant to the Lease is hereby terminated without prejudice to LESSEE's continuing obligations under the Lease including, without limitation, paragraph 6 above and Articles 10.5, 15 and 16. 7. LESSEE represents and warrants that during the term of the Lease all maintenance and repairs to the Airframe and Engines were performed in accordance with the requirements contained in the Lease. LESSEE further confirms that all of its obligations under the Lease whether accruing prior to the date hereof or which survive the termination of the Lease by their terms and accrue after the date hereof, will remain in full force and effect until all such obligations have been satisfactorily completed. 8. This Return Acceptance Supplement is executed and delivered by the parties in [place]. IN WITNESS WHEREOF, the parties hereto have caused this Return Acceptance Receipt to be executed in their respective corporate names by their duly authorized representatives as of the day and year first above written. INTERNATIONAL LEASE FINANCE CORPORATION AMERICAN TRANS AIR, INC. By: By: Its: Its: ATTACHMENTS: 1. List of Aircraft Documentation 2. List of Loose Equipment 3. List of Discrepancies 4. Engine Maximum Power Assurance Test Conditions and Results 5. Dent and Damage Chart 6. Form of No Accident/Incident Letter 7. Technical Evaluation Report (in the form of Exhibit L) ATTACHMENT 1 TO RETURN ACCEPTANCE RECEIPT LIST OF AIRCRAFT DOCUMENTATION [The (a) manuals and (b) Aircraft records and historical documents set forth below are to be returned with the Aircraft in a current, up-to-date and correct status] MANUALS 1. FAA Approved Flight Manual 2. Airplane Flight Operation Manual 3. Aircraft Recover Manual 4. Quick Reference Handbook (QRH) 5. Weight and Balance Manual 6. Aircraft Fueling Manual 7. Aircraft Maintenance Manual (MM) 8. Aircraft Maintenance Manual Supplement 9. Ramp Maintenance Manual (RMM) 10. Cargo Loading Manual 11. Fault Reporting Manual (FRM) 12. Fault Isolation Manual (FIM) 13. Illustrated Parts Catalog (IPC) 14. Life Limited Parts Manual 15. Structural Repair Manual (SRM) 16. Master Minimum Equipment List 17. Wiring Diagram Manual (WD) 18. Wiring Practices Manual 19. System Schematics Manual 20. B.I.T.E. Manual 21. Non-Destructive Test Manual 22. Corrosion Prevention Manual 23. Component Maintenance Manual 24. APU Log Book 25. Engine Maintenance Manual 26. Engine Log Book 27. Engine Illustrated Parts Catalog 28. Engine Data Submittal Book 29. Engine Overhaul Manual 30. Power Plant Build-up Manual AIRCRAFT RECORDS AND HISTORICAL DOCUMENTS 1. Copies of original Certificates delivered by Boeing: a. Airworthiness Certificate for Export b. Radio installation conformity certificate c. Noise limitation certificate 2. Copies of original Documents delivered by Boeing: a. Airworthiness Directive Compliance list b. Aircraft inspection report c. Aircraft Readiness Log d. Weighing report 3. Copies of current Certificates: a. Airworthiness Certificate b. Noise limitation c. Radio license d. Interior material burn certificates e. Certificate of Export f. Aircraft deregistration confirmation e. Aircraft Registration 4. Letters signed and stamped by Quality Assurance: a. Current aircraft hours and cycles b. Current engines hours and cycles c. Accident and Incident report d. Summary of Maintenance Program e. AD compliance during the lease term 5. Aircraft log books and Aircraft readiness log. 6. Aircraft Hard Time (HT) inspection status. 7. One year forecast for HT inspection. 8. Aircraft Modification status, including service bulletins. 9. Last weighing report prior to redelivery. 10. AD compliance report with original signoffs. 11. Routine and non-routine job cards of the last "C" and "D" checks. 12. Past year pilots and maintenance discrepancies. 13. Major and Minor structural repairs with applicable approvals. 14. Compass Swing report of the last three years. 15. Cabin Configuration drawing (LOPA). 16. Emergency equipment location drawing. 17. Last X-RAYs ENGINES RECORDS 1. Last test cell run reports. 2. Life Limited Parts status and traceability. 3. AD compliance report with original signoffs. 4. Engine Modification/service bulletin/inspection report and applicable forms. 5. Last heavy maintenance records for each module. 6. Engine log books. 7. Engine removal history. 8. Past year trend monitoring reports. 9. Historical borescope reports. 10. Engine component report. APU RECORDS 1. APU status (FH, FC, limits). 2. Life limited Part status and traceability. 3. AD compliance with original signoffs. 4. Modification status. 5. Last heavy maintenance documents. 6. APU log books. 7. Last test cell report. COMPONENT RECORDS 1. Aircraft component inventory. 2. Hard time component inventory. 3. All serviceable tags. 4. Landing Gear status with last overhaul and life limited Part status. 5. AD compliance with original signoffs. 6. Modification status. ATTACHMENT 2 TO RETURN ACCEPTANCE RECEIPT LIST OF LOOSE EQUIPMENT ATTACHMENT 3 TO RETURN ACCEPTANCE RECEIPT LIST OF DISCREPANCIES ATTACHMENT 4 TO RETURN ACCEPTANCE RECEIPT ENGINE MAXIMUM POWER ASSURANCE TEST CONDITIONS AND RESULTS ATTACHMENT 5 TO RETURN ACCEPTANCE RECEIPT DENT AND DAMAGE CHART ATTACHMENT 6 TO RETURN ACCEPTANCE RECEIPT FORM OF NO ACCIDENT/INCIDENT LETTER EXHIBIT J MONTHLY REPORT (SEE FOLLOWING SHEET) MONTHLY AIRCRAFT UTILIZATION AND STATUS REPORT Page 1 of 2 Report Due Date: To: INTERNATIONAL LEASE FINANCE CORPORATION Fax: (310) 788-1990 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067, United States Attn: Finance Department From: AMERICAN TRANS AIR, INC. Contact: Fax: AIRCRAFT TYPE: BOEING 737-800 ENGINE TYPE: CFM56-7B-27 REGISTRATION: ____ SERIAL NUMBER: ____ MONTH OF: NOTE: PLEASE RECORD TIME IN HOURS AND MINUTES NOT DECIMALS. Aircraft Total Time Since New As Of Last Month: Hours: Min: Aircraft Total Time Since New: Hours: Min: Aircraft Total Cycles Since New: Cycles: Airframe Hours Flown During Month: Hours: Min: Airframe Cycles/Landings During Month: Cycles: Time Remaining to "D" or Heavy Maintenance Check: HOURS OR US$ PER CYCLES FLOWN HOUR OR DURING MONTH (AS CYCLE (AS APPLICABLE) X APPLICABLE) = RESERVES TOTAL AIRFRAME: HRS: X = TOTAL LANDING GEAR: HRS: X = TOTAL APU: HRS: X = ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles(for Engine LLP Reserves): x = ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles (for Engine LLP Reserves): x = ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles (for LLP x = Reserves): ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles (for Engine LLP Reserves): x = TOTAL AMOUNT OF RESERVES (US$) PAID THIS MONTH: US$ Monthly Aircraft Utilization and Status Report From: AMERICAN TRANS AIR, INC. PAGE 2 OF 2 ENGINE SERIAL NUMBER: ENGINE SERIAL NUMBER: ORIGINAL POSITION: ORIGINAL POSITION: ACTUAL LOCATION: ACTUAL LOCATION: CURRENT THRUST RATING: CURRENT THRUST RATING: HOURS:/MIN: HOURS:/MIN: Total Time Since New As Of Total Time Since New As Of Last Month: Last Month: Total Time Since New: Total Time Since New: Total Cycles Since New: Total Cycles Since New: Hours Flown During Month: Hours Flown During Month: Cycles During Month: Cycles During Month: IMPORTANT: IF ILFC-OWNED ENGINE IS REMOVED OR INSTALLED ON ANOTHER AIRCRAFT, IT MUST BE REPORTED MONTHLY ON THIS FORM. EXHIBIT K AIRCRAFT DOCUMENTATION AIRCRAFT RECORDS 1. Copies of original Certificates delivered by Boeing: a. Airworthiness Certificate for Export b. Radio installation conformity certificate c. Noise limitation certificate 2. Copies of original Documents delivered by Boeing: a. Airworthiness Directive Compliance list b. Aircraft inspection report c. Aircraft Readiness Log d. Weighing report 3. Copies of current Certificates: a. Airworthiness Certificate b. Noise limitation c. Radio license d. Interior material burn certificates e. Certificate of Export f. Aircraft deregistration confirmation e. Aircraft Registration 4. Letters signed and stamped by Quality Assurance: a. Current aircraft hours and cycles b. Current engines hours and cycles c. Accident and Incident report d. Summary of Maintenance Program e. AD compliance during the lease term 5. Aircraft log books and Aircraft readiness log. 6. Aircraft Hard Time (HT) inspection status. 7. One year forecast for HT inspection. 8. Aircraft Modification status, including service bulletins. 9. Last weighing report prior to redelivery. 10. AD compliance report with original signoffs. 11. Routine and non-routine job cards of the last "C" and "D" checks. 12. Past year pilots and maintenance discrepancies. 13. Major and Minor structural repairs with applicable approvals. 14. Compass Swing report of the last three years. 15. Cabin Configuration drawing (LOPA). 16. Emergency equipment location drawing. 17. Last X-RAYs ENGINES RECORDS 1. Last test cell run reports. 2. Life Limited Parts status and traceability. 3. AD compliance report with original signoffs. 4. Engine Modification/service bulletin/inspection report and applicable forms. 5. Last heavy maintenance records for each module. 6. Engine log books. 7. Engine removal history. 8. Past year trend monitoring reports. 9. Historical borescope reports. 10. Engine component report. APU RECORDS 1. APU status (FH, FC, limits). 2. Life limited Part status and traceability. 3. AD compliance with original signoffs. 4. Modification status. 5. Last heavy maintenance documents. 6. APU log books. 7. Last test cell report. COMPONENT RECORDS 1. Aircraft component inventory. 2. Hard time component inventory. 3. All serviceable tags. 4. Landing Gear status with last overhaul and life limited Part status. 5. AD compliance with original signoffs. 6. Modification status. EXHIBIT L TECHNICAL EVALUATION REPORT (SEE FOLLOWING SHEETS) EX-10.6(B) 17 file063.txt AMTRAN, INC., 2000 10-K, EXHIBIT 10.6(B) AIRCRAFT LEASE AGREEMENT Dated as of September 5, 2000 BETWEEN AMERICAN TRANS AIR, INC. as LESSEE and INTERNATIONAL LEASE FINANCE CORPORATION as LESSOR ------------------------------------------------------------------------------- Aircraft Make and Model: New Boeing 737-800 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Aircraft Manufacturer's Serial Number: 30706 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Aircraft Registration Mark: Per Estoppel and Acceptance Certificate ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Make and Model of Engines: CFM56-7B-27 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Serial Numbers of Engines: Per Estoppel and Acceptance Certificate ------------------------------------------------------------------------------- NEW BOEING 737-800 AIRCRAFT NO. 3 TABLE OF CONTENTS ARTICLE 1 SUMMARY OF TRANSACTION.........................................2 1.1 Description of Aircraft........................................2 1.2 Scheduled Delivery Date and Location...........................2 1.3 Lease Term.....................................................2 1.4 Security Deposit...............................................2 1.5 Transaction Fee................................................2 1.6 Rent During Lease Term.........................................2 1.7 Country of Aircraft Registration...............................4 1.8 Maintenance Program............................................4 1.9 Agreed Value of Aircraft.......................................4 1.10 LESSOR's Bank Account..........................................4 ARTICLE 2 DEFINITIONS....................................................5 2.1 General Definitions............................................5 2.2 Specific Definitions...........................................9 ARTICLE 3 PLACE AND DATE OF DELIVERY....................................11 3.1 Place of Delivery.............................................11 3.2 Scheduled Delivery Date.......................................11 3.3 Delivery subject to Manufacturer Delivery.....................11 3.4 No LESSOR Liability...........................................11 3.5 Total Loss of Aircraft prior to Delivery......................11 3.6 Cancellation for Delay........................................11 ARTICLE 4 LEASE TERM....................................................12 4.1 Lease Term....................................................12 4.2 "Expiration Date".............................................12 4.3 "Termination Date"............................................12 ARTICLE 5 SECURITY DEPOSIT, TRANSACTION FEE, RENT AND OTHER PAYMENTS......................................................13 5.1 Security Deposit..............................................13 5.2 Transaction Fee...............................................14 5.3 Rent..........................................................14 5.4 LESSOR's Bank Account.........................................15 5.5 Default Interest..............................................16 5.6 No Deductions or Withholdings.................................16 5.7 Value Added Taxes.............................................16 5.8 Net Lease.....................................................17 5.9 LESSOR Performance of LESSEE Obligation.......................18 5.10 Consideration for Rent and other Amounts......................18 ARTICLE 6 INVOLVEMENT WITH AIRCRAFT MANUFACTURER........................19 6.1 LESSEE Selection of Aircraft..................................19 6.2 Agency Agreement..............................................19 6.3 Procurement of BFE............................................19 6.4 Assignment of Training........................................19 6.5 LESSEE Inspection of Aircraft.................................19 6.6 Aircraft at Delivery..........................................19 6.7 Delivery of the Aircraft to LESSEE............................20 6.8 LESSEE Acceptance of Aircraft.................................20 ARTICLE 7 PRE-DELIVERY, DELIVERY AND POST-DELIVERY DOCUMENTARY AND OTHER REQUIREMENTS............................21 7.1 Pre-Delivery Requirements.....................................21 7.2 Delivery Requirements.........................................22 7.3 Post-Delivery Requirements....................................23 ARTICLE 8 DISCLAIMERS...................................................24 8.1 "As Is, Where Is".............................................24 8.2 Waiver of Warranty of Description.............................24 8.3 LESSEE Waiver.................................................25 8.4 Conclusive Proof..............................................25 8.5 No LESSOR Liability for Losses................................25 8.6 No Liability to Repair or Replace.............................25 8.7 No Waiver.....................................................26 ARTICLE 9 MANUFACTURERS' AND VENDORS' WARRANTIES........................27 9.1 Warranties....................................................27 9.2 Reassignment..................................................27 ARTICLE 10 OPERATION OF AIRCRAFT.........................................28 10.1 Costs of Operation............................................28 10.2 Compliance with Laws..........................................28 10.3 Training......................................................28 10.4 No Violation of Insurance Policies............................28 10.5 Flight Charges................................................29 ARTICLE 11 SUBLEASES.....................................................30 11.1 No Sublease without LESSOR Consent............................30 11.2 LESSOR Costs..................................................30 11.3 Any Approved Sublease.........................................30 11.4 Assignment of Sublease........................................30 11.5 Continued Responsibility of LESSEE............................30 ARTICLE 12 MAINTENANCE AND USE OF AIRCRAFT...............................31 12.1 General Obligation............................................31 12.2 Specific Obligations..........................................31 12.3 Replacement of Parts..........................................32 12.4 Removal of Engines............................................33 12.5 Pooling of Engines and Parts..................................34 12.6 Installation of Engines on other aircraft.....................34 12.7 Modifications.................................................35 12.8 Performance of Work by Third Parties..........................36 12.9 Reporting Requirements........................................36 12.10 Information Regarding Maintenance Program.....................36 12.11 LESSOR Rights to Inspect Aircraft.............................36 ARTICLE 13 TITLE AND REGISTRATION........................................37 13.1 Title to the Aircraft During Lease Term.......................37 13.2 Registration of Aircraft......................................37 13.3 Filing of this Lease..........................................37 13.4 Evidence of Registration and Filings..........................37 ARTICLE 14 IDENTIFICATION PLATES.........................................38 14.1 Airframe Identification Plates................................38 14.2 Engine Identification Plates..................................38 ARTICLE 15 TAXES.........................................................39 15.1 General Obligation of LESSEE..................................39 15.2 Exceptions to Indemnity.......................................39 15.3 After-Tax Basis...............................................40 15.4 Claims and Contests...........................................40 15.5 Refunds.......................................................41 15.6 Cooperation in Filing Tax Returns.............................41 ARTICLE 16 INDEMNITIES...................................................42 16.1 General Indemnity.............................................42 16.2 Exceptions to General Indemnities.............................43 16.3 After-Tax Basis...............................................44 16.4 Timing of Payment.............................................44 16.5 Subrogation...................................................44 16.6 Notice........................................................44 16.7 Refunds.......................................................44 16.8 Defense of Claims.............................................45 16.9 Survival of Obligation........................................45 ARTICLE 17 INSURANCE.....................................................46 17.1 Categories of Insurance.......................................46 17.2 Insurance for Indemnities.....................................46 17.3 Insurance required by Manufacturer............................46 17.4 Renewal.......................................................46 17.5 Assignment of Rights by LESSOR................................46 17.6 Deductibles...................................................46 17.7 Other Insurance...............................................47 17.8 Information...................................................47 17.9 Currency......................................................47 17.10 Grounding of Aircraft.........................................47 17.11 Failure to Insure.............................................47 17.12 Limit on Hull in favor of LESSEE..............................47 17.13 Marketplace Limitations.......................................48 ARTICLE 18 LOSS, DAMAGE AND REQUISITION..................................49 18.1 Definitions...................................................49 18.2 Notice of Total Loss..........................................50 18.3 Total Loss of Aircraft or Airframe............................50 18.4 Surviving Engine(s)...........................................51 18.5 Total Loss of Engine and not Airframe.........................51 18.6 Other Loss or Damage..........................................52 18.7 Copy of Insurance Policy......................................53 18.8 Government Requisition........................................53 18.9 Conveyance to LESSEE..........................................53 ARTICLE 19 CRAF PROGRAM..................................................54 19.1 Dedication to CRAF............................................54 19.2 Notice to LESSOR..............................................54 19.3 Requisition of Engine.........................................54 19.4 Government Indemnification....................................54 19.5 No Geographic Limits..........................................54 19.6 Notice of Default.............................................55 19.7 Receipt of Payments...........................................55 ARTICLE 20 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE...........56 20.1 Representations and Warranties................................56 20.2 Covenants.....................................................58 ARTICLE 21 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSOR...........61 21.1 Representations and Warranties................................61 21.2 Covenant of Quiet Enjoyment...................................62 ARTICLE 22 FINANCIAL AND RELATED INFORMATION.............................63 ARTICLE 23 RETURN OF AIRCRAFT............................................64 23.1 Date of Return................................................64 23.2 Technical Report..............................................64 23.3 Return Location...............................................64 23.4 Full Aircraft Documentation Review............................64 23.5 Aircraft Inspection...........................................64 23.6 Certificate of Airworthiness Matters..........................65 23.7 General Condition of Aircraft at Return.......................66 23.8 Checks Prior to Return........................................69 23.9 Part Lives....................................................72 23.10 Export and Deregistration of Aircraft.........................74 23.11 LESSEE's Continuing Obligations...............................75 23.12 Airport and Navigation Charges................................75 23.13 Return Acceptance Certificate.................................76 23.14 Indemnities and Insurance.....................................76 ARTICLE 24 ASSIGNMENT....................................................77 24.1 No Assignment by LESSEE.......................................77 24.2 Sale or Assignment by LESSOR..................................77 24.3 LESSOR's Lender...............................................79 24.4 LESSEE Cooperation............................................79 24.5 Protections...................................................79 ARTICLE 25 DEFAULT OF LESSEE.............................................80 25.1 LESSEE Notice to LESSOR.......................................80 25.2 Events of Default.............................................80 25.3 LESSOR's General Rights.......................................82 25.4 Deregistration and Export of Aircraft.........................83 25.5 LESSEE Liability for Damages..................................83 25.6 Waiver of Default.............................................84 25.7 Present Value of Payments.....................................84 25.8 Use of "Termination Date".....................................84 ARTICLE 26 NOTICES.......................................................85 26.1 Manner of Sending Notices.....................................85 26.2 Notice Information............................................85 ARTICLE 27 GOVERNING LAW AND JURISDICTION................................86 27.1 California Law................................................86 27.2 Non-Exclusive Jurisdiction in California......................86 27.3 Service of Process............................................86 27.4 Prevailing Party in Dispute...................................86 27.5 Waiver........................................................86 ARTICLE 28 MISCELLANEOUS.................................................87 28.1 Press Releases................................................87 28.2 LESSOR Performance for LESSEE.................................87 28.3 LESSOR's Payment Obligations..................................87 28.4 Application of Payments.......................................87 28.5 Usury Laws....................................................87 28.6 Delegation by LESSOR..........................................87 28.7 Confidentiality...............................................88 28.8 Rights of Parties.............................................88 28.9 Further Assurances............................................88 28.10 Use of Word "including".......................................88 28.11 Headings......................................................88 28.12 Invalidity of any Provision...................................88 28.13 Negotiation...................................................88 28.14 Time is of the Essence........................................89 28.15 Amendments in Writing.........................................89 28.16 Counterparts..................................................89 28.17 Delivery of Documents by Fax..................................89 28.18 Entire Agreement..............................................89 EXHIBIT A AIRCRAFT DESCRIPTION..........................................91 EXHIBIT B AGENCY AGREEMENT..............................................92 EXHIBIT C CERTIFICATE OF INSURANCE......................................96 EXHIBIT D BROKERS' LETTER OF UNDERTAKING...............................102 EXHIBIT E ESTOPPEL AND ACCEPTANCE CERTIFICATE..........................104 EXHIBIT F OPINION OF COUNSEL...........................................111 EXHIBIT G ASSIGNMENT OF RIGHTS (AIRFRAME)..............................114 EXHIBIT H ASSIGNMENT OF RIGHTS (ENGINES)...............................119 EXHIBIT I RETURN ACCEPTANCE RECEIPT....................................123 EXHIBIT J MONTHLY REPORT...............................................134 EXHIBIT K AIRCRAFT DOCUMENTATION.......................................138 EXHIBIT L TECHNICAL EVALUATION REPORT..................................140 AIRCRAFT LEASE AGREEMENT THIS AIRCRAFT LEASE AGREEMENT is made and entered into as of September 5, 2000. BETWEEN: AMERICAN TRANS AIR, INC., a Indiana corporation whose address and principal place of business is at 7337 West Washington Street, Indianapolis International Airport, Indianapolis, Indiana 46231, United States of America ("LESSEE") and INTERNATIONAL LEASE FINANCE CORPORATION, a California corporation whose address and principal place of business is at 1999 Avenue of the Stars, 39th Floor, Los Angeles, California 90067, United States of America ("LESSOR"). The subject matter of this Lease is one (1) new Boeing 737-800 aircraft. In consideration of and subject to the mutual covenants, terms and conditions contained in this Lease, LESSOR hereby agrees to lease to LESSEE and LESSEE hereby agrees to lease from LESSOR the aircraft and the parties further agree as follows: ARTICLE 1 SUMMARY OF TRANSACTION The information in this Article 1 is a summary of the lease transaction between LESSEE and LESSOR. It is set forth for the convenience of the parties only and will not be deemed in any way to amend, detract from or simplify the other provisions of this Lease. 1.1 DESCRIPTION OF AIRCRAFT One new Boeing 737-800 aircraft 1.2 SCHEDULED DELIVERY DATE AND LOCATION In the month of (CONFIDENTIAL MATERIAL OMITTED) at Seattle, Washington 1.3 LEASE TERM 15 years 1.4 SECURITY DEPOSIT (CONFIDENTIAL MATERIAL OMITTED) 1.5 TRANSACTION FEE (CONFIDENTIAL MATERIAL OMITTED) 1.6 RENT DURING LEASE TERM Payable monthly in advance and equal to the sum of: (a The following amounts for the following years of the Lease Term: LEASE PERIOD MONTHLY RENTAL AMOUNT* (CONFIDENTIAL MATERIAL OMITTED) *The above base rent is expressed in January 1999 U.S.Dollars and will increase in the following amounts for the following periods: PERIOD ESCALATION FACTOR (CONFIDENTIAL MATERIAL OMITTED) 1.7 COUNTRY OF AIRCRAFT REGISTRATION U.S. 1.8 MAINTENANCE PROGRAM LESSEE's Maintenance Program 1.9 AGREED VALUE OF AIRCRAFT (CONFIDENTIAL MATERIAL OMITTED) The Agreed Value is expressed in March 2001 U.S. Dollars and will increase in accordance with Manufacturer's announced escalation rate from March 1, 2001 to the Delivery Date. On each annual renewal date of LESSEE's insurance policy commencing on the renewal date following the first anniversary of the Lease Term, the Agreed Value will decrease by two percent (2.0%) of the then existing Agreed Value. 1.10 LESSOR'S BANK ACCOUNT (Confidential Material Omitted) ARTICLE 2 DEFINITIONS Except where the context otherwise requires, the following words have the following meanings for all purposes of this Lease. The definitions are equally applicable to the singular and plural forms of the words. Any agreement defined below includes each amendment, modification, supplement and waiver thereto in effect from time to time. 2.1 GENERAL DEFINITIONS. "ACT" means the Federal Aviation Act of 1958, as amended from time to time, or any successor act thereto. "AIRCRAFT" means the Airframe, two (2) Engines, Parts and Aircraft Documentation, collectively. As the context requires, "Aircraft" may also mean the Airframe, any Engine, any Part, the Aircraft Documentation or any part thereof individually. For example, in the context of return to LESSOR the term "Aircraft" means the Airframe, Engines, Parts and Aircraft Documentation collectively, yet in the context of LESSEE not creating any Security Interests other than Permitted Liens on the Aircraft, the term "Aircraft" means any of the Airframe, any Engine, any Part or the Aircraft Documentation individually. "AIRCRAFT DOCUMENTATION" means all (a) log books, Aircraft records, manuals and other documents provided to LESSEE in connection with the Aircraft, (b) documents listed in Exhibits E and K and (c) any other documents required to be maintained during the Lease Term by the Aviation Authority, LESSEE's Maintenance Program and this Lease. "AIRFRAME" means the airframe listed in the Estoppel and Acceptance Certificate executed at Delivery together with all Parts relating thereto (except Engines or engines). "AIRWORTHINESS DIRECTIVES" or "ADS" means all airworthiness directives (or equivalent) of the FAA and the Aviation Authority applicable to the Aircraft. "APU" means the auxiliary power unit of the Aircraft. "AVIATION AUTHORITY" means the FAA or any Government Entity which under the Laws of the U.S. from time to time has control over civil aviation or the registration, airworthiness or operation of aircraft in the U.S. If the Aircraft is registered in a country other than the U.S., "Aviation Authority" means the agency which regulates civil aviation in such other country. "AVIATION DOCUMENTS" means any or all of the following which at any time may be obtainable from the Aviation Authority: (a) if required, a temporary certificate of airworthiness from the Aviation Authority allowing the Aircraft to be flown after Delivery to the State of Registration, (b) an application for registration of the Aircraft with the appropriate authority in the State of Registration, (c) the certificate of registration for the Aircraft issued by the State of Registration, (d) a full certificate of airworthiness for the Aircraft specifying transport category (passenger), (e) an air transport license, (f) an air operator's certificate, (g) such recordation of LESSOR's title to the Aircraft and interest in this Lease as may be available in the State of Registration and (h) all such other authorizations, approvals, consents and certificates in the State of Registration as may be required to enable LESSEE lawfully to operate the Aircraft. "BANKRUPTCY CODE" means The Bankruptcy Reform Act of 1978 (11 U.S.C. ss.ss. 101-1330), as amended or supplemented from time to time, and any successor statute, and all of the rules and regulations issued or promulgated in connection therewith. "BASIC ENGINE" means those units and components of the Engine which are used to induce and convert fuel/air mixture into thrust/power; to transmit power to the fan and accessory drives; to supplement the function of other defined systems external to the Engine; and to control and direct the flow of internal lubrication, plus all essential accessories as supplied by the Engine manufacturer. The nacelle, installed components related to the Aircraft systems, thrust reversers, QEC and the primary flight nozzle are excluded. "BFE" means any equipment which is to be provided by the purchaser of the Aircraft (whether actually provided by LESSOR as buyer-furnished equipment or Manufacturer as seller-purchased equipment). "BUSINESS DAY" means a day other than a Saturday or Sunday on which the banks in Indianapolis, Indiana and in the city where LESSOR's Bank is located are open for the transaction of business of the type required by this Lease. "CREDITOR" means any lessor, owner, bank, lender, mortgagee or other Person which is the owner of or has any interest in an aircraft engine or aircraft operated by LESSEE. "CREDITOR AGREEMENT" means the applicable agreement between a Creditor and LESSEE or between Creditors pursuant to which such Creditor owns, leases or has an interest in either an aircraft operated by LESSEE on which an Engine may be installed or in an aircraft engine which may be installed on the Airframe. "DEFAULT" means any event which, upon the giving of notice, the lapse of time and/or a relevant determination, would constitute an Event of Default. "DELIVERY" means the delivery of the Aircraft from LESSOR to LESSEE pursuant to Articles 3 and 6. "DELIVERY DATE" means the date on which Delivery takes place. "DOLLARS" and "$" means the lawful currency of the U.S. "ENGINE" means (a) each of the engines listed on the Estoppel and Acceptance Certificate; or (b) any replacement engine acquired by LESSOR and leased to LESSEE pursuant to Article 18.5 following a Total Loss of an Engine; including in each case all Parts installed in or on any of such engines at Delivery (or substituted, renewed or replacement Parts in accordance with this Lease) so long as title thereto is or remains vested in LESSOR in accordance with the terms of Article 12.3. "EVENT OF DEFAULT" means any of the events referred to in Article 25.2. "FAA" means the Federal Aviation Administration of the Department of Transportation or any successor thereto under the Laws of the U.S. "FARS" means the U.S. Federal Aviation Regulations embodied in Title 14 of the U.S. Code of Federal Regulations, as amended from time to time, or any successor regulations thereto. "GENEVA CONVENTION" means the Convention on the International Recognition of Rights in Aircraft signed in Geneva, Switzerland on June 19, 1948. "GOVERNMENT ENTITY" means any (a) national, state or local government, (b) board, commission, department, division, instrumentality, court, agency or political subdivision thereof and (c) association, organization or institution of which any of the entities listed in (a) or (b) is a member or to whose jurisdiction any such entity is subject. "LANDING GEAR" means the installed main and nose landing gear, components and their associated actuators, side braces and parts. "LAW" means any (a) statute, decree, constitution, regulation, order or any directive of any Government Entity, (b) treaty, pact, compact or other agreement to which any Government Entity is a signatory or party and (c) judicial or administrative interpretation or application of any of the foregoing. "LEASE" means this Aircraft Lease Agreement, together with all Exhibits hereto. "LESSOR'S LIEN" means any Security Interest created by LESSOR, or arising from a claim against LESSOR completely unrelated to this Lease or the other Operative Documents. "MAINTENANCE PROGRAM" means LESSEE's maintenance program as approved by the Aviation Authority or such other maintenance program as LESSOR may, in its discretion, accept in writing. "MANUFACTURER" means The Boeing Company, a Delaware corporation. "MPD" means the Maintenance Planning Document published by Manufacturer and applicable to the Aircraft. "OVERHAUL" means the full reconditioning of the Aircraft, an Engine, APU, Landing Gear, module or Part, as the case may be, in which such equipment has been fully disassembled; cleaned; thoroughly inspected; and returned to the highest standard specified by the applicable manufacturer's manual. "PART" means the APU, any part, component, appliance, system module, engine module, accessory, material, instrument, communications equipment, furnishing, LESSEE-furnished or LESSOR-purchased equipment or other item of equipment (other than complete Engines or engines) for the time being installed in or attached to the Airframe or any Engine or which, having been removed from the Airframe or any Engine, remains the property of LESSOR. "PERMITTED INSTITUTION" means any Person (other than a commercial air carrier, a commercial aircraft operator, a freight forwarder, or an affiliate of any of the foregoing), with either: (a) a combined capital and surplus or net worth of at least; or (b) have a credit rating on the majority of its unsecured debt which is at least equal to BBB or its equivalent from Standard and Poor's Rating Group, a division of The McGraw-Hill Companies, Inc. or Moody's Investors Service, Inc. "PERMITTED LIEN" means (a) LESSOR's Liens; (b) Security Interests arising in the ordinary course of LESSEE's business for Taxes either not yet due and payable or, if due and payable, being contested in good faith in accordance with Article 15.4; (c) materialmen's, mechanics', workmen's, repairmen's, employees' liens or similar Security Interests arising by operation of Law after the Delivery Date in the ordinary course of LESSEE's business for amounts which are either not yet due or are being contested in good faith by appropriate proceedings (and for which adequate reserves have been made or, when required in order to pursue such proceedings, an adequate bond has been provided) so long as such proceedings do not involve any material danger of sale, forfeiture or loss of the Aircraft; (d) the rights of LESSOR and any LESSOR's Lender and the rights of LESSEE under this Lease and the other Operative Documents; (e) the rights of others under agreements or arrangements to the extent permitted by Articles 10 and 11.5; and (f) any Security Interest against which LESSEE causes to be provided a bond in such amount and under such terms and conditions as are reasonably satisfactory to LESSOR. "PERSON" means any individual, firm, partnership, joint venture, trust, corporation, limited liability company, Government Entity, committee, department, authority or any body, incorporated or unincorporated, whether having distinct legal personality or not. "PRIME RATE" means the rate of interest from time to time announced by Bank of America Illinois in Chicago, Illinois as its prime commercial lending rate. "SECURITY INTEREST" means any encumbrance or security interest, however and wherever created or arising including (without prejudice to the generality of the foregoing) any right of ownership, security, mortgage, pledge, charge, encumbrance, lease, lien, statutory or other right in rem, hypothecation, title retention, attachment, levy, claim or right of possession or detention. "STATE OF REGISTRATION" means the U.S. or such other country or state of registration of the Aircraft as LESSOR may, in its absolute discretion, approve in writing. "U.S." means the United States of America. "U.S. AIR CARRIER" means any U.S. air carrier who is a Citizen of the U.S. holding an air carrier operating certificate issued by the Secretary of Transportation pursuant to chapter 447 of the Act for aircraft capable of carrying 10 or more individuals or 6000 pounds or more of cargo, and as to whom there is in force an air carrier operating certificate issued pursuant to FAR Part 121, or who may operate as an air carrier by certification or otherwise under any successor or substitute provisions therefor or in the absence thereof. 2.2 SPECIFIC DEFINITIONS. The following terms are defined in the Articles referenced below: TERMS ARTICLE Agreed Value 18.1 CRAF Program 19.1 CRAF Program Requisition 19.1 Period Default Interest 5.5 Delivery Location 3.1 Expenses 16.1 Expiration Date 4.3 Indemnities 16.1 Lease Term 4.1 LESSEE Customization 5.3.1 Costs LESSOR's Assignee 24.2.1 LESSOR's Bank 5.4 LESSOR's Lender 24.3 Manufacturer's Escalation 5.3.1 Rate Modifications 12.7.2 Net Total Loss Proceeds 18.1 Operative Documents 20.1.3 Rent 5.3.1 Return Check 23.8.1 Scheduled Delivery Date 3.2 Security Deposit 5.1.1 Taxes 15.1 Termination Date 4.3 Total Loss 18.1 Total Loss Date 18.1 Total Loss Proceeds 18.1 Transaction Fee 5.2 ARTICLE 3 PLACE AND DATE OF DELIVERY 3.1 PLACE OF DELIVERY. LESSOR will deliver the Aircraft to LESSEE at Manufacturer's facility at Seattle, Washington or such other place as may be agreed in writing between the parties (the "DELIVERY LOCATION"). 3.2 SCHEDULED DELIVERY DATE. As of the date of this Lease, delivery of the Aircraft from Manufacturer to LESSOR is scheduled to occur in the month of (CONFIDENTIAL MATERIAL OMITTED).LESSOR will not agree to reschedule such delivery without LESSEE's prior written consent. LESSOR will notify LESSEE from time to time and in a timely manner of the exact date on which LESSOR expects such delivery to take place (the "SCHEDULED DELIVERY DATE"). 3.3 DELIVERY SUBJECT TO MANUFACTURER DELIVERY. LESSOR and LESSEE expressly acknowledge that Delivery of the Aircraft to LESSEE is subject to and conditioned upon, and is to occur simultaneously with, delivery of the Aircraft by Manufacturer to LESSOR. 3.4 NO LESSOR LIABILITY. LESSOR will not be liable for any loss or expense, or any loss of profit, arising from any delay or failure in Delivery to LESSEE unless such delay or failure arises as a consequence of the willful misconduct of LESSOR, and in no event will LESSOR be liable for any delay or failure which is caused by any breach or delay on the part of Manufacturer or any BFE supplier. 3.5 TOTAL LOSS OF AIRCRAFT PRIOR TO DELIVERY. If a Total Loss of the Aircraft occurs prior to Delivery, neither party will have any further liability to the other except that LESSOR will return to LESSEE the Security Deposit in accordance with Article 5.1.3 and any prepaid Rent. 3.6 CANCELLATION FOR DELAY. Promptly after LESSOR becomes aware that in Manufacturer's opinion a delay will cause Delivery to be delayed beyond (CONFIDENTIAL MATERIAL OMITTED) LESSOR will notify LESSEE. By written notice given within ten (10) Business Days after LESSEE's receipt of such LESSOR notice, either party may by written notice to the other party terminate this Lease and this Lease will terminate on the date of receipt of such notice. In the event of such termination, neither party will have any further liability to the other party except that LESSOR will return to LESSEE the Security Deposit in accordance with Article 5.1.3 and any prepaid Rent. If neither party gives notice of termination within such ten (10) Business Days, both parties lose all right to terminate under this Article 3.6 unless otherwise agreed in writing by the parties. ARTICLE 4 LEASE TERM 4.1 LEASE TERM. The term of leasing of the Aircraft will commence on the Delivery Date and continue for a term of fifteen (15) years ("LEASE TERM"). 4.2 "EXPIRATION DATE". "EXPIRATION DATE" means the date on which LESSEE is required to redeliver the Aircraft to LESSOR in the condition required by this Lease on the last day of the Lease Term. 4.3 "TERMINATION DATE". This Lease may in fact terminate on any of the dates set forth below: (a the Expiration Date, provided LESSEE returns the Aircraft to LESSOR on the Expiration Date in the condition required by Article 23; or (b a date earlier than the Expiration Date, if: (i there is a Total Loss of the Aircraft prior to Delivery pursuant to Article 3.5; (ii cancellation of this Lease occurs pursuant to Article 3.6; (iii there is a Total Loss of the Aircraft and payment is made to LESSOR in accordance with Article 18.3; or (iv an Event of Default occurs and LESSOR repossesses the Aircraft or otherwise terminates this Lease pursuant to Article 25.3. (c a date later than the Expiration Date, if: (i an Event of Default occurs hereunder by LESSEE returning the Aircraft in the condition required by this Lease after the Expiration Date; or (ii an Event of Default occurs and LESSOR repossesses the Aircraft or otherwise terminates this Lease pursuant to Article 25.3. The "TERMINATION DATE" is the date on which this Lease terminates because one of the above has occurred. ARTICLE 5 SECURITY DEPOSIT, TRANSACTION FEE, RENT AND OTHER PAYMENTS 5.1 SECURITY DEPOSIT. 5.1.1 (CONFIDENTIAL MATERIAL OMITTED) 5.1.2 The Security Deposit may be commingled with LESSOR's general funds and any interest earned on such Security Deposit will be for LESSOR's account. If the Security Deposit is reduced below the required amount by application to meet LESSEE's unperformed obligations under this Lease, LESSEE will replenish the Security Deposit within ten (10) days after LESSOR's demand therefor. The Security Deposit will serve as security for the performance by LESSEE of its obligations under this Lease and any other agreements between LESSEE and LESSOR relating to aircraft, engines, aircraft equipment or the extension of credit and may be applied by LESSOR upon the occurrence of a Default or Event of Default hereunder or of a default by LESSEE under any such other agreements. 5.1.3 Upon termination of this Lease in accordance with Article 4.3 other than if an Event of Default has occurred and is continuing, LESSOR will return to LESSEE the amount of the Security Deposit then held by LESSOR (so long as no default by LESSEE exists under any other agreement between LESSEE and LESSOR relating to aircraft, engines or aircraft equipment or the extension of credit by LESSOR to LESSEE), without interest, less an amount determined by LESSOR to be a reasonable estimate of the costs, if any, which LESSOR will incur to remedy any unperformed obligations of LESSEE under this Lease, including the correction of any discrepancies from the required condition of the Aircraft on return of the Aircraft. 5.2 TRANSACTION FEE. Within two (2) Business Days after execution of this Lease, LESSEE will pay LESSOR a nonrefundable transaction fee (CONFIDENTIAL MATERIAL OMITTED) 5.3 RENT. 5.3.1 LESSEE will pay LESSOR the following amounts monthly in advance as rent for the Aircraft (the "RENT"): (a The following amounts for the following years of the Lease Term: LEASE PERIOD MONTHLY RENTAL AMOUNT* ------------ --------------------- (CONFIDENTIAL MATERIAL OMITTED) *The above base rent is expressed in January 1999 U.S. dollars and will increase in the following amounts for the following periods (the "MANUFACTURER'S ESCALATION RATE"): PERIOD ESCALATION FACTOR ------------ --------------------- (CONFIDENTIAL MATERIAL OMITTED) Any increases to the above base Rent during the Lease Term will be calculated immediately prior to Delivery. 5.3.2 The first payment of Rent during the Lease Term will be paid prior to the Scheduled Delivery Date. Each subsequent payment of Rent will be due monthly thereafter no later than the same day of the month as the Delivery Date of the Aircraft except that, if such day is not a Business Day, the Rent will be due on the immediately preceding Business Day. If Delivery occurred on the 29th, 30th or 31st of the month and in any given month during the Lease Term there is no such corresponding date, Rent will be payable on the last Business Day of such month. 5.4 LESSOR'S BANK ACCOUNT. The Security Deposit, Transaction Fee, Rent and any other payment due under this Lease will be paid by wire transfer of immediately available U.S. Dollar funds to LESSOR's bank account at: (CONFIDENTIAL MATERIAL OMITTED) or to such other bank account in the U.S. as LESSOR may from time to time designate by written notice ("LESSOR'S BANK"). When it is stated in this Lease that an installment of the Security Deposit, the monthly Rent or any other payment is due or must be paid or made by LESSEE by a specific date, then such payment actually must be received by LESSOR's Bank on or before such specific date, even if, in order for such payment to be received by LESSOR's Bank by such specific date, LESSEE must initiate the wire transfer prior to such specific date. 5.5 DEFAULT INTEREST. If LESSOR's Bank does not receive the Rent or any other amount on or before the specific date when due, LESSOR will suffer loss and damage the exact nature and amount of which are difficult or impossible to ascertain. LESSEE will pay LESSOR as supplemental Rent (by way of agreed compensation and not as a penalty) interest on any due and unpaid amounts payable by LESSEE under this Lease. Interest will be calculated at a per annum rate (based on a 360 day year) which is equal to three percent (3%) plus the Prime Rate in effect on the date on which the amount was originally due for the period from the date the amount originally was due through the date the amount actually is received at LESSOR's Bank or, in the case of LESSOR's performance of LESSEE's obligations hereunder, from the date of payment by LESSOR through the date of LESSEE's repayment to LESSOR ("DEFAULT INTEREST"). Default Interest will accrue on a day-to-day basis and be compounded monthly. 5.6 NO DEDUCTIONS OR WITHHOLDINGS. All payments by LESSEE under this Lease, including the Security Deposit, Transaction Fee, Rent, Default Interest, fees, indemnities or any other item, will be made in full without any deduction or withholding whether in respect of set-off, counterclaim, duties, or Taxes (as defined in Article 15) imposed in the State of Registration or any jurisdiction from which such payments are made unless LESSEE is prohibited by Law from doing so, in which event LESSEE will gross up the payment amount such that the net payment received by LESSOR after any deduction or withholding equals the amounts called for under this Lease. LESSEE's requirement to pay the amounts required by this Article 5.6 is subject to the exceptions provided in Article 15.2. 5.7 VALUE ADDED TAXES. The Rent and other amounts payable by LESSEE under this Lease are exclusive of any value added tax, turnover tax or similar tax or duty. 5.8 NET LEASE. 5.8.1 This Lease is a net lease and LESSEE's obligation to pay Rent and make other payments in accordance with this Lease will be absolute and unconditional under any and all circumstances and regardless of other events, including the following: (a) any right of set-off, counterclaim, recoupment, defense or other right (including any right of reimbursement) which LESSEE may have against LESSOR, Manufacturer, the Engine manufacturer or any other person for any reason, including any claim LESSEE may have for the foregoing; (b) unavailability or interruption in use of the Aircraft for any reason, including a requisition thereof or any prohibition or interference with or other restriction against LESSEE's use, operation or possession of the Aircraft (whether by Law or otherwise), any defect in title, airworthiness, merchantability, fitness for any purpose, condition, design, specification or operation of any kind or nature of the Aircraft, the ineligibility of the Aircraft for any particular use or trade or for registration under the Laws of any jurisdiction or Total Loss of the Aircraft; (c) insolvency, bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, liquidation, receivership, administration or similar proceedings by or against LESSOR, LESSEE, Manufacturer, the Engine manufacturer or any other Person; (d) invalidity or unenforceability or lack of due authorization of or other defect in this Lease; (e) failure or delay on the part of any party to perform its obligations under this Lease; or (f) any other circumstance which but for this provision would or might have the effect of terminating or in any other way affecting any obligation of LESSEE hereunder. 5.8.2 Nothing in Article 5.8 will be construed to limit LESSEE's rights and remedies in the event of LESSOR's breach of its warranty of quiet enjoyment set forth in Article 21.2 or to limit LESSEE's rights and remedies to pursue in a court of law any claim it may have against LESSOR or any other Person. 5.9 LESSOR PERFORMANCE OF LESSEE OBLIGATION. If LESSEE fails to make any payment under this Lease to a third party in connection with the Aircraft or fails to perform any other obligation required under this Lease, LESSOR may (but is not required to) at its election and without waiver of its rights perform such obligation and/or pay such amount. Within five (5) Business Days after written notice to LESSEE of the amount paid by LESSOR on behalf of LESSEE, LESSEE will repay such amount to LESSOR together with Default Interest. Such payment to LESSOR will constitute additional Rent payable by LESSEE to LESSOR hereunder. Any payment, performance or compliance by LESSOR of a LESSEE obligation hereunder will not affect the occurrence or continuance of a Default or Event of Default, as the case may be. 5.10 CONSIDERATION FOR RENT AND OTHER AMOUNTS. The amount of the Rent and other payments contained herein are in consideration of LESSEE's waiver of warranties and indemnities set forth in Articles 8 and 16, respectively, and the other provisions of this Lease. ARTICLE 6 INVOLVEMENT WITH AIRCRAFT MANUFACTURER 6.1 LESSEE SELECTION OF AIRCRAFT. LESSEE ACKNOWLEDGES THAT THE DESCRIPTION OF THE AIRCRAFT SET FORTH IN THIS LEASE IS BASED UPON INFORMATION SUPPLIED BY MANUFACTURER. LESSEE COVENANTS TO LESSOR THAT LESSEE HAS USED ITS OWN JUDGMENT IN SELECTING THE AIRCRAFT AND HAS DONE SO BASED ON ITS SIZE, DESIGN AND TYPE. LESSEE ACKNOWLEDGES THAT LESSOR IS NOT A MANUFACTURER, REPAIRER OR SERVICING AGENT OF THE AIRCRAFT. 6.2 AGENCY AGREEMENT. Certain obligations remain to be performed by LESSOR in connection with the manufacture, fabrication and completion of the Aircraft by Manufacturer which will be performed by LESSEE (as provided in the Agency Agreement). LESSEE will act as LESSOR's agent with respect to some of these matters pursuant to the terms of an Agency Agreement to be entered into between LESSEE and LESSOR in the form set forth in Exhibit B. 6.3 PROCUREMENT OF BFE. LESSEE's and LESSOR's technical representatives will meet and determine which of LESSEE or LESSOR will provide specific items of BFE. Such BFE will then be provided to Manufacturer by LESSEE or LESSOR, as applicable, within the time frames required by Manufacturer. 6.4 ASSIGNMENT OF TRAINING. LESSOR hereby assigns to LESSEE all rights to training to which LESSOR is entitled as a result of LESSOR's purchase of the Aircraft and lease of the Aircraft to LESSEE. If LESSEE fails to take Delivery of the Aircraft when tendered in accordance with Article 6.7, LESSEE will immediately pay to LESSOR an amount equal to the Dollar value of such training based on what the training would have cost LESSEE had LESSEE purchased such training directly from Manufacturer. 6.5 LESSEE INSPECTION OF AIRCRAFT. During the course of final assembly of the Aircraft, and at Delivery, LESSEE will have its own representative present to inspect the Aircraft and to ensure its conformity with LESSEE's needs and the terms of this Lease. LESSEE will have ground inspection and acceptance flight rights with respect to the Aircraft. LESSEE acknowledges that, as between LESSEE and LESSOR, in accepting the Aircraft LESSEE is relying on its own inspection and knowledge of the Aircraft in determining whether the Aircraft meets the requirements of this Lease. 6.6 AIRCRAFT AT DELIVERY. At Delivery, the Aircraft will be as set forth in Exhibit A, as such description may be modified by any change requests agreed to among LESSEE, LESSOR and Manufacturer (which will be reflected in amendment(s) to this Lease). In the event of any discrepancies, LESSEE and LESSOR will cooperate in good faith with one another and with Manufacturer and Engine manufacturer, as applicable, in order to arrive at a mutually acceptable resolution of any such discrepancies. 6.7 DELIVERY OF THE AIRCRAFT TO LESSEE. Subject to LESSEE having performed all of the conditions precedent to Delivery set forth herein, immediately following delivery of the Aircraft from Manufacturer to LESSOR, LESSOR will deliver the Aircraft to LESSEE at the Delivery Location. Provided that the Aircraft is in the condition required by Article 6.6, upon the tender of the Aircraft by LESSOR to LESSEE, LESSEE will accept the Aircraft and the date of tender by LESSOR to LESSEE will be deemed to be the Delivery Date for all purposes under this Lease, including, but not limited to, the commencement of LESSEE's obligation to pay Rent hereunder. 6.8 LESSEE ACCEPTANCE OF AIRCRAFT. If LESSEE fails to (a) comply with its obligations set forth in Article 6.2, (b) comply with the conditions contained in Articles 7.1 and 7.2 so as to allow Delivery to take place immediately following delivery of the Aircraft by Manufacturer to LESSOR or (c) take delivery of the Aircraft when properly tendered for delivery by LESSOR in the condition required hereunder, LESSEE will indemnify LESSOR for all costs and expenses incurred by LESSOR as a result thereof including (but without limitation) any payments other than the purchase price which LESSOR becomes obliged to make to Manufacturer. ARTICLE 7 PRE-DELIVERY, DELIVERY AND POST-DELIVERY DOCUMENTARY AND OTHER REQUIREMENTS 7.1 PRE-DELIVERY REQUIREMENTS. LESSEE will do each of the following prior to the Scheduled Delivery Date of the Aircraft within the time frames set forth below: 7.1.1 Within one (1) month after execution of this Lease, LESSEE will deliver to LESSOR each of the following: (a) copies of resolutions of the Board of Directors of LESSEE or other written evidence of appropriate corporate action, duly certifying and authorizing the lease of the Aircraft hereunder and the execution, delivery and performance of this Lease, together with an incumbency certificate as to the person or persons authorized to execute and deliver documents on behalf of LESSEE hereunder; and (b) an opinion of counsel in the form and substance of Exhibit F. 7.1.2 At least three (3) days prior to the Scheduled Delivery Date, LESSEE will have delivered to LESSOR a Certificate of Insurance and Brokers' Letter of Undertaking in the form and substance of Exhibits C and D, respectively, from LESSEE's insurance brokers evidencing insurance of the Aircraft in accordance with this Lease from the Delivery Date. 7.1.3 At least three (3) Business Days prior to the Scheduled Delivery Date, LESSEE will do each of the following: (a) provide LESSOR with a copy of such Aviation Documents as may be available prior to the Scheduled Delivery Date; (b) provide LESSOR with a power of attorney empowering LESSEE's representative, who may be an officer or employee of LESSEE, to accept the Aircraft on behalf of LESSEE; and (c) provide LESSOR with such other documents as LESSOR may reasonably request. 7.1.4 Prior to the Scheduled Delivery Date, LESSEE will pay LESSOR the first monthly installment of Rent in accordance with Article 5.3.2. 7.2 DELIVERY REQUIREMENTS. On the Delivery Date of the Aircraft, each of the following will occur: 7.2.1 LESSEE will execute and deliver to LESSOR an Estoppel and Acceptance Certificate in the form of Exhibit E covering the Aircraft and effective as of the Delivery Date. 7.2.2 If not previously done, LESSEE and LESSOR will sign an amendment or supplement to Exhibit A evidencing all agreed-to changes to the specification of the Aircraft. 7.2.3 LESSEE will deliver a certificate signed on behalf of LESSEE by an officer of LESSEE stating all of the following: (a) the representations and warranties contained in Article 20 are true and accurate on and as of the Delivery Date as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date); (b) no Default has occurred and is continuing or will result from LESSEE's lease of the Aircraft hereunder; and (c) none of the Creditor Agreements contains terms which provide or contemplate that any Creditor will obtain any right, title or interest in an Engine which is installed on another aircraft (or, if this is not the case, such certificate will identify the parties, the aircraft and the Creditor Agreements for which this statement is untrue). 7.2.4 LESSEE's counsel will deliver opinions confirming the matters set forth in the opinion of counsel described in Article 7.1 and advising that all filing and other requirements have been met or concurrently are being met. 7.2.5 If any Creditor Agreement provides or contemplates that such Creditor will obtain any right, title or interest in an Engine which is installed on such Creditor's aircraft, LESSEE will deliver to LESSOR an engines cooperation agreement in form and substance acceptable to LESSOR which is executed by LESSEE and LESSEE's Creditors (as defined therein). 7.2.6 LESSOR will deliver to LESSEE an assignment of Manufacturer and Engine manufacturer rights in the form and substance of Exhibits G and H, respectively, and concurrently therewith LESSOR, to the extent it has not previously done so, will be deemed to have assigned all training, product assurance and product support applicable to the owner or operator of the Aircraft to LESSEE during the Lease Term. 7.3 POST-DELIVERY REQUIREMENTS. 7.3.1 Promptly after Delivery, LESSEE will do each of the following: (a) provide LESSOR with copies of all Aviation Documents not previously delivered; and (b) provide LESSOR with a follow-up opinion of counsel advising that the Aircraft has been registered in the State of Registration and that all necessary filings have been made. ARTICLE 8 DISCLAIMERS LESSOR HAS COMMITTED TO LESSEE THAT ON THE DELIVERY DATE THE AIRCRAFT WILL BE IN THE CONDITION REQUIRED BY ARTICLE 6. SUCH COMMITMENT OR COVENANT ON THE PART OF LESSOR EXPIRES AND THE DISCLAIMERS SET FORTH IN THIS ARTICLE 8 APPLY UPON LESSEE'S ACCEPTANCE OF THE AIRCRAFT AND EXECUTION OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATE. AFTER SUCH TIME, THEN AS BETWEEN LESSOR AND LESSEE: 8.1 "AS IS, WHERE IS". LESSEE AGREES THAT IT IS LEASING THE AIRCRAFT "AS IS, WHERE IS". LESSEE UNCONDITIONALLY ACKNOWLEDGES AND AGREES THAT NEITHER LESSOR NOR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES OR REPRESENTATIVES HAVE MADE OR WILL BE DEEMED TO HAVE MADE ANY TERM, CONDITION, REPRESENTATION, WARRANTY OR COVENANT EXPRESS OR IMPLIED (WHETHER STATUTORY OR OTHERWISE) AS TO (a) THE CAPACITY, AGE, AIRWORTHINESS, VALUE, QUALITY, DURABILITY, CONFORMITY TO THE PROVISIONS OF THIS LEASE, DESCRIPTION, CONDITION (WHETHER OF THE AIRCRAFT, ANY ENGINE, ANY PART THEREOF OR THE AIRCRAFT DOCUMENTATION), DESIGN, WORKMANSHIP, MATERIALS, MANUFACTURE, CONSTRUCTION, OPERATION, DESCRIPTION, STATE, MERCHANTABILITY, PERFORMANCE, FITNESS FOR ANY PARTICULAR USE OR PURPOSE (INCLUDING THE ABILITY TO OPERATE OR REGISTER THE AIRCRAFT OR USE THE AIRCRAFT DOCUMENTATION IN ANY OR ALL JURISDICTIONS) OR SUITABILITY OF THE AIRCRAFT OR ANY PART THEREOF, OR THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, KNOWN OR UNKNOWN, APPARENT OR CONCEALED, EXTERIOR OR INTERIOR, (b) THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK, COPYRIGHT OR OTHER INTELLECTUAL PROPERTY RIGHTS, (c) ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE OR (d) EXCEPT AS SET FORTH IN ARTICLE 21.1, ANY OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY PART THEREOF, ALL OF WHICH ARE HEREBY EXPRESSLY EXCLUDED AND EXTINGUISHED. 8.2 WAIVER OF WARRANTY OF DESCRIPTION. IN CONSIDERATION OF (a) LESSEE'S RIGHTS HEREUNDER TO INSPECT THE AIRCRAFT AND (b) LESSOR'S ASSIGNMENT TO LESSEE OF ANY EXISTING AND ASSIGNABLE WARRANTIES OF MANUFACTURER AND THE ENGINE MANUFACTURER, LESSEE HEREBY AGREES THAT ITS ACCEPTANCE OF THE AIRCRAFT AT DELIVERY AND ITS EXECUTION AND DELIVERY OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATE CONSTITUTE LESSEE'S WAIVER OF THE WARRANTY OF DESCRIPTION, ANY CLAIMS LESSEE MAY HAVE AGAINST LESSOR BASED UPON THE FAILURE OF THE AIRCRAFT TO CONFORM WITH SUCH DESCRIPTION AND ANY AND ALL RIGHTS IT MAY HAVE TO THE REMEDIES SET FORTH IN SECTIONS 10508 THROUGH 10522 OF THE CALIFORNIA COMMERCIAL CODE. EVEN IF AT ANY TIME THE FAILURE OF THE AIRCRAFT TO CONFORM TO SUCH DESCRIPTION SUBSTANTIALLY IMPAIRS THE VALUE AND UTILITY OF THE AIRCRAFT AND EITHER (i) LESSEE ACCEPTED THE AIRCRAFT BASED ON A REASONABLE ASSUMPTION THAT THE NONCONFORMITY WOULD BE CURED AND IT WAS NOT SEASONABLY CURED OR (ii) LESSEE ACCEPTED THE AIRCRAFT WITHOUT DISCOVERING THE NONCONFORMITY BUT LESSEE'S ACCEPTANCE OF THE AIRCRAFT WAS REASONABLY INDUCED EITHER BY LESSOR'S ASSURANCES OR BY THE DIFFICULTY OF DISCOVERING ANY DEFECT PRIOR TO ACCEPTANCE, LESSEE AGREES NOT TO LOOK TO LESSOR FOR DAMAGES OR RELIEF ARISING OUT OF THE FAILURE OF THE AIRCRAFT TO CONFORM TO SUCH DESCRIPTION. 8.3 LESSEE WAIVER. LESSEE hereby waives as between itself and LESSOR and agrees not to seek to establish or enforce any rights and remedies, express or implied (whether statutory or otherwise) against LESSOR or the Aircraft relating to any of the matters mentioned in Articles 8.1 or 8.2. 8.4 CONCLUSIVE PROOF. DELIVERY BY LESSEE TO LESSOR OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATE WILL BE CONCLUSIVE PROOF AS BETWEEN LESSOR AND LESSEE THAT LESSEE'S TECHNICAL EXPERTS HAVE EXAMINED AND INVESTIGATED THE AIRCRAFT AND ENGINES AND (a) EACH IS AIRWORTHY AND IN GOOD WORKING ORDER AND REPAIR AND (b) THE AIRCRAFT AND ENGINES AND THE AIRCRAFT DOCUMENTATION ARE WITHOUT DEFECT (WHETHER OR NOT DISCOVERABLE AT DELIVERY) AND IN EVERY WAY SATISFACTORY TO LESSEE. 8.5 NO LESSOR LIABILITY FOR LOSSES. LESSEE agrees that LESSOR will not be liable to LESSEE, any sublessee or any Person, whether in contract or tort and however arising, for any cost, loss or damage (consequential or otherwise) arising out of the condition of the Aircraft, whether or not due in whole or in part to an act or omission or the active or passive negligence of LESSOR. 8.6 NO LIABILITY TO REPAIR OR REPLACE. LESSOR will not be liable for any expense in repairing or replacing any item of the Aircraft or be liable to supply another aircraft or any item in lieu of the Aircraft or any Part thereof if the same is lost, confiscated, damaged, destroyed or otherwise rendered unfit for use. 8.7 NO WAIVER. Nothing in this Article 8 or elsewhere in this Lease will be deemed to be a waiver by LESSEE of any rights it may have against Manufacturer, the Engine manufacturer or any other Person. ARTICLE 9 MANUFACTURERS' AND VENDORS' WARRANTIES 9.1 WARRANTIES. As set forth in Article 7.2.6, at Delivery LESSOR will assign to LESSEE for the duration of the Lease Term the benefit of all warranties and indemnities given to LESSOR by Manufacturer and the Engine manufacturer. Effective on the Delivery Date, all other vendor warranties with respect to the Aircraft are hereby assigned by LESSOR to LESSEE. 9.2 REASSIGNMENT. On the Termination Date, the benefit of any warranty assigned by LESSOR to LESSEE pursuant to Article 7.2.6 will be reassigned automatically to LESSOR or its designee. ARTICLE 10 OPERATION OF AIRCRAFT 10.1 COSTS OF OPERATION. As between LESSEE and LESSOR, LESSEE will pay all costs incurred in the operation of the Aircraft during the Lease Term, for profit or otherwise, including the costs of flight crews, cabin personnel, fuel, oil, lubricants, maintenance, insurance, storage, landing and navigation fees, airport charges, passenger service and any and all other expenses of any kind or nature, directly or indirectly, in connection with or related to the use, movement and operation of the Aircraft. The obligations, covenants and liabilities of LESSEE under this paragraph arising prior to return of the Aircraft to LESSOR will continue in full force and effect, notwithstanding the termination of this Lease or expiration of the Lease Term. 10.2 COMPLIANCE WITH LAWS. LESSEE agrees throughout the Lease Term that all use of the Aircraft will be in accordance with applicable Laws of the State of Registration and of any country, state, territory or municipality into or over which LESSEE may operate. LESSEE will not employ, suffer or cause the Aircraft to be used in any business which is forbidden by Law or in any manner which may render it liable to condemnation, destruction, seizure, or confiscation by any authority. LESSEE will not permit the Aircraft to fly to any airport or country if so doing would cause LESSEE to be in violation of any Law applicable to LESSEE or the Aircraft. The foregoing provisions in this Article 10.2 shall not prohibit any violation of Law (a) during a good-faith contest of the validity, application, or alleged violation thereof in any reasonable manner so long as there is no material danger of sale, forfeiture, or loss of the Aircraft (however, this good faith exception shall not apply in the case of a mandatory grounding order, the good faith contest of which does not permit LESSEE to operate the Aircraft during such contest), and which does not extend beyond the end of the Lease Term if the pendency of such contest would adversely affect the Aircraft or the remarketing thereof in any material respect; and (b) for minor or non-recurring violations (with the understanding that minor violations may cease to be minor if recurring) that LESSEE is diligently trying to rectify which do not render the Aircraft liable to any risk of condemnation, destruction, seizure, or confiscation by any Government Entity. 10.3 TRAINING. LESSEE will not use the Aircraft for testing or for training of flight crew members other than LESSEE crew members and will not use the Aircraft for training any more than it utilizes for training the other aircraft in its fleet. 10.4 NO VIOLATION OF INSURANCE POLICIES. LESSEE will not use or permit the Aircraft to be used in any manner or for any purpose which is not covered by the insurance policies LESSEE is required to carry and maintain as set forth in this Lease. LESSEE will not carry any goods of any description that would invalidate or limit such policies or do any other act or permit to be done anything which could reasonably be expected to invalidate or limit any such insurance policy. 10.5 FLIGHT CHARGES. 10.5.1 LESSEE will pay promptly when due all enroute navigation charges, navigation service charges and all other charges payable by LESSEE for the use of or for services provided at any airport, whether in respect of the Aircraft or any other aircraft of LESSEE, and will indemnify and hold LESSOR harmless in respect of the same. This indemnity will continue in full force and effect notwithstanding the termination or expiration of the Lease Term for any reason or the return of the Aircraft. 10.5.2 If requested by LESSOR, LESSEE will provide LESSOR with a list of the airports to which LESSEE regularly operates the Aircraft or its other aircraft. LESSEE hereby authorizes Eurocontrol or another aviation authority or airport or creditor claiming rights on the Aircraft to confirm the status of LESSEE's payments to such creditor for the Aircraft and its other aircraft, as and when requested by LESSOR. ARTICLE 11 SUBLEASES 11.1 NO SUBLEASE WITHOUT LESSOR CONSENT. LESSEE WILL NOT SUBLEASE OR PART WITH POSSESSION OF THE AIRCRAFT (EXCEPT FOR MAINTENANCE AND REPAIR) AT ANY TIME WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR (NOT TO BE UNREASONABLY WITHHELD) AND IN ACCORDANCE WITH SUCH REQUIREMENTS AS MAY FROM TIME TO TIME BE AGREED IN WRITING BETWEEN LESSOR AND LESSEE. The wet leasing of the Aircraft during the Lease Term (in which LESSEE and its crews retain operational control of the Aircraft) will not be considered a sublease of the Aircraft. 11.2 LESSOR COSTS. LESSEE will indemnify LESSOR on demand for all out-of-pocket expenses (including legal fees) incurred in connection with LESSOR's assessment of the subleasing proposal (whether or not LESSOR's consent to such sublease is ultimately given) and implementation of the sublease. 11.3 ANY APPROVED SUBLEASE. Any sublease approved by LESSOR will be for a term no greater than the remaining Lease Term and contain provisions consistent with this Lease protecting LESSOR's title to the Aircraft, providing appropriate LESSOR indemnities, regarding the maintenance and repair standards for the Aircraft, concerning the insurances which will be carried by the sublessee and the circumstances which constitute a Total Loss of the Aircraft. Any such sublease will be subject and subordinate to this Lease. In its sole discretion, LESSOR may require an opinion of counsel in connection with such sublease, including LESSOR's right to repossess the Aircraft in the event of an Event of Default hereunder or under the sublease. LESSEE will not amend the terms of any approved sublease without the prior written consent of LESSOR, which will not be unreasonably withheld. 11.4 ASSIGNMENT OF SUBLEASE. Any approved sublease will be assigned to LESSOR as security. LESSEE will deliver the original counterpart of the sublease to LESSOR and make any filings necessary to protect LESSOR's security interest. 11.5 CONTINUED RESPONSIBILITY OF LESSEE. LESSEE will continue to be responsible for performance of its obligations under this Lease during any period of sublease. ARTICLE 12 MAINTENANCE AND USE OF AIRCRAFT 12.1 GENERAL OBLIGATION. 12.1.1 During the Lease Term and until the Aircraft is returned to LESSOR, LESSEE alone has the obligation, at its expense, to maintain and repair the Aircraft, Engines and all of the Parts (a) in accordance with the Maintenance Program, (b) in accordance with the rules and regulations of the Aviation Authority, (c) in accordance with Manufacturer's type design, (d) in accordance with any other regulations or requirements necessary in order to maintain a valid Certificate of Airworthiness for the Aircraft and meet the requirements at all times during the Lease Term and upon return of the Aircraft to LESSOR for issuance of a Standard Certificate of Airworthiness for transport category aircraft issued by the Aviation Authority (except during those periods when the Aircraft is undergoing maintenance or repairs as required or permitted by this Lease) and (e) in the same manner and with the same care as used by LESSEE or its sublessee with respect to similar aircraft and engines operated by LESSEE or its sublessee and without in any way discriminating against the Aircraft. 12.1.2 LESSEE will maintain and repair the Engines in the same manner and in the equivalent time frame to its other engines and LESSEE will not discriminate against any of the Engines in respect of the repair and maintenance. 12.1.3 LESSEE will not enter into any Engine maintenance cost per flight hour, power-by-the-hour or similar agreement with Engine manufacturer or any other Engine maintenance facility or organization without LESSOR's prior written consent. 12.2 SPECIFIC OBLIGATIONS. Without limiting Article 12.1, LESSEE agrees that such maintenance and repairs will include but will not be limited to each of the following specific items: (a) performance in accordance with the Maintenance Program of all routine and non-routine maintenance work; (b) incorporation in the Aircraft of all Airworthiness Directives; (c) incorporation in the Aircraft of all service bulletins of Manufacturer, the Engine manufacturer and other vendors which LESSEE schedules to adopt within the Lease Term for the rest of its Boeing 737-800 aircraft fleet. It is the intent of the parties that the Aircraft will not be discriminated from the rest of LESSEE's fleet in service bulletin compliance (including method of compliance) or other maintenance matters. LESSEE will not discriminate against the Engines with respect to Overhaul build standards and life-limited part replacements; (d) incorporation in the Maintenance Program for the Aircraft of a corrosion prevention and control program; (e) maintaining in English and keeping in an up-to-date status the records and historical documents set forth in Attachment 1 of Exhibit I; (f) maintaining historical records, in English, for on condition, condition-monitored, hard time and life-limited Parts (including tags from the manufacturer of such Part or a repair facility which evidence that such Part is new or overhauled and establish authenticity, total time in service and time since overhaul for such Part), the hours and cycles the Aircraft and Engines operate and all maintenance and repairs performed on the Aircraft; and (g) properly documenting all repairs, Modifications and alterations and the addition, removal or replacement of equipment, systems or components in accordance with the rules and regulations of the Aviation Authority and reflecting such items in the Aircraft Documentation. In addition, all repairs to the Aircraft will be accomplished in accordance with Manufacturer's Structural Repair Manual (or FAA-approved data supported by FAA Form 8110-3 or equivalent). All Modifications and alterations will also be accomplished in accordance with FAA-approved data supported by FAA Form 8110-3 or equivalent. 12.3 REPLACEMENT OF PARTS. 12.3.1 LESSEE, at its own cost and expense, will promptly replace all Parts which may from time to time become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or rendered unfit or beyond economical repair (BER) for any reason. In the ordinary course of maintenance, service, repair, overhaul or testing, LESSEE may remove any Part provided that LESSEE replaces such Part as promptly as practicable. All replacement Parts will (a) be free and clear of all Security Interests (except Permitted Liens) of any kind or description, (b) be in airworthy condition and of at least equivalent model, service bulletin and modification status and have a value and utility at least equal to the Parts replaced, assuming such replaced Parts were in the condition and repair required to be maintained by the terms hereof and (c) have a current "serviceable tag" of the manufacturer or maintenance facility providing such items to LESSEE, indicating that such Parts are new, serviceable or Overhauled. So long as a substitution meets the requirements of the Maintenance Program and Aviation Authority, LESSEE may substitute for any Part a part that does not meet the requirements of the foregoing sentence if a complying Part cannot be procured or installed within the available groundtime of the Aircraft and as soon as practicable the noncomplying part is removed and replaced by a complying Part. 12.3.2 All Parts removed from the Airframe or any Engine will remain the property of LESSOR and subject to this Lease no matter where located, until such time as such Parts have been replaced by Parts (which have been incorporated or installed in or attached to the Airframe or such Engine) which meet the requirements for replacement Parts specified above and title to such replacement Parts has passed to LESSOR under the Laws of the State of Registration and LEX SITUS. To the extent permitted by the Laws of the State of --- ----- Registration and the LEX SITUS it is the intent of LESSOR and LESSEE that without further --- ----- act and immediately upon any replacement Part becoming incorporated, installed or attached to the Airframe or an Engine as above provided, (a) title to the removed Part will thereupon vest in LESSEE, free and clear of all rights of LESSOR, (b) title to the replacement Part will thereupon vest in LESSOR free and clear of all rights of LESSEE and (c) such replacement Part will become subject to this Lease and be deemed to be a Part hereunder to the same extent as the Parts originally incorporated or installed in or attached to the Airframe or such Engine. 12.4 REMOVAL OF ENGINES. 12.4.1 If an Engine is removed for testing, service, repair, maintenance, Overhaul work, alterations or modifications, title to such Engine will remain vested in LESSOR. 12.4.2 LESSEE will be entitled to remove any of the Engines from the Aircraft and install another engine or engines on the Aircraft, provided that LESSEE complies with each of the following obligations: (a) the insurance requirements set forth in Article 17 and Exhibit C are in place; (b) LESSEE ensures that the identification plates referred to in Article 14 are not removed from any Engine upon such Engine being detached from the Aircraft; and (c) title to the Engine remains with LESSOR free from all Security Interests (except Permitted Liens) regardless of the location of the Engine or its attachment to or detachment from the Aircraft. 12.5 POOLING OF ENGINES AND PARTS. With LESSOR's prior written consent, not to be unreasonably withheld, LESSEE may subject the Engines and Parts to normal interchange or pooling agreements with responsible commercial air carriers customary in the airline industry and entered into by LESSEE in the ordinary course of its business with respect to its Boeing 737-800 fleet generally, so long as (a) in the case of pooling of an Engine, such Engine is returned to LESSEE within two (2) months, (b) no transfer of title to the Engine occurs, (c) all other terms of this Lease continue to be observed with respect to the Engines or Parts, including but not limited to Articles 8, 10, 12, 13, 14, 15, 16, 17 and 18 and (d) LESSEE continues to be fully responsible to LESSOR for the performance of all of its obligations hereunder. 12.6 INSTALLATION OF ENGINES ON OTHER AIRCRAFT. Any Engine removed from the Aircraft may be installed on another airframe in LESSEE's fleet which utilizes engines of the same type as the Engine only if one of the situations described in this Article 12.6 exists: 12.6.1 LESSEE or LESSOR has title to such other aircraft free and clear of all Security Interests (except Permitted Liens). 12.6.2 LESSEE, LESSOR and all of the Creditors of LESSEE of such aircraft enter into an engines cooperation agreement in form and substance acceptable to LESSOR in which each party agrees to recognize one another's rights in the engines. LESSEE will reimburse LESSOR and LESSOR's Lender for their reasonable attorneys' fees and costs in negotiating and finalizing engine cooperation agreement arrangements with LESSEE and its Creditors. 12.6.3 Such other aircraft is subject to a Creditor Agreement (but no other Security Interests except Permitted Liens) which by its terms expressly or effectively states that such Creditor and its successors and assigns will not acquire any right, title or interest in any Engine by reason of such Engine being installed on such aircraft. LESSEE hereby agrees that if LESSOR's title to an Engine is in fact impaired under any such Creditor Agreement, such impairment will be a Total Loss of such Engine and the provisions of Article 18.5 will apply. To the extent another Creditor Agreement contains such provisions, then LESSOR hereby agrees for the benefit of the Creditor of such Creditor Agreement that neither LESSOR nor its successors or assigns will acquire or claim any right, title or interest in any engine in which LESSEE or another Creditor has an interest as a result of such engine being installed on the Airframe. 12.7 MODIFICATIONS. 12.7.1 No modification, alteration, addition or removal to the Aircraft ("MODIFICATION") expected to cost over Five Hundred Thousand U.S. Dollars (US$500,000) or deviation from the Aircraft's original type design or configuration will be made without the prior written consent of LESSOR, which consent will not be unreasonably withheld. "Modifications" do not include Airworthiness Directives or Manufacturer's recommended service bulletins, for which LESSOR's consent is not required. 12.7.2 LESSOR may review LESSEE's proposed designs, plans, engineering drawings and diagrams, and flight and maintenance manual revisions for any proposed Modification. If requested by LESSOR, LESSEE will furnish LESSOR (at LESSEE's expense) with such documents in final form and any other documents required by Law, as a result of such Modification. All Modifications incorporated on the Aircraft will be properly documented in the Aircraft Documentation and be fully approved by the Aviation Authority. 12.7.3 Notwithstanding any other provision of this Lease, no Modification will be made which has the effect of decreasing the utility or value of the Aircraft. 12.7.4 No Modification will be made by LESSEE if an Event of Default exists and is continuing hereunder. 12.7.5 Unless otherwise agreed by LESSOR in writing, all non-severable or structural Modifications will forthwith become a part of the Aircraft and LESSEE relinquishes to LESSOR all rights and title thereto. However, all severable Modifications will remain the property of LESSEE or the third-party owner and, at LESSOR's request and LESSEE's cost, will be removed from the Aircraft prior to return of the Aircraft, with LESSEE restoring the Aircraft to the condition it was in prior to the Modification. Notwithstanding the foregoing, no such removal will be permitted without LESSOR's permission after the occurrence of an Event of Default hereunder and immediately upon the occurrence of an Event of Default hereunder, without the requirement of any further act or notice, all right, title and interest in such Modifications will immediately vest in LESSOR. 12.7.6 LESSOR will bear no liability for the cost of Modifications of the Aircraft whether in the event of grounding or suspensions of certification, or for any other cause. 12.8 PERFORMANCE OF WORK BY THIRD PARTIES. Whenever maintenance and repair work on the Aircraft or Engines will be regularly performed by a Person other than LESSEE, such Person will be an FAA-authorized repair station. 12.9 REPORTING REQUIREMENTS. 12.9.1 Commencing with a report furnished ten (10) days after the end of the calendar month in which Delivery occurs, LESSEE will furnish to LESSOR a Monthly Report in English in the form attached hereto as Exhibit J. Each Monthly Report will be furnished within ten (10) days after the end of each calendar month, except that the Monthly Report pertaining to the last month (or any portion thereof) of the Lease Term will be furnished to LESSOR on the Termination Date. 12.9.2 On each anniversary of the Delivery Date, LESSEE will provide LESSOR with a Technical Evaluation Report for the Aircraft in the form and substance of Exhibit L, as revised. 12.10 INFORMATION REGARDING MAINTENANCE PROGRAM. LESSEE will provide LESSOR with a copy of or information regarding the Maintenance Program for the Aircraft, as requested by LESSOR. 12.11 LESSOR RIGHTS TO INSPECT AIRCRAFT. On reasonable notice, LESSOR and/or its authorized agents or representatives will have the right to inspect the Aircraft and Aircraft Documentation. LESSOR agrees that such requests will be coordinated with LESSEE so as to cause the minimum practical disturbance to LESSEE's operation or its personnel. LESSEE agrees to cooperate with LESSOR in making the Aircraft and Aircraft Documentation available to such authorized technical teams. No such inspection shall include opening panels, bays, or the like (although LESSOR may observe those that are then open), or disassembling any item. LESSOR will have no duty to make any such inspection and will not incur any liability or obligation by reason of (and LESSEE's indemnity obligations pursuant to Article 16 will apply notwithstanding) not making any such inspection or by reason of any reports it receives or any reviews it may make of the Aircraft records. ARTICLE 13 TITLE AND REGISTRATION 13.1 TITLE TO THE AIRCRAFT DURING LEASE TERM. Title to the Aircraft will be and remain vested in LESSOR. LESSOR and LESSEE intend this Lease to be a "true lease". LESSEE will have no right, title or interest in the Aircraft except as provided in this Lease. 13.2 REGISTRATION OF AIRCRAFT. LESSEE at its sole cost and expense will (a) register and maintain registration of the Aircraft in the name of LESSOR at the register of aircraft in the State of Registration and (b) from time to time take all other steps then required by Law (including the Geneva Convention if applicable) or by practice, custom or understanding or as LESSOR may reasonably request to protect and perfect LESSOR's interest in the Aircraft and this Lease in the State of Registration or in any other jurisdictions in or over which LESSEE may operate the Aircraft. 13.3 FILING OF THIS LEASE. To the extent permitted by Law and in accordance with the requirements of the Law from time to time, LESSEE at its sole cost and expense will cause this Lease to be kept, filed, recorded and refiled or rerecorded in the State of Registration and in any other offices necessary to protect LESSOR's rights hereunder. 13.4 EVIDENCE OF REGISTRATION AND FILINGS. As LESSOR may reasonably request from time to time, LESSEE will furnish to LESSOR an opinion of counsel or other evidence reasonably satisfactory to LESSOR of the registrations and filings required hereunder. ARTICLE 14 IDENTIFICATION PLATES LESSOR will affix and LESSEE will at all times maintain on the Airframe and each Engine the identification plates containing the following legends or any other legend reasonably requested by LESSOR in writing: 14.1 AIRFRAME IDENTIFICATION PLATES. Location: One to be affixed to the Aircraft structure above the forward entry door adjacent to and not less prominent than that of Manufacturer's data plate and another in a prominent place on the flight deck. Size: No smaller than 4" x 6". Legend: "THIS AIRCRAFT IS OWNED BY INTERNATIONAL LEASE FINANCE CORPORATION. MANUFACTURER'S SERIAL NO: 30706 OWNER'S ADDRESS: INTERNATIONAL LEASE FINANCE CORPORATION 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States of America Fax: (310) 788-1990" 14.2 ENGINE IDENTIFICATION PLATES. Location: The legend on the plate must be visible. Size: No smaller than 2" x 6". "THIS ENGINE IS OWNED BY INTERNATIONAL LEASE FINANCE CORPORATION, LOS ANGELES, CALIFORNIA, USA." ARTICLE 15 TAXES 15.1 GENERAL OBLIGATION OF LESSEE. Except as set forth in Article 15.2, LESSEE agrees to pay promptly when due, and to indemnify and hold harmless LESSOR on a full indemnity basis from, all license and registration fees and all taxes, fees, levies, imposts, duties, charges or withholdings of any nature whatsoever (including without limitation any value added, franchise, transfer, sales, gross receipts, use, business, occupation, excise, personal property, real property, stamp or other tax) together with any assessments, penalties, fines, additions to tax or interest thereon, however or wherever imposed (whether imposed upon LESSEE, LESSOR, on all or part of the Aircraft, the Engines or otherwise), by any Government Entity or taxing authority in the U.S., any State thereof, or any foreign country or by any international taxing authority, upon or with respect to, based upon or measured by any of the following (collectively, "TAXES"): (a) the Aircraft, the Engines or any Parts. (b) the use, operation or maintenance of the Aircraft or carriage of passengers or freight during the Lease Term. (c) this Lease, the payments due hereunder and the terms and conditions hereof. (d) the return of the Aircraft to LESSOR or other use or disposition of the Aircraft by LESSEE. 15.2 EXCEPTIONS TO INDEMNITY. The indemnity provided in Article 15.1 does not extend to any of the following Taxes: (a) Imposed by the U.S. (including without limitation any taxes collected by withholding) or any state or local government or governmental subdivision or state or local taxing authority in the U.S. (including any possession or territory of the U.S.) or by any foreign government, taxing authority or governmental subdivision of a foreign country which are based on, or measured by, the receipts, gross or net income, capital, net worth, franchises, excess profits, or conduct of business (including minimum taxes, withholding taxes and taxes on or measured by any items of tax preference) of LESSOR, except to the extent that such Tax would not have been imposed on or payable by LESSOR but for the location, use, registration or operation of the Aircraft or any part thereof, or any place of business or any activity of LESSEE in the jurisdiction imposing such Tax. (b) Imposed as a result of LESSOR's transfer, mortgage, pledge, financing or other disposition by LESSOR of all or a portion of its interest in the Aircraft or this Lease except a transfer or sale resulting from an exercise of remedies pursuant to Article 25.3 hereunder or in connection with a termination of the Lease pursuant to Article 18 hereof. (c) Attributable to the period prior to the Delivery Date or after return of the Aircraft to LESSOR in accordance with this Lease. (d) Attributable to LESSOR's gross negligence, willful misconduct or breach of this Lease. 15.3 AFTER-TAX BASIS. The amount which LESSEE is required to pay with respect to any Taxes indemnified against under Article 15.1 is an amount sufficient to restore LESSOR on an after-tax basis to the same position LESSOR would have been in had such Taxes not been incurred. 15.4 CLAIMS AND CONTESTS. If a written claim is received by LESSOR for Taxes, which claim, if sustained, would require the payment of an indemnity by LESSEE pursuant to this Article 15, LESSOR shall notify LESSEE of such claim within thirty (30) days after its receipt, provided that failure to provide such notice within thirty (30) days will not relieve LESSEE of any indemnification obligation pursuant to this Article 15 if such failure does not preclude LESSEE from exercising its contest rights hereunder. Payments due from LESSEE to LESSOR pursuant to this Article 15 shall be made directly to LESSOR within thirty (30) days of written demand by LESSOR to LESSEE. If requested by LESSEE in writing, LESSOR shall upon receipt of indemnity reasonably satisfactory to it and at the expense of LESSEE (including, without limitation, all reasonable costs, expenses, legal and accountants' fees, and disbursements, penalties, interest incurred in contesting such claim, and additions to tax) in good faith, in the name of LESSOR or, if requested by LESSEE, in the name of LESSEE (or permit LESSEE, if desired by LESSEE, to contest in the name of LESSEE) if permissible under applicable laws, the validity, applicability or amount of such Taxes by (i) resisting payment thereof if practicable only if adequate reserves have been made for such Taxes or, if required, an adequate bond has been posted, (ii) paying the same under protest, if protest shall be necessary and proper, (iii) if payment shall be made, using reasonable efforts to obtain a refund thereof in appropriate administrative and judicial proceedings, and (iv) taking such other action as is reasonably requested by LESSEE from time to time including not paying such Taxes only if adequate reserves have been made for such Taxes or, if required, an adequate bond has been posted. LESSOR shall determine the method of any contest and (in good faith consultation with LESSEE) control the conduct thereof. Notwithstanding anything contained in this Article 15.4, LESSOR will not be required to contest, or to continue to contest, the validity, applicability or amount of any Tax (or portion thereof) (x) if such contest would result in any material risk of criminal penalties or any material risk of sale, forfeiture or loss of the Aircraft, (y) if an Event of Default has occurred and is continuing, or (z) in the case of a contest of a Tax reflected on a return of LESSOR with other taxes of LESSOR that are not indemnified by the LESSEE hereunder, if LESSEE shall not have furnished an opinion of independent tax counsel selected by the LESSEE, and reasonably satisfactory to LESSOR, that a reasonable basis exists for such contest. If LESSOR shall obtain a refund of all or any part of such Taxes for which an indemnity was paid by LESSEE, LESSOR shall pay LESSEE the amount of such refund; PROVIDED, HOWEVER, that such amount shall not be payable before such time as LESSEE shall have made all payments or indemnities to LESSOR then due under this Article 15 and under the Lease or while an Event of Default shall have occurred and be continuing. If in addition to such refund LESSOR shall receive an amount representing interest on the amount of such refund, LESSEE shall be paid that proportion of such interest which is fairly attributable to Taxes paid with an indemnity payment by LESSEE prior to the receipt of such refund or interest and increased by any taxes saved by reason of the deductibility of such payment by LESSOR. LESSEE shall not be deemed to be in default under any of the indemnification provisions under this Article 15 so long as it or LESSOR shall diligently prosecute such contest and LESSEE has indemnified LESSOR to LESSOR's reasonable satisfaction. In case any report or return is required to be made with respect to any obligation of LESSEE under this Article 15.4 or arising out of this Article 15.4, LESSEE will either timely make such report or return in such manner as will show the ownership of the Aircraft in LESSOR, and will as soon as possible send a copy of such report or return to LESSOR, or will notify LESSOR of such requirement and prepare and deliver such report or return to LESSOR in such manner as shall be satisfactory to LESSOR. 15.5 REFUNDS. Upon receipt by LESSOR of a refund of all or any part of any Taxes (including any deductions or withholdings referred to in Article 15.1) which LESSEE has paid, LESSOR will pay to LESSEE the net amount of such Taxes refunded. 15.6 COOPERATION IN FILING TAX RETURNS. LESSEE and LESSOR will cooperate with one another in providing information which may be reasonably required to fulfill each party's tax filing requirements and any audit information request arising from such filing. ARTICLE 16 INDEMNITIES 16.1 GENERAL INDEMNITY. Except as set forth in Article 16.2, LESSEE agrees to indemnify and hold harmless LESSOR and its officers, directors, employees, agents and shareholders (individually an "INDEMNITEE" and collectively "INDEMNITEES") from any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs, disbursements and expenses (including legal fees, costs and related expenses) of every kind and nature, whether or not any of the transactions contemplated by this Lease are consummated (collectively "EXPENSES"), which are imposed on, incurred by or asserted against any Indemnitee and which are in any way relating to, based on or arising out of any of the following: (a) this Lease or any transactions contemplated hereby; (b) the operation, possession, use, non-use, control, leasing, subleasing, maintenance, storage, overhaul, testing, inspections or acceptance flights at return of the Aircraft, any Engine or any Part during the Lease Term by LESSEE, any sublessee or any other Person, whether or not the same is in compliance with the terms of this Lease, including without limitation claims for death, personal injury, property damage, other loss or harm to any Person and claims relating to any Laws, including without limitation environmental control, noise and pollution laws, rules or regulations; (c) the manufacture, design, acceptance, rejection, delivery, return, sale in connection with an Event of Default, import, export, condition, repair, modification, servicing, rebuilding, enforcement of warranties whether in LESSOR's or LESSEE's name, customer and product support provided by Manufacturer and other vendors, airworthiness, registration, reregistration, performance, sublease, merchantability, fitness for use, substitution or replacement of the Aircraft, Engine or any Part under this Lease or other transfer of use or possession of the Aircraft, Engine or any Part, including under a pooling or interchange arrangement, including without limitation latent and other defects, whether or not discoverable and patent, trademark or copyright infringement; (d) any non-compliance by LESSEE with any term of this Lease or the falsity or inaccuracy of any representation or warranty of LESSEE set forth herein; (e) the prevention or attempt to prevent the arrest, confiscation, seizure, taking in execution, impounding, forfeiture or detention of the Aircraft, or in securing the release of the Aircraft; or (f) as a consequence of any Default in payment by LESSEE of any sum to be paid by LESSEE when due under this Lease or any other Default by LESSEE in the due and punctual performance of its obligations under this Lease. The foregoing indemnity by LESSEE is intended to include and cover any Expense to which an Indemnitee may be subject (in contract, tort, strict liability or under any other theory) regardless of the negligence, active or passive or any other type, of such Indemnitee, so long as such Expense does not fall within any of the exceptions listed in Article 16.2. 16.2 EXCEPTIONS TO GENERAL INDEMNITIES. The indemnity provided for in Article 16.1 will not extend to Expenses of any Indemnitee to the extent resulting from or arising out of any of the following: (a) Expenses which have resulted from the willful misconduct of such Indemnitee; (b) Expenses which LESSEE and LESSOR mutually agree or, absent mutual agreement, are judicially determined to be attributable to acts or events which occur after the Termination Date and return of the Aircraft to LESSOR in the condition required hereunder, but in any such case only to the extent not attributable to acts or omissions of LESSEE; (c) Expenses representing Taxes, it being acknowledged that the terms of Article 15 apply exclusively to LESSEE's indemnity obligations with respect to Taxes; (d) Expenses due to the breach by LESSOR of its covenant of quiet enjoyment pursuant to Article 21.2 (except to the extent covered by LESSEE's insurances); (e) Expenses which arise in connection with the transfer by LESSOR of any interest in the Aircraft or this Lease, except for any transfer in connection with any Event of Default or a Total Loss of the Aircraft or an Engine. (f) Expenses which are solely attributable to the representation or warranty of LESSOR contained in or made pursuant to any Operative Document being untrue; (g) Expenses which are solely related to the failure of such Indemnitees to perform or observe any agreement, covenant, or condition on its part to be performed or observed in any Operative Document; (h) Expenses which are solely an ordinary and usual internal customary operating expense; or (i) Expenses which are solely related to a breach of Article 21.1.6, or (j) Expenses which are solely related to a LESSOR's Lien. 16.3 AFTER-TAX BASIS. The amount which LESSEE will be required to pay with respect to any Expense indemnified against under Article 16.1 will be an amount sufficient to restore the Indemnitee, on an after-tax basis, to the same position such Indemnitee would have been in had such Expense not been incurred. 16.4 TIMING OF PAYMENT. It is the intent of the parties that each Indemnitee will have the right to indemnification for Expenses hereunder as soon as a claim is made and as soon as an Expense is incurred, whether or not such claim is meritorious and whether or not liability is established (but subject to Articles 16.2 and 16.8). LESSEE will pay an Indemnitee for Expenses pursuant to this Article 16 within ten (10) days after receipt of a written demand therefor from such Indemnitee accompanied by a written statement describing in reasonable detail the basis for such indemnity (but not before payment is due from such Indemnitee). 16.5 SUBROGATION. Upon the payment in full of any indemnity pursuant to this Article 16 by LESSEE, LESSEE will be subrogated to any right of the Indemnitee in respect of the matter against which such indemnity has been made. 16.6 NOTICE. Each Indemnitee and LESSEE will give prompt written notice one to the other of any liability of which such party has knowledge for which LESSEE is, or may be, liable under Article 16.1; provided, however, that failure to give such notice will not terminate any of the rights of Indemnitees under this Article 16 except to the extent that LESSEE has been materially prejudiced by the failure to provide such notice. 16.7 REFUNDS. If any Indemnitee obtains a recovery of all or any part of any amount which LESSEE has paid to such Indemnitee, such Indemnitee will pay to LESSEE the net amount recovered by such Indemnitee. 16.8 DEFENSE OF CLAIMS. (a) LESSEE and its insurers will have the right (in each such case at LESSEE's sole expense) to investigate or, provided that LESSEE or its insurers have not reserved the right to dispute liability with respect to any insurance policies pursuant to which coverage is sought, defend or compromise any claim covered by insurance for which indemnification is sought pursuant to Article 16.1 and each Indemnitee will cooperate with LESSEE or its insurers with respect thereto. If LESSEE or its insurers are retaining attorneys to handle such claim, such counsel must be reasonably satisfactory to the Indemnitees. If not, the Indemnitees will have the right to retain counsel of their choice at LESSEE's expense. (b) Unless LESSOR agrees in writing otherwise, no settlement of any claim hereunder may require LESSOR to agree to any remedy apart from the payment of money damages (for which such payment of money damages LESSEE will in any event indemnify the Indemnitees). (c) In no event shall any Indemnitee enter into a settlement or other compromise with respect to any Expense without LESSEE's prior written consent (which shall not be unreasonably withheld or delayed), unless such Indemnitee waives its right to be indemnified with respect to such Expense under this Article 16. (d) To the extent that any Expense indemnified by LESSEE hereunder may be covered by insurance maintained by LESSEE, at LESSEE's expense, each Indemnitee agrees to cooperate with the insurers in the exercise of their rights to investigate, defend, or compromise that Expense as may be required to retain the benefits of the insurance for that Expense. (e) If an Indemnitee is not a party to this Lease, LESSEE may require that Indemnitee to agree in writing to the terms of this Article 16 before making any payment to such Indemnitee under this Article 16. 16.9 SURVIVAL OF OBLIGATION. Notwithstanding anything in this Lease to the contrary, the provisions of this Article 16 will survive the Termination Date and continue in full force and effect notwithstanding any breach by LESSOR or LESSEE of the terms of this Lease, the termination of the lease of the Aircraft to LESSEE under this Lease or the repudiation by LESSOR or LESSEE of this Lease. ARTICLE 17 INSURANCE 17.1 CATEGORIES OF INSURANCE. Throughout the Lease Term and until the Termination Date LESSEE will, at its own expense, effect and maintain in full force and effect the types of insurance and amounts of insurance (including deductibles) described in Exhibit C through such brokers and with such insurers favorably regarded in the airline industry. 17.2 INSURANCE FOR INDEMNITIES. The insurance referred to in Article 17.1 will in each case include and insure (to the extent of the risks covered by the policies) the indemnity provisions of Article 16 and LESSEE will maintain such insurance of the indemnities for a minimum of two (2) years following the Termination Date. 17.3 INSURANCE REQUIRED BY MANUFACTURER. During the Lease Term, LESSEE will carry the insurance required by Manufacturer in connection with LESSOR's assignment of Manufacturer's warranties and product support to LESSEE. 17.4 RENEWAL. Not less than two (2) Business Days before the expiration or termination date of any insurance required hereunder, LESSEE will provide LESSOR with fax confirmation from LESSEE's insurance brokers that renewed certificates of insurance evidencing the renewal or replacement of such insurance and complying with Exhibit C will be issued on the termination date of the prior certificate. Within seven (7) days after such renewal, LESSEE will furnish its brokers' certificates of insurance to LESSOR. 17.5 ASSIGNMENT OF RIGHTS BY LESSOR. If LESSOR assigns all or any of its rights under this Lease as permitted by this Lease or otherwise disposes of any interest in the Aircraft to any other Person, LESSEE will, upon request, procure that (to the extent of the assignment or disposition) such Person hereunder be added as loss payee and/or additional assured in the policies effected hereunder and enjoy the same rights and insurance enjoyed by LESSOR under such policies. To the extent of its retained interest or as provided in Article 24.2.1, LESSOR will nevertheless continue to be covered by such policies. 17.6 DEDUCTIBLES. If there is a material adverse change in the financial condition of LESSEE which LESSOR reasonably believes will not enable LESSEE to pay the deductible upon the occurrence of a partial loss of the Aircraft or an Engine, then LESSOR may require LESSEE at LESSEE's expense to lower its deductibles on the insurance maintained hereunder to a level which is available on commercially reasonable terms in the insurance market. 17.7 OTHER INSURANCE. LESSOR may from time to time by notice to LESSEE require LESSEE at LESSEE's expense to effect such other insurance or such variations to the terms of the existing insurance as may then be customary in the airline industry for aircraft of the same type as the Aircraft and at the time commonly available in the insurance market. 17.8 INFORMATION. LESSEE will provide LESSOR with any information reasonably requested by LESSOR from time to time concerning the insurance maintained with respect to the Aircraft or in connection with any claim being made or proposed to be made thereunder. 17.9 CURRENCY. All proceeds of insurance pursuant to this Lease will be payable in Dollars except as may be otherwise agreed by LESSOR. 17.10 GROUNDING OF AIRCRAFT. If at any time any of the insurance required pursuant to this Lease will cease to be in full force and effect, LESSEE will forthwith ground the Aircraft and keep the Aircraft grounded until such time as such insurance is in full force and effect again. 17.11 FAILURE TO INSURE. If at any time LESSEE fails to maintain insurance in compliance with this Article 17, LESSOR will be entitled but not bound to do any of the following (without prejudice to any other rights which it may have under this Lease by reason of such failure): (a) to pay any premiums due or to effect or maintain substitute insurance or otherwise remedy such failure in any reasonable manner (and LESSEE will upon demand reimburse LESSOR in full for any amount so expended in that connection); or (b) at any time while such failure is continuing, to require the Aircraft to remain at any airport or (as the case may be), proceed to and remain at any airport designated by LESSOR. 17.12 LIMIT ON HULL IN FAVOR OF LESSEE. LESSEE may carry hull all risks or hull war and allied perils on the Aircraft in excess of the Agreed Value (which Agreed Value is payable to LESSOR) only to the extent such excess insurance which would be payable to LESSEE in the event of a Total Loss does not exceed fifteen percent (15%) of the Agreed Value and only to the extent that such additional insurance will not prejudice the insurances required herein or the recovery by LESSOR thereunder. LESSEE agrees that it will not create or permit to exist any liens or encumbrances over the insurances, or its interest therein, except as constituted by this Lease. 17.13 MARKETPLACE LIMITATIONS. The insurance required by this Lease may be subject to any limitations generally prevailing in the airline insurance marketplace at the time (e.g., AVN67B). ARTICLE 18 LOSS, DAMAGE AND REQUISITION Throughout the Lease Term and until the Termination Date, LESSEE will bear all risk of loss, theft, damage and destruction to the Aircraft. 18.1 DEFINITIONS. In this Article 18: "AGREED VALUE" (CONFIDENTIAL MATERIAL OMITTED) The Agreed Value is set forth in March 2001 U.S. Dollars and will be increased in accordance with Manufacturer's announced escalation rate from March 1, 2001 to the Delivery Date. On each annual renewal date of LESSEE's insurance policy commencing on the renewal date following the first anniversary of the Lease Term, the Agreed Value will decrease by two percent (2.0%) of the then-existing Agreed Value. "NET TOTAL LOSS PROCEEDS" means the Total Loss Proceeds actually received by LESSOR following a Total Loss, less any legal and other out-of-pocket expenses or duties incurred by LESSOR in connection with the collection of such proceeds. "TOTAL LOSS" means any of the following in relation to the Aircraft, Airframe or any Engine and "TOTAL LOSS DATE" means the date set forth in parenthesis after each Total Loss: (a) destruction, damage beyond repair or being rendered permanently unfit for normal use for any reason (the date such event occurs or, if not known, the date on which the Aircraft, Airframe or Engine was last heard of); (b) actual, constructive, compromised, arranged or agreed total loss (the earlier of the date on which the loss is agreed or compromised by the insurers or thirty (30) days after the date of notice to LESSEE's brokers or insurers claiming such total loss); (c) requisition of title, confiscation, forfeiture or any compulsory acquisition of title or other similar event (the date on which the same takes effect); (d) sequestration, detention, seizure or any similar event for more than one hundred eighty (180) consecutive days (the earlier of the date on which insurers make payment on the basis of a total loss or the date of expiration of such period); (e) requisition for use for more than one hundred eighty (180) consecutive days, except as set forth in Article 18.8 (the earlier of the date on which the insurers make payment on the basis of a total loss or the date of expiration of such period); (f) in the case of an Engine, the event described in Article 12.6.3 (the date on which the same takes effect); "TOTAL LOSS PROCEEDS" means the proceeds of any insurance or any compensation or similar payment arising in respect of a Total Loss. 18.2 NOTICE OF TOTAL LOSS. LESSEE will notify LESSOR in writing within two (2) Business Days after a Total Loss Date of the Aircraft, Airframe or any Engine. 18.3 TOTAL LOSS OF AIRCRAFT OR AIRFRAME. If the Total Loss of the Aircraft or Airframe occurs during the Lease Term, the following will occur: 18.3.1 After the Total Loss Date and until receipt by LESSOR of the Agreed Value and all other amounts then due under this Lease, LESSEE will continue to pay Rent and the parties will perform all of their other obligations under this Lease. 18.3.2 On the date which is the earlier of the following dates: (a) the date on which the Total Loss Proceeds of the Aircraft or the Airframe are paid by LESSEE's insurance underwriters or brokers and (b) the date which falls sixty (60) days after the Total Loss Date, LESSEE will pay to LESSOR an amount equal to the sum of: (a) the Agreed Value and (b) all other amounts then due and payable under this Lease, less an amount equal to the Net Total Loss Proceeds received by LESSOR by such date. 18.3.3 LESSOR will apply the Net Total Loss Proceeds and any amounts received from LESSEE pursuant to Article 18.3.2 as follows: (a) first, in discharge of any unpaid Rent and any other amounts accrued and unpaid up to the date of LESSOR's receipt of the Agreed Value; (b) second, in discharge of the Agreed Value; and (c) third, payment of the balance, if any, to LESSEE. 18.3.4 Upon receipt by LESSOR of all monies payable by LESSEE in Article 18.3, provided no Default has occurred and is continuing, this Lease will terminate except for LESSEE's obligations under Articles 10.5, 15 and 16 which survive the Termination Date and the Security Deposit will be returned to LESSEE in accordance with Article 5.3.1. FOR AVOIDANCE OF DOUBT, THE AGREED VALUE OF THE AIRCRAFT WILL BE PAYABLE TO LESSOR PURSUANT TO THIS ARTICLE 18.3 IF A TOTAL LOSS OF THE AIRFRAME OCCURS EVEN IF THERE HAS NOT BEEN A TOTAL LOSS OF AN ENGINE OR ENGINES. 18.4 SURVIVING ENGINE(S). If a Total Loss of the Airframe occurs and there has not been a Total Loss of an Engine or Engines, then provided no Default has occurred and is continuing, at the request of LESSEE (subject to agreement of relevant insurers) and on receipt of all monies due under Article 18.3 and payment by LESSEE of all airport, navigation and other charges on the Aircraft, LESSOR will transfer all of its right, title and interest in the surviving Engine(s) to LESSEE, but without any responsibility, condition or warranty on the part of LESSOR other than as to freedom from any LESSOR's Lien. 18.5 TOTAL LOSS OF ENGINE AND NOT AIRFRAME. 18.5.1 Upon a Total Loss of any Engine not installed on the Airframe or a Total Loss of an Engine installed on the Airframe not involving a Total Loss of the Airframe, LESSEE will replace such Engine as soon as reasonably possible by duly conveying to LESSOR title to another engine (a) free and clear of all Security Interests (except Permitted Liens) of any kind or description, (b) in airworthy condition and of the same or improved model, service bulletin and modification status and having a value and utility at least equal to the Engine which sustained the Total Loss, and (c) not older (by reference to serial number or manufacture date) than three (3) years older than the oldest of the two Engines delivered by LESSOR to LESSEE with the Aircraft on the Delivery Date. Such replacement engine will be an Engine as defined herein and the Engine which sustained such Total Loss will cease to be an Engine. 18.5.2 LESSEE agrees at its own expense to take such action as LESSOR may reasonably request in order that any such replacement Engine becomes the property of LESSOR and is leased hereunder on the same terms as the destroyed Engine. LESSEE's obligation to pay Rent will continue in full force and effect, but an amount equal to the Net Total Loss Proceeds received by LESSOR with respect to such destroyed Engine will, subject to LESSOR's right to deduct therefrom any amounts then due and payable by LESSEE under this Lease, be paid to LESSEE. 18.6 OTHER LOSS OR DAMAGE. 18.6.1 If the Aircraft or any Part thereof suffers loss or damage not constituting a Total Loss of the Aircraft or the Airframe or any Engine, all the obligations of LESSEE under this Lease (including payment of Rent) will continue in full force. 18.6.2 In the event of any loss or damage to the Aircraft or Airframe which does not constitute a Total Loss of the Aircraft or the Airframe, or any loss or damage to an Engine which does not constitute a Total Loss of such Engine, LESSEE will at its sole cost and expense fully repair the Aircraft or Engine in order that the Aircraft or Engine is placed in an airworthy condition and substantially the same condition as it was prior to such loss or damage. All repairs will be performed in accordance with sound airline procedures. LESSEE will notify LESSOR forthwith of any loss, theft or damage to the Aircraft for which the cost of repairs is estimated to exceed Seven Hundred Fifty Thousand U.S. Dollars (US$750,000), together with LESSEE's proposal for carrying out the repair. In the event that LESSOR does not agree with LESSEE's proposals for repair, LESSOR will so notify LESSEE within two (2) Business Days after its receipt of such proposal. LESSEE and LESSOR will then consult with Manufacturer and LESSEE and LESSOR agree to accept as conclusive, and be bound by, Manufacturer's directions or recommendations as to the manner in which to carry out such repairs. If Manufacturer declines to give directions or recommendations, LESSEE will carry out the repairs in accordance with the directions of LESSOR. 18.6.3 To the extent that LESSOR has received insurance proceeds from LESSEE's insurers with respect to any loss or damage, LESSOR will (subject to LESSOR's right to deduct therefrom any amounts then due and payable by LESSEE under this Lease and submission by LESSEE of reasonable documentation confirming the completion of the repairs in accordance with the requirements of this Lease) pay to LESSEE insurance proceeds received by LESSOR as and when such repair work is performed on the Aircraft. 18.7 COPY OF INSURANCE POLICY. Promptly after LESSOR's request following the occurrence of a partial loss or Total Loss of the Aircraft or an Engine, LESSEE will provide LESSOR with a copy of LESSEE's insurance policy. 18.8 GOVERNMENT REQUISITION. If the Aircraft, Airframe or any Engine is requisitioned for use by any Government Entity, LESSEE will promptly notify LESSOR of such requisition. All of LESSEE's obligations hereunder will continue as if such requisition had not occurred. Except if a Default or an Event of Default has occurred and is continuing, all payments received by LESSOR or LESSEE from such Government Entity will be paid over to or retained by LESSEE. 18.9 CONVEYANCE TO LESSEE. Upon compliance by LESSEE with the applicable terms of Article 18.3 or 18.5, LESSOR will transfer to LESSEE the Airframe or Engine(s), as applicable, with respect to which such Total Loss. ARTICLE 19 CRAF PROGRAM 19.1 DEDICATION TO CRAF. LESSEE may transfer possession of the Airframe or any Engine to the United States of America or any instrumentality or agency thereof as part of the Civil Reserve Air Fleet Program authorized under 10 U.S.C. ss. 9511 ET SEQ. (or any substantially similar program) ("CRAF PROGRAM") for a period which includes (collectively, the "CRAF PROGRAM REQUISITION PERIOD") the entire period of requisition under the CRAF Program. If the CRAF Program Requisition Period extends beyond the Expiration Date provided by this Lease, then the Lease will be deemed to continue for six (6) months after the end of the CRAF Program Requisition Period at a monthly rental rate equal to the monthly rental rate during the Lease Term. If such extension extends beyond the Lease Term, then LESSEE will provide LESSOR with written notice of the proposed redelivery by the earlier of six (6) months prior to the proposed redelivery date or five (5) Business Days after the date of receipt of the actual notice given to LESSEE by the government prior to the government's redelivery date and LESSEE will return the Aircraft to LESSOR in the condition required by Article 23 on LESSEE's proposed redelivery date set forth in such notice. 19.2 NOTICE TO LESSOR. LESSEE will promptly notify LESSOR in writing in the event of the requisition for use of the Aircraft under CRAF activation by the U.S. Government. All of LESSEE's obligations under this Lease will continue to the same extent as if such requisition had not occurred. 19.3 REQUISITION OF ENGINE. If there is a requisition for use of any Engine (but not the Airframe) by the U.S. Government in connection with the CRAF Program, LESSEE will replace such Engine by complying with the terms of Article 18.5 hereof. 19.4 GOVERNMENT INDEMNIFICATION. Any provisions of this Lease to the contrary notwithstanding, if there is a requisition for use of the Aircraft pursuant to the CRAF Program and/or CRAF activation, LESSOR agrees that LESSEE's insurances described in Exhibit C may be supplemented by insurances provided under Title XIII of the Act, and/or U.S. Government indemnification (which Title XIII insurances and indemnification will be in amounts not less than those established in Exhibit C); provided, however, that LESSEE will remain responsible for full compliance with all the provisions of this Lease, including Articles 14 and 16, to the extent Title XIII and/or the U.S. Government indemnification do not satisfy LESSEE's obligations under this Lease. 19.5 NO GEOGRAPHIC LIMITS. If there is a requisition for use of the Aircraft pursuant to the CRAF Program and/or CRAF activation, there will be no limitation on the geographic area in which the Aircraft may be operated so long as, taken as a whole, LESSEE's insurance, the Title XIII insurance and/or the indemnification provided by the U.S. Government fully cover (without any geographic exclusions) LESSEE's Exhibit C insurance requirements. 19.6 NOTICE OF DEFAULT. If an Event of Default occurs under this Lease and LESSOR elects to pursue its remedies under Article 25.3(e) to terminate this Lease and repossess the Aircraft, LESSOR will so notify the U.S. Government by sending a written communication as follows: Headquarters Air Mobility Command AMC Contracting Office -- XOKA Scott Air Force Base, Illinois 62225-5007 19.7 RECEIPT OF PAYMENTS. Subject to the following sentence, all payments received by LESSOR or LESSEE from such Government Entity in connection with the requisition of the Aircraft under the CRAF Program will be paid over to or retained by LESSEE. If a Default has occurred and is continuing, all payments received by LESSEE or LESSOR from such Government Entity in connection with the requisition of the Aircraft under the CRAF Program may be used by LESSOR to satisfy any obligations owing by LESSEE. ARTICLE 20 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE 20.1 REPRESENTATIONS AND WARRANTIES. LESSEE represents and warrants the following to LESSOR as of the date of execution of this Lease and as of the Delivery Date: 20.1.1 CORPORATE STATUS. LESSEE is a corporation duly incorporated, validly existing and in good standing under the Laws of Indiana (or, on the Delivery Date, the state of its incorporation). It has the corporate power and authority to carry on its business as presently conducted and to perform its obligations hereunder. 20.1.2 GOVERNMENTAL APPROVALS. No authorization, approval, consent, license or order of, or registration with, or the giving of notice to the Aviation Authority or any other Government Entity is required for the valid authorization, execution, delivery and performance by LESSEE of this Lease, except as will have been duly effected as of the Delivery Date. 20.1.3 BINDING. LESSEE's Board of Directors has authorized LESSEE to enter into this Lease, any Side Letters hereto and any other documentation in connection with the leasing of the Aircraft from LESSOR (collectively, the "OPERATIVE DOCUMENTS") and perform its obligations under the Operative Documents. This Lease and the other Operative Documents have been duly executed and delivered by LESSEE and represent the valid, binding and enforceable obligations of LESSEE except as enforceability may be limited by bankruptcy, insolvency, reorganization or other Laws of general application affecting the enforcement of creditors' rights. When executed by LESSEE at Delivery, the same will apply to the Estoppel and Acceptance Certificate. 20.1.4 NO BREACH. The execution and delivery of the Operative Documents, the consummation by LESSEE of the transactions contemplated herein and compliance by LESSEE with the terms and provisions hereof do not and will not contravene any Law applicable to LESSEE, or result in any breach of or constitute any default under or result in the creation of any Security Interest upon any property of LESSEE, pursuant to any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which LESSEE is a party or by which LESSEE or its properties or assets may be bound or affected. When executed by LESSEE at Delivery, the same will apply to the Estoppel and Acceptance Certificate. 20.1.5 FILINGS. Except for any filing or recording that may be required by the FARs, no filing or recording of any instrument or document (including the filing of any financial statement) is necessary under the Laws of the State of Registration in order for this Lease to constitute a valid and perfected lease of record relating to the Aircraft. 20.1.6 LICENSES. LESSEE holds all licenses, certificates and permits from applicable Government Entities in the U.S. for the conduct of its business as a certificated air carrier and performance of its obligations under this Lease. 20.1.7 NO SUITS. There are no suits, arbitrations or other proceedings pending or threatened before any court or administrative agency against LESSEE which are reasonably likely to be determined adversely and, if adversely determined, would have a material adverse effect on the business, assets or condition (financial or otherwise) of LESSEE or its ability to perform under this Lease, except as described in the filings provided to LESSOR pursuant to Article 22. 20.1.8 GENERAL OBLIGATIONS. The obligations of LESSEE under this Lease are direct, general and unconditional obligations of LESSEE and rank or will rank at least PARI PASSU with all other present and future unsecured and unsubordinated obligations (including contingent obligations) of LESSEE, with the exception of such obligations as are mandatorily preferred by law and not by reason of any encumbrance. 20.1.9 NO SOVEREIGN IMMUNITY. LESSEE, under the Laws of the U.S. or of any other jurisdiction affecting LESSEE, is subject to private commercial law and suit. Neither LESSEE nor its properties or assets is entitled to sovereign immunity under any such Laws. LESSEE's performance of its obligations hereunder constitute commercial acts done for commercial purposes. 20.1.10 TAX RETURNS. All necessary federal and state income tax returns have been delivered by LESSEE to all relevant taxation authorities in the U.S. or any state thereof and LESSEE is not in default in the payment of any taxes due and payable as shown on any such returns or on any assessment received by LESSEE. 20.1.11 NO MATERIAL ADVERSE EFFECT. LESSEE is not in default under any agreement to which it is a party or by which it may be bound which would have a material adverse effect on its business, assets or condition. 20.1.12 NO DEFAULT UNDER THIS LEASE. At the time of execution of this Lease, no Default has occurred and is continuing and the financial statements provided to LESSOR pursuant to Article 22 fairly present the financial condition of LESSEE. 20.2 COVENANTS. LESSEE covenants to LESSOR that it will comply with the following throughout the entire Lease Term: 20.2.1 LICENSING. LESSEE will hold all licenses, certificates and permits from applicable Government Entities in the U.S. for the conduct of its business as a certificated air carrier and performance of its obligations under this Lease. LESSEE will advise LESSOR promptly in the event any such licenses, certificates or permits are cancelled, terminated, revoked or not renewed. 20.2.2 SOVEREIGN IMMUNITY. LESSEE, under the Laws of the U.S. or of any other jurisdiction affecting LESSEE, will continue to be subject to private commercial law and suit. Neither LESSEE nor its properties or assets will be entitled to sovereign immunity under any such Laws. LESSEE's performance of its obligations hereunder will constitute commercial acts done for commercial purposes. LESSEE will advise LESSOR promptly of any change in the foregoing. 20.2.3 INFORMATION ABOUT SUITS. LESSEE will promptly give to LESSOR a notice in writing of any suit, arbitration or proceeding against LESSEE before any court, administrative agency or Government Entity which is reasonably likely to be determined adversely and, if adversely determined, would materially adversely affect LESSEE's financial condition, affairs, operations or its ability to perform under this Lease. 20.2.4 MERGER OF LESSEE. (a) LESSEE shall not consolidate with or merge into any other Person under circumstances in which LESSEE is not the surviving corporation, or convey, transfer, or lease in one or more transactions all or substantially all of its assets to any other Person, unless: (i) such Person is organized, existing, and in good standing under the Laws of the U.S., any state of the U.S., or the District of Columbia, and, upon consummation of such transaction, such Person will be a U.S. Air Carrier; (ii) such Person executes and delivers to LESSOR a duly authorized, legal, valid, binding and enforceable agreement, reasonably satisfactory in form and substance to LESSOR, containing an effective assumption by such Person of the due and punctual performance and observance of each covenant, agreement and condition in the Operative Documents to be performed or observed by LESSEE; (iii) such Person makes such filings and recordings with the FAA pursuant to the Act as shall be necessary to evidence such consolidation or merger; (iv) LESSEE furnishes LESSOR an opinion of counsel reasonably satisfactory to LESSOR to the effect that such consolidation or merger has satisfied at the closing of such consolidation or merger items (i), (ii) and (iii) above; (v) immediately after giving effect to such consolidation or merger, no Default or Event of Default exists; (vi) unless LESSOR otherwise consents, immediately after giving effect to such consolidation or merger, such Person will have a tangible net worth of not less than sixty-five percent (65%) of the LESSEE's tangible net worth immediately prior to such merger; and (vii) upon such merger becoming effective, LESSOR will enjoy the same degree of protection under ss. 1110 of the Bankruptcy Code with respect to the Aircraft as LESSOR enjoyed prior to such merger. (b) Upon any such consolidation or merger of LESSEE with or into, or the conveyance, transfer, or lease by LESSEE of all or substantially all of its assets to, any Person in accordance with this Article 20.2.4, such Person will succeed to, and be substituted for, and may exercise every right and power of, LESSEE under the Operative Documents with the same effect as if such Person had been named as "LESSEE" therein. No such consolidation, merger, conveyance, transfer, or lease shall have the effect of releasing LESSEE or such Person from any of LESSEE's obligations, liabilities, covenants, or undertakings under this Lease. 20.2.5 RESTRICTION ON RELINQUISHMENT OF POSSESSION. LESSEE will not, without the prior consent of LESSOR, deliver, transfer or relinquish possession of the Aircraft except in accordance with Articles 11 and 12. 20.2.6 NO SECURITY INTERESTS. LESSEE will not create or agree to or permit to arise any Security Interest (other than Permitted Liens) on or with respect to the Aircraft, title thereto or any interest therein. LESSEE will forthwith, at its own expense, take all action as may be necessary to discharge or remove any such Security Interest if it exists at any time. LESSEE will within five (5) Business Days after becoming aware of the existence of any such Security Interest give written notice thereof to LESSOR. 20.2.7 REPRESENTATIONS TO OTHER PARTIES. LESSEE will not represent or hold out LESSOR as carrying goods or passengers on the Aircraft or as being in any way connected or associated with any operation of the Aircraft. ARTICLE 21 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSOR 21.1 REPRESENTATIONS AND WARRANTIES. LESSOR represents and warrants the following to LESSEE as of the date of execution of the Lease and as of the Delivery Date and ALL OTHER WARRANTIES, EXPRESS OR IMPLIED HAVE BEEN WAIVED IN ACCORDANCE WITH ARTICLE 8: 21.1.1 CORPORATE STATUS. LESSOR is a corporation duly incorporated, validly existing and in good standing under the Laws of the State of California. It has the corporate power and authority to carry on its business as presently conducted and to perform its obligations hereunder. 21.1.2 GOVERNMENTAL APPROVALS. No authorization, approval, consent, license or order of, or registration with, or the giving of notice to any U.S. Government Entity is required for the valid authorization, execution, delivery and performance by LESSOR of this Lease. 21.1.3 BINDING. This Lease and the other Operative Documents have been duly authorized, executed and delivered by LESSOR and represent the valid, enforceable and binding obligations of LESSOR except as enforceability may be limited by bankruptcy, insolvency, reorganization or other Laws of general application affecting the enforcement of creditors' rights. 21.1.4 NO BREACH. The execution and delivery of the Operative Documents, the consummation by LESSOR of the transactions contemplated herein and compliance by LESSOR with the terms and provisions hereof do not and will not contravene any Law applicable to LESSOR, or result in any breach of or constitute any default under any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which LESSOR is a party or by which LESSOR or its properties or assets may be bound or affected. 21.1.5 TITLE TO AIRCRAFT. On the Delivery Date LESSOR will have good and valid title to the Aircraft. 21.1.6 CITIZENSHIP. LESSOR is a "citizen of the United States" within the meaning of 49 U.S. Code 40102(a)(15). 21.1.7 INVESTMENT BY LESSOR. LESSOR is acquiring its interest in the Aircraft for its own account from its corporate funds, for investment and not with a view to any resale or distribution thereof that would require registration under the Securities Act of 1933; PROVIDED, HOWEVER, that subject to the transfer restrictions in Article 24.2, its disposition of its interest in the Aircraft shall at all times be within its control. 21.2 COVENANT OF QUIET ENJOYMENT. So long as no Event of Default has occurred and is continuing hereunder, LESSOR covenants that neither LESSOR nor any person lawfully claiming through LESSOR will interfere with LESSEE's quiet, peaceful use and enjoyment of the Aircraft. ARTICLE 22 FINANCIAL AND RELATED INFORMATION LESSEE agrees to furnish each of the following to LESSOR: (a) within sixty (60) days after the end of each fiscal quarter of LESSEE, the unaudited consolidated financial statements (including a balance sheet and profit and loss statement) prepared for such quarter in accordance with generally accepted accounting principles in the U.S.; (b) within one hundred twenty (120) days after the end of each fiscal year of LESSEE, the audited consolidated financial statements (including a balance sheet and profit and loss statement) prepared as of the close of such fiscal year in accordance with generally accepted accounting principles in the U.S. LESSEE's chief financial officer will also provide a certificate of LESSEE stating that, to such officer's knowledge, no Default exists under this Lease (or if, to such officer's knowledge, a Default does exist, identifying it); (c) promptly after distribution, all reports and financial statements which Amtran, Inc. sends or makes generally available to its stockholders or creditors; and (d) from time to time, such other reasonable information as LESSOR or LESSOR's Lender may reasonably request concerning the location, condition, use and operation of the Aircraft or the financial condition of LESSEE. ARTICLE 23 RETURN OF AIRCRAFT 23.1 DATE OF RETURN. LESSEE is obligated to return the Aircraft, Engines Parts and Aircraft Documentation to LESSOR on the Expiration Date, unless a Total Loss of the Aircraft occurred prior to the Expiration Date and this Lease was terminated early in accordance with Article 18.3. If LESSEE is in Default hereunder by failing to return the Aircraft on the Expiration Date or if an Event of Default occurs prior to the Expiration Date and LESSOR repossesses the Aircraft, the return requirements set forth in this Article 23 nonetheless must be met on the date the Aircraft is actually returned to LESSOR or repossessed by LESSOR. 23.2 TECHNICAL REPORT. Six (6) months prior to the Expiration Date (and in an updated form at return of the Aircraft), LESSEE will provide LESSOR with a Technical Evaluation Report in the form and substance of Exhibit L, as revised, and, in addition upon LESSOR's request, will make copies available of (a) drawings of the interior configuration of the Aircraft both as it presently exists and as it will exist at return, (b) an Airworthiness Directive status list, (c) a service bulletin incorporation list, (d) rotable tracked, hard-time and life-limited component listings, (e) a list of LESSEE-initiated modifications and alterations, (f) interior material burn certificates, (g) the Aircraft Maintenance Program, (h) the complete workscope for the checks, inspections and other work to be performed prior to return, (i) a list of all no-charge service bulletin kits with respect to the Aircraft which were ordered by LESSEE from Manufacturer or Engine manufacturer, (j) current Engine disk sheets and a description of the last shop visit for each Engine and (k) any other data which is reasonably requested by LESSOR. 23.3 RETURN LOCATION. LESSEE at its expense will return the Aircraft, Engines, Parts and Aircraft Documentation to LESSOR at Indianapolis International Airport, Indianapolis, Indiana or to such other airport as may be mutually agreed to by LESSEE and LESSOR. 23.4 FULL AIRCRAFT DOCUMENTATION REVIEW. For the period commencing at least ten (10) Business Days prior to the proposed redelivery date and continuing until the date on which the Aircraft is returned to LESSOR in the condition required by this Lease, LESSEE will provide for the review of LESSOR and/or its representative all of the Aircraft records and historical documents described in Exhibit K in one central room at the Aircraft return location. 23.5 AIRCRAFT INSPECTION. 23.5.1 During the maintenance checks performed immediately prior to the proposed redelivery and at the actual return of the Aircraft, LESSOR and/or its representatives will have an opportunity to conduct a full systems functional and operational inspection of the Aircraft (and other types of reasonable inspections based upon the Aircraft type, age, use and other known factors with respect to the Aircraft) and a full inspection of the Aircraft Documentation (including records and manuals), all to LESSOR's satisfaction. The inspection will occur during the Return Check when the panels, bays or the like are open and certain Parts are disassembled. LESSOR may inspect such opened panels, bays or the like and the disassembled Parts so long as LESSOR does not disrupt the Return Check or cause such Return Check to be extended beyond the anticipated completion date of such Return Check. Any deficiencies from the Aircraft return condition requirements set forth in this Article 23 will be corrected by LESSEE at its cost prior to the acceptance flight described in Article 23.5.2. 23.5.2 Immediately prior to the proposed redelivery of the Aircraft, LESSEE will carry out for LESSOR and/or LESSOR's representatives an Aircraft acceptance flight in accordance with Manufacturer's standard flight operation check flight procedures or, if agreed to in writing by LESSOR, in accordance with an airline acceptance flight procedure, either of which will be for the duration necessary to perform such check flight procedures but in any event not less than two (2) hours. Flight costs and fuel will be furnished by and at the expense of LESSEE. Any deficiencies from the Aircraft return condition requirements set forth in this Article 23 will be corrected by LESSEE at its cost prior to return of the Aircraft. 23.5.3 To the extent that the ground inspection and acceptance flight extend beyond the Expiration Date, the Lease Term will be deemed to have been automatically extended and the obligations of LESSEE hereunder (including Article 23.11.3) will continue on a day-to-day basis until the Aircraft is accepted by LESSOR executing the Return Acceptance Receipt in the form of Exhibit I. 23.6 CERTIFICATE OF AIRWORTHINESS MATTERS. 23.6.1 The Aircraft will possess a current Certificate of Airworthiness issued by the Aviation Authority (although this Certificate of Airworthiness may later be substituted by the Export Certificate of Airworthiness or equivalent if requested by LESSOR pursuant to Article 23.10). The Aircraft at return must be in the condition required in order to meet the requirements of a U.S. Standard Certificate of Airworthiness for transport category aircraft issued by the FAA in accordance with FAR Part 21 and, in addition, to meet the operating requirements of FAR Part 121. 23.6.2 LESSEE at its cost will demonstrate that the Aircraft meets the requirements for issuance of the U.S. Standard Certificate of Airworthiness for transport category aircraft specified in Article 23.6.1 by delivering to LESSOR an actual U.S. Standard Certificate of Airworthiness. If there is a dispute in regards to the condition of the Aircraft or the Aircraft Documentation, then LESSEE will provide LESSOR with a letter acceptable to LESSOR signed by an FAA Designated Airworthiness Representative (DAR) or another Person acceptable to LESSOR stating that the DAR or such Person has inspected the Aircraft and Aircraft Documentation (including records and manuals) and has found that the Aircraft meets the requirements for issuance of a U.S. Standard Certificate of Airworthiness for transport category aircraft in accordance with FAR Part 21 and, in addition, meets the operating requirements of FAR Part 121. 23.6.3 If the Aircraft is to be registered in a country other than in the U.S. after return from LESSEE, LESSOR may in its sole discretion waive the requirements of Article 23.6.2 and instead require that LESSEE at its expense (to the extent such expense is no greater than that which LESSEE would have incurred pursuant to Articles 23.6.1 and 23.6.2, with any additional expenses being for LESSOR's account) put the Aircraft in a condition to meet the requirements for issuance of a Certificate of Airworthiness of the Aviation Authority of the next country of register. 23.7 GENERAL CONDITION OF AIRCRAFT AT RETURN. 23.7.1 The Aircraft, Engines and Parts will have been maintained and repaired in accordance with the Maintenance Program, the rules and regulations of the Aviation Authority and this Lease. 23.7.2 Aircraft Documentation (including records and manuals) will have been maintained in an up-to-date status, in accordance with the rules and regulations of the Aviation Authority and the FAA and this Lease and in a form necessary in order to meet the requirements of Article 23.6.2. The records and historical documents set forth in Attachment 1 of Exhibit I will be in English. 23.7.3 The Aircraft will be in the same working order and condition as at Delivery (subject to the other provisions of this Article 23, reasonable wear and tear from normal flight operations excepted), with all pilot discrepancies and deferred maintenance items cleared on a terminating action basis. 23.7.4 The Aircraft will be airworthy (conform to type design and be in a condition for safe operation), with all Aircraft equipment, components and systems operating in accordance with their intended use and within limits approved by the Manufacturer, Aviation Authority and FAA. 23.7.5 The Aircraft interior (including cabin and windows) and exterior will be clean and all compartments will be reasonably free of foreign objects, dirt, grease, fluids, stains, grime, cracks, tears and rips (with the exception of normal wear and tear) and ready to be placed into immediate commercial airline operations. 23.7.6 No special or unique Manufacturer, Engine manufacturer or Aviation Authority inspection or check requirements which are specific to the Aircraft or Engines (as opposed to all aircraft or engines of their types) will exist with respect to the Airframe, Engines and Aircraft equipment, components and systems. 23.7.7 All repairs, modifications and alterations to the Aircraft will have been accomplished in accordance with Manufacturer's Structural Repair Manual (or FAA-approved data supported by FAA Form 8110-3) for the Aircraft. 23.7.8 The Aircraft will be returned with LESSOR's Engines installed and with the same equipment as at Delivery, subject only to those replacements, additions and Modifications permitted under this Lease. LESSEE will inform LESSOR of whether LESSEE will be able to redeliver the Engines with the Aircraft and the proposed replacement engines that LESSEE wants to provide LESSOR in place of the Engines. LESSEE will provide LESSOR with whatever data, records and information that LESSOR reasonably requests in order to evaluate the proposed replacement engines. In the event that LESSEE is unable to return either of the Engines in the conditions required by this Article 23, then LESSEE may provide a replacement engine (a "REPLACEMENT ENGINE") for such Engine to LESSOR by duly conveying to LESSOR as owner hereunder title to another engine of the same manufacturer and of the same or an improved model as the Engine being replaced and suitable for installation and use on the Aircraft, which engine shall be free and clear of all Security Interests, and shall be no more than three (3) years older by reference to serial number than the replaced Engine and have a modification status, value and utility at least equal to the Engine which such Replacement Engine is replacing on the Aircraft assuming that such Engine which such Replacement Engine is replacing was then of the value, utility, condition, and airworthiness required to be maintained by the terms of this Lease. Such Replacement Engine, after approval and acceptance by LESSOR, shall be deemed an "Engine" as defined herein for all purposes hereunder. LESSEE agrees to take such action as LESSOR may reasonably request in order that such Replacement Engine shall be duly and properly titled in the name of LESSOR. Prior to or at the time of any such conveyance, LESSEE, at its own expense, will promptly: (a) furnish LESSOR with a warranty bill of sale, in form and substance satisfactory to LESSOR, with respect to such Replacement Engine, (b) furnish LESSOR with such evidence of title to such Replacement Engine as reasonably requested by LESSOR, and (c) furnish LESSOR with an opinion of LESSEE's counsel to the effect that title to such Replacement Engine has been duly conveyed to LESSOR free and clear of all Security Interests of any kind or nature and that such exchange qualifies for tax free treatment under the Internal Revenue Code of 1986, as amended. Upon full compliance with this Article, LESSOR shall transfer to LESSEE all of LESSOR's right, title and interest, on an "AS-IS", "WHERE-IS" basis in and to the Engine being replaced by such Replacement Engine, without recourse or warranty, express or implied, except that LESSOR has good and marketable title to such Engine and such Engine shall be free and clear of LESSOR's Liens. 23.7.9 All Airworthiness Directives which are issued prior to the date of return of the Aircraft and require compliance (either by means of repetitive inspections, modifications or terminating action) prior to return of the Aircraft to LESSOR or within one (1) year after the Termination Date will have been complied with on the Aircraft on a terminating action basis at LESSEE's cost. Airworthiness Directives which do not have a terminating action will be accomplished at the highest level of inspection or modification possible. If, after using best efforts, LESSEE is unable to acquire the material, parts or components necessary to accomplish such Airworthiness Directive, LESSEE will pay to LESSOR upon return of the Aircraft the estimated cost of terminating such Airworthiness Directive. If the estimated cost cannot be mutually agreed upon by LESSEE and LESSOR, LESSEE and LESSOR will each obtain an estimate from a reputable FAA-approved maintenance facility (unaffiliated with LESSEE or LESSOR) and the estimated cost will be the average of the two estimates. 23.7.10 The Aircraft will be in compliance with the Corrosion Prevention and Control Program (CPCP) specified in LESSEE's Maintenance Program. 23.7.11 If any waivers, deviations, dispensations, alternate means of compliance, extensions or carry-overs with respect to maintenance or operating requirements, repairs or Airworthiness Directives are granted by the Aviation Authority or permitted by the Maintenance Program, LESSEE at its sole cost and expense will nonetheless perform such maintenance or operating requirements, repairs or Airworthiness Directives as if such waivers, deviations, dispensations, alternate means of compliance, or extensions or carry-overs did not exist. 23.7.12 The Aircraft will be free from any Security Interest except LESSOR's Liens and no circumstance will have so arisen whereby the Aircraft is or could become subject to any Security Interest or right of detention or sale in favor of the Aviation Authority, any airport authority, or any other authority. 23.7.13 All no-charge vendor and Manufacturer's service bulletin kits received by LESSEE for the Aircraft but not installed thereon will be on board the Aircraft as cargo. At LESSOR's request, any other service bulletin kit which LESSEE paid for will also be delivered to LESSOR on board the Aircraft, but LESSOR will reimburse LESSEE for its actual out-of-pocket costs for such kit, unless LESSEE purchased such kit as part of its implementation of a service bulletin on its fleet of aircraft of the same type as the Aircraft but had not yet installed such kit on the Aircraft, in which case such kit will be furnished free of charge to LESSOR. 23.7.14 The Aircraft will be free of any leaks and any damage resulting therefrom. All repairs will have been performed on a permanent basis in accordance with the applicable manufacturer's instructions. 23.7.15 The Aircraft fluid reservoirs (including oil, oxygen, hydraulic and water) will be serviced to full and the waste tank serviced in accordance with Manufacturer's instructions. (Fuel tanks will be at least as full as at Delivery.) 23.8 CHECKS PRIOR TO RETURN. Immediately prior to return of the Aircraft to LESSOR, LESSEE at its expense will do each of the following: 23.8.1 Have performed, and completed, by an FAA-approved repair station, all maintenance tasks specified in LESSEE's Maintenance Program and the MPD which (a) are necessary to clear the Aircraft of all such tasks for eighteen (18) months, five thousand (5,000) hours, and three thousand (3,000) cycles from the date of return of the Aircraft, and (b) are required to be performed at lesser intervals than eighteen (18) months, five thousand (5,000) hours or three thousand (3,000) cycles (all such work collectively referred to as the "RETURN CHECK"). If a maintenance task is specific to LESSEE's Maintenance Program and not required or recommended to be performed by the MPD, then LESSEE will not be required to perform such maintenance task so long as the Return Check is performed in such a manner that clears the Aircraft of all maintenance tasks in accordance with the requirements of the preceding sentence. As part of the Return Check, all non-routine tasks generated as a result of the performance of the work included in the Return Check and any other discrepancies revealed during the Return Check must also be performed in accordance with the FAA approved procedures. LESSEE will also weigh the Aircraft. LESSEE agrees to perform during the Return Check any other work reasonably required by LESSOR (and not otherwise required under this Lease) and LESSOR will, promptly upon receipt of an invoice from LESSEE, reimburse LESSEE for such work at LESSEE's preferred customer rates. 23.8.2 Have the Aircraft in compliance with Corrosion Prevention and Control Program (CPCP) as specified in the MPD and LESSEE's Maintenance Program. 23.8.3 Remove LESSEE's exterior markings, including all exterior paint, by stripping (or, at LESSOR's option, pneumatically scuff/sanding) the paint from the fuselage, empennage, wings and Engine cowlings, and clean, reseal, refinish, prepare (including application of alodine or another corrosion inhibitor) and prime the surfaces to be painted, all in accordance with Manufacturer's and paint manufacturer's recommendations. LESSEE will then repaint the fuselage, empennage, wings and Engine cowlings in the colors and logo specified by LESSOR ; PROVIDED, HOWEVER, that LESSEE will be responsible for only paying the amount that it would cost to strip or scuff/sand (whichever is performed on the Aircraft at return) and properly paint the Aircraft in LESSEE's colors and logo and LESSOR will be responsible for the excess cost to paint the Aircraft in the next lessee's colors and logo. Such painting will be accomplished in such a manner as to result in a uniformly smooth and cosmetically acceptable aerodynamic surface. All external placards, signs and markings will be properly attached, free from damage, clean and legible. 23.8.4 Clean the exterior and interior of the Aircraft. 23.8.5 If reasonably required by LESSOR, apply touch up to paint to the interior of the Aircraft, including flight deck, and replace any missing or broken placards. 23.8.6 In accordance with Article 23.7.7, permanently repair damage to the Aircraft that exceeds Manufacturer's limits and replace any non-flush structural patch repairs installed on the Aircraft with flush-type repairs, so long as the Manufacturer or the Manufacturer's Structural Repair Manual permits flush-type repairs on the portion of the Aircraft where the non-flush structural repairs were made. 23.8.7 With LESSOR or its representatives present, perform a full and complete hot and cold section videotape borescope on each Engine and its modules in accordance with the Engine manufacturer's maintenance manual. 23.8.8 If the Engine historical and technical records and/or condition trend monitoring data of any Engine (including the APU) indicate an acceleration in the rate of deterioration in the performance of an Engine, LESSEE will correct, to LESSOR's satisfaction, such conditions which are determined to be causing such accelerated rate of deterioration. 23.8.9 With LESSOR or its representatives present, accomplish a maximum power assurance run on the Engines. LESSEE will evaluate the Engine performance and record the Engine maximum power assurance test conditions and results on the Return Acceptance Receipt. 23.8.10 LESSEE will provide evidence to LESSOR's satisfaction that the Engine historical and technical records, borescope inspection, trend monitoring and other checks specified in Article 23.8.9 do not reveal any condition which would cause the Engines or any module to be unserviceable, beyond serviceable limits or serviceable with an increased frequency of inspection or with calendar time, flight hour or flight cycle restrictions under the Engine manufacturer's maintenance manual. LESSEE will correct any discrepancies in accordance with the guidelines set out by the Engine manufacturer which may be discovered during such inspection. 23.8.11 In the event the Engine historical and technical records, borescope inspection, trend monitoring and other checks specified in Article 23.8.9 result in a dispute regarding the conformity of an Engine with the requirements of this Article 23, LESSEE and LESSOR will consult with Engine manufacturer and follow Engine manufacturer's recommendations (including the accomplishment of an Engine test cell operational check) with regard to determining if such Engine complies with the requirements of this Article 23 and the manner in which any discrepancies from the requirements of this Article 23 will be rectified. 23.9 PART LIVES. At return, the condition of the Aircraft will be as follows: (CONFIDENTIAL MATERIAL OMITTED) 23.10 EXPORT AND DEREGISTRATION OF AIRCRAFT. At LESSOR's request, LESSEE at its cost will (a) provide an Export Certificate of Airworthiness or its equivalent from the State of Registration so that the Aircraft can be exported to the country designated by LESSOR, (b) assist with deregistration of the Aircraft from the register of aircraft in the State of Registration, (c) assist with arranging for prompt confirmation of such deregistration to be sent by the registry in the State of Registration to the next country of registration and (d) perform any other acts reasonably required by LESSOR in connection with the foregoing. If any Aircraft work which LESSEE is not otherwise required to perform hereunder, including engineering, is required in order to obtain such Export Certificate of Airworthiness, LESSEE will perform such work and LESSOR will reimburse LESSEE for such work at LESSEE's preferred customer rates. 23.11 LESSEE'S CONTINUING OBLIGATIONS. In the event that LESSEE does not return the Aircraft to LESSOR on the Expiration Date and in the condition required by this Article 23 for any reason (whether or not the reason is within LESSEE's control): 23.11.1 the obligations of LESSEE under this Lease will continue in full force and effect on a day-to-day basis until such return. This will not be considered a waiver of LESSEE's Event of Default or any right of LESSOR hereunder. 23.11.2 Until such return, the Agreed Value will be an amount equal to the Agreed Value on the day the Aircraft should have been returned to LESSOR pursuant to this Lease. 23.11.3 LESSEE will fully indemnify LESSOR on demand for all losses (including consequential damages), liabilities, actions, proceedings, costs and expenses thereby suffered or incurred by LESSOR and, in addition, if a delay in return of the Aircraft was due to reasons within LESSEE's reasonable control, then until such time as the Aircraft is redelivered to LESSOR and put into the condition required by this Article 23, instead of paying the Rent specified in Article 5.3, LESSEE will pay twice the amount of Rent for each day from the scheduled Expiration Date until the Termination Date (the monthly Rent payable under Article 5.3.1 will be prorated based on the actual number of days in the applicable month). Payment will be made upon presentation of LESSOR's invoice. 23.11.4 LESSOR may elect, in its sole and absolute discretion, to accept the return of the Aircraft prior to the Aircraft being put in the condition required by this Article 23 and thereafter have any such non-conformance corrected at such time as LESSOR may deem appropriate (but within ninety (90) days following the return of the Aircraft) and at commercial rates then-charged by the Person selected by LESSOR to perform such correction. Any direct expenses incurred by LESSOR for such correction will become additional Rent payable by LESSEE within fifteen (15) days following the submission of a written statement by LESSOR to LESSEE, identifying the items corrected and setting forth the expense of such corrections. LESSEE's obligation to pay such supplemental Rent will survive the Termination Date. 23.12 AIRPORT AND NAVIGATION CHARGES. LESSEE will ensure that at return of the Aircraft any and all airport, navigation and other charges which give rise or may if unpaid give rise to any lien, right of detention, right of sale or other Security Interest in relation to the Aircraft, Engine or any Part have been paid and discharged in full and will at LESSOR's request produce evidence thereof satisfactory to LESSOR. 23.13 RETURN ACCEPTANCE CERTIFICATE. Upon return of the Aircraft in accordance with the terms of this Lease, LESSEE will prepare and execute two (2) Return Acceptance Certificates in the form and substance of Exhibit I and LESSOR will countersign and return one such Return Acceptance Certificate to LESSEE. In addition, LESSEE and LESSOR will execute a Lease Termination for filing with the FAA evidencing termination of this Lease. 23.14 INDEMNITIES AND INSURANCE. The indemnities and insurance requirements set forth in Articles 16 and 17, respectively, will apply to Indemnitees and LESSOR's representatives during return of the Aircraft, including the ground inspection and acceptance flight. With respect to the acceptance flight, LESSOR's representatives will receive the same protections as LESSOR on LESSEE's Aviation and Airline General Third Party Liability Insurance. ARTICLE 24 ASSIGNMENT 24.1 NO ASSIGNMENT BY LESSEE. EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED BY THE TERMS OF THIS LEASE, NO ASSIGNMENT, NOVATION, TRANSFER, MORTGAGE OR OTHER CHARGE MAY BE MADE BY LESSEE OF ANY OF ITS RIGHTS WITH RESPECT TO THE AIRCRAFT, ENGINE OR PART OF THIS LEASE. 24.2 SALE OR ASSIGNMENT BY LESSOR. 24.2.1 Subject to LESSEE's rights pursuant to this Lease, LESSOR may at any time and without LESSEE's consent sell, assign or transfer its rights, interest and obligations hereunder or with respect to the Aircraft to a third party ("LESSOR'S ASSIGNEE"), but only if: (a) LESSOR's Assignee has full power, authority, and legal right to execute, deliver, and perform the obligations of LESSOR under the Operative Documents and provides reasonably satisfactory evidence of such power and authority to LESSEE; (b) LESSOR's Assignee enters into one or more legal, valid, binding and enforceable agreements effective to confirm that LESSOR's Assignee agrees to be bound by all the terms of, and to undertake all of the obligations arising after such transfer of LESSOR in, the Operative Documents, and in which it makes representations and warranties substantially the same as those in Article 21.1 of this Lease; (c) upon such transfer LESSEE shall not be obligated to pay any greater amount or incur any greater obligation (other than indemnifying additional indemnitees, insuring additional insureds and other minor ministerial matters) than that which it would have been obliged to pay or incur under the Operative Documents if no transfer or assignment had taken place, and upon such transfer the terms and conditions of the Operative Documents insofar as they relate to the rights and obligations of LESSEE are not altered; (d) LESSOR shall cause LESSOR's Assignee to deliver to LESSEE an opinion of counsel reasonably satisfactory to LESSEE to the effect that such agreement or agreements referred to in clause (2) and, if applicable, clause (6) are legal, binding, and enforceable in accordance with its or their terms, subject to the typical exceptions. (e) the transfer shall relate to LESSOR's entire interest as owner or lessor; (f) LESSOR's Assignee is a citizen of the United States under 49 U.S. Code ss.40102(a)(15) (such status to be determined without considering FAR ss.47.9 or any other provision that may restrict LESSEE's use or operation of the Aircraft), or shall use a voting powers trust or similar arrangement in order to hold an interest in the Aircraft such that the Aircraft can be registered in the U.S. (without considering FAR ss.47.9 or any other provision that may restrict LESSEE's use or operation of the Aircraft); (g) LESSOR's Assignee is a single Person and is either (i) a Permitted Institution, or (ii) or an affiliate of a Permitted Institution, if such affiliate's obligations under the Operative Documents are guaranteed by such Permitted Institution pursuant to a written guaranty, in form and substance reasonably satisfactory to LESSEE; and (h) LESSOR shall give written notice to LESSEE at least five (5) days before any such transfer, specifying the name and address of the proposed LESSOR's Assignee, and providing reasonably satisfactory evidence that the proposed LESSOR's Assignee meets the requirements described in Article 24.2.1(g)(i) or (ii). For a period of two (2) years after such sale or assignment and at LESSEE's cost, LESSEE will continue to name LESSOR as an additional insured under the Aviation and Airline General Third Party Liability Insurance required pursuant to Article 17 and Exhibit C. 24.2.2 The term "LESSOR" as used in this Lease means the lessor of the Aircraft at the time in question. In the event of the sale of the Aircraft and transfer of LESSOR's rights and obligations under this Lease, LESSOR's Assignee will become "LESSOR" of the Aircraft under this Lease and the transferring party (the prior "LESSOR") will be relieved of all liability to LESSEE under this Lease for obligations arising on and after the date the Aircraft is sold. LESSEE will acknowledge and accept LESSOR's Assignee as the new "LESSOR" under this Lease and will look solely to LESSOR's Assignee for the performance of all LESSOR obligations and covenants under this Lease arising on and after the Aircraft sale date. 24.3 LESSOR'S LENDER. Subject to LESSEE's rights pursuant to this Lease, LESSOR may at any time and without LESSEE's consent grant security interests over the Aircraft and assign the benefit of this Lease to a lender ("LESSOR'S LENDER") as security for LESSOR's obligations to LESSOR's Lender. Accordingly, if LESSOR's Lender requires, as a condition to providing financing, any nonsubstantive modification of this Lease, LESSEE agrees to enter into an agreement so modifying this Lease. 24.4 LESSEE COOPERATION. On request by LESSOR, LESSOR's Assignee or LESSOR's Lender, LESSEE will execute all such documents (such as a lease assignment agreement) as LESSOR, LESSOR's Assignee or LESSOR's Lender may reasonably require to confirm LESSEE's obligations under this Lease and obtain LESSEE's acknowledgment that to the best of LESSEE's knowledge, LESSOR is not in breach of this Lease. LESSEE will provide all other reasonable assistance and cooperation to LESSOR, LESSOR's Assignee and LESSOR's Lender in connection with any such sale or assignment or the perfection and maintenance of any such security interest, at LESSOR's cost, including making all necessary filings and registrations in the State of Registration and providing all opinions of counsel with respect to matters reasonably requested by LESSOR, LESSOR's Lender or LESSOR's Assignee. LESSOR will reimburse LESSEE for its reasonable out-of-pocket costs in reviewing documents required by LESSOR or LESSOR's Lender. 24.5 PROTECTIONS. 24.5.1 LESSOR will obtain for the benefit of LESSEE an acknowledgment from any LESSOR's Assignee or LESSOR's Lender that, so long as no Event of Default has occurred and is continuing hereunder, such Person will not interfere with LESSEE's quiet, peaceful use and enjoyment of the Aircraft. 24.5.2 Wherever the term "LESSOR" is used in this Lease in relation to any of the provisions relating to disclaimer, title and registration, indemnity and insurance contained in Articles 8, 13, 16 and 17, respectively, or with respect to Article 20.2.7, the term "LESSOR" will be deemed to include LESSOR's Assignee and LESSOR's Lender, if applicable. For avoidance of doubt, in the event of LESSOR's sale or financing of the Aircraft, the disclaimer and indemnity provisions contained in Articles 8 and 16 will continue to be applicable after the sale or assignment to International Lease Finance Corporation, as well as being applicable to LESSOR's Assignee and LESSOR's Lender. ARTICLE 25 DEFAULT OF LESSEE 25.1 LESSEE NOTICE TO LESSOR. LESSEE will promptly notify LESSOR if LESSEE becomes aware of the occurrence of any Default. 25.2 EVENTS OF DEFAULT. The occurrence of any of the following will constitute an Event of Default and material breach of this Lease by LESSEE: (a) LESSEE fails to take delivery of the Aircraft when obligated to do so under the terms of this Lease; (b) LESSEE fails to make a Rent or other payment due hereunder in the manner and by the date provided herein and fails to make such payment within five (5) Business Days after its receipt of notice that such payment is due; (c) LESSEE fails to obtain or maintain the insurance required by Article 17; (d) LESSEE fails to return the Aircraft to LESSOR on the Expiration Date in accordance with Article 23; (e) LESSEE fails to observe or perform any of its other obligations hereunder and fails to cure the same within thirty (30) days after written notice thereof to LESSEE; provided, that LESSEE will have up to a total of sixty (60) days to cure such failure so long as it uses diligent efforts to do so; (f) any representation or warranty of LESSEE herein proves to have been untrue in any material respect when made; provided, that, if the effect of such falsity is curable, LESSEE shall have thirty (30) days after LESSEE has knowledge that the representation or warranty is untrue; (g) the registration of the Aircraft is cancelled other than as a result of an act or omission of LESSOR; (h) LESSEE abandons the Aircraft or Engines; (i) LESSEE or an approved sublessee no longer has unencumbered control (other than Permitted Liens) or possession of the Aircraft or Engines, except as otherwise permitted by this Lease; (j) LESSEE temporarily or permanently discontinues business or (except as permitted by Article 20.2.4) sells or otherwise disposes of all or substantially all of its assets; (k) a material adverse change occurs in the financial condition of LESSEE; (l) LESSEE no longer possesses the licenses, certificates and permits required for the conduct of its business as a certificated air carrier in the U.S.; (m) LESSEE (i) suspends payment on its debts or other obligations generally, (ii) is unable to or admits its inability to pay its debts or other obligations generally as they fall due, (iii) is adjudicated or becomes bankrupt or insolvent or (iv) enters into any composition or other arrangement for the benefit of its creditors generally; (n) any proceedings, resolutions, filings or other steps are instituted with respect to LESSEE relating to the bankruptcy, liquidation, reorganization or protection from creditors of LESSEE or at least half of LESSEE's property. If instituted by LESSEE, the same will be an immediate Event of Default. If instituted by another Person, the same will be an Event of Default if not dismissed, remedied or relinquished within sixty (60) days; (o) any order, judgment or decree is entered by any court of competent jurisdiction appointing a receiver, trustee or liquidator of LESSEE or at least half of its property, or if at least half of LESSEE's property is to be sequestered. If instituted by or done with the consent of LESSEE, the same will be an immediate Event of Default. If instituted by another Person, the same will be an Event of Default if not dismissed, stayed, remedied or relinquished within sixty (60) days; PROVIDED, HOWEVER, that if such proceeding is stayed, then such proceeding will become an immediate Event of Default if such stay is removed or terminates and the proceeding is not dismissed, remedied or relinquished when such stay is removed or terminates. (p) any indebtedness for borrowed moneys or a guarantee or similar obligation owed by LESSEE with an unpaid balance of CONFIDENTIAL MATERIAL OMITTED is declared due before its stated maturity or LESSEE is in default of payment obligations CONFIDENTIAL MATERIAL OMITTED under any other purchase agreement, lease, conditional sale agreement or other agreement pursuant to which LESSEE has possession of any aircraft; (q) Eurocontrol has notified LESSOR that there are unpaid Eurocontrol charges due from LESSEE (unless such charges are being contested in good faith and by appropriate proceedings, an adequate bond has been provided and such proceedings do not involve any danger of the detention, interference with the use or operation, sale, forfeiture or loss of the Aircraft) and such charges remain outstanding for a period of thirty (30) days from the date of Eurocontrol's notice to LESSOR provided that such thirty (30) day grace period will not apply if there is a danger of detention, interference with the use or operation, sale, forfeiture or loss of the Aircraft; or (r) LESSEE is in default under any other lease or agreement between LESSEE and LESSOR and the same is not cured within its specified cure period. 25.3 LESSOR'S GENERAL RIGHTS. Upon the occurrence of any Event of Default, LESSOR may do all or any of the following at its option (in addition to such other rights and remedies which LESSOR may have by statute or otherwise but subject to any requirements of applicable Law): (a) terminate this Lease by giving written notice to LESSEE; (b) require that LESSEE immediately move the Aircraft to an airport or other location designated by LESSOR; (c) for LESSEE's account, do anything that may reasonably be required to cure any default and recover from LESSEE all reasonable costs, including legal fees and expenses incurred in doing so and Default Interest; (d) proceed as appropriate to enforce performance of this Lease and to recover any damages for the breach hereof, including the amounts specified in Article 25.5; (e) terminate this Lease by taking possession of the Aircraft or by serving notice requiring LESSEE to return the Aircraft to LESSOR at the location specified by LESSOR. If LESSOR takes possession of the Aircraft, it may enter upon LESSEE's premises where the Aircraft is located without liability. Upon repossession of the Aircraft, LESSOR will then be entitled to sell, lease or otherwise deal with the Aircraft as if this Lease had never been made. LESSOR will be entitled to the full benefit of its bargain with LESSEE; or (f) apply all or any portion of the Security Deposit and any other security deposits held by LESSOR pursuant to any other agreements between LESSOR and LESSEE to any amounts due. 25.4 DEREGISTRATION AND EXPORT OF AIRCRAFT. If an Event of Default has occurred and is continuing, LESSOR may take all steps necessary to deregister the Aircraft in and export the Aircraft from the State of Registration. 25.5 LESSEE LIABILITY FOR DAMAGES. If an Event of Default occurs, in addition to all other remedies available at law or in equity, LESSOR has the right to recover from LESSEE and LESSEE will pay LESSOR within two (2) Business Days after LESSOR's written demand, all of the following: (a) all amounts which are then due and unpaid hereunder and which become due prior to the earlier of LESSOR's recovery of possession of the Aircraft or LESSEE making an effective tender thereof; (b) any losses suffered by LESSOR because of LESSOR's inability to place the Aircraft on lease with another lessee or to otherwise utilize the Aircraft on financial terms as favorable to LESSOR as the terms hereof or, if LESSOR elects to dispose of the Aircraft, the funds arising from a sale or other disposition of the Aircraft are not as profitable to LESSOR as leasing the Aircraft in accordance with the terms hereof would have been (and LESSOR will be entitled to accelerate any and all Rent which would have been due from the date of LESSOR's recovery or repossession of the Aircraft through the Expiration Date); (c) all costs associated with LESSOR's exercise of its remedies hereunder, including but not limited to repossession costs, legal fees, Aircraft storage costs, Aircraft re-lease or sale costs and LESSOR's internal costs and expenses (including the cost of personnel time calculated based upon the compensation paid to the individuals involved on an annual basis and a general LESSOR overhead allocation); (d) any amount of principal, interest, fees or other sums paid or payable on account of funds borrowed in order to carry any unpaid amount; (e) any loss, premium, penalty or expense which may be incurred in repaying funds raised to finance the Aircraft or in unwinding any financial instrument relating in whole or in part to LESSOR's financing of the Aircraft; (f) any loss, cost, expense or liability sustained by LESSOR due to LESSEE's failure to redeliver the Aircraft in the condition required by this Lease; and (g) any other loss, damage, expense, cost or liability which LESSOR suffers or incurs as a result of the Event of Default and/or termination of this Lease, including an amount sufficient to fully compensate LESSOR for any loss of or damage to LESSOR's residual interest in the Aircraft caused by LESSEE's default. 25.6 WAIVER OF DEFAULT. By written notice to LESSEE, LESSOR may at its election waive any Default or Event of Default and its consequences and rescind and annul any prior notice of termination of this Lease. The respective rights of the parties will then be as they would have been had no Default or Event of Default occurred and no such notice been given. 25.7 PRESENT VALUE OF PAYMENTS. In calculating LESSOR's damages hereunder, upon an Event of Default all Rent and other amounts which would have been due hereunder during the Lease Term if an Event of Default had not occurred will be calculated on a present value basis using a discounting rate of six percent (6%) per annum discounted to the earlier of the date on which LESSOR obtains possession of the Aircraft or LESSEE makes an effective tender thereof. 25.8 USE OF "TERMINATION DATE". For avoidance of doubt, it is agreed that if this Lease terminates and the Aircraft is repossessed by LESSOR due to an Event of Default, then, notwithstanding the use of the term "Termination Date" in this Lease, the period of the Lease Term and the "Expiration Date" will be utilized in calculating the damages to which LESSOR is entitled pursuant to Article 25.5. For example, it is agreed and understood that LESSOR is entitled to receive from LESSEE the Rent and the benefit of LESSEE's insurance and maintenance of the Aircraft until expiration of the Lease Term. ARTICLE 26 NOTICES 26.1 MANNER OF SENDING NOTICES. Any notice, request or information required or permissible under this Lease will be in writing and in English. Notices will be delivered in person or sent by fax, letter (mailed airmail, certified and return receipt requested), or by expedited delivery addressed to the parties as set forth in Article 26.2. In the case of a fax, notice will be deemed received upon actual receipt (and the date of actual receipt will be deemed to be the date set forth on the confirmation of receipt produced by the sender's fax machine immediately after the fax is sent). In the case of a notice sent by expedited delivery, notice will be deemed received on the date of delivery set forth in the records of the Person which accomplished the delivery. If any notice is sent by more than one of the above listed methods, notice will be deemed received on the earliest possible date in accordance with the above provisions. 26.2 NOTICE INFORMATION. Notices will be sent: If to LESSOR: INTERNATIONAL LEASE FINANCE CORPORATION 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067, U.S.A. Attention: Legal Department Fax: 310-788-1990 Telephone: 310-788-1999 If to LESSEE: AMERICAN TRANS AIR, INC. 7337 West Washington Street Indianapolis International Airport Indianapolis, Indiana 46231 United States of America Attention: Ken Wolff Executive Vice President and Chief Financial Officer Fax: 317-240-7091 Telephone: 317-247-4000 or to such other places and numbers as either party directs in writing to the other party. ARTICLE 27 GOVERNING LAW AND JURISDICTION 27.1 CALIFORNIA LAW. This Lease is being delivered in the State of California and will in all respects be governed by and construed in accordance with the Laws of the State of California (notwithstanding the conflict Laws of the State of California). 27.2 NON-EXCLUSIVE JURISDICTION IN CALIFORNIA. As permitted by Section 410.40 of the California Code of Civil Procedure, the parties hereby irrevocably submit to the non-exclusive jurisdiction of the Federal District Court for the Central District of California and the State of California Superior or Municipal Court in Los Angeles, California. Nothing herein will prevent either party from bringing suit in any other appropriate jurisdiction. 27.3 SERVICE OF PROCESS. The parties hereby consent to the service of process (a) out of any of the courts referred to above, (b) in accordance with Section 415.40 of the California Code of Civil Procedure by mailing copies of the summons and complaint to the person to be served by certified or registered mail to the address set forth in Article 26.2, postage prepaid, return receipt requested or (c) in accordance with the Hague Convention, if applicable. 27.4 PREVAILING PARTY IN DISPUTE. If any legal action or other proceeding is brought in connection with or arises out of any provisions in this Lease, the prevailing party will be entitled to recover reasonable attorneys' fees and other costs incurred in such action or proceedings. The prevailing party will also, to the extent permissible by Law, be entitled to receive pre- and post-judgment Default Interest. 27.5 WAIVER. LESSEE AND LESSOR HEREBY WAIVE THE RIGHT TO A TRIAL BY JURY. LESSEE AND LESSOR HEREBY IRREVOCABLY WAIVE ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATED TO THIS LEASE BROUGHT IN ANY OF THE COURTS REFERRED TO IN ARTICLE 27.2, AND HEREBY FURTHER IRREVOCABLY WAIVE ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. ARTICLE 28 MISCELLANEOUS 28.1 PRESS RELEASES. The parties will give copies to one another, in advance if possible, of all news, articles and other releases provided to the public media regarding this Lease. 28.2 LESSOR PERFORMANCE FOR LESSEE. The exercise by LESSOR of its remedy of performing a LESSEE obligation hereunder is not a waiver of and will not relieve LESSEE from the performance of such obligation at any subsequent time or from the performance of any of its other obligations hereunder. 28.3 LESSOR'S PAYMENT OBLIGATIONS. Any obligation of LESSOR under this Lease to pay or release any amount to LESSEE is conditioned upon (a) all amounts then due and payable by LESSEE to LESSOR under this Lease or under any other agreement between LESSOR and LESSEE having been paid in full and (b) no Default or Event of Default having occurred and continuing hereunder at the time such payment or release of payment is payable to LESSEE. 28.4 APPLICATION OF PAYMENTS. Any amounts paid or recovered in respect of LESSEE liabilities hereunder may be applied to Rent, Default Interest, fees or any other amount due hereunder in such proportions, order and manner as LESSOR determines. 28.5 USURY LAWS. The parties intend to contract in strict compliance with the usury Laws of the State of California and, to the extent applicable, the U.S. Notwithstanding anything to the contrary in the Operative Documents, LESSEE will not be obligated to pay Default Interest or other interest in excess of the maximum non-usurious interest rate, as in effect from time to time, which may by applicable Law be charged, contracted for, reserved, received or collected by LESSOR in connection with the Operative Documents. During any period of time in which the then-applicable highest lawful rate is lower than the Default Interest rate, Default Interest will accrue and be payable at such highest lawful rate; however, if at later times such highest lawful rate is greater than the Default Interest rate, then LESSEE will pay Default Interest at the highest lawful rate until the Default Interest which is paid by LESSEE equals the amount of interest that would have been payable in accordance with the interest rate set forth in Article 5.5. 28.6 DELEGATION BY LESSOR. LESSOR may delegate to any Person(s) all or any of the rights, powers or discretion vested in it by this Lease and any such delegation may be made upon such terms and conditions as LESSOR in its absolute discretion thinks fit. 28.7 CONFIDENTIALITY. The Operative Documents and all non-public information obtained by either party about the other are confidential and are between LESSOR and LESSEE only and will not be disclosed by a party to third parties (other than to such party's auditors or legal advisors or as required in connection with any filings of this Lease in accordance with Article 13) without the prior written consent of the other party. If disclosure is required as a result of applicable Law, LESSEE and LESSOR will cooperate with one another to obtain confidential treatment as to the commercial terms and other material provisions of this Lease. 28.8 RIGHTS OF PARTIES. The rights of the parties hereunder are cumulative, not exclusive, may be exercised as often as each party considers appropriate and are in addition to its rights under general Law. The rights of one party against the other party are not capable of being waived or amended except by an express waiver or amendment in writing. Any failure to exercise or any delay in exercising any of such rights will not operate as a waiver or amendment of that or any other such right any defective or partial exercise of any such rights will not preclude any other or further exercise of that or any other such right and no act or course of conduct or negotiation on a party's part or on its behalf will in any way preclude such party from exercising any such right or constitute a suspension or any amendment of any such right. 28.9 FURTHER ASSURANCES. Each party agrees from time to time to do and perform such other and further acts and execute and deliver any and all such other instruments as may be required by Law, reasonably requested by the auditors of the other party or requested by the other party to establish, maintain or protect the rights and remedies of the requesting party or to carry out and effect the intent and purpose of this Lease. 28.10 USE OF WORD "INCLUDING". The term "INCLUDING" is used herein without limitation. 28.11 HEADINGS. All article and paragraph headings and captions are purely for convenience and will not affect the interpretation of this Lease. Any reference to a specific article, paragraph or section will be interpreted as a reference to such article, paragraph or section of this Lease. 28.12 INVALIDITY OF ANY PROVISION. If any of the provisions of this Lease become invalid, illegal or unenforceable in any respect under any Law, the validity, legality and enforceability of the remaining provisions will not in any way be affected or impaired. 28.13 NEGOTIATION. The terms of this Lease are agreed by LESSOR from its principal place of business in Los Angeles, California. 28.14 TIME IS OF THE ESSENCE. Time is of the essence in the performance of all obligations of the parties under this Lease and, consequently, all time limitations set forth in the provisions of this Lease will be strictly observed. 28.15 AMENDMENTS IN WRITING. The provisions of this Lease may only be amended or modified by a writing executed by LESSOR and LESSEE. 28.16 COUNTERPARTS. This Lease may be executed in any number of identical counterparts, each of which will be deemed to be an original, and all of which together will be deemed to be one and the same instrument when each party has signed and delivered one such counterpart to the other party. 28.17 DELIVERY OF DOCUMENTS BY FAX. Delivery of an executed counterpart of this Lease or of any other documents in connection with this Lease by fax will be deemed as effective as delivery of an originally executed counterpart. Any party delivering an executed counterpart of this Lease or other document by fax will also deliver an originally executed counterpart, but the failure of any party to deliver an originally executed counterpart of this Lease or such other document will not affect the validity or effectiveness of this Lease or such other document. 28.18 ENTIRE AGREEMENT. The Operative Documents constitute the entire agreement between the parties in relation to the leasing of the Aircraft by LESSOR to LESSEE and supersede all previous proposals, agreements and other written and oral communications in relation hereto. The parties acknowledge that there have been no representations, warranties, promises, guarantees or agreements, express or implied, except as set forth herein and in the other Operative Documents. IN WITNESS WHEREOF, LESSEE and LESSOR have caused this Lease to be executed by their respective officers as of September 5, 2000. INTERNATIONAL LEASE FINANCE AMERICAN TRANS AIR, INC. CORPORATION By: /s/ Grant Levy By: /s/ Kenneth K. Wolff Its: Vice President Its: Executive Vice President & CFO EXHIBIT A AIRCRAFT DESCRIPTION Aircraft Manufacturer and Model: Boeing 737-800 Specification: Seating Configuration: Manufacturer's Serial Number: 30706 Registration Mark: ____ Engine Manufacturer and Model: CFM56-7B-27 Engine Serial Numbers: _______ and ________ Engine Thrust Rating: 27,300 pounds Maximum Gross Takeoff Weight: 160,000 pounds EXHIBIT B AGENCY AGREEMENT (Limited Authority) Relating to Boeing 737-800 Aircraft THIS AGENCY AGREEMENT ("AGREEMENT") is made and entered into as of ____________________. BETWEEN: AMERICAN TRANS AIR, INC., a Indiana corporation whose address and principal place of business is at 7337 West Washington Street, Indianapolis International Airport, Indianapolis, Indiana 46231, United States of America ("AGENT") and INTERNATIONAL LEASE FINANCE CORPORATION, a California corporation, whose address and principal place of business is at 1999 Avenue of the Stars, 39th Floor, Los Angeles, California 90067, U.S.A. ("BUYER"). RECITAL The Boeing Company ("MANUFACTURER") and Buyer have entered into Purchase Agreement 2241, dated as of July 30, 1999 (such purchase agreement as may be amended in accordance with the provisions thereof is hereinafter referred to as the "PURCHASE AGREEMENT") under which Manufacturer has agreed to manufacture and sell and Buyer has agreed to purchase certain Boeing 737-800 aircraft. Buyer has agreed to lease one (1) of such aircraft bearing manufacturer's serial number 30706 (the "AIRCRAFT") to the Agent pursuant to an Aircraft Lease Agreement between Buyer and Agent dated as of September 5, 2000 (the "LEASE"). The Agent is engaged in business as a commercial air carrier and intends to lease the Aircraft from Buyer, and Buyer is desirous of utilizing the expertise of the Agent as Buyer's agent in all matters to which the Purchase Agreement relates with respect to the Aircraft except certain items as indicated below, and the Agent, as Buyer's agent, is willing to make such expertise available to Buyer. Accordingly, the parties agree as follows: 1. Buyer hereby appoints the Agent as Buyer's sole and exclusive agent with authority to perform the following, on behalf of Buyer, as the Agent may in its discretion determine to be necessary or desirable: (a) monitor Manufacturer's production, testing and delivery of the Aircraft in accordance with the Purchase Agreement and (b) do all such other things permitted by the Purchase Agreement related to the technical and engineering aspects of Manufacturer's production of the Aircraft, except Buyer limits Agent's authority to perform on behalf of Buyer on any defect that occurs during manufacture that is considered significant in nature by Buyer as measured by the criteria set forth below. Buyer retains the sole authority to perform on any defect meeting such criteria. (i) Deviations from the drawing configuration that could affect future modifications, maintenance, repair or overhaul of the Aircraft; (ii) Defects that are obvious appearance items; (iii) Rework that requires stress concurrence to satisfy Manufacturer's Material Review Board (MRB) requirements; (iv) A high quantity of defects normally considered minor on a singular basis; (v) Major rework requiring extensive repair or modification, E.G. replacement of ---- skin panels, extensive use of oversize fasteners, repair of damaged areas and significant structural modifications; (vi) Rework that affects the aerodynamic drag coefficient of the Aircraft; or (vii) Rework that involves areas known to be sensitive to Buyer. 2. Notwithstanding anything in the provisions of paragraph 1, nothing in this Agreement will confer authority upon or otherwise permit the Agent: (a) to exercise any power of termination under the Purchase Agreement or (b) to make any payments due from Buyer to Manufacturer or to receive on behalf of Buyer any payments due from Manufacturer under the Purchase Agreement, or to alter any of the terms and conditions of the Purchase Agreement or the Detail Specifications of the Aircraft. 3. Buyer will not revoke the appointment of and authority granted under this Agreement to the Agent unless a termination of the Purchase Agreement or Lease has occurred with respect to the Aircraft or the Agent has failed to perform a material obligation under this Agreement. Notice of any such revocation will be provided in accordance with the provisions of Article 14 of the Purchase Agreement and given to both Manufacturer and the Agent. 4. Manufacturer acknowledges the appointment of the Agent for the purpose set forth hereunder and Manufacturer and Buyer agree that due performance by Manufacturer or Agent of an obligation under the Purchase Agreement will constitute due satisfaction of such obligation by such party and Buyer agrees to be bound by the acts of the Agent. 5. Buyer and Agent agree to identify the technical organization and/or person(s) with the limited authority to act for Agent during production of the Aircraft. Buyer will, if possible, provide such identification to Manufacturer in writing, along with office space requirements for Agent, if required, prior to or at the time of Manufacturer's acknowledgment of this Agreement. 6. Nothing in this Agreement will subject Manufacturer to any liability under the Purchase Agreement which it would not otherwise be subject to, or modify Manufacturer's rights thereunder, or require Manufacturer to divest itself of title to or possession of Aircraft or any other property which is subject to the Purchase Agreement until payment therefor and delivery thereof in accordance with the Purchase Agreement. 7. None of the parties hereto will be entitled to assign to any third party any of their rights under this Agreement. 8. The Agent will not delegate to any third party the performance of the obligations imposed on it by this Agreement or appoint a sub-agent. 9. References to Manufacturer in this Agreement will include any wholly-owned subsidiary of Manufacturer to which Manufacturer assigns any of its rights and obligations under the Purchase Agreement pursuant to the terms and conditions thereof. 10. This Agreement will be governed by the laws of the State of California; however, the Purchase Agreement shall remain governed by the laws of the State of Washington. This Agreement has been executed by the parties hereto as of the day and year first above written. INTERNATIONAL LEASE FINANCE CORPORATION AMERICAN TRANS AIR, INC. By: By: Its: Its: The Boeing Company acknowledges the appointment of AMERICAN TRANS AIR, INC. as agent of International Lease Finance Corporation in connection with the above referenced Aircraft as set forth in this Agreement. THE BOEING COMPANY By: Its: EXHIBIT C CERTIFICATE OF INSURANCE [Refer to Aircraft Lease Agreement dated as of September 5, 2000 between LESSEE and LESSOR (the "Lease"). If applicable, insurance certificates from both the insurers and reinsurers will be provided. If there is a LESSOR's Lender, include references to it where appropriate after references to LESSOR.] To: INTERNATIONAL LEASE FINANCE CORPORATION ("LESSOR") ------ 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States Re: AMERICAN TRANS AIR, INC. ("LESSEE") Boeing 737-800 Manufacturer's Serial No.: 30706 Registration Mark: ____ (the "AIRCRAFT") The following security has subscribed to the insurance and/or reinsurance policies: [LIST COMPANIES & PERCENTAGES] THIS IS TO CERTIFY THAT, as Insurance Brokers, we have effected Fleet Insurance in respect of aircraft owned or operated by LESSEE (including the Aircraft), and that insurance in respect of the Aircraft is as specified below. AIRCRAFT HULL ALL RISKS COVERING: All risks of physical loss or damage to the Aircraft from any cause (subject only to the exclusions as specified below), for an Agreed Value of Aircraft in the amount of [list amount calculated in accordance with Article 18.1] DEDUCTIBLES: (CONFIDENTIAL MATERIAL OMITTED) each and every loss (or such lesser amount as generally applicable to the rest of LESSEE's 737-800 fleet). Not applicable to Total Loss/Constructive Total Loss or Arranged Total Loss GEOGRAPHICAL COVERAGE: Worldwide [subject to customary exclusions] AVIATION AND AIRLINE GENERAL THIRD PARTY LIABILITY COVERING: Aircraft Third Party, Passenger, Baggage, Cargo and Mail Liability and Airline General Third Party Liability (including Premises, Hangarkeepers and Products Liability) for combined single limit of not less than (CONFIDENTIAL MATERIAL OMITTED) (or such higher amount as LESSEE may carry generally on other 737-800 aircraft in its fleet) any one accident/occurrence (but in the aggregate in relation to Products Liability), extended to cover LESSEE's liability under the Lease to the extent of the risks covered by the policy including war and allied perils under Extended Coverage Endorsement as per AVN 52 subject only to exclusions as specified below GEOGRAPHICAL LIMITS: Worldwide [subject to customary exclusions] HULL WAR AND ALLIED PERILS COVERING: Hull War Risks as per LSW555.B, but including (a) confiscation or requisition (including by State of Registration and state where airline is domiciled), (b) hijacking or other unlawful seizure or wrongful exercise of control of the Aircraft or crew in flight (including any attempt at such seizure or control) and including "All Risks" Continuation Clause and Extortion Risks (including expenses) and covering claims excluded from Hull All Risks Policy while Aircraft outside Assured's control by reason of perils insured under this policy, for an Agreed Value of Aircraft in the amount of [list amount calculated in accordance with Article 18.1] DEDUCTIBLE: No deductible GEOGRAPHICAL LIMITS: Worldwide AIRCRAFT SPARES ALL RISKS INSURANCE COVERING: All risks of physical loss or damage to Aircraft Parts or spares or Engines at all times when removed from the Aircraft from whatever cause, subject only to the exclusions specified below, including the risks set down in AVN 48B other than paragraphs (a) and (b) thereof (but including paragraph (a) in respect of transit risks) for limits of not less than: CONFIDENTIAL MATERIAL OMITTED and covering: With respect to an Engine, an agreed value (CONFIDENTIAL MATERIAL OMITTED) or, with LESSOR's written concurrence, replacement cost With respect to Parts, replacement cost DEDUCTIBLE: (CONFIDENTIAL MATERIAL OMITTED) GEOGRAPHICAL COVERAGE: Worldwide INSURANCE REQUIRED BY MANUFACTURER LESSEE will carry the insurance required by Manufacturer in connection with LESSOR's assignment of Manufacturer's warranties and product support to LESSEE CONTRACTUAL INDEMNITY To the extent of the risks covered by the policies, LESSEE has insurance coverage for the indemnities agreed to by LESSEE pursuant to Article 16 of the Lease, subject to AVN67B or equivalent PERIOD OF COVERAGE (ALL POLICIES) From the Delivery Date of Aircraft to [END OF POLICY PERIOD] It is further certified that LESSOR has an interest in respect of the Aircraft under the Lease. Accordingly, with respect to losses occurring during the period from the Effective Date until the expiry of the Insurance or until the expiry or agreed termination of the Lease or until the obligations under the Lease are terminated by any action of the Insured or LESSOR and in consideration of the Additional Premium it is confirmed that the Insurance afforded by the Policy is in full force and effect and it is further agreed that the following provisions are specifically endorsed to the Policy. 1. UNDER THE HULL (ALL RISKS AND HULL WAR AND ALLIED RISKS) AND AIRCRAFT SPARES INSURANCES (a) In respect of any claim on the Aircraft that becomes payable on the basis of a Total Loss, payment of any settlement will be made to, or to the order of LESSOR as sole loss payee, up to the Agreed Value. With respect to repairable damage to an Aircraft or Engine, LESSOR will receive all insurance proceeds in excess of CONFIDENTIAL MATERIAL OMITTED provided that upon receipt by the insurance broker of written notice of a material default on the part of LESSEE (and until notice that it has been cured), all insurance proceeds which otherwise would be payable to LESSEE will be made directly to LESSOR. In respect of any other claim, payment of any settlement (net of any relevant policy deductible) will be made with such party(ies) as may be necessary to repair the Aircraft unless otherwise agreed after consultation between the Insurers and the Insured and, where necessary under the terms of the Lease, LESSOR. Such payments will only be made provided they are in compliance with all applicable laws and regulations. (b) Insurers agree on a 50/50 settlement in terms of AVS 103. (c) Insurers have no right to replace the Aircraft on a Total Loss (arranged, constructive or otherwise). (d) Insurers confirm that under the insurance policies, if the Insured installs an engine owned by a third party on the Aircraft, either (i) the hull insurance will automatically increase to such higher amount as is necessary in order to satisfy both LESSOR's requirement to receive the Agreed Value in the event of a Total Loss, Constructive Total Loss or Arranged Total Loss and the amount required by the third party engine owner, or (ii) separate additional insurance on such engine will attach in order to satisfy separately the requirements of the Insured to such third party engine owner. 2. UNDER THE LEGAL LIABILITY INSURANCE (a) Subject to the provisions of this Endorsement, the Insurance will operate in all respects as if a separate Policy had been issued covering each party insured hereunder, but this provision will not operate to include any claim arising howsoever in respect of loss or damage to the Aircraft insured under the Hull or Spares Insurance of the Insured. Notwithstanding the foregoing the total liability of Insurers in respect of any and all Insureds will not exceed the limits of liability stated in the Policy. (b) The Insurance provided hereunder will be primary and without right of contribution from any other insurance which may be available to LESSOR. 3. UNDER ALL INSURANCES (a) LESSOR, its successors and assigns, and (with respect to Aviation and Airline General Third Party Liability only) its directors, officers and employees for their respective rights and interests, are included as Additional Insureds. (b) The cover afforded to LESSOR by the Policy in accordance with this Endorsement will 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 Policy. (c) LESSOR will have no responsibility for premium and insurers will waive any right of set-off or counterclaim against LESSOR except in respect of outstanding premium in respect of the Aircraft, provided that Insurer may only set-off for premiums against the proceeds of the hull insurance for outstanding premiums in connection with hull all risks and hull war and allied perils insurance. (d) Upon payment of any loss or claim to or on behalf of LESSOR, Insurers will to the extent and in respect of such payment be thereupon subrogated to all legal and equitable rights of LESSOR indemnified hereby (but not against LESSOR). Insurers will not exercise such rights without the consent of those indemnified, such consent not to be unreasonably withheld. At the expense of Insurers LESSOR will do all things reasonably necessary to assist the Insurers to exercise said rights. (e) Except in respect of any provision for Cancellation or Automatic Termination specified in the Policy or any endorsement thereof, cover provided by this Endorsement may only be cancelled or materially altered in a manner adverse to LESSOR by the giving of not less than thirty (30) days notice in writing to LESSOR. Notice will be deemed to commence from the date such notice is given by the Insurers. Such notice will NOT, however, be given at normal expiry date of the Policy or any endorsement. 4. EXCEPT AS SPECIFICALLY VARIED OR PROVIDED BY THE TERMS OF THIS CERTIFICATE (a) LESSOR IS COVERED BY THE POLICY SUBJECT TO ALL TERMS, CONDITIONS, LIMITATIONS,WARRANTIES, EXCLUSIONS AND CANCELLATION PROVISIONS THEREOF. (b) THE POLICY WILL NOT BE VARIED BY ANY PROVISIONS CONTAINED IN THE LEASE WHICH PURPORT TO SERVE AS AN ENDORSEMENT OR AMENDMENT TO THE POLICY. SUBJECT (save as specifically stated in this Certificate) to policy terms, conditions, limitations and exclusions. Yours faithfully, [BROKERS] EXHIBIT D BROKERS' LETTER OF UNDERTAKING To: INTERNATIONAL LEASE FINANCE CORPORATION 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States Date: Our Ref: Re: AMERICAN TRANS AIR, INC. ("LESSEE") ------ Boeing 737-800 Manufacturer's Serial No.: ____ Registration Mark: ____ (the "AIRCRAFT") Dear Sirs: We confirm that insurance has been effected for the account of [LESSEE] (the "OPERATOR") covering all aircraft owned or operated by them, including the above-referenced aircraft (the "Aircraft"). [Also confirm, if applicable, the amount of any hull all risks or hull war and allied perils on the Aircraft which LESSEE is carrying in excess of the Agreed Value (which excess insurance would be payable to LESSEE). Such excess insurance may not exceed ten percent (10%) of the Agreed Value.] Pursuant to instructions received from the Operator and in consideration of your approving the arrangement of the Operator's "Fleet Policy" (under which the above-referenced Aircraft is insured) through the intermediary of ourselves as Brokers in connection with the insurance (the "INSURANCE") mentioned in our Certificate of Insurance (Reference No. [ ] dated [ ] and attached hereto), we undertake as follows: 1. In relation to the Hull and War Risks Insurance to hold to your order the insurance Slips or Contracts and any Policies which may be issued or any policies substituted (with your consent) therefor (but only insofar as the same relate to the Aircraft only) and the benefit of the Hull and War Risks Insurance thereunder, but subject to our requirements to operate the Fleet Policy insofar as it relates to any other aircraft insured thereunder. 2. To advise you of any of the following: (a) If any insurer cancels or gives notice of cancellation of any of the Insurance at least thirty (30) days (or such lesser period as may be available in the case of War and Allied Perils) before such cancellation is to take effect in respect of the Aircraft. (b) Of any act or omission or of any event (including non-payment of premium) of which we have knowledge or are notified and which might invalidate or render unenforceable in whole or in part any of the Insurance, insofar as the same relate to the Aircraft. (c) If we do not receive instructions to renew all or any of the Insurance at least thirty (30) days prior to their expiration. (d) If any of the Insurance are not renewed on the same terms (save as to premium and period of cover and as you might otherwise have notified us to be acceptable to you) seven (7) days prior to expiry thereof. The above undertakings are given subject to our continuing appointment for the time being as Insurance Brokers to the Operator. We also undertake to advise you if we cease to be Insurance Brokers to the Operator. Yours faithfully, EXHIBIT E ESTOPPEL AND ACCEPTANCE CERTIFICATE AMERICAN TRANS AIR, INC. ("LESSEE"), a corporation organized under the laws of Indiana does hereby represent, acknowledge, warrant and agree as follows: 1. LESSEE and INTERNATIONAL LEASE FINANCE CORPORATION, as LESSOR, have entered into an Aircraft Lease Agreement dated as of September 5, 2000 (hereinafter referred to as the "LEASE"). Words used herein with capital letters and not otherwise defined will have the meanings set forth in the Lease. 2. LESSEE has this ____ day of __________, ____ (Time: __________) at ____________________ received from LESSOR possession of: (a) One (1) Boeing 737-800 aircraft bearing Manufacturer's serial number ____ and U.S. registration mark ____, together with two (2) CFM56-7B-27 engines bearing manufacturer's serial numbers _______ and ________ (each of which has 750 or more rated take-off horsepower), all in airworthy condition. (b) All Aircraft Documentation, including the usual and customary manuals, logbooks, flight records and historical information regarding the Aircraft, Engines and Parts. 3. All of the foregoing has been delivered and accepted on the date set forth above to LESSEE's full satisfaction and pursuant to the terms and provisions of the Lease. 4. The Agreed Value of the Aircraft is US$_______________. 5. The amount of fuel on board at Delivery is __________ (circle one) pounds/kilos (________ gallons). 6. The Aircraft, Engines, Parts and Aircraft Documentation as described in the Lease have been fully examined by LESSEE and have been received in a condition fully satisfactory to LESSEE and in full conformity with the Lease in every respect. 7. The Lease is in full force and effect, LESSEE has no claims, offsets, deductions or set-off of any kind or nature in connection with the Lease, except for any claims against LESSOR set forth on the attached List of Discrepancies. 8. LESSOR's Lender may rely upon all of the foregoing in granting substantial financial accommodations to LESSOR and LESSEE understands and agrees that any funds being advanced by LESSOR's Lender will be made in reliance upon the foregoing. 9. LESSEE has obtained all required permits, authorizations, licenses and fees of the State of Registration or any Government Entity thereof necessary in order for LESSEE to operate the Aircraft as permitted by the terms of the Lease. Dated on the date set forth above AMERICAN TRANS AIR, INC. By: Title: ATTACHMENTS: 1. List of Aircraft Documentation 2. List of Loose Equipment 3. List of Discrepancies ATTACHMENT 1 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE LIST OF AIRCRAFT DOCUMENTATION MANUALS 1. FAA Approved Flight Manual 2. Airplane Flight Operation Manual 3. Aircraft Recover Manual 4. Quick Reference Handbook (QRH) 5. Weight and Balance Manual 6. Aircraft Fueling Manual 7. Aircraft Maintenance Manual (MM) 8. Aircraft Maintenance Manual Supplement 9. Ramp Maintenance Manual (RMM) 10. Cargo Loading Manual 11. Fault Reporting Manual (FRM) 12. Fault Isolation Manual (FIM) 13. Illustrated Parts Catalog (IPC) 14. Life Limited Parts Manual 15. Structural Repair Manual (SRM) 16. Master Minimum Equipment List 17. Wiring Diagram Manual (WD) 18. Wiring Practices Manual 19. System Schematics Manual 20. B.I.T.E. Manual 21. Non-Destructive Test Manual 22. Corrosion Prevention Manual 23. Component Maintenance Manual 24. APU Log Book 25. Engine Maintenance Manual 26. Engine Log Book 27. Engine Illustrated Parts Catalog 28. Engine Data Submittal Book 29. Engine Overhaul Manual 30. Power Plant Build-up Manual AIRCRAFT RECORDS AND HISTORICAL DOCUMENTS 1. Copies of original Certificates delivered by Boeing: a. Airworthiness Certificate for Export b. Radio installation conformity certificate c. Noise limitation certificate 2. Copies of original Documents delivered by Boeing: a. Airworthiness Directive Compliance list b. Aircraft inspection report c. Aircraft Readiness Log d. Weighing report 3. Copies of current Certificates: a. Airworthiness Certificate b. Noise limitation c. Radio license d. Interior material burn certificates e. Certificate of Export f. Aircraft deregistration confirmation e. Aircraft Registration 4. Letters signed and stamped by Quality Assurance: a. Current aircraft hours and cycles b. Current engines hours and cycles c. Accident and Incident report d. Summary of Maintenance Program e. AD compliance during the lease term 5. Aircraft log books and Aircraft readiness log. 6. Aircraft Hard Time (HT) inspection status. 7. One year forecast for HT inspection. 8. Aircraft Modification status, including service bulletins. 9. Last weighing report prior to redelivery. 10. AD compliance report with original signoffs. 11. Routine and non-routine job cards of the last "C" and "D" checks. 12. Past year pilots and maintenance discrepancies. 13. Major and Minor structural repairs with applicable approvals. 14. Compass Swing report of the last three years. 15. Cabin Configuration drawing (LOPA). 16. Emergency equipment location drawing. 17. Last X-RAYs ENGINES RECORDS 1. Last test cell run reports. 2. Life Limited Parts status and traceability. 3. AD compliance report with original signoffs. 4. Engine Modification/service bulletin/inspection report and applicableforms. 5. Last heavy maintenance records for each module. 6. Engine log books. 7. Engine removal history. 8. Past year trend monitoring reports. 9. Historical borescope reports. 10. Engine component report. APU RECORDS 1. APU status (FH, FC, limits). 2. Life limited Part status and traceability. 3. AD compliance with original signoffs. 4. Modification status. 5. Last heavy maintenance documents. 6. APU log books. 7. Last test cell report. COMPONENT RECORDS 1. Aircraft component inventory. 2. Hard time component inventory. 3. All serviceable tags. 4. Landing Gear status with last overhaul and life limited Part status. 5. AD compliance with original signoffs. 6. Modification status. ATTACHMENT 2 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE LIST OF LOOSE EQUIPMENT ATTACHMENT 3 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE LIST OF DISCREPANCIES EXHIBIT F OPINION OF COUNSEL TO BE GIVEN BY INDEPENDENT OUTSIDE COUNSEL OF LESSEE OR OTHER LAWYERS ACCEPTABLE TO LESSOR To: International Lease Finance Corporation 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States Gentlemen: This opinion is furnished to you pursuant to Article 7 of the Aircraft Lease Agreement dated as of September 5, 2000 (the "LEASE") between AMERICAN TRANS AIR, INC. ("LESSEE") and INTERNATIONAL LEASE FINANCE CORPORATION ("LESSOR"). Defined terms in this opinion are used herein as defined in the Lease. I have acted as counsel for LESSEE in connection with the preparation, execution and delivery of the Lease. In that connection I have examined: (a) The Lease and Estoppel and Acceptance Certificate; (b) The charter of LESSEE and all amendments thereto (the "CHARTER"); and (c) Such other documents, agreements and instruments, and such treaties, laws, rules, regulations, decrees and the like, as I have deemed necessary as a basis for the opinions hereinafter expressed. [ (d) All of the agreements and any amendments thereto between LESSEE and all other lessors and lenders of LESSEE covering other aircraft operated by LESSEE on which the Engines can be installed.] Based upon the foregoing and having regard for legal considerations which I deem relevant, I am of the opinion that: 1. LESSEE is a corporation duly incorporated, validly existing and in good standing under the Laws of Indiana. It has the corporate power and authority to carry on its business as presently conducted and to perform its obligations under the Lease. 2. No authorization, approval, consent, license or order of, or registration with, or the giving of notice to the Aviation Authority or any other regulatory body or authority is required for the valid authorization, execution, delivery and performance by LESSEE of the Lease. 3. The Lease and the Estoppel and Acceptance Certificate have each been duly authorized, executed and delivered by LESSEE. Each such instrument is a valid, enforceable and binding obligation of LESSEE except as enforceability may be limited by bankruptcy, insolvency, reorganization or other Laws of general application affecting the enforcement of creditors' rights. 4. The execution and delivery of the Lease and the Estoppel and Acceptance Certificate, the consummation by LESSEE of the transactions contemplated therein and compliance by LESSEE with the terms and provisions thereof do not contravene any Law applicable to LESSEE, or result in any breach of or constitute any default under or result in the creation of any lien, charge or encumbrance upon any property of LESSEE, under any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which LESSEE is a party or by which LESSEE or its properties or assets is bound. 5. Except for any filing or recording that may be required with the [NAME OF AIRCRAFT REGISTER] and except for [DESCRIBE SUCH OTHER FILINGS OR RECORDINGS], no filing or recording of any instrument or document (including the filing of any financial statement) is necessary under the laws of the U.S. in order for the Lease to constitute a valid and perfected lease of record relating to the Aircraft, it being understood that such counsel expresses no opinion as to the nature of LESSOR's title to the Aircraft on the Delivery Date. 6. LESSEE holds all licenses, certificates and permits from applicable governmental authorities in the U.S. necessary for the conduct of its business as a certificated air carrier and performance of its obligations under the Lease. 7. To my knowledge, there are no suits or proceedings pending or threatened against LESSEE before any Government Entity against or affecting LESSEE which are reasonably likely to be adversely determined and, if adversely determined, would have a material adverse effect on the financial condition or business of LESSEE or its ability to perform under the Lease, except as described in the filings provided to LESSOR pursuant to Article 22. 8. The obligations of LESSEE under the Lease are direct, general and unconditional obligations of LESSEE and rank or will rank at least PARI PASSU with all other present and future unsecured and unsubordinated obligations (including contingent obligations) of LESSEE, with the exception of such obligations as are mandatorily preferred by law. 9. LESSEE, under the laws of the U.S. or of any other jurisdiction affecting LESSEE, is subject to private commercial law and suit. Neither LESSEE nor its properties or assets have the right of immunity from suit or execution on the grounds of sovereignty in such jurisdictions and the performance by LESSEE of its obligations under the Lease constitute commercial acts done for commercial purposes. 10. There is no applicable usury or interest limitation Law in Indiana which may restrict the recovery of payments in accordance with the Lease. 11. LESSOR will not violate any Law or become liable to any tax in Indiana or the U.S. by reason of entering into or performing its obligations under the Lease and it is not necessary to establish a place of business in Indiana in order to enforce any provisions of the Lease. Very truly yours, EXHIBIT G ASSIGNMENT OF RIGHTS (AIRFRAME) [DATE] Boeing Commercial Airplane Group P.O. Box 3707 Seattle, Washington 98124-2207 Attention: Vice President-Contracts Mail Code 21-34 Subject: Full Assignment of Rights and Obligations - International Lease Finance Corporation as Lessor and AMERICAN TRANS AIR, INC. as Lessee of Model Boeing 737-800 aircraft bearing manufacturer's serial number 30706 Ladies and Gentlemen: In connection with International Lease Finance Corporation's lease to AMERICAN TRANS AIR, INC. ("Lessee") of a Boeing aircraft (more fully described below), reference is made to the following documents: A. Purchase Agreement 2241, dated as of July 30, 1999, between The Boeing Company ("Boeing") and International Lease Finance Corporation ("ILFC") (the "Boeing Agreement") under which ILFC purchased a certain Boeing Model 737-800 aircraft bearing manufacturer's serial number 30706 (the "Aircraft"). B. Aircraft Lease Agreement (the "Lease") for the Aircraft dated as of September 5, 2000 between ILFC and Lessee. Capitalized terms used herein without definition will have the same meaning as in the Boeing Agreement. In connection with ILFC's lease of the Aircraft under the Lease, ILFC is transferring to Lessee certain rights of ILFC related to the Aircraft under the Boeing Agreement. To accomplish this transfer of rights, as authorized by the provisions of the Boeing Agreement: 1. Lessee acknowledges that it has received copies of the following specific provisions of the Boeing Agreement applicable to the Aircraft and agrees to be bound by and comply with all the terms, conditions, and limitations contained in such provisions, including without limitation the disclaimer and release, exclusion of liabilities, indemnity and insurance provisions thereof: Boeing Agreement Article 6 - Excusable Delay 6.1 General Article 10 - Assignment, Resale or Lease 10.1 Assignment 10.3 Sale by Buyer after Delivery 10.4 Lease by Buyer after Delivery 10.5 No Increase in Boeing Liability 10.6 Exculpatory or Indemnity Clause in Post-delivery Sale or Lease Article 12 - Product Assurance; Disclaimer and Release; Exclusion of Liabilities; Customer Support; Indemnification and Insurance (in its entirety) Article 14 - Contractual Notices and Requests Article 15 - Miscellaneous 15.4 Governing Law Exhibit B - Product Assurance Document Part A Boeing Warrant Part B Warranty Repairs and Modifications by Buyer Part C Boeing Service Life Policy Part D Boeing Indemnity Against Patent Infringement Part D-1 Boeing Indemnity Against Copyright Infringement Part E Supplier Warranties and Patent Indemnities Part G Boeing Interface Commitment Part H General Exhibit C-1 - Customer Support Document Part B Boeing Customer Support Services Part D Technical Data and Documents Part E Buyer's Indemnification of Boeing and Insurance Part F Alleviation or Cessation of Performance Exhibit E - Buyer Furnished Equipment Provisions Document Paragraph 8 Indemnification of Boeing Paragraph 9 Patent Indemnity Paragraph 10 Definitions Letter Agreement No. 1830-3 - Seller Purchased Equipment Paragraph 6 Buyer's Indemnification of Boeing 2. Lessee recognizes that Boeing's obligation to provide training, support and services to Lessee pursuant to Exhibit C of the Boeing Agreement is conditioned on the receipt by Boeing of evidence of compliance by Lessee with the insurance requirements set forth in paragraph 2 of Part E of Exhibit C or in such other form as may be satisfactory to Boeing, prior to the commencement of such training, support and services. 3. ILFC reserves to itself all rights, claims and interests it may have under the Boeing Agreement not expressly assigned to Lessee hereunder. ILFC will remain responsible to Boeing for any amounts with respect to the Aircraft owed to Boeing under the Boeing Agreement prior to the effective date of this letter, including any amounts owed by ILFC to Boeing under the specific articles and paragraphs of the Boeing Agreement referenced in paragraph 1 above based upon events or incidents relating to the Aircraft occurring prior to the effective date of this letter. 4. ILFC hereby assigns to Lessee the sole authority to exercise in Lessee's name all rights and powers of ILFC with respect to the Aircraft under the specific portions of the Boeing Agreement referenced in paragraph 1 above. Such authorization will continue until Boeing receives from ILFC written notice that the Lease has been cancelled or terminated, addressed to Boeing's Vice President, Contracts, P.O. Box 3707, MC 21-34, Seattle, Washington 98124-2207, U.S.A. Until Boeing receives such notice, Boeing will be entitled to deal exclusively with Lessee with respect to the Aircraft under the specific portions of the Boeing Agreement referenced in paragraph 1 above and, with respect to the rights, powers, duties or obligations under such portions of the Boeing Agreement, any and all actions taken by Lessee or agreements entered into by Lessee during the period prior to Boeing's receipt of such notice will be final and binding on ILFC. 5. Lessee hereby accepts the authorization set forth in paragraph 4 above and agrees to be bound by and to comply with all the terms, conditions and limitations of the portion of the Boeing Agreement referenced in paragraph 1 above. 6. This Assignment may be signed by the parties hereto in separate counterparts, each of which when executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. 7. This Assignment shall be governed by, and construed in accordance with,the laws of the State of Washington, including all matters of construction, validity and performance. We request that Boeing, upon receipt of this letter, acknowledge receipt thereof and the transfer of rights set forth above by signing the acknowledgment and forwarding one copy of this letter to each of the undersigned. IN WITNESS WHEREOF, the parties hereto have caused this Assignment Agreement to be duly executed as of the dates written below. INTERNATIONAL LEASE FINANCE AMERICAN TRANS AIR, INC., as Lessee CORPORATION, as Lessor and Buyer By: By: Its: Its: BOEING ACKNOWLEDGMENT AND CONSENT TO ASSIGNMENT Receipt of the above letter is acknowledged and transfer of certain rights as described above under the Boeing Agreement is confirmed, effective as of this date. THE BOEING COMPANY By: Its: Date: EXHIBIT H ASSIGNMENT OF RIGHTS (ENGINES) [DATE] CFM INTERNATIONAL, INC. 1 Neumann Way, F-17 Cincinnati, Ohio 45215 Attention: Commercial Contracts - Warranty Assignment Administrator Dear Warranty Assignment Administrator: Reference is hereby made to that Consent to Assignment made as of April 29, 1988 (the "CONSENT TO ASSIGNMENT"), by and between CFM INTERNATIONAL, INC. ("CFMI") and INTERNATIONAL LEASE FINANCE CORPORATION ("ILFC"). Terms defined in the Consent to Assignment are used herein with the same meaning as in the Consent to Assignment. As of ________________ ___, ______, ILFC has assigned all of its rights and interest in, to and under the Engine Warranties to AMERICAN TRANS AIR, INC. ("ASSIGNEE") in connection with its lease to Assignee of a Boeing 737-800 aircraft (the "AIRCRAFT") together with two (2) CFMI Model CFM56-7B-27 engines bearing Manufacturer's Serial Numbers _______ and ________ (the "ENGINES") as of the date each such Engine was delivered to Assignee. Such assignment shall be effective from such date until ILFC notifies CFMI that the Lease has been cancelled or terminated. The Assignee has accepted such assignment and all the limitations and liabilities pertaining to the Engine Warranties as stated in the provisions of the GTA listed in Schedule 2 to the Consent to Assignment. A copy of the aforesaid assignment is attached hereto. Very truly yours, INTERNATIONAL LEASE FINANCE CORPORATION By: Title: cc: Ruben M. Cabrera Director, Commercial Contracts ASSIGNMENT OF WARRANTIES [DATE] In consideration of AMERICAN TRANS AIR, INC. ("LESSEE") leasing from International Lease Finance Corporation ("ILFC") one (1) Boeing 737-800 aircraft together with two (2) CFMI Model CFM56-7B-27 engines bearing manufacturer's serial numbers _______ and ________, it is hereby agreed as follows: 1. ILFC hereby assigns and transfers to Lessee all of ILFC's respective rights and interest in and to and in and under the Engine Warranties set forth in and subject to the limitations and liabilities set forth in Exhibit B Warranty, Section X (the "ENGINE WARRANTIES") of CFM International, Inc. - ILFC General Terms Agreement No. 6-3987 dated 22 June 1984 (the "GTA") during the term of such leases so long as Lessee is not in default thereunder. 2. Lessee hereby accepts such assignment including all the limitations and liabilities pertaining to said Engine Warranties as stated in the provisions of Exhibit B Warranty, Section X of the GTA. 3. This Agreement shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors and assigns to the extent permitted by the GTA and hereunder. 4. This Agreement shall be governed by and construed in accordance with the laws of the State of California. 5. This Agreement may be executed in any number of counterparts, each of which when executed and delivered is an original but all of which taken together constitute one and the same instrument and any party may execute this Agreement by signing any counterpart. IN WITNESS WHEREOF, the authorized representative of the parties hereto have executed this Agreement as of the day and year first above written. For and on behalf of For and on behalf of INTERNATIONAL LEASE FINANCE AMERICAN TRANS AIR, INC. CORPORATION By: By: Its: Its: EXHIBIT I RETURN ACCEPTANCE RECEIPT Date: _________________ ___, ____ 1. AMERICAN TRANS AIR, INC., as LESSEE, and INTERNATIONAL LEASE FINANCE CORPORATION, as LESSOR, have entered into an Aircraft Lease Agreement dated as of September 5, 2000 (the "LEASE"). Words used herein with capital letters and not otherwise defined will have the meanings set forth in the Lease. 2. LESSOR has this ____ day of __________, ____ (Time: __________) at ____________________ received from LESSEE possession of: (a) One (1) Boeing 737-800 Aircraft bearing Manufacturer's serial number ____, together with two (2) CFM56-7B-27 engines bearing manufacturer's serial numbers _______ and ________, and all Parts attached thereto and thereon in an airworthy condition and (b) All Aircraft Documentation, including the usual and customary manuals, logbooks, flight records and historical information regarding the Aircraft, Engines and Parts, as listed in the Document Receipt attached hereto. 3. The Airframe, Engines and Parts had the following hours/cycles at return: (a) AIRFRAME: Total hours: _______________ Total Landings: _______________ (b) ENGINES: POSITION SERIAL NO. TOTAL HOURS TOTAL CYCLES HRS/CYCLES SINCE LAST SHOP VISIT Time Remaining to Next LIFE LIMITED PART REMOVAL PART NAME HOURS CYCLES MSN MSN (c) APU: MSN __________ Total hours: __________ ______ hours/ ______ cycles since last Overhaul ______ hours/ ______ cycles remaining on APU life-limited Parts (d) LANDING GEARS: POSITION SERIAL NO. Total Hrs/Cycles since Date of last HRS/CYCLES LAST OVERHAUL OVERHAUL Nose Right Main Left Main (e) FUEL ON BOARD AT RETURN: ______ (circle one) pounds/kilos (______ gallons) 4. Other technical information regarding the Aircraft and its components are correctly set forth on the Technical Evaluation Report (in the form of Exhibit L) attached hereto. 5. The above specified aircraft, engines and documentation are hereby accepted by LESSOR subject to correction by LESSEE (or procurement by LESSEE at LESSEE's cost) as soon as reasonably possible of the discrepancies specified in Attachment 2 hereto. 6. Subject to the following paragraph, the leasing of the Aircraft by LESSOR to LESSEE pursuant to the Lease is hereby terminated without prejudice to LESSEE's continuing obligations under the Lease including, without limitation, paragraph 6 above and Articles 10.5, 15 and 16. 7. LESSEE represents and warrants that during the term of the Lease all maintenance and repairs to the Airframe and Engines were performed in accordance with the requirements contained in the Lease. LESSEE further confirms that all of its obligations under the Lease whether accruing prior to the date hereof or which survive the termination of the Lease by their terms and accrue after the date hereof, will remain in full force and effect until all such obligations have been satisfactorily completed. 8. This Return Acceptance Supplement is executed and delivered by the parties in [place]. IN WITNESS WHEREOF, the parties hereto have caused this Return Acceptance Receipt to be executed in their respective corporate names by their duly authorized representatives as of the day and year first above written. INTERNATIONAL LEASE FINANCE CORPORATION AMERICAN TRANS AIR, INC. By: By: Its: Its: ATTACHMENTS: 1. List of Aircraft Documentation 2. List of Loose Equipment 3. List of Discrepancies 4. Engine Maximum Power Assurance Test Conditions and Results 5. Dent and Damage Chart 6. Form of No Accident/Incident Letter 7. Technical Evaluation Report (in the form of Exhibit L) ATTACHMENT 1 TO RETURN ACCEPTANCE RECEIPT LIST OF AIRCRAFT DOCUMENTATION [The (a) manuals and (b) Aircraft records and historical documents set forth below are to be returned with the Aircraft in a current, up-to-date and correct status] MANUALS 1. FAA Approved Flight Manual 2. Airplane Flight Operation Manual 3. Aircraft Recover Manual 4. Quick Reference Handbook (QRH) 5. Weight and Balance Manual 6. Aircraft Fueling Manual 7. Aircraft Maintenance Manual (MM) 8. Aircraft Maintenance Manual Supplement 9. Ramp Maintenance Manual (RMM) 10. Cargo Loading Manual 11. Fault Reporting Manual (FRM) 12. Fault Isolation Manual (FIM) 13. Illustrated Parts Catalog (IPC) 14. Life Limited Parts Manual 15. Structural Repair Manual (SRM) 16. Master Minimum Equipment List 17. Wiring Diagram Manual (WD) 18. Wiring Practices Manual 19. System Schematics Manual 20. B.I.T.E. Manual 21. Non-Destructive Test Manual 22. Corrosion Prevention Manual 23. Component Maintenance Manual 24. APU Log Book 25. Engine Maintenance Manual 26. Engine Log Book 27. Engine Illustrated Parts Catalog 28. Engine Data Submittal Book 29. Engine Overhaul Manual 30. Power Plant Build-up Manual AIRCRAFT RECORDS AND HISTORICAL DOCUMENTS 1. Copies of original Certificates delivered by Boeing: a. Airworthiness Certificate for Export b. Radio installation conformity certificate c. Noise limitation certificate 2. Copies of original Documents delivered by Boeing: a. Airworthiness Directive Compliance list b. Aircraft inspection report c. Aircraft Readiness Log d. Weighing report 3. Copies of current Certificates: a. Airworthiness Certificate b. Noise limitation c. Radio license d. Interior material burn certificates e. Certificate of Export f. Aircraft deregistration confirmation e. Aircraft Registration 4. Letters signed and stamped by Quality Assurance: a. Current aircraft hours and cycles b. Current engines hours and cycles c. Accident and Incident report d. Summary of Maintenance Program e. AD compliance during the lease term 5. Aircraft log books and Aircraft readiness log. 6. Aircraft Hard Time (HT) inspection status. 7. One year forecast for HT inspection. 8. Aircraft Modification status, including service bulletins. 9. Last weighing report prior to redelivery. 10. AD compliance report with original signoffs. 11. Routine and non-routine job cards of the last "C" and "D" checks. 12. Past year pilots and maintenance discrepancies. 13. Major and Minor structural repairs with applicable approvals. 14. Compass Swing report of the last three years. 15. Cabin Configuration drawing (LOPA). 16. Emergency equipment location drawing. 17. Last X-RAYs ENGINES RECORDS 1. Last test cell run reports. 2. Life Limited Parts status and traceability. 3. AD compliance report with original signoffs. 4. Engine Modification/service bulletin/inspection report and applicable forms. 5. Last heavy maintenance records for each module. 6. Engine log books. 7. Engine removal history. 8. Past year trend monitoring reports. 9. Historical borescope reports. 10. Engine component report. APU RECORDS 1. APU status (FH, FC, limits). 2. Life limited Part status and traceability. 3. AD compliance with original signoffs. 4. Modification status. 5. Last heavy maintenance documents. 6. APU log books. 7. Last test cell report. COMPONENT RECORDS 1. Aircraft component inventory. 2. Hard time component inventory. 3. All serviceable tags. 4. Landing Gear status with last overhaul and life limited Part status. 5. AD compliance with original signoffs. 6. Modification status. ATTACHMENT 2 TO RETURN ACCEPTANCE RECEIPT LIST OF LOOSE EQUIPMENT ATTACHMENT 3 TO RETURN ACCEPTANCE RECEIPT LIST OF DISCREPANCIES ATTACHMENT 4 TO RETURN ACCEPTANCE RECEIPT ENGINE MAXIMUM POWER ASSURANCE TEST CONDITIONS AND RESULTS ATTACHMENT 5 TO RETURN ACCEPTANCE RECEIPT DENT AND DAMAGE CHART ATTACHMENT 6 TO RETURN ACCEPTANCE RECEIPT FORM OF NO ACCIDENT/INCIDENT LETTER EXHIBIT J MONTHLY REPORT (SEE FOLLOWING SHEET) MONTHLY AIRCRAFT UTILIZATION AND STATUS REPORT Page 1 of 2 Report Due Date: To: INTERNATIONAL LEASE FINANCE CORPORATION Fax: (310) 788-1990 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067, United States Attn: Finance Department From: AMERICAN TRANS AIR, INC. Contact: Fax: AIRCRAFT TYPE: BOEING 737-800 ENGINE TYPE: CFM56-7B-27 REGISTRATION: ____ SERIAL NUMBER: ____ MONTH OF: NOTE: PLEASE RECORD TIME IN HOURS AND MINUTES NOT DECIMALS. Aircraft Total Time Since New As Of Last Month: Hours: Min: Aircraft Total Time Since New: Hours: Min: Aircraft Total Cycles Since New: Cycles: Airframe Hours Flown During Month: Hours: Min: Airframe Cycles/Landings During Month: Cycles: Time Remaining to "D" or Heavy Maintenance Check: HOURS OR US$ PER CYCLES FLOWN HOUR OR DURING MONTH (AS CYCLE (AS APPLICABLE) X APPLICABLE) = RESERVES TOTAL AIRFRAME: HRS: X = TOTAL LANDING GEAR: HRS: X = TOTAL APU: HRS: X = ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles(for Engine LLP Reserves): x = ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles (for Engine LLP Reserves): x = ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles (for LLP x = Reserves): ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles (for Engine LLP Reserves): x = TOTAL AMOUNT OF RESERVES (US$) PAID THIS MONTH: US$ Monthly Aircraft Utilization and Status Report From: AMERICAN TRANS AIR, INC. PAGE 2 OF 2 ENGINE SERIAL NUMBER: ENGINE SERIAL NUMBER: ORIGINAL POSITION: ORIGINAL POSITION: ACTUAL LOCATION: ACTUAL LOCATION: CURRENT THRUST RATING: CURRENT THRUST RATING: HOURS:/MIN: HOURS:/MIN: Total Time Since New As Of Total Time Since New As Of Last Month: Last Month: Total Time Since New: Total Time Since New: Total Cycles Since New: Total Cycles Since New: Hours Flown During Month: Hours Flown During Month: Cycles During Month: Cycles During Month: IMPORTANT: IF ILFC-OWNED ENGINE IS REMOVED OR INSTALLED ON ANOTHER AIRCRAFT, IT MUST BE REPORTED MONTHLY ON THIS FORM. EXHIBIT K AIRCRAFT DOCUMENTATION AIRCRAFT RECORDS 1. Copies of original Certificates delivered by Boeing: a. Airworthiness Certificate for Export b. Radio installation conformity certificate c. Noise limitation certificate 2. Copies of original Documents delivered by Boeing: a. Airworthiness Directive Compliance list b. Aircraft inspection report c. Aircraft Readiness Log d. Weighing report 3. Copies of current Certificates: a. Airworthiness Certificate b. Noise limitation c. Radio license d. Interior material burn certificates e. Certificate of Export f. Aircraft deregistration confirmation e. Aircraft Registration 4. Letters signed and stamped by Quality Assurance: a. Current aircraft hours and cycles b. Current engines hours and cycles c. Accident and Incident report d. Summary of Maintenance Program e. AD compliance during the lease term 5. Aircraft log books and Aircraft readiness log. 6. Aircraft Hard Time (HT) inspection status. 7. One year forecast for HT inspection. 8. Aircraft Modification status, including service bulletins. 9. Last weighing report prior to redelivery. 10. AD compliance report with original signoffs. 11. Routine and non-routine job cards of the last "C" and "D" checks. 12. Past year pilots and maintenance discrepancies. 13. Major and Minor structural repairs with applicable approvals. 14. Compass Swing report of the last three years. 15. Cabin Configuration drawing (LOPA). 16. Emergency equipment location drawing. 17. Last X-RAYs ENGINES RECORDS 1. Last test cell run reports. 2. Life Limited Parts status and traceability. 3. AD compliance report with original signoffs. 4. Engine Modification/service bulletin/inspection report and applicable forms. 5. Last heavy maintenance records for each module. 6. Engine log books. 7. Engine removal history. 8. Past year trend monitoring reports. 9. Historical borescope reports. 10. Engine component report. APU RECORDS 1. APU status (FH, FC, limits). 2. Life limited Part status and traceability. 3. AD compliance with original signoffs. 4. Modification status. 5. Last heavy maintenance documents. 6. APU log books. 7. Last test cell report. COMPONENT RECORDS 1. Aircraft component inventory. 2. Hard time component inventory. 3. All serviceable tags. 4. Landing Gear status with last overhaul and life limited Part status. 5. AD compliance with original signoffs. 6. Modification status. EXHIBIT L TECHNICAL EVALUATION REPORT (SEE FOLLOWING SHEETS) EX-10.6(C) 18 file064.txt AMTRAN, INC., 2000 10-K, EXHIBIT 10.6(C) AIRCRAFT LEASE AGREEMENT Dated as of September 5, 2000 BETWEEN AMERICAN TRANS AIR, INC. as LESSEE and INTERNATIONAL LEASE FINANCE CORPORATION as LESSOR ------------------------------------------------------------------------------- Aircraft Make and Model: New Boeing 737-800 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Aircraft Manufacturer's Serial Number: 28243 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Aircraft Registration Mark: Per Estoppel and Acceptance Certificate ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Make and Model of Engines: CFM56-7B-27 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Serial Numbers of Engines: Per Estoppel and Acceptance Certificate ------------------------------------------------------------------------------- NEW BOEING 737-800 AIRCRAFT NO. 4 TABLE OF CONTENTS ARTICLE 1 SUMMARY OF TRANSACTION.........................................2 1.1 Description of Aircraft........................................2 1.2 Scheduled Delivery Date and Location...........................2 1.3 Lease Term.....................................................2 1.4 Security Deposit...............................................2 1.5 Transaction Fee................................................2 1.6 Rent During Lease Term.........................................2 1.7 Country of Aircraft Registration...............................4 1.8 Maintenance Program............................................4 1.9 Agreed Value of Aircraft.......................................4 1.10 LESSOR's Bank Account..........................................4 ARTICLE 2 DEFINITIONS....................................................5 2.1 General Definitions............................................5 2.2 Specific Definitions...........................................9 ARTICLE 3 PLACE AND DATE OF DELIVERY....................................11 3.1 Place of Delivery.............................................11 3.2 Scheduled Delivery Date.......................................11 3.3 Delivery subject to Manufacturer Delivery.....................11 3.4 No LESSOR Liability...........................................11 3.5 Total Loss of Aircraft prior to Delivery......................11 3.6 Cancellation for Delay........................................11 ARTICLE 4 LEASE TERM....................................................12 4.1 Lease Term....................................................12 4.2 "Expiration Date".............................................12 4.3 "Termination Date"............................................12 ARTICLE 5 SECURITY DEPOSIT, TRANSACTION FEE, RENT AND OTHER PAYMENTS......................................................13 5.1 Security Deposit..............................................13 5.2 Transaction Fee...............................................14 5.3 Rent..........................................................14 5.4 LESSOR's Bank Account.........................................15 5.5 Default Interest..............................................16 5.6 No Deductions or Withholdings.................................16 5.7 Value Added Taxes.............................................16 5.8 Net Lease.....................................................17 5.9 LESSOR Performance of LESSEE Obligation.......................18 5.10 Consideration for Rent and other Amounts......................18 ARTICLE 6 INVOLVEMENT WITH AIRCRAFT MANUFACTURER........................19 6.1 LESSEE Selection of Aircraft..................................19 6.2 Agency Agreement..............................................19 6.3 Procurement of BFE............................................19 6.4 Assignment of Training........................................19 6.5 LESSEE Inspection of Aircraft.................................19 6.6 Aircraft at Delivery..........................................19 6.7 Delivery of the Aircraft to LESSEE............................20 6.8 LESSEE Acceptance of Aircraft.................................20 ARTICLE 7 PRE-DELIVERY, DELIVERY AND POST-DELIVERY DOCUMENTARY AND OTHER REQUIREMENTS............................21 7.1 Pre-Delivery Requirements.....................................21 7.2 Delivery Requirements.........................................22 7.3 Post-Delivery Requirements....................................23 ARTICLE 8 DISCLAIMERS...................................................24 8.1 "As Is, Where Is".............................................24 8.2 Waiver of Warranty of Description.............................24 8.3 LESSEE Waiver.................................................25 8.4 Conclusive Proof..............................................25 8.5 No LESSOR Liability for Losses................................25 8.6 No Liability to Repair or Replace.............................25 8.7 No Waiver.....................................................26 ARTICLE 9 MANUFACTURERS' AND VENDORS' WARRANTIES........................27 9.1 Warranties....................................................27 9.2 Reassignment..................................................27 ARTICLE 10 OPERATION OF AIRCRAFT.........................................28 10.1 Costs of Operation............................................28 10.2 Compliance with Laws..........................................28 10.3 Training......................................................28 10.4 No Violation of Insurance Policies............................28 10.5 Flight Charges................................................29 ARTICLE 11 SUBLEASES.....................................................30 11.1 No Sublease without LESSOR Consent............................30 11.2 LESSOR Costs..................................................30 11.3 Any Approved Sublease.........................................30 11.4 Assignment of Sublease........................................30 11.5 Continued Responsibility of LESSEE............................30 ARTICLE 12 MAINTENANCE AND USE OF AIRCRAFT...............................31 12.1 General Obligation............................................31 12.2 Specific Obligations..........................................31 12.3 Replacement of Parts..........................................32 12.4 Removal of Engines............................................33 12.5 Pooling of Engines and Parts..................................34 12.6 Installation of Engines on other aircraft.....................34 12.7 Modifications.................................................35 12.8 Performance of Work by Third Parties..........................36 12.9 Reporting Requirements........................................36 12.10 Information Regarding Maintenance Program.....................36 12.11 LESSOR Rights to Inspect Aircraft.............................36 ARTICLE 13 TITLE AND REGISTRATION........................................37 13.1 Title to the Aircraft During Lease Term.......................37 13.2 Registration of Aircraft......................................37 13.3 Filing of this Lease..........................................37 13.4 Evidence of Registration and Filings..........................37 ARTICLE 14 IDENTIFICATION PLATES.........................................38 14.1 Airframe Identification Plates................................38 14.2 Engine Identification Plates..................................38 ARTICLE 15 TAXES.........................................................39 15.1 General Obligation of LESSEE..................................39 15.2 Exceptions to Indemnity.......................................39 15.3 After-Tax Basis...............................................40 15.4 Claims and Contests...........................................40 15.5 Refunds.......................................................41 15.6 Cooperation in Filing Tax Returns.............................41 ARTICLE 16 INDEMNITIES...................................................42 16.1 General Indemnity.............................................42 16.2 Exceptions to General Indemnities.............................43 16.3 After-Tax Basis...............................................44 16.4 Timing of Payment.............................................44 16.5 Subrogation...................................................44 16.6 Notice........................................................44 16.7 Refunds.......................................................44 16.8 Defense of Claims.............................................45 16.9 Survival of Obligation........................................45 ARTICLE 17 INSURANCE.....................................................46 17.1 Categories of Insurance.......................................46 17.2 Insurance for Indemnities.....................................46 17.3 Insurance required by Manufacturer............................46 17.4 Renewal.......................................................46 17.5 Assignment of Rights by LESSOR................................46 17.6 Deductibles...................................................46 17.7 Other Insurance...............................................47 17.8 Information...................................................47 17.9 Currency......................................................47 17.10 Grounding of Aircraft.........................................47 17.11 Failure to Insure.............................................47 17.12 Limit on Hull in favor of LESSEE..............................47 17.13 Marketplace Limitations.......................................48 ARTICLE 18 LOSS, DAMAGE AND REQUISITION..................................49 18.1 Definitions...................................................49 18.2 Notice of Total Loss..........................................50 18.3 Total Loss of Aircraft or Airframe............................50 18.4 Surviving Engine(s)...........................................51 18.5 Total Loss of Engine and not Airframe.........................51 18.6 Other Loss or Damage..........................................52 18.7 Copy of Insurance Policy......................................53 18.8 Government Requisition........................................53 18.9 Conveyance to LESSEE..........................................53 ARTICLE 19 CRAF PROGRAM..................................................54 19.1 Dedication to CRAF............................................54 19.2 Notice to LESSOR..............................................54 19.3 Requisition of Engine.........................................54 19.4 Government Indemnification....................................54 19.5 No Geographic Limits..........................................54 19.6 Notice of Default.............................................55 19.7 Receipt of Payments...........................................55 ARTICLE 20 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE...........56 20.1 Representations and Warranties................................56 20.2 Covenants.....................................................58 ARTICLE 21 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSOR...........61 21.1 Representations and Warranties................................61 21.2 Covenant of Quiet Enjoyment...................................62 ARTICLE 22 FINANCIAL AND RELATED INFORMATION.............................63 ARTICLE 23 RETURN OF AIRCRAFT............................................64 23.1 Date of Return................................................64 23.2 Technical Report..............................................64 23.3 Return Location...............................................64 23.4 Full Aircraft Documentation Review............................64 23.5 Aircraft Inspection...........................................64 23.6 Certificate of Airworthiness Matters..........................65 23.7 General Condition of Aircraft at Return.......................66 23.8 Checks Prior to Return........................................69 23.9 Part Lives....................................................72 23.10 Export and Deregistration of Aircraft.........................74 23.11 LESSEE's Continuing Obligations...............................75 23.12 Airport and Navigation Charges................................75 23.13 Return Acceptance Certificate.................................76 23.14 Indemnities and Insurance.....................................76 ARTICLE 24 ASSIGNMENT....................................................77 24.1 No Assignment by LESSEE.......................................77 24.2 Sale or Assignment by LESSOR..................................77 24.3 LESSOR's Lender...............................................79 24.4 LESSEE Cooperation............................................79 24.5 Protections...................................................79 ARTICLE 25 DEFAULT OF LESSEE.............................................80 25.1 LESSEE Notice to LESSOR.......................................80 25.2 Events of Default.............................................80 25.3 LESSOR's General Rights.......................................82 25.4 Deregistration and Export of Aircraft.........................83 25.5 LESSEE Liability for Damages..................................83 25.6 Waiver of Default.............................................84 25.7 Present Value of Payments.....................................84 25.8 Use of "Termination Date".....................................84 ARTICLE 26 NOTICES.......................................................85 26.1 Manner of Sending Notices.....................................85 26.2 Notice Information............................................85 ARTICLE 27 GOVERNING LAW AND JURISDICTION................................86 27.1 California Law................................................86 27.2 Non-Exclusive Jurisdiction in California......................86 27.3 Service of Process............................................86 27.4 Prevailing Party in Dispute...................................86 27.5 Waiver........................................................86 ARTICLE 28 MISCELLANEOUS.................................................87 28.1 Press Releases................................................87 28.2 LESSOR Performance for LESSEE.................................87 28.3 LESSOR's Payment Obligations..................................87 28.4 Application of Payments.......................................87 28.5 Usury Laws....................................................87 28.6 Delegation by LESSOR..........................................87 28.7 Confidentiality...............................................88 28.8 Rights of Parties.............................................88 28.9 Further Assurances............................................88 28.10 Use of Word "including".......................................88 28.11 Headings......................................................88 28.12 Invalidity of any Provision...................................88 28.13 Negotiation...................................................88 28.14 Time is of the Essence........................................89 28.15 Amendments in Writing.........................................89 28.16 Counterparts..................................................89 28.17 Delivery of Documents by Fax..................................89 28.18 Entire Agreement..............................................89 EXHIBIT A AIRCRAFT DESCRIPTION..........................................91 EXHIBIT B AGENCY AGREEMENT..............................................92 EXHIBIT C CERTIFICATE OF INSURANCE......................................96 EXHIBIT D BROKERS' LETTER OF UNDERTAKING...............................102 EXHIBIT E ESTOPPEL AND ACCEPTANCE CERTIFICATE..........................104 EXHIBIT F OPINION OF COUNSEL...........................................111 EXHIBIT G ASSIGNMENT OF RIGHTS (AIRFRAME)..............................114 EXHIBIT H ASSIGNMENT OF RIGHTS (ENGINES)...............................119 EXHIBIT I RETURN ACCEPTANCE RECEIPT....................................123 EXHIBIT J MONTHLY REPORT...............................................134 EXHIBIT K AIRCRAFT DOCUMENTATION.......................................138 EXHIBIT L TECHNICAL EVALUATION REPORT..................................140 AIRCRAFT LEASE AGREEMENT THIS AIRCRAFT LEASE AGREEMENT is made and entered into as of September 5, 2000. BETWEEN: AMERICAN TRANS AIR, INC., a Indiana corporation whose address and principal place of business is at 7337 West Washington Street, Indianapolis International Airport, Indianapolis, Indiana 46231, United States of America ("LESSEE") and INTERNATIONAL LEASE FINANCE CORPORATION, a California corporation whose address and principal place of business is at 1999 Avenue of the Stars, 39th Floor, Los Angeles, California 90067, United States of America ("LESSOR"). The subject matter of this Lease is one (1) new Boeing 737-800 aircraft. In consideration of and subject to the mutual covenants, terms and conditions contained in this Lease, LESSOR hereby agrees to lease to LESSEE and LESSEE hereby agrees to lease from LESSOR the aircraft and the parties further agree as follows: ARTICLE 1 SUMMARY OF TRANSACTION The information in this Article 1 is a summary of the lease transaction between LESSEE and LESSOR. It is set forth for the convenience of the parties only and will not be deemed in any way to amend, detract from or simplify the other provisions of this Lease. 1.1 DESCRIPTION OF AIRCRAFT One new Boeing 737-800 aircraft 1.2 SCHEDULED DELIVERY DATE AND LOCATION In the month of (CONFIDENTIAL MATERIAL OMITTED) at Seattle, Washington 1.3 LEASE TERM 15 years 1.4 SECURITY DEPOSIT (CONFIDENTIAL MATERIAL OMITTED) 1.5 TRANSACTION FEE (CONFIDENTIAL MATERIAL OMITTED) 1.6 RENT DURING LEASE TERM Payable monthly in advance and equal to the sum of: (a The following amounts for the following years of the Lease Term: LEASE PERIOD MONTHLY RENTAL AMOUNT* (CONFIDENTIAL MATERIAL OMITTED) *The above base rent is expressed in January 1999 U.S.Dollars and will increase in the following amounts for the following periods: PERIOD ESCALATION FACTOR (CONFIDENTIAL MATERIAL OMITTED) 1.7 COUNTRY OF AIRCRAFT REGISTRATION U.S. 1.8 MAINTENANCE PROGRAM LESSEE's Maintenance Program 1.9 AGREED VALUE OF AIRCRAFT (CONFIDENTIAL MATERIAL OMITTED) The Agreed Value is expressed in March 2001 U.S. Dollars and will increase in accordance with Manufacturer's announced escalation rate from March 1, 2001 to the Delivery Date. On each annual renewal date of LESSEE's insurance policy commencing on the renewal date following the first anniversary of the Lease Term, the Agreed Value will decrease by two percent (2.0%) of the then existing Agreed Value. 1.10 LESSOR'S BANK ACCOUNT (Confidential Material Omitted) ARTICLE 2 DEFINITIONS Except where the context otherwise requires, the following words have the following meanings for all purposes of this Lease. The definitions are equally applicable to the singular and plural forms of the words. Any agreement defined below includes each amendment, modification, supplement and waiver thereto in effect from time to time. 2.1 GENERAL DEFINITIONS. "ACT" means the Federal Aviation Act of 1958, as amended from time to time, or any successor act thereto. "AIRCRAFT" means the Airframe, two (2) Engines, Parts and Aircraft Documentation, collectively. As the context requires, "Aircraft" may also mean the Airframe, any Engine, any Part, the Aircraft Documentation or any part thereof individually. For example, in the context of return to LESSOR the term "Aircraft" means the Airframe, Engines, Parts and Aircraft Documentation collectively, yet in the context of LESSEE not creating any Security Interests other than Permitted Liens on the Aircraft, the term "Aircraft" means any of the Airframe, any Engine, any Part or the Aircraft Documentation individually. "AIRCRAFT DOCUMENTATION" means all (a) log books, Aircraft records, manuals and other documents provided to LESSEE in connection with the Aircraft, (b) documents listed in Exhibits E and K and (c) any other documents required to be maintained during the Lease Term by the Aviation Authority, LESSEE's Maintenance Program and this Lease. "AIRFRAME" means the airframe listed in the Estoppel and Acceptance Certificate executed at Delivery together with all Parts relating thereto (except Engines or engines). "AIRWORTHINESS DIRECTIVES" or "ADS" means all airworthiness directives (or equivalent) of the FAA and the Aviation Authority applicable to the Aircraft. "APU" means the auxiliary power unit of the Aircraft. "AVIATION AUTHORITY" means the FAA or any Government Entity which under the Laws of the U.S. from time to time has control over civil aviation or the registration, airworthiness or operation of aircraft in the U.S. If the Aircraft is registered in a country other than the U.S., "Aviation Authority" means the agency which regulates civil aviation in such other country. "AVIATION DOCUMENTS" means any or all of the following which at any time may be obtainable from the Aviation Authority: (a) if required, a temporary certificate of airworthiness from the Aviation Authority allowing the Aircraft to be flown after Delivery to the State of Registration, (b) an application for registration of the Aircraft with the appropriate authority in the State of Registration, (c) the certificate of registration for the Aircraft issued by the State of Registration, (d) a full certificate of airworthiness for the Aircraft specifying transport category (passenger), (e) an air transport license, (f) an air operator's certificate, (g) such recordation of LESSOR's title to the Aircraft and interest in this Lease as may be available in the State of Registration and (h) all such other authorizations, approvals, consents and certificates in the State of Registration as may be required to enable LESSEE lawfully to operate the Aircraft. "BANKRUPTCY CODE" means The Bankruptcy Reform Act of 1978 (11 U.S.C. ss.ss. 101-1330), as amended or supplemented from time to time, and any successor statute, and all of the rules and regulations issued or promulgated in connection therewith. "BASIC ENGINE" means those units and components of the Engine which are used to induce and convert fuel/air mixture into thrust/power; to transmit power to the fan and accessory drives; to supplement the function of other defined systems external to the Engine; and to control and direct the flow of internal lubrication, plus all essential accessories as supplied by the Engine manufacturer. The nacelle, installed components related to the Aircraft systems, thrust reversers, QEC and the primary flight nozzle are excluded. "BFE" means any equipment which is to be provided by the purchaser of the Aircraft (whether actually provided by LESSOR as buyer-furnished equipment or Manufacturer as seller-purchased equipment). "BUSINESS DAY" means a day other than a Saturday or Sunday on which the banks in Indianapolis, Indiana and in the city where LESSOR's Bank is located are open for the transaction of business of the type required by this Lease. "CREDITOR" means any lessor, owner, bank, lender, mortgagee or other Person which is the owner of or has any interest in an aircraft engine or aircraft operated by LESSEE. "CREDITOR AGREEMENT" means the applicable agreement between a Creditor and LESSEE or between Creditors pursuant to which such Creditor owns, leases or has an interest in either an aircraft operated by LESSEE on which an Engine may be installed or in an aircraft engine which may be installed on the Airframe. "DEFAULT" means any event which, upon the giving of notice, the lapse of time and/or a relevant determination, would constitute an Event of Default. "DELIVERY" means the delivery of the Aircraft from LESSOR to LESSEE pursuant to Articles 3 and 6. "DELIVERY DATE" means the date on which Delivery takes place. "DOLLARS" and "$" means the lawful currency of the U.S. "ENGINE" means (a) each of the engines listed on the Estoppel and Acceptance Certificate; or (b) any replacement engine acquired by LESSOR and leased to LESSEE pursuant to Article 18.5 following a Total Loss of an Engine; including in each case all Parts installed in or on any of such engines at Delivery (or substituted, renewed or replacement Parts in accordance with this Lease) so long as title thereto is or remains vested in LESSOR in accordance with the terms of Article 12.3. "EVENT OF DEFAULT" means any of the events referred to in Article 25.2. "FAA" means the Federal Aviation Administration of the Department of Transportation or any successor thereto under the Laws of the U.S. "FARS" means the U.S. Federal Aviation Regulations embodied in Title 14 of the U.S. Code of Federal Regulations, as amended from time to time, or any successor regulations thereto. "GENEVA CONVENTION" means the Convention on the International Recognition of Rights in Aircraft signed in Geneva, Switzerland on June 19, 1948. "GOVERNMENT ENTITY" means any (a) national, state or local government, (b) board, commission, department, division, instrumentality, court, agency or political subdivision thereof and (c) association, organization or institution of which any of the entities listed in (a) or (b) is a member or to whose jurisdiction any such entity is subject. "LANDING GEAR" means the installed main and nose landing gear, components and their associated actuators, side braces and parts. "LAW" means any (a) statute, decree, constitution, regulation, order or any directive of any Government Entity, (b) treaty, pact, compact or other agreement to which any Government Entity is a signatory or party and (c) judicial or administrative interpretation or application of any of the foregoing. "LEASE" means this Aircraft Lease Agreement, together with all Exhibits hereto. "LESSOR'S LIEN" means any Security Interest created by LESSOR, or arising from a claim against LESSOR completely unrelated to this Lease or the other Operative Documents. "MAINTENANCE PROGRAM" means LESSEE's maintenance program as approved by the Aviation Authority or such other maintenance program as LESSOR may, in its discretion, accept in writing. "MANUFACTURER" means The Boeing Company, a Delaware corporation. "MPD" means the Maintenance Planning Document published by Manufacturer and applicable to the Aircraft. "OVERHAUL" means the full reconditioning of the Aircraft, an Engine, APU, Landing Gear, module or Part, as the case may be, in which such equipment has been fully disassembled; cleaned; thoroughly inspected; and returned to the highest standard specified by the applicable manufacturer's manual. "PART" means the APU, any part, component, appliance, system module, engine module, accessory, material, instrument, communications equipment, furnishing, LESSEE-furnished or LESSOR-purchased equipment or other item of equipment (other than complete Engines or engines) for the time being installed in or attached to the Airframe or any Engine or which, having been removed from the Airframe or any Engine, remains the property of LESSOR. "PERMITTED INSTITUTION" means any Person (other than a commercial air carrier, a commercial aircraft operator, a freight forwarder, or an affiliate of any of the foregoing), with either: (a) a combined capital and surplus or net worth of at least; or (b) have a credit rating on the majority of its unsecured debt which is at least equal to BBB or its equivalent from Standard and Poor's Rating Group, a division of The McGraw-Hill Companies, Inc. or Moody's Investors Service, Inc. "PERMITTED LIEN" means (a) LESSOR's Liens; (b) Security Interests arising in the ordinary course of LESSEE's business for Taxes either not yet due and payable or, if due and payable, being contested in good faith in accordance with Article 15.4; (c) materialmen's, mechanics', workmen's, repairmen's, employees' liens or similar Security Interests arising by operation of Law after the Delivery Date in the ordinary course of LESSEE's business for amounts which are either not yet due or are being contested in good faith by appropriate proceedings (and for which adequate reserves have been made or, when required in order to pursue such proceedings, an adequate bond has been provided) so long as such proceedings do not involve any material danger of sale, forfeiture or loss of the Aircraft; (d) the rights of LESSOR and any LESSOR's Lender and the rights of LESSEE under this Lease and the other Operative Documents; (e) the rights of others under agreements or arrangements to the extent permitted by Articles 10 and 11.5; and (f) any Security Interest against which LESSEE causes to be provided a bond in such amount and under such terms and conditions as are reasonably satisfactory to LESSOR. "PERSON" means any individual, firm, partnership, joint venture, trust, corporation, limited liability company, Government Entity, committee, department, authority or any body, incorporated or unincorporated, whether having distinct legal personality or not. "PRIME RATE" means the rate of interest from time to time announced by Bank of America Illinois in Chicago, Illinois as its prime commercial lending rate. "SECURITY INTEREST" means any encumbrance or security interest, however and wherever created or arising including (without prejudice to the generality of the foregoing) any right of ownership, security, mortgage, pledge, charge, encumbrance, lease, lien, statutory or other right in rem, hypothecation, title retention, attachment, levy, claim or right of possession or detention. "STATE OF REGISTRATION" means the U.S. or such other country or state of registration of the Aircraft as LESSOR may, in its absolute discretion, approve in writing. "U.S." means the United States of America. "U.S. AIR CARRIER" means any U.S. air carrier who is a Citizen of the U.S. holding an air carrier operating certificate issued by the Secretary of Transportation pursuant to chapter 447 of the Act for aircraft capable of carrying 10 or more individuals or 6000 pounds or more of cargo, and as to whom there is in force an air carrier operating certificate issued pursuant to FAR Part 121, or who may operate as an air carrier by certification or otherwise under any successor or substitute provisions therefor or in the absence thereof. 2.2 SPECIFIC DEFINITIONS. The following terms are defined in the Articles referenced below: TERMS ARTICLE Agreed Value 18.1 CRAF Program 19.1 CRAF Program Requisition 19.1 Period Default Interest 5.5 Delivery Location 3.1 Expenses 16.1 Expiration Date 4.3 Indemnities 16.1 Lease Term 4.1 LESSEE Customization 5.3.1 Costs LESSOR's Assignee 24.2.1 LESSOR's Bank 5.4 LESSOR's Lender 24.3 Manufacturer's Escalation 5.3.1 Rate Modifications 12.7.2 Net Total Loss Proceeds 18.1 Operative Documents 20.1.3 Rent 5.3.1 Return Check 23.8.1 Scheduled Delivery Date 3.2 Security Deposit 5.1.1 Taxes 15.1 Termination Date 4.3 Total Loss 18.1 Total Loss Date 18.1 Total Loss Proceeds 18.1 Transaction Fee 5.2 ARTICLE 3 PLACE AND DATE OF DELIVERY 3.1 PLACE OF DELIVERY. LESSOR will deliver the Aircraft to LESSEE at Manufacturer's facility at Seattle, Washington or such other place as may be agreed in writing between the parties (the "DELIVERY LOCATION"). 3.2 SCHEDULED DELIVERY DATE. As of the date of this Lease, delivery of the Aircraft from Manufacturer to LESSOR is scheduled to occur in the month of (CONFIDENTIAL MATERIAL OMITTED). LESSOR will not agree to reschedule such delivery without LESSEE's prior written consent. LESSOR will notify LESSEE from time to time and in a timely manner of the exact date on which LESSOR expects such delivery to take place (the "SCHEDULED DELIVERY DATE"). 3.3 DELIVERY SUBJECT TO MANUFACTURER DELIVERY. LESSOR and LESSEE expressly acknowledge that Delivery of the Aircraft to LESSEE is subject to and conditioned upon, and is to occur simultaneously with, delivery of the Aircraft by Manufacturer to LESSOR. 3.4 NO LESSOR LIABILITY. LESSOR will not be liable for any loss or expense, or any loss of profit, arising from any delay or failure in Delivery to LESSEE unless such delay or failure arises as a consequence of the willful misconduct of LESSOR, and in no event will LESSOR be liable for any delay or failure which is caused by any breach or delay on the part of Manufacturer or any BFE supplier. 3.5 TOTAL LOSS OF AIRCRAFT PRIOR TO DELIVERY. If a Total Loss of the Aircraft occurs prior to Delivery, neither party will have any further liability to the other except that LESSOR will return to LESSEE the Security Deposit in accordance with Article 5.1.3 and any prepaid Rent. 3.6 CANCELLATION FOR DELAY. Promptly after LESSOR becomes aware that in Manufacturer's opinion a delay will cause Delivery to be delayed beyond (CONFIDENTIAL MATERIAL OMITTED) LESSOR will notify LESSEE. By written notice given within ten (10) Business Days after LESSEE's receipt of such LESSOR notice, either party may by written notice to the other party terminate this Lease and this Lease will terminate on the date of receipt of such notice. In the event of such termination, neither party will have any further liability to the other party except that LESSOR will return to LESSEE the Security Deposit in accordance with Article 5.1.3 and any prepaid Rent. If neither party gives notice of termination within such ten (10) Business Days, both parties lose all right to terminate under this Article 3.6 unless otherwise agreed in writing by the parties. ARTICLE 4 LEASE TERM 4.1 LEASE TERM. The term of leasing of the Aircraft will commence on the Delivery Date and continue for a term of fifteen (15) years ("LEASE TERM"). 4.2 "EXPIRATION DATE". "EXPIRATION DATE" means the date on which LESSEE is required to redeliver the Aircraft to LESSOR in the condition required by this Lease on the last day of the Lease Term. 4.3 "TERMINATION DATE". This Lease may in fact terminate on any of the dates set forth below: (a the Expiration Date, provided LESSEE returns the Aircraft to LESSOR on the Expiration Date in the condition required by Article 23; or (b a date earlier than the Expiration Date, if: (i there is a Total Loss of the Aircraft prior to Delivery pursuant to Article 3.5; (ii cancellation of this Lease occurs pursuant to Article 3.6; (iii there is a Total Loss of the Aircraft and payment is made to LESSOR in accordance with Article 18.3; or (iv an Event of Default occurs and LESSOR repossesses the Aircraft or otherwise terminates this Lease pursuant to Article 25.3. (c a date later than the Expiration Date, if: (i an Event of Default occurs hereunder by LESSEE returning the Aircraft in the condition required by this Lease after the Expiration Date; or (ii an Event of Default occurs and LESSOR repossesses the Aircraft or otherwise terminates this Lease pursuant to Article 25.3. The "TERMINATION DATE" is the date on which this Lease terminates because one of the above has occurred. ARTICLE 5 SECURITY DEPOSIT, TRANSACTION FEE, RENT AND OTHER PAYMENTS 5.1 SECURITY DEPOSIT. 5.1.1 (CONFIDENTIAL MATERIAL OMITTED) 5.1.2 The Security Deposit may be commingled with LESSOR's general funds and any interest earned on such Security Deposit will be for LESSOR's account. If the Security Deposit is reduced below the required amount by application to meet LESSEE's unperformed obligations under this Lease, LESSEE will replenish the Security Deposit within ten (10) days after LESSOR's demand therefor. The Security Deposit will serve as security for the performance by LESSEE of its obligations under this Lease and any other agreements between LESSEE and LESSOR relating to aircraft, engines, aircraft equipment or the extension of credit and may be applied by LESSOR upon the occurrence of a Default or Event of Default hereunder or of a default by LESSEE under any such other agreements. 5.1.3 Upon termination of this Lease in accordance with Article 4.3 other than if an Event of Default has occurred and is continuing, LESSOR will return to LESSEE the amount of the Security Deposit then held by LESSOR (so long as no default by LESSEE exists under any other agreement between LESSEE and LESSOR relating to aircraft, engines or aircraft equipment or the extension of credit by LESSOR to LESSEE), without interest, less an amount determined by LESSOR to be a reasonable estimate of the costs, if any, which LESSOR will incur to remedy any unperformed obligations of LESSEE under this Lease, including the correction of any discrepancies from the required condition of the Aircraft on return of the Aircraft. 5.2 TRANSACTION FEE. Within two (2) Business Days after execution of this Lease, LESSEE will pay LESSOR a nonrefundable transaction fee (CONFIDENTIAL MATERIAL OMITTED) 5.3 RENT. 5.3.1 LESSEE will pay LESSOR the following amounts monthly in advance as rent for the Aircraft (the "RENT"): (a The following amounts for the following years of the Lease Term: LEASE PERIOD MONTHLY RENTAL AMOUNT* ------------ --------------------- (CONFIDENTIAL MATERIAL OMITTED) *The above base rent is expressed in January 1999 U.S. dollars and will increase in the following amounts for the following periods (the "MANUFACTURER'S ESCALATION RATE"): PERIOD ESCALATION FACTOR ------------ --------------------- (CONFIDENTIAL MATERIAL OMITTED) Any increases to the above base Rent during the Lease Term will be calculated immediately prior to Delivery. 5.3.2 The first payment of Rent during the Lease Term will be paid prior to the Scheduled Delivery Date. Each subsequent payment of Rent will be due monthly thereafter no later than the same day of the month as the Delivery Date of the Aircraft except that, if such day is not a Business Day, the Rent will be due on the immediately preceding Business Day. If Delivery occurred on the 29th, 30th or 31st of the month and in any given month during the Lease Term there is no such corresponding date, Rent will be payable on the last Business Day of such month. 5.4 LESSOR'S BANK ACCOUNT. The Security Deposit, Transaction Fee, Rent and any other payment due under this Lease will be paid by wire transfer of immediately available U.S. Dollar funds to LESSOR's bank account at: (CONFIDENTIAL MATERIAL OMITTED) or to such other bank account in the U.S. as LESSOR may from time to time designate by written notice ("LESSOR'S BANK"). When it is stated in this Lease that an installment of the Security Deposit, the monthly Rent or any other payment is due or must be paid or made by LESSEE by a specific date, then such payment actually must be received by LESSOR's Bank on or before such specific date, even if, in order for such payment to be received by LESSOR's Bank by such specific date, LESSEE must initiate the wire transfer prior to such specific date. 5.5 DEFAULT INTEREST. If LESSOR's Bank does not receive the Rent or any other amount on or before the specific date when due, LESSOR will suffer loss and damage the exact nature and amount of which are difficult or impossible to ascertain. LESSEE will pay LESSOR as supplemental Rent (by way of agreed compensation and not as a penalty) interest on any due and unpaid amounts payable by LESSEE under this Lease. Interest will be calculated at a per annum rate (based on a 360 day year) which is equal to three percent (3%) plus the Prime Rate in effect on the date on which the amount was originally due for the period from the date the amount originally was due through the date the amount actually is received at LESSOR's Bank or, in the case of LESSOR's performance of LESSEE's obligations hereunder, from the date of payment by LESSOR through the date of LESSEE's repayment to LESSOR ("DEFAULT INTEREST"). Default Interest will accrue on a day-to-day basis and be compounded monthly. 5.6 NO DEDUCTIONS OR WITHHOLDINGS. All payments by LESSEE under this Lease, including the Security Deposit, Transaction Fee, Rent, Default Interest, fees, indemnities or any other item, will be made in full without any deduction or withholding whether in respect of set-off, counterclaim, duties, or Taxes (as defined in Article 15) imposed in the State of Registration or any jurisdiction from which such payments are made unless LESSEE is prohibited by Law from doing so, in which event LESSEE will gross up the payment amount such that the net payment received by LESSOR after any deduction or withholding equals the amounts called for under this Lease. LESSEE's requirement to pay the amounts required by this Article 5.6 is subject to the exceptions provided in Article 15.2. 5.7 VALUE ADDED TAXES. The Rent and other amounts payable by LESSEE under this Lease are exclusive of any value added tax, turnover tax or similar tax or duty. 5.8 NET LEASE. 5.8.1 This Lease is a net lease and LESSEE's obligation to pay Rent and make other payments in accordance with this Lease will be absolute and unconditional under any and all circumstances and regardless of other events, including the following: (a) any right of set-off, counterclaim, recoupment, defense or other right (including any right of reimbursement) which LESSEE may have against LESSOR, Manufacturer, the Engine manufacturer or any other person for any reason, including any claim LESSEE may have for the foregoing; (b) unavailability or interruption in use of the Aircraft for any reason, including a requisition thereof or any prohibition or interference with or other restriction against LESSEE's use, operation or possession of the Aircraft (whether by Law or otherwise), any defect in title, airworthiness, merchantability, fitness for any purpose, condition, design, specification or operation of any kind or nature of the Aircraft, the ineligibility of the Aircraft for any particular use or trade or for registration under the Laws of any jurisdiction or Total Loss of the Aircraft; (c) insolvency, bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, liquidation, receivership, administration or similar proceedings by or against LESSOR, LESSEE, Manufacturer, the Engine manufacturer or any other Person; (d) invalidity or unenforceability or lack of due authorization of or other defect in this Lease; (e) failure or delay on the part of any party to perform its obligations under this Lease; or (f) any other circumstance which but for this provision would or might have the effect of terminating or in any other way affecting any obligation of LESSEE hereunder. 5.8.2 Nothing in Article 5.8 will be construed to limit LESSEE's rights and remedies in the event of LESSOR's breach of its warranty of quiet enjoyment set forth in Article 21.2 or to limit LESSEE's rights and remedies to pursue in a court of law any claim it may have against LESSOR or any other Person. 5.9 LESSOR PERFORMANCE OF LESSEE OBLIGATION. If LESSEE fails to make any payment under this Lease to a third party in connection with the Aircraft or fails to perform any other obligation required under this Lease, LESSOR may (but is not required to) at its election and without waiver of its rights perform such obligation and/or pay such amount. Within five (5) Business Days after written notice to LESSEE of the amount paid by LESSOR on behalf of LESSEE, LESSEE will repay such amount to LESSOR together with Default Interest. Such payment to LESSOR will constitute additional Rent payable by LESSEE to LESSOR hereunder. Any payment, performance or compliance by LESSOR of a LESSEE obligation hereunder will not affect the occurrence or continuance of a Default or Event of Default, as the case may be. 5.10 CONSIDERATION FOR RENT AND OTHER AMOUNTS. The amount of the Rent and other payments contained herein are in consideration of LESSEE's waiver of warranties and indemnities set forth in Articles 8 and 16, respectively, and the other provisions of this Lease. ARTICLE 6 INVOLVEMENT WITH AIRCRAFT MANUFACTURER 6.1 LESSEE SELECTION OF AIRCRAFT. LESSEE ACKNOWLEDGES THAT THE DESCRIPTION OF THE AIRCRAFT SET FORTH IN THIS LEASE IS BASED UPON INFORMATION SUPPLIED BY MANUFACTURER. LESSEE COVENANTS TO LESSOR THAT LESSEE HAS USED ITS OWN JUDGMENT IN SELECTING THE AIRCRAFT AND HAS DONE SO BASED ON ITS SIZE, DESIGN AND TYPE. LESSEE ACKNOWLEDGES THAT LESSOR IS NOT A MANUFACTURER, REPAIRER OR SERVICING AGENT OF THE AIRCRAFT. 6.2 AGENCY AGREEMENT. Certain obligations remain to be performed by LESSOR in connection with the manufacture, fabrication and completion of the Aircraft by Manufacturer which will be performed by LESSEE (as provided in the Agency Agreement). LESSEE will act as LESSOR's agent with respect to some of these matters pursuant to the terms of an Agency Agreement to be entered into between LESSEE and LESSOR in the form set forth in Exhibit B. 6.3 PROCUREMENT OF BFE. LESSEE's and LESSOR's technical representatives will meet and determine which of LESSEE or LESSOR will provide specific items of BFE. Such BFE will then be provided to Manufacturer by LESSEE or LESSOR, as applicable, within the time frames required by Manufacturer. 6.4 ASSIGNMENT OF TRAINING. LESSOR hereby assigns to LESSEE all rights to training to which LESSOR is entitled as a result of LESSOR's purchase of the Aircraft and lease of the Aircraft to LESSEE. If LESSEE fails to take Delivery of the Aircraft when tendered in accordance with Article 6.7, LESSEE will immediately pay to LESSOR an amount equal to the Dollar value of such training based on what the training would have cost LESSEE had LESSEE purchased such training directly from Manufacturer. 6.5 LESSEE INSPECTION OF AIRCRAFT. During the course of final assembly of the Aircraft, and at Delivery, LESSEE will have its own representative present to inspect the Aircraft and to ensure its conformity with LESSEE's needs and the terms of this Lease. LESSEE will have ground inspection and acceptance flight rights with respect to the Aircraft. LESSEE acknowledges that, as between LESSEE and LESSOR, in accepting the Aircraft LESSEE is relying on its own inspection and knowledge of the Aircraft in determining whether the Aircraft meets the requirements of this Lease. 6.6 AIRCRAFT AT DELIVERY. At Delivery, the Aircraft will be as set forth in Exhibit A, as such description may be modified by any change requests agreed to among LESSEE, LESSOR and Manufacturer (which will be reflected in amendment(s) to this Lease). In the event of any discrepancies, LESSEE and LESSOR will cooperate in good faith with one another and with Manufacturer and Engine manufacturer, as applicable, in order to arrive at a mutually acceptable resolution of any such discrepancies. 6.7 DELIVERY OF THE AIRCRAFT TO LESSEE. Subject to LESSEE having performed all of the conditions precedent to Delivery set forth herein, immediately following delivery of the Aircraft from Manufacturer to LESSOR, LESSOR will deliver the Aircraft to LESSEE at the Delivery Location. Provided that the Aircraft is in the condition required by Article 6.6, upon the tender of the Aircraft by LESSOR to LESSEE, LESSEE will accept the Aircraft and the date of tender by LESSOR to LESSEE will be deemed to be the Delivery Date for all purposes under this Lease, including, but not limited to, the commencement of LESSEE's obligation to pay Rent hereunder. 6.8 LESSEE ACCEPTANCE OF AIRCRAFT. If LESSEE fails to (a) comply with its obligations set forth in Article 6.2, (b) comply with the conditions contained in Articles 7.1 and 7.2 so as to allow Delivery to take place immediately following delivery of the Aircraft by Manufacturer to LESSOR or (c) take delivery of the Aircraft when properly tendered for delivery by LESSOR in the condition required hereunder, LESSEE will indemnify LESSOR for all costs and expenses incurred by LESSOR as a result thereof including (but without limitation) any payments other than the purchase price which LESSOR becomes obliged to make to Manufacturer. ARTICLE 7 PRE-DELIVERY, DELIVERY AND POST-DELIVERY DOCUMENTARY AND OTHER REQUIREMENTS 7.1 PRE-DELIVERY REQUIREMENTS. LESSEE will do each of the following prior to the Scheduled Delivery Date of the Aircraft within the time frames set forth below: 7.1.1 Within one (1) month after execution of this Lease, LESSEE will deliver to LESSOR each of the following: (a) copies of resolutions of the Board of Directors of LESSEE or other written evidence of appropriate corporate action, duly certifying and authorizing the lease of the Aircraft hereunder and the execution, delivery and performance of this Lease, together with an incumbency certificate as to the person or persons authorized to execute and deliver documents on behalf of LESSEE hereunder; and (b) an opinion of counsel in the form and substance of Exhibit F. 7.1.2 At least three (3) days prior to the Scheduled Delivery Date, LESSEE will have delivered to LESSOR a Certificate of Insurance and Brokers' Letter of Undertaking in the form and substance of Exhibits C and D, respectively, from LESSEE's insurance brokers evidencing insurance of the Aircraft in accordance with this Lease from the Delivery Date. 7.1.3 At least three (3) Business Days prior to the Scheduled Delivery Date, LESSEE will do each of the following: (a) provide LESSOR with a copy of such Aviation Documents as may be available prior to the Scheduled Delivery Date; (b) provide LESSOR with a power of attorney empowering LESSEE's representative, who may be an officer or employee of LESSEE, to accept the Aircraft on behalf of LESSEE; and (c) provide LESSOR with such other documents as LESSOR may reasonably request. 7.1.4 Prior to the Scheduled Delivery Date, LESSEE will pay LESSOR the first monthly installment of Rent in accordance with Article 5.3.2. 7.2 DELIVERY REQUIREMENTS. On the Delivery Date of the Aircraft, each of the following will occur: 7.2.1 LESSEE will execute and deliver to LESSOR an Estoppel and Acceptance Certificate in the form of Exhibit E covering the Aircraft and effective as of the Delivery Date. 7.2.2 If not previously done, LESSEE and LESSOR will sign an amendment or supplement to Exhibit A evidencing all agreed-to changes to the specification of the Aircraft. 7.2.3 LESSEE will deliver a certificate signed on behalf of LESSEE by an officer of LESSEE stating all of the following: (a) the representations and warranties contained in Article 20 are true and accurate on and as of the Delivery Date as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date); (b) no Default has occurred and is continuing or will result from LESSEE's lease of the Aircraft hereunder; and (c) none of the Creditor Agreements contains terms which provide or contemplate that any Creditor will obtain any right, title or interest in an Engine which is installed on another aircraft (or, if this is not the case, such certificate will identify the parties, the aircraft and the Creditor Agreements for which this statement is untrue). 7.2.4 LESSEE's counsel will deliver opinions confirming the matters set forth in the opinion of counsel described in Article 7.1 and advising that all filing and other requirements have been met or concurrently are being met. 7.2.5 If any Creditor Agreement provides or contemplates that such Creditor will obtain any right, title or interest in an Engine which is installed on such Creditor's aircraft, LESSEE will deliver to LESSOR an engines cooperation agreement in form and substance acceptable to LESSOR which is executed by LESSEE and LESSEE's Creditors (as defined therein). 7.2.6 LESSOR will deliver to LESSEE an assignment of Manufacturer and Engine manufacturer rights in the form and substance of Exhibits G and H, respectively, and concurrently therewith LESSOR, to the extent it has not previously done so, will be deemed to have assigned all training, product assurance and product support applicable to the owner or operator of the Aircraft to LESSEE during the Lease Term. 7.3 POST-DELIVERY REQUIREMENTS. 7.3.1 Promptly after Delivery, LESSEE will do each of the following: (a) provide LESSOR with copies of all Aviation Documents not previously delivered; and (b) provide LESSOR with a follow-up opinion of counsel advising that the Aircraft has been registered in the State of Registration and that all necessary filings have been made. ARTICLE 8 DISCLAIMERS LESSOR HAS COMMITTED TO LESSEE THAT ON THE DELIVERY DATE THE AIRCRAFT WILL BE IN THE CONDITION REQUIRED BY ARTICLE 6. SUCH COMMITMENT OR COVENANT ON THE PART OF LESSOR EXPIRES AND THE DISCLAIMERS SET FORTH IN THIS ARTICLE 8 APPLY UPON LESSEE'S ACCEPTANCE OF THE AIRCRAFT AND EXECUTION OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATE. AFTER SUCH TIME, THEN AS BETWEEN LESSOR AND LESSEE: 8.1 "AS IS, WHERE IS". LESSEE AGREES THAT IT IS LEASING THE AIRCRAFT "AS IS, WHERE IS". LESSEE UNCONDITIONALLY ACKNOWLEDGES AND AGREES THAT NEITHER LESSOR NOR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES OR REPRESENTATIVES HAVE MADE OR WILL BE DEEMED TO HAVE MADE ANY TERM, CONDITION, REPRESENTATION, WARRANTY OR COVENANT EXPRESS OR IMPLIED (WHETHER STATUTORY OR OTHERWISE) AS TO (a) THE CAPACITY, AGE, AIRWORTHINESS, VALUE, QUALITY, DURABILITY, CONFORMITY TO THE PROVISIONS OF THIS LEASE, DESCRIPTION, CONDITION (WHETHER OF THE AIRCRAFT, ANY ENGINE, ANY PART THEREOF OR THE AIRCRAFT DOCUMENTATION), DESIGN, WORKMANSHIP, MATERIALS, MANUFACTURE, CONSTRUCTION, OPERATION, DESCRIPTION, STATE, MERCHANTABILITY, PERFORMANCE, FITNESS FOR ANY PARTICULAR USE OR PURPOSE (INCLUDING THE ABILITY TO OPERATE OR REGISTER THE AIRCRAFT OR USE THE AIRCRAFT DOCUMENTATION IN ANY OR ALL JURISDICTIONS) OR SUITABILITY OF THE AIRCRAFT OR ANY PART THEREOF, OR THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, KNOWN OR UNKNOWN, APPARENT OR CONCEALED, EXTERIOR OR INTERIOR, (b) THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK, COPYRIGHT OR OTHER INTELLECTUAL PROPERTY RIGHTS, (c) ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE OR (d) EXCEPT AS SET FORTH IN ARTICLE 21.1, ANY OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY PART THEREOF, ALL OF WHICH ARE HEREBY EXPRESSLY EXCLUDED AND EXTINGUISHED. 8.2 WAIVER OF WARRANTY OF DESCRIPTION. IN CONSIDERATION OF (a) LESSEE'S RIGHTS HEREUNDER TO INSPECT THE AIRCRAFT AND (b) LESSOR'S ASSIGNMENT TO LESSEE OF ANY EXISTING AND ASSIGNABLE WARRANTIES OF MANUFACTURER AND THE ENGINE MANUFACTURER, LESSEE HEREBY AGREES THAT ITS ACCEPTANCE OF THE AIRCRAFT AT DELIVERY AND ITS EXECUTION AND DELIVERY OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATE CONSTITUTE LESSEE'S WAIVER OF THE WARRANTY OF DESCRIPTION, ANY CLAIMS LESSEE MAY HAVE AGAINST LESSOR BASED UPON THE FAILURE OF THE AIRCRAFT TO CONFORM WITH SUCH DESCRIPTION AND ANY AND ALL RIGHTS IT MAY HAVE TO THE REMEDIES SET FORTH IN SECTIONS 10508 THROUGH 10522 OF THE CALIFORNIA COMMERCIAL CODE. EVEN IF AT ANY TIME THE FAILURE OF THE AIRCRAFT TO CONFORM TO SUCH DESCRIPTION SUBSTANTIALLY IMPAIRS THE VALUE AND UTILITY OF THE AIRCRAFT AND EITHER (i) LESSEE ACCEPTED THE AIRCRAFT BASED ON A REASONABLE ASSUMPTION THAT THE NONCONFORMITY WOULD BE CURED AND IT WAS NOT SEASONABLY CURED OR (ii) LESSEE ACCEPTED THE AIRCRAFT WITHOUT DISCOVERING THE NONCONFORMITY BUT LESSEE'S ACCEPTANCE OF THE AIRCRAFT WAS REASONABLY INDUCED EITHER BY LESSOR'S ASSURANCES OR BY THE DIFFICULTY OF DISCOVERING ANY DEFECT PRIOR TO ACCEPTANCE, LESSEE AGREES NOT TO LOOK TO LESSOR FOR DAMAGES OR RELIEF ARISING OUT OF THE FAILURE OF THE AIRCRAFT TO CONFORM TO SUCH DESCRIPTION. 8.3 LESSEE WAIVER. LESSEE hereby waives as between itself and LESSOR and agrees not to seek to establish or enforce any rights and remedies, express or implied (whether statutory or otherwise) against LESSOR or the Aircraft relating to any of the matters mentioned in Articles 8.1 or 8.2. 8.4 CONCLUSIVE PROOF. DELIVERY BY LESSEE TO LESSOR OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATE WILL BE CONCLUSIVE PROOF AS BETWEEN LESSOR AND LESSEE THAT LESSEE'S TECHNICAL EXPERTS HAVE EXAMINED AND INVESTIGATED THE AIRCRAFT AND ENGINES AND (a) EACH IS AIRWORTHY AND IN GOOD WORKING ORDER AND REPAIR AND (b) THE AIRCRAFT AND ENGINES AND THE AIRCRAFT DOCUMENTATION ARE WITHOUT DEFECT (WHETHER OR NOT DISCOVERABLE AT DELIVERY) AND IN EVERY WAY SATISFACTORY TO LESSEE. 8.5 NO LESSOR LIABILITY FOR LOSSES. LESSEE agrees that LESSOR will not be liable to LESSEE, any sublessee or any Person, whether in contract or tort and however arising, for any cost, loss or damage (consequential or otherwise) arising out of the condition of the Aircraft, whether or not due in whole or in part to an act or omission or the active or passive negligence of LESSOR. 8.6 NO LIABILITY TO REPAIR OR REPLACE. LESSOR will not be liable for any expense in repairing or replacing any item of the Aircraft or be liable to supply another aircraft or any item in lieu of the Aircraft or any Part thereof if the same is lost, confiscated, damaged, destroyed or otherwise rendered unfit for use. 8.7 NO WAIVER. Nothing in this Article 8 or elsewhere in this Lease will be deemed to be a waiver by LESSEE of any rights it may have against Manufacturer, the Engine manufacturer or any other Person. ARTICLE 9 MANUFACTURERS' AND VENDORS' WARRANTIES 9.1 WARRANTIES. As set forth in Article 7.2.6, at Delivery LESSOR will assign to LESSEE for the duration of the Lease Term the benefit of all warranties and indemnities given to LESSOR by Manufacturer and the Engine manufacturer. Effective on the Delivery Date, all other vendor warranties with respect to the Aircraft are hereby assigned by LESSOR to LESSEE. 9.2 REASSIGNMENT. On the Termination Date, the benefit of any warranty assigned by LESSOR to LESSEE pursuant to Article 7.2.6 will be reassigned automatically to LESSOR or its designee. ARTICLE 10 OPERATION OF AIRCRAFT 10.1 COSTS OF OPERATION. As between LESSEE and LESSOR, LESSEE will pay all costs incurred in the operation of the Aircraft during the Lease Term, for profit or otherwise, including the costs of flight crews, cabin personnel, fuel, oil, lubricants, maintenance, insurance, storage, landing and navigation fees, airport charges, passenger service and any and all other expenses of any kind or nature, directly or indirectly, in connection with or related to the use, movement and operation of the Aircraft. The obligations, covenants and liabilities of LESSEE under this paragraph arising prior to return of the Aircraft to LESSOR will continue in full force and effect, notwithstanding the termination of this Lease or expiration of the Lease Term. 10.2 COMPLIANCE WITH LAWS. LESSEE agrees throughout the Lease Term that all use of the Aircraft will be in accordance with applicable Laws of the State of Registration and of any country, state, territory or municipality into or over which LESSEE may operate. LESSEE will not employ, suffer or cause the Aircraft to be used in any business which is forbidden by Law or in any manner which may render it liable to condemnation, destruction, seizure, or confiscation by any authority. LESSEE will not permit the Aircraft to fly to any airport or country if so doing would cause LESSEE to be in violation of any Law applicable to LESSEE or the Aircraft. The foregoing provisions in this Article 10.2 shall not prohibit any violation of Law (a) during a good-faith contest of the validity, application, or alleged violation thereof in any reasonable manner so long as there is no material danger of sale, forfeiture, or loss of the Aircraft (however, this good faith exception shall not apply in the case of a mandatory grounding order, the good faith contest of which does not permit LESSEE to operate the Aircraft during such contest), and which does not extend beyond the end of the Lease Term if the pendency of such contest would adversely affect the Aircraft or the remarketing thereof in any material respect; and (b) for minor or non-recurring violations (with the understanding that minor violations may cease to be minor if recurring) that LESSEE is diligently trying to rectify which do not render the Aircraft liable to any risk of condemnation, destruction, seizure, or confiscation by any Government Entity. 10.3 TRAINING. LESSEE will not use the Aircraft for testing or for training of flight crew members other than LESSEE crew members and will not use the Aircraft for training any more than it utilizes for training the other aircraft in its fleet. 10.4 NO VIOLATION OF INSURANCE POLICIES. LESSEE will not use or permit the Aircraft to be used in any manner or for any purpose which is not covered by the insurance policies LESSEE is required to carry and maintain as set forth in this Lease. LESSEE will not carry any goods of any description that would invalidate or limit such policies or do any other act or permit to be done anything which could reasonably be expected to invalidate or limit any such insurance policy. 10.5 FLIGHT CHARGES. 10.5.1 LESSEE will pay promptly when due all enroute navigation charges, navigation service charges and all other charges payable by LESSEE for the use of or for services provided at any airport, whether in respect of the Aircraft or any other aircraft of LESSEE, and will indemnify and hold LESSOR harmless in respect of the same. This indemnity will continue in full force and effect notwithstanding the termination or expiration of the Lease Term for any reason or the return of the Aircraft. 10.5.2 If requested by LESSOR, LESSEE will provide LESSOR with a list of the airports to which LESSEE regularly operates the Aircraft or its other aircraft. LESSEE hereby authorizes Eurocontrol or another aviation authority or airport or creditor claiming rights on the Aircraft to confirm the status of LESSEE's payments to such creditor for the Aircraft and its other aircraft, as and when requested by LESSOR. ARTICLE 11 SUBLEASES 11.1 NO SUBLEASE WITHOUT LESSOR CONSENT. LESSEE WILL NOT SUBLEASE OR PART WITH POSSESSION OF THE AIRCRAFT (EXCEPT FOR MAINTENANCE AND REPAIR) AT ANY TIME WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR (NOT TO BE UNREASONABLY WITHHELD) AND IN ACCORDANCE WITH SUCH REQUIREMENTS AS MAY FROM TIME TO TIME BE AGREED IN WRITING BETWEEN LESSOR AND LESSEE. The wet leasing of the Aircraft during the Lease Term (in which LESSEE and its crews retain operational control of the Aircraft) will not be considered a sublease of the Aircraft. 11.2 LESSOR COSTS. LESSEE will indemnify LESSOR on demand for all out-of-pocket expenses (including legal fees) incurred in connection with LESSOR's assessment of the subleasing proposal (whether or not LESSOR's consent to such sublease is ultimately given) and implementation of the sublease. 11.3 ANY APPROVED SUBLEASE. Any sublease approved by LESSOR will be for a term no greater than the remaining Lease Term and contain provisions consistent with this Lease protecting LESSOR's title to the Aircraft, providing appropriate LESSOR indemnities, regarding the maintenance and repair standards for the Aircraft, concerning the insurances which will be carried by the sublessee and the circumstances which constitute a Total Loss of the Aircraft. Any such sublease will be subject and subordinate to this Lease. In its sole discretion, LESSOR may require an opinion of counsel in connection with such sublease, including LESSOR's right to repossess the Aircraft in the event of an Event of Default hereunder or under the sublease. LESSEE will not amend the terms of any approved sublease without the prior written consent of LESSOR, which will not be unreasonably withheld. 11.4 ASSIGNMENT OF SUBLEASE. Any approved sublease will be assigned to LESSOR as security. LESSEE will deliver the original counterpart of the sublease to LESSOR and make any filings necessary to protect LESSOR's security interest. 11.5 CONTINUED RESPONSIBILITY OF LESSEE. LESSEE will continue to be responsible for performance of its obligations under this Lease during any period of sublease. ARTICLE 12 MAINTENANCE AND USE OF AIRCRAFT 12.1 GENERAL OBLIGATION. 12.1.1 During the Lease Term and until the Aircraft is returned to LESSOR, LESSEE alone has the obligation, at its expense, to maintain and repair the Aircraft, Engines and all of the Parts (a) in accordance with the Maintenance Program, (b) in accordance with the rules and regulations of the Aviation Authority, (c) in accordance with Manufacturer's type design, (d) in accordance with any other regulations or requirements necessary in order to maintain a valid Certificate of Airworthiness for the Aircraft and meet the requirements at all times during the Lease Term and upon return of the Aircraft to LESSOR for issuance of a Standard Certificate of Airworthiness for transport category aircraft issued by the Aviation Authority (except during those periods when the Aircraft is undergoing maintenance or repairs as required or permitted by this Lease) and (e) in the same manner and with the same care as used by LESSEE or its sublessee with respect to similar aircraft and engines operated by LESSEE or its sublessee and without in any way discriminating against the Aircraft. 12.1.2 LESSEE will maintain and repair the Engines in the same manner and in the equivalent time frame to its other engines and LESSEE will not discriminate against any of the Engines in respect of the repair and maintenance. 12.1.3 LESSEE will not enter into any Engine maintenance cost per flight hour, power-by-the-hour or similar agreement with Engine manufacturer or any other Engine maintenance facility or organization without LESSOR's prior written consent. 12.2 SPECIFIC OBLIGATIONS. Without limiting Article 12.1, LESSEE agrees that such maintenance and repairs will include but will not be limited to each of the following specific items: (a) performance in accordance with the Maintenance Program of all routine and non-routine maintenance work; (b) incorporation in the Aircraft of all Airworthiness Directives; (c) incorporation in the Aircraft of all service bulletins of Manufacturer, the Engine manufacturer and other vendors which LESSEE schedules to adopt within the Lease Term for the rest of its Boeing 737-800 aircraft fleet. It is the intent of the parties that the Aircraft will not be discriminated from the rest of LESSEE's fleet in service bulletin compliance (including method of compliance) or other maintenance matters. LESSEE will not discriminate against the Engines with respect to Overhaul build standards and life-limited part replacements; (d) incorporation in the Maintenance Program for the Aircraft of a corrosion prevention and control program; (e) maintaining in English and keeping in an up-to-date status the records and historical documents set forth in Attachment 1 of Exhibit I; (f) maintaining historical records, in English, for on condition, condition-monitored, hard time and life-limited Parts (including tags from the manufacturer of such Part or a repair facility which evidence that such Part is new or overhauled and establish authenticity, total time in service and time since overhaul for such Part), the hours and cycles the Aircraft and Engines operate and all maintenance and repairs performed on the Aircraft; and (g) properly documenting all repairs, Modifications and alterations and the addition, removal or replacement of equipment, systems or components in accordance with the rules and regulations of the Aviation Authority and reflecting such items in the Aircraft Documentation. In addition, all repairs to the Aircraft will be accomplished in accordance with Manufacturer's Structural Repair Manual (or FAA-approved data supported by FAA Form 8110-3 or equivalent). All Modifications and alterations will also be accomplished in accordance with FAA-approved data supported by FAA Form 8110-3 or equivalent. 12.3 REPLACEMENT OF PARTS. 12.3.1 LESSEE, at its own cost and expense, will promptly replace all Parts which may from time to time become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or rendered unfit or beyond economical repair (BER) for any reason. In the ordinary course of maintenance, service, repair, overhaul or testing, LESSEE may remove any Part provided that LESSEE replaces such Part as promptly as practicable. All replacement Parts will (a) be free and clear of all Security Interests (except Permitted Liens) of any kind or description, (b) be in airworthy condition and of at least equivalent model, service bulletin and modification status and have a value and utility at least equal to the Parts replaced, assuming such replaced Parts were in the condition and repair required to be maintained by the terms hereof and (c) have a current "serviceable tag" of the manufacturer or maintenance facility providing such items to LESSEE, indicating that such Parts are new, serviceable or Overhauled. So long as a substitution meets the requirements of the Maintenance Program and Aviation Authority, LESSEE may substitute for any Part a part that does not meet the requirements of the foregoing sentence if a complying Part cannot be procured or installed within the available groundtime of the Aircraft and as soon as practicable the noncomplying part is removed and replaced by a complying Part. 12.3.2 All Parts removed from the Airframe or any Engine will remain the property of LESSOR and subject to this Lease no matter where located, until such time as such Parts have been replaced by Parts (which have been incorporated or installed in or attached to the Airframe or such Engine) which meet the requirements for replacement Parts specified above and title to such replacement Parts has passed to LESSOR under the Laws of the State of Registration and LEX SITUS. To the extent permitted by the Laws of the State of --- ----- Registration and the LEX SITUS it is the intent of LESSOR and LESSEE that without further --- ----- act and immediately upon any replacement Part becoming incorporated, installed or attached to the Airframe or an Engine as above provided, (a) title to the removed Part will thereupon vest in LESSEE, free and clear of all rights of LESSOR, (b) title to the replacement Part will thereupon vest in LESSOR free and clear of all rights of LESSEE and (c) such replacement Part will become subject to this Lease and be deemed to be a Part hereunder to the same extent as the Parts originally incorporated or installed in or attached to the Airframe or such Engine. 12.4 REMOVAL OF ENGINES. 12.4.1 If an Engine is removed for testing, service, repair, maintenance, Overhaul work, alterations or modifications, title to such Engine will remain vested in LESSOR. 12.4.2 LESSEE will be entitled to remove any of the Engines from the Aircraft and install another engine or engines on the Aircraft, provided that LESSEE complies with each of the following obligations: (a) the insurance requirements set forth in Article 17 and Exhibit C are in place; (b) LESSEE ensures that the identification plates referred to in Article 14 are not removed from any Engine upon such Engine being detached from the Aircraft; and (c) title to the Engine remains with LESSOR free from all Security Interests (except Permitted Liens) regardless of the location of the Engine or its attachment to or detachment from the Aircraft. 12.5 POOLING OF ENGINES AND PARTS. With LESSOR's prior written consent, not to be unreasonably withheld, LESSEE may subject the Engines and Parts to normal interchange or pooling agreements with responsible commercial air carriers customary in the airline industry and entered into by LESSEE in the ordinary course of its business with respect to its Boeing 737-800 fleet generally, so long as (a) in the case of pooling of an Engine, such Engine is returned to LESSEE within two (2) months, (b) no transfer of title to the Engine occurs, (c) all other terms of this Lease continue to be observed with respect to the Engines or Parts, including but not limited to Articles 8, 10, 12, 13, 14, 15, 16, 17 and 18 and (d) LESSEE continues to be fully responsible to LESSOR for the performance of all of its obligations hereunder. 12.6 INSTALLATION OF ENGINES ON OTHER AIRCRAFT. Any Engine removed from the Aircraft may be installed on another airframe in LESSEE's fleet which utilizes engines of the same type as the Engine only if one of the situations described in this Article 12.6 exists: 12.6.1 LESSEE or LESSOR has title to such other aircraft free and clear of all Security Interests (except Permitted Liens). 12.6.2 LESSEE, LESSOR and all of the Creditors of LESSEE of such aircraft enter into an engines cooperation agreement in form and substance acceptable to LESSOR in which each party agrees to recognize one another's rights in the engines. LESSEE will reimburse LESSOR and LESSOR's Lender for their reasonable attorneys' fees and costs in negotiating and finalizing engine cooperation agreement arrangements with LESSEE and its Creditors. 12.6.3 Such other aircraft is subject to a Creditor Agreement (but no other Security Interests except Permitted Liens) which by its terms expressly or effectively states that such Creditor and its successors and assigns will not acquire any right, title or interest in any Engine by reason of such Engine being installed on such aircraft. LESSEE hereby agrees that if LESSOR's title to an Engine is in fact impaired under any such Creditor Agreement, such impairment will be a Total Loss of such Engine and the provisions of Article 18.5 will apply. To the extent another Creditor Agreement contains such provisions, then LESSOR hereby agrees for the benefit of the Creditor of such Creditor Agreement that neither LESSOR nor its successors or assigns will acquire or claim any right, title or interest in any engine in which LESSEE or another Creditor has an interest as a result of such engine being installed on the Airframe. 12.7 MODIFICATIONS. 12.7.1 No modification, alteration, addition or removal to the Aircraft ("MODIFICATION") expected to cost over Five Hundred Thousand U.S. Dollars (US$500,000) or deviation from the Aircraft's original type design or configuration will be made without the prior written consent of LESSOR, which consent will not be unreasonably withheld. "Modifications" do not include Airworthiness Directives or Manufacturer's recommended service bulletins, for which LESSOR's consent is not required. 12.7.2 LESSOR may review LESSEE's proposed designs, plans, engineering drawings and diagrams, and flight and maintenance manual revisions for any proposed Modification. If requested by LESSOR, LESSEE will furnish LESSOR (at LESSEE's expense) with such documents in final form and any other documents required by Law, as a result of such Modification. All Modifications incorporated on the Aircraft will be properly documented in the Aircraft Documentation and be fully approved by the Aviation Authority. 12.7.3 Notwithstanding any other provision of this Lease, no Modification will be made which has the effect of decreasing the utility or value of the Aircraft. 12.7.4 No Modification will be made by LESSEE if an Event of Default exists and is continuing hereunder. 12.7.5 Unless otherwise agreed by LESSOR in writing, all non-severable or structural Modifications will forthwith become a part of the Aircraft and LESSEE relinquishes to LESSOR all rights and title thereto. However, all severable Modifications will remain the property of LESSEE or the third-party owner and, at LESSOR's request and LESSEE's cost, will be removed from the Aircraft prior to return of the Aircraft, with LESSEE restoring the Aircraft to the condition it was in prior to the Modification. Notwithstanding the foregoing, no such removal will be permitted without LESSOR's permission after the occurrence of an Event of Default hereunder and immediately upon the occurrence of an Event of Default hereunder, without the requirement of any further act or notice, all right, title and interest in such Modifications will immediately vest in LESSOR. 12.7.6 LESSOR will bear no liability for the cost of Modifications of the Aircraft whether in the event of grounding or suspensions of certification, or for any other cause. 12.8 PERFORMANCE OF WORK BY THIRD PARTIES. Whenever maintenance and repair work on the Aircraft or Engines will be regularly performed by a Person other than LESSEE, such Person will be an FAA-authorized repair station. 12.9 REPORTING REQUIREMENTS. 12.9.1 Commencing with a report furnished ten (10) days after the end of the calendar month in which Delivery occurs, LESSEE will furnish to LESSOR a Monthly Report in English in the form attached hereto as Exhibit J. Each Monthly Report will be furnished within ten (10) days after the end of each calendar month, except that the Monthly Report pertaining to the last month (or any portion thereof) of the Lease Term will be furnished to LESSOR on the Termination Date. 12.9.2 On each anniversary of the Delivery Date, LESSEE will provide LESSOR with a Technical Evaluation Report for the Aircraft in the form and substance of Exhibit L, as revised. 12.10 INFORMATION REGARDING MAINTENANCE PROGRAM. LESSEE will provide LESSOR with a copy of or information regarding the Maintenance Program for the Aircraft, as requested by LESSOR. 12.11 LESSOR RIGHTS TO INSPECT AIRCRAFT. On reasonable notice, LESSOR and/or its authorized agents or representatives will have the right to inspect the Aircraft and Aircraft Documentation. LESSOR agrees that such requests will be coordinated with LESSEE so as to cause the minimum practical disturbance to LESSEE's operation or its personnel. LESSEE agrees to cooperate with LESSOR in making the Aircraft and Aircraft Documentation available to such authorized technical teams. No such inspection shall include opening panels, bays, or the like (although LESSOR may observe those that are then open), or disassembling any item. LESSOR will have no duty to make any such inspection and will not incur any liability or obligation by reason of (and LESSEE's indemnity obligations pursuant to Article 16 will apply notwithstanding) not making any such inspection or by reason of any reports it receives or any reviews it may make of the Aircraft records. ARTICLE 13 TITLE AND REGISTRATION 13.1 TITLE TO THE AIRCRAFT DURING LEASE TERM. Title to the Aircraft will be and remain vested in LESSOR. LESSOR and LESSEE intend this Lease to be a "true lease". LESSEE will have no right, title or interest in the Aircraft except as provided in this Lease. 13.2 REGISTRATION OF AIRCRAFT. LESSEE at its sole cost and expense will (a) register and maintain registration of the Aircraft in the name of LESSOR at the register of aircraft in the State of Registration and (b) from time to time take all other steps then required by Law (including the Geneva Convention if applicable) or by practice, custom or understanding or as LESSOR may reasonably request to protect and perfect LESSOR's interest in the Aircraft and this Lease in the State of Registration or in any other jurisdictions in or over which LESSEE may operate the Aircraft. 13.3 FILING OF THIS LEASE. To the extent permitted by Law and in accordance with the requirements of the Law from time to time, LESSEE at its sole cost and expense will cause this Lease to be kept, filed, recorded and refiled or rerecorded in the State of Registration and in any other offices necessary to protect LESSOR's rights hereunder. 13.4 EVIDENCE OF REGISTRATION AND FILINGS. As LESSOR may reasonably request from time to time, LESSEE will furnish to LESSOR an opinion of counsel or other evidence reasonably satisfactory to LESSOR of the registrations and filings required hereunder. ARTICLE 14 IDENTIFICATION PLATES LESSOR will affix and LESSEE will at all times maintain on the Airframe and each Engine the identification plates containing the following legends or any other legend reasonably requested by LESSOR in writing: 14.1 AIRFRAME IDENTIFICATION PLATES. Location: One to be affixed to the Aircraft structure above the forward entry door adjacent to and not less prominent than that of Manufacturer's data plate and another in a prominent place on the flight deck. Size: No smaller than 4" x 6". Legend: "THIS AIRCRAFT IS OWNED BY INTERNATIONAL LEASE FINANCE CORPORATION. MANUFACTURER'S SERIAL NO: 28243 OWNER'S ADDRESS: INTERNATIONAL LEASE FINANCE CORPORATION 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States of America Fax: (310) 788-1990" 14.2 ENGINE IDENTIFICATION PLATES. Location: The legend on the plate must be visible. Size: No smaller than 2" x 6". "THIS ENGINE IS OWNED BY INTERNATIONAL LEASE FINANCE CORPORATION, LOS ANGELES, CALIFORNIA, USA." ARTICLE 15 TAXES 15.1 GENERAL OBLIGATION OF LESSEE. Except as set forth in Article 15.2, LESSEE agrees to pay promptly when due, and to indemnify and hold harmless LESSOR on a full indemnity basis from, all license and registration fees and all taxes, fees, levies, imposts, duties, charges or withholdings of any nature whatsoever (including without limitation any value added, franchise, transfer, sales, gross receipts, use, business, occupation, excise, personal property, real property, stamp or other tax) together with any assessments, penalties, fines, additions to tax or interest thereon, however or wherever imposed (whether imposed upon LESSEE, LESSOR, on all or part of the Aircraft, the Engines or otherwise), by any Government Entity or taxing authority in the U.S., any State thereof, or any foreign country or by any international taxing authority, upon or with respect to, based upon or measured by any of the following (collectively, "TAXES"): (a) the Aircraft, the Engines or any Parts. (b) the use, operation or maintenance of the Aircraft or carriage of passengers or freight during the Lease Term. (c) this Lease, the payments due hereunder and the terms and conditions hereof. (d) the return of the Aircraft to LESSOR or other use or disposition of the Aircraft by LESSEE. 15.2 EXCEPTIONS TO INDEMNITY. The indemnity provided in Article 15.1 does not extend to any of the following Taxes: (a) Imposed by the U.S. (including without limitation any taxes collected by withholding) or any state or local government or governmental subdivision or state or local taxing authority in the U.S. (including any possession or territory of the U.S.) or by any foreign government, taxing authority or governmental subdivision of a foreign country which are based on, or measured by, the receipts, gross or net income, capital, net worth, franchises, excess profits, or conduct of business (including minimum taxes, withholding taxes and taxes on or measured by any items of tax preference) of LESSOR, except to the extent that such Tax would not have been imposed on or payable by LESSOR but for the location, use, registration or operation of the Aircraft or any part thereof, or any place of business or any activity of LESSEE in the jurisdiction imposing such Tax. (b) Imposed as a result of LESSOR's transfer, mortgage, pledge, financing or other disposition by LESSOR of all or a portion of its interest in the Aircraft or this Lease except a transfer or sale resulting from an exercise of remedies pursuant to Article 25.3 hereunder or in connection with a termination of the Lease pursuant to Article 18 hereof. (c) Attributable to the period prior to the Delivery Date or after return of the Aircraft to LESSOR in accordance with this Lease. (d) Attributable to LESSOR's gross negligence, willful misconduct or breach of this Lease. 15.3 AFTER-TAX BASIS. The amount which LESSEE is required to pay with respect to any Taxes indemnified against under Article 15.1 is an amount sufficient to restore LESSOR on an after-tax basis to the same position LESSOR would have been in had such Taxes not been incurred. 15.4 CLAIMS AND CONTESTS. If a written claim is received by LESSOR for Taxes, which claim, if sustained, would require the payment of an indemnity by LESSEE pursuant to this Article 15, LESSOR shall notify LESSEE of such claim within thirty (30) days after its receipt, provided that failure to provide such notice within thirty (30) days will not relieve LESSEE of any indemnification obligation pursuant to this Article 15 if such failure does not preclude LESSEE from exercising its contest rights hereunder. Payments due from LESSEE to LESSOR pursuant to this Article 15 shall be made directly to LESSOR within thirty (30) days of written demand by LESSOR to LESSEE. If requested by LESSEE in writing, LESSOR shall upon receipt of indemnity reasonably satisfactory to it and at the expense of LESSEE (including, without limitation, all reasonable costs, expenses, legal and accountants' fees, and disbursements, penalties, interest incurred in contesting such claim, and additions to tax) in good faith, in the name of LESSOR or, if requested by LESSEE, in the name of LESSEE (or permit LESSEE, if desired by LESSEE, to contest in the name of LESSEE) if permissible under applicable laws, the validity, applicability or amount of such Taxes by (i) resisting payment thereof if practicable only if adequate reserves have been made for such Taxes or, if required, an adequate bond has been posted, (ii) paying the same under protest, if protest shall be necessary and proper, (iii) if payment shall be made, using reasonable efforts to obtain a refund thereof in appropriate administrative and judicial proceedings, and (iv) taking such other action as is reasonably requested by LESSEE from time to time including not paying such Taxes only if adequate reserves have been made for such Taxes or, if required, an adequate bond has been posted. LESSOR shall determine the method of any contest and (in good faith consultation with LESSEE) control the conduct thereof. Notwithstanding anything contained in this Article 15.4, LESSOR will not be required to contest, or to continue to contest, the validity, applicability or amount of any Tax (or portion thereof) (x) if such contest would result in any material risk of criminal penalties or any material risk of sale, forfeiture or loss of the Aircraft, (y) if an Event of Default has occurred and is continuing, or (z) in the case of a contest of a Tax reflected on a return of LESSOR with other taxes of LESSOR that are not indemnified by the LESSEE hereunder, if LESSEE shall not have furnished an opinion of independent tax counsel selected by the LESSEE, and reasonably satisfactory to LESSOR, that a reasonable basis exists for such contest. If LESSOR shall obtain a refund of all or any part of such Taxes for which an indemnity was paid by LESSEE, LESSOR shall pay LESSEE the amount of such refund; PROVIDED, HOWEVER, that such amount shall not be payable before such time as LESSEE shall have made all payments or indemnities to LESSOR then due under this Article 15 and under the Lease or while an Event of Default shall have occurred and be continuing. If in addition to such refund LESSOR shall receive an amount representing interest on the amount of such refund, LESSEE shall be paid that proportion of such interest which is fairly attributable to Taxes paid with an indemnity payment by LESSEE prior to the receipt of such refund or interest and increased by any taxes saved by reason of the deductibility of such payment by LESSOR. LESSEE shall not be deemed to be in default under any of the indemnification provisions under this Article 15 so long as it or LESSOR shall diligently prosecute such contest and LESSEE has indemnified LESSOR to LESSOR's reasonable satisfaction. In case any report or return is required to be made with respect to any obligation of LESSEE under this Article 15.4 or arising out of this Article 15.4, LESSEE will either timely make such report or return in such manner as will show the ownership of the Aircraft in LESSOR, and will as soon as possible send a copy of such report or return to LESSOR, or will notify LESSOR of such requirement and prepare and deliver such report or return to LESSOR in such manner as shall be satisfactory to LESSOR. 15.5 REFUNDS. Upon receipt by LESSOR of a refund of all or any part of any Taxes (including any deductions or withholdings referred to in Article 15.1) which LESSEE has paid, LESSOR will pay to LESSEE the net amount of such Taxes refunded. 15.6 COOPERATION IN FILING TAX RETURNS. LESSEE and LESSOR will cooperate with one another in providing information which may be reasonably required to fulfill each party's tax filing requirements and any audit information request arising from such filing. ARTICLE 16 INDEMNITIES 16.1 GENERAL INDEMNITY. Except as set forth in Article 16.2, LESSEE agrees to indemnify and hold harmless LESSOR and its officers, directors, employees, agents and shareholders (individually an "INDEMNITEE" and collectively "INDEMNITEES") from any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs, disbursements and expenses (including legal fees, costs and related expenses) of every kind and nature, whether or not any of the transactions contemplated by this Lease are consummated (collectively "EXPENSES"), which are imposed on, incurred by or asserted against any Indemnitee and which are in any way relating to, based on or arising out of any of the following: (a) this Lease or any transactions contemplated hereby; (b) the operation, possession, use, non-use, control, leasing, subleasing, maintenance, storage, overhaul, testing, inspections or acceptance flights at return of the Aircraft, any Engine or any Part during the Lease Term by LESSEE, any sublessee or any other Person, whether or not the same is in compliance with the terms of this Lease, including without limitation claims for death, personal injury, property damage, other loss or harm to any Person and claims relating to any Laws, including without limitation environmental control, noise and pollution laws, rules or regulations; (c) the manufacture, design, acceptance, rejection, delivery, return, sale in connection with an Event of Default, import, export, condition, repair, modification, servicing, rebuilding, enforcement of warranties whether in LESSOR's or LESSEE's name, customer and product support provided by Manufacturer and other vendors, airworthiness, registration, reregistration, performance, sublease, merchantability, fitness for use, substitution or replacement of the Aircraft, Engine or any Part under this Lease or other transfer of use or possession of the Aircraft, Engine or any Part, including under a pooling or interchange arrangement, including without limitation latent and other defects, whether or not discoverable and patent, trademark or copyright infringement; (d) any non-compliance by LESSEE with any term of this Lease or the falsity or inaccuracy of any representation or warranty of LESSEE set forth herein; (e) the prevention or attempt to prevent the arrest, confiscation, seizure, taking in execution, impounding, forfeiture or detention of the Aircraft, or in securing the release of the Aircraft; or (f) as a consequence of any Default in payment by LESSEE of any sum to be paid by LESSEE when due under this Lease or any other Default by LESSEE in the due and punctual performance of its obligations under this Lease. The foregoing indemnity by LESSEE is intended to include and cover any Expense to which an Indemnitee may be subject (in contract, tort, strict liability or under any other theory) regardless of the negligence, active or passive or any other type, of such Indemnitee, so long as such Expense does not fall within any of the exceptions listed in Article 16.2. 16.2 EXCEPTIONS TO GENERAL INDEMNITIES. The indemnity provided for in Article 16.1 will not extend to Expenses of any Indemnitee to the extent resulting from or arising out of any of the following: (a) Expenses which have resulted from the willful misconduct of such Indemnitee; (b) Expenses which LESSEE and LESSOR mutually agree or, absent mutual agreement, are judicially determined to be attributable to acts or events which occur after the Termination Date and return of the Aircraft to LESSOR in the condition required hereunder, but in any such case only to the extent not attributable to acts or omissions of LESSEE; (c) Expenses representing Taxes, it being acknowledged that the terms of Article 15 apply exclusively to LESSEE's indemnity obligations with respect to Taxes; (d) Expenses due to the breach by LESSOR of its covenant of quiet enjoyment pursuant to Article 21.2 (except to the extent covered by LESSEE's insurances); (e) Expenses which arise in connection with the transfer by LESSOR of any interest in the Aircraft or this Lease, except for any transfer in connection with any Event of Default or a Total Loss of the Aircraft or an Engine. (f) Expenses which are solely attributable to the representation or warranty of LESSOR contained in or made pursuant to any Operative Document being untrue; (g) Expenses which are solely related to the failure of such Indemnitees to perform or observe any agreement, covenant, or condition on its part to be performed or observed in any Operative Document; (h) Expenses which are solely an ordinary and usual internal customary operating expense; or (i) Expenses which are solely related to a breach of Article 21.1.6, or (j) Expenses which are solely related to a LESSOR's Lien. 16.3 AFTER-TAX BASIS. The amount which LESSEE will be required to pay with respect to any Expense indemnified against under Article 16.1 will be an amount sufficient to restore the Indemnitee, on an after-tax basis, to the same position such Indemnitee would have been in had such Expense not been incurred. 16.4 TIMING OF PAYMENT. It is the intent of the parties that each Indemnitee will have the right to indemnification for Expenses hereunder as soon as a claim is made and as soon as an Expense is incurred, whether or not such claim is meritorious and whether or not liability is established (but subject to Articles 16.2 and 16.8). LESSEE will pay an Indemnitee for Expenses pursuant to this Article 16 within ten (10) days after receipt of a written demand therefor from such Indemnitee accompanied by a written statement describing in reasonable detail the basis for such indemnity (but not before payment is due from such Indemnitee). 16.5 SUBROGATION. Upon the payment in full of any indemnity pursuant to this Article 16 by LESSEE, LESSEE will be subrogated to any right of the Indemnitee in respect of the matter against which such indemnity has been made. 16.6 NOTICE. Each Indemnitee and LESSEE will give prompt written notice one to the other of any liability of which such party has knowledge for which LESSEE is, or may be, liable under Article 16.1; provided, however, that failure to give such notice will not terminate any of the rights of Indemnitees under this Article 16 except to the extent that LESSEE has been materially prejudiced by the failure to provide such notice. 16.7 REFUNDS. If any Indemnitee obtains a recovery of all or any part of any amount which LESSEE has paid to such Indemnitee, such Indemnitee will pay to LESSEE the net amount recovered by such Indemnitee. 16.8 DEFENSE OF CLAIMS. (a) LESSEE and its insurers will have the right (in each such case at LESSEE's sole expense) to investigate or, provided that LESSEE or its insurers have not reserved the right to dispute liability with respect to any insurance policies pursuant to which coverage is sought, defend or compromise any claim covered by insurance for which indemnification is sought pursuant to Article 16.1 and each Indemnitee will cooperate with LESSEE or its insurers with respect thereto. If LESSEE or its insurers are retaining attorneys to handle such claim, such counsel must be reasonably satisfactory to the Indemnitees. If not, the Indemnitees will have the right to retain counsel of their choice at LESSEE's expense. (b) Unless LESSOR agrees in writing otherwise, no settlement of any claim hereunder may require LESSOR to agree to any remedy apart from the payment of money damages (for which such payment of money damages LESSEE will in any event indemnify the Indemnitees). (c) In no event shall any Indemnitee enter into a settlement or other compromise with respect to any Expense without LESSEE's prior written consent (which shall not be unreasonably withheld or delayed), unless such Indemnitee waives its right to be indemnified with respect to such Expense under this Article 16. (d) To the extent that any Expense indemnified by LESSEE hereunder may be covered by insurance maintained by LESSEE, at LESSEE's expense, each Indemnitee agrees to cooperate with the insurers in the exercise of their rights to investigate, defend, or compromise that Expense as may be required to retain the benefits of the insurance for that Expense. (e) If an Indemnitee is not a party to this Lease, LESSEE may require that Indemnitee to agree in writing to the terms of this Article 16 before making any payment to such Indemnitee under this Article 16. 16.9 SURVIVAL OF OBLIGATION. Notwithstanding anything in this Lease to the contrary, the provisions of this Article 16 will survive the Termination Date and continue in full force and effect notwithstanding any breach by LESSOR or LESSEE of the terms of this Lease, the termination of the lease of the Aircraft to LESSEE under this Lease or the repudiation by LESSOR or LESSEE of this Lease. ARTICLE 17 INSURANCE 17.1 CATEGORIES OF INSURANCE. Throughout the Lease Term and until the Termination Date LESSEE will, at its own expense, effect and maintain in full force and effect the types of insurance and amounts of insurance (including deductibles) described in Exhibit C through such brokers and with such insurers favorably regarded in the airline industry. 17.2 INSURANCE FOR INDEMNITIES. The insurance referred to in Article 17.1 will in each case include and insure (to the extent of the risks covered by the policies) the indemnity provisions of Article 16 and LESSEE will maintain such insurance of the indemnities for a minimum of two (2) years following the Termination Date. 17.3 INSURANCE REQUIRED BY MANUFACTURER. During the Lease Term, LESSEE will carry the insurance required by Manufacturer in connection with LESSOR's assignment of Manufacturer's warranties and product support to LESSEE. 17.4 RENEWAL. Not less than two (2) Business Days before the expiration or termination date of any insurance required hereunder, LESSEE will provide LESSOR with fax confirmation from LESSEE's insurance brokers that renewed certificates of insurance evidencing the renewal or replacement of such insurance and complying with Exhibit C will be issued on the termination date of the prior certificate. Within seven (7) days after such renewal, LESSEE will furnish its brokers' certificates of insurance to LESSOR. 17.5 ASSIGNMENT OF RIGHTS BY LESSOR. If LESSOR assigns all or any of its rights under this Lease as permitted by this Lease or otherwise disposes of any interest in the Aircraft to any other Person, LESSEE will, upon request, procure that (to the extent of the assignment or disposition) such Person hereunder be added as loss payee and/or additional assured in the policies effected hereunder and enjoy the same rights and insurance enjoyed by LESSOR under such policies. To the extent of its retained interest or as provided in Article 24.2.1, LESSOR will nevertheless continue to be covered by such policies. 17.6 DEDUCTIBLES. If there is a material adverse change in the financial condition of LESSEE which LESSOR reasonably believes will not enable LESSEE to pay the deductible upon the occurrence of a partial loss of the Aircraft or an Engine, then LESSOR may require LESSEE at LESSEE's expense to lower its deductibles on the insurance maintained hereunder to a level which is available on commercially reasonable terms in the insurance market. 17.7 OTHER INSURANCE. LESSOR may from time to time by notice to LESSEE require LESSEE at LESSEE's expense to effect such other insurance or such variations to the terms of the existing insurance as may then be customary in the airline industry for aircraft of the same type as the Aircraft and at the time commonly available in the insurance market. 17.8 INFORMATION. LESSEE will provide LESSOR with any information reasonably requested by LESSOR from time to time concerning the insurance maintained with respect to the Aircraft or in connection with any claim being made or proposed to be made thereunder. 17.9 CURRENCY. All proceeds of insurance pursuant to this Lease will be payable in Dollars except as may be otherwise agreed by LESSOR. 17.10 GROUNDING OF AIRCRAFT. If at any time any of the insurance required pursuant to this Lease will cease to be in full force and effect, LESSEE will forthwith ground the Aircraft and keep the Aircraft grounded until such time as such insurance is in full force and effect again. 17.11 FAILURE TO INSURE. If at any time LESSEE fails to maintain insurance in compliance with this Article 17, LESSOR will be entitled but not bound to do any of the following (without prejudice to any other rights which it may have under this Lease by reason of such failure): (a) to pay any premiums due or to effect or maintain substitute insurance or otherwise remedy such failure in any reasonable manner (and LESSEE will upon demand reimburse LESSOR in full for any amount so expended in that connection); or (b) at any time while such failure is continuing, to require the Aircraft to remain at any airport or (as the case may be), proceed to and remain at any airport designated by LESSOR. 17.12 LIMIT ON HULL IN FAVOR OF LESSEE. LESSEE may carry hull all risks or hull war and allied perils on the Aircraft in excess of the Agreed Value (which Agreed Value is payable to LESSOR) only to the extent such excess insurance which would be payable to LESSEE in the event of a Total Loss does not exceed fifteen percent (15%) of the Agreed Value and only to the extent that such additional insurance will not prejudice the insurances required herein or the recovery by LESSOR thereunder. LESSEE agrees that it will not create or permit to exist any liens or encumbrances over the insurances, or its interest therein, except as constituted by this Lease. 17.13 MARKETPLACE LIMITATIONS. The insurance required by this Lease may be subject to any limitations generally prevailing in the airline insurance marketplace at the time (e.g., AVN67B). ARTICLE 18 LOSS, DAMAGE AND REQUISITION Throughout the Lease Term and until the Termination Date, LESSEE will bear all risk of loss, theft, damage and destruction to the Aircraft. 18.1 DEFINITIONS. In this Article 18: "AGREED VALUE" (CONFIDENTIAL MATERIAL OMITTED) The Agreed Value is set forth in March 2001 U.S. Dollars and will be increased in accordance with Manufacturer's announced escalation rate from March 1, 2001 to the Delivery Date. On each annual renewal date of LESSEE's insurance policy commencing on the renewal date following the first anniversary of the Lease Term, the Agreed Value will decrease by two percent (2.0%) of the then-existing Agreed Value. "NET TOTAL LOSS PROCEEDS" means the Total Loss Proceeds actually received by LESSOR following a Total Loss, less any legal and other out-of-pocket expenses or duties incurred by LESSOR in connection with the collection of such proceeds. "TOTAL LOSS" means any of the following in relation to the Aircraft, Airframe or any Engine and "TOTAL LOSS DATE" means the date set forth in parenthesis after each Total Loss: (a) destruction, damage beyond repair or being rendered permanently unfit for normal use for any reason (the date such event occurs or, if not known, the date on which the Aircraft, Airframe or Engine was last heard of); (b) actual, constructive, compromised, arranged or agreed total loss (the earlier of the date on which the loss is agreed or compromised by the insurers or thirty (30) days after the date of notice to LESSEE's brokers or insurers claiming such total loss); (c) requisition of title, confiscation, forfeiture or any compulsory acquisition of title or other similar event (the date on which the same takes effect); (d) sequestration, detention, seizure or any similar event for more than one hundred eighty (180) consecutive days (the earlier of the date on which insurers make payment on the basis of a total loss or the date of expiration of such period); (e) requisition for use for more than one hundred eighty (180) consecutive days, except as set forth in Article 18.8 (the earlier of the date on which the insurers make payment on the basis of a total loss or the date of expiration of such period); (f) in the case of an Engine, the event described in Article 12.6.3 (the date on which the same takes effect); "TOTAL LOSS PROCEEDS" means the proceeds of any insurance or any compensation or similar payment arising in respect of a Total Loss. 18.2 NOTICE OF TOTAL LOSS. LESSEE will notify LESSOR in writing within two (2) Business Days after a Total Loss Date of the Aircraft, Airframe or any Engine. 18.3 TOTAL LOSS OF AIRCRAFT OR AIRFRAME. If the Total Loss of the Aircraft or Airframe occurs during the Lease Term, the following will occur: 18.3.1 After the Total Loss Date and until receipt by LESSOR of the Agreed Value and all other amounts then due under this Lease, LESSEE will continue to pay Rent and the parties will perform all of their other obligations under this Lease. 18.3.2 On the date which is the earlier of the following dates: (a) the date on which the Total Loss Proceeds of the Aircraft or the Airframe are paid by LESSEE's insurance underwriters or brokers and (b) the date which falls sixty (60) days after the Total Loss Date, LESSEE will pay to LESSOR an amount equal to the sum of: (a) the Agreed Value and (b) all other amounts then due and payable under this Lease, less an amount equal to the Net Total Loss Proceeds received by LESSOR by such date. 18.3.3 LESSOR will apply the Net Total Loss Proceeds and any amounts received from LESSEE pursuant to Article 18.3.2 as follows: (a) first, in discharge of any unpaid Rent and any other amounts accrued and unpaid up to the date of LESSOR's receipt of the Agreed Value; (b) second, in discharge of the Agreed Value; and (c) third, payment of the balance, if any, to LESSEE. 18.3.4 Upon receipt by LESSOR of all monies payable by LESSEE in Article 18.3, provided no Default has occurred and is continuing, this Lease will terminate except for LESSEE's obligations under Articles 10.5, 15 and 16 which survive the Termination Date and the Security Deposit will be returned to LESSEE in accordance with Article 5.3.1. FOR AVOIDANCE OF DOUBT, THE AGREED VALUE OF THE AIRCRAFT WILL BE PAYABLE TO LESSOR PURSUANT TO THIS ARTICLE 18.3 IF A TOTAL LOSS OF THE AIRFRAME OCCURS EVEN IF THERE HAS NOT BEEN A TOTAL LOSS OF AN ENGINE OR ENGINES. 18.4 SURVIVING ENGINE(S). If a Total Loss of the Airframe occurs and there has not been a Total Loss of an Engine or Engines, then provided no Default has occurred and is continuing, at the request of LESSEE (subject to agreement of relevant insurers) and on receipt of all monies due under Article 18.3 and payment by LESSEE of all airport, navigation and other charges on the Aircraft, LESSOR will transfer all of its right, title and interest in the surviving Engine(s) to LESSEE, but without any responsibility, condition or warranty on the part of LESSOR other than as to freedom from any LESSOR's Lien. 18.5 TOTAL LOSS OF ENGINE AND NOT AIRFRAME. 18.5.1 Upon a Total Loss of any Engine not installed on the Airframe or a Total Loss of an Engine installed on the Airframe not involving a Total Loss of the Airframe, LESSEE will replace such Engine as soon as reasonably possible by duly conveying to LESSOR title to another engine (a) free and clear of all Security Interests (except Permitted Liens) of any kind or description, (b) in airworthy condition and of the same or improved model, service bulletin and modification status and having a value and utility at least equal to the Engine which sustained the Total Loss, and (c) not older (by reference to serial number or manufacture date) than three (3) years older than the oldest of the two Engines delivered by LESSOR to LESSEE with the Aircraft on the Delivery Date. Such replacement engine will be an Engine as defined herein and the Engine which sustained such Total Loss will cease to be an Engine. 18.5.2 LESSEE agrees at its own expense to take such action as LESSOR may reasonably request in order that any such replacement Engine becomes the property of LESSOR and is leased hereunder on the same terms as the destroyed Engine. LESSEE's obligation to pay Rent will continue in full force and effect, but an amount equal to the Net Total Loss Proceeds received by LESSOR with respect to such destroyed Engine will, subject to LESSOR's right to deduct therefrom any amounts then due and payable by LESSEE under this Lease, be paid to LESSEE. 18.6 OTHER LOSS OR DAMAGE. 18.6.1 If the Aircraft or any Part thereof suffers loss or damage not constituting a Total Loss of the Aircraft or the Airframe or any Engine, all the obligations of LESSEE under this Lease (including payment of Rent) will continue in full force. 18.6.2 In the event of any loss or damage to the Aircraft or Airframe which does not constitute a Total Loss of the Aircraft or the Airframe, or any loss or damage to an Engine which does not constitute a Total Loss of such Engine, LESSEE will at its sole cost and expense fully repair the Aircraft or Engine in order that the Aircraft or Engine is placed in an airworthy condition and substantially the same condition as it was prior to such loss or damage. All repairs will be performed in accordance with sound airline procedures. LESSEE will notify LESSOR forthwith of any loss, theft or damage to the Aircraft for which the cost of repairs is estimated to exceed Seven Hundred Fifty Thousand U.S. Dollars (US$750,000), together with LESSEE's proposal for carrying out the repair. In the event that LESSOR does not agree with LESSEE's proposals for repair, LESSOR will so notify LESSEE within two (2) Business Days after its receipt of such proposal. LESSEE and LESSOR will then consult with Manufacturer and LESSEE and LESSOR agree to accept as conclusive, and be bound by, Manufacturer's directions or recommendations as to the manner in which to carry out such repairs. If Manufacturer declines to give directions or recommendations, LESSEE will carry out the repairs in accordance with the directions of LESSOR. 18.6.3 To the extent that LESSOR has received insurance proceeds from LESSEE's insurers with respect to any loss or damage, LESSOR will (subject to LESSOR's right to deduct therefrom any amounts then due and payable by LESSEE under this Lease and submission by LESSEE of reasonable documentation confirming the completion of the repairs in accordance with the requirements of this Lease) pay to LESSEE insurance proceeds received by LESSOR as and when such repair work is performed on the Aircraft. 18.7 COPY OF INSURANCE POLICY. Promptly after LESSOR's request following the occurrence of a partial loss or Total Loss of the Aircraft or an Engine, LESSEE will provide LESSOR with a copy of LESSEE's insurance policy. 18.8 GOVERNMENT REQUISITION. If the Aircraft, Airframe or any Engine is requisitioned for use by any Government Entity, LESSEE will promptly notify LESSOR of such requisition. All of LESSEE's obligations hereunder will continue as if such requisition had not occurred. Except if a Default or an Event of Default has occurred and is continuing, all payments received by LESSOR or LESSEE from such Government Entity will be paid over to or retained by LESSEE. 18.9 CONVEYANCE TO LESSEE. Upon compliance by LESSEE with the applicable terms of Article 18.3 or 18.5, LESSOR will transfer to LESSEE the Airframe or Engine(s), as applicable, with respect to which such Total Loss. ARTICLE 19 CRAF PROGRAM 19.1 DEDICATION TO CRAF. LESSEE may transfer possession of the Airframe or any Engine to the United States of America or any instrumentality or agency thereof as part of the Civil Reserve Air Fleet Program authorized under 10 U.S.C. ss. 9511 ET SEQ. (or any substantially similar program) ("CRAF PROGRAM") for a period which includes (collectively, the "CRAF PROGRAM REQUISITION PERIOD") the entire period of requisition under the CRAF Program. If the CRAF Program Requisition Period extends beyond the Expiration Date provided by this Lease, then the Lease will be deemed to continue for six (6) months after the end of the CRAF Program Requisition Period at a monthly rental rate equal to the monthly rental rate during the Lease Term. If such extension extends beyond the Lease Term, then LESSEE will provide LESSOR with written notice of the proposed redelivery by the earlier of six (6) months prior to the proposed redelivery date or five (5) Business Days after the date of receipt of the actual notice given to LESSEE by the government prior to the government's redelivery date and LESSEE will return the Aircraft to LESSOR in the condition required by Article 23 on LESSEE's proposed redelivery date set forth in such notice. 19.2 NOTICE TO LESSOR. LESSEE will promptly notify LESSOR in writing in the event of the requisition for use of the Aircraft under CRAF activation by the U.S. Government. All of LESSEE's obligations under this Lease will continue to the same extent as if such requisition had not occurred. 19.3 REQUISITION OF ENGINE. If there is a requisition for use of any Engine (but not the Airframe) by the U.S. Government in connection with the CRAF Program, LESSEE will replace such Engine by complying with the terms of Article 18.5 hereof. 19.4 GOVERNMENT INDEMNIFICATION. Any provisions of this Lease to the contrary notwithstanding, if there is a requisition for use of the Aircraft pursuant to the CRAF Program and/or CRAF activation, LESSOR agrees that LESSEE's insurances described in Exhibit C may be supplemented by insurances provided under Title XIII of the Act, and/or U.S. Government indemnification (which Title XIII insurances and indemnification will be in amounts not less than those established in Exhibit C); provided, however, that LESSEE will remain responsible for full compliance with all the provisions of this Lease, including Articles 14 and 16, to the extent Title XIII and/or the U.S. Government indemnification do not satisfy LESSEE's obligations under this Lease. 19.5 NO GEOGRAPHIC LIMITS. If there is a requisition for use of the Aircraft pursuant to the CRAF Program and/or CRAF activation, there will be no limitation on the geographic area in which the Aircraft may be operated so long as, taken as a whole, LESSEE's insurance, the Title XIII insurance and/or the indemnification provided by the U.S. Government fully cover (without any geographic exclusions) LESSEE's Exhibit C insurance requirements. 19.6 NOTICE OF DEFAULT. If an Event of Default occurs under this Lease and LESSOR elects to pursue its remedies under Article 25.3(e) to terminate this Lease and repossess the Aircraft, LESSOR will so notify the U.S. Government by sending a written communication as follows: Headquarters Air Mobility Command AMC Contracting Office -- XOKA Scott Air Force Base, Illinois 62225-5007 19.7 RECEIPT OF PAYMENTS. Subject to the following sentence, all payments received by LESSOR or LESSEE from such Government Entity in connection with the requisition of the Aircraft under the CRAF Program will be paid over to or retained by LESSEE. If a Default has occurred and is continuing, all payments received by LESSEE or LESSOR from such Government Entity in connection with the requisition of the Aircraft under the CRAF Program may be used by LESSOR to satisfy any obligations owing by LESSEE. ARTICLE 20 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE 20.1 REPRESENTATIONS AND WARRANTIES. LESSEE represents and warrants the following to LESSOR as of the date of execution of this Lease and as of the Delivery Date: 20.1.1 CORPORATE STATUS. LESSEE is a corporation duly incorporated, validly existing and in good standing under the Laws of Indiana (or, on the Delivery Date, the state of its incorporation). It has the corporate power and authority to carry on its business as presently conducted and to perform its obligations hereunder. 20.1.2 GOVERNMENTAL APPROVALS. No authorization, approval, consent, license or order of, or registration with, or the giving of notice to the Aviation Authority or any other Government Entity is required for the valid authorization, execution, delivery and performance by LESSEE of this Lease, except as will have been duly effected as of the Delivery Date. 20.1.3 BINDING. LESSEE's Board of Directors has authorized LESSEE to enter into this Lease, any Side Letters hereto and any other documentation in connection with the leasing of the Aircraft from LESSOR (collectively, the "OPERATIVE DOCUMENTS") and perform its obligations under the Operative Documents. This Lease and the other Operative Documents have been duly executed and delivered by LESSEE and represent the valid, binding and enforceable obligations of LESSEE except as enforceability may be limited by bankruptcy, insolvency, reorganization or other Laws of general application affecting the enforcement of creditors' rights. When executed by LESSEE at Delivery, the same will apply to the Estoppel and Acceptance Certificate. 20.1.4 NO BREACH. The execution and delivery of the Operative Documents, the consummation by LESSEE of the transactions contemplated herein and compliance by LESSEE with the terms and provisions hereof do not and will not contravene any Law applicable to LESSEE, or result in any breach of or constitute any default under or result in the creation of any Security Interest upon any property of LESSEE, pursuant to any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which LESSEE is a party or by which LESSEE or its properties or assets may be bound or affected. When executed by LESSEE at Delivery, the same will apply to the Estoppel and Acceptance Certificate. 20.1.5 FILINGS. Except for any filing or recording that may be required by the FARs, no filing or recording of any instrument or document (including the filing of any financial statement) is necessary under the Laws of the State of Registration in order for this Lease to constitute a valid and perfected lease of record relating to the Aircraft. 20.1.6 LICENSES. LESSEE holds all licenses, certificates and permits from applicable Government Entities in the U.S. for the conduct of its business as a certificated air carrier and performance of its obligations under this Lease. 20.1.7 NO SUITS. There are no suits, arbitrations or other proceedings pending or threatened before any court or administrative agency against LESSEE which are reasonably likely to be determined adversely and, if adversely determined, would have a material adverse effect on the business, assets or condition (financial or otherwise) of LESSEE or its ability to perform under this Lease, except as described in the filings provided to LESSOR pursuant to Article 22. 20.1.8 GENERAL OBLIGATIONS. The obligations of LESSEE under this Lease are direct, general and unconditional obligations of LESSEE and rank or will rank at least PARI PASSU with all other present and future unsecured and unsubordinated obligations (including contingent obligations) of LESSEE, with the exception of such obligations as are mandatorily preferred by law and not by reason of any encumbrance. 20.1.9 NO SOVEREIGN IMMUNITY. LESSEE, under the Laws of the U.S. or of any other jurisdiction affecting LESSEE, is subject to private commercial law and suit. Neither LESSEE nor its properties or assets is entitled to sovereign immunity under any such Laws. LESSEE's performance of its obligations hereunder constitute commercial acts done for commercial purposes. 20.1.10 TAX RETURNS. All necessary federal and state income tax returns have been delivered by LESSEE to all relevant taxation authorities in the U.S. or any state thereof and LESSEE is not in default in the payment of any taxes due and payable as shown on any such returns or on any assessment received by LESSEE. 20.1.11 NO MATERIAL ADVERSE EFFECT. LESSEE is not in default under any agreement to which it is a party or by which it may be bound which would have a material adverse effect on its business, assets or condition. 20.1.12 NO DEFAULT UNDER THIS LEASE. At the time of execution of this Lease, no Default has occurred and is continuing and the financial statements provided to LESSOR pursuant to Article 22 fairly present the financial condition of LESSEE. 20.2 COVENANTS. LESSEE covenants to LESSOR that it will comply with the following throughout the entire Lease Term: 20.2.1 LICENSING. LESSEE will hold all licenses, certificates and permits from applicable Government Entities in the U.S. for the conduct of its business as a certificated air carrier and performance of its obligations under this Lease. LESSEE will advise LESSOR promptly in the event any such licenses, certificates or permits are cancelled, terminated, revoked or not renewed. 20.2.2 SOVEREIGN IMMUNITY. LESSEE, under the Laws of the U.S. or of any other jurisdiction affecting LESSEE, will continue to be subject to private commercial law and suit. Neither LESSEE nor its properties or assets will be entitled to sovereign immunity under any such Laws. LESSEE's performance of its obligations hereunder will constitute commercial acts done for commercial purposes. LESSEE will advise LESSOR promptly of any change in the foregoing. 20.2.3 INFORMATION ABOUT SUITS. LESSEE will promptly give to LESSOR a notice in writing of any suit, arbitration or proceeding against LESSEE before any court, administrative agency or Government Entity which is reasonably likely to be determined adversely and, if adversely determined, would materially adversely affect LESSEE's financial condition, affairs, operations or its ability to perform under this Lease. 20.2.4 MERGER OF LESSEE. (a) LESSEE shall not consolidate with or merge into any other Person under circumstances in which LESSEE is not the surviving corporation, or convey, transfer, or lease in one or more transactions all or substantially all of its assets to any other Person, unless: (i) such Person is organized, existing, and in good standing under the Laws of the U.S., any state of the U.S., or the District of Columbia, and, upon consummation of such transaction, such Person will be a U.S. Air Carrier; (ii) such Person executes and delivers to LESSOR a duly authorized, legal, valid, binding and enforceable agreement, reasonably satisfactory in form and substance to LESSOR, containing an effective assumption by such Person of the due and punctual performance and observance of each covenant, agreement and condition in the Operative Documents to be performed or observed by LESSEE; (iii) such Person makes such filings and recordings with the FAA pursuant to the Act as shall be necessary to evidence such consolidation or merger; (iv) LESSEE furnishes LESSOR an opinion of counsel reasonably satisfactory to LESSOR to the effect that such consolidation or merger has satisfied at the closing of such consolidation or merger items (i), (ii) and (iii) above; (v) immediately after giving effect to such consolidation or merger, no Default or Event of Default exists; (vi) unless LESSOR otherwise consents, immediately after giving effect to such consolidation or merger, such Person will have a tangible net worth of not less than sixty-five percent (65%) of the LESSEE's tangible net worth immediately prior to such merger; and (vii) upon such merger becoming effective, LESSOR will enjoy the same degree of protection under ss. 1110 of the Bankruptcy Code with respect to the Aircraft as LESSOR enjoyed prior to such merger. (b) Upon any such consolidation or merger of LESSEE with or into, or the conveyance, transfer, or lease by LESSEE of all or substantially all of its assets to, any Person in accordance with this Article 20.2.4, such Person will succeed to, and be substituted for, and may exercise every right and power of, LESSEE under the Operative Documents with the same effect as if such Person had been named as "LESSEE" therein. No such consolidation, merger, conveyance, transfer, or lease shall have the effect of releasing LESSEE or such Person from any of LESSEE's obligations, liabilities, covenants, or undertakings under this Lease. 20.2.5 RESTRICTION ON RELINQUISHMENT OF POSSESSION. LESSEE will not, without the prior consent of LESSOR, deliver, transfer or relinquish possession of the Aircraft except in accordance with Articles 11 and 12. 20.2.6 NO SECURITY INTERESTS. LESSEE will not create or agree to or permit to arise any Security Interest (other than Permitted Liens) on or with respect to the Aircraft, title thereto or any interest therein. LESSEE will forthwith, at its own expense, take all action as may be necessary to discharge or remove any such Security Interest if it exists at any time. LESSEE will within five (5) Business Days after becoming aware of the existence of any such Security Interest give written notice thereof to LESSOR. 20.2.7 REPRESENTATIONS TO OTHER PARTIES. LESSEE will not represent or hold out LESSOR as carrying goods or passengers on the Aircraft or as being in any way connected or associated with any operation of the Aircraft. ARTICLE 21 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSOR 21.1 REPRESENTATIONS AND WARRANTIES. LESSOR represents and warrants the following to LESSEE as of the date of execution of the Lease and as of the Delivery Date and ALL OTHER WARRANTIES, EXPRESS OR IMPLIED HAVE BEEN WAIVED IN ACCORDANCE WITH ARTICLE 8: 21.1.1 CORPORATE STATUS. LESSOR is a corporation duly incorporated, validly existing and in good standing under the Laws of the State of California. It has the corporate power and authority to carry on its business as presently conducted and to perform its obligations hereunder. 21.1.2 GOVERNMENTAL APPROVALS. No authorization, approval, consent, license or order of, or registration with, or the giving of notice to any U.S. Government Entity is required for the valid authorization, execution, delivery and performance by LESSOR of this Lease. 21.1.3 BINDING. This Lease and the other Operative Documents have been duly authorized, executed and delivered by LESSOR and represent the valid, enforceable and binding obligations of LESSOR except as enforceability may be limited by bankruptcy, insolvency, reorganization or other Laws of general application affecting the enforcement of creditors' rights. 21.1.4 NO BREACH. The execution and delivery of the Operative Documents, the consummation by LESSOR of the transactions contemplated herein and compliance by LESSOR with the terms and provisions hereof do not and will not contravene any Law applicable to LESSOR, or result in any breach of or constitute any default under any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which LESSOR is a party or by which LESSOR or its properties or assets may be bound or affected. 21.1.5 TITLE TO AIRCRAFT. On the Delivery Date LESSOR will have good and valid title to the Aircraft. 21.1.6 CITIZENSHIP. LESSOR is a "citizen of the United States" within the meaning of 49 U.S. Code 40102(a)(15). 21.1.7 INVESTMENT BY LESSOR. LESSOR is acquiring its interest in the Aircraft for its own account from its corporate funds, for investment and not with a view to any resale or distribution thereof that would require registration under the Securities Act of 1933; PROVIDED, HOWEVER, that subject to the transfer restrictions in Article 24.2, its disposition of its interest in the Aircraft shall at all times be within its control. 21.2 COVENANT OF QUIET ENJOYMENT. So long as no Event of Default has occurred and is continuing hereunder, LESSOR covenants that neither LESSOR nor any person lawfully claiming through LESSOR will interfere with LESSEE's quiet, peaceful use and enjoyment of the Aircraft. ARTICLE 22 FINANCIAL AND RELATED INFORMATION LESSEE agrees to furnish each of the following to LESSOR: (a) within sixty (60) days after the end of each fiscal quarter of LESSEE, the unaudited consolidated financial statements (including a balance sheet and profit and loss statement) prepared for such quarter in accordance with generally accepted accounting principles in the U.S.; (b) within one hundred twenty (120) days after the end of each fiscal year of LESSEE, the audited consolidated financial statements (including a balance sheet and profit and loss statement) prepared as of the close of such fiscal year in accordance with generally accepted accounting principles in the U.S. LESSEE's chief financial officer will also provide a certificate of LESSEE stating that, to such officer's knowledge, no Default exists under this Lease (or if, to such officer's knowledge, a Default does exist, identifying it); (c) promptly after distribution, all reports and financial statements which Amtran, Inc. sends or makes generally available to its stockholders or creditors; and (d) from time to time, such other reasonable information as LESSOR or LESSOR's Lender may reasonably request concerning the location, condition, use and operation of the Aircraft or the financial condition of LESSEE. ARTICLE 23 RETURN OF AIRCRAFT 23.1 DATE OF RETURN. LESSEE is obligated to return the Aircraft, Engines Parts and Aircraft Documentation to LESSOR on the Expiration Date, unless a Total Loss of the Aircraft occurred prior to the Expiration Date and this Lease was terminated early in accordance with Article 18.3. If LESSEE is in Default hereunder by failing to return the Aircraft on the Expiration Date or if an Event of Default occurs prior to the Expiration Date and LESSOR repossesses the Aircraft, the return requirements set forth in this Article 23 nonetheless must be met on the date the Aircraft is actually returned to LESSOR or repossessed by LESSOR. 23.2 TECHNICAL REPORT. Six (6) months prior to the Expiration Date (and in an updated form at return of the Aircraft), LESSEE will provide LESSOR with a Technical Evaluation Report in the form and substance of Exhibit L, as revised, and, in addition upon LESSOR's request, will make copies available of (a) drawings of the interior configuration of the Aircraft both as it presently exists and as it will exist at return, (b) an Airworthiness Directive status list, (c) a service bulletin incorporation list, (d) rotable tracked, hard-time and life-limited component listings, (e) a list of LESSEE-initiated modifications and alterations, (f) interior material burn certificates, (g) the Aircraft Maintenance Program, (h) the complete workscope for the checks, inspections and other work to be performed prior to return, (i) a list of all no-charge service bulletin kits with respect to the Aircraft which were ordered by LESSEE from Manufacturer or Engine manufacturer, (j) current Engine disk sheets and a description of the last shop visit for each Engine and (k) any other data which is reasonably requested by LESSOR. 23.3 RETURN LOCATION. LESSEE at its expense will return the Aircraft, Engines, Parts and Aircraft Documentation to LESSOR at Indianapolis International Airport, Indianapolis, Indiana or to such other airport as may be mutually agreed to by LESSEE and LESSOR. 23.4 FULL AIRCRAFT DOCUMENTATION REVIEW. For the period commencing at least ten (10) Business Days prior to the proposed redelivery date and continuing until the date on which the Aircraft is returned to LESSOR in the condition required by this Lease, LESSEE will provide for the review of LESSOR and/or its representative all of the Aircraft records and historical documents described in Exhibit K in one central room at the Aircraft return location. 23.5 AIRCRAFT INSPECTION. 23.5.1 During the maintenance checks performed immediately prior to the proposed redelivery and at the actual return of the Aircraft, LESSOR and/or its representatives will have an opportunity to conduct a full systems functional and operational inspection of the Aircraft (and other types of reasonable inspections based upon the Aircraft type, age, use and other known factors with respect to the Aircraft) and a full inspection of the Aircraft Documentation (including records and manuals), all to LESSOR's satisfaction. The inspection will occur during the Return Check when the panels, bays or the like are open and certain Parts are disassembled. LESSOR may inspect such opened panels, bays or the like and the disassembled Parts so long as LESSOR does not disrupt the Return Check or cause such Return Check to be extended beyond the anticipated completion date of such Return Check. Any deficiencies from the Aircraft return condition requirements set forth in this Article 23 will be corrected by LESSEE at its cost prior to the acceptance flight described in Article 23.5.2. 23.5.2 Immediately prior to the proposed redelivery of the Aircraft, LESSEE will carry out for LESSOR and/or LESSOR's representatives an Aircraft acceptance flight in accordance with Manufacturer's standard flight operation check flight procedures or, if agreed to in writing by LESSOR, in accordance with an airline acceptance flight procedure, either of which will be for the duration necessary to perform such check flight procedures but in any event not less than two (2) hours. Flight costs and fuel will be furnished by and at the expense of LESSEE. Any deficiencies from the Aircraft return condition requirements set forth in this Article 23 will be corrected by LESSEE at its cost prior to return of the Aircraft. 23.5.3 To the extent that the ground inspection and acceptance flight extend beyond the Expiration Date, the Lease Term will be deemed to have been automatically extended and the obligations of LESSEE hereunder (including Article 23.11.3) will continue on a day-to-day basis until the Aircraft is accepted by LESSOR executing the Return Acceptance Receipt in the form of Exhibit I. 23.6 CERTIFICATE OF AIRWORTHINESS MATTERS. 23.6.1 The Aircraft will possess a current Certificate of Airworthiness issued by the Aviation Authority (although this Certificate of Airworthiness may later be substituted by the Export Certificate of Airworthiness or equivalent if requested by LESSOR pursuant to Article 23.10). The Aircraft at return must be in the condition required in order to meet the requirements of a U.S. Standard Certificate of Airworthiness for transport category aircraft issued by the FAA in accordance with FAR Part 21 and, in addition, to meet the operating requirements of FAR Part 121. 23.6.2 LESSEE at its cost will demonstrate that the Aircraft meets the requirements for issuance of the U.S. Standard Certificate of Airworthiness for transport category aircraft specified in Article 23.6.1 by delivering to LESSOR an actual U.S. Standard Certificate of Airworthiness. If there is a dispute in regards to the condition of the Aircraft or the Aircraft Documentation, then LESSEE will provide LESSOR with a letter acceptable to LESSOR signed by an FAA Designated Airworthiness Representative (DAR) or another Person acceptable to LESSOR stating that the DAR or such Person has inspected the Aircraft and Aircraft Documentation (including records and manuals) and has found that the Aircraft meets the requirements for issuance of a U.S. Standard Certificate of Airworthiness for transport category aircraft in accordance with FAR Part 21 and, in addition, meets the operating requirements of FAR Part 121. 23.6.3 If the Aircraft is to be registered in a country other than in the U.S. after return from LESSEE, LESSOR may in its sole discretion waive the requirements of Article 23.6.2 and instead require that LESSEE at its expense (to the extent such expense is no greater than that which LESSEE would have incurred pursuant to Articles 23.6.1 and 23.6.2, with any additional expenses being for LESSOR's account) put the Aircraft in a condition to meet the requirements for issuance of a Certificate of Airworthiness of the Aviation Authority of the next country of register. 23.7 GENERAL CONDITION OF AIRCRAFT AT RETURN. 23.7.1 The Aircraft, Engines and Parts will have been maintained and repaired in accordance with the Maintenance Program, the rules and regulations of the Aviation Authority and this Lease. 23.7.2 Aircraft Documentation (including records and manuals) will have been maintained in an up-to-date status, in accordance with the rules and regulations of the Aviation Authority and the FAA and this Lease and in a form necessary in order to meet the requirements of Article 23.6.2. The records and historical documents set forth in Attachment 1 of Exhibit I will be in English. 23.7.3 The Aircraft will be in the same working order and condition as at Delivery (subject to the other provisions of this Article 23, reasonable wear and tear from normal flight operations excepted), with all pilot discrepancies and deferred maintenance items cleared on a terminating action basis. 23.7.4 The Aircraft will be airworthy (conform to type design and be in a condition for safe operation), with all Aircraft equipment, components and systems operating in accordance with their intended use and within limits approved by the Manufacturer, Aviation Authority and FAA. 23.7.5 The Aircraft interior (including cabin and windows) and exterior will be clean and all compartments will be reasonably free of foreign objects, dirt, grease, fluids, stains, grime, cracks, tears and rips (with the exception of normal wear and tear) and ready to be placed into immediate commercial airline operations. 23.7.6 No special or unique Manufacturer, Engine manufacturer or Aviation Authority inspection or check requirements which are specific to the Aircraft or Engines (as opposed to all aircraft or engines of their types) will exist with respect to the Airframe, Engines and Aircraft equipment, components and systems. 23.7.7 All repairs, modifications and alterations to the Aircraft will have been accomplished in accordance with Manufacturer's Structural Repair Manual (or FAA-approved data supported by FAA Form 8110-3) for the Aircraft. 23.7.8 The Aircraft will be returned with LESSOR's Engines installed and with the same equipment as at Delivery, subject only to those replacements, additions and Modifications permitted under this Lease. LESSEE will inform LESSOR of whether LESSEE will be able to redeliver the Engines with the Aircraft and the proposed replacement engines that LESSEE wants to provide LESSOR in place of the Engines. LESSEE will provide LESSOR with whatever data, records and information that LESSOR reasonably requests in order to evaluate the proposed replacement engines. In the event that LESSEE is unable to return either of the Engines in the conditions required by this Article 23, then LESSEE may provide a replacement engine (a "REPLACEMENT ENGINE") for such Engine to LESSOR by duly conveying to LESSOR as owner hereunder title to another engine of the same manufacturer and of the same or an improved model as the Engine being replaced and suitable for installation and use on the Aircraft, which engine shall be free and clear of all Security Interests, and shall be no more than three (3) years older by reference to serial number than the replaced Engine and have a modification status, value and utility at least equal to the Engine which such Replacement Engine is replacing on the Aircraft assuming that such Engine which such Replacement Engine is replacing was then of the value, utility, condition, and airworthiness required to be maintained by the terms of this Lease. Such Replacement Engine, after approval and acceptance by LESSOR, shall be deemed an "Engine" as defined herein for all purposes hereunder. LESSEE agrees to take such action as LESSOR may reasonably request in order that such Replacement Engine shall be duly and properly titled in the name of LESSOR. Prior to or at the time of any such conveyance, LESSEE, at its own expense, will promptly: (a) furnish LESSOR with a warranty bill of sale, in form and substance satisfactory to LESSOR, with respect to such Replacement Engine, (b) furnish LESSOR with such evidence of title to such Replacement Engine as reasonably requested by LESSOR, and (c) furnish LESSOR with an opinion of LESSEE's counsel to the effect that title to such Replacement Engine has been duly conveyed to LESSOR free and clear of all Security Interests of any kind or nature and that such exchange qualifies for tax free treatment under the Internal Revenue Code of 1986, as amended. Upon full compliance with this Article, LESSOR shall transfer to LESSEE all of LESSOR's right, title and interest, on an "AS-IS", "WHERE-IS" basis in and to the Engine being replaced by such Replacement Engine, without recourse or warranty, express or implied, except that LESSOR has good and marketable title to such Engine and such Engine shall be free and clear of LESSOR's Liens. 23.7.9 All Airworthiness Directives which are issued prior to the date of return of the Aircraft and require compliance (either by means of repetitive inspections, modifications or terminating action) prior to return of the Aircraft to LESSOR or within one (1) year after the Termination Date will have been complied with on the Aircraft on a terminating action basis at LESSEE's cost. Airworthiness Directives which do not have a terminating action will be accomplished at the highest level of inspection or modification possible. If, after using best efforts, LESSEE is unable to acquire the material, parts or components necessary to accomplish such Airworthiness Directive, LESSEE will pay to LESSOR upon return of the Aircraft the estimated cost of terminating such Airworthiness Directive. If the estimated cost cannot be mutually agreed upon by LESSEE and LESSOR, LESSEE and LESSOR will each obtain an estimate from a reputable FAA-approved maintenance facility (unaffiliated with LESSEE or LESSOR) and the estimated cost will be the average of the two estimates. 23.7.10 The Aircraft will be in compliance with the Corrosion Prevention and Control Program (CPCP) specified in LESSEE's Maintenance Program. 23.7.11 If any waivers, deviations, dispensations, alternate means of compliance, extensions or carry-overs with respect to maintenance or operating requirements, repairs or Airworthiness Directives are granted by the Aviation Authority or permitted by the Maintenance Program, LESSEE at its sole cost and expense will nonetheless perform such maintenance or operating requirements, repairs or Airworthiness Directives as if such waivers, deviations, dispensations, alternate means of compliance, or extensions or carry-overs did not exist. 23.7.12 The Aircraft will be free from any Security Interest except LESSOR's Liens and no circumstance will have so arisen whereby the Aircraft is or could become subject to any Security Interest or right of detention or sale in favor of the Aviation Authority, any airport authority, or any other authority. 23.7.13 All no-charge vendor and Manufacturer's service bulletin kits received by LESSEE for the Aircraft but not installed thereon will be on board the Aircraft as cargo. At LESSOR's request, any other service bulletin kit which LESSEE paid for will also be delivered to LESSOR on board the Aircraft, but LESSOR will reimburse LESSEE for its actual out-of-pocket costs for such kit, unless LESSEE purchased such kit as part of its implementation of a service bulletin on its fleet of aircraft of the same type as the Aircraft but had not yet installed such kit on the Aircraft, in which case such kit will be furnished free of charge to LESSOR. 23.7.14 The Aircraft will be free of any leaks and any damage resulting therefrom. All repairs will have been performed on a permanent basis in accordance with the applicable manufacturer's instructions. 23.7.15 The Aircraft fluid reservoirs (including oil, oxygen, hydraulic and water) will be serviced to full and the waste tank serviced in accordance with Manufacturer's instructions. (Fuel tanks will be at least as full as at Delivery.) 23.8 CHECKS PRIOR TO RETURN. Immediately prior to return of the Aircraft to LESSOR, LESSEE at its expense will do each of the following: 23.8.1 Have performed, and completed, by an FAA-approved repair station, all maintenance tasks specified in LESSEE's Maintenance Program and the MPD which (a) are necessary to clear the Aircraft of all such tasks for eighteen (18) months, five thousand (5,000) hours, and three thousand (3,000) cycles from the date of return of the Aircraft, and (b) are required to be performed at lesser intervals than eighteen (18) months, five thousand (5,000) hours or three thousand (3,000) cycles (all such work collectively referred to as the "RETURN CHECK"). If a maintenance task is specific to LESSEE's Maintenance Program and not required or recommended to be performed by the MPD, then LESSEE will not be required to perform such maintenance task so long as the Return Check is performed in such a manner that clears the Aircraft of all maintenance tasks in accordance with the requirements of the preceding sentence. As part of the Return Check, all non-routine tasks generated as a result of the performance of the work included in the Return Check and any other discrepancies revealed during the Return Check must also be performed in accordance with the FAA approved procedures. LESSEE will also weigh the Aircraft. LESSEE agrees to perform during the Return Check any other work reasonably required by LESSOR (and not otherwise required under this Lease) and LESSOR will, promptly upon receipt of an invoice from LESSEE, reimburse LESSEE for such work at LESSEE's preferred customer rates. 23.8.2 Have the Aircraft in compliance with Corrosion Prevention and Control Program (CPCP) as specified in the MPD and LESSEE's Maintenance Program. 23.8.3 Remove LESSEE's exterior markings, including all exterior paint, by stripping (or, at LESSOR's option, pneumatically scuff/sanding) the paint from the fuselage, empennage, wings and Engine cowlings, and clean, reseal, refinish, prepare (including application of alodine or another corrosion inhibitor) and prime the surfaces to be painted, all in accordance with Manufacturer's and paint manufacturer's recommendations. LESSEE will then repaint the fuselage, empennage, wings and Engine cowlings in the colors and logo specified by LESSOR ; PROVIDED, HOWEVER, that LESSEE will be responsible for only paying the amount that it would cost to strip or scuff/sand (whichever is performed on the Aircraft at return) and properly paint the Aircraft in LESSEE's colors and logo and LESSOR will be responsible for the excess cost to paint the Aircraft in the next lessee's colors and logo. Such painting will be accomplished in such a manner as to result in a uniformly smooth and cosmetically acceptable aerodynamic surface. All external placards, signs and markings will be properly attached, free from damage, clean and legible. 23.8.4 Clean the exterior and interior of the Aircraft. 23.8.5 If reasonably required by LESSOR, apply touch up to paint to the interior of the Aircraft, including flight deck, and replace any missing or broken placards. 23.8.6 In accordance with Article 23.7.7, permanently repair damage to the Aircraft that exceeds Manufacturer's limits and replace any non-flush structural patch repairs installed on the Aircraft with flush-type repairs, so long as the Manufacturer or the Manufacturer's Structural Repair Manual permits flush-type repairs on the portion of the Aircraft where the non-flush structural repairs were made. 23.8.7 With LESSOR or its representatives present, perform a full and complete hot and cold section videotape borescope on each Engine and its modules in accordance with the Engine manufacturer's maintenance manual. 23.8.8 If the Engine historical and technical records and/or condition trend monitoring data of any Engine (including the APU) indicate an acceleration in the rate of deterioration in the performance of an Engine, LESSEE will correct, to LESSOR's satisfaction, such conditions which are determined to be causing such accelerated rate of deterioration. 23.8.9 With LESSOR or its representatives present, accomplish a maximum power assurance run on the Engines. LESSEE will evaluate the Engine performance and record the Engine maximum power assurance test conditions and results on the Return Acceptance Receipt. 23.8.10 LESSEE will provide evidence to LESSOR's satisfaction that the Engine historical and technical records, borescope inspection, trend monitoring and other checks specified in Article 23.8.9 do not reveal any condition which would cause the Engines or any module to be unserviceable, beyond serviceable limits or serviceable with an increased frequency of inspection or with calendar time, flight hour or flight cycle restrictions under the Engine manufacturer's maintenance manual. LESSEE will correct any discrepancies in accordance with the guidelines set out by the Engine manufacturer which may be discovered during such inspection. 23.8.11 In the event the Engine historical and technical records, borescope inspection, trend monitoring and other checks specified in Article 23.8.9 result in a dispute regarding the conformity of an Engine with the requirements of this Article 23, LESSEE and LESSOR will consult with Engine manufacturer and follow Engine manufacturer's recommendations (including the accomplishment of an Engine test cell operational check) with regard to determining if such Engine complies with the requirements of this Article 23 and the manner in which any discrepancies from the requirements of this Article 23 will be rectified. 23.9 PART LIVES. At return, the condition of the Aircraft will be as follows: (CONFIDENTIAL MATERIAL OMITTED) 23.10 EXPORT AND DEREGISTRATION OF AIRCRAFT. At LESSOR's request, LESSEE at its cost will (a) provide an Export Certificate of Airworthiness or its equivalent from the State of Registration so that the Aircraft can be exported to the country designated by LESSOR, (b) assist with deregistration of the Aircraft from the register of aircraft in the State of Registration, (c) assist with arranging for prompt confirmation of such deregistration to be sent by the registry in the State of Registration to the next country of registration and (d) perform any other acts reasonably required by LESSOR in connection with the foregoing. If any Aircraft work which LESSEE is not otherwise required to perform hereunder, including engineering, is required in order to obtain such Export Certificate of Airworthiness, LESSEE will perform such work and LESSOR will reimburse LESSEE for such work at LESSEE's preferred customer rates. 23.11 LESSEE'S CONTINUING OBLIGATIONS. In the event that LESSEE does not return the Aircraft to LESSOR on the Expiration Date and in the condition required by this Article 23 for any reason (whether or not the reason is within LESSEE's control): 23.11.1 the obligations of LESSEE under this Lease will continue in full force and effect on a day-to-day basis until such return. This will not be considered a waiver of LESSEE's Event of Default or any right of LESSOR hereunder. 23.11.2 Until such return, the Agreed Value will be an amount equal to the Agreed Value on the day the Aircraft should have been returned to LESSOR pursuant to this Lease. 23.11.3 LESSEE will fully indemnify LESSOR on demand for all losses (including consequential damages), liabilities, actions, proceedings, costs and expenses thereby suffered or incurred by LESSOR and, in addition, if a delay in return of the Aircraft was due to reasons within LESSEE's reasonable control, then until such time as the Aircraft is redelivered to LESSOR and put into the condition required by this Article 23, instead of paying the Rent specified in Article 5.3, LESSEE will pay twice the amount of Rent for each day from the scheduled Expiration Date until the Termination Date (the monthly Rent payable under Article 5.3.1 will be prorated based on the actual number of days in the applicable month). Payment will be made upon presentation of LESSOR's invoice. 23.11.4 LESSOR may elect, in its sole and absolute discretion, to accept the return of the Aircraft prior to the Aircraft being put in the condition required by this Article 23 and thereafter have any such non-conformance corrected at such time as LESSOR may deem appropriate (but within ninety (90) days following the return of the Aircraft) and at commercial rates then-charged by the Person selected by LESSOR to perform such correction. Any direct expenses incurred by LESSOR for such correction will become additional Rent payable by LESSEE within fifteen (15) days following the submission of a written statement by LESSOR to LESSEE, identifying the items corrected and setting forth the expense of such corrections. LESSEE's obligation to pay such supplemental Rent will survive the Termination Date. 23.12 AIRPORT AND NAVIGATION CHARGES. LESSEE will ensure that at return of the Aircraft any and all airport, navigation and other charges which give rise or may if unpaid give rise to any lien, right of detention, right of sale or other Security Interest in relation to the Aircraft, Engine or any Part have been paid and discharged in full and will at LESSOR's request produce evidence thereof satisfactory to LESSOR. 23.13 RETURN ACCEPTANCE CERTIFICATE. Upon return of the Aircraft in accordance with the terms of this Lease, LESSEE will prepare and execute two (2) Return Acceptance Certificates in the form and substance of Exhibit I and LESSOR will countersign and return one such Return Acceptance Certificate to LESSEE. In addition, LESSEE and LESSOR will execute a Lease Termination for filing with the FAA evidencing termination of this Lease. 23.14 INDEMNITIES AND INSURANCE. The indemnities and insurance requirements set forth in Articles 16 and 17, respectively, will apply to Indemnitees and LESSOR's representatives during return of the Aircraft, including the ground inspection and acceptance flight. With respect to the acceptance flight, LESSOR's representatives will receive the same protections as LESSOR on LESSEE's Aviation and Airline General Third Party Liability Insurance. ARTICLE 24 ASSIGNMENT 24.1 NO ASSIGNMENT BY LESSEE. EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED BY THE TERMS OF THIS LEASE, NO ASSIGNMENT, NOVATION, TRANSFER, MORTGAGE OR OTHER CHARGE MAY BE MADE BY LESSEE OF ANY OF ITS RIGHTS WITH RESPECT TO THE AIRCRAFT, ENGINE OR PART OF THIS LEASE. 24.2 SALE OR ASSIGNMENT BY LESSOR. 24.2.1 Subject to LESSEE's rights pursuant to this Lease, LESSOR may at any time and without LESSEE's consent sell, assign or transfer its rights, interest and obligations hereunder or with respect to the Aircraft to a third party ("LESSOR'S ASSIGNEE"), but only if: (a) LESSOR's Assignee has full power, authority, and legal right to execute, deliver, and perform the obligations of LESSOR under the Operative Documents and provides reasonably satisfactory evidence of such power and authority to LESSEE; (b) LESSOR's Assignee enters into one or more legal, valid, binding and enforceable agreements effective to confirm that LESSOR's Assignee agrees to be bound by all the terms of, and to undertake all of the obligations arising after such transfer of LESSOR in, the Operative Documents, and in which it makes representations and warranties substantially the same as those in Article 21.1 of this Lease; (c) upon such transfer LESSEE shall not be obligated to pay any greater amount or incur any greater obligation (other than indemnifying additional indemnitees, insuring additional insureds and other minor ministerial matters) than that which it would have been obliged to pay or incur under the Operative Documents if no transfer or assignment had taken place, and upon such transfer the terms and conditions of the Operative Documents insofar as they relate to the rights and obligations of LESSEE are not altered; (d) LESSOR shall cause LESSOR's Assignee to deliver to LESSEE an opinion of counsel reasonably satisfactory to LESSEE to the effect that such agreement or agreements referred to in clause (2) and, if applicable, clause (6) are legal, binding, and enforceable in accordance with its or their terms, subject to the typical exceptions. (e) the transfer shall relate to LESSOR's entire interest as owner or lessor; (f) LESSOR's Assignee is a citizen of the United States under 49 U.S. Code ss.40102(a)(15) (such status to be determined without considering FAR ss.47.9 or any other provision that may restrict LESSEE's use or operation of the Aircraft), or shall use a voting powers trust or similar arrangement in order to hold an interest in the Aircraft such that the Aircraft can be registered in the U.S. (without considering FAR ss.47.9 or any other provision that may restrict LESSEE's use or operation of the Aircraft); (g) LESSOR's Assignee is a single Person and is either (i) a Permitted Institution, or (ii) or an affiliate of a Permitted Institution, if such affiliate's obligations under the Operative Documents are guaranteed by such Permitted Institution pursuant to a written guaranty, in form and substance reasonably satisfactory to LESSEE; and (h) LESSOR shall give written notice to LESSEE at least five (5) days before any such transfer, specifying the name and address of the proposed LESSOR's Assignee, and providing reasonably satisfactory evidence that the proposed LESSOR's Assignee meets the requirements described in Article 24.2.1(g)(i) or (ii). For a period of two (2) years after such sale or assignment and at LESSEE's cost, LESSEE will continue to name LESSOR as an additional insured under the Aviation and Airline General Third Party Liability Insurance required pursuant to Article 17 and Exhibit C. 24.2.2 The term "LESSOR" as used in this Lease means the lessor of the Aircraft at the time in question. In the event of the sale of the Aircraft and transfer of LESSOR's rights and obligations under this Lease, LESSOR's Assignee will become "LESSOR" of the Aircraft under this Lease and the transferring party (the prior "LESSOR") will be relieved of all liability to LESSEE under this Lease for obligations arising on and after the date the Aircraft is sold. LESSEE will acknowledge and accept LESSOR's Assignee as the new "LESSOR" under this Lease and will look solely to LESSOR's Assignee for the performance of all LESSOR obligations and covenants under this Lease arising on and after the Aircraft sale date. 24.3 LESSOR'S LENDER. Subject to LESSEE's rights pursuant to this Lease, LESSOR may at any time and without LESSEE's consent grant security interests over the Aircraft and assign the benefit of this Lease to a lender ("LESSOR'S LENDER") as security for LESSOR's obligations to LESSOR's Lender. Accordingly, if LESSOR's Lender requires, as a condition to providing financing, any nonsubstantive modification of this Lease, LESSEE agrees to enter into an agreement so modifying this Lease. 24.4 LESSEE COOPERATION. On request by LESSOR, LESSOR's Assignee or LESSOR's Lender, LESSEE will execute all such documents (such as a lease assignment agreement) as LESSOR, LESSOR's Assignee or LESSOR's Lender may reasonably require to confirm LESSEE's obligations under this Lease and obtain LESSEE's acknowledgment that to the best of LESSEE's knowledge, LESSOR is not in breach of this Lease. LESSEE will provide all other reasonable assistance and cooperation to LESSOR, LESSOR's Assignee and LESSOR's Lender in connection with any such sale or assignment or the perfection and maintenance of any such security interest, at LESSOR's cost, including making all necessary filings and registrations in the State of Registration and providing all opinions of counsel with respect to matters reasonably requested by LESSOR, LESSOR's Lender or LESSOR's Assignee. LESSOR will reimburse LESSEE for its reasonable out-of-pocket costs in reviewing documents required by LESSOR or LESSOR's Lender. 24.5 PROTECTIONS. 24.5.1 LESSOR will obtain for the benefit of LESSEE an acknowledgment from any LESSOR's Assignee or LESSOR's Lender that, so long as no Event of Default has occurred and is continuing hereunder, such Person will not interfere with LESSEE's quiet, peaceful use and enjoyment of the Aircraft. 24.5.2 Wherever the term "LESSOR" is used in this Lease in relation to any of the provisions relating to disclaimer, title and registration, indemnity and insurance contained in Articles 8, 13, 16 and 17, respectively, or with respect to Article 20.2.7, the term "LESSOR" will be deemed to include LESSOR's Assignee and LESSOR's Lender, if applicable. For avoidance of doubt, in the event of LESSOR's sale or financing of the Aircraft, the disclaimer and indemnity provisions contained in Articles 8 and 16 will continue to be applicable after the sale or assignment to International Lease Finance Corporation, as well as being applicable to LESSOR's Assignee and LESSOR's Lender. ARTICLE 25 DEFAULT OF LESSEE 25.1 LESSEE NOTICE TO LESSOR. LESSEE will promptly notify LESSOR if LESSEE becomes aware of the occurrence of any Default. 25.2 EVENTS OF DEFAULT. The occurrence of any of the following will constitute an Event of Default and material breach of this Lease by LESSEE: (a) LESSEE fails to take delivery of the Aircraft when obligated to do so under the terms of this Lease; (b) LESSEE fails to make a Rent or other payment due hereunder in the manner and by the date provided herein and fails to make such payment within five (5) Business Days after its receipt of notice that such payment is due; (c) LESSEE fails to obtain or maintain the insurance required by Article 17; (d) LESSEE fails to return the Aircraft to LESSOR on the Expiration Date in accordance with Article 23; (e) LESSEE fails to observe or perform any of its other obligations hereunder and fails to cure the same within thirty (30) days after written notice thereof to LESSEE; provided, that LESSEE will have up to a total of sixty (60) days to cure such failure so long as it uses diligent efforts to do so; (f) any representation or warranty of LESSEE herein proves to have been untrue in any material respect when made; provided, that, if the effect of such falsity is curable, LESSEE shall have thirty (30) days after LESSEE has knowledge that the representation or warranty is untrue; (g) the registration of the Aircraft is cancelled other than as a result of an act or omission of LESSOR; (h) LESSEE abandons the Aircraft or Engines; (i) LESSEE or an approved sublessee no longer has unencumbered control (other than Permitted Liens) or possession of the Aircraft or Engines, except as otherwise permitted by this Lease; (j) LESSEE temporarily or permanently discontinues business or (except as permitted by Article 20.2.4) sells or otherwise disposes of all or substantially all of its assets; (k) a material adverse change occurs in the financial condition of LESSEE; (l) LESSEE no longer possesses the licenses, certificates and permits required for the conduct of its business as a certificated air carrier in the U.S.; (m) LESSEE (i) suspends payment on its debts or other obligations generally, (ii) is unable to or admits its inability to pay its debts or other obligations generally as they fall due, (iii) is adjudicated or becomes bankrupt or insolvent or (iv) enters into any composition or other arrangement for the benefit of its creditors generally; (n) any proceedings, resolutions, filings or other steps are instituted with respect to LESSEE relating to the bankruptcy, liquidation, reorganization or protection from creditors of LESSEE or at least half of LESSEE's property. If instituted by LESSEE, the same will be an immediate Event of Default. If instituted by another Person, the same will be an Event of Default if not dismissed, remedied or relinquished within sixty (60) days; (o) any order, judgment or decree is entered by any court of competent jurisdiction appointing a receiver, trustee or liquidator of LESSEE or at least half of its property, or if at least half of LESSEE's property is to be sequestered. If instituted by or done with the consent of LESSEE, the same will be an immediate Event of Default. If instituted by another Person, the same will be an Event of Default if not dismissed, stayed, remedied or relinquished within sixty (60) days; PROVIDED, HOWEVER, that if such proceeding is stayed, then such proceeding will become an immediate Event of Default if such stay is removed or terminates and the proceeding is not dismissed, remedied or relinquished when such stay is removed or terminates. (p) any indebtedness for borrowed moneys or a guarantee or similar obligation owed by LESSEE with an unpaid balance of CONFIDENTIAL MATERIAL OMITTED is declared due before its stated maturity or LESSEE is in default of payment obligations CONFIDENTIAL MATERIAL OMITTED under any other purchase agreement, lease, conditional sale agreement or other agreement pursuant to which LESSEE has possession of any aircraft; (q) Eurocontrol has notified LESSOR that there are unpaid Eurocontrol charges due from LESSEE (unless such charges are being contested in good faith and by appropriate proceedings, an adequate bond has been provided and such proceedings do not involve any danger of the detention, interference with the use or operation, sale, forfeiture or loss of the Aircraft) and such charges remain outstanding for a period of thirty (30) days from the date of Eurocontrol's notice to LESSOR provided that such thirty (30) day grace period will not apply if there is a danger of detention, interference with the use or operation, sale, forfeiture or loss of the Aircraft; or (r) LESSEE is in default under any other lease or agreement between LESSEE and LESSOR and the same is not cured within its specified cure period. 25.3 LESSOR'S GENERAL RIGHTS. Upon the occurrence of any Event of Default, LESSOR may do all or any of the following at its option (in addition to such other rights and remedies which LESSOR may have by statute or otherwise but subject to any requirements of applicable Law): (a) terminate this Lease by giving written notice to LESSEE; (b) require that LESSEE immediately move the Aircraft to an airport or other location designated by LESSOR; (c) for LESSEE's account, do anything that may reasonably be required to cure any default and recover from LESSEE all reasonable costs, including legal fees and expenses incurred in doing so and Default Interest; (d) proceed as appropriate to enforce performance of this Lease and to recover any damages for the breach hereof, including the amounts specified in Article 25.5; (e) terminate this Lease by taking possession of the Aircraft or by serving notice requiring LESSEE to return the Aircraft to LESSOR at the location specified by LESSOR. If LESSOR takes possession of the Aircraft, it may enter upon LESSEE's premises where the Aircraft is located without liability. Upon repossession of the Aircraft, LESSOR will then be entitled to sell, lease or otherwise deal with the Aircraft as if this Lease had never been made. LESSOR will be entitled to the full benefit of its bargain with LESSEE; or (f) apply all or any portion of the Security Deposit and any other security deposits held by LESSOR pursuant to any other agreements between LESSOR and LESSEE to any amounts due. 25.4 DEREGISTRATION AND EXPORT OF AIRCRAFT. If an Event of Default has occurred and is continuing, LESSOR may take all steps necessary to deregister the Aircraft in and export the Aircraft from the State of Registration. 25.5 LESSEE LIABILITY FOR DAMAGES. If an Event of Default occurs, in addition to all other remedies available at law or in equity, LESSOR has the right to recover from LESSEE and LESSEE will pay LESSOR within two (2) Business Days after LESSOR's written demand, all of the following: (a) all amounts which are then due and unpaid hereunder and which become due prior to the earlier of LESSOR's recovery of possession of the Aircraft or LESSEE making an effective tender thereof; (b) any losses suffered by LESSOR because of LESSOR's inability to place the Aircraft on lease with another lessee or to otherwise utilize the Aircraft on financial terms as favorable to LESSOR as the terms hereof or, if LESSOR elects to dispose of the Aircraft, the funds arising from a sale or other disposition of the Aircraft are not as profitable to LESSOR as leasing the Aircraft in accordance with the terms hereof would have been (and LESSOR will be entitled to accelerate any and all Rent which would have been due from the date of LESSOR's recovery or repossession of the Aircraft through the Expiration Date); (c) all costs associated with LESSOR's exercise of its remedies hereunder, including but not limited to repossession costs, legal fees, Aircraft storage costs, Aircraft re-lease or sale costs and LESSOR's internal costs and expenses (including the cost of personnel time calculated based upon the compensation paid to the individuals involved on an annual basis and a general LESSOR overhead allocation); (d) any amount of principal, interest, fees or other sums paid or payable on account of funds borrowed in order to carry any unpaid amount; (e) any loss, premium, penalty or expense which may be incurred in repaying funds raised to finance the Aircraft or in unwinding any financial instrument relating in whole or in part to LESSOR's financing of the Aircraft; (f) any loss, cost, expense or liability sustained by LESSOR due to LESSEE's failure to redeliver the Aircraft in the condition required by this Lease; and (g) any other loss, damage, expense, cost or liability which LESSOR suffers or incurs as a result of the Event of Default and/or termination of this Lease, including an amount sufficient to fully compensate LESSOR for any loss of or damage to LESSOR's residual interest in the Aircraft caused by LESSEE's default. 25.6 WAIVER OF DEFAULT. By written notice to LESSEE, LESSOR may at its election waive any Default or Event of Default and its consequences and rescind and annul any prior notice of termination of this Lease. The respective rights of the parties will then be as they would have been had no Default or Event of Default occurred and no such notice been given. 25.7 PRESENT VALUE OF PAYMENTS. In calculating LESSOR's damages hereunder, upon an Event of Default all Rent and other amounts which would have been due hereunder during the Lease Term if an Event of Default had not occurred will be calculated on a present value basis using a discounting rate of six percent (6%) per annum discounted to the earlier of the date on which LESSOR obtains possession of the Aircraft or LESSEE makes an effective tender thereof. 25.8 USE OF "TERMINATION DATE". For avoidance of doubt, it is agreed that if this Lease terminates and the Aircraft is repossessed by LESSOR due to an Event of Default, then, notwithstanding the use of the term "Termination Date" in this Lease, the period of the Lease Term and the "Expiration Date" will be utilized in calculating the damages to which LESSOR is entitled pursuant to Article 25.5. For example, it is agreed and understood that LESSOR is entitled to receive from LESSEE the Rent and the benefit of LESSEE's insurance and maintenance of the Aircraft until expiration of the Lease Term. ARTICLE 26 NOTICES 26.1 MANNER OF SENDING NOTICES. Any notice, request or information required or permissible under this Lease will be in writing and in English. Notices will be delivered in person or sent by fax, letter (mailed airmail, certified and return receipt requested), or by expedited delivery addressed to the parties as set forth in Article 26.2. In the case of a fax, notice will be deemed received upon actual receipt (and the date of actual receipt will be deemed to be the date set forth on the confirmation of receipt produced by the sender's fax machine immediately after the fax is sent). In the case of a notice sent by expedited delivery, notice will be deemed received on the date of delivery set forth in the records of the Person which accomplished the delivery. If any notice is sent by more than one of the above listed methods, notice will be deemed received on the earliest possible date in accordance with the above provisions. 26.2 NOTICE INFORMATION. Notices will be sent: If to LESSOR: INTERNATIONAL LEASE FINANCE CORPORATION 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067, U.S.A. Attention: Legal Department Fax: 310-788-1990 Telephone: 310-788-1999 If to LESSEE: AMERICAN TRANS AIR, INC. 7337 West Washington Street Indianapolis International Airport Indianapolis, Indiana 46231 United States of America Attention: Ken Wolff Executive Vice President and Chief Financial Officer Fax: 317-240-7091 Telephone: 317-247-4000 or to such other places and numbers as either party directs in writing to the other party. ARTICLE 27 GOVERNING LAW AND JURISDICTION 27.1 CALIFORNIA LAW. This Lease is being delivered in the State of California and will in all respects be governed by and construed in accordance with the Laws of the State of California (notwithstanding the conflict Laws of the State of California). 27.2 NON-EXCLUSIVE JURISDICTION IN CALIFORNIA. As permitted by Section 410.40 of the California Code of Civil Procedure, the parties hereby irrevocably submit to the non-exclusive jurisdiction of the Federal District Court for the Central District of California and the State of California Superior or Municipal Court in Los Angeles, California. Nothing herein will prevent either party from bringing suit in any other appropriate jurisdiction. 27.3 SERVICE OF PROCESS. The parties hereby consent to the service of process (a) out of any of the courts referred to above, (b) in accordance with Section 415.40 of the California Code of Civil Procedure by mailing copies of the summons and complaint to the person to be served by certified or registered mail to the address set forth in Article 26.2, postage prepaid, return receipt requested or (c) in accordance with the Hague Convention, if applicable. 27.4 PREVAILING PARTY IN DISPUTE. If any legal action or other proceeding is brought in connection with or arises out of any provisions in this Lease, the prevailing party will be entitled to recover reasonable attorneys' fees and other costs incurred in such action or proceedings. The prevailing party will also, to the extent permissible by Law, be entitled to receive pre- and post-judgment Default Interest. 27.5 WAIVER. LESSEE AND LESSOR HEREBY WAIVE THE RIGHT TO A TRIAL BY JURY. LESSEE AND LESSOR HEREBY IRREVOCABLY WAIVE ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATED TO THIS LEASE BROUGHT IN ANY OF THE COURTS REFERRED TO IN ARTICLE 27.2, AND HEREBY FURTHER IRREVOCABLY WAIVE ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. ARTICLE 28 MISCELLANEOUS 28.1 PRESS RELEASES. The parties will give copies to one another, in advance if possible, of all news, articles and other releases provided to the public media regarding this Lease. 28.2 LESSOR PERFORMANCE FOR LESSEE. The exercise by LESSOR of its remedy of performing a LESSEE obligation hereunder is not a waiver of and will not relieve LESSEE from the performance of such obligation at any subsequent time or from the performance of any of its other obligations hereunder. 28.3 LESSOR'S PAYMENT OBLIGATIONS. Any obligation of LESSOR under this Lease to pay or release any amount to LESSEE is conditioned upon (a) all amounts then due and payable by LESSEE to LESSOR under this Lease or under any other agreement between LESSOR and LESSEE having been paid in full and (b) no Default or Event of Default having occurred and continuing hereunder at the time such payment or release of payment is payable to LESSEE. 28.4 APPLICATION OF PAYMENTS. Any amounts paid or recovered in respect of LESSEE liabilities hereunder may be applied to Rent, Default Interest, fees or any other amount due hereunder in such proportions, order and manner as LESSOR determines. 28.5 USURY LAWS. The parties intend to contract in strict compliance with the usury Laws of the State of California and, to the extent applicable, the U.S. Notwithstanding anything to the contrary in the Operative Documents, LESSEE will not be obligated to pay Default Interest or other interest in excess of the maximum non-usurious interest rate, as in effect from time to time, which may by applicable Law be charged, contracted for, reserved, received or collected by LESSOR in connection with the Operative Documents. During any period of time in which the then-applicable highest lawful rate is lower than the Default Interest rate, Default Interest will accrue and be payable at such highest lawful rate; however, if at later times such highest lawful rate is greater than the Default Interest rate, then LESSEE will pay Default Interest at the highest lawful rate until the Default Interest which is paid by LESSEE equals the amount of interest that would have been payable in accordance with the interest rate set forth in Article 5.5. 28.6 DELEGATION BY LESSOR. LESSOR may delegate to any Person(s) all or any of the rights, powers or discretion vested in it by this Lease and any such delegation may be made upon such terms and conditions as LESSOR in its absolute discretion thinks fit. 28.7 CONFIDENTIALITY. The Operative Documents and all non-public information obtained by either party about the other are confidential and are between LESSOR and LESSEE only and will not be disclosed by a party to third parties (other than to such party's auditors or legal advisors or as required in connection with any filings of this Lease in accordance with Article 13) without the prior written consent of the other party. If disclosure is required as a result of applicable Law, LESSEE and LESSOR will cooperate with one another to obtain confidential treatment as to the commercial terms and other material provisions of this Lease. 28.8 RIGHTS OF PARTIES. The rights of the parties hereunder are cumulative, not exclusive, may be exercised as often as each party considers appropriate and are in addition to its rights under general Law. The rights of one party against the other party are not capable of being waived or amended except by an express waiver or amendment in writing. Any failure to exercise or any delay in exercising any of such rights will not operate as a waiver or amendment of that or any other such right any defective or partial exercise of any such rights will not preclude any other or further exercise of that or any other such right and no act or course of conduct or negotiation on a party's part or on its behalf will in any way preclude such party from exercising any such right or constitute a suspension or any amendment of any such right. 28.9 FURTHER ASSURANCES. Each party agrees from time to time to do and perform such other and further acts and execute and deliver any and all such other instruments as may be required by Law, reasonably requested by the auditors of the other party or requested by the other party to establish, maintain or protect the rights and remedies of the requesting party or to carry out and effect the intent and purpose of this Lease. 28.10 USE OF WORD "INCLUDING". The term "INCLUDING" is used herein without limitation. 28.11 HEADINGS. All article and paragraph headings and captions are purely for convenience and will not affect the interpretation of this Lease. Any reference to a specific article, paragraph or section will be interpreted as a reference to such article, paragraph or section of this Lease. 28.12 INVALIDITY OF ANY PROVISION. If any of the provisions of this Lease become invalid, illegal or unenforceable in any respect under any Law, the validity, legality and enforceability of the remaining provisions will not in any way be affected or impaired. 28.13 NEGOTIATION. The terms of this Lease are agreed by LESSOR from its principal place of business in Los Angeles, California. 28.14 TIME IS OF THE ESSENCE. Time is of the essence in the performance of all obligations of the parties under this Lease and, consequently, all time limitations set forth in the provisions of this Lease will be strictly observed. 28.15 AMENDMENTS IN WRITING. The provisions of this Lease may only be amended or modified by a writing executed by LESSOR and LESSEE. 28.16 COUNTERPARTS. This Lease may be executed in any number of identical counterparts, each of which will be deemed to be an original, and all of which together will be deemed to be one and the same instrument when each party has signed and delivered one such counterpart to the other party. 28.17 DELIVERY OF DOCUMENTS BY FAX. Delivery of an executed counterpart of this Lease or of any other documents in connection with this Lease by fax will be deemed as effective as delivery of an originally executed counterpart. Any party delivering an executed counterpart of this Lease or other document by fax will also deliver an originally executed counterpart, but the failure of any party to deliver an originally executed counterpart of this Lease or such other document will not affect the validity or effectiveness of this Lease or such other document. 28.18 ENTIRE AGREEMENT. The Operative Documents constitute the entire agreement between the parties in relation to the leasing of the Aircraft by LESSOR to LESSEE and supersede all previous proposals, agreements and other written and oral communications in relation hereto. The parties acknowledge that there have been no representations, warranties, promises, guarantees or agreements, express or implied, except as set forth herein and in the other Operative Documents. IN WITNESS WHEREOF, LESSEE and LESSOR have caused this Lease to be executed by their respective officers as of September 5, 2000. INTERNATIONAL LEASE FINANCE AMERICAN TRANS AIR, INC. CORPORATION By: /s/ Grant Levy By: /s/ Kenneth K. Wolff Its: Vice President Its: Executive Vice President & CFO EXHIBIT A AIRCRAFT DESCRIPTION Aircraft Manufacturer and Model: Boeing 737-800 Specification: Seating Configuration: Manufacturer's Serial Number: 28243 Registration Mark: ____ Engine Manufacturer and Model: CFM56-7B-27 Engine Serial Numbers: _______ and ________ Engine Thrust Rating: 27,300 pounds Maximum Gross Takeoff Weight: 160,000 pounds EXHIBIT B AGENCY AGREEMENT (Limited Authority) Relating to Boeing 737-800 Aircraft THIS AGENCY AGREEMENT ("AGREEMENT") is made and entered into as of ____________________. BETWEEN: AMERICAN TRANS AIR, INC., a Indiana corporation whose address and principal place of business is at 7337 West Washington Street, Indianapolis International Airport, Indianapolis, Indiana 46231, United States of America ("AGENT") and INTERNATIONAL LEASE FINANCE CORPORATION, a California corporation, whose address and principal place of business is at 1999 Avenue of the Stars, 39th Floor, Los Angeles, California 90067, U.S.A. ("BUYER"). RECITAL The Boeing Company ("MANUFACTURER") and Buyer have entered into Purchase Agreement 1830, dated as of June 27, 1995 (such purchase agreement as may be amended in accordance with the provisions thereof is hereinafter referred to as the "PURCHASE AGREEMENT") under which Manufacturer has agreed to manufacture and sell and Buyer has agreed to purchase certain Boeing 737-800 aircraft. Buyer has agreed to lease one (1) of such aircraft bearing manufacturer's serial number 28243 (the "AIRCRAFT") to the Agent pursuant to an Aircraft Lease Agreement between Buyer and Agent dated as of September 5, 2000 (the "LEASE"). The Agent is engaged in business as a commercial air carrier and intends to lease the Aircraft from Buyer, and Buyer is desirous of utilizing the expertise of the Agent as Buyer's agent in all matters to which the Purchase Agreement relates with respect to the Aircraft except certain items as indicated below, and the Agent, as Buyer's agent, is willing to make such expertise available to Buyer. Accordingly, the parties agree as follows: 1. Buyer hereby appoints the Agent as Buyer's sole and exclusive agent with authority to perform the following, on behalf of Buyer, as the Agent may in its discretion determine to be necessary or desirable: (a) monitor Manufacturer's production, testing and delivery of the Aircraft in accordance with the Purchase Agreement and (b) do all such other things permitted by the Purchase Agreement related to the technical and engineering aspects of Manufacturer's production of the Aircraft, except Buyer limits Agent's authority to perform on behalf of Buyer on any defect that occurs during manufacture that is considered significant in nature by Buyer as measured by the criteria set forth below. Buyer retains the sole authority to perform on any defect meeting such criteria. (i) Deviations from the drawing configuration that could affect future modifications, maintenance, repair or overhaul of the Aircraft; (ii) Defects that are obvious appearance items; (iii) Rework that requires stress concurrence to satisfy Manufacturer's Material Review Board (MRB) requirements; (iv) A high quantity of defects normally considered minor on a singular basis; (v) Major rework requiring extensive repair or modification, E.G. replacement of ---- skin panels, extensive use of oversize fasteners, repair of damaged areas and significant structural modifications; (vi) Rework that affects the aerodynamic drag coefficient of the Aircraft; or (vii) Rework that involves areas known to be sensitive to Buyer. 2. Notwithstanding anything in the provisions of paragraph 1, nothing in this Agreement will confer authority upon or otherwise permit the Agent: (a) to exercise any power of termination under the Purchase Agreement or (b) to make any payments due from Buyer to Manufacturer or to receive on behalf of Buyer any payments due from Manufacturer under the Purchase Agreement, or to alter any of the terms and conditions of the Purchase Agreement or the Detail Specifications of the Aircraft. 3. Buyer will not revoke the appointment of and authority granted under this Agreement to the Agent unless a termination of the Purchase Agreement or Lease has occurred with respect to the Aircraft or the Agent has failed to perform a material obligation under this Agreement. Notice of any such revocation will be provided in accordance with the provisions of Article 14 of the Purchase Agreement and given to both Manufacturer and the Agent. 4. Manufacturer acknowledges the appointment of the Agent for the purpose set forth hereunder and Manufacturer and Buyer agree that due performance by Manufacturer or Agent of an obligation under the Purchase Agreement will constitute due satisfaction of such obligation by such party and Buyer agrees to be bound by the acts of the Agent. 5. Buyer and Agent agree to identify the technical organization and/or person(s) with the limited authority to act for Agent during production of the Aircraft. Buyer will, if possible, provide such identification to Manufacturer in writing, along with office space requirements for Agent, if required, prior to or at the time of Manufacturer's acknowledgment of this Agreement. 6. Nothing in this Agreement will subject Manufacturer to any liability under the Purchase Agreement which it would not otherwise be subject to, or modify Manufacturer's rights thereunder, or require Manufacturer to divest itself of title to or possession of Aircraft or any other property which is subject to the Purchase Agreement until payment therefor and delivery thereof in accordance with the Purchase Agreement. 7. None of the parties hereto will be entitled to assign to any third party any of their rights under this Agreement. 8. The Agent will not delegate to any third party the performance of the obligations imposed on it by this Agreement or appoint a sub-agent. 9. References to Manufacturer in this Agreement will include any wholly-owned subsidiary of Manufacturer to which Manufacturer assigns any of its rights and obligations under the Purchase Agreement pursuant to the terms and conditions thereof. 10. This Agreement will be governed by the laws of the State of California; however, the Purchase Agreement shall remain governed by the laws of the State of Washington. This Agreement has been executed by the parties hereto as of the day and year first above written. INTERNATIONAL LEASE FINANCE CORPORATION AMERICAN TRANS AIR, INC. By: By: Its: Its: The Boeing Company acknowledges the appointment of AMERICAN TRANS AIR, INC. as agent of International Lease Finance Corporation in connection with the above referenced Aircraft as set forth in this Agreement. THE BOEING COMPANY By: Its: EXHIBIT C CERTIFICATE OF INSURANCE [Refer to Aircraft Lease Agreement dated as of September 5, 2000 between LESSEE and LESSOR (the "Lease"). If applicable, insurance certificates from both the insurers and reinsurers will be provided. If there is a LESSOR's Lender, include references to it where appropriate after references to LESSOR.] To: INTERNATIONAL LEASE FINANCE CORPORATION ("LESSOR") ------ 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States Re: AMERICAN TRANS AIR, INC. ("LESSEE") Boeing 737-800 Manufacturer's Serial No.: 28243 Registration Mark: ____ (the "AIRCRAFT") The following security has subscribed to the insurance and/or reinsurance policies: [LIST COMPANIES & PERCENTAGES] THIS IS TO CERTIFY THAT, as Insurance Brokers, we have effected Fleet Insurance in respect of aircraft owned or operated by LESSEE (including the Aircraft), and that insurance in respect of the Aircraft is as specified below. AIRCRAFT HULL ALL RISKS COVERING: All risks of physical loss or damage to the Aircraft from any cause (subject only to the exclusions as specified below), for an Agreed Value of Aircraft in the amount of [list amount calculated in accordance with Article 18.1] DEDUCTIBLES: (CONFIDENTIAL MATERIAL OMITTED) each and every loss (or such lesser amount as generally applicable to the rest of LESSEE's 737-800 fleet). Not applicable to Total Loss/Constructive Total Loss or Arranged Total Loss GEOGRAPHICAL COVERAGE: Worldwide [subject to customary exclusions] AVIATION AND AIRLINE GENERAL THIRD PARTY LIABILITY COVERING: Aircraft Third Party, Passenger, Baggage, Cargo and Mail Liability and Airline General Third Party Liability (including Premises, Hangarkeepers and Products Liability) for combined single limit of not less than (CONFIDENTIAL MATERIAL OMITTED) (or such higher amount as LESSEE may carry generally on other 737-800 aircraft in its fleet) any one accident/occurrence (but in the aggregate in relation to Products Liability), extended to cover LESSEE's liability under the Lease to the extent of the risks covered by the policy including war and allied perils under Extended Coverage Endorsement as per AVN 52 subject only to exclusions as specified below GEOGRAPHICAL LIMITS: Worldwide [subject to customary exclusions] HULL WAR AND ALLIED PERILS COVERING: Hull War Risks as per LSW555.B, but including (a) confiscation or requisition (including by State of Registration and state where airline is domiciled), (b) hijacking or other unlawful seizure or wrongful exercise of control of the Aircraft or crew in flight (including any attempt at such seizure or control) and including "All Risks" Continuation Clause and Extortion Risks (including expenses) and covering claims excluded from Hull All Risks Policy while Aircraft outside Assured's control by reason of perils insured under this policy, for an Agreed Value of Aircraft in the amount of [list amount calculated in accordance with Article 18.1] DEDUCTIBLE: No deductible GEOGRAPHICAL LIMITS: Worldwide AIRCRAFT SPARES ALL RISKS INSURANCE COVERING: All risks of physical loss or damage to Aircraft Parts or spares or Engines at all times when removed from the Aircraft from whatever cause, subject only to the exclusions specified below, including the risks set down in AVN 48B other than paragraphs (a) and (b) thereof (but including paragraph (a) in respect of transit risks) for limits of not less than: CONFIDENTIAL MATERIAL OMITTED and covering: With respect to an Engine, an agreed value (CONFIDENTIAL MATERIAL OMITTED) or, with LESSOR's written concurrence, replacement cost With respect to Parts, replacement cost DEDUCTIBLE: (CONFIDENTIAL MATERIAL OMITTED) GEOGRAPHICAL COVERAGE: Worldwide INSURANCE REQUIRED BY MANUFACTURER LESSEE will carry the insurance required by Manufacturer in connection with LESSOR's assignment of Manufacturer's warranties and product support to LESSEE CONTRACTUAL INDEMNITY To the extent of the risks covered by the policies, LESSEE has insurance coverage for the indemnities agreed to by LESSEE pursuant to Article 16 of the Lease, subject to AVN67B or equivalent PERIOD OF COVERAGE (ALL POLICIES) From the Delivery Date of Aircraft to [END OF POLICY PERIOD] It is further certified that LESSOR has an interest in respect of the Aircraft under the Lease. Accordingly, with respect to losses occurring during the period from the Effective Date until the expiry of the Insurance or until the expiry or agreed termination of the Lease or until the obligations under the Lease are terminated by any action of the Insured or LESSOR and in consideration of the Additional Premium it is confirmed that the Insurance afforded by the Policy is in full force and effect and it is further agreed that the following provisions are specifically endorsed to the Policy. 1. UNDER THE HULL (ALL RISKS AND HULL WAR AND ALLIED RISKS) AND AIRCRAFT SPARES INSURANCES (a) In respect of any claim on the Aircraft that becomes payable on the basis of a Total Loss, payment of any settlement will be made to, or to the order of LESSOR as sole loss payee, up to the Agreed Value. With respect to repairable damage to an Aircraft or Engine, LESSOR will receive all insurance proceeds in excess of CONFIDENTIAL MATERIAL OMITTED provided that upon receipt by the insurance broker of written notice of a material default on the part of LESSEE (and until notice that it has been cured), all insurance proceeds which otherwise would be payable to LESSEE will be made directly to LESSOR. In respect of any other claim, payment of any settlement (net of any relevant policy deductible) will be made with such party(ies) as may be necessary to repair the Aircraft unless otherwise agreed after consultation between the Insurers and the Insured and, where necessary under the terms of the Lease, LESSOR. Such payments will only be made provided they are in compliance with all applicable laws and regulations. (b) Insurers agree on a 50/50 settlement in terms of AVS 103. (c) Insurers have no right to replace the Aircraft on a Total Loss (arranged, constructive or otherwise). (d) Insurers confirm that under the insurance policies, if the Insured installs an engine owned by a third party on the Aircraft, either (i) the hull insurance will automatically increase to such higher amount as is necessary in order to satisfy both LESSOR's requirement to receive the Agreed Value in the event of a Total Loss, Constructive Total Loss or Arranged Total Loss and the amount required by the third party engine owner, or (ii) separate additional insurance on such engine will attach in order to satisfy separately the requirements of the Insured to such third party engine owner. 2. UNDER THE LEGAL LIABILITY INSURANCE (a) Subject to the provisions of this Endorsement, the Insurance will operate in all respects as if a separate Policy had been issued covering each party insured hereunder, but this provision will not operate to include any claim arising howsoever in respect of loss or damage to the Aircraft insured under the Hull or Spares Insurance of the Insured. Notwithstanding the foregoing the total liability of Insurers in respect of any and all Insureds will not exceed the limits of liability stated in the Policy. (b) The Insurance provided hereunder will be primary and without right of contribution from any other insurance which may be available to LESSOR. 3. UNDER ALL INSURANCES (a) LESSOR, its successors and assigns, and (with respect to Aviation and Airline General Third Party Liability only) its directors, officers and employees for their respective rights and interests, are included as Additional Insureds. (b) The cover afforded to LESSOR by the Policy in accordance with this Endorsement will 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 Policy. (c) LESSOR will have no responsibility for premium and insurers will waive any right of set-off or counterclaim against LESSOR except in respect of outstanding premium in respect of the Aircraft, provided that Insurer may only set-off for premiums against the proceeds of the hull insurance for outstanding premiums in connection with hull all risks and hull war and allied perils insurance. (d) Upon payment of any loss or claim to or on behalf of LESSOR, Insurers will to the extent and in respect of such payment be thereupon subrogated to all legal and equitable rights of LESSOR indemnified hereby (but not against LESSOR). Insurers will not exercise such rights without the consent of those indemnified, such consent not to be unreasonably withheld. At the expense of Insurers LESSOR will do all things reasonably necessary to assist the Insurers to exercise said rights. (e) Except in respect of any provision for Cancellation or Automatic Termination specified in the Policy or any endorsement thereof, cover provided by this Endorsement may only be cancelled or materially altered in a manner adverse to LESSOR by the giving of not less than thirty (30) days notice in writing to LESSOR. Notice will be deemed to commence from the date such notice is given by the Insurers. Such notice will NOT, however, be given at normal expiry date of the Policy or any endorsement. 4. EXCEPT AS SPECIFICALLY VARIED OR PROVIDED BY THE TERMS OF THIS CERTIFICATE (a) LESSOR IS COVERED BY THE POLICY SUBJECT TO ALL TERMS, CONDITIONS, LIMITATIONS,WARRANTIES, EXCLUSIONS AND CANCELLATION PROVISIONS THEREOF. (b) THE POLICY WILL NOT BE VARIED BY ANY PROVISIONS CONTAINED IN THE LEASE WHICH PURPORT TO SERVE AS AN ENDORSEMENT OR AMENDMENT TO THE POLICY. SUBJECT (save as specifically stated in this Certificate) to policy terms, conditions, limitations and exclusions. Yours faithfully, [BROKERS] EXHIBIT D BROKERS' LETTER OF UNDERTAKING To: INTERNATIONAL LEASE FINANCE CORPORATION 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States Date: Our Ref: Re: AMERICAN TRANS AIR, INC. ("LESSEE") ------ Boeing 737-800 Manufacturer's Serial No.: ____ Registration Mark: ____ (the "AIRCRAFT") Dear Sirs: We confirm that insurance has been effected for the account of [LESSEE] (the "OPERATOR") covering all aircraft owned or operated by them, including the above-referenced aircraft (the "Aircraft"). [Also confirm, if applicable, the amount of any hull all risks or hull war and allied perils on the Aircraft which LESSEE is carrying in excess of the Agreed Value (which excess insurance would be payable to LESSEE). Such excess insurance may not exceed ten percent (10%) of the Agreed Value.] Pursuant to instructions received from the Operator and in consideration of your approving the arrangement of the Operator's "Fleet Policy" (under which the above-referenced Aircraft is insured) through the intermediary of ourselves as Brokers in connection with the insurance (the "INSURANCE") mentioned in our Certificate of Insurance (Reference No. [ ] dated [ ] and attached hereto), we undertake as follows: 1. In relation to the Hull and War Risks Insurance to hold to your order the insurance Slips or Contracts and any Policies which may be issued or any policies substituted (with your consent) therefor (but only insofar as the same relate to the Aircraft only) and the benefit of the Hull and War Risks Insurance thereunder, but subject to our requirements to operate the Fleet Policy insofar as it relates to any other aircraft insured thereunder. 2. To advise you of any of the following: (a) If any insurer cancels or gives notice of cancellation of any of the Insurance at least thirty (30) days (or such lesser period as may be available in the case of War and Allied Perils) before such cancellation is to take effect in respect of the Aircraft. (b) Of any act or omission or of any event (including non-payment of premium) of which we have knowledge or are notified and which might invalidate or render unenforceable in whole or in part any of the Insurance, insofar as the same relate to the Aircraft. (c) If we do not receive instructions to renew all or any of the Insurance at least thirty (30) days prior to their expiration. (d) If any of the Insurance are not renewed on the same terms (save as to premium and period of cover and as you might otherwise have notified us to be acceptable to you) seven (7) days prior to expiry thereof. The above undertakings are given subject to our continuing appointment for the time being as Insurance Brokers to the Operator. We also undertake to advise you if we cease to be Insurance Brokers to the Operator. Yours faithfully, EXHIBIT E ESTOPPEL AND ACCEPTANCE CERTIFICATE AMERICAN TRANS AIR, INC. ("LESSEE"), a corporation organized under the laws of Indiana does hereby represent, acknowledge, warrant and agree as follows: 1. LESSEE and INTERNATIONAL LEASE FINANCE CORPORATION, as LESSOR, have entered into an Aircraft Lease Agreement dated as of September 5, 2000 (hereinafter referred to as the "LEASE"). Words used herein with capital letters and not otherwise defined will have the meanings set forth in the Lease. 2. LESSEE has this ____ day of __________, ____ (Time: __________) at ____________________ received from LESSOR possession of: (a) One (1) Boeing 737-800 aircraft bearing Manufacturer's serial number ____ and U.S. registration mark ____, together with two (2) CFM56-7B-27 engines bearing manufacturer's serial numbers _______ and ________ (each of which has 750 or more rated take-off horsepower), all in airworthy condition. (b) All Aircraft Documentation, including the usual and customary manuals, logbooks, flight records and historical information regarding the Aircraft, Engines and Parts. 3. All of the foregoing has been delivered and accepted on the date set forth above to LESSEE's full satisfaction and pursuant to the terms and provisions of the Lease. 4. The Agreed Value of the Aircraft is US$_______________. 5. The amount of fuel on board at Delivery is __________ (circle one) pounds/kilos (________ gallons). 6. The Aircraft, Engines, Parts and Aircraft Documentation as described in the Lease have been fully examined by LESSEE and have been received in a condition fully satisfactory to LESSEE and in full conformity with the Lease in every respect. 7. The Lease is in full force and effect, LESSEE has no claims, offsets, deductions or set-off of any kind or nature in connection with the Lease, except for any claims against LESSOR set forth on the attached List of Discrepancies. 8. LESSOR's Lender may rely upon all of the foregoing in granting substantial financial accommodations to LESSOR and LESSEE understands and agrees that any funds being advanced by LESSOR's Lender will be made in reliance upon the foregoing. 9. LESSEE has obtained all required permits, authorizations, licenses and fees of the State of Registration or any Government Entity thereof necessary in order for LESSEE to operate the Aircraft as permitted by the terms of the Lease. Dated on the date set forth above AMERICAN TRANS AIR, INC. By: Title: ATTACHMENTS: 1. List of Aircraft Documentation 2. List of Loose Equipment 3. List of Discrepancies ATTACHMENT 1 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE LIST OF AIRCRAFT DOCUMENTATION MANUALS 1. FAA Approved Flight Manual 2. Airplane Flight Operation Manual 3. Aircraft Recover Manual 4. Quick Reference Handbook (QRH) 5. Weight and Balance Manual 6. Aircraft Fueling Manual 7. Aircraft Maintenance Manual (MM) 8. Aircraft Maintenance Manual Supplement 9. Ramp Maintenance Manual (RMM) 10. Cargo Loading Manual 11. Fault Reporting Manual (FRM) 12. Fault Isolation Manual (FIM) 13. Illustrated Parts Catalog (IPC) 14. Life Limited Parts Manual 15. Structural Repair Manual (SRM) 16. Master Minimum Equipment List 17. Wiring Diagram Manual (WD) 18. Wiring Practices Manual 19. System Schematics Manual 20. B.I.T.E. Manual 21. Non-Destructive Test Manual 22. Corrosion Prevention Manual 23. Component Maintenance Manual 24. APU Log Book 25. Engine Maintenance Manual 26. Engine Log Book 27. Engine Illustrated Parts Catalog 28. Engine Data Submittal Book 29. Engine Overhaul Manual 30. Power Plant Build-up Manual AIRCRAFT RECORDS AND HISTORICAL DOCUMENTS 1. Copies of original Certificates delivered by Boeing: a. Airworthiness Certificate for Export b. Radio installation conformity certificate c. Noise limitation certificate 2. Copies of original Documents delivered by Boeing: a. Airworthiness Directive Compliance list b. Aircraft inspection report c. Aircraft Readiness Log d. Weighing report 3. Copies of current Certificates: a. Airworthiness Certificate b. Noise limitation c. Radio license d. Interior material burn certificates e. Certificate of Export f. Aircraft deregistration confirmation e. Aircraft Registration 4. Letters signed and stamped by Quality Assurance: a. Current aircraft hours and cycles b. Current engines hours and cycles c. Accident and Incident report d. Summary of Maintenance Program e. AD compliance during the lease term 5. Aircraft log books and Aircraft readiness log. 6. Aircraft Hard Time (HT) inspection status. 7. One year forecast for HT inspection. 8. Aircraft Modification status, including service bulletins. 9. Last weighing report prior to redelivery. 10. AD compliance report with original signoffs. 11. Routine and non-routine job cards of the last "C" and "D" checks. 12. Past year pilots and maintenance discrepancies. 13. Major and Minor structural repairs with applicable approvals. 14. Compass Swing report of the last three years. 15. Cabin Configuration drawing (LOPA). 16. Emergency equipment location drawing. 17. Last X-RAYs ENGINES RECORDS 1. Last test cell run reports. 2. Life Limited Parts status and traceability. 3. AD compliance report with original signoffs. 4. Engine Modification/service bulletin/inspection report and applicableforms. 5. Last heavy maintenance records for each module. 6. Engine log books. 7. Engine removal history. 8. Past year trend monitoring reports. 9. Historical borescope reports. 10. Engine component report. APU RECORDS 1. APU status (FH, FC, limits). 2. Life limited Part status and traceability. 3. AD compliance with original signoffs. 4. Modification status. 5. Last heavy maintenance documents. 6. APU log books. 7. Last test cell report. COMPONENT RECORDS 1. Aircraft component inventory. 2. Hard time component inventory. 3. All serviceable tags. 4. Landing Gear status with last overhaul and life limited Part status. 5. AD compliance with original signoffs. 6. Modification status. ATTACHMENT 2 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE LIST OF LOOSE EQUIPMENT ATTACHMENT 3 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE LIST OF DISCREPANCIES EXHIBIT F OPINION OF COUNSEL TO BE GIVEN BY INDEPENDENT OUTSIDE COUNSEL OF LESSEE OR OTHER LAWYERS ACCEPTABLE TO LESSOR To: International Lease Finance Corporation 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States Gentlemen: This opinion is furnished to you pursuant to Article 7 of the Aircraft Lease Agreement dated as of September 5, 2000 (the "LEASE") between AMERICAN TRANS AIR, INC. ("LESSEE") and INTERNATIONAL LEASE FINANCE CORPORATION ("LESSOR"). Defined terms in this opinion are used herein as defined in the Lease. I have acted as counsel for LESSEE in connection with the preparation, execution and delivery of the Lease. In that connection I have examined: (a) The Lease and Estoppel and Acceptance Certificate; (b) The charter of LESSEE and all amendments thereto (the "CHARTER"); and (c) Such other documents, agreements and instruments, and such treaties, laws, rules, regulations, decrees and the like, as I have deemed necessary as a basis for the opinions hereinafter expressed. [ (d) All of the agreements and any amendments thereto between LESSEE and all other lessors and lenders of LESSEE covering other aircraft operated by LESSEE on which the Engines can be installed.] Based upon the foregoing and having regard for legal considerations which I deem relevant, I am of the opinion that: 1. LESSEE is a corporation duly incorporated, validly existing and in good standing under the Laws of Indiana. It has the corporate power and authority to carry on its business as presently conducted and to perform its obligations under the Lease. 2. No authorization, approval, consent, license or order of, or registration with, or the giving of notice to the Aviation Authority or any other regulatory body or authority is required for the valid authorization, execution, delivery and performance by LESSEE of the Lease. 3. The Lease and the Estoppel and Acceptance Certificate have each been duly authorized, executed and delivered by LESSEE. Each such instrument is a valid, enforceable and binding obligation of LESSEE except as enforceability may be limited by bankruptcy, insolvency, reorganization or other Laws of general application affecting the enforcement of creditors' rights. 4. The execution and delivery of the Lease and the Estoppel and Acceptance Certificate, the consummation by LESSEE of the transactions contemplated therein and compliance by LESSEE with the terms and provisions thereof do not contravene any Law applicable to LESSEE, or result in any breach of or constitute any default under or result in the creation of any lien, charge or encumbrance upon any property of LESSEE, under any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which LESSEE is a party or by which LESSEE or its properties or assets is bound. 5. Except for any filing or recording that may be required with the [NAME OF AIRCRAFT REGISTER] and except for [DESCRIBE SUCH OTHER FILINGS OR RECORDINGS], no filing or recording of any instrument or document (including the filing of any financial statement) is necessary under the laws of the U.S. in order for the Lease to constitute a valid and perfected lease of record relating to the Aircraft, it being understood that such counsel expresses no opinion as to the nature of LESSOR's title to the Aircraft on the Delivery Date. 6. LESSEE holds all licenses, certificates and permits from applicable governmental authorities in the U.S. necessary for the conduct of its business as a certificated air carrier and performance of its obligations under the Lease. 7. To my knowledge, there are no suits or proceedings pending or threatened against LESSEE before any Government Entity against or affecting LESSEE which are reasonably likely to be adversely determined and, if adversely determined, would have a material adverse effect on the financial condition or business of LESSEE or its ability to perform under the Lease, except as described in the filings provided to LESSOR pursuant to Article 22. 8. The obligations of LESSEE under the Lease are direct, general and unconditional obligations of LESSEE and rank or will rank at least PARI PASSU with all other present and future unsecured and unsubordinated obligations (including contingent obligations) of LESSEE, with the exception of such obligations as are mandatorily preferred by law. 9. LESSEE, under the laws of the U.S. or of any other jurisdiction affecting LESSEE, is subject to private commercial law and suit. Neither LESSEE nor its properties or assets have the right of immunity from suit or execution on the grounds of sovereignty in such jurisdictions and the performance by LESSEE of its obligations under the Lease constitute commercial acts done for commercial purposes. 10. There is no applicable usury or interest limitation Law in Indiana which may restrict the recovery of payments in accordance with the Lease. 11. LESSOR will not violate any Law or become liable to any tax in Indiana or the U.S. by reason of entering into or performing its obligations under the Lease and it is not necessary to establish a place of business in Indiana in order to enforce any provisions of the Lease. Very truly yours, EXHIBIT G ASSIGNMENT OF RIGHTS (AIRFRAME) [DATE] Boeing Commercial Airplane Group P.O. Box 3707 Seattle, Washington 98124-2207 Attention: Vice President-Contracts Mail Code 21-34 Subject: Full Assignment of Rights and Obligations - International Lease Finance Corporation as Lessor and AMERICAN TRANS AIR, INC. as Lessee of Model Boeing 737-800 aircraft bearing manufacturer's serial number 28243 Ladies and Gentlemen: In connection with International Lease Finance Corporation's lease to AMERICAN TRANS AIR, INC. ("Lessee") of a Boeing aircraft (more fully described below), reference is made to the following documents: A. Purchase Agreement 1830, dated as of June 27, 1995, between The Boeing Company ("Boeing") and International Lease Finance Corporation ("ILFC") (the "Boeing Agreement") under which ILFC purchased a certain Boeing Model 737-800 aircraft bearing manufacturer's serial number 28243 (the "Aircraft"). B. Aircraft Lease Agreement (the "Lease") for the Aircraft dated as of September 5, 2000 between ILFC and Lessee. Capitalized terms used herein without definition will have the same meaning as in the Boeing Agreement. In connection with ILFC's lease of the Aircraft under the Lease, ILFC is transferring to Lessee certain rights of ILFC related to the Aircraft under the Boeing Agreement. To accomplish this transfer of rights, as authorized by the provisions of the Boeing Agreement: 1. Lessee acknowledges that it has received copies of the following specific provisions of the Boeing Agreement applicable to the Aircraft and agrees to be bound by and comply with all the terms, conditions, and limitations contained in such provisions, including without limitation the disclaimer and release, exclusion of liabilities, indemnity and insurance provisions thereof: Boeing Agreement Article 6 - Excusable Delay 6.1 General Article 10 - Assignment, Resale or Lease 10.1 Assignment 10.3 Sale by Buyer after Delivery 10.4 Lease by Buyer after Delivery 10.5 No Increase in Boeing Liability 10.6 Exculpatory or Indemnity Clause in Post-delivery Sale or Lease Article 12 - Product Assurance; Disclaimer and Release; Exclusion of Liabilities; Customer Support; Indemnification and Insurance (in its entirety) Article 14 - Contractual Notices and Requests Article 15 - Miscellaneous 15.4 Governing Law Exhibit B - Product Assurance Document Part A Boeing Warrant Part B Warranty Repairs and Modifications by Buyer Part C Boeing Service Life Policy Part D Boeing Indemnity Against Patent Infringement Part D-1 Boeing Indemnity Against Copyright Infringement Part E Supplier Warranties and Patent Indemnities Part G Boeing Interface Commitment Part H General Exhibit C-1 - Customer Support Document Part B Boeing Customer Support Services Part D Technical Data and Documents Part E Buyer's Indemnification of Boeing and Insurance Part F Alleviation or Cessation of Performance Exhibit E - Buyer Furnished Equipment Provisions Document Paragraph 8 Indemnification of Boeing Paragraph 9 Patent Indemnity Paragraph 10 Definitions Letter Agreement No. 1830-3 - Seller Purchased Equipment Paragraph 6 Buyer's Indemnification of Boeing 2. Lessee recognizes that Boeing's obligation to provide training, support and services to Lessee pursuant to Exhibit C of the Boeing Agreement is conditioned on the receipt by Boeing of evidence of compliance by Lessee with the insurance requirements set forth in paragraph 2 of Part E of Exhibit C or in such other form as may be satisfactory to Boeing, prior to the commencement of such training, support and services. 3. ILFC reserves to itself all rights, claims and interests it may have under the Boeing Agreement not expressly assigned to Lessee hereunder. ILFC will remain responsible to Boeing for any amounts with respect to the Aircraft owed to Boeing under the Boeing Agreement prior to the effective date of this letter, including any amounts owed by ILFC to Boeing under the specific articles and paragraphs of the Boeing Agreement referenced in paragraph 1 above based upon events or incidents relating to the Aircraft occurring prior to the effective date of this letter. 4. ILFC hereby assigns to Lessee the sole authority to exercise in Lessee's name all rights and powers of ILFC with respect to the Aircraft under the specific portions of the Boeing Agreement referenced in paragraph 1 above. Such authorization will continue until Boeing receives from ILFC written notice that the Lease has been cancelled or terminated, addressed to Boeing's Vice President, Contracts, P.O. Box 3707, MC 21-34, Seattle, Washington 98124-2207, U.S.A. Until Boeing receives such notice, Boeing will be entitled to deal exclusively with Lessee with respect to the Aircraft under the specific portions of the Boeing Agreement referenced in paragraph 1 above and, with respect to the rights, powers, duties or obligations under such portions of the Boeing Agreement, any and all actions taken by Lessee or agreements entered into by Lessee during the period prior to Boeing's receipt of such notice will be final and binding on ILFC. 5. Lessee hereby accepts the authorization set forth in paragraph 4 above and agrees to be bound by and to comply with all the terms, conditions and limitations of the portion of the Boeing Agreement referenced in paragraph 1 above. 6. This Assignment may be signed by the parties hereto in separate counterparts, each of which when executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. 7. This Assignment shall be governed by, and construed in accordance with,the laws of the State of Washington, including all matters of construction, validity and performance. We request that Boeing, upon receipt of this letter, acknowledge receipt thereof and the transfer of rights set forth above by signing the acknowledgment and forwarding one copy of this letter to each of the undersigned. IN WITNESS WHEREOF, the parties hereto have caused this Assignment Agreement to be duly executed as of the dates written below. INTERNATIONAL LEASE FINANCE AMERICAN TRANS AIR, INC., as Lessee CORPORATION, as Lessor and Buyer By: By: Its: Its: BOEING ACKNOWLEDGMENT AND CONSENT TO ASSIGNMENT Receipt of the above letter is acknowledged and transfer of certain rights as described above under the Boeing Agreement is confirmed, effective as of this date. THE BOEING COMPANY By: Its: Date: EXHIBIT H ASSIGNMENT OF RIGHTS (ENGINES) [DATE] CFM INTERNATIONAL, INC. 1 Neumann Way, F-17 Cincinnati, Ohio 45215 Attention: Commercial Contracts - Warranty Assignment Administrator Dear Warranty Assignment Administrator: Reference is hereby made to that Consent to Assignment made as of April 29, 1988 (the "CONSENT TO ASSIGNMENT"), by and between CFM INTERNATIONAL, INC. ("CFMI") and INTERNATIONAL LEASE FINANCE CORPORATION ("ILFC"). Terms defined in the Consent to Assignment are used herein with the same meaning as in the Consent to Assignment. As of ________________ ___, ______, ILFC has assigned all of its rights and interest in, to and under the Engine Warranties to AMERICAN TRANS AIR, INC. ("ASSIGNEE") in connection with its lease to Assignee of a Boeing 737-800 aircraft (the "AIRCRAFT") together with two (2) CFMI Model CFM56-7B-27 engines bearing Manufacturer's Serial Numbers _______ and ________ (the "ENGINES") as of the date each such Engine was delivered to Assignee. Such assignment shall be effective from such date until ILFC notifies CFMI that the Lease has been cancelled or terminated. The Assignee has accepted such assignment and all the limitations and liabilities pertaining to the Engine Warranties as stated in the provisions of the GTA listed in Schedule 2 to the Consent to Assignment. A copy of the aforesaid assignment is attached hereto. Very truly yours, INTERNATIONAL LEASE FINANCE CORPORATION By: Title: cc: Ruben M. Cabrera Director, Commercial Contracts ASSIGNMENT OF WARRANTIES [DATE] In consideration of AMERICAN TRANS AIR, INC. ("LESSEE") leasing from International Lease Finance Corporation ("ILFC") one (1) Boeing 737-800 aircraft together with two (2) CFMI Model CFM56-7B-27 engines bearing manufacturer's serial numbers _______ and ________, it is hereby agreed as follows: 1. ILFC hereby assigns and transfers to Lessee all of ILFC's respective rights and interest in and to and in and under the Engine Warranties set forth in and subject to the limitations and liabilities set forth in Exhibit B Warranty, Section X (the "ENGINE WARRANTIES") of CFM International, Inc. - ILFC General Terms Agreement No. 6-3987 dated 22 June 1984 (the "GTA") during the term of such leases so long as Lessee is not in default thereunder. 2. Lessee hereby accepts such assignment including all the limitations and liabilities pertaining to said Engine Warranties as stated in the provisions of Exhibit B Warranty, Section X of the GTA. 3. This Agreement shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors and assigns to the extent permitted by the GTA and hereunder. 4. This Agreement shall be governed by and construed in accordance with the laws of the State of California. 5. This Agreement may be executed in any number of counterparts, each of which when executed and delivered is an original but all of which taken together constitute one and the same instrument and any party may execute this Agreement by signing any counterpart. IN WITNESS WHEREOF, the authorized representative of the parties hereto have executed this Agreement as of the day and year first above written. For and on behalf of For and on behalf of INTERNATIONAL LEASE FINANCE AMERICAN TRANS AIR, INC. CORPORATION By: By: Its: Its: EXHIBIT I RETURN ACCEPTANCE RECEIPT Date: _________________ ___, ____ 1. AMERICAN TRANS AIR, INC., as LESSEE, and INTERNATIONAL LEASE FINANCE CORPORATION, as LESSOR, have entered into an Aircraft Lease Agreement dated as of September 5, 2000 (the "LEASE"). Words used herein with capital letters and not otherwise defined will have the meanings set forth in the Lease. 2. LESSOR has this ____ day of __________, ____ (Time: __________) at ____________________ received from LESSEE possession of: (a) One (1) Boeing 737-800 Aircraft bearing Manufacturer's serial number ____, together with two (2) CFM56-7B-27 engines bearing manufacturer's serial numbers _______ and ________, and all Parts attached thereto and thereon in an airworthy condition and (b) All Aircraft Documentation, including the usual and customary manuals, logbooks, flight records and historical information regarding the Aircraft, Engines and Parts, as listed in the Document Receipt attached hereto. 3. The Airframe, Engines and Parts had the following hours/cycles at return: (a) AIRFRAME: Total hours: _______________ Total Landings: _______________ (b) ENGINES: POSITION SERIAL NO. TOTAL HOURS TOTAL CYCLES HRS/CYCLES SINCE LAST SHOP VISIT Time Remaining to Next LIFE LIMITED PART REMOVAL PART NAME HOURS CYCLES MSN MSN (c) APU: MSN __________ Total hours: __________ ______ hours/ ______ cycles since last Overhaul ______ hours/ ______ cycles remaining on APU life-limited Parts (d) LANDING GEARS: POSITION SERIAL NO. Total Hrs/Cycles since Date of last HRS/CYCLES LAST OVERHAUL OVERHAUL Nose Right Main Left Main (e) FUEL ON BOARD AT RETURN: ______ (circle one) pounds/kilos (______ gallons) 4. Other technical information regarding the Aircraft and its components are correctly set forth on the Technical Evaluation Report (in the form of Exhibit L) attached hereto. 5. The above specified aircraft, engines and documentation are hereby accepted by LESSOR subject to correction by LESSEE (or procurement by LESSEE at LESSEE's cost) as soon as reasonably possible of the discrepancies specified in Attachment 2 hereto. 6. Subject to the following paragraph, the leasing of the Aircraft by LESSOR to LESSEE pursuant to the Lease is hereby terminated without prejudice to LESSEE's continuing obligations under the Lease including, without limitation, paragraph 6 above and Articles 10.5, 15 and 16. 7. LESSEE represents and warrants that during the term of the Lease all maintenance and repairs to the Airframe and Engines were performed in accordance with the requirements contained in the Lease. LESSEE further confirms that all of its obligations under the Lease whether accruing prior to the date hereof or which survive the termination of the Lease by their terms and accrue after the date hereof, will remain in full force and effect until all such obligations have been satisfactorily completed. 8. This Return Acceptance Supplement is executed and delivered by the parties in [place]. IN WITNESS WHEREOF, the parties hereto have caused this Return Acceptance Receipt to be executed in their respective corporate names by their duly authorized representatives as of the day and year first above written. INTERNATIONAL LEASE FINANCE CORPORATION AMERICAN TRANS AIR, INC. By: By: Its: Its: ATTACHMENTS: 1. List of Aircraft Documentation 2. List of Loose Equipment 3. List of Discrepancies 4. Engine Maximum Power Assurance Test Conditions and Results 5. Dent and Damage Chart 6. Form of No Accident/Incident Letter 7. Technical Evaluation Report (in the form of Exhibit L) ATTACHMENT 1 TO RETURN ACCEPTANCE RECEIPT LIST OF AIRCRAFT DOCUMENTATION [The (a) manuals and (b) Aircraft records and historical documents set forth below are to be returned with the Aircraft in a current, up-to-date and correct status] MANUALS 1. FAA Approved Flight Manual 2. Airplane Flight Operation Manual 3. Aircraft Recover Manual 4. Quick Reference Handbook (QRH) 5. Weight and Balance Manual 6. Aircraft Fueling Manual 7. Aircraft Maintenance Manual (MM) 8. Aircraft Maintenance Manual Supplement 9. Ramp Maintenance Manual (RMM) 10. Cargo Loading Manual 11. Fault Reporting Manual (FRM) 12. Fault Isolation Manual (FIM) 13. Illustrated Parts Catalog (IPC) 14. Life Limited Parts Manual 15. Structural Repair Manual (SRM) 16. Master Minimum Equipment List 17. Wiring Diagram Manual (WD) 18. Wiring Practices Manual 19. System Schematics Manual 20. B.I.T.E. Manual 21. Non-Destructive Test Manual 22. Corrosion Prevention Manual 23. Component Maintenance Manual 24. APU Log Book 25. Engine Maintenance Manual 26. Engine Log Book 27. Engine Illustrated Parts Catalog 28. Engine Data Submittal Book 29. Engine Overhaul Manual 30. Power Plant Build-up Manual AIRCRAFT RECORDS AND HISTORICAL DOCUMENTS 1. Copies of original Certificates delivered by Boeing: a. Airworthiness Certificate for Export b. Radio installation conformity certificate c. Noise limitation certificate 2. Copies of original Documents delivered by Boeing: a. Airworthiness Directive Compliance list b. Aircraft inspection report c. Aircraft Readiness Log d. Weighing report 3. Copies of current Certificates: a. Airworthiness Certificate b. Noise limitation c. Radio license d. Interior material burn certificates e. Certificate of Export f. Aircraft deregistration confirmation e. Aircraft Registration 4. Letters signed and stamped by Quality Assurance: a. Current aircraft hours and cycles b. Current engines hours and cycles c. Accident and Incident report d. Summary of Maintenance Program e. AD compliance during the lease term 5. Aircraft log books and Aircraft readiness log. 6. Aircraft Hard Time (HT) inspection status. 7. One year forecast for HT inspection. 8. Aircraft Modification status, including service bulletins. 9. Last weighing report prior to redelivery. 10. AD compliance report with original signoffs. 11. Routine and non-routine job cards of the last "C" and "D" checks. 12. Past year pilots and maintenance discrepancies. 13. Major and Minor structural repairs with applicable approvals. 14. Compass Swing report of the last three years. 15. Cabin Configuration drawing (LOPA). 16. Emergency equipment location drawing. 17. Last X-RAYs ENGINES RECORDS 1. Last test cell run reports. 2. Life Limited Parts status and traceability. 3. AD compliance report with original signoffs. 4. Engine Modification/service bulletin/inspection report and applicable forms. 5. Last heavy maintenance records for each module. 6. Engine log books. 7. Engine removal history. 8. Past year trend monitoring reports. 9. Historical borescope reports. 10. Engine component report. APU RECORDS 1. APU status (FH, FC, limits). 2. Life limited Part status and traceability. 3. AD compliance with original signoffs. 4. Modification status. 5. Last heavy maintenance documents. 6. APU log books. 7. Last test cell report. COMPONENT RECORDS 1. Aircraft component inventory. 2. Hard time component inventory. 3. All serviceable tags. 4. Landing Gear status with last overhaul and life limited Part status. 5. AD compliance with original signoffs. 6. Modification status. ATTACHMENT 2 TO RETURN ACCEPTANCE RECEIPT LIST OF LOOSE EQUIPMENT ATTACHMENT 3 TO RETURN ACCEPTANCE RECEIPT LIST OF DISCREPANCIES ATTACHMENT 4 TO RETURN ACCEPTANCE RECEIPT ENGINE MAXIMUM POWER ASSURANCE TEST CONDITIONS AND RESULTS ATTACHMENT 5 TO RETURN ACCEPTANCE RECEIPT DENT AND DAMAGE CHART ATTACHMENT 6 TO RETURN ACCEPTANCE RECEIPT FORM OF NO ACCIDENT/INCIDENT LETTER EXHIBIT J MONTHLY REPORT (SEE FOLLOWING SHEET) MONTHLY AIRCRAFT UTILIZATION AND STATUS REPORT Page 1 of 2 Report Due Date: To: INTERNATIONAL LEASE FINANCE CORPORATION Fax: (310) 788-1990 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067, United States Attn: Finance Department From: AMERICAN TRANS AIR, INC. Contact: Fax: AIRCRAFT TYPE: BOEING 737-800 ENGINE TYPE: CFM56-7B-27 REGISTRATION: ____ SERIAL NUMBER: ____ MONTH OF: NOTE: PLEASE RECORD TIME IN HOURS AND MINUTES NOT DECIMALS. Aircraft Total Time Since New As Of Last Month: Hours: Min: Aircraft Total Time Since New: Hours: Min: Aircraft Total Cycles Since New: Cycles: Airframe Hours Flown During Month: Hours: Min: Airframe Cycles/Landings During Month: Cycles: Time Remaining to "D" or Heavy Maintenance Check: HOURS OR US$ PER CYCLES FLOWN HOUR OR DURING MONTH (AS CYCLE (AS APPLICABLE) X APPLICABLE) = RESERVES TOTAL AIRFRAME: HRS: X = TOTAL LANDING GEAR: HRS: X = TOTAL APU: HRS: X = ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles(for Engine LLP Reserves): x = ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles (for Engine LLP Reserves): x = ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles (for LLP x = Reserves): ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles (for Engine LLP Reserves): x = TOTAL AMOUNT OF RESERVES (US$) PAID THIS MONTH: US$ Monthly Aircraft Utilization and Status Report From: AMERICAN TRANS AIR, INC. PAGE 2 OF 2 ENGINE SERIAL NUMBER: ENGINE SERIAL NUMBER: ORIGINAL POSITION: ORIGINAL POSITION: ACTUAL LOCATION: ACTUAL LOCATION: CURRENT THRUST RATING: CURRENT THRUST RATING: HOURS:/MIN: HOURS:/MIN: Total Time Since New As Of Total Time Since New As Of Last Month: Last Month: Total Time Since New: Total Time Since New: Total Cycles Since New: Total Cycles Since New: Hours Flown During Month: Hours Flown During Month: Cycles During Month: Cycles During Month: IMPORTANT: IF ILFC-OWNED ENGINE IS REMOVED OR INSTALLED ON ANOTHER AIRCRAFT, IT MUST BE REPORTED MONTHLY ON THIS FORM. EXHIBIT K AIRCRAFT DOCUMENTATION AIRCRAFT RECORDS 1. Copies of original Certificates delivered by Boeing: a. Airworthiness Certificate for Export b. Radio installation conformity certificate c. Noise limitation certificate 2. Copies of original Documents delivered by Boeing: a. Airworthiness Directive Compliance list b. Aircraft inspection report c. Aircraft Readiness Log d. Weighing report 3. Copies of current Certificates: a. Airworthiness Certificate b. Noise limitation c. Radio license d. Interior material burn certificates e. Certificate of Export f. Aircraft deregistration confirmation e. Aircraft Registration 4. Letters signed and stamped by Quality Assurance: a. Current aircraft hours and cycles b. Current engines hours and cycles c. Accident and Incident report d. Summary of Maintenance Program e. AD compliance during the lease term 5. Aircraft log books and Aircraft readiness log. 6. Aircraft Hard Time (HT) inspection status. 7. One year forecast for HT inspection. 8. Aircraft Modification status, including service bulletins. 9. Last weighing report prior to redelivery. 10. AD compliance report with original signoffs. 11. Routine and non-routine job cards of the last "C" and "D" checks. 12. Past year pilots and maintenance discrepancies. 13. Major and Minor structural repairs with applicable approvals. 14. Compass Swing report of the last three years. 15. Cabin Configuration drawing (LOPA). 16. Emergency equipment location drawing. 17. Last X-RAYs ENGINES RECORDS 1. Last test cell run reports. 2. Life Limited Parts status and traceability. 3. AD compliance report with original signoffs. 4. Engine Modification/service bulletin/inspection report and applicable forms. 5. Last heavy maintenance records for each module. 6. Engine log books. 7. Engine removal history. 8. Past year trend monitoring reports. 9. Historical borescope reports. 10. Engine component report. APU RECORDS 1. APU status (FH, FC, limits). 2. Life limited Part status and traceability. 3. AD compliance with original signoffs. 4. Modification status. 5. Last heavy maintenance documents. 6. APU log books. 7. Last test cell report. COMPONENT RECORDS 1. Aircraft component inventory. 2. Hard time component inventory. 3. All serviceable tags. 4. Landing Gear status with last overhaul and life limited Part status. 5. AD compliance with original signoffs. 6. Modification status. EXHIBIT L TECHNICAL EVALUATION REPORT (SEE FOLLOWING SHEETS) EX-10.6(D) 19 file065.txt AMTRAN, INC., 2000 10-K, EXHIBIT 10.6(D) AIRCRAFT LEASE AGREEMENT Dated as of September 5, 2000 BETWEEN AMERICAN TRANS AIR, INC. as LESSEE and INTERNATIONAL LEASE FINANCE CORPORATION as LESSOR ------------------------------------------------------------------------------- Aircraft Make and Model: New Boeing 737-800 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Aircraft Manufacturer's Serial Number: 28244 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Aircraft Registration Mark: Per Estoppel and Acceptance Certificate ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Make and Model of Engines: CFM56-7B-27 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Serial Numbers of Engines: Per Estoppel and Acceptance Certificate ------------------------------------------------------------------------------- NEW BOEING 737-800 AIRCRAFT NO. 5 TABLE OF CONTENTS ARTICLE 1 SUMMARY OF TRANSACTION.........................................2 1.1 Description of Aircraft........................................2 1.2 Scheduled Delivery Date and Location...........................2 1.3 Lease Term.....................................................2 1.4 Security Deposit...............................................2 1.5 Transaction Fee................................................2 1.6 Rent During Lease Term.........................................2 1.7 Country of Aircraft Registration...............................4 1.8 Maintenance Program............................................4 1.9 Agreed Value of Aircraft.......................................4 1.10 LESSOR's Bank Account..........................................4 ARTICLE 2 DEFINITIONS....................................................5 2.1 General Definitions............................................5 2.2 Specific Definitions...........................................9 ARTICLE 3 PLACE AND DATE OF DELIVERY....................................11 3.1 Place of Delivery.............................................11 3.2 Scheduled Delivery Date.......................................11 3.3 Delivery subject to Manufacturer Delivery.....................11 3.4 No LESSOR Liability...........................................11 3.5 Total Loss of Aircraft prior to Delivery......................11 3.6 Cancellation for Delay........................................11 ARTICLE 4 LEASE TERM....................................................12 4.1 Lease Term....................................................12 4.2 "Expiration Date".............................................12 4.3 "Termination Date"............................................12 ARTICLE 5 SECURITY DEPOSIT, TRANSACTION FEE, RENT AND OTHER PAYMENTS......................................................13 5.1 Security Deposit..............................................13 5.2 Transaction Fee...............................................14 5.3 Rent..........................................................14 5.4 LESSOR's Bank Account.........................................15 5.5 Default Interest..............................................16 5.6 No Deductions or Withholdings.................................16 5.7 Value Added Taxes.............................................16 5.8 Net Lease.....................................................17 5.9 LESSOR Performance of LESSEE Obligation.......................18 5.10 Consideration for Rent and other Amounts......................18 ARTICLE 6 INVOLVEMENT WITH AIRCRAFT MANUFACTURER........................19 6.1 LESSEE Selection of Aircraft..................................19 6.2 Agency Agreement..............................................19 6.3 Procurement of BFE............................................19 6.4 Assignment of Training........................................19 6.5 LESSEE Inspection of Aircraft.................................19 6.6 Aircraft at Delivery..........................................19 6.7 Delivery of the Aircraft to LESSEE............................20 6.8 LESSEE Acceptance of Aircraft.................................20 ARTICLE 7 PRE-DELIVERY, DELIVERY AND POST-DELIVERY DOCUMENTARY AND OTHER REQUIREMENTS............................21 7.1 Pre-Delivery Requirements.....................................21 7.2 Delivery Requirements.........................................22 7.3 Post-Delivery Requirements....................................23 ARTICLE 8 DISCLAIMERS...................................................24 8.1 "As Is, Where Is".............................................24 8.2 Waiver of Warranty of Description.............................24 8.3 LESSEE Waiver.................................................25 8.4 Conclusive Proof..............................................25 8.5 No LESSOR Liability for Losses................................25 8.6 No Liability to Repair or Replace.............................25 8.7 No Waiver.....................................................26 ARTICLE 9 MANUFACTURERS' AND VENDORS' WARRANTIES........................27 9.1 Warranties....................................................27 9.2 Reassignment..................................................27 ARTICLE 10 OPERATION OF AIRCRAFT.........................................28 10.1 Costs of Operation............................................28 10.2 Compliance with Laws..........................................28 10.3 Training......................................................28 10.4 No Violation of Insurance Policies............................28 10.5 Flight Charges................................................29 ARTICLE 11 SUBLEASES.....................................................30 11.1 No Sublease without LESSOR Consent............................30 11.2 LESSOR Costs..................................................30 11.3 Any Approved Sublease.........................................30 11.4 Assignment of Sublease........................................30 11.5 Continued Responsibility of LESSEE............................30 ARTICLE 12 MAINTENANCE AND USE OF AIRCRAFT...............................31 12.1 General Obligation............................................31 12.2 Specific Obligations..........................................31 12.3 Replacement of Parts..........................................32 12.4 Removal of Engines............................................33 12.5 Pooling of Engines and Parts..................................34 12.6 Installation of Engines on other aircraft.....................34 12.7 Modifications.................................................35 12.8 Performance of Work by Third Parties..........................36 12.9 Reporting Requirements........................................36 12.10 Information Regarding Maintenance Program.....................36 12.11 LESSOR Rights to Inspect Aircraft.............................36 ARTICLE 13 TITLE AND REGISTRATION........................................37 13.1 Title to the Aircraft During Lease Term.......................37 13.2 Registration of Aircraft......................................37 13.3 Filing of this Lease..........................................37 13.4 Evidence of Registration and Filings..........................37 ARTICLE 14 IDENTIFICATION PLATES.........................................38 14.1 Airframe Identification Plates................................38 14.2 Engine Identification Plates..................................38 ARTICLE 15 TAXES.........................................................39 15.1 General Obligation of LESSEE..................................39 15.2 Exceptions to Indemnity.......................................39 15.3 After-Tax Basis...............................................40 15.4 Claims and Contests...........................................40 15.5 Refunds.......................................................41 15.6 Cooperation in Filing Tax Returns.............................41 ARTICLE 16 INDEMNITIES...................................................42 16.1 General Indemnity.............................................42 16.2 Exceptions to General Indemnities.............................43 16.3 After-Tax Basis...............................................44 16.4 Timing of Payment.............................................44 16.5 Subrogation...................................................44 16.6 Notice........................................................44 16.7 Refunds.......................................................44 16.8 Defense of Claims.............................................45 16.9 Survival of Obligation........................................45 ARTICLE 17 INSURANCE.....................................................46 17.1 Categories of Insurance.......................................46 17.2 Insurance for Indemnities.....................................46 17.3 Insurance required by Manufacturer............................46 17.4 Renewal.......................................................46 17.5 Assignment of Rights by LESSOR................................46 17.6 Deductibles...................................................46 17.7 Other Insurance...............................................47 17.8 Information...................................................47 17.9 Currency......................................................47 17.10 Grounding of Aircraft.........................................47 17.11 Failure to Insure.............................................47 17.12 Limit on Hull in favor of LESSEE..............................47 17.13 Marketplace Limitations.......................................48 ARTICLE 18 LOSS, DAMAGE AND REQUISITION..................................49 18.1 Definitions...................................................49 18.2 Notice of Total Loss..........................................50 18.3 Total Loss of Aircraft or Airframe............................50 18.4 Surviving Engine(s)...........................................51 18.5 Total Loss of Engine and not Airframe.........................51 18.6 Other Loss or Damage..........................................52 18.7 Copy of Insurance Policy......................................53 18.8 Government Requisition........................................53 18.9 Conveyance to LESSEE..........................................53 ARTICLE 19 CRAF PROGRAM..................................................54 19.1 Dedication to CRAF............................................54 19.2 Notice to LESSOR..............................................54 19.3 Requisition of Engine.........................................54 19.4 Government Indemnification....................................54 19.5 No Geographic Limits..........................................54 19.6 Notice of Default.............................................55 19.7 Receipt of Payments...........................................55 ARTICLE 20 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE...........56 20.1 Representations and Warranties................................56 20.2 Covenants.....................................................58 ARTICLE 21 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSOR...........61 21.1 Representations and Warranties................................61 21.2 Covenant of Quiet Enjoyment...................................62 ARTICLE 22 FINANCIAL AND RELATED INFORMATION.............................63 ARTICLE 23 RETURN OF AIRCRAFT............................................64 23.1 Date of Return................................................64 23.2 Technical Report..............................................64 23.3 Return Location...............................................64 23.4 Full Aircraft Documentation Review............................64 23.5 Aircraft Inspection...........................................64 23.6 Certificate of Airworthiness Matters..........................65 23.7 General Condition of Aircraft at Return.......................66 23.8 Checks Prior to Return........................................69 23.9 Part Lives....................................................72 23.10 Export and Deregistration of Aircraft.........................74 23.11 LESSEE's Continuing Obligations...............................75 23.12 Airport and Navigation Charges................................75 23.13 Return Acceptance Certificate.................................76 23.14 Indemnities and Insurance.....................................76 ARTICLE 24 ASSIGNMENT....................................................77 24.1 No Assignment by LESSEE.......................................77 24.2 Sale or Assignment by LESSOR..................................77 24.3 LESSOR's Lender...............................................79 24.4 LESSEE Cooperation............................................79 24.5 Protections...................................................79 ARTICLE 25 DEFAULT OF LESSEE.............................................80 25.1 LESSEE Notice to LESSOR.......................................80 25.2 Events of Default.............................................80 25.3 LESSOR's General Rights.......................................82 25.4 Deregistration and Export of Aircraft.........................83 25.5 LESSEE Liability for Damages..................................83 25.6 Waiver of Default.............................................84 25.7 Present Value of Payments.....................................84 25.8 Use of "Termination Date".....................................84 ARTICLE 26 NOTICES.......................................................85 26.1 Manner of Sending Notices.....................................85 26.2 Notice Information............................................85 ARTICLE 27 GOVERNING LAW AND JURISDICTION................................86 27.1 California Law................................................86 27.2 Non-Exclusive Jurisdiction in California......................86 27.3 Service of Process............................................86 27.4 Prevailing Party in Dispute...................................86 27.5 Waiver........................................................86 ARTICLE 28 MISCELLANEOUS.................................................87 28.1 Press Releases................................................87 28.2 LESSOR Performance for LESSEE.................................87 28.3 LESSOR's Payment Obligations..................................87 28.4 Application of Payments.......................................87 28.5 Usury Laws....................................................87 28.6 Delegation by LESSOR..........................................87 28.7 Confidentiality...............................................88 28.8 Rights of Parties.............................................88 28.9 Further Assurances............................................88 28.10 Use of Word "including".......................................88 28.11 Headings......................................................88 28.12 Invalidity of any Provision...................................88 28.13 Negotiation...................................................88 28.14 Time is of the Essence........................................89 28.15 Amendments in Writing.........................................89 28.16 Counterparts..................................................89 28.17 Delivery of Documents by Fax..................................89 28.18 Entire Agreement..............................................89 EXHIBIT A AIRCRAFT DESCRIPTION..........................................91 EXHIBIT B AGENCY AGREEMENT..............................................92 EXHIBIT C CERTIFICATE OF INSURANCE......................................96 EXHIBIT D BROKERS' LETTER OF UNDERTAKING...............................102 EXHIBIT E ESTOPPEL AND ACCEPTANCE CERTIFICATE..........................104 EXHIBIT F OPINION OF COUNSEL...........................................111 EXHIBIT G ASSIGNMENT OF RIGHTS (AIRFRAME)..............................114 EXHIBIT H ASSIGNMENT OF RIGHTS (ENGINES)...............................119 EXHIBIT I RETURN ACCEPTANCE RECEIPT....................................123 EXHIBIT J MONTHLY REPORT...............................................134 EXHIBIT K AIRCRAFT DOCUMENTATION.......................................138 EXHIBIT L TECHNICAL EVALUATION REPORT..................................140 AIRCRAFT LEASE AGREEMENT THIS AIRCRAFT LEASE AGREEMENT is made and entered into as of September 5, 2000. BETWEEN: AMERICAN TRANS AIR, INC., a Indiana corporation whose address and principal place of business is at 7337 West Washington Street, Indianapolis International Airport, Indianapolis, Indiana 46231, United States of America ("LESSEE") and INTERNATIONAL LEASE FINANCE CORPORATION, a California corporation whose address and principal place of business is at 1999 Avenue of the Stars, 39th Floor, Los Angeles, California 90067, United States of America ("LESSOR"). The subject matter of this Lease is one (1) new Boeing 737-800 aircraft. In consideration of and subject to the mutual covenants, terms and conditions contained in this Lease, LESSOR hereby agrees to lease to LESSEE and LESSEE hereby agrees to lease from LESSOR the aircraft and the parties further agree as follows: ARTICLE 1 SUMMARY OF TRANSACTION The information in this Article 1 is a summary of the lease transaction between LESSEE and LESSOR. It is set forth for the convenience of the parties only and will not be deemed in any way to amend, detract from or simplify the other provisions of this Lease. 1.1 DESCRIPTION OF AIRCRAFT One new Boeing 737-800 aircraft 1.2 SCHEDULED DELIVERY DATE AND LOCATION In the month of (CONFIDENTIAL MATERIAL OMITTED) at Seattle, Washington 1.3 LEASE TERM 15 years 1.4 SECURITY DEPOSIT (CONFIDENTIAL MATERIAL OMITTED) 1.5 TRANSACTION FEE (CONFIDENTIAL MATERIAL OMITTED) 1.6 RENT DURING LEASE TERM Payable monthly in advance and equal to the sum of: (a The following amounts for the following years of the Lease Term: LEASE PERIOD MONTHLY RENTAL AMOUNT* (CONFIDENTIAL MATERIAL OMITTED) *The above base rent is expressed in January 1999 U.S.Dollars and will increase in the following amounts for the following periods: PERIOD ESCALATION FACTOR (CONFIDENTIAL MATERIAL OMITTED) 1.7 COUNTRY OF AIRCRAFT REGISTRATION U.S. 1.8 MAINTENANCE PROGRAM LESSEE's Maintenance Program 1.9 AGREED VALUE OF AIRCRAFT (CONFIDENTIAL MATERIAL OMITTED) The Agreed Value is expressed in March 2001 U.S. Dollars and will increase in accordance with Manufacturer's announced escalation rate from March 1, 2001 to the Delivery Date. On each annual renewal date of LESSEE's insurance policy commencing on the renewal date following the first anniversary of the Lease Term, the Agreed Value will decrease by two percent (2.0%) of the then existing Agreed Value. 1.10 LESSOR'S BANK ACCOUNT (Confidential Material Omitted) ARTICLE 2 DEFINITIONS Except where the context otherwise requires, the following words have the following meanings for all purposes of this Lease. The definitions are equally applicable to the singular and plural forms of the words. Any agreement defined below includes each amendment, modification, supplement and waiver thereto in effect from time to time. 2.1 GENERAL DEFINITIONS. "ACT" means the Federal Aviation Act of 1958, as amended from time to time, or any successor act thereto. "AIRCRAFT" means the Airframe, two (2) Engines, Parts and Aircraft Documentation, collectively. As the context requires, "Aircraft" may also mean the Airframe, any Engine, any Part, the Aircraft Documentation or any part thereof individually. For example, in the context of return to LESSOR the term "Aircraft" means the Airframe, Engines, Parts and Aircraft Documentation collectively, yet in the context of LESSEE not creating any Security Interests other than Permitted Liens on the Aircraft, the term "Aircraft" means any of the Airframe, any Engine, any Part or the Aircraft Documentation individually. "AIRCRAFT DOCUMENTATION" means all (a) log books, Aircraft records, manuals and other documents provided to LESSEE in connection with the Aircraft, (b) documents listed in Exhibits E and K and (c) any other documents required to be maintained during the Lease Term by the Aviation Authority, LESSEE's Maintenance Program and this Lease. "AIRFRAME" means the airframe listed in the Estoppel and Acceptance Certificate executed at Delivery together with all Parts relating thereto (except Engines or engines). "AIRWORTHINESS DIRECTIVES" or "ADS" means all airworthiness directives (or equivalent) of the FAA and the Aviation Authority applicable to the Aircraft. "APU" means the auxiliary power unit of the Aircraft. "AVIATION AUTHORITY" means the FAA or any Government Entity which under the Laws of the U.S. from time to time has control over civil aviation or the registration, airworthiness or operation of aircraft in the U.S. If the Aircraft is registered in a country other than the U.S., "Aviation Authority" means the agency which regulates civil aviation in such other country. "AVIATION DOCUMENTS" means any or all of the following which at any time may be obtainable from the Aviation Authority: (a) if required, a temporary certificate of airworthiness from the Aviation Authority allowing the Aircraft to be flown after Delivery to the State of Registration, (b) an application for registration of the Aircraft with the appropriate authority in the State of Registration, (c) the certificate of registration for the Aircraft issued by the State of Registration, (d) a full certificate of airworthiness for the Aircraft specifying transport category (passenger), (e) an air transport license, (f) an air operator's certificate, (g) such recordation of LESSOR's title to the Aircraft and interest in this Lease as may be available in the State of Registration and (h) all such other authorizations, approvals, consents and certificates in the State of Registration as may be required to enable LESSEE lawfully to operate the Aircraft. "BANKRUPTCY CODE" means The Bankruptcy Reform Act of 1978 (11 U.S.C. ss.ss. 101-1330), as amended or supplemented from time to time, and any successor statute, and all of the rules and regulations issued or promulgated in connection therewith. "BASIC ENGINE" means those units and components of the Engine which are used to induce and convert fuel/air mixture into thrust/power; to transmit power to the fan and accessory drives; to supplement the function of other defined systems external to the Engine; and to control and direct the flow of internal lubrication, plus all essential accessories as supplied by the Engine manufacturer. The nacelle, installed components related to the Aircraft systems, thrust reversers, QEC and the primary flight nozzle are excluded. "BFE" means any equipment which is to be provided by the purchaser of the Aircraft (whether actually provided by LESSOR as buyer-furnished equipment or Manufacturer as seller-purchased equipment). "BUSINESS DAY" means a day other than a Saturday or Sunday on which the banks in Indianapolis, Indiana and in the city where LESSOR's Bank is located are open for the transaction of business of the type required by this Lease. "CREDITOR" means any lessor, owner, bank, lender, mortgagee or other Person which is the owner of or has any interest in an aircraft engine or aircraft operated by LESSEE. "CREDITOR AGREEMENT" means the applicable agreement between a Creditor and LESSEE or between Creditors pursuant to which such Creditor owns, leases or has an interest in either an aircraft operated by LESSEE on which an Engine may be installed or in an aircraft engine which may be installed on the Airframe. "DEFAULT" means any event which, upon the giving of notice, the lapse of time and/or a relevant determination, would constitute an Event of Default. "DELIVERY" means the delivery of the Aircraft from LESSOR to LESSEE pursuant to Articles 3 and 6. "DELIVERY DATE" means the date on which Delivery takes place. "DOLLARS" and "$" means the lawful currency of the U.S. "ENGINE" means (a) each of the engines listed on the Estoppel and Acceptance Certificate; or (b) any replacement engine acquired by LESSOR and leased to LESSEE pursuant to Article 18.5 following a Total Loss of an Engine; including in each case all Parts installed in or on any of such engines at Delivery (or substituted, renewed or replacement Parts in accordance with this Lease) so long as title thereto is or remains vested in LESSOR in accordance with the terms of Article 12.3. "EVENT OF DEFAULT" means any of the events referred to in Article 25.2. "FAA" means the Federal Aviation Administration of the Department of Transportation or any successor thereto under the Laws of the U.S. "FARS" means the U.S. Federal Aviation Regulations embodied in Title 14 of the U.S. Code of Federal Regulations, as amended from time to time, or any successor regulations thereto. "GENEVA CONVENTION" means the Convention on the International Recognition of Rights in Aircraft signed in Geneva, Switzerland on June 19, 1948. "GOVERNMENT ENTITY" means any (a) national, state or local government, (b) board, commission, department, division, instrumentality, court, agency or political subdivision thereof and (c) association, organization or institution of which any of the entities listed in (a) or (b) is a member or to whose jurisdiction any such entity is subject. "LANDING GEAR" means the installed main and nose landing gear, components and their associated actuators, side braces and parts. "LAW" means any (a) statute, decree, constitution, regulation, order or any directive of any Government Entity, (b) treaty, pact, compact or other agreement to which any Government Entity is a signatory or party and (c) judicial or administrative interpretation or application of any of the foregoing. "LEASE" means this Aircraft Lease Agreement, together with all Exhibits hereto. "LESSOR'S LIEN" means any Security Interest created by LESSOR, or arising from a claim against LESSOR completely unrelated to this Lease or the other Operative Documents. "MAINTENANCE PROGRAM" means LESSEE's maintenance program as approved by the Aviation Authority or such other maintenance program as LESSOR may, in its discretion, accept in writing. "MANUFACTURER" means The Boeing Company, a Delaware corporation. "MPD" means the Maintenance Planning Document published by Manufacturer and applicable to the Aircraft. "OVERHAUL" means the full reconditioning of the Aircraft, an Engine, APU, Landing Gear, module or Part, as the case may be, in which such equipment has been fully disassembled; cleaned; thoroughly inspected; and returned to the highest standard specified by the applicable manufacturer's manual. "PART" means the APU, any part, component, appliance, system module, engine module, accessory, material, instrument, communications equipment, furnishing, LESSEE-furnished or LESSOR-purchased equipment or other item of equipment (other than complete Engines or engines) for the time being installed in or attached to the Airframe or any Engine or which, having been removed from the Airframe or any Engine, remains the property of LESSOR. "PERMITTED INSTITUTION" means any Person (other than a commercial air carrier, a commercial aircraft operator, a freight forwarder, or an affiliate of any of the foregoing), with either: (a) a combined capital and surplus or net worth of at least; or (b) have a credit rating on the majority of its unsecured debt which is at least equal to BBB or its equivalent from Standard and Poor's Rating Group, a division of The McGraw-Hill Companies, Inc. or Moody's Investors Service, Inc. "PERMITTED LIEN" means (a) LESSOR's Liens; (b) Security Interests arising in the ordinary course of LESSEE's business for Taxes either not yet due and payable or, if due and payable, being contested in good faith in accordance with Article 15.4; (c) materialmen's, mechanics', workmen's, repairmen's, employees' liens or similar Security Interests arising by operation of Law after the Delivery Date in the ordinary course of LESSEE's business for amounts which are either not yet due or are being contested in good faith by appropriate proceedings (and for which adequate reserves have been made or, when required in order to pursue such proceedings, an adequate bond has been provided) so long as such proceedings do not involve any material danger of sale, forfeiture or loss of the Aircraft; (d) the rights of LESSOR and any LESSOR's Lender and the rights of LESSEE under this Lease and the other Operative Documents; (e) the rights of others under agreements or arrangements to the extent permitted by Articles 10 and 11.5; and (f) any Security Interest against which LESSEE causes to be provided a bond in such amount and under such terms and conditions as are reasonably satisfactory to LESSOR. "PERSON" means any individual, firm, partnership, joint venture, trust, corporation, limited liability company, Government Entity, committee, department, authority or any body, incorporated or unincorporated, whether having distinct legal personality or not. "PRIME RATE" means the rate of interest from time to time announced by Bank of America Illinois in Chicago, Illinois as its prime commercial lending rate. "SECURITY INTEREST" means any encumbrance or security interest, however and wherever created or arising including (without prejudice to the generality of the foregoing) any right of ownership, security, mortgage, pledge, charge, encumbrance, lease, lien, statutory or other right in rem, hypothecation, title retention, attachment, levy, claim or right of possession or detention. "STATE OF REGISTRATION" means the U.S. or such other country or state of registration of the Aircraft as LESSOR may, in its absolute discretion, approve in writing. "U.S." means the United States of America. "U.S. AIR CARRIER" means any U.S. air carrier who is a Citizen of the U.S. holding an air carrier operating certificate issued by the Secretary of Transportation pursuant to chapter 447 of the Act for aircraft capable of carrying 10 or more individuals or 6000 pounds or more of cargo, and as to whom there is in force an air carrier operating certificate issued pursuant to FAR Part 121, or who may operate as an air carrier by certification or otherwise under any successor or substitute provisions therefor or in the absence thereof. 2.2 SPECIFIC DEFINITIONS. The following terms are defined in the Articles referenced below: TERMS ARTICLE Agreed Value 18.1 CRAF Program 19.1 CRAF Program Requisition 19.1 Period Default Interest 5.5 Delivery Location 3.1 Expenses 16.1 Expiration Date 4.3 Indemnities 16.1 Lease Term 4.1 LESSEE Customization 5.3.1 Costs LESSOR's Assignee 24.2.1 LESSOR's Bank 5.4 LESSOR's Lender 24.3 Manufacturer's Escalation 5.3.1 Rate Modifications 12.7.2 Net Total Loss Proceeds 18.1 Operative Documents 20.1.3 Rent 5.3.1 Return Check 23.8.1 Scheduled Delivery Date 3.2 Security Deposit 5.1.1 Taxes 15.1 Termination Date 4.3 Total Loss 18.1 Total Loss Date 18.1 Total Loss Proceeds 18.1 Transaction Fee 5.2 ARTICLE 3 PLACE AND DATE OF DELIVERY 3.1 PLACE OF DELIVERY. LESSOR will deliver the Aircraft to LESSEE at Manufacturer's facility at Seattle, Washington or such other place as may be agreed in writing between the parties (the "DELIVERY LOCATION"). 3.2 SCHEDULED DELIVERY DATE. As of the date of this Lease, delivery of the Aircraft from Manufacturer to LESSOR is scheduled to occur in the month of (CONFIDENTIAL MATERIAL OMITTED). LESSOR will not agree to reschedule such delivery without LESSEE's prior written consent. LESSOR will notify LESSEE from time to time and in a timely manner of the exact date on which LESSOR expects such delivery to take place (the "SCHEDULED DELIVERY DATE"). 3.3 DELIVERY SUBJECT TO MANUFACTURER DELIVERY. LESSOR and LESSEE expressly acknowledge that Delivery of the Aircraft to LESSEE is subject to and conditioned upon, and is to occur simultaneously with, delivery of the Aircraft by Manufacturer to LESSOR. 3.4 NO LESSOR LIABILITY. LESSOR will not be liable for any loss or expense, or any loss of profit, arising from any delay or failure in Delivery to LESSEE unless such delay or failure arises as a consequence of the willful misconduct of LESSOR, and in no event will LESSOR be liable for any delay or failure which is caused by any breach or delay on the part of Manufacturer or any BFE supplier. 3.5 TOTAL LOSS OF AIRCRAFT PRIOR TO DELIVERY. If a Total Loss of the Aircraft occurs prior to Delivery, neither party will have any further liability to the other except that LESSOR will return to LESSEE the Security Deposit in accordance with Article 5.1.3 and any prepaid Rent. 3.6 CANCELLATION FOR DELAY. Promptly after LESSOR becomes aware that in Manufacturer's opinion a delay will cause Delivery to be delayed beyond (CONFIDENTIAL MATERIAL OMITTED) LESSOR will notify LESSEE. By written notice given within ten (10) Business Days after LESSEE's receipt of such LESSOR notice, either party may by written notice to the other party terminate this Lease and this Lease will terminate on the date of receipt of such notice. In the event of such termination, neither party will have any further liability to the other party except that LESSOR will return to LESSEE the Security Deposit in accordance with Article 5.1.3 and any prepaid Rent. If neither party gives notice of termination within such ten (10) Business Days, both parties lose all right to terminate under this Article 3.6 unless otherwise agreed in writing by the parties. ARTICLE 4 LEASE TERM 4.1 LEASE TERM. The term of leasing of the Aircraft will commence on the Delivery Date and continue for a term of fifteen (15) years ("LEASE TERM"). 4.2 "EXPIRATION DATE". "EXPIRATION DATE" means the date on which LESSEE is required to redeliver the Aircraft to LESSOR in the condition required by this Lease on the last day of the Lease Term. 4.3 "TERMINATION DATE". This Lease may in fact terminate on any of the dates set forth below: (a the Expiration Date, provided LESSEE returns the Aircraft to LESSOR on the Expiration Date in the condition required by Article 23; or (b a date earlier than the Expiration Date, if: (i there is a Total Loss of the Aircraft prior to Delivery pursuant to Article 3.5; (ii cancellation of this Lease occurs pursuant to Article 3.6; (iii there is a Total Loss of the Aircraft and payment is made to LESSOR in accordance with Article 18.3; or (iv an Event of Default occurs and LESSOR repossesses the Aircraft or otherwise terminates this Lease pursuant to Article 25.3. (c a date later than the Expiration Date, if: (i an Event of Default occurs hereunder by LESSEE returning the Aircraft in the condition required by this Lease after the Expiration Date; or (ii an Event of Default occurs and LESSOR repossesses the Aircraft or otherwise terminates this Lease pursuant to Article 25.3. The "TERMINATION DATE" is the date on which this Lease terminates because one of the above has occurred. ARTICLE 5 SECURITY DEPOSIT, TRANSACTION FEE, RENT AND OTHER PAYMENTS 5.1 SECURITY DEPOSIT. 5.1.1 (CONFIDENTIAL MATERIAL OMITTED) 5.1.2 The Security Deposit may be commingled with LESSOR's general funds and any interest earned on such Security Deposit will be for LESSOR's account. If the Security Deposit is reduced below the required amount by application to meet LESSEE's unperformed obligations under this Lease, LESSEE will replenish the Security Deposit within ten (10) days after LESSOR's demand therefor. The Security Deposit will serve as security for the performance by LESSEE of its obligations under this Lease and any other agreements between LESSEE and LESSOR relating to aircraft, engines, aircraft equipment or the extension of credit and may be applied by LESSOR upon the occurrence of a Default or Event of Default hereunder or of a default by LESSEE under any such other agreements. 5.1.3 Upon termination of this Lease in accordance with Article 4.3 other than if an Event of Default has occurred and is continuing, LESSOR will return to LESSEE the amount of the Security Deposit then held by LESSOR (so long as no default by LESSEE exists under any other agreement between LESSEE and LESSOR relating to aircraft, engines or aircraft equipment or the extension of credit by LESSOR to LESSEE), without interest, less an amount determined by LESSOR to be a reasonable estimate of the costs, if any, which LESSOR will incur to remedy any unperformed obligations of LESSEE under this Lease, including the correction of any discrepancies from the required condition of the Aircraft on return of the Aircraft. 5.2 TRANSACTION FEE. Within two (2) Business Days after execution of this Lease, LESSEE will pay LESSOR a nonrefundable transaction fee (CONFIDENTIAL MATERIAL OMITTED) 5.3 RENT. 5.3.1 LESSEE will pay LESSOR the following amounts monthly in advance as rent for the Aircraft (the "RENT"): (a The following amounts for the following years of the Lease Term: LEASE PERIOD MONTHLY RENTAL AMOUNT* ------------ --------------------- (CONFIDENTIAL MATERIAL OMITTED) *The above base rent is expressed in January 1999 U.S. dollars and will increase in the following amounts for the following periods (the "MANUFACTURER'S ESCALATION RATE"): PERIOD ESCALATION FACTOR ------------ --------------------- (CONFIDENTIAL MATERIAL OMITTED) Any increases to the above base Rent during the Lease Term will be calculated immediately prior to Delivery. 5.3.2 The first payment of Rent during the Lease Term will be paid prior to the Scheduled Delivery Date. Each subsequent payment of Rent will be due monthly thereafter no later than the same day of the month as the Delivery Date of the Aircraft except that, if such day is not a Business Day, the Rent will be due on the immediately preceding Business Day. If Delivery occurred on the 29th, 30th or 31st of the month and in any given month during the Lease Term there is no such corresponding date, Rent will be payable on the last Business Day of such month. 5.4 LESSOR'S BANK ACCOUNT. The Security Deposit, Transaction Fee, Rent and any other payment due under this Lease will be paid by wire transfer of immediately available U.S. Dollar funds to LESSOR's bank account at: (CONFIDENTIAL MATERIAL OMITTED) or to such other bank account in the U.S. as LESSOR may from time to time designate by written notice ("LESSOR'S BANK"). When it is stated in this Lease that an installment of the Security Deposit, the monthly Rent or any other payment is due or must be paid or made by LESSEE by a specific date, then such payment actually must be received by LESSOR's Bank on or before such specific date, even if, in order for such payment to be received by LESSOR's Bank by such specific date, LESSEE must initiate the wire transfer prior to such specific date. 5.5 DEFAULT INTEREST. If LESSOR's Bank does not receive the Rent or any other amount on or before the specific date when due, LESSOR will suffer loss and damage the exact nature and amount of which are difficult or impossible to ascertain. LESSEE will pay LESSOR as supplemental Rent (by way of agreed compensation and not as a penalty) interest on any due and unpaid amounts payable by LESSEE under this Lease. Interest will be calculated at a per annum rate (based on a 360 day year) which is equal to three percent (3%) plus the Prime Rate in effect on the date on which the amount was originally due for the period from the date the amount originally was due through the date the amount actually is received at LESSOR's Bank or, in the case of LESSOR's performance of LESSEE's obligations hereunder, from the date of payment by LESSOR through the date of LESSEE's repayment to LESSOR ("DEFAULT INTEREST"). Default Interest will accrue on a day-to-day basis and be compounded monthly. 5.6 NO DEDUCTIONS OR WITHHOLDINGS. All payments by LESSEE under this Lease, including the Security Deposit, Transaction Fee, Rent, Default Interest, fees, indemnities or any other item, will be made in full without any deduction or withholding whether in respect of set-off, counterclaim, duties, or Taxes (as defined in Article 15) imposed in the State of Registration or any jurisdiction from which such payments are made unless LESSEE is prohibited by Law from doing so, in which event LESSEE will gross up the payment amount such that the net payment received by LESSOR after any deduction or withholding equals the amounts called for under this Lease. LESSEE's requirement to pay the amounts required by this Article 5.6 is subject to the exceptions provided in Article 15.2. 5.7 VALUE ADDED TAXES. The Rent and other amounts payable by LESSEE under this Lease are exclusive of any value added tax, turnover tax or similar tax or duty. 5.8 NET LEASE. 5.8.1 This Lease is a net lease and LESSEE's obligation to pay Rent and make other payments in accordance with this Lease will be absolute and unconditional under any and all circumstances and regardless of other events, including the following: (a) any right of set-off, counterclaim, recoupment, defense or other right (including any right of reimbursement) which LESSEE may have against LESSOR, Manufacturer, the Engine manufacturer or any other person for any reason, including any claim LESSEE may have for the foregoing; (b) unavailability or interruption in use of the Aircraft for any reason, including a requisition thereof or any prohibition or interference with or other restriction against LESSEE's use, operation or possession of the Aircraft (whether by Law or otherwise), any defect in title, airworthiness, merchantability, fitness for any purpose, condition, design, specification or operation of any kind or nature of the Aircraft, the ineligibility of the Aircraft for any particular use or trade or for registration under the Laws of any jurisdiction or Total Loss of the Aircraft; (c) insolvency, bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, liquidation, receivership, administration or similar proceedings by or against LESSOR, LESSEE, Manufacturer, the Engine manufacturer or any other Person; (d) invalidity or unenforceability or lack of due authorization of or other defect in this Lease; (e) failure or delay on the part of any party to perform its obligations under this Lease; or (f) any other circumstance which but for this provision would or might have the effect of terminating or in any other way affecting any obligation of LESSEE hereunder. 5.8.2 Nothing in Article 5.8 will be construed to limit LESSEE's rights and remedies in the event of LESSOR's breach of its warranty of quiet enjoyment set forth in Article 21.2 or to limit LESSEE's rights and remedies to pursue in a court of law any claim it may have against LESSOR or any other Person. 5.9 LESSOR PERFORMANCE OF LESSEE OBLIGATION. If LESSEE fails to make any payment under this Lease to a third party in connection with the Aircraft or fails to perform any other obligation required under this Lease, LESSOR may (but is not required to) at its election and without waiver of its rights perform such obligation and/or pay such amount. Within five (5) Business Days after written notice to LESSEE of the amount paid by LESSOR on behalf of LESSEE, LESSEE will repay such amount to LESSOR together with Default Interest. Such payment to LESSOR will constitute additional Rent payable by LESSEE to LESSOR hereunder. Any payment, performance or compliance by LESSOR of a LESSEE obligation hereunder will not affect the occurrence or continuance of a Default or Event of Default, as the case may be. 5.10 CONSIDERATION FOR RENT AND OTHER AMOUNTS. The amount of the Rent and other payments contained herein are in consideration of LESSEE's waiver of warranties and indemnities set forth in Articles 8 and 16, respectively, and the other provisions of this Lease. ARTICLE 6 INVOLVEMENT WITH AIRCRAFT MANUFACTURER 6.1 LESSEE SELECTION OF AIRCRAFT. LESSEE ACKNOWLEDGES THAT THE DESCRIPTION OF THE AIRCRAFT SET FORTH IN THIS LEASE IS BASED UPON INFORMATION SUPPLIED BY MANUFACTURER. LESSEE COVENANTS TO LESSOR THAT LESSEE HAS USED ITS OWN JUDGMENT IN SELECTING THE AIRCRAFT AND HAS DONE SO BASED ON ITS SIZE, DESIGN AND TYPE. LESSEE ACKNOWLEDGES THAT LESSOR IS NOT A MANUFACTURER, REPAIRER OR SERVICING AGENT OF THE AIRCRAFT. 6.2 AGENCY AGREEMENT. Certain obligations remain to be performed by LESSOR in connection with the manufacture, fabrication and completion of the Aircraft by Manufacturer which will be performed by LESSEE (as provided in the Agency Agreement). LESSEE will act as LESSOR's agent with respect to some of these matters pursuant to the terms of an Agency Agreement to be entered into between LESSEE and LESSOR in the form set forth in Exhibit B. 6.3 PROCUREMENT OF BFE. LESSEE's and LESSOR's technical representatives will meet and determine which of LESSEE or LESSOR will provide specific items of BFE. Such BFE will then be provided to Manufacturer by LESSEE or LESSOR, as applicable, within the time frames required by Manufacturer. 6.4 ASSIGNMENT OF TRAINING. LESSOR hereby assigns to LESSEE all rights to training to which LESSOR is entitled as a result of LESSOR's purchase of the Aircraft and lease of the Aircraft to LESSEE. If LESSEE fails to take Delivery of the Aircraft when tendered in accordance with Article 6.7, LESSEE will immediately pay to LESSOR an amount equal to the Dollar value of such training based on what the training would have cost LESSEE had LESSEE purchased such training directly from Manufacturer. 6.5 LESSEE INSPECTION OF AIRCRAFT. During the course of final assembly of the Aircraft, and at Delivery, LESSEE will have its own representative present to inspect the Aircraft and to ensure its conformity with LESSEE's needs and the terms of this Lease. LESSEE will have ground inspection and acceptance flight rights with respect to the Aircraft. LESSEE acknowledges that, as between LESSEE and LESSOR, in accepting the Aircraft LESSEE is relying on its own inspection and knowledge of the Aircraft in determining whether the Aircraft meets the requirements of this Lease. 6.6 AIRCRAFT AT DELIVERY. At Delivery, the Aircraft will be as set forth in Exhibit A, as such description may be modified by any change requests agreed to among LESSEE, LESSOR and Manufacturer (which will be reflected in amendment(s) to this Lease). In the event of any discrepancies, LESSEE and LESSOR will cooperate in good faith with one another and with Manufacturer and Engine manufacturer, as applicable, in order to arrive at a mutually acceptable resolution of any such discrepancies. 6.7 DELIVERY OF THE AIRCRAFT TO LESSEE. Subject to LESSEE having performed all of the conditions precedent to Delivery set forth herein, immediately following delivery of the Aircraft from Manufacturer to LESSOR, LESSOR will deliver the Aircraft to LESSEE at the Delivery Location. Provided that the Aircraft is in the condition required by Article 6.6, upon the tender of the Aircraft by LESSOR to LESSEE, LESSEE will accept the Aircraft and the date of tender by LESSOR to LESSEE will be deemed to be the Delivery Date for all purposes under this Lease, including, but not limited to, the commencement of LESSEE's obligation to pay Rent hereunder. 6.8 LESSEE ACCEPTANCE OF AIRCRAFT. If LESSEE fails to (a) comply with its obligations set forth in Article 6.2, (b) comply with the conditions contained in Articles 7.1 and 7.2 so as to allow Delivery to take place immediately following delivery of the Aircraft by Manufacturer to LESSOR or (c) take delivery of the Aircraft when properly tendered for delivery by LESSOR in the condition required hereunder, LESSEE will indemnify LESSOR for all costs and expenses incurred by LESSOR as a result thereof including (but without limitation) any payments other than the purchase price which LESSOR becomes obliged to make to Manufacturer. ARTICLE 7 PRE-DELIVERY, DELIVERY AND POST-DELIVERY DOCUMENTARY AND OTHER REQUIREMENTS 7.1 PRE-DELIVERY REQUIREMENTS. LESSEE will do each of the following prior to the Scheduled Delivery Date of the Aircraft within the time frames set forth below: 7.1.1 Within one (1) month after execution of this Lease, LESSEE will deliver to LESSOR each of the following: (a) copies of resolutions of the Board of Directors of LESSEE or other written evidence of appropriate corporate action, duly certifying and authorizing the lease of the Aircraft hereunder and the execution, delivery and performance of this Lease, together with an incumbency certificate as to the person or persons authorized to execute and deliver documents on behalf of LESSEE hereunder; and (b) an opinion of counsel in the form and substance of Exhibit F. 7.1.2 At least three (3) days prior to the Scheduled Delivery Date, LESSEE will have delivered to LESSOR a Certificate of Insurance and Brokers' Letter of Undertaking in the form and substance of Exhibits C and D, respectively, from LESSEE's insurance brokers evidencing insurance of the Aircraft in accordance with this Lease from the Delivery Date. 7.1.3 At least three (3) Business Days prior to the Scheduled Delivery Date, LESSEE will do each of the following: (a) provide LESSOR with a copy of such Aviation Documents as may be available prior to the Scheduled Delivery Date; (b) provide LESSOR with a power of attorney empowering LESSEE's representative, who may be an officer or employee of LESSEE, to accept the Aircraft on behalf of LESSEE; and (c) provide LESSOR with such other documents as LESSOR may reasonably request. 7.1.4 Prior to the Scheduled Delivery Date, LESSEE will pay LESSOR the first monthly installment of Rent in accordance with Article 5.3.2. 7.2 DELIVERY REQUIREMENTS. On the Delivery Date of the Aircraft, each of the following will occur: 7.2.1 LESSEE will execute and deliver to LESSOR an Estoppel and Acceptance Certificate in the form of Exhibit E covering the Aircraft and effective as of the Delivery Date. 7.2.2 If not previously done, LESSEE and LESSOR will sign an amendment or supplement to Exhibit A evidencing all agreed-to changes to the specification of the Aircraft. 7.2.3 LESSEE will deliver a certificate signed on behalf of LESSEE by an officer of LESSEE stating all of the following: (a) the representations and warranties contained in Article 20 are true and accurate on and as of the Delivery Date as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date); (b) no Default has occurred and is continuing or will result from LESSEE's lease of the Aircraft hereunder; and (c) none of the Creditor Agreements contains terms which provide or contemplate that any Creditor will obtain any right, title or interest in an Engine which is installed on another aircraft (or, if this is not the case, such certificate will identify the parties, the aircraft and the Creditor Agreements for which this statement is untrue). 7.2.4 LESSEE's counsel will deliver opinions confirming the matters set forth in the opinion of counsel described in Article 7.1 and advising that all filing and other requirements have been met or concurrently are being met. 7.2.5 If any Creditor Agreement provides or contemplates that such Creditor will obtain any right, title or interest in an Engine which is installed on such Creditor's aircraft, LESSEE will deliver to LESSOR an engines cooperation agreement in form and substance acceptable to LESSOR which is executed by LESSEE and LESSEE's Creditors (as defined therein). 7.2.6 LESSOR will deliver to LESSEE an assignment of Manufacturer and Engine manufacturer rights in the form and substance of Exhibits G and H, respectively, and concurrently therewith LESSOR, to the extent it has not previously done so, will be deemed to have assigned all training, product assurance and product support applicable to the owner or operator of the Aircraft to LESSEE during the Lease Term. 7.3 POST-DELIVERY REQUIREMENTS. 7.3.1 Promptly after Delivery, LESSEE will do each of the following: (a) provide LESSOR with copies of all Aviation Documents not previously delivered; and (b) provide LESSOR with a follow-up opinion of counsel advising that the Aircraft has been registered in the State of Registration and that all necessary filings have been made. ARTICLE 8 DISCLAIMERS LESSOR HAS COMMITTED TO LESSEE THAT ON THE DELIVERY DATE THE AIRCRAFT WILL BE IN THE CONDITION REQUIRED BY ARTICLE 6. SUCH COMMITMENT OR COVENANT ON THE PART OF LESSOR EXPIRES AND THE DISCLAIMERS SET FORTH IN THIS ARTICLE 8 APPLY UPON LESSEE'S ACCEPTANCE OF THE AIRCRAFT AND EXECUTION OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATE. AFTER SUCH TIME, THEN AS BETWEEN LESSOR AND LESSEE: 8.1 "AS IS, WHERE IS". LESSEE AGREES THAT IT IS LEASING THE AIRCRAFT "AS IS, WHERE IS". LESSEE UNCONDITIONALLY ACKNOWLEDGES AND AGREES THAT NEITHER LESSOR NOR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES OR REPRESENTATIVES HAVE MADE OR WILL BE DEEMED TO HAVE MADE ANY TERM, CONDITION, REPRESENTATION, WARRANTY OR COVENANT EXPRESS OR IMPLIED (WHETHER STATUTORY OR OTHERWISE) AS TO (a) THE CAPACITY, AGE, AIRWORTHINESS, VALUE, QUALITY, DURABILITY, CONFORMITY TO THE PROVISIONS OF THIS LEASE, DESCRIPTION, CONDITION (WHETHER OF THE AIRCRAFT, ANY ENGINE, ANY PART THEREOF OR THE AIRCRAFT DOCUMENTATION), DESIGN, WORKMANSHIP, MATERIALS, MANUFACTURE, CONSTRUCTION, OPERATION, DESCRIPTION, STATE, MERCHANTABILITY, PERFORMANCE, FITNESS FOR ANY PARTICULAR USE OR PURPOSE (INCLUDING THE ABILITY TO OPERATE OR REGISTER THE AIRCRAFT OR USE THE AIRCRAFT DOCUMENTATION IN ANY OR ALL JURISDICTIONS) OR SUITABILITY OF THE AIRCRAFT OR ANY PART THEREOF, OR THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, KNOWN OR UNKNOWN, APPARENT OR CONCEALED, EXTERIOR OR INTERIOR, (b) THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK, COPYRIGHT OR OTHER INTELLECTUAL PROPERTY RIGHTS, (c) ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE OR (d) EXCEPT AS SET FORTH IN ARTICLE 21.1, ANY OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY PART THEREOF, ALL OF WHICH ARE HEREBY EXPRESSLY EXCLUDED AND EXTINGUISHED. 8.2 WAIVER OF WARRANTY OF DESCRIPTION. IN CONSIDERATION OF (a) LESSEE'S RIGHTS HEREUNDER TO INSPECT THE AIRCRAFT AND (b) LESSOR'S ASSIGNMENT TO LESSEE OF ANY EXISTING AND ASSIGNABLE WARRANTIES OF MANUFACTURER AND THE ENGINE MANUFACTURER, LESSEE HEREBY AGREES THAT ITS ACCEPTANCE OF THE AIRCRAFT AT DELIVERY AND ITS EXECUTION AND DELIVERY OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATE CONSTITUTE LESSEE'S WAIVER OF THE WARRANTY OF DESCRIPTION, ANY CLAIMS LESSEE MAY HAVE AGAINST LESSOR BASED UPON THE FAILURE OF THE AIRCRAFT TO CONFORM WITH SUCH DESCRIPTION AND ANY AND ALL RIGHTS IT MAY HAVE TO THE REMEDIES SET FORTH IN SECTIONS 10508 THROUGH 10522 OF THE CALIFORNIA COMMERCIAL CODE. EVEN IF AT ANY TIME THE FAILURE OF THE AIRCRAFT TO CONFORM TO SUCH DESCRIPTION SUBSTANTIALLY IMPAIRS THE VALUE AND UTILITY OF THE AIRCRAFT AND EITHER (i) LESSEE ACCEPTED THE AIRCRAFT BASED ON A REASONABLE ASSUMPTION THAT THE NONCONFORMITY WOULD BE CURED AND IT WAS NOT SEASONABLY CURED OR (ii) LESSEE ACCEPTED THE AIRCRAFT WITHOUT DISCOVERING THE NONCONFORMITY BUT LESSEE'S ACCEPTANCE OF THE AIRCRAFT WAS REASONABLY INDUCED EITHER BY LESSOR'S ASSURANCES OR BY THE DIFFICULTY OF DISCOVERING ANY DEFECT PRIOR TO ACCEPTANCE, LESSEE AGREES NOT TO LOOK TO LESSOR FOR DAMAGES OR RELIEF ARISING OUT OF THE FAILURE OF THE AIRCRAFT TO CONFORM TO SUCH DESCRIPTION. 8.3 LESSEE WAIVER. LESSEE hereby waives as between itself and LESSOR and agrees not to seek to establish or enforce any rights and remedies, express or implied (whether statutory or otherwise) against LESSOR or the Aircraft relating to any of the matters mentioned in Articles 8.1 or 8.2. 8.4 CONCLUSIVE PROOF. DELIVERY BY LESSEE TO LESSOR OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATE WILL BE CONCLUSIVE PROOF AS BETWEEN LESSOR AND LESSEE THAT LESSEE'S TECHNICAL EXPERTS HAVE EXAMINED AND INVESTIGATED THE AIRCRAFT AND ENGINES AND (a) EACH IS AIRWORTHY AND IN GOOD WORKING ORDER AND REPAIR AND (b) THE AIRCRAFT AND ENGINES AND THE AIRCRAFT DOCUMENTATION ARE WITHOUT DEFECT (WHETHER OR NOT DISCOVERABLE AT DELIVERY) AND IN EVERY WAY SATISFACTORY TO LESSEE. 8.5 NO LESSOR LIABILITY FOR LOSSES. LESSEE agrees that LESSOR will not be liable to LESSEE, any sublessee or any Person, whether in contract or tort and however arising, for any cost, loss or damage (consequential or otherwise) arising out of the condition of the Aircraft, whether or not due in whole or in part to an act or omission or the active or passive negligence of LESSOR. 8.6 NO LIABILITY TO REPAIR OR REPLACE. LESSOR will not be liable for any expense in repairing or replacing any item of the Aircraft or be liable to supply another aircraft or any item in lieu of the Aircraft or any Part thereof if the same is lost, confiscated, damaged, destroyed or otherwise rendered unfit for use. 8.7 NO WAIVER. Nothing in this Article 8 or elsewhere in this Lease will be deemed to be a waiver by LESSEE of any rights it may have against Manufacturer, the Engine manufacturer or any other Person. ARTICLE 9 MANUFACTURERS' AND VENDORS' WARRANTIES 9.1 WARRANTIES. As set forth in Article 7.2.6, at Delivery LESSOR will assign to LESSEE for the duration of the Lease Term the benefit of all warranties and indemnities given to LESSOR by Manufacturer and the Engine manufacturer. Effective on the Delivery Date, all other vendor warranties with respect to the Aircraft are hereby assigned by LESSOR to LESSEE. 9.2 REASSIGNMENT. On the Termination Date, the benefit of any warranty assigned by LESSOR to LESSEE pursuant to Article 7.2.6 will be reassigned automatically to LESSOR or its designee. ARTICLE 10 OPERATION OF AIRCRAFT 10.1 COSTS OF OPERATION. As between LESSEE and LESSOR, LESSEE will pay all costs incurred in the operation of the Aircraft during the Lease Term, for profit or otherwise, including the costs of flight crews, cabin personnel, fuel, oil, lubricants, maintenance, insurance, storage, landing and navigation fees, airport charges, passenger service and any and all other expenses of any kind or nature, directly or indirectly, in connection with or related to the use, movement and operation of the Aircraft. The obligations, covenants and liabilities of LESSEE under this paragraph arising prior to return of the Aircraft to LESSOR will continue in full force and effect, notwithstanding the termination of this Lease or expiration of the Lease Term. 10.2 COMPLIANCE WITH LAWS. LESSEE agrees throughout the Lease Term that all use of the Aircraft will be in accordance with applicable Laws of the State of Registration and of any country, state, territory or municipality into or over which LESSEE may operate. LESSEE will not employ, suffer or cause the Aircraft to be used in any business which is forbidden by Law or in any manner which may render it liable to condemnation, destruction, seizure, or confiscation by any authority. LESSEE will not permit the Aircraft to fly to any airport or country if so doing would cause LESSEE to be in violation of any Law applicable to LESSEE or the Aircraft. The foregoing provisions in this Article 10.2 shall not prohibit any violation of Law (a) during a good-faith contest of the validity, application, or alleged violation thereof in any reasonable manner so long as there is no material danger of sale, forfeiture, or loss of the Aircraft (however, this good faith exception shall not apply in the case of a mandatory grounding order, the good faith contest of which does not permit LESSEE to operate the Aircraft during such contest), and which does not extend beyond the end of the Lease Term if the pendency of such contest would adversely affect the Aircraft or the remarketing thereof in any material respect; and (b) for minor or non-recurring violations (with the understanding that minor violations may cease to be minor if recurring) that LESSEE is diligently trying to rectify which do not render the Aircraft liable to any risk of condemnation, destruction, seizure, or confiscation by any Government Entity. 10.3 TRAINING. LESSEE will not use the Aircraft for testing or for training of flight crew members other than LESSEE crew members and will not use the Aircraft for training any more than it utilizes for training the other aircraft in its fleet. 10.4 NO VIOLATION OF INSURANCE POLICIES. LESSEE will not use or permit the Aircraft to be used in any manner or for any purpose which is not covered by the insurance policies LESSEE is required to carry and maintain as set forth in this Lease. LESSEE will not carry any goods of any description that would invalidate or limit such policies or do any other act or permit to be done anything which could reasonably be expected to invalidate or limit any such insurance policy. 10.5 FLIGHT CHARGES. 10.5.1 LESSEE will pay promptly when due all enroute navigation charges, navigation service charges and all other charges payable by LESSEE for the use of or for services provided at any airport, whether in respect of the Aircraft or any other aircraft of LESSEE, and will indemnify and hold LESSOR harmless in respect of the same. This indemnity will continue in full force and effect notwithstanding the termination or expiration of the Lease Term for any reason or the return of the Aircraft. 10.5.2 If requested by LESSOR, LESSEE will provide LESSOR with a list of the airports to which LESSEE regularly operates the Aircraft or its other aircraft. LESSEE hereby authorizes Eurocontrol or another aviation authority or airport or creditor claiming rights on the Aircraft to confirm the status of LESSEE's payments to such creditor for the Aircraft and its other aircraft, as and when requested by LESSOR. ARTICLE 11 SUBLEASES 11.1 NO SUBLEASE WITHOUT LESSOR CONSENT. LESSEE WILL NOT SUBLEASE OR PART WITH POSSESSION OF THE AIRCRAFT (EXCEPT FOR MAINTENANCE AND REPAIR) AT ANY TIME WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR (NOT TO BE UNREASONABLY WITHHELD) AND IN ACCORDANCE WITH SUCH REQUIREMENTS AS MAY FROM TIME TO TIME BE AGREED IN WRITING BETWEEN LESSOR AND LESSEE. The wet leasing of the Aircraft during the Lease Term (in which LESSEE and its crews retain operational control of the Aircraft) will not be considered a sublease of the Aircraft. 11.2 LESSOR COSTS. LESSEE will indemnify LESSOR on demand for all out-of-pocket expenses (including legal fees) incurred in connection with LESSOR's assessment of the subleasing proposal (whether or not LESSOR's consent to such sublease is ultimately given) and implementation of the sublease. 11.3 ANY APPROVED SUBLEASE. Any sublease approved by LESSOR will be for a term no greater than the remaining Lease Term and contain provisions consistent with this Lease protecting LESSOR's title to the Aircraft, providing appropriate LESSOR indemnities, regarding the maintenance and repair standards for the Aircraft, concerning the insurances which will be carried by the sublessee and the circumstances which constitute a Total Loss of the Aircraft. Any such sublease will be subject and subordinate to this Lease. In its sole discretion, LESSOR may require an opinion of counsel in connection with such sublease, including LESSOR's right to repossess the Aircraft in the event of an Event of Default hereunder or under the sublease. LESSEE will not amend the terms of any approved sublease without the prior written consent of LESSOR, which will not be unreasonably withheld. 11.4 ASSIGNMENT OF SUBLEASE. Any approved sublease will be assigned to LESSOR as security. LESSEE will deliver the original counterpart of the sublease to LESSOR and make any filings necessary to protect LESSOR's security interest. 11.5 CONTINUED RESPONSIBILITY OF LESSEE. LESSEE will continue to be responsible for performance of its obligations under this Lease during any period of sublease. ARTICLE 12 MAINTENANCE AND USE OF AIRCRAFT 12.1 GENERAL OBLIGATION. 12.1.1 During the Lease Term and until the Aircraft is returned to LESSOR, LESSEE alone has the obligation, at its expense, to maintain and repair the Aircraft, Engines and all of the Parts (a) in accordance with the Maintenance Program, (b) in accordance with the rules and regulations of the Aviation Authority, (c) in accordance with Manufacturer's type design, (d) in accordance with any other regulations or requirements necessary in order to maintain a valid Certificate of Airworthiness for the Aircraft and meet the requirements at all times during the Lease Term and upon return of the Aircraft to LESSOR for issuance of a Standard Certificate of Airworthiness for transport category aircraft issued by the Aviation Authority (except during those periods when the Aircraft is undergoing maintenance or repairs as required or permitted by this Lease) and (e) in the same manner and with the same care as used by LESSEE or its sublessee with respect to similar aircraft and engines operated by LESSEE or its sublessee and without in any way discriminating against the Aircraft. 12.1.2 LESSEE will maintain and repair the Engines in the same manner and in the equivalent time frame to its other engines and LESSEE will not discriminate against any of the Engines in respect of the repair and maintenance. 12.1.3 LESSEE will not enter into any Engine maintenance cost per flight hour, power-by-the-hour or similar agreement with Engine manufacturer or any other Engine maintenance facility or organization without LESSOR's prior written consent. 12.2 SPECIFIC OBLIGATIONS. Without limiting Article 12.1, LESSEE agrees that such maintenance and repairs will include but will not be limited to each of the following specific items: (a) performance in accordance with the Maintenance Program of all routine and non-routine maintenance work; (b) incorporation in the Aircraft of all Airworthiness Directives; (c) incorporation in the Aircraft of all service bulletins of Manufacturer, the Engine manufacturer and other vendors which LESSEE schedules to adopt within the Lease Term for the rest of its Boeing 737-800 aircraft fleet. It is the intent of the parties that the Aircraft will not be discriminated from the rest of LESSEE's fleet in service bulletin compliance (including method of compliance) or other maintenance matters. LESSEE will not discriminate against the Engines with respect to Overhaul build standards and life-limited part replacements; (d) incorporation in the Maintenance Program for the Aircraft of a corrosion prevention and control program; (e) maintaining in English and keeping in an up-to-date status the records and historical documents set forth in Attachment 1 of Exhibit I; (f) maintaining historical records, in English, for on condition, condition-monitored, hard time and life-limited Parts (including tags from the manufacturer of such Part or a repair facility which evidence that such Part is new or overhauled and establish authenticity, total time in service and time since overhaul for such Part), the hours and cycles the Aircraft and Engines operate and all maintenance and repairs performed on the Aircraft; and (g) properly documenting all repairs, Modifications and alterations and the addition, removal or replacement of equipment, systems or components in accordance with the rules and regulations of the Aviation Authority and reflecting such items in the Aircraft Documentation. In addition, all repairs to the Aircraft will be accomplished in accordance with Manufacturer's Structural Repair Manual (or FAA-approved data supported by FAA Form 8110-3 or equivalent). All Modifications and alterations will also be accomplished in accordance with FAA-approved data supported by FAA Form 8110-3 or equivalent. 12.3 REPLACEMENT OF PARTS. 12.3.1 LESSEE, at its own cost and expense, will promptly replace all Parts which may from time to time become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or rendered unfit or beyond economical repair (BER) for any reason. In the ordinary course of maintenance, service, repair, overhaul or testing, LESSEE may remove any Part provided that LESSEE replaces such Part as promptly as practicable. All replacement Parts will (a) be free and clear of all Security Interests (except Permitted Liens) of any kind or description, (b) be in airworthy condition and of at least equivalent model, service bulletin and modification status and have a value and utility at least equal to the Parts replaced, assuming such replaced Parts were in the condition and repair required to be maintained by the terms hereof and (c) have a current "serviceable tag" of the manufacturer or maintenance facility providing such items to LESSEE, indicating that such Parts are new, serviceable or Overhauled. So long as a substitution meets the requirements of the Maintenance Program and Aviation Authority, LESSEE may substitute for any Part a part that does not meet the requirements of the foregoing sentence if a complying Part cannot be procured or installed within the available groundtime of the Aircraft and as soon as practicable the noncomplying part is removed and replaced by a complying Part. 12.3.2 All Parts removed from the Airframe or any Engine will remain the property of LESSOR and subject to this Lease no matter where located, until such time as such Parts have been replaced by Parts (which have been incorporated or installed in or attached to the Airframe or such Engine) which meet the requirements for replacement Parts specified above and title to such replacement Parts has passed to LESSOR under the Laws of the State of Registration and LEX SITUS. To the extent permitted by the Laws of the State of --- ----- Registration and the LEX SITUS it is the intent of LESSOR and LESSEE that without further --- ----- act and immediately upon any replacement Part becoming incorporated, installed or attached to the Airframe or an Engine as above provided, (a) title to the removed Part will thereupon vest in LESSEE, free and clear of all rights of LESSOR, (b) title to the replacement Part will thereupon vest in LESSOR free and clear of all rights of LESSEE and (c) such replacement Part will become subject to this Lease and be deemed to be a Part hereunder to the same extent as the Parts originally incorporated or installed in or attached to the Airframe or such Engine. 12.4 REMOVAL OF ENGINES. 12.4.1 If an Engine is removed for testing, service, repair, maintenance, Overhaul work, alterations or modifications, title to such Engine will remain vested in LESSOR. 12.4.2 LESSEE will be entitled to remove any of the Engines from the Aircraft and install another engine or engines on the Aircraft, provided that LESSEE complies with each of the following obligations: (a) the insurance requirements set forth in Article 17 and Exhibit C are in place; (b) LESSEE ensures that the identification plates referred to in Article 14 are not removed from any Engine upon such Engine being detached from the Aircraft; and (c) title to the Engine remains with LESSOR free from all Security Interests (except Permitted Liens) regardless of the location of the Engine or its attachment to or detachment from the Aircraft. 12.5 POOLING OF ENGINES AND PARTS. With LESSOR's prior written consent, not to be unreasonably withheld, LESSEE may subject the Engines and Parts to normal interchange or pooling agreements with responsible commercial air carriers customary in the airline industry and entered into by LESSEE in the ordinary course of its business with respect to its Boeing 737-800 fleet generally, so long as (a) in the case of pooling of an Engine, such Engine is returned to LESSEE within two (2) months, (b) no transfer of title to the Engine occurs, (c) all other terms of this Lease continue to be observed with respect to the Engines or Parts, including but not limited to Articles 8, 10, 12, 13, 14, 15, 16, 17 and 18 and (d) LESSEE continues to be fully responsible to LESSOR for the performance of all of its obligations hereunder. 12.6 INSTALLATION OF ENGINES ON OTHER AIRCRAFT. Any Engine removed from the Aircraft may be installed on another airframe in LESSEE's fleet which utilizes engines of the same type as the Engine only if one of the situations described in this Article 12.6 exists: 12.6.1 LESSEE or LESSOR has title to such other aircraft free and clear of all Security Interests (except Permitted Liens). 12.6.2 LESSEE, LESSOR and all of the Creditors of LESSEE of such aircraft enter into an engines cooperation agreement in form and substance acceptable to LESSOR in which each party agrees to recognize one another's rights in the engines. LESSEE will reimburse LESSOR and LESSOR's Lender for their reasonable attorneys' fees and costs in negotiating and finalizing engine cooperation agreement arrangements with LESSEE and its Creditors. 12.6.3 Such other aircraft is subject to a Creditor Agreement (but no other Security Interests except Permitted Liens) which by its terms expressly or effectively states that such Creditor and its successors and assigns will not acquire any right, title or interest in any Engine by reason of such Engine being installed on such aircraft. LESSEE hereby agrees that if LESSOR's title to an Engine is in fact impaired under any such Creditor Agreement, such impairment will be a Total Loss of such Engine and the provisions of Article 18.5 will apply. To the extent another Creditor Agreement contains such provisions, then LESSOR hereby agrees for the benefit of the Creditor of such Creditor Agreement that neither LESSOR nor its successors or assigns will acquire or claim any right, title or interest in any engine in which LESSEE or another Creditor has an interest as a result of such engine being installed on the Airframe. 12.7 MODIFICATIONS. 12.7.1 No modification, alteration, addition or removal to the Aircraft ("MODIFICATION") expected to cost over Five Hundred Thousand U.S. Dollars (US$500,000) or deviation from the Aircraft's original type design or configuration will be made without the prior written consent of LESSOR, which consent will not be unreasonably withheld. "Modifications" do not include Airworthiness Directives or Manufacturer's recommended service bulletins, for which LESSOR's consent is not required. 12.7.2 LESSOR may review LESSEE's proposed designs, plans, engineering drawings and diagrams, and flight and maintenance manual revisions for any proposed Modification. If requested by LESSOR, LESSEE will furnish LESSOR (at LESSEE's expense) with such documents in final form and any other documents required by Law, as a result of such Modification. All Modifications incorporated on the Aircraft will be properly documented in the Aircraft Documentation and be fully approved by the Aviation Authority. 12.7.3 Notwithstanding any other provision of this Lease, no Modification will be made which has the effect of decreasing the utility or value of the Aircraft. 12.7.4 No Modification will be made by LESSEE if an Event of Default exists and is continuing hereunder. 12.7.5 Unless otherwise agreed by LESSOR in writing, all non-severable or structural Modifications will forthwith become a part of the Aircraft and LESSEE relinquishes to LESSOR all rights and title thereto. However, all severable Modifications will remain the property of LESSEE or the third-party owner and, at LESSOR's request and LESSEE's cost, will be removed from the Aircraft prior to return of the Aircraft, with LESSEE restoring the Aircraft to the condition it was in prior to the Modification. Notwithstanding the foregoing, no such removal will be permitted without LESSOR's permission after the occurrence of an Event of Default hereunder and immediately upon the occurrence of an Event of Default hereunder, without the requirement of any further act or notice, all right, title and interest in such Modifications will immediately vest in LESSOR. 12.7.6 LESSOR will bear no liability for the cost of Modifications of the Aircraft whether in the event of grounding or suspensions of certification, or for any other cause. 12.8 PERFORMANCE OF WORK BY THIRD PARTIES. Whenever maintenance and repair work on the Aircraft or Engines will be regularly performed by a Person other than LESSEE, such Person will be an FAA-authorized repair station. 12.9 REPORTING REQUIREMENTS. 12.9.1 Commencing with a report furnished ten (10) days after the end of the calendar month in which Delivery occurs, LESSEE will furnish to LESSOR a Monthly Report in English in the form attached hereto as Exhibit J. Each Monthly Report will be furnished within ten (10) days after the end of each calendar month, except that the Monthly Report pertaining to the last month (or any portion thereof) of the Lease Term will be furnished to LESSOR on the Termination Date. 12.9.2 On each anniversary of the Delivery Date, LESSEE will provide LESSOR with a Technical Evaluation Report for the Aircraft in the form and substance of Exhibit L, as revised. 12.10 INFORMATION REGARDING MAINTENANCE PROGRAM. LESSEE will provide LESSOR with a copy of or information regarding the Maintenance Program for the Aircraft, as requested by LESSOR. 12.11 LESSOR RIGHTS TO INSPECT AIRCRAFT. On reasonable notice, LESSOR and/or its authorized agents or representatives will have the right to inspect the Aircraft and Aircraft Documentation. LESSOR agrees that such requests will be coordinated with LESSEE so as to cause the minimum practical disturbance to LESSEE's operation or its personnel. LESSEE agrees to cooperate with LESSOR in making the Aircraft and Aircraft Documentation available to such authorized technical teams. No such inspection shall include opening panels, bays, or the like (although LESSOR may observe those that are then open), or disassembling any item. LESSOR will have no duty to make any such inspection and will not incur any liability or obligation by reason of (and LESSEE's indemnity obligations pursuant to Article 16 will apply notwithstanding) not making any such inspection or by reason of any reports it receives or any reviews it may make of the Aircraft records. ARTICLE 13 TITLE AND REGISTRATION 13.1 TITLE TO THE AIRCRAFT DURING LEASE TERM. Title to the Aircraft will be and remain vested in LESSOR. LESSOR and LESSEE intend this Lease to be a "true lease". LESSEE will have no right, title or interest in the Aircraft except as provided in this Lease. 13.2 REGISTRATION OF AIRCRAFT. LESSEE at its sole cost and expense will (a) register and maintain registration of the Aircraft in the name of LESSOR at the register of aircraft in the State of Registration and (b) from time to time take all other steps then required by Law (including the Geneva Convention if applicable) or by practice, custom or understanding or as LESSOR may reasonably request to protect and perfect LESSOR's interest in the Aircraft and this Lease in the State of Registration or in any other jurisdictions in or over which LESSEE may operate the Aircraft. 13.3 FILING OF THIS LEASE. To the extent permitted by Law and in accordance with the requirements of the Law from time to time, LESSEE at its sole cost and expense will cause this Lease to be kept, filed, recorded and refiled or rerecorded in the State of Registration and in any other offices necessary to protect LESSOR's rights hereunder. 13.4 EVIDENCE OF REGISTRATION AND FILINGS. As LESSOR may reasonably request from time to time, LESSEE will furnish to LESSOR an opinion of counsel or other evidence reasonably satisfactory to LESSOR of the registrations and filings required hereunder. ARTICLE 14 IDENTIFICATION PLATES LESSOR will affix and LESSEE will at all times maintain on the Airframe and each Engine the identification plates containing the following legends or any other legend reasonably requested by LESSOR in writing: 14.1 AIRFRAME IDENTIFICATION PLATES. Location: One to be affixed to the Aircraft structure above the forward entry door adjacent to and not less prominent than that of Manufacturer's data plate and another in a prominent place on the flight deck. Size: No smaller than 4" x 6". Legend: "THIS AIRCRAFT IS OWNED BY INTERNATIONAL LEASE FINANCE CORPORATION. MANUFACTURER'S SERIAL NO: 28244 OWNER'S ADDRESS: INTERNATIONAL LEASE FINANCE CORPORATION 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States of America Fax: (310) 788-1990" 14.2 ENGINE IDENTIFICATION PLATES. Location: The legend on the plate must be visible. Size: No smaller than 2" x 6". "THIS ENGINE IS OWNED BY INTERNATIONAL LEASE FINANCE CORPORATION, LOS ANGELES, CALIFORNIA, USA." ARTICLE 15 TAXES 15.1 GENERAL OBLIGATION OF LESSEE. Except as set forth in Article 15.2, LESSEE agrees to pay promptly when due, and to indemnify and hold harmless LESSOR on a full indemnity basis from, all license and registration fees and all taxes, fees, levies, imposts, duties, charges or withholdings of any nature whatsoever (including without limitation any value added, franchise, transfer, sales, gross receipts, use, business, occupation, excise, personal property, real property, stamp or other tax) together with any assessments, penalties, fines, additions to tax or interest thereon, however or wherever imposed (whether imposed upon LESSEE, LESSOR, on all or part of the Aircraft, the Engines or otherwise), by any Government Entity or taxing authority in the U.S., any State thereof, or any foreign country or by any international taxing authority, upon or with respect to, based upon or measured by any of the following (collectively, "TAXES"): (a) the Aircraft, the Engines or any Parts. (b) the use, operation or maintenance of the Aircraft or carriage of passengers or freight during the Lease Term. (c) this Lease, the payments due hereunder and the terms and conditions hereof. (d) the return of the Aircraft to LESSOR or other use or disposition of the Aircraft by LESSEE. 15.2 EXCEPTIONS TO INDEMNITY. The indemnity provided in Article 15.1 does not extend to any of the following Taxes: (a) Imposed by the U.S. (including without limitation any taxes collected by withholding) or any state or local government or governmental subdivision or state or local taxing authority in the U.S. (including any possession or territory of the U.S.) or by any foreign government, taxing authority or governmental subdivision of a foreign country which are based on, or measured by, the receipts, gross or net income, capital, net worth, franchises, excess profits, or conduct of business (including minimum taxes, withholding taxes and taxes on or measured by any items of tax preference) of LESSOR, except to the extent that such Tax would not have been imposed on or payable by LESSOR but for the location, use, registration or operation of the Aircraft or any part thereof, or any place of business or any activity of LESSEE in the jurisdiction imposing such Tax. (b) Imposed as a result of LESSOR's transfer, mortgage, pledge, financing or other disposition by LESSOR of all or a portion of its interest in the Aircraft or this Lease except a transfer or sale resulting from an exercise of remedies pursuant to Article 25.3 hereunder or in connection with a termination of the Lease pursuant to Article 18 hereof. (c) Attributable to the period prior to the Delivery Date or after return of the Aircraft to LESSOR in accordance with this Lease. (d) Attributable to LESSOR's gross negligence, willful misconduct or breach of this Lease. 15.3 AFTER-TAX BASIS. The amount which LESSEE is required to pay with respect to any Taxes indemnified against under Article 15.1 is an amount sufficient to restore LESSOR on an after-tax basis to the same position LESSOR would have been in had such Taxes not been incurred. 15.4 CLAIMS AND CONTESTS. If a written claim is received by LESSOR for Taxes, which claim, if sustained, would require the payment of an indemnity by LESSEE pursuant to this Article 15, LESSOR shall notify LESSEE of such claim within thirty (30) days after its receipt, provided that failure to provide such notice within thirty (30) days will not relieve LESSEE of any indemnification obligation pursuant to this Article 15 if such failure does not preclude LESSEE from exercising its contest rights hereunder. Payments due from LESSEE to LESSOR pursuant to this Article 15 shall be made directly to LESSOR within thirty (30) days of written demand by LESSOR to LESSEE. If requested by LESSEE in writing, LESSOR shall upon receipt of indemnity reasonably satisfactory to it and at the expense of LESSEE (including, without limitation, all reasonable costs, expenses, legal and accountants' fees, and disbursements, penalties, interest incurred in contesting such claim, and additions to tax) in good faith, in the name of LESSOR or, if requested by LESSEE, in the name of LESSEE (or permit LESSEE, if desired by LESSEE, to contest in the name of LESSEE) if permissible under applicable laws, the validity, applicability or amount of such Taxes by (i) resisting payment thereof if practicable only if adequate reserves have been made for such Taxes or, if required, an adequate bond has been posted, (ii) paying the same under protest, if protest shall be necessary and proper, (iii) if payment shall be made, using reasonable efforts to obtain a refund thereof in appropriate administrative and judicial proceedings, and (iv) taking such other action as is reasonably requested by LESSEE from time to time including not paying such Taxes only if adequate reserves have been made for such Taxes or, if required, an adequate bond has been posted. LESSOR shall determine the method of any contest and (in good faith consultation with LESSEE) control the conduct thereof. Notwithstanding anything contained in this Article 15.4, LESSOR will not be required to contest, or to continue to contest, the validity, applicability or amount of any Tax (or portion thereof) (x) if such contest would result in any material risk of criminal penalties or any material risk of sale, forfeiture or loss of the Aircraft, (y) if an Event of Default has occurred and is continuing, or (z) in the case of a contest of a Tax reflected on a return of LESSOR with other taxes of LESSOR that are not indemnified by the LESSEE hereunder, if LESSEE shall not have furnished an opinion of independent tax counsel selected by the LESSEE, and reasonably satisfactory to LESSOR, that a reasonable basis exists for such contest. If LESSOR shall obtain a refund of all or any part of such Taxes for which an indemnity was paid by LESSEE, LESSOR shall pay LESSEE the amount of such refund; PROVIDED, HOWEVER, that such amount shall not be payable before such time as LESSEE shall have made all payments or indemnities to LESSOR then due under this Article 15 and under the Lease or while an Event of Default shall have occurred and be continuing. If in addition to such refund LESSOR shall receive an amount representing interest on the amount of such refund, LESSEE shall be paid that proportion of such interest which is fairly attributable to Taxes paid with an indemnity payment by LESSEE prior to the receipt of such refund or interest and increased by any taxes saved by reason of the deductibility of such payment by LESSOR. LESSEE shall not be deemed to be in default under any of the indemnification provisions under this Article 15 so long as it or LESSOR shall diligently prosecute such contest and LESSEE has indemnified LESSOR to LESSOR's reasonable satisfaction. In case any report or return is required to be made with respect to any obligation of LESSEE under this Article 15.4 or arising out of this Article 15.4, LESSEE will either timely make such report or return in such manner as will show the ownership of the Aircraft in LESSOR, and will as soon as possible send a copy of such report or return to LESSOR, or will notify LESSOR of such requirement and prepare and deliver such report or return to LESSOR in such manner as shall be satisfactory to LESSOR. 15.5 REFUNDS. Upon receipt by LESSOR of a refund of all or any part of any Taxes (including any deductions or withholdings referred to in Article 15.1) which LESSEE has paid, LESSOR will pay to LESSEE the net amount of such Taxes refunded. 15.6 COOPERATION IN FILING TAX RETURNS. LESSEE and LESSOR will cooperate with one another in providing information which may be reasonably required to fulfill each party's tax filing requirements and any audit information request arising from such filing. ARTICLE 16 INDEMNITIES 16.1 GENERAL INDEMNITY. Except as set forth in Article 16.2, LESSEE agrees to indemnify and hold harmless LESSOR and its officers, directors, employees, agents and shareholders (individually an "INDEMNITEE" and collectively "INDEMNITEES") from any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs, disbursements and expenses (including legal fees, costs and related expenses) of every kind and nature, whether or not any of the transactions contemplated by this Lease are consummated (collectively "EXPENSES"), which are imposed on, incurred by or asserted against any Indemnitee and which are in any way relating to, based on or arising out of any of the following: (a) this Lease or any transactions contemplated hereby; (b) the operation, possession, use, non-use, control, leasing, subleasing, maintenance, storage, overhaul, testing, inspections or acceptance flights at return of the Aircraft, any Engine or any Part during the Lease Term by LESSEE, any sublessee or any other Person, whether or not the same is in compliance with the terms of this Lease, including without limitation claims for death, personal injury, property damage, other loss or harm to any Person and claims relating to any Laws, including without limitation environmental control, noise and pollution laws, rules or regulations; (c) the manufacture, design, acceptance, rejection, delivery, return, sale in connection with an Event of Default, import, export, condition, repair, modification, servicing, rebuilding, enforcement of warranties whether in LESSOR's or LESSEE's name, customer and product support provided by Manufacturer and other vendors, airworthiness, registration, reregistration, performance, sublease, merchantability, fitness for use, substitution or replacement of the Aircraft, Engine or any Part under this Lease or other transfer of use or possession of the Aircraft, Engine or any Part, including under a pooling or interchange arrangement, including without limitation latent and other defects, whether or not discoverable and patent, trademark or copyright infringement; (d) any non-compliance by LESSEE with any term of this Lease or the falsity or inaccuracy of any representation or warranty of LESSEE set forth herein; (e) the prevention or attempt to prevent the arrest, confiscation, seizure, taking in execution, impounding, forfeiture or detention of the Aircraft, or in securing the release of the Aircraft; or (f) as a consequence of any Default in payment by LESSEE of any sum to be paid by LESSEE when due under this Lease or any other Default by LESSEE in the due and punctual performance of its obligations under this Lease. The foregoing indemnity by LESSEE is intended to include and cover any Expense to which an Indemnitee may be subject (in contract, tort, strict liability or under any other theory) regardless of the negligence, active or passive or any other type, of such Indemnitee, so long as such Expense does not fall within any of the exceptions listed in Article 16.2. 16.2 EXCEPTIONS TO GENERAL INDEMNITIES. The indemnity provided for in Article 16.1 will not extend to Expenses of any Indemnitee to the extent resulting from or arising out of any of the following: (a) Expenses which have resulted from the willful misconduct of such Indemnitee; (b) Expenses which LESSEE and LESSOR mutually agree or, absent mutual agreement, are judicially determined to be attributable to acts or events which occur after the Termination Date and return of the Aircraft to LESSOR in the condition required hereunder, but in any such case only to the extent not attributable to acts or omissions of LESSEE; (c) Expenses representing Taxes, it being acknowledged that the terms of Article 15 apply exclusively to LESSEE's indemnity obligations with respect to Taxes; (d) Expenses due to the breach by LESSOR of its covenant of quiet enjoyment pursuant to Article 21.2 (except to the extent covered by LESSEE's insurances); (e) Expenses which arise in connection with the transfer by LESSOR of any interest in the Aircraft or this Lease, except for any transfer in connection with any Event of Default or a Total Loss of the Aircraft or an Engine. (f) Expenses which are solely attributable to the representation or warranty of LESSOR contained in or made pursuant to any Operative Document being untrue; (g) Expenses which are solely related to the failure of such Indemnitees to perform or observe any agreement, covenant, or condition on its part to be performed or observed in any Operative Document; (h) Expenses which are solely an ordinary and usual internal customary operating expense; or (i) Expenses which are solely related to a breach of Article 21.1.6, or (j) Expenses which are solely related to a LESSOR's Lien. 16.3 AFTER-TAX BASIS. The amount which LESSEE will be required to pay with respect to any Expense indemnified against under Article 16.1 will be an amount sufficient to restore the Indemnitee, on an after-tax basis, to the same position such Indemnitee would have been in had such Expense not been incurred. 16.4 TIMING OF PAYMENT. It is the intent of the parties that each Indemnitee will have the right to indemnification for Expenses hereunder as soon as a claim is made and as soon as an Expense is incurred, whether or not such claim is meritorious and whether or not liability is established (but subject to Articles 16.2 and 16.8). LESSEE will pay an Indemnitee for Expenses pursuant to this Article 16 within ten (10) days after receipt of a written demand therefor from such Indemnitee accompanied by a written statement describing in reasonable detail the basis for such indemnity (but not before payment is due from such Indemnitee). 16.5 SUBROGATION. Upon the payment in full of any indemnity pursuant to this Article 16 by LESSEE, LESSEE will be subrogated to any right of the Indemnitee in respect of the matter against which such indemnity has been made. 16.6 NOTICE. Each Indemnitee and LESSEE will give prompt written notice one to the other of any liability of which such party has knowledge for which LESSEE is, or may be, liable under Article 16.1; provided, however, that failure to give such notice will not terminate any of the rights of Indemnitees under this Article 16 except to the extent that LESSEE has been materially prejudiced by the failure to provide such notice. 16.7 REFUNDS. If any Indemnitee obtains a recovery of all or any part of any amount which LESSEE has paid to such Indemnitee, such Indemnitee will pay to LESSEE the net amount recovered by such Indemnitee. 16.8 DEFENSE OF CLAIMS. (a) LESSEE and its insurers will have the right (in each such case at LESSEE's sole expense) to investigate or, provided that LESSEE or its insurers have not reserved the right to dispute liability with respect to any insurance policies pursuant to which coverage is sought, defend or compromise any claim covered by insurance for which indemnification is sought pursuant to Article 16.1 and each Indemnitee will cooperate with LESSEE or its insurers with respect thereto. If LESSEE or its insurers are retaining attorneys to handle such claim, such counsel must be reasonably satisfactory to the Indemnitees. If not, the Indemnitees will have the right to retain counsel of their choice at LESSEE's expense. (b) Unless LESSOR agrees in writing otherwise, no settlement of any claim hereunder may require LESSOR to agree to any remedy apart from the payment of money damages (for which such payment of money damages LESSEE will in any event indemnify the Indemnitees). (c) In no event shall any Indemnitee enter into a settlement or other compromise with respect to any Expense without LESSEE's prior written consent (which shall not be unreasonably withheld or delayed), unless such Indemnitee waives its right to be indemnified with respect to such Expense under this Article 16. (d) To the extent that any Expense indemnified by LESSEE hereunder may be covered by insurance maintained by LESSEE, at LESSEE's expense, each Indemnitee agrees to cooperate with the insurers in the exercise of their rights to investigate, defend, or compromise that Expense as may be required to retain the benefits of the insurance for that Expense. (e) If an Indemnitee is not a party to this Lease, LESSEE may require that Indemnitee to agree in writing to the terms of this Article 16 before making any payment to such Indemnitee under this Article 16. 16.9 SURVIVAL OF OBLIGATION. Notwithstanding anything in this Lease to the contrary, the provisions of this Article 16 will survive the Termination Date and continue in full force and effect notwithstanding any breach by LESSOR or LESSEE of the terms of this Lease, the termination of the lease of the Aircraft to LESSEE under this Lease or the repudiation by LESSOR or LESSEE of this Lease. ARTICLE 17 INSURANCE 17.1 CATEGORIES OF INSURANCE. Throughout the Lease Term and until the Termination Date LESSEE will, at its own expense, effect and maintain in full force and effect the types of insurance and amounts of insurance (including deductibles) described in Exhibit C through such brokers and with such insurers favorably regarded in the airline industry. 17.2 INSURANCE FOR INDEMNITIES. The insurance referred to in Article 17.1 will in each case include and insure (to the extent of the risks covered by the policies) the indemnity provisions of Article 16 and LESSEE will maintain such insurance of the indemnities for a minimum of two (2) years following the Termination Date. 17.3 INSURANCE REQUIRED BY MANUFACTURER. During the Lease Term, LESSEE will carry the insurance required by Manufacturer in connection with LESSOR's assignment of Manufacturer's warranties and product support to LESSEE. 17.4 RENEWAL. Not less than two (2) Business Days before the expiration or termination date of any insurance required hereunder, LESSEE will provide LESSOR with fax confirmation from LESSEE's insurance brokers that renewed certificates of insurance evidencing the renewal or replacement of such insurance and complying with Exhibit C will be issued on the termination date of the prior certificate. Within seven (7) days after such renewal, LESSEE will furnish its brokers' certificates of insurance to LESSOR. 17.5 ASSIGNMENT OF RIGHTS BY LESSOR. If LESSOR assigns all or any of its rights under this Lease as permitted by this Lease or otherwise disposes of any interest in the Aircraft to any other Person, LESSEE will, upon request, procure that (to the extent of the assignment or disposition) such Person hereunder be added as loss payee and/or additional assured in the policies effected hereunder and enjoy the same rights and insurance enjoyed by LESSOR under such policies. To the extent of its retained interest or as provided in Article 24.2.1, LESSOR will nevertheless continue to be covered by such policies. 17.6 DEDUCTIBLES. If there is a material adverse change in the financial condition of LESSEE which LESSOR reasonably believes will not enable LESSEE to pay the deductible upon the occurrence of a partial loss of the Aircraft or an Engine, then LESSOR may require LESSEE at LESSEE's expense to lower its deductibles on the insurance maintained hereunder to a level which is available on commercially reasonable terms in the insurance market. 17.7 OTHER INSURANCE. LESSOR may from time to time by notice to LESSEE require LESSEE at LESSEE's expense to effect such other insurance or such variations to the terms of the existing insurance as may then be customary in the airline industry for aircraft of the same type as the Aircraft and at the time commonly available in the insurance market. 17.8 INFORMATION. LESSEE will provide LESSOR with any information reasonably requested by LESSOR from time to time concerning the insurance maintained with respect to the Aircraft or in connection with any claim being made or proposed to be made thereunder. 17.9 CURRENCY. All proceeds of insurance pursuant to this Lease will be payable in Dollars except as may be otherwise agreed by LESSOR. 17.10 GROUNDING OF AIRCRAFT. If at any time any of the insurance required pursuant to this Lease will cease to be in full force and effect, LESSEE will forthwith ground the Aircraft and keep the Aircraft grounded until such time as such insurance is in full force and effect again. 17.11 FAILURE TO INSURE. If at any time LESSEE fails to maintain insurance in compliance with this Article 17, LESSOR will be entitled but not bound to do any of the following (without prejudice to any other rights which it may have under this Lease by reason of such failure): (a) to pay any premiums due or to effect or maintain substitute insurance or otherwise remedy such failure in any reasonable manner (and LESSEE will upon demand reimburse LESSOR in full for any amount so expended in that connection); or (b) at any time while such failure is continuing, to require the Aircraft to remain at any airport or (as the case may be), proceed to and remain at any airport designated by LESSOR. 17.12 LIMIT ON HULL IN FAVOR OF LESSEE. LESSEE may carry hull all risks or hull war and allied perils on the Aircraft in excess of the Agreed Value (which Agreed Value is payable to LESSOR) only to the extent such excess insurance which would be payable to LESSEE in the event of a Total Loss does not exceed fifteen percent (15%) of the Agreed Value and only to the extent that such additional insurance will not prejudice the insurances required herein or the recovery by LESSOR thereunder. LESSEE agrees that it will not create or permit to exist any liens or encumbrances over the insurances, or its interest therein, except as constituted by this Lease. 17.13 MARKETPLACE LIMITATIONS. The insurance required by this Lease may be subject to any limitations generally prevailing in the airline insurance marketplace at the time (e.g., AVN67B). ARTICLE 18 LOSS, DAMAGE AND REQUISITION Throughout the Lease Term and until the Termination Date, LESSEE will bear all risk of loss, theft, damage and destruction to the Aircraft. 18.1 DEFINITIONS. In this Article 18: "AGREED VALUE" (CONFIDENTIAL MATERIAL OMITTED) The Agreed Value is set forth in March 2001 U.S. Dollars and will be increased in accordance with Manufacturer's announced escalation rate from March 1, 2001 to the Delivery Date. On each annual renewal date of LESSEE's insurance policy commencing on the renewal date following the first anniversary of the Lease Term, the Agreed Value will decrease by two percent (2.0%) of the then-existing Agreed Value. "NET TOTAL LOSS PROCEEDS" means the Total Loss Proceeds actually received by LESSOR following a Total Loss, less any legal and other out-of-pocket expenses or duties incurred by LESSOR in connection with the collection of such proceeds. "TOTAL LOSS" means any of the following in relation to the Aircraft, Airframe or any Engine and "TOTAL LOSS DATE" means the date set forth in parenthesis after each Total Loss: (a) destruction, damage beyond repair or being rendered permanently unfit for normal use for any reason (the date such event occurs or, if not known, the date on which the Aircraft, Airframe or Engine was last heard of); (b) actual, constructive, compromised, arranged or agreed total loss (the earlier of the date on which the loss is agreed or compromised by the insurers or thirty (30) days after the date of notice to LESSEE's brokers or insurers claiming such total loss); (c) requisition of title, confiscation, forfeiture or any compulsory acquisition of title or other similar event (the date on which the same takes effect); (d) sequestration, detention, seizure or any similar event for more than one hundred eighty (180) consecutive days (the earlier of the date on which insurers make payment on the basis of a total loss or the date of expiration of such period); (e) requisition for use for more than one hundred eighty (180) consecutive days, except as set forth in Article 18.8 (the earlier of the date on which the insurers make payment on the basis of a total loss or the date of expiration of such period); (f) in the case of an Engine, the event described in Article 12.6.3 (the date on which the same takes effect); "TOTAL LOSS PROCEEDS" means the proceeds of any insurance or any compensation or similar payment arising in respect of a Total Loss. 18.2 NOTICE OF TOTAL LOSS. LESSEE will notify LESSOR in writing within two (2) Business Days after a Total Loss Date of the Aircraft, Airframe or any Engine. 18.3 TOTAL LOSS OF AIRCRAFT OR AIRFRAME. If the Total Loss of the Aircraft or Airframe occurs during the Lease Term, the following will occur: 18.3.1 After the Total Loss Date and until receipt by LESSOR of the Agreed Value and all other amounts then due under this Lease, LESSEE will continue to pay Rent and the parties will perform all of their other obligations under this Lease. 18.3.2 On the date which is the earlier of the following dates: (a) the date on which the Total Loss Proceeds of the Aircraft or the Airframe are paid by LESSEE's insurance underwriters or brokers and (b) the date which falls sixty (60) days after the Total Loss Date, LESSEE will pay to LESSOR an amount equal to the sum of: (a) the Agreed Value and (b) all other amounts then due and payable under this Lease, less an amount equal to the Net Total Loss Proceeds received by LESSOR by such date. 18.3.3 LESSOR will apply the Net Total Loss Proceeds and any amounts received from LESSEE pursuant to Article 18.3.2 as follows: (a) first, in discharge of any unpaid Rent and any other amounts accrued and unpaid up to the date of LESSOR's receipt of the Agreed Value; (b) second, in discharge of the Agreed Value; and (c) third, payment of the balance, if any, to LESSEE. 18.3.4 Upon receipt by LESSOR of all monies payable by LESSEE in Article 18.3, provided no Default has occurred and is continuing, this Lease will terminate except for LESSEE's obligations under Articles 10.5, 15 and 16 which survive the Termination Date and the Security Deposit will be returned to LESSEE in accordance with Article 5.3.1. FOR AVOIDANCE OF DOUBT, THE AGREED VALUE OF THE AIRCRAFT WILL BE PAYABLE TO LESSOR PURSUANT TO THIS ARTICLE 18.3 IF A TOTAL LOSS OF THE AIRFRAME OCCURS EVEN IF THERE HAS NOT BEEN A TOTAL LOSS OF AN ENGINE OR ENGINES. 18.4 SURVIVING ENGINE(S). If a Total Loss of the Airframe occurs and there has not been a Total Loss of an Engine or Engines, then provided no Default has occurred and is continuing, at the request of LESSEE (subject to agreement of relevant insurers) and on receipt of all monies due under Article 18.3 and payment by LESSEE of all airport, navigation and other charges on the Aircraft, LESSOR will transfer all of its right, title and interest in the surviving Engine(s) to LESSEE, but without any responsibility, condition or warranty on the part of LESSOR other than as to freedom from any LESSOR's Lien. 18.5 TOTAL LOSS OF ENGINE AND NOT AIRFRAME. 18.5.1 Upon a Total Loss of any Engine not installed on the Airframe or a Total Loss of an Engine installed on the Airframe not involving a Total Loss of the Airframe, LESSEE will replace such Engine as soon as reasonably possible by duly conveying to LESSOR title to another engine (a) free and clear of all Security Interests (except Permitted Liens) of any kind or description, (b) in airworthy condition and of the same or improved model, service bulletin and modification status and having a value and utility at least equal to the Engine which sustained the Total Loss, and (c) not older (by reference to serial number or manufacture date) than three (3) years older than the oldest of the two Engines delivered by LESSOR to LESSEE with the Aircraft on the Delivery Date. Such replacement engine will be an Engine as defined herein and the Engine which sustained such Total Loss will cease to be an Engine. 18.5.2 LESSEE agrees at its own expense to take such action as LESSOR may reasonably request in order that any such replacement Engine becomes the property of LESSOR and is leased hereunder on the same terms as the destroyed Engine. LESSEE's obligation to pay Rent will continue in full force and effect, but an amount equal to the Net Total Loss Proceeds received by LESSOR with respect to such destroyed Engine will, subject to LESSOR's right to deduct therefrom any amounts then due and payable by LESSEE under this Lease, be paid to LESSEE. 18.6 OTHER LOSS OR DAMAGE. 18.6.1 If the Aircraft or any Part thereof suffers loss or damage not constituting a Total Loss of the Aircraft or the Airframe or any Engine, all the obligations of LESSEE under this Lease (including payment of Rent) will continue in full force. 18.6.2 In the event of any loss or damage to the Aircraft or Airframe which does not constitute a Total Loss of the Aircraft or the Airframe, or any loss or damage to an Engine which does not constitute a Total Loss of such Engine, LESSEE will at its sole cost and expense fully repair the Aircraft or Engine in order that the Aircraft or Engine is placed in an airworthy condition and substantially the same condition as it was prior to such loss or damage. All repairs will be performed in accordance with sound airline procedures. LESSEE will notify LESSOR forthwith of any loss, theft or damage to the Aircraft for which the cost of repairs is estimated to exceed Seven Hundred Fifty Thousand U.S. Dollars (US$750,000), together with LESSEE's proposal for carrying out the repair. In the event that LESSOR does not agree with LESSEE's proposals for repair, LESSOR will so notify LESSEE within two (2) Business Days after its receipt of such proposal. LESSEE and LESSOR will then consult with Manufacturer and LESSEE and LESSOR agree to accept as conclusive, and be bound by, Manufacturer's directions or recommendations as to the manner in which to carry out such repairs. If Manufacturer declines to give directions or recommendations, LESSEE will carry out the repairs in accordance with the directions of LESSOR. 18.6.3 To the extent that LESSOR has received insurance proceeds from LESSEE's insurers with respect to any loss or damage, LESSOR will (subject to LESSOR's right to deduct therefrom any amounts then due and payable by LESSEE under this Lease and submission by LESSEE of reasonable documentation confirming the completion of the repairs in accordance with the requirements of this Lease) pay to LESSEE insurance proceeds received by LESSOR as and when such repair work is performed on the Aircraft. 18.7 COPY OF INSURANCE POLICY. Promptly after LESSOR's request following the occurrence of a partial loss or Total Loss of the Aircraft or an Engine, LESSEE will provide LESSOR with a copy of LESSEE's insurance policy. 18.8 GOVERNMENT REQUISITION. If the Aircraft, Airframe or any Engine is requisitioned for use by any Government Entity, LESSEE will promptly notify LESSOR of such requisition. All of LESSEE's obligations hereunder will continue as if such requisition had not occurred. Except if a Default or an Event of Default has occurred and is continuing, all payments received by LESSOR or LESSEE from such Government Entity will be paid over to or retained by LESSEE. 18.9 CONVEYANCE TO LESSEE. Upon compliance by LESSEE with the applicable terms of Article 18.3 or 18.5, LESSOR will transfer to LESSEE the Airframe or Engine(s), as applicable, with respect to which such Total Loss. ARTICLE 19 CRAF PROGRAM 19.1 DEDICATION TO CRAF. LESSEE may transfer possession of the Airframe or any Engine to the United States of America or any instrumentality or agency thereof as part of the Civil Reserve Air Fleet Program authorized under 10 U.S.C. ss. 9511 ET SEQ. (or any substantially similar program) ("CRAF PROGRAM") for a period which includes (collectively, the "CRAF PROGRAM REQUISITION PERIOD") the entire period of requisition under the CRAF Program. If the CRAF Program Requisition Period extends beyond the Expiration Date provided by this Lease, then the Lease will be deemed to continue for six (6) months after the end of the CRAF Program Requisition Period at a monthly rental rate equal to the monthly rental rate during the Lease Term. If such extension extends beyond the Lease Term, then LESSEE will provide LESSOR with written notice of the proposed redelivery by the earlier of six (6) months prior to the proposed redelivery date or five (5) Business Days after the date of receipt of the actual notice given to LESSEE by the government prior to the government's redelivery date and LESSEE will return the Aircraft to LESSOR in the condition required by Article 23 on LESSEE's proposed redelivery date set forth in such notice. 19.2 NOTICE TO LESSOR. LESSEE will promptly notify LESSOR in writing in the event of the requisition for use of the Aircraft under CRAF activation by the U.S. Government. All of LESSEE's obligations under this Lease will continue to the same extent as if such requisition had not occurred. 19.3 REQUISITION OF ENGINE. If there is a requisition for use of any Engine (but not the Airframe) by the U.S. Government in connection with the CRAF Program, LESSEE will replace such Engine by complying with the terms of Article 18.5 hereof. 19.4 GOVERNMENT INDEMNIFICATION. Any provisions of this Lease to the contrary notwithstanding, if there is a requisition for use of the Aircraft pursuant to the CRAF Program and/or CRAF activation, LESSOR agrees that LESSEE's insurances described in Exhibit C may be supplemented by insurances provided under Title XIII of the Act, and/or U.S. Government indemnification (which Title XIII insurances and indemnification will be in amounts not less than those established in Exhibit C); provided, however, that LESSEE will remain responsible for full compliance with all the provisions of this Lease, including Articles 14 and 16, to the extent Title XIII and/or the U.S. Government indemnification do not satisfy LESSEE's obligations under this Lease. 19.5 NO GEOGRAPHIC LIMITS. If there is a requisition for use of the Aircraft pursuant to the CRAF Program and/or CRAF activation, there will be no limitation on the geographic area in which the Aircraft may be operated so long as, taken as a whole, LESSEE's insurance, the Title XIII insurance and/or the indemnification provided by the U.S. Government fully cover (without any geographic exclusions) LESSEE's Exhibit C insurance requirements. 19.6 NOTICE OF DEFAULT. If an Event of Default occurs under this Lease and LESSOR elects to pursue its remedies under Article 25.3(e) to terminate this Lease and repossess the Aircraft, LESSOR will so notify the U.S. Government by sending a written communication as follows: Headquarters Air Mobility Command AMC Contracting Office -- XOKA Scott Air Force Base, Illinois 62225-5007 19.7 RECEIPT OF PAYMENTS. Subject to the following sentence, all payments received by LESSOR or LESSEE from such Government Entity in connection with the requisition of the Aircraft under the CRAF Program will be paid over to or retained by LESSEE. If a Default has occurred and is continuing, all payments received by LESSEE or LESSOR from such Government Entity in connection with the requisition of the Aircraft under the CRAF Program may be used by LESSOR to satisfy any obligations owing by LESSEE. ARTICLE 20 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE 20.1 REPRESENTATIONS AND WARRANTIES. LESSEE represents and warrants the following to LESSOR as of the date of execution of this Lease and as of the Delivery Date: 20.1.1 CORPORATE STATUS. LESSEE is a corporation duly incorporated, validly existing and in good standing under the Laws of Indiana (or, on the Delivery Date, the state of its incorporation). It has the corporate power and authority to carry on its business as presently conducted and to perform its obligations hereunder. 20.1.2 GOVERNMENTAL APPROVALS. No authorization, approval, consent, license or order of, or registration with, or the giving of notice to the Aviation Authority or any other Government Entity is required for the valid authorization, execution, delivery and performance by LESSEE of this Lease, except as will have been duly effected as of the Delivery Date. 20.1.3 BINDING. LESSEE's Board of Directors has authorized LESSEE to enter into this Lease, any Side Letters hereto and any other documentation in connection with the leasing of the Aircraft from LESSOR (collectively, the "OPERATIVE DOCUMENTS") and perform its obligations under the Operative Documents. This Lease and the other Operative Documents have been duly executed and delivered by LESSEE and represent the valid, binding and enforceable obligations of LESSEE except as enforceability may be limited by bankruptcy, insolvency, reorganization or other Laws of general application affecting the enforcement of creditors' rights. When executed by LESSEE at Delivery, the same will apply to the Estoppel and Acceptance Certificate. 20.1.4 NO BREACH. The execution and delivery of the Operative Documents, the consummation by LESSEE of the transactions contemplated herein and compliance by LESSEE with the terms and provisions hereof do not and will not contravene any Law applicable to LESSEE, or result in any breach of or constitute any default under or result in the creation of any Security Interest upon any property of LESSEE, pursuant to any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which LESSEE is a party or by which LESSEE or its properties or assets may be bound or affected. When executed by LESSEE at Delivery, the same will apply to the Estoppel and Acceptance Certificate. 20.1.5 FILINGS. Except for any filing or recording that may be required by the FARs, no filing or recording of any instrument or document (including the filing of any financial statement) is necessary under the Laws of the State of Registration in order for this Lease to constitute a valid and perfected lease of record relating to the Aircraft. 20.1.6 LICENSES. LESSEE holds all licenses, certificates and permits from applicable Government Entities in the U.S. for the conduct of its business as a certificated air carrier and performance of its obligations under this Lease. 20.1.7 NO SUITS. There are no suits, arbitrations or other proceedings pending or threatened before any court or administrative agency against LESSEE which are reasonably likely to be determined adversely and, if adversely determined, would have a material adverse effect on the business, assets or condition (financial or otherwise) of LESSEE or its ability to perform under this Lease, except as described in the filings provided to LESSOR pursuant to Article 22. 20.1.8 GENERAL OBLIGATIONS. The obligations of LESSEE under this Lease are direct, general and unconditional obligations of LESSEE and rank or will rank at least PARI PASSU with all other present and future unsecured and unsubordinated obligations (including contingent obligations) of LESSEE, with the exception of such obligations as are mandatorily preferred by law and not by reason of any encumbrance. 20.1.9 NO SOVEREIGN IMMUNITY. LESSEE, under the Laws of the U.S. or of any other jurisdiction affecting LESSEE, is subject to private commercial law and suit. Neither LESSEE nor its properties or assets is entitled to sovereign immunity under any such Laws. LESSEE's performance of its obligations hereunder constitute commercial acts done for commercial purposes. 20.1.10 TAX RETURNS. All necessary federal and state income tax returns have been delivered by LESSEE to all relevant taxation authorities in the U.S. or any state thereof and LESSEE is not in default in the payment of any taxes due and payable as shown on any such returns or on any assessment received by LESSEE. 20.1.11 NO MATERIAL ADVERSE EFFECT. LESSEE is not in default under any agreement to which it is a party or by which it may be bound which would have a material adverse effect on its business, assets or condition. 20.1.12 NO DEFAULT UNDER THIS LEASE. At the time of execution of this Lease, no Default has occurred and is continuing and the financial statements provided to LESSOR pursuant to Article 22 fairly present the financial condition of LESSEE. 20.2 COVENANTS. LESSEE covenants to LESSOR that it will comply with the following throughout the entire Lease Term: 20.2.1 LICENSING. LESSEE will hold all licenses, certificates and permits from applicable Government Entities in the U.S. for the conduct of its business as a certificated air carrier and performance of its obligations under this Lease. LESSEE will advise LESSOR promptly in the event any such licenses, certificates or permits are cancelled, terminated, revoked or not renewed. 20.2.2 SOVEREIGN IMMUNITY. LESSEE, under the Laws of the U.S. or of any other jurisdiction affecting LESSEE, will continue to be subject to private commercial law and suit. Neither LESSEE nor its properties or assets will be entitled to sovereign immunity under any such Laws. LESSEE's performance of its obligations hereunder will constitute commercial acts done for commercial purposes. LESSEE will advise LESSOR promptly of any change in the foregoing. 20.2.3 INFORMATION ABOUT SUITS. LESSEE will promptly give to LESSOR a notice in writing of any suit, arbitration or proceeding against LESSEE before any court, administrative agency or Government Entity which is reasonably likely to be determined adversely and, if adversely determined, would materially adversely affect LESSEE's financial condition, affairs, operations or its ability to perform under this Lease. 20.2.4 MERGER OF LESSEE. (a) LESSEE shall not consolidate with or merge into any other Person under circumstances in which LESSEE is not the surviving corporation, or convey, transfer, or lease in one or more transactions all or substantially all of its assets to any other Person, unless: (i) such Person is organized, existing, and in good standing under the Laws of the U.S., any state of the U.S., or the District of Columbia, and, upon consummation of such transaction, such Person will be a U.S. Air Carrier; (ii) such Person executes and delivers to LESSOR a duly authorized, legal, valid, binding and enforceable agreement, reasonably satisfactory in form and substance to LESSOR, containing an effective assumption by such Person of the due and punctual performance and observance of each covenant, agreement and condition in the Operative Documents to be performed or observed by LESSEE; (iii) such Person makes such filings and recordings with the FAA pursuant to the Act as shall be necessary to evidence such consolidation or merger; (iv) LESSEE furnishes LESSOR an opinion of counsel reasonably satisfactory to LESSOR to the effect that such consolidation or merger has satisfied at the closing of such consolidation or merger items (i), (ii) and (iii) above; (v) immediately after giving effect to such consolidation or merger, no Default or Event of Default exists; (vi) unless LESSOR otherwise consents, immediately after giving effect to such consolidation or merger, such Person will have a tangible net worth of not less than sixty-five percent (65%) of the LESSEE's tangible net worth immediately prior to such merger; and (vii) upon such merger becoming effective, LESSOR will enjoy the same degree of protection under ss. 1110 of the Bankruptcy Code with respect to the Aircraft as LESSOR enjoyed prior to such merger. (b) Upon any such consolidation or merger of LESSEE with or into, or the conveyance, transfer, or lease by LESSEE of all or substantially all of its assets to, any Person in accordance with this Article 20.2.4, such Person will succeed to, and be substituted for, and may exercise every right and power of, LESSEE under the Operative Documents with the same effect as if such Person had been named as "LESSEE" therein. No such consolidation, merger, conveyance, transfer, or lease shall have the effect of releasing LESSEE or such Person from any of LESSEE's obligations, liabilities, covenants, or undertakings under this Lease. 20.2.5 RESTRICTION ON RELINQUISHMENT OF POSSESSION. LESSEE will not, without the prior consent of LESSOR, deliver, transfer or relinquish possession of the Aircraft except in accordance with Articles 11 and 12. 20.2.6 NO SECURITY INTERESTS. LESSEE will not create or agree to or permit to arise any Security Interest (other than Permitted Liens) on or with respect to the Aircraft, title thereto or any interest therein. LESSEE will forthwith, at its own expense, take all action as may be necessary to discharge or remove any such Security Interest if it exists at any time. LESSEE will within five (5) Business Days after becoming aware of the existence of any such Security Interest give written notice thereof to LESSOR. 20.2.7 REPRESENTATIONS TO OTHER PARTIES. LESSEE will not represent or hold out LESSOR as carrying goods or passengers on the Aircraft or as being in any way connected or associated with any operation of the Aircraft. ARTICLE 21 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSOR 21.1 REPRESENTATIONS AND WARRANTIES. LESSOR represents and warrants the following to LESSEE as of the date of execution of the Lease and as of the Delivery Date and ALL OTHER WARRANTIES, EXPRESS OR IMPLIED HAVE BEEN WAIVED IN ACCORDANCE WITH ARTICLE 8: 21.1.1 CORPORATE STATUS. LESSOR is a corporation duly incorporated, validly existing and in good standing under the Laws of the State of California. It has the corporate power and authority to carry on its business as presently conducted and to perform its obligations hereunder. 21.1.2 GOVERNMENTAL APPROVALS. No authorization, approval, consent, license or order of, or registration with, or the giving of notice to any U.S. Government Entity is required for the valid authorization, execution, delivery and performance by LESSOR of this Lease. 21.1.3 BINDING. This Lease and the other Operative Documents have been duly authorized, executed and delivered by LESSOR and represent the valid, enforceable and binding obligations of LESSOR except as enforceability may be limited by bankruptcy, insolvency, reorganization or other Laws of general application affecting the enforcement of creditors' rights. 21.1.4 NO BREACH. The execution and delivery of the Operative Documents, the consummation by LESSOR of the transactions contemplated herein and compliance by LESSOR with the terms and provisions hereof do not and will not contravene any Law applicable to LESSOR, or result in any breach of or constitute any default under any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which LESSOR is a party or by which LESSOR or its properties or assets may be bound or affected. 21.1.5 TITLE TO AIRCRAFT. On the Delivery Date LESSOR will have good and valid title to the Aircraft. 21.1.6 CITIZENSHIP. LESSOR is a "citizen of the United States" within the meaning of 49 U.S. Code 40102(a)(15). 21.1.7 INVESTMENT BY LESSOR. LESSOR is acquiring its interest in the Aircraft for its own account from its corporate funds, for investment and not with a view to any resale or distribution thereof that would require registration under the Securities Act of 1933; PROVIDED, HOWEVER, that subject to the transfer restrictions in Article 24.2, its disposition of its interest in the Aircraft shall at all times be within its control. 21.2 COVENANT OF QUIET ENJOYMENT. So long as no Event of Default has occurred and is continuing hereunder, LESSOR covenants that neither LESSOR nor any person lawfully claiming through LESSOR will interfere with LESSEE's quiet, peaceful use and enjoyment of the Aircraft. ARTICLE 22 FINANCIAL AND RELATED INFORMATION LESSEE agrees to furnish each of the following to LESSOR: (a) within sixty (60) days after the end of each fiscal quarter of LESSEE, the unaudited consolidated financial statements (including a balance sheet and profit and loss statement) prepared for such quarter in accordance with generally accepted accounting principles in the U.S.; (b) within one hundred twenty (120) days after the end of each fiscal year of LESSEE, the audited consolidated financial statements (including a balance sheet and profit and loss statement) prepared as of the close of such fiscal year in accordance with generally accepted accounting principles in the U.S. LESSEE's chief financial officer will also provide a certificate of LESSEE stating that, to such officer's knowledge, no Default exists under this Lease (or if, to such officer's knowledge, a Default does exist, identifying it); (c) promptly after distribution, all reports and financial statements which Amtran, Inc. sends or makes generally available to its stockholders or creditors; and (d) from time to time, such other reasonable information as LESSOR or LESSOR's Lender may reasonably request concerning the location, condition, use and operation of the Aircraft or the financial condition of LESSEE. ARTICLE 23 RETURN OF AIRCRAFT 23.1 DATE OF RETURN. LESSEE is obligated to return the Aircraft, Engines Parts and Aircraft Documentation to LESSOR on the Expiration Date, unless a Total Loss of the Aircraft occurred prior to the Expiration Date and this Lease was terminated early in accordance with Article 18.3. If LESSEE is in Default hereunder by failing to return the Aircraft on the Expiration Date or if an Event of Default occurs prior to the Expiration Date and LESSOR repossesses the Aircraft, the return requirements set forth in this Article 23 nonetheless must be met on the date the Aircraft is actually returned to LESSOR or repossessed by LESSOR. 23.2 TECHNICAL REPORT. Six (6) months prior to the Expiration Date (and in an updated form at return of the Aircraft), LESSEE will provide LESSOR with a Technical Evaluation Report in the form and substance of Exhibit L, as revised, and, in addition upon LESSOR's request, will make copies available of (a) drawings of the interior configuration of the Aircraft both as it presently exists and as it will exist at return, (b) an Airworthiness Directive status list, (c) a service bulletin incorporation list, (d) rotable tracked, hard-time and life-limited component listings, (e) a list of LESSEE-initiated modifications and alterations, (f) interior material burn certificates, (g) the Aircraft Maintenance Program, (h) the complete workscope for the checks, inspections and other work to be performed prior to return, (i) a list of all no-charge service bulletin kits with respect to the Aircraft which were ordered by LESSEE from Manufacturer or Engine manufacturer, (j) current Engine disk sheets and a description of the last shop visit for each Engine and (k) any other data which is reasonably requested by LESSOR. 23.3 RETURN LOCATION. LESSEE at its expense will return the Aircraft, Engines, Parts and Aircraft Documentation to LESSOR at Indianapolis International Airport, Indianapolis, Indiana or to such other airport as may be mutually agreed to by LESSEE and LESSOR. 23.4 FULL AIRCRAFT DOCUMENTATION REVIEW. For the period commencing at least ten (10) Business Days prior to the proposed redelivery date and continuing until the date on which the Aircraft is returned to LESSOR in the condition required by this Lease, LESSEE will provide for the review of LESSOR and/or its representative all of the Aircraft records and historical documents described in Exhibit K in one central room at the Aircraft return location. 23.5 AIRCRAFT INSPECTION. 23.5.1 During the maintenance checks performed immediately prior to the proposed redelivery and at the actual return of the Aircraft, LESSOR and/or its representatives will have an opportunity to conduct a full systems functional and operational inspection of the Aircraft (and other types of reasonable inspections based upon the Aircraft type, age, use and other known factors with respect to the Aircraft) and a full inspection of the Aircraft Documentation (including records and manuals), all to LESSOR's satisfaction. The inspection will occur during the Return Check when the panels, bays or the like are open and certain Parts are disassembled. LESSOR may inspect such opened panels, bays or the like and the disassembled Parts so long as LESSOR does not disrupt the Return Check or cause such Return Check to be extended beyond the anticipated completion date of such Return Check. Any deficiencies from the Aircraft return condition requirements set forth in this Article 23 will be corrected by LESSEE at its cost prior to the acceptance flight described in Article 23.5.2. 23.5.2 Immediately prior to the proposed redelivery of the Aircraft, LESSEE will carry out for LESSOR and/or LESSOR's representatives an Aircraft acceptance flight in accordance with Manufacturer's standard flight operation check flight procedures or, if agreed to in writing by LESSOR, in accordance with an airline acceptance flight procedure, either of which will be for the duration necessary to perform such check flight procedures but in any event not less than two (2) hours. Flight costs and fuel will be furnished by and at the expense of LESSEE. Any deficiencies from the Aircraft return condition requirements set forth in this Article 23 will be corrected by LESSEE at its cost prior to return of the Aircraft. 23.5.3 To the extent that the ground inspection and acceptance flight extend beyond the Expiration Date, the Lease Term will be deemed to have been automatically extended and the obligations of LESSEE hereunder (including Article 23.11.3) will continue on a day-to-day basis until the Aircraft is accepted by LESSOR executing the Return Acceptance Receipt in the form of Exhibit I. 23.6 CERTIFICATE OF AIRWORTHINESS MATTERS. 23.6.1 The Aircraft will possess a current Certificate of Airworthiness issued by the Aviation Authority (although this Certificate of Airworthiness may later be substituted by the Export Certificate of Airworthiness or equivalent if requested by LESSOR pursuant to Article 23.10). The Aircraft at return must be in the condition required in order to meet the requirements of a U.S. Standard Certificate of Airworthiness for transport category aircraft issued by the FAA in accordance with FAR Part 21 and, in addition, to meet the operating requirements of FAR Part 121. 23.6.2 LESSEE at its cost will demonstrate that the Aircraft meets the requirements for issuance of the U.S. Standard Certificate of Airworthiness for transport category aircraft specified in Article 23.6.1 by delivering to LESSOR an actual U.S. Standard Certificate of Airworthiness. If there is a dispute in regards to the condition of the Aircraft or the Aircraft Documentation, then LESSEE will provide LESSOR with a letter acceptable to LESSOR signed by an FAA Designated Airworthiness Representative (DAR) or another Person acceptable to LESSOR stating that the DAR or such Person has inspected the Aircraft and Aircraft Documentation (including records and manuals) and has found that the Aircraft meets the requirements for issuance of a U.S. Standard Certificate of Airworthiness for transport category aircraft in accordance with FAR Part 21 and, in addition, meets the operating requirements of FAR Part 121. 23.6.3 If the Aircraft is to be registered in a country other than in the U.S. after return from LESSEE, LESSOR may in its sole discretion waive the requirements of Article 23.6.2 and instead require that LESSEE at its expense (to the extent such expense is no greater than that which LESSEE would have incurred pursuant to Articles 23.6.1 and 23.6.2, with any additional expenses being for LESSOR's account) put the Aircraft in a condition to meet the requirements for issuance of a Certificate of Airworthiness of the Aviation Authority of the next country of register. 23.7 GENERAL CONDITION OF AIRCRAFT AT RETURN. 23.7.1 The Aircraft, Engines and Parts will have been maintained and repaired in accordance with the Maintenance Program, the rules and regulations of the Aviation Authority and this Lease. 23.7.2 Aircraft Documentation (including records and manuals) will have been maintained in an up-to-date status, in accordance with the rules and regulations of the Aviation Authority and the FAA and this Lease and in a form necessary in order to meet the requirements of Article 23.6.2. The records and historical documents set forth in Attachment 1 of Exhibit I will be in English. 23.7.3 The Aircraft will be in the same working order and condition as at Delivery (subject to the other provisions of this Article 23, reasonable wear and tear from normal flight operations excepted), with all pilot discrepancies and deferred maintenance items cleared on a terminating action basis. 23.7.4 The Aircraft will be airworthy (conform to type design and be in a condition for safe operation), with all Aircraft equipment, components and systems operating in accordance with their intended use and within limits approved by the Manufacturer, Aviation Authority and FAA. 23.7.5 The Aircraft interior (including cabin and windows) and exterior will be clean and all compartments will be reasonably free of foreign objects, dirt, grease, fluids, stains, grime, cracks, tears and rips (with the exception of normal wear and tear) and ready to be placed into immediate commercial airline operations. 23.7.6 No special or unique Manufacturer, Engine manufacturer or Aviation Authority inspection or check requirements which are specific to the Aircraft or Engines (as opposed to all aircraft or engines of their types) will exist with respect to the Airframe, Engines and Aircraft equipment, components and systems. 23.7.7 All repairs, modifications and alterations to the Aircraft will have been accomplished in accordance with Manufacturer's Structural Repair Manual (or FAA-approved data supported by FAA Form 8110-3) for the Aircraft. 23.7.8 The Aircraft will be returned with LESSOR's Engines installed and with the same equipment as at Delivery, subject only to those replacements, additions and Modifications permitted under this Lease. LESSEE will inform LESSOR of whether LESSEE will be able to redeliver the Engines with the Aircraft and the proposed replacement engines that LESSEE wants to provide LESSOR in place of the Engines. LESSEE will provide LESSOR with whatever data, records and information that LESSOR reasonably requests in order to evaluate the proposed replacement engines. In the event that LESSEE is unable to return either of the Engines in the conditions required by this Article 23, then LESSEE may provide a replacement engine (a "REPLACEMENT ENGINE") for such Engine to LESSOR by duly conveying to LESSOR as owner hereunder title to another engine of the same manufacturer and of the same or an improved model as the Engine being replaced and suitable for installation and use on the Aircraft, which engine shall be free and clear of all Security Interests, and shall be no more than three (3) years older by reference to serial number than the replaced Engine and have a modification status, value and utility at least equal to the Engine which such Replacement Engine is replacing on the Aircraft assuming that such Engine which such Replacement Engine is replacing was then of the value, utility, condition, and airworthiness required to be maintained by the terms of this Lease. Such Replacement Engine, after approval and acceptance by LESSOR, shall be deemed an "Engine" as defined herein for all purposes hereunder. LESSEE agrees to take such action as LESSOR may reasonably request in order that such Replacement Engine shall be duly and properly titled in the name of LESSOR. Prior to or at the time of any such conveyance, LESSEE, at its own expense, will promptly: (a) furnish LESSOR with a warranty bill of sale, in form and substance satisfactory to LESSOR, with respect to such Replacement Engine, (b) furnish LESSOR with such evidence of title to such Replacement Engine as reasonably requested by LESSOR, and (c) furnish LESSOR with an opinion of LESSEE's counsel to the effect that title to such Replacement Engine has been duly conveyed to LESSOR free and clear of all Security Interests of any kind or nature and that such exchange qualifies for tax free treatment under the Internal Revenue Code of 1986, as amended. Upon full compliance with this Article, LESSOR shall transfer to LESSEE all of LESSOR's right, title and interest, on an "AS-IS", "WHERE-IS" basis in and to the Engine being replaced by such Replacement Engine, without recourse or warranty, express or implied, except that LESSOR has good and marketable title to such Engine and such Engine shall be free and clear of LESSOR's Liens. 23.7.9 All Airworthiness Directives which are issued prior to the date of return of the Aircraft and require compliance (either by means of repetitive inspections, modifications or terminating action) prior to return of the Aircraft to LESSOR or within one (1) year after the Termination Date will have been complied with on the Aircraft on a terminating action basis at LESSEE's cost. Airworthiness Directives which do not have a terminating action will be accomplished at the highest level of inspection or modification possible. If, after using best efforts, LESSEE is unable to acquire the material, parts or components necessary to accomplish such Airworthiness Directive, LESSEE will pay to LESSOR upon return of the Aircraft the estimated cost of terminating such Airworthiness Directive. If the estimated cost cannot be mutually agreed upon by LESSEE and LESSOR, LESSEE and LESSOR will each obtain an estimate from a reputable FAA-approved maintenance facility (unaffiliated with LESSEE or LESSOR) and the estimated cost will be the average of the two estimates. 23.7.10 The Aircraft will be in compliance with the Corrosion Prevention and Control Program (CPCP) specified in LESSEE's Maintenance Program. 23.7.11 If any waivers, deviations, dispensations, alternate means of compliance, extensions or carry-overs with respect to maintenance or operating requirements, repairs or Airworthiness Directives are granted by the Aviation Authority or permitted by the Maintenance Program, LESSEE at its sole cost and expense will nonetheless perform such maintenance or operating requirements, repairs or Airworthiness Directives as if such waivers, deviations, dispensations, alternate means of compliance, or extensions or carry-overs did not exist. 23.7.12 The Aircraft will be free from any Security Interest except LESSOR's Liens and no circumstance will have so arisen whereby the Aircraft is or could become subject to any Security Interest or right of detention or sale in favor of the Aviation Authority, any airport authority, or any other authority. 23.7.13 All no-charge vendor and Manufacturer's service bulletin kits received by LESSEE for the Aircraft but not installed thereon will be on board the Aircraft as cargo. At LESSOR's request, any other service bulletin kit which LESSEE paid for will also be delivered to LESSOR on board the Aircraft, but LESSOR will reimburse LESSEE for its actual out-of-pocket costs for such kit, unless LESSEE purchased such kit as part of its implementation of a service bulletin on its fleet of aircraft of the same type as the Aircraft but had not yet installed such kit on the Aircraft, in which case such kit will be furnished free of charge to LESSOR. 23.7.14 The Aircraft will be free of any leaks and any damage resulting therefrom. All repairs will have been performed on a permanent basis in accordance with the applicable manufacturer's instructions. 23.7.15 The Aircraft fluid reservoirs (including oil, oxygen, hydraulic and water) will be serviced to full and the waste tank serviced in accordance with Manufacturer's instructions. (Fuel tanks will be at least as full as at Delivery.) 23.8 CHECKS PRIOR TO RETURN. Immediately prior to return of the Aircraft to LESSOR, LESSEE at its expense will do each of the following: 23.8.1 Have performed, and completed, by an FAA-approved repair station, all maintenance tasks specified in LESSEE's Maintenance Program and the MPD which (a) are necessary to clear the Aircraft of all such tasks for eighteen (18) months, five thousand (5,000) hours, and three thousand (3,000) cycles from the date of return of the Aircraft, and (b) are required to be performed at lesser intervals than eighteen (18) months, five thousand (5,000) hours or three thousand (3,000) cycles (all such work collectively referred to as the "RETURN CHECK"). If a maintenance task is specific to LESSEE's Maintenance Program and not required or recommended to be performed by the MPD, then LESSEE will not be required to perform such maintenance task so long as the Return Check is performed in such a manner that clears the Aircraft of all maintenance tasks in accordance with the requirements of the preceding sentence. As part of the Return Check, all non-routine tasks generated as a result of the performance of the work included in the Return Check and any other discrepancies revealed during the Return Check must also be performed in accordance with the FAA approved procedures. LESSEE will also weigh the Aircraft. LESSEE agrees to perform during the Return Check any other work reasonably required by LESSOR (and not otherwise required under this Lease) and LESSOR will, promptly upon receipt of an invoice from LESSEE, reimburse LESSEE for such work at LESSEE's preferred customer rates. 23.8.2 Have the Aircraft in compliance with Corrosion Prevention and Control Program (CPCP) as specified in the MPD and LESSEE's Maintenance Program. 23.8.3 Remove LESSEE's exterior markings, including all exterior paint, by stripping (or, at LESSOR's option, pneumatically scuff/sanding) the paint from the fuselage, empennage, wings and Engine cowlings, and clean, reseal, refinish, prepare (including application of alodine or another corrosion inhibitor) and prime the surfaces to be painted, all in accordance with Manufacturer's and paint manufacturer's recommendations. LESSEE will then repaint the fuselage, empennage, wings and Engine cowlings in the colors and logo specified by LESSOR ; PROVIDED, HOWEVER, that LESSEE will be responsible for only paying the amount that it would cost to strip or scuff/sand (whichever is performed on the Aircraft at return) and properly paint the Aircraft in LESSEE's colors and logo and LESSOR will be responsible for the excess cost to paint the Aircraft in the next lessee's colors and logo. Such painting will be accomplished in such a manner as to result in a uniformly smooth and cosmetically acceptable aerodynamic surface. All external placards, signs and markings will be properly attached, free from damage, clean and legible. 23.8.4 Clean the exterior and interior of the Aircraft. 23.8.5 If reasonably required by LESSOR, apply touch up to paint to the interior of the Aircraft, including flight deck, and replace any missing or broken placards. 23.8.6 In accordance with Article 23.7.7, permanently repair damage to the Aircraft that exceeds Manufacturer's limits and replace any non-flush structural patch repairs installed on the Aircraft with flush-type repairs, so long as the Manufacturer or the Manufacturer's Structural Repair Manual permits flush-type repairs on the portion of the Aircraft where the non-flush structural repairs were made. 23.8.7 With LESSOR or its representatives present, perform a full and complete hot and cold section videotape borescope on each Engine and its modules in accordance with the Engine manufacturer's maintenance manual. 23.8.8 If the Engine historical and technical records and/or condition trend monitoring data of any Engine (including the APU) indicate an acceleration in the rate of deterioration in the performance of an Engine, LESSEE will correct, to LESSOR's satisfaction, such conditions which are determined to be causing such accelerated rate of deterioration. 23.8.9 With LESSOR or its representatives present, accomplish a maximum power assurance run on the Engines. LESSEE will evaluate the Engine performance and record the Engine maximum power assurance test conditions and results on the Return Acceptance Receipt. 23.8.10 LESSEE will provide evidence to LESSOR's satisfaction that the Engine historical and technical records, borescope inspection, trend monitoring and other checks specified in Article 23.8.9 do not reveal any condition which would cause the Engines or any module to be unserviceable, beyond serviceable limits or serviceable with an increased frequency of inspection or with calendar time, flight hour or flight cycle restrictions under the Engine manufacturer's maintenance manual. LESSEE will correct any discrepancies in accordance with the guidelines set out by the Engine manufacturer which may be discovered during such inspection. 23.8.11 In the event the Engine historical and technical records, borescope inspection, trend monitoring and other checks specified in Article 23.8.9 result in a dispute regarding the conformity of an Engine with the requirements of this Article 23, LESSEE and LESSOR will consult with Engine manufacturer and follow Engine manufacturer's recommendations (including the accomplishment of an Engine test cell operational check) with regard to determining if such Engine complies with the requirements of this Article 23 and the manner in which any discrepancies from the requirements of this Article 23 will be rectified. 23.9 PART LIVES. At return, the condition of the Aircraft will be as follows: (CONFIDENTIAL MATERIAL OMITTED) 23.10 EXPORT AND DEREGISTRATION OF AIRCRAFT. At LESSOR's request, LESSEE at its cost will (a) provide an Export Certificate of Airworthiness or its equivalent from the State of Registration so that the Aircraft can be exported to the country designated by LESSOR, (b) assist with deregistration of the Aircraft from the register of aircraft in the State of Registration, (c) assist with arranging for prompt confirmation of such deregistration to be sent by the registry in the State of Registration to the next country of registration and (d) perform any other acts reasonably required by LESSOR in connection with the foregoing. If any Aircraft work which LESSEE is not otherwise required to perform hereunder, including engineering, is required in order to obtain such Export Certificate of Airworthiness, LESSEE will perform such work and LESSOR will reimburse LESSEE for such work at LESSEE's preferred customer rates. 23.11 LESSEE'S CONTINUING OBLIGATIONS. In the event that LESSEE does not return the Aircraft to LESSOR on the Expiration Date and in the condition required by this Article 23 for any reason (whether or not the reason is within LESSEE's control): 23.11.1 the obligations of LESSEE under this Lease will continue in full force and effect on a day-to-day basis until such return. This will not be considered a waiver of LESSEE's Event of Default or any right of LESSOR hereunder. 23.11.2 Until such return, the Agreed Value will be an amount equal to the Agreed Value on the day the Aircraft should have been returned to LESSOR pursuant to this Lease. 23.11.3 LESSEE will fully indemnify LESSOR on demand for all losses (including consequential damages), liabilities, actions, proceedings, costs and expenses thereby suffered or incurred by LESSOR and, in addition, if a delay in return of the Aircraft was due to reasons within LESSEE's reasonable control, then until such time as the Aircraft is redelivered to LESSOR and put into the condition required by this Article 23, instead of paying the Rent specified in Article 5.3, LESSEE will pay twice the amount of Rent for each day from the scheduled Expiration Date until the Termination Date (the monthly Rent payable under Article 5.3.1 will be prorated based on the actual number of days in the applicable month). Payment will be made upon presentation of LESSOR's invoice. 23.11.4 LESSOR may elect, in its sole and absolute discretion, to accept the return of the Aircraft prior to the Aircraft being put in the condition required by this Article 23 and thereafter have any such non-conformance corrected at such time as LESSOR may deem appropriate (but within ninety (90) days following the return of the Aircraft) and at commercial rates then-charged by the Person selected by LESSOR to perform such correction. Any direct expenses incurred by LESSOR for such correction will become additional Rent payable by LESSEE within fifteen (15) days following the submission of a written statement by LESSOR to LESSEE, identifying the items corrected and setting forth the expense of such corrections. LESSEE's obligation to pay such supplemental Rent will survive the Termination Date. 23.12 AIRPORT AND NAVIGATION CHARGES. LESSEE will ensure that at return of the Aircraft any and all airport, navigation and other charges which give rise or may if unpaid give rise to any lien, right of detention, right of sale or other Security Interest in relation to the Aircraft, Engine or any Part have been paid and discharged in full and will at LESSOR's request produce evidence thereof satisfactory to LESSOR. 23.13 RETURN ACCEPTANCE CERTIFICATE. Upon return of the Aircraft in accordance with the terms of this Lease, LESSEE will prepare and execute two (2) Return Acceptance Certificates in the form and substance of Exhibit I and LESSOR will countersign and return one such Return Acceptance Certificate to LESSEE. In addition, LESSEE and LESSOR will execute a Lease Termination for filing with the FAA evidencing termination of this Lease. 23.14 INDEMNITIES AND INSURANCE. The indemnities and insurance requirements set forth in Articles 16 and 17, respectively, will apply to Indemnitees and LESSOR's representatives during return of the Aircraft, including the ground inspection and acceptance flight. With respect to the acceptance flight, LESSOR's representatives will receive the same protections as LESSOR on LESSEE's Aviation and Airline General Third Party Liability Insurance. ARTICLE 24 ASSIGNMENT 24.1 NO ASSIGNMENT BY LESSEE. EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED BY THE TERMS OF THIS LEASE, NO ASSIGNMENT, NOVATION, TRANSFER, MORTGAGE OR OTHER CHARGE MAY BE MADE BY LESSEE OF ANY OF ITS RIGHTS WITH RESPECT TO THE AIRCRAFT, ENGINE OR PART OF THIS LEASE. 24.2 SALE OR ASSIGNMENT BY LESSOR. 24.2.1 Subject to LESSEE's rights pursuant to this Lease, LESSOR may at any time and without LESSEE's consent sell, assign or transfer its rights, interest and obligations hereunder or with respect to the Aircraft to a third party ("LESSOR'S ASSIGNEE"), but only if: (a) LESSOR's Assignee has full power, authority, and legal right to execute, deliver, and perform the obligations of LESSOR under the Operative Documents and provides reasonably satisfactory evidence of such power and authority to LESSEE; (b) LESSOR's Assignee enters into one or more legal, valid, binding and enforceable agreements effective to confirm that LESSOR's Assignee agrees to be bound by all the terms of, and to undertake all of the obligations arising after such transfer of LESSOR in, the Operative Documents, and in which it makes representations and warranties substantially the same as those in Article 21.1 of this Lease; (c) upon such transfer LESSEE shall not be obligated to pay any greater amount or incur any greater obligation (other than indemnifying additional indemnitees, insuring additional insureds and other minor ministerial matters) than that which it would have been obliged to pay or incur under the Operative Documents if no transfer or assignment had taken place, and upon such transfer the terms and conditions of the Operative Documents insofar as they relate to the rights and obligations of LESSEE are not altered; (d) LESSOR shall cause LESSOR's Assignee to deliver to LESSEE an opinion of counsel reasonably satisfactory to LESSEE to the effect that such agreement or agreements referred to in clause (2) and, if applicable, clause (6) are legal, binding, and enforceable in accordance with its or their terms, subject to the typical exceptions. (e) the transfer shall relate to LESSOR's entire interest as owner or lessor; (f) LESSOR's Assignee is a citizen of the United States under 49 U.S. Code ss.40102(a)(15) (such status to be determined without considering FAR ss.47.9 or any other provision that may restrict LESSEE's use or operation of the Aircraft), or shall use a voting powers trust or similar arrangement in order to hold an interest in the Aircraft such that the Aircraft can be registered in the U.S. (without considering FAR ss.47.9 or any other provision that may restrict LESSEE's use or operation of the Aircraft); (g) LESSOR's Assignee is a single Person and is either (i) a Permitted Institution, or (ii) or an affiliate of a Permitted Institution, if such affiliate's obligations under the Operative Documents are guaranteed by such Permitted Institution pursuant to a written guaranty, in form and substance reasonably satisfactory to LESSEE; and (h) LESSOR shall give written notice to LESSEE at least five (5) days before any such transfer, specifying the name and address of the proposed LESSOR's Assignee, and providing reasonably satisfactory evidence that the proposed LESSOR's Assignee meets the requirements described in Article 24.2.1(g)(i) or (ii). For a period of two (2) years after such sale or assignment and at LESSEE's cost, LESSEE will continue to name LESSOR as an additional insured under the Aviation and Airline General Third Party Liability Insurance required pursuant to Article 17 and Exhibit C. 24.2.2 The term "LESSOR" as used in this Lease means the lessor of the Aircraft at the time in question. In the event of the sale of the Aircraft and transfer of LESSOR's rights and obligations under this Lease, LESSOR's Assignee will become "LESSOR" of the Aircraft under this Lease and the transferring party (the prior "LESSOR") will be relieved of all liability to LESSEE under this Lease for obligations arising on and after the date the Aircraft is sold. LESSEE will acknowledge and accept LESSOR's Assignee as the new "LESSOR" under this Lease and will look solely to LESSOR's Assignee for the performance of all LESSOR obligations and covenants under this Lease arising on and after the Aircraft sale date. 24.3 LESSOR'S LENDER. Subject to LESSEE's rights pursuant to this Lease, LESSOR may at any time and without LESSEE's consent grant security interests over the Aircraft and assign the benefit of this Lease to a lender ("LESSOR'S LENDER") as security for LESSOR's obligations to LESSOR's Lender. Accordingly, if LESSOR's Lender requires, as a condition to providing financing, any nonsubstantive modification of this Lease, LESSEE agrees to enter into an agreement so modifying this Lease. 24.4 LESSEE COOPERATION. On request by LESSOR, LESSOR's Assignee or LESSOR's Lender, LESSEE will execute all such documents (such as a lease assignment agreement) as LESSOR, LESSOR's Assignee or LESSOR's Lender may reasonably require to confirm LESSEE's obligations under this Lease and obtain LESSEE's acknowledgment that to the best of LESSEE's knowledge, LESSOR is not in breach of this Lease. LESSEE will provide all other reasonable assistance and cooperation to LESSOR, LESSOR's Assignee and LESSOR's Lender in connection with any such sale or assignment or the perfection and maintenance of any such security interest, at LESSOR's cost, including making all necessary filings and registrations in the State of Registration and providing all opinions of counsel with respect to matters reasonably requested by LESSOR, LESSOR's Lender or LESSOR's Assignee. LESSOR will reimburse LESSEE for its reasonable out-of-pocket costs in reviewing documents required by LESSOR or LESSOR's Lender. 24.5 PROTECTIONS. 24.5.1 LESSOR will obtain for the benefit of LESSEE an acknowledgment from any LESSOR's Assignee or LESSOR's Lender that, so long as no Event of Default has occurred and is continuing hereunder, such Person will not interfere with LESSEE's quiet, peaceful use and enjoyment of the Aircraft. 24.5.2 Wherever the term "LESSOR" is used in this Lease in relation to any of the provisions relating to disclaimer, title and registration, indemnity and insurance contained in Articles 8, 13, 16 and 17, respectively, or with respect to Article 20.2.7, the term "LESSOR" will be deemed to include LESSOR's Assignee and LESSOR's Lender, if applicable. For avoidance of doubt, in the event of LESSOR's sale or financing of the Aircraft, the disclaimer and indemnity provisions contained in Articles 8 and 16 will continue to be applicable after the sale or assignment to International Lease Finance Corporation, as well as being applicable to LESSOR's Assignee and LESSOR's Lender. ARTICLE 25 DEFAULT OF LESSEE 25.1 LESSEE NOTICE TO LESSOR. LESSEE will promptly notify LESSOR if LESSEE becomes aware of the occurrence of any Default. 25.2 EVENTS OF DEFAULT. The occurrence of any of the following will constitute an Event of Default and material breach of this Lease by LESSEE: (a) LESSEE fails to take delivery of the Aircraft when obligated to do so under the terms of this Lease; (b) LESSEE fails to make a Rent or other payment due hereunder in the manner and by the date provided herein and fails to make such payment within five (5) Business Days after its receipt of notice that such payment is due; (c) LESSEE fails to obtain or maintain the insurance required by Article 17; (d) LESSEE fails to return the Aircraft to LESSOR on the Expiration Date in accordance with Article 23; (e) LESSEE fails to observe or perform any of its other obligations hereunder and fails to cure the same within thirty (30) days after written notice thereof to LESSEE; provided, that LESSEE will have up to a total of sixty (60) days to cure such failure so long as it uses diligent efforts to do so; (f) any representation or warranty of LESSEE herein proves to have been untrue in any material respect when made; provided, that, if the effect of such falsity is curable, LESSEE shall have thirty (30) days after LESSEE has knowledge that the representation or warranty is untrue; (g) the registration of the Aircraft is cancelled other than as a result of an act or omission of LESSOR; (h) LESSEE abandons the Aircraft or Engines; (i) LESSEE or an approved sublessee no longer has unencumbered control (other than Permitted Liens) or possession of the Aircraft or Engines, except as otherwise permitted by this Lease; (j) LESSEE temporarily or permanently discontinues business or (except as permitted by Article 20.2.4) sells or otherwise disposes of all or substantially all of its assets; (k) a material adverse change occurs in the financial condition of LESSEE; (l) LESSEE no longer possesses the licenses, certificates and permits required for the conduct of its business as a certificated air carrier in the U.S.; (m) LESSEE (i) suspends payment on its debts or other obligations generally, (ii) is unable to or admits its inability to pay its debts or other obligations generally as they fall due, (iii) is adjudicated or becomes bankrupt or insolvent or (iv) enters into any composition or other arrangement for the benefit of its creditors generally; (n) any proceedings, resolutions, filings or other steps are instituted with respect to LESSEE relating to the bankruptcy, liquidation, reorganization or protection from creditors of LESSEE or at least half of LESSEE's property. If instituted by LESSEE, the same will be an immediate Event of Default. If instituted by another Person, the same will be an Event of Default if not dismissed, remedied or relinquished within sixty (60) days; (o) any order, judgment or decree is entered by any court of competent jurisdiction appointing a receiver, trustee or liquidator of LESSEE or at least half of its property, or if at least half of LESSEE's property is to be sequestered. If instituted by or done with the consent of LESSEE, the same will be an immediate Event of Default. If instituted by another Person, the same will be an Event of Default if not dismissed, stayed, remedied or relinquished within sixty (60) days; PROVIDED, HOWEVER, that if such proceeding is stayed, then such proceeding will become an immediate Event of Default if such stay is removed or terminates and the proceeding is not dismissed, remedied or relinquished when such stay is removed or terminates. (p) any indebtedness for borrowed moneys or a guarantee or similar obligation owed by LESSEE with an unpaid balance of CONFIDENTIAL MATERIAL OMITTED is declared due before its stated maturity or LESSEE is in default of payment obligations CONFIDENTIAL MATERIAL OMITTED under any other purchase agreement, lease, conditional sale agreement or other agreement pursuant to which LESSEE has possession of any aircraft; (q) Eurocontrol has notified LESSOR that there are unpaid Eurocontrol charges due from LESSEE (unless such charges are being contested in good faith and by appropriate proceedings, an adequate bond has been provided and such proceedings do not involve any danger of the detention, interference with the use or operation, sale, forfeiture or loss of the Aircraft) and such charges remain outstanding for a period of thirty (30) days from the date of Eurocontrol's notice to LESSOR provided that such thirty (30) day grace period will not apply if there is a danger of detention, interference with the use or operation, sale, forfeiture or loss of the Aircraft; or (r) LESSEE is in default under any other lease or agreement between LESSEE and LESSOR and the same is not cured within its specified cure period. 25.3 LESSOR'S GENERAL RIGHTS. Upon the occurrence of any Event of Default, LESSOR may do all or any of the following at its option (in addition to such other rights and remedies which LESSOR may have by statute or otherwise but subject to any requirements of applicable Law): (a) terminate this Lease by giving written notice to LESSEE; (b) require that LESSEE immediately move the Aircraft to an airport or other location designated by LESSOR; (c) for LESSEE's account, do anything that may reasonably be required to cure any default and recover from LESSEE all reasonable costs, including legal fees and expenses incurred in doing so and Default Interest; (d) proceed as appropriate to enforce performance of this Lease and to recover any damages for the breach hereof, including the amounts specified in Article 25.5; (e) terminate this Lease by taking possession of the Aircraft or by serving notice requiring LESSEE to return the Aircraft to LESSOR at the location specified by LESSOR. If LESSOR takes possession of the Aircraft, it may enter upon LESSEE's premises where the Aircraft is located without liability. Upon repossession of the Aircraft, LESSOR will then be entitled to sell, lease or otherwise deal with the Aircraft as if this Lease had never been made. LESSOR will be entitled to the full benefit of its bargain with LESSEE; or (f) apply all or any portion of the Security Deposit and any other security deposits held by LESSOR pursuant to any other agreements between LESSOR and LESSEE to any amounts due. 25.4 DEREGISTRATION AND EXPORT OF AIRCRAFT. If an Event of Default has occurred and is continuing, LESSOR may take all steps necessary to deregister the Aircraft in and export the Aircraft from the State of Registration. 25.5 LESSEE LIABILITY FOR DAMAGES. If an Event of Default occurs, in addition to all other remedies available at law or in equity, LESSOR has the right to recover from LESSEE and LESSEE will pay LESSOR within two (2) Business Days after LESSOR's written demand, all of the following: (a) all amounts which are then due and unpaid hereunder and which become due prior to the earlier of LESSOR's recovery of possession of the Aircraft or LESSEE making an effective tender thereof; (b) any losses suffered by LESSOR because of LESSOR's inability to place the Aircraft on lease with another lessee or to otherwise utilize the Aircraft on financial terms as favorable to LESSOR as the terms hereof or, if LESSOR elects to dispose of the Aircraft, the funds arising from a sale or other disposition of the Aircraft are not as profitable to LESSOR as leasing the Aircraft in accordance with the terms hereof would have been (and LESSOR will be entitled to accelerate any and all Rent which would have been due from the date of LESSOR's recovery or repossession of the Aircraft through the Expiration Date); (c) all costs associated with LESSOR's exercise of its remedies hereunder, including but not limited to repossession costs, legal fees, Aircraft storage costs, Aircraft re-lease or sale costs and LESSOR's internal costs and expenses (including the cost of personnel time calculated based upon the compensation paid to the individuals involved on an annual basis and a general LESSOR overhead allocation); (d) any amount of principal, interest, fees or other sums paid or payable on account of funds borrowed in order to carry any unpaid amount; (e) any loss, premium, penalty or expense which may be incurred in repaying funds raised to finance the Aircraft or in unwinding any financial instrument relating in whole or in part to LESSOR's financing of the Aircraft; (f) any loss, cost, expense or liability sustained by LESSOR due to LESSEE's failure to redeliver the Aircraft in the condition required by this Lease; and (g) any other loss, damage, expense, cost or liability which LESSOR suffers or incurs as a result of the Event of Default and/or termination of this Lease, including an amount sufficient to fully compensate LESSOR for any loss of or damage to LESSOR's residual interest in the Aircraft caused by LESSEE's default. 25.6 WAIVER OF DEFAULT. By written notice to LESSEE, LESSOR may at its election waive any Default or Event of Default and its consequences and rescind and annul any prior notice of termination of this Lease. The respective rights of the parties will then be as they would have been had no Default or Event of Default occurred and no such notice been given. 25.7 PRESENT VALUE OF PAYMENTS. In calculating LESSOR's damages hereunder, upon an Event of Default all Rent and other amounts which would have been due hereunder during the Lease Term if an Event of Default had not occurred will be calculated on a present value basis using a discounting rate of six percent (6%) per annum discounted to the earlier of the date on which LESSOR obtains possession of the Aircraft or LESSEE makes an effective tender thereof. 25.8 USE OF "TERMINATION DATE". For avoidance of doubt, it is agreed that if this Lease terminates and the Aircraft is repossessed by LESSOR due to an Event of Default, then, notwithstanding the use of the term "Termination Date" in this Lease, the period of the Lease Term and the "Expiration Date" will be utilized in calculating the damages to which LESSOR is entitled pursuant to Article 25.5. For example, it is agreed and understood that LESSOR is entitled to receive from LESSEE the Rent and the benefit of LESSEE's insurance and maintenance of the Aircraft until expiration of the Lease Term. ARTICLE 26 NOTICES 26.1 MANNER OF SENDING NOTICES. Any notice, request or information required or permissible under this Lease will be in writing and in English. Notices will be delivered in person or sent by fax, letter (mailed airmail, certified and return receipt requested), or by expedited delivery addressed to the parties as set forth in Article 26.2. In the case of a fax, notice will be deemed received upon actual receipt (and the date of actual receipt will be deemed to be the date set forth on the confirmation of receipt produced by the sender's fax machine immediately after the fax is sent). In the case of a notice sent by expedited delivery, notice will be deemed received on the date of delivery set forth in the records of the Person which accomplished the delivery. If any notice is sent by more than one of the above listed methods, notice will be deemed received on the earliest possible date in accordance with the above provisions. 26.2 NOTICE INFORMATION. Notices will be sent: If to LESSOR: INTERNATIONAL LEASE FINANCE CORPORATION 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067, U.S.A. Attention: Legal Department Fax: 310-788-1990 Telephone: 310-788-1999 If to LESSEE: AMERICAN TRANS AIR, INC. 7337 West Washington Street Indianapolis International Airport Indianapolis, Indiana 46231 United States of America Attention: Ken Wolff Executive Vice President and Chief Financial Officer Fax: 317-240-7091 Telephone: 317-247-4000 or to such other places and numbers as either party directs in writing to the other party. ARTICLE 27 GOVERNING LAW AND JURISDICTION 27.1 CALIFORNIA LAW. This Lease is being delivered in the State of California and will in all respects be governed by and construed in accordance with the Laws of the State of California (notwithstanding the conflict Laws of the State of California). 27.2 NON-EXCLUSIVE JURISDICTION IN CALIFORNIA. As permitted by Section 410.40 of the California Code of Civil Procedure, the parties hereby irrevocably submit to the non-exclusive jurisdiction of the Federal District Court for the Central District of California and the State of California Superior or Municipal Court in Los Angeles, California. Nothing herein will prevent either party from bringing suit in any other appropriate jurisdiction. 27.3 SERVICE OF PROCESS. The parties hereby consent to the service of process (a) out of any of the courts referred to above, (b) in accordance with Section 415.40 of the California Code of Civil Procedure by mailing copies of the summons and complaint to the person to be served by certified or registered mail to the address set forth in Article 26.2, postage prepaid, return receipt requested or (c) in accordance with the Hague Convention, if applicable. 27.4 PREVAILING PARTY IN DISPUTE. If any legal action or other proceeding is brought in connection with or arises out of any provisions in this Lease, the prevailing party will be entitled to recover reasonable attorneys' fees and other costs incurred in such action or proceedings. The prevailing party will also, to the extent permissible by Law, be entitled to receive pre- and post-judgment Default Interest. 27.5 WAIVER. LESSEE AND LESSOR HEREBY WAIVE THE RIGHT TO A TRIAL BY JURY. LESSEE AND LESSOR HEREBY IRREVOCABLY WAIVE ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATED TO THIS LEASE BROUGHT IN ANY OF THE COURTS REFERRED TO IN ARTICLE 27.2, AND HEREBY FURTHER IRREVOCABLY WAIVE ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. ARTICLE 28 MISCELLANEOUS 28.1 PRESS RELEASES. The parties will give copies to one another, in advance if possible, of all news, articles and other releases provided to the public media regarding this Lease. 28.2 LESSOR PERFORMANCE FOR LESSEE. The exercise by LESSOR of its remedy of performing a LESSEE obligation hereunder is not a waiver of and will not relieve LESSEE from the performance of such obligation at any subsequent time or from the performance of any of its other obligations hereunder. 28.3 LESSOR'S PAYMENT OBLIGATIONS. Any obligation of LESSOR under this Lease to pay or release any amount to LESSEE is conditioned upon (a) all amounts then due and payable by LESSEE to LESSOR under this Lease or under any other agreement between LESSOR and LESSEE having been paid in full and (b) no Default or Event of Default having occurred and continuing hereunder at the time such payment or release of payment is payable to LESSEE. 28.4 APPLICATION OF PAYMENTS. Any amounts paid or recovered in respect of LESSEE liabilities hereunder may be applied to Rent, Default Interest, fees or any other amount due hereunder in such proportions, order and manner as LESSOR determines. 28.5 USURY LAWS. The parties intend to contract in strict compliance with the usury Laws of the State of California and, to the extent applicable, the U.S. Notwithstanding anything to the contrary in the Operative Documents, LESSEE will not be obligated to pay Default Interest or other interest in excess of the maximum non-usurious interest rate, as in effect from time to time, which may by applicable Law be charged, contracted for, reserved, received or collected by LESSOR in connection with the Operative Documents. During any period of time in which the then-applicable highest lawful rate is lower than the Default Interest rate, Default Interest will accrue and be payable at such highest lawful rate; however, if at later times such highest lawful rate is greater than the Default Interest rate, then LESSEE will pay Default Interest at the highest lawful rate until the Default Interest which is paid by LESSEE equals the amount of interest that would have been payable in accordance with the interest rate set forth in Article 5.5. 28.6 DELEGATION BY LESSOR. LESSOR may delegate to any Person(s) all or any of the rights, powers or discretion vested in it by this Lease and any such delegation may be made upon such terms and conditions as LESSOR in its absolute discretion thinks fit. 28.7 CONFIDENTIALITY. The Operative Documents and all non-public information obtained by either party about the other are confidential and are between LESSOR and LESSEE only and will not be disclosed by a party to third parties (other than to such party's auditors or legal advisors or as required in connection with any filings of this Lease in accordance with Article 13) without the prior written consent of the other party. If disclosure is required as a result of applicable Law, LESSEE and LESSOR will cooperate with one another to obtain confidential treatment as to the commercial terms and other material provisions of this Lease. 28.8 RIGHTS OF PARTIES. The rights of the parties hereunder are cumulative, not exclusive, may be exercised as often as each party considers appropriate and are in addition to its rights under general Law. The rights of one party against the other party are not capable of being waived or amended except by an express waiver or amendment in writing. Any failure to exercise or any delay in exercising any of such rights will not operate as a waiver or amendment of that or any other such right any defective or partial exercise of any such rights will not preclude any other or further exercise of that or any other such right and no act or course of conduct or negotiation on a party's part or on its behalf will in any way preclude such party from exercising any such right or constitute a suspension or any amendment of any such right. 28.9 FURTHER ASSURANCES. Each party agrees from time to time to do and perform such other and further acts and execute and deliver any and all such other instruments as may be required by Law, reasonably requested by the auditors of the other party or requested by the other party to establish, maintain or protect the rights and remedies of the requesting party or to carry out and effect the intent and purpose of this Lease. 28.10 USE OF WORD "INCLUDING". The term "INCLUDING" is used herein without limitation. 28.11 HEADINGS. All article and paragraph headings and captions are purely for convenience and will not affect the interpretation of this Lease. Any reference to a specific article, paragraph or section will be interpreted as a reference to such article, paragraph or section of this Lease. 28.12 INVALIDITY OF ANY PROVISION. If any of the provisions of this Lease become invalid, illegal or unenforceable in any respect under any Law, the validity, legality and enforceability of the remaining provisions will not in any way be affected or impaired. 28.13 NEGOTIATION. The terms of this Lease are agreed by LESSOR from its principal place of business in Los Angeles, California. 28.14 TIME IS OF THE ESSENCE. Time is of the essence in the performance of all obligations of the parties under this Lease and, consequently, all time limitations set forth in the provisions of this Lease will be strictly observed. 28.15 AMENDMENTS IN WRITING. The provisions of this Lease may only be amended or modified by a writing executed by LESSOR and LESSEE. 28.16 COUNTERPARTS. This Lease may be executed in any number of identical counterparts, each of which will be deemed to be an original, and all of which together will be deemed to be one and the same instrument when each party has signed and delivered one such counterpart to the other party. 28.17 DELIVERY OF DOCUMENTS BY FAX. Delivery of an executed counterpart of this Lease or of any other documents in connection with this Lease by fax will be deemed as effective as delivery of an originally executed counterpart. Any party delivering an executed counterpart of this Lease or other document by fax will also deliver an originally executed counterpart, but the failure of any party to deliver an originally executed counterpart of this Lease or such other document will not affect the validity or effectiveness of this Lease or such other document. 28.18 ENTIRE AGREEMENT. The Operative Documents constitute the entire agreement between the parties in relation to the leasing of the Aircraft by LESSOR to LESSEE and supersede all previous proposals, agreements and other written and oral communications in relation hereto. The parties acknowledge that there have been no representations, warranties, promises, guarantees or agreements, express or implied, except as set forth herein and in the other Operative Documents. IN WITNESS WHEREOF, LESSEE and LESSOR have caused this Lease to be executed by their respective officers as of September 5, 2000. INTERNATIONAL LEASE FINANCE AMERICAN TRANS AIR, INC. CORPORATION By: /s/ Grant Levy By: /s/ Kenneth K. Wolff Its: Vice President Its: Executive Vice President & CFO EXHIBIT A AIRCRAFT DESCRIPTION Aircraft Manufacturer and Model: Boeing 737-800 Specification: Seating Configuration: Manufacturer's Serial Number: 28244 Registration Mark: ____ Engine Manufacturer and Model: CFM56-7B-27 Engine Serial Numbers: _______ and ________ Engine Thrust Rating: 27,300 pounds Maximum Gross Takeoff Weight: 160,000 pounds EXHIBIT B AGENCY AGREEMENT (Limited Authority) Relating to Boeing 737-800 Aircraft THIS AGENCY AGREEMENT ("AGREEMENT") is made and entered into as of ____________________. BETWEEN: AMERICAN TRANS AIR, INC., a Indiana corporation whose address and principal place of business is at 7337 West Washington Street, Indianapolis International Airport, Indianapolis, Indiana 46231, United States of America ("AGENT") and INTERNATIONAL LEASE FINANCE CORPORATION, a California corporation, whose address and principal place of business is at 1999 Avenue of the Stars, 39th Floor, Los Angeles, California 90067, U.S.A. ("BUYER"). RECITAL The Boeing Company ("MANUFACTURER") and Buyer have entered into Purchase Agreement 1830, dated as of June 27, 1995 (such purchase agreement as may be amended in accordance with the provisions thereof is hereinafter referred to as the "PURCHASE AGREEMENT") under which Manufacturer has agreed to manufacture and sell and Buyer has agreed to purchase certain Boeing 737-800 aircraft. Buyer has agreed to lease one (1) of such aircraft bearing manufacturer's serial number 28244 (the "AIRCRAFT") to the Agent pursuant to an Aircraft Lease Agreement between Buyer and Agent dated as of September 5, 2000 (the "LEASE"). The Agent is engaged in business as a commercial air carrier and intends to lease the Aircraft from Buyer, and Buyer is desirous of utilizing the expertise of the Agent as Buyer's agent in all matters to which the Purchase Agreement relates with respect to the Aircraft except certain items as indicated below, and the Agent, as Buyer's agent, is willing to make such expertise available to Buyer. Accordingly, the parties agree as follows: 1. Buyer hereby appoints the Agent as Buyer's sole and exclusive agent with authority to perform the following, on behalf of Buyer, as the Agent may in its discretion determine to be necessary or desirable: (a) monitor Manufacturer's production, testing and delivery of the Aircraft in accordance with the Purchase Agreement and (b) do all such other things permitted by the Purchase Agreement related to the technical and engineering aspects of Manufacturer's production of the Aircraft, except Buyer limits Agent's authority to perform on behalf of Buyer on any defect that occurs during manufacture that is considered significant in nature by Buyer as measured by the criteria set forth below. Buyer retains the sole authority to perform on any defect meeting such criteria. (i) Deviations from the drawing configuration that could affect future modifications, maintenance, repair or overhaul of the Aircraft; (ii) Defects that are obvious appearance items; (iii) Rework that requires stress concurrence to satisfy Manufacturer's Material Review Board (MRB) requirements; (iv) A high quantity of defects normally considered minor on a singular basis; (v) Major rework requiring extensive repair or modification, E.G. replacement of ---- skin panels, extensive use of oversize fasteners, repair of damaged areas and significant structural modifications; (vi) Rework that affects the aerodynamic drag coefficient of the Aircraft; or (vii) Rework that involves areas known to be sensitive to Buyer. 2. Notwithstanding anything in the provisions of paragraph 1, nothing in this Agreement will confer authority upon or otherwise permit the Agent: (a) to exercise any power of termination under the Purchase Agreement or (b) to make any payments due from Buyer to Manufacturer or to receive on behalf of Buyer any payments due from Manufacturer under the Purchase Agreement, or to alter any of the terms and conditions of the Purchase Agreement or the Detail Specifications of the Aircraft. 3. Buyer will not revoke the appointment of and authority granted under this Agreement to the Agent unless a termination of the Purchase Agreement or Lease has occurred with respect to the Aircraft or the Agent has failed to perform a material obligation under this Agreement. Notice of any such revocation will be provided in accordance with the provisions of Article 14 of the Purchase Agreement and given to both Manufacturer and the Agent. 4. Manufacturer acknowledges the appointment of the Agent for the purpose set forth hereunder and Manufacturer and Buyer agree that due performance by Manufacturer or Agent of an obligation under the Purchase Agreement will constitute due satisfaction of such obligation by such party and Buyer agrees to be bound by the acts of the Agent. 5. Buyer and Agent agree to identify the technical organization and/or person(s) with the limited authority to act for Agent during production of the Aircraft. Buyer will, if possible, provide such identification to Manufacturer in writing, along with office space requirements for Agent, if required, prior to or at the time of Manufacturer's acknowledgment of this Agreement. 6. Nothing in this Agreement will subject Manufacturer to any liability under the Purchase Agreement which it would not otherwise be subject to, or modify Manufacturer's rights thereunder, or require Manufacturer to divest itself of title to or possession of Aircraft or any other property which is subject to the Purchase Agreement until payment therefor and delivery thereof in accordance with the Purchase Agreement. 7. None of the parties hereto will be entitled to assign to any third party any of their rights under this Agreement. 8. The Agent will not delegate to any third party the performance of the obligations imposed on it by this Agreement or appoint a sub-agent. 9. References to Manufacturer in this Agreement will include any wholly-owned subsidiary of Manufacturer to which Manufacturer assigns any of its rights and obligations under the Purchase Agreement pursuant to the terms and conditions thereof. 10. This Agreement will be governed by the laws of the State of California; however, the Purchase Agreement shall remain governed by the laws of the State of Washington. This Agreement has been executed by the parties hereto as of the day and year first above written. INTERNATIONAL LEASE FINANCE CORPORATION AMERICAN TRANS AIR, INC. By: By: Its: Its: The Boeing Company acknowledges the appointment of AMERICAN TRANS AIR, INC. as agent of International Lease Finance Corporation in connection with the above referenced Aircraft as set forth in this Agreement. THE BOEING COMPANY By: Its: EXHIBIT C CERTIFICATE OF INSURANCE [Refer to Aircraft Lease Agreement dated as of September 5, 2000 between LESSEE and LESSOR (the "Lease"). If applicable, insurance certificates from both the insurers and reinsurers will be provided. If there is a LESSOR's Lender, include references to it where appropriate after references to LESSOR.] To: INTERNATIONAL LEASE FINANCE CORPORATION ("LESSOR") ------ 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States Re: AMERICAN TRANS AIR, INC. ("LESSEE") Boeing 737-800 Manufacturer's Serial No.: 28244 Registration Mark: ____ (the "AIRCRAFT") The following security has subscribed to the insurance and/or reinsurance policies: [LIST COMPANIES & PERCENTAGES] THIS IS TO CERTIFY THAT, as Insurance Brokers, we have effected Fleet Insurance in respect of aircraft owned or operated by LESSEE (including the Aircraft), and that insurance in respect of the Aircraft is as specified below. AIRCRAFT HULL ALL RISKS COVERING: All risks of physical loss or damage to the Aircraft from any cause (subject only to the exclusions as specified below), for an Agreed Value of Aircraft in the amount of [list amount calculated in accordance with Article 18.1] DEDUCTIBLES: (CONFIDENTIAL MATERIAL OMITTED) each and every loss (or such lesser amount as generally applicable to the rest of LESSEE's 737-800 fleet). Not applicable to Total Loss/Constructive Total Loss or Arranged Total Loss GEOGRAPHICAL COVERAGE: Worldwide [subject to customary exclusions] AVIATION AND AIRLINE GENERAL THIRD PARTY LIABILITY COVERING: Aircraft Third Party, Passenger, Baggage, Cargo and Mail Liability and Airline General Third Party Liability (including Premises, Hangarkeepers and Products Liability) for combined single limit of not less than (CONFIDENTIAL MATERIAL OMITTED) (or such higher amount as LESSEE may carry generally on other 737-800 aircraft in its fleet) any one accident/occurrence (but in the aggregate in relation to Products Liability), extended to cover LESSEE's liability under the Lease to the extent of the risks covered by the policy including war and allied perils under Extended Coverage Endorsement as per AVN 52 subject only to exclusions as specified below GEOGRAPHICAL LIMITS: Worldwide [subject to customary exclusions] HULL WAR AND ALLIED PERILS COVERING: Hull War Risks as per LSW555.B, but including (a) confiscation or requisition (including by State of Registration and state where airline is domiciled), (b) hijacking or other unlawful seizure or wrongful exercise of control of the Aircraft or crew in flight (including any attempt at such seizure or control) and including "All Risks" Continuation Clause and Extortion Risks (including expenses) and covering claims excluded from Hull All Risks Policy while Aircraft outside Assured's control by reason of perils insured under this policy, for an Agreed Value of Aircraft in the amount of [list amount calculated in accordance with Article 18.1] DEDUCTIBLE: No deductible GEOGRAPHICAL LIMITS: Worldwide AIRCRAFT SPARES ALL RISKS INSURANCE COVERING: All risks of physical loss or damage to Aircraft Parts or spares or Engines at all times when removed from the Aircraft from whatever cause, subject only to the exclusions specified below, including the risks set down in AVN 48B other than paragraphs (a) and (b) thereof (but including paragraph (a) in respect of transit risks) for limits of not less than: CONFIDENTIAL MATERIAL OMITTED and covering: With respect to an Engine, an agreed value (CONFIDENTIAL MATERIAL OMITTED) or, with LESSOR's written concurrence, replacement cost With respect to Parts, replacement cost DEDUCTIBLE: (CONFIDENTIAL MATERIAL OMITTED) GEOGRAPHICAL COVERAGE: Worldwide INSURANCE REQUIRED BY MANUFACTURER LESSEE will carry the insurance required by Manufacturer in connection with LESSOR's assignment of Manufacturer's warranties and product support to LESSEE CONTRACTUAL INDEMNITY To the extent of the risks covered by the policies, LESSEE has insurance coverage for the indemnities agreed to by LESSEE pursuant to Article 16 of the Lease, subject to AVN67B or equivalent PERIOD OF COVERAGE (ALL POLICIES) From the Delivery Date of Aircraft to [END OF POLICY PERIOD] It is further certified that LESSOR has an interest in respect of the Aircraft under the Lease. Accordingly, with respect to losses occurring during the period from the Effective Date until the expiry of the Insurance or until the expiry or agreed termination of the Lease or until the obligations under the Lease are terminated by any action of the Insured or LESSOR and in consideration of the Additional Premium it is confirmed that the Insurance afforded by the Policy is in full force and effect and it is further agreed that the following provisions are specifically endorsed to the Policy. 1. UNDER THE HULL (ALL RISKS AND HULL WAR AND ALLIED RISKS) AND AIRCRAFT SPARES INSURANCES (a) In respect of any claim on the Aircraft that becomes payable on the basis of a Total Loss, payment of any settlement will be made to, or to the order of LESSOR as sole loss payee, up to the Agreed Value. With respect to repairable damage to an Aircraft or Engine, LESSOR will receive all insurance proceeds in excess of CONFIDENTIAL MATERIAL OMITTED provided that upon receipt by the insurance broker of written notice of a material default on the part of LESSEE (and until notice that it has been cured), all insurance proceeds which otherwise would be payable to LESSEE will be made directly to LESSOR. In respect of any other claim, payment of any settlement (net of any relevant policy deductible) will be made with such party(ies) as may be necessary to repair the Aircraft unless otherwise agreed after consultation between the Insurers and the Insured and, where necessary under the terms of the Lease, LESSOR. Such payments will only be made provided they are in compliance with all applicable laws and regulations. (b) Insurers agree on a 50/50 settlement in terms of AVS 103. (c) Insurers have no right to replace the Aircraft on a Total Loss (arranged, constructive or otherwise). (d) Insurers confirm that under the insurance policies, if the Insured installs an engine owned by a third party on the Aircraft, either (i) the hull insurance will automatically increase to such higher amount as is necessary in order to satisfy both LESSOR's requirement to receive the Agreed Value in the event of a Total Loss, Constructive Total Loss or Arranged Total Loss and the amount required by the third party engine owner, or (ii) separate additional insurance on such engine will attach in order to satisfy separately the requirements of the Insured to such third party engine owner. 2. UNDER THE LEGAL LIABILITY INSURANCE (a) Subject to the provisions of this Endorsement, the Insurance will operate in all respects as if a separate Policy had been issued covering each party insured hereunder, but this provision will not operate to include any claim arising howsoever in respect of loss or damage to the Aircraft insured under the Hull or Spares Insurance of the Insured. Notwithstanding the foregoing the total liability of Insurers in respect of any and all Insureds will not exceed the limits of liability stated in the Policy. (b) The Insurance provided hereunder will be primary and without right of contribution from any other insurance which may be available to LESSOR. 3. UNDER ALL INSURANCES (a) LESSOR, its successors and assigns, and (with respect to Aviation and Airline General Third Party Liability only) its directors, officers and employees for their respective rights and interests, are included as Additional Insureds. (b) The cover afforded to LESSOR by the Policy in accordance with this Endorsement will 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 Policy. (c) LESSOR will have no responsibility for premium and insurers will waive any right of set-off or counterclaim against LESSOR except in respect of outstanding premium in respect of the Aircraft, provided that Insurer may only set-off for premiums against the proceeds of the hull insurance for outstanding premiums in connection with hull all risks and hull war and allied perils insurance. (d) Upon payment of any loss or claim to or on behalf of LESSOR, Insurers will to the extent and in respect of such payment be thereupon subrogated to all legal and equitable rights of LESSOR indemnified hereby (but not against LESSOR). Insurers will not exercise such rights without the consent of those indemnified, such consent not to be unreasonably withheld. At the expense of Insurers LESSOR will do all things reasonably necessary to assist the Insurers to exercise said rights. (e) Except in respect of any provision for Cancellation or Automatic Termination specified in the Policy or any endorsement thereof, cover provided by this Endorsement may only be cancelled or materially altered in a manner adverse to LESSOR by the giving of not less than thirty (30) days notice in writing to LESSOR. Notice will be deemed to commence from the date such notice is given by the Insurers. Such notice will NOT, however, be given at normal expiry date of the Policy or any endorsement. 4. EXCEPT AS SPECIFICALLY VARIED OR PROVIDED BY THE TERMS OF THIS CERTIFICATE (a) LESSOR IS COVERED BY THE POLICY SUBJECT TO ALL TERMS, CONDITIONS, LIMITATIONS,WARRANTIES, EXCLUSIONS AND CANCELLATION PROVISIONS THEREOF. (b) THE POLICY WILL NOT BE VARIED BY ANY PROVISIONS CONTAINED IN THE LEASE WHICH PURPORT TO SERVE AS AN ENDORSEMENT OR AMENDMENT TO THE POLICY. SUBJECT (save as specifically stated in this Certificate) to policy terms, conditions, limitations and exclusions. Yours faithfully, [BROKERS] EXHIBIT D BROKERS' LETTER OF UNDERTAKING To: INTERNATIONAL LEASE FINANCE CORPORATION 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States Date: Our Ref: Re: AMERICAN TRANS AIR, INC. ("LESSEE") ------ Boeing 737-800 Manufacturer's Serial No.: ____ Registration Mark: ____ (the "AIRCRAFT") Dear Sirs: We confirm that insurance has been effected for the account of [LESSEE] (the "OPERATOR") covering all aircraft owned or operated by them, including the above-referenced aircraft (the "Aircraft"). [Also confirm, if applicable, the amount of any hull all risks or hull war and allied perils on the Aircraft which LESSEE is carrying in excess of the Agreed Value (which excess insurance would be payable to LESSEE). Such excess insurance may not exceed ten percent (10%) of the Agreed Value.] Pursuant to instructions received from the Operator and in consideration of your approving the arrangement of the Operator's "Fleet Policy" (under which the above-referenced Aircraft is insured) through the intermediary of ourselves as Brokers in connection with the insurance (the "INSURANCE") mentioned in our Certificate of Insurance (Reference No. [ ] dated [ ] and attached hereto), we undertake as follows: 1. In relation to the Hull and War Risks Insurance to hold to your order the insurance Slips or Contracts and any Policies which may be issued or any policies substituted (with your consent) therefor (but only insofar as the same relate to the Aircraft only) and the benefit of the Hull and War Risks Insurance thereunder, but subject to our requirements to operate the Fleet Policy insofar as it relates to any other aircraft insured thereunder. 2. To advise you of any of the following: (a) If any insurer cancels or gives notice of cancellation of any of the Insurance at least thirty (30) days (or such lesser period as may be available in the case of War and Allied Perils) before such cancellation is to take effect in respect of the Aircraft. (b) Of any act or omission or of any event (including non-payment of premium) of which we have knowledge or are notified and which might invalidate or render unenforceable in whole or in part any of the Insurance, insofar as the same relate to the Aircraft. (c) If we do not receive instructions to renew all or any of the Insurance at least thirty (30) days prior to their expiration. (d) If any of the Insurance are not renewed on the same terms (save as to premium and period of cover and as you might otherwise have notified us to be acceptable to you) seven (7) days prior to expiry thereof. The above undertakings are given subject to our continuing appointment for the time being as Insurance Brokers to the Operator. We also undertake to advise you if we cease to be Insurance Brokers to the Operator. Yours faithfully, EXHIBIT E ESTOPPEL AND ACCEPTANCE CERTIFICATE AMERICAN TRANS AIR, INC. ("LESSEE"), a corporation organized under the laws of Indiana does hereby represent, acknowledge, warrant and agree as follows: 1. LESSEE and INTERNATIONAL LEASE FINANCE CORPORATION, as LESSOR, have entered into an Aircraft Lease Agreement dated as of September 5, 2000 (hereinafter referred to as the "LEASE"). Words used herein with capital letters and not otherwise defined will have the meanings set forth in the Lease. 2. LESSEE has this ____ day of __________, ____ (Time: __________) at ____________________ received from LESSOR possession of: (a) One (1) Boeing 737-800 aircraft bearing Manufacturer's serial number ____ and U.S. registration mark ____, together with two (2) CFM56-7B-27 engines bearing manufacturer's serial numbers _______ and ________ (each of which has 750 or more rated take-off horsepower), all in airworthy condition. (b) All Aircraft Documentation, including the usual and customary manuals, logbooks, flight records and historical information regarding the Aircraft, Engines and Parts. 3. All of the foregoing has been delivered and accepted on the date set forth above to LESSEE's full satisfaction and pursuant to the terms and provisions of the Lease. 4. The Agreed Value of the Aircraft is US$_______________. 5. The amount of fuel on board at Delivery is __________ (circle one) pounds/kilos (________ gallons). 6. The Aircraft, Engines, Parts and Aircraft Documentation as described in the Lease have been fully examined by LESSEE and have been received in a condition fully satisfactory to LESSEE and in full conformity with the Lease in every respect. 7. The Lease is in full force and effect, LESSEE has no claims, offsets, deductions or set-off of any kind or nature in connection with the Lease, except for any claims against LESSOR set forth on the attached List of Discrepancies. 8. LESSOR's Lender may rely upon all of the foregoing in granting substantial financial accommodations to LESSOR and LESSEE understands and agrees that any funds being advanced by LESSOR's Lender will be made in reliance upon the foregoing. 9. LESSEE has obtained all required permits, authorizations, licenses and fees of the State of Registration or any Government Entity thereof necessary in order for LESSEE to operate the Aircraft as permitted by the terms of the Lease. Dated on the date set forth above AMERICAN TRANS AIR, INC. By: Title: ATTACHMENTS: 1. List of Aircraft Documentation 2. List of Loose Equipment 3. List of Discrepancies ATTACHMENT 1 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE LIST OF AIRCRAFT DOCUMENTATION MANUALS 1. FAA Approved Flight Manual 2. Airplane Flight Operation Manual 3. Aircraft Recover Manual 4. Quick Reference Handbook (QRH) 5. Weight and Balance Manual 6. Aircraft Fueling Manual 7. Aircraft Maintenance Manual (MM) 8. Aircraft Maintenance Manual Supplement 9. Ramp Maintenance Manual (RMM) 10. Cargo Loading Manual 11. Fault Reporting Manual (FRM) 12. Fault Isolation Manual (FIM) 13. Illustrated Parts Catalog (IPC) 14. Life Limited Parts Manual 15. Structural Repair Manual (SRM) 16. Master Minimum Equipment List 17. Wiring Diagram Manual (WD) 18. Wiring Practices Manual 19. System Schematics Manual 20. B.I.T.E. Manual 21. Non-Destructive Test Manual 22. Corrosion Prevention Manual 23. Component Maintenance Manual 24. APU Log Book 25. Engine Maintenance Manual 26. Engine Log Book 27. Engine Illustrated Parts Catalog 28. Engine Data Submittal Book 29. Engine Overhaul Manual 30. Power Plant Build-up Manual AIRCRAFT RECORDS AND HISTORICAL DOCUMENTS 1. Copies of original Certificates delivered by Boeing: a. Airworthiness Certificate for Export b. Radio installation conformity certificate c. Noise limitation certificate 2. Copies of original Documents delivered by Boeing: a. Airworthiness Directive Compliance list b. Aircraft inspection report c. Aircraft Readiness Log d. Weighing report 3. Copies of current Certificates: a. Airworthiness Certificate b. Noise limitation c. Radio license d. Interior material burn certificates e. Certificate of Export f. Aircraft deregistration confirmation e. Aircraft Registration 4. Letters signed and stamped by Quality Assurance: a. Current aircraft hours and cycles b. Current engines hours and cycles c. Accident and Incident report d. Summary of Maintenance Program e. AD compliance during the lease term 5. Aircraft log books and Aircraft readiness log. 6. Aircraft Hard Time (HT) inspection status. 7. One year forecast for HT inspection. 8. Aircraft Modification status, including service bulletins. 9. Last weighing report prior to redelivery. 10. AD compliance report with original signoffs. 11. Routine and non-routine job cards of the last "C" and "D" checks. 12. Past year pilots and maintenance discrepancies. 13. Major and Minor structural repairs with applicable approvals. 14. Compass Swing report of the last three years. 15. Cabin Configuration drawing (LOPA). 16. Emergency equipment location drawing. 17. Last X-RAYs ENGINES RECORDS 1. Last test cell run reports. 2. Life Limited Parts status and traceability. 3. AD compliance report with original signoffs. 4. Engine Modification/service bulletin/inspection report and applicableforms. 5. Last heavy maintenance records for each module. 6. Engine log books. 7. Engine removal history. 8. Past year trend monitoring reports. 9. Historical borescope reports. 10. Engine component report. APU RECORDS 1. APU status (FH, FC, limits). 2. Life limited Part status and traceability. 3. AD compliance with original signoffs. 4. Modification status. 5. Last heavy maintenance documents. 6. APU log books. 7. Last test cell report. COMPONENT RECORDS 1. Aircraft component inventory. 2. Hard time component inventory. 3. All serviceable tags. 4. Landing Gear status with last overhaul and life limited Part status. 5. AD compliance with original signoffs. 6. Modification status. ATTACHMENT 2 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE LIST OF LOOSE EQUIPMENT ATTACHMENT 3 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE LIST OF DISCREPANCIES EXHIBIT F OPINION OF COUNSEL TO BE GIVEN BY INDEPENDENT OUTSIDE COUNSEL OF LESSEE OR OTHER LAWYERS ACCEPTABLE TO LESSOR To: International Lease Finance Corporation 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States Gentlemen: This opinion is furnished to you pursuant to Article 7 of the Aircraft Lease Agreement dated as of September 5, 2000 (the "LEASE") between AMERICAN TRANS AIR, INC. ("LESSEE") and INTERNATIONAL LEASE FINANCE CORPORATION ("LESSOR"). Defined terms in this opinion are used herein as defined in the Lease. I have acted as counsel for LESSEE in connection with the preparation, execution and delivery of the Lease. In that connection I have examined: (a) The Lease and Estoppel and Acceptance Certificate; (b) The charter of LESSEE and all amendments thereto (the "CHARTER"); and (c) Such other documents, agreements and instruments, and such treaties, laws, rules, regulations, decrees and the like, as I have deemed necessary as a basis for the opinions hereinafter expressed. [ (d) All of the agreements and any amendments thereto between LESSEE and all other lessors and lenders of LESSEE covering other aircraft operated by LESSEE on which the Engines can be installed.] Based upon the foregoing and having regard for legal considerations which I deem relevant, I am of the opinion that: 1. LESSEE is a corporation duly incorporated, validly existing and in good standing under the Laws of Indiana. It has the corporate power and authority to carry on its business as presently conducted and to perform its obligations under the Lease. 2. No authorization, approval, consent, license or order of, or registration with, or the giving of notice to the Aviation Authority or any other regulatory body or authority is required for the valid authorization, execution, delivery and performance by LESSEE of the Lease. 3. The Lease and the Estoppel and Acceptance Certificate have each been duly authorized, executed and delivered by LESSEE. Each such instrument is a valid, enforceable and binding obligation of LESSEE except as enforceability may be limited by bankruptcy, insolvency, reorganization or other Laws of general application affecting the enforcement of creditors' rights. 4. The execution and delivery of the Lease and the Estoppel and Acceptance Certificate, the consummation by LESSEE of the transactions contemplated therein and compliance by LESSEE with the terms and provisions thereof do not contravene any Law applicable to LESSEE, or result in any breach of or constitute any default under or result in the creation of any lien, charge or encumbrance upon any property of LESSEE, under any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which LESSEE is a party or by which LESSEE or its properties or assets is bound. 5. Except for any filing or recording that may be required with the [NAME OF AIRCRAFT REGISTER] and except for [DESCRIBE SUCH OTHER FILINGS OR RECORDINGS], no filing or recording of any instrument or document (including the filing of any financial statement) is necessary under the laws of the U.S. in order for the Lease to constitute a valid and perfected lease of record relating to the Aircraft, it being understood that such counsel expresses no opinion as to the nature of LESSOR's title to the Aircraft on the Delivery Date. 6. LESSEE holds all licenses, certificates and permits from applicable governmental authorities in the U.S. necessary for the conduct of its business as a certificated air carrier and performance of its obligations under the Lease. 7. To my knowledge, there are no suits or proceedings pending or threatened against LESSEE before any Government Entity against or affecting LESSEE which are reasonably likely to be adversely determined and, if adversely determined, would have a material adverse effect on the financial condition or business of LESSEE or its ability to perform under the Lease, except as described in the filings provided to LESSOR pursuant to Article 22. 8. The obligations of LESSEE under the Lease are direct, general and unconditional obligations of LESSEE and rank or will rank at least PARI PASSU with all other present and future unsecured and unsubordinated obligations (including contingent obligations) of LESSEE, with the exception of such obligations as are mandatorily preferred by law. 9. LESSEE, under the laws of the U.S. or of any other jurisdiction affecting LESSEE, is subject to private commercial law and suit. Neither LESSEE nor its properties or assets have the right of immunity from suit or execution on the grounds of sovereignty in such jurisdictions and the performance by LESSEE of its obligations under the Lease constitute commercial acts done for commercial purposes. 10. There is no applicable usury or interest limitation Law in Indiana which may restrict the recovery of payments in accordance with the Lease. 11. LESSOR will not violate any Law or become liable to any tax in Indiana or the U.S. by reason of entering into or performing its obligations under the Lease and it is not necessary to establish a place of business in Indiana in order to enforce any provisions of the Lease. Very truly yours, EXHIBIT G ASSIGNMENT OF RIGHTS (AIRFRAME) [DATE] Boeing Commercial Airplane Group P.O. Box 3707 Seattle, Washington 98124-2207 Attention: Vice President-Contracts Mail Code 21-34 Subject: Full Assignment of Rights and Obligations - International Lease Finance Corporation as Lessor and AMERICAN TRANS AIR, INC. as Lessee of Model Boeing 737-800 aircraft bearing manufacturer's serial number 28244 Ladies and Gentlemen: In connection with International Lease Finance Corporation's lease to AMERICAN TRANS AIR, INC. ("Lessee") of a Boeing aircraft (more fully described below), reference is made to the following documents: A. Purchase Agreement 1830, dated as of June 27, 1995, between The Boeing Company ("Boeing") and International Lease Finance Corporation ("ILFC") (the "Boeing Agreement") under which ILFC purchased a certain Boeing Model 737-800 aircraft bearing manufacturer's serial number 28244 (the "Aircraft"). B. Aircraft Lease Agreement (the "Lease") for the Aircraft dated as of September 5, 2000 between ILFC and Lessee. Capitalized terms used herein without definition will have the same meaning as in the Boeing Agreement. In connection with ILFC's lease of the Aircraft under the Lease, ILFC is transferring to Lessee certain rights of ILFC related to the Aircraft under the Boeing Agreement. To accomplish this transfer of rights, as authorized by the provisions of the Boeing Agreement: 1. Lessee acknowledges that it has received copies of the following specific provisions of the Boeing Agreement applicable to the Aircraft and agrees to be bound by and comply with all the terms, conditions, and limitations contained in such provisions, including without limitation the disclaimer and release, exclusion of liabilities, indemnity and insurance provisions thereof: Boeing Agreement Article 6 - Excusable Delay 6.1 General Article 10 - Assignment, Resale or Lease 10.1 Assignment 10.3 Sale by Buyer after Delivery 10.4 Lease by Buyer after Delivery 10.5 No Increase in Boeing Liability 10.6 Exculpatory or Indemnity Clause in Post-delivery Sale or Lease Article 12 - Product Assurance; Disclaimer and Release; Exclusion of Liabilities; Customer Support; Indemnification and Insurance (in its entirety) Article 14 - Contractual Notices and Requests Article 15 - Miscellaneous 15.4 Governing Law Exhibit B - Product Assurance Document Part A Boeing Warrant Part B Warranty Repairs and Modifications by Buyer Part C Boeing Service Life Policy Part D Boeing Indemnity Against Patent Infringement Part D-1 Boeing Indemnity Against Copyright Infringement Part E Supplier Warranties and Patent Indemnities Part G Boeing Interface Commitment Part H General Exhibit C-1 - Customer Support Document Part B Boeing Customer Support Services Part D Technical Data and Documents Part E Buyer's Indemnification of Boeing and Insurance Part F Alleviation or Cessation of Performance Exhibit E - Buyer Furnished Equipment Provisions Document Paragraph 8 Indemnification of Boeing Paragraph 9 Patent Indemnity Paragraph 10 Definitions Letter Agreement No. 1830-3 - Seller Purchased Equipment Paragraph 6 Buyer's Indemnification of Boeing 2. Lessee recognizes that Boeing's obligation to provide training, support and services to Lessee pursuant to Exhibit C of the Boeing Agreement is conditioned on the receipt by Boeing of evidence of compliance by Lessee with the insurance requirements set forth in paragraph 2 of Part E of Exhibit C or in such other form as may be satisfactory to Boeing, prior to the commencement of such training, support and services. 3. ILFC reserves to itself all rights, claims and interests it may have under the Boeing Agreement not expressly assigned to Lessee hereunder. ILFC will remain responsible to Boeing for any amounts with respect to the Aircraft owed to Boeing under the Boeing Agreement prior to the effective date of this letter, including any amounts owed by ILFC to Boeing under the specific articles and paragraphs of the Boeing Agreement referenced in paragraph 1 above based upon events or incidents relating to the Aircraft occurring prior to the effective date of this letter. 4. ILFC hereby assigns to Lessee the sole authority to exercise in Lessee's name all rights and powers of ILFC with respect to the Aircraft under the specific portions of the Boeing Agreement referenced in paragraph 1 above. Such authorization will continue until Boeing receives from ILFC written notice that the Lease has been cancelled or terminated, addressed to Boeing's Vice President, Contracts, P.O. Box 3707, MC 21-34, Seattle, Washington 98124-2207, U.S.A. Until Boeing receives such notice, Boeing will be entitled to deal exclusively with Lessee with respect to the Aircraft under the specific portions of the Boeing Agreement referenced in paragraph 1 above and, with respect to the rights, powers, duties or obligations under such portions of the Boeing Agreement, any and all actions taken by Lessee or agreements entered into by Lessee during the period prior to Boeing's receipt of such notice will be final and binding on ILFC. 5. Lessee hereby accepts the authorization set forth in paragraph 4 above and agrees to be bound by and to comply with all the terms, conditions and limitations of the portion of the Boeing Agreement referenced in paragraph 1 above. 6. This Assignment may be signed by the parties hereto in separate counterparts, each of which when executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. 7. This Assignment shall be governed by, and construed in accordance with,the laws of the State of Washington, including all matters of construction, validity and performance. We request that Boeing, upon receipt of this letter, acknowledge receipt thereof and the transfer of rights set forth above by signing the acknowledgment and forwarding one copy of this letter to each of the undersigned. IN WITNESS WHEREOF, the parties hereto have caused this Assignment Agreement to be duly executed as of the dates written below. INTERNATIONAL LEASE FINANCE AMERICAN TRANS AIR, INC., as Lessee CORPORATION, as Lessor and Buyer By: By: Its: Its: BOEING ACKNOWLEDGMENT AND CONSENT TO ASSIGNMENT Receipt of the above letter is acknowledged and transfer of certain rights as described above under the Boeing Agreement is confirmed, effective as of this date. THE BOEING COMPANY By: Its: Date: EXHIBIT H ASSIGNMENT OF RIGHTS (ENGINES) [DATE] CFM INTERNATIONAL, INC. 1 Neumann Way, F-17 Cincinnati, Ohio 45215 Attention: Commercial Contracts - Warranty Assignment Administrator Dear Warranty Assignment Administrator: Reference is hereby made to that Consent to Assignment made as of April 29, 1988 (the "CONSENT TO ASSIGNMENT"), by and between CFM INTERNATIONAL, INC. ("CFMI") and INTERNATIONAL LEASE FINANCE CORPORATION ("ILFC"). Terms defined in the Consent to Assignment are used herein with the same meaning as in the Consent to Assignment. As of ________________ ___, ______, ILFC has assigned all of its rights and interest in, to and under the Engine Warranties to AMERICAN TRANS AIR, INC. ("ASSIGNEE") in connection with its lease to Assignee of a Boeing 737-800 aircraft (the "AIRCRAFT") together with two (2) CFMI Model CFM56-7B-27 engines bearing Manufacturer's Serial Numbers _______ and ________ (the "ENGINES") as of the date each such Engine was delivered to Assignee. Such assignment shall be effective from such date until ILFC notifies CFMI that the Lease has been cancelled or terminated. The Assignee has accepted such assignment and all the limitations and liabilities pertaining to the Engine Warranties as stated in the provisions of the GTA listed in Schedule 2 to the Consent to Assignment. A copy of the aforesaid assignment is attached hereto. Very truly yours, INTERNATIONAL LEASE FINANCE CORPORATION By: Title: cc: Ruben M. Cabrera Director, Commercial Contracts ASSIGNMENT OF WARRANTIES [DATE] In consideration of AMERICAN TRANS AIR, INC. ("LESSEE") leasing from International Lease Finance Corporation ("ILFC") one (1) Boeing 737-800 aircraft together with two (2) CFMI Model CFM56-7B-27 engines bearing manufacturer's serial numbers _______ and ________, it is hereby agreed as follows: 1. ILFC hereby assigns and transfers to Lessee all of ILFC's respective rights and interest in and to and in and under the Engine Warranties set forth in and subject to the limitations and liabilities set forth in Exhibit B Warranty, Section X (the "ENGINE WARRANTIES") of CFM International, Inc. - ILFC General Terms Agreement No. 6-3987 dated 22 June 1984 (the "GTA") during the term of such leases so long as Lessee is not in default thereunder. 2. Lessee hereby accepts such assignment including all the limitations and liabilities pertaining to said Engine Warranties as stated in the provisions of Exhibit B Warranty, Section X of the GTA. 3. This Agreement shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors and assigns to the extent permitted by the GTA and hereunder. 4. This Agreement shall be governed by and construed in accordance with the laws of the State of California. 5. This Agreement may be executed in any number of counterparts, each of which when executed and delivered is an original but all of which taken together constitute one and the same instrument and any party may execute this Agreement by signing any counterpart. IN WITNESS WHEREOF, the authorized representative of the parties hereto have executed this Agreement as of the day and year first above written. For and on behalf of For and on behalf of INTERNATIONAL LEASE FINANCE AMERICAN TRANS AIR, INC. CORPORATION By: By: Its: Its: EXHIBIT I RETURN ACCEPTANCE RECEIPT Date: _________________ ___, ____ 1. AMERICAN TRANS AIR, INC., as LESSEE, and INTERNATIONAL LEASE FINANCE CORPORATION, as LESSOR, have entered into an Aircraft Lease Agreement dated as of September 5, 2000 (the "LEASE"). Words used herein with capital letters and not otherwise defined will have the meanings set forth in the Lease. 2. LESSOR has this ____ day of __________, ____ (Time: __________) at ____________________ received from LESSEE possession of: (a) One (1) Boeing 737-800 Aircraft bearing Manufacturer's serial number ____, together with two (2) CFM56-7B-27 engines bearing manufacturer's serial numbers _______ and ________, and all Parts attached thereto and thereon in an airworthy condition and (b) All Aircraft Documentation, including the usual and customary manuals, logbooks, flight records and historical information regarding the Aircraft, Engines and Parts, as listed in the Document Receipt attached hereto. 3. The Airframe, Engines and Parts had the following hours/cycles at return: (a) AIRFRAME: Total hours: _______________ Total Landings: _______________ (b) ENGINES: POSITION SERIAL NO. TOTAL HOURS TOTAL CYCLES HRS/CYCLES SINCE LAST SHOP VISIT Time Remaining to Next LIFE LIMITED PART REMOVAL PART NAME HOURS CYCLES MSN MSN (c) APU: MSN __________ Total hours: __________ ______ hours/ ______ cycles since last Overhaul ______ hours/ ______ cycles remaining on APU life-limited Parts (d) LANDING GEARS: POSITION SERIAL NO. Total Hrs/Cycles since Date of last HRS/CYCLES LAST OVERHAUL OVERHAUL Nose Right Main Left Main (e) FUEL ON BOARD AT RETURN: ______ (circle one) pounds/kilos (______ gallons) 4. Other technical information regarding the Aircraft and its components are correctly set forth on the Technical Evaluation Report (in the form of Exhibit L) attached hereto. 5. The above specified aircraft, engines and documentation are hereby accepted by LESSOR subject to correction by LESSEE (or procurement by LESSEE at LESSEE's cost) as soon as reasonably possible of the discrepancies specified in Attachment 2 hereto. 6. Subject to the following paragraph, the leasing of the Aircraft by LESSOR to LESSEE pursuant to the Lease is hereby terminated without prejudice to LESSEE's continuing obligations under the Lease including, without limitation, paragraph 6 above and Articles 10.5, 15 and 16. 7. LESSEE represents and warrants that during the term of the Lease all maintenance and repairs to the Airframe and Engines were performed in accordance with the requirements contained in the Lease. LESSEE further confirms that all of its obligations under the Lease whether accruing prior to the date hereof or which survive the termination of the Lease by their terms and accrue after the date hereof, will remain in full force and effect until all such obligations have been satisfactorily completed. 8. This Return Acceptance Supplement is executed and delivered by the parties in [place]. IN WITNESS WHEREOF, the parties hereto have caused this Return Acceptance Receipt to be executed in their respective corporate names by their duly authorized representatives as of the day and year first above written. INTERNATIONAL LEASE FINANCE CORPORATION AMERICAN TRANS AIR, INC. By: By: Its: Its: ATTACHMENTS: 1. List of Aircraft Documentation 2. List of Loose Equipment 3. List of Discrepancies 4. Engine Maximum Power Assurance Test Conditions and Results 5. Dent and Damage Chart 6. Form of No Accident/Incident Letter 7. Technical Evaluation Report (in the form of Exhibit L) ATTACHMENT 1 TO RETURN ACCEPTANCE RECEIPT LIST OF AIRCRAFT DOCUMENTATION [The (a) manuals and (b) Aircraft records and historical documents set forth below are to be returned with the Aircraft in a current, up-to-date and correct status] MANUALS 1. FAA Approved Flight Manual 2. Airplane Flight Operation Manual 3. Aircraft Recover Manual 4. Quick Reference Handbook (QRH) 5. Weight and Balance Manual 6. Aircraft Fueling Manual 7. Aircraft Maintenance Manual (MM) 8. Aircraft Maintenance Manual Supplement 9. Ramp Maintenance Manual (RMM) 10. Cargo Loading Manual 11. Fault Reporting Manual (FRM) 12. Fault Isolation Manual (FIM) 13. Illustrated Parts Catalog (IPC) 14. Life Limited Parts Manual 15. Structural Repair Manual (SRM) 16. Master Minimum Equipment List 17. Wiring Diagram Manual (WD) 18. Wiring Practices Manual 19. System Schematics Manual 20. B.I.T.E. Manual 21. Non-Destructive Test Manual 22. Corrosion Prevention Manual 23. Component Maintenance Manual 24. APU Log Book 25. Engine Maintenance Manual 26. Engine Log Book 27. Engine Illustrated Parts Catalog 28. Engine Data Submittal Book 29. Engine Overhaul Manual 30. Power Plant Build-up Manual AIRCRAFT RECORDS AND HISTORICAL DOCUMENTS 1. Copies of original Certificates delivered by Boeing: a. Airworthiness Certificate for Export b. Radio installation conformity certificate c. Noise limitation certificate 2. Copies of original Documents delivered by Boeing: a. Airworthiness Directive Compliance list b. Aircraft inspection report c. Aircraft Readiness Log d. Weighing report 3. Copies of current Certificates: a. Airworthiness Certificate b. Noise limitation c. Radio license d. Interior material burn certificates e. Certificate of Export f. Aircraft deregistration confirmation e. Aircraft Registration 4. Letters signed and stamped by Quality Assurance: a. Current aircraft hours and cycles b. Current engines hours and cycles c. Accident and Incident report d. Summary of Maintenance Program e. AD compliance during the lease term 5. Aircraft log books and Aircraft readiness log. 6. Aircraft Hard Time (HT) inspection status. 7. One year forecast for HT inspection. 8. Aircraft Modification status, including service bulletins. 9. Last weighing report prior to redelivery. 10. AD compliance report with original signoffs. 11. Routine and non-routine job cards of the last "C" and "D" checks. 12. Past year pilots and maintenance discrepancies. 13. Major and Minor structural repairs with applicable approvals. 14. Compass Swing report of the last three years. 15. Cabin Configuration drawing (LOPA). 16. Emergency equipment location drawing. 17. Last X-RAYs ENGINES RECORDS 1. Last test cell run reports. 2. Life Limited Parts status and traceability. 3. AD compliance report with original signoffs. 4. Engine Modification/service bulletin/inspection report and applicable forms. 5. Last heavy maintenance records for each module. 6. Engine log books. 7. Engine removal history. 8. Past year trend monitoring reports. 9. Historical borescope reports. 10. Engine component report. APU RECORDS 1. APU status (FH, FC, limits). 2. Life limited Part status and traceability. 3. AD compliance with original signoffs. 4. Modification status. 5. Last heavy maintenance documents. 6. APU log books. 7. Last test cell report. COMPONENT RECORDS 1. Aircraft component inventory. 2. Hard time component inventory. 3. All serviceable tags. 4. Landing Gear status with last overhaul and life limited Part status. 5. AD compliance with original signoffs. 6. Modification status. ATTACHMENT 2 TO RETURN ACCEPTANCE RECEIPT LIST OF LOOSE EQUIPMENT ATTACHMENT 3 TO RETURN ACCEPTANCE RECEIPT LIST OF DISCREPANCIES ATTACHMENT 4 TO RETURN ACCEPTANCE RECEIPT ENGINE MAXIMUM POWER ASSURANCE TEST CONDITIONS AND RESULTS ATTACHMENT 5 TO RETURN ACCEPTANCE RECEIPT DENT AND DAMAGE CHART ATTACHMENT 6 TO RETURN ACCEPTANCE RECEIPT FORM OF NO ACCIDENT/INCIDENT LETTER EXHIBIT J MONTHLY REPORT (SEE FOLLOWING SHEET) MONTHLY AIRCRAFT UTILIZATION AND STATUS REPORT Page 1 of 2 Report Due Date: To: INTERNATIONAL LEASE FINANCE CORPORATION Fax: (310) 788-1990 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067, United States Attn: Finance Department From: AMERICAN TRANS AIR, INC. Contact: Fax: AIRCRAFT TYPE: BOEING 737-800 ENGINE TYPE: CFM56-7B-27 REGISTRATION: ____ SERIAL NUMBER: ____ MONTH OF: NOTE: PLEASE RECORD TIME IN HOURS AND MINUTES NOT DECIMALS. Aircraft Total Time Since New As Of Last Month: Hours: Min: Aircraft Total Time Since New: Hours: Min: Aircraft Total Cycles Since New: Cycles: Airframe Hours Flown During Month: Hours: Min: Airframe Cycles/Landings During Month: Cycles: Time Remaining to "D" or Heavy Maintenance Check: HOURS OR US$ PER CYCLES FLOWN HOUR OR DURING MONTH (AS CYCLE (AS APPLICABLE) X APPLICABLE) = RESERVES TOTAL AIRFRAME: HRS: X = TOTAL LANDING GEAR: HRS: X = TOTAL APU: HRS: X = ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles(for Engine LLP Reserves): x = ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles (for Engine LLP Reserves): x = ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles (for LLP x = Reserves): ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles (for Engine LLP Reserves): x = TOTAL AMOUNT OF RESERVES (US$) PAID THIS MONTH: US$ Monthly Aircraft Utilization and Status Report From: AMERICAN TRANS AIR, INC. PAGE 2 OF 2 ENGINE SERIAL NUMBER: ENGINE SERIAL NUMBER: ORIGINAL POSITION: ORIGINAL POSITION: ACTUAL LOCATION: ACTUAL LOCATION: CURRENT THRUST RATING: CURRENT THRUST RATING: HOURS:/MIN: HOURS:/MIN: Total Time Since New As Of Total Time Since New As Of Last Month: Last Month: Total Time Since New: Total Time Since New: Total Cycles Since New: Total Cycles Since New: Hours Flown During Month: Hours Flown During Month: Cycles During Month: Cycles During Month: IMPORTANT: IF ILFC-OWNED ENGINE IS REMOVED OR INSTALLED ON ANOTHER AIRCRAFT, IT MUST BE REPORTED MONTHLY ON THIS FORM. EXHIBIT K AIRCRAFT DOCUMENTATION AIRCRAFT RECORDS 1. Copies of original Certificates delivered by Boeing: a. Airworthiness Certificate for Export b. Radio installation conformity certificate c. Noise limitation certificate 2. Copies of original Documents delivered by Boeing: a. Airworthiness Directive Compliance list b. Aircraft inspection report c. Aircraft Readiness Log d. Weighing report 3. Copies of current Certificates: a. Airworthiness Certificate b. Noise limitation c. Radio license d. Interior material burn certificates e. Certificate of Export f. Aircraft deregistration confirmation e. Aircraft Registration 4. Letters signed and stamped by Quality Assurance: a. Current aircraft hours and cycles b. Current engines hours and cycles c. Accident and Incident report d. Summary of Maintenance Program e. AD compliance during the lease term 5. Aircraft log books and Aircraft readiness log. 6. Aircraft Hard Time (HT) inspection status. 7. One year forecast for HT inspection. 8. Aircraft Modification status, including service bulletins. 9. Last weighing report prior to redelivery. 10. AD compliance report with original signoffs. 11. Routine and non-routine job cards of the last "C" and "D" checks. 12. Past year pilots and maintenance discrepancies. 13. Major and Minor structural repairs with applicable approvals. 14. Compass Swing report of the last three years. 15. Cabin Configuration drawing (LOPA). 16. Emergency equipment location drawing. 17. Last X-RAYs ENGINES RECORDS 1. Last test cell run reports. 2. Life Limited Parts status and traceability. 3. AD compliance report with original signoffs. 4. Engine Modification/service bulletin/inspection report and applicable forms. 5. Last heavy maintenance records for each module. 6. Engine log books. 7. Engine removal history. 8. Past year trend monitoring reports. 9. Historical borescope reports. 10. Engine component report. APU RECORDS 1. APU status (FH, FC, limits). 2. Life limited Part status and traceability. 3. AD compliance with original signoffs. 4. Modification status. 5. Last heavy maintenance documents. 6. APU log books. 7. Last test cell report. COMPONENT RECORDS 1. Aircraft component inventory. 2. Hard time component inventory. 3. All serviceable tags. 4. Landing Gear status with last overhaul and life limited Part status. 5. AD compliance with original signoffs. 6. Modification status. EXHIBIT L TECHNICAL EVALUATION REPORT (SEE FOLLOWING SHEETS) EX-10.6(E) 20 file066.txt AMTRAN, INC., 2000 10-K, EXHIBIT 10.6(E) AIRCRAFT LEASE AGREEMENT Dated as of September 5, 2000 BETWEEN AMERICAN TRANS AIR, INC. as LESSEE and INTERNATIONAL LEASE FINANCE CORPORATION as LESSOR ------------------------------------------------------------------------------- Aircraft Make and Model: New Boeing 737-800 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Aircraft Manufacturer's Serial Number: 30640 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Aircraft Registration Mark: Per Estoppel and Acceptance Certificate ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Make and Model of Engines: CFM56-7B-27 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Serial Numbers of Engines: Per Estoppel and Acceptance Certificate ------------------------------------------------------------------------------- NEW BOEING 737-800 AIRCRAFT NO. 6 TABLE OF CONTENTS ARTICLE 1 SUMMARY OF TRANSACTION.........................................2 1.1 Description of Aircraft........................................2 1.2 Scheduled Delivery Date and Location...........................2 1.3 Lease Term.....................................................2 1.4 Security Deposit...............................................2 1.5 Transaction Fee................................................2 1.6 Rent During Lease Term.........................................2 1.7 Country of Aircraft Registration...............................4 1.8 Maintenance Program............................................4 1.9 Agreed Value of Aircraft.......................................4 1.10 LESSOR's Bank Account..........................................4 ARTICLE 2 DEFINITIONS....................................................5 2.1 General Definitions............................................5 2.2 Specific Definitions...........................................9 ARTICLE 3 PLACE AND DATE OF DELIVERY....................................11 3.1 Place of Delivery.............................................11 3.2 Scheduled Delivery Date.......................................11 3.3 Delivery subject to Manufacturer Delivery.....................11 3.4 No LESSOR Liability...........................................11 3.5 Total Loss of Aircraft prior to Delivery......................11 3.6 Cancellation for Delay........................................11 ARTICLE 4 LEASE TERM....................................................12 4.1 Lease Term....................................................12 4.2 "Expiration Date".............................................12 4.3 "Termination Date"............................................12 ARTICLE 5 SECURITY DEPOSIT, TRANSACTION FEE, RENT AND OTHER PAYMENTS......................................................13 5.1 Security Deposit..............................................13 5.2 Transaction Fee...............................................14 5.3 Rent..........................................................14 5.4 LESSOR's Bank Account.........................................15 5.5 Default Interest..............................................16 5.6 No Deductions or Withholdings.................................16 5.7 Value Added Taxes.............................................16 5.8 Net Lease.....................................................17 5.9 LESSOR Performance of LESSEE Obligation.......................18 5.10 Consideration for Rent and other Amounts......................18 ARTICLE 6 INVOLVEMENT WITH AIRCRAFT MANUFACTURER........................19 6.1 LESSEE Selection of Aircraft..................................19 6.2 Agency Agreement..............................................19 6.3 Procurement of BFE............................................19 6.4 Assignment of Training........................................19 6.5 LESSEE Inspection of Aircraft.................................19 6.6 Aircraft at Delivery..........................................19 6.7 Delivery of the Aircraft to LESSEE............................20 6.8 LESSEE Acceptance of Aircraft.................................20 ARTICLE 7 PRE-DELIVERY, DELIVERY AND POST-DELIVERY DOCUMENTARY AND OTHER REQUIREMENTS............................21 7.1 Pre-Delivery Requirements.....................................21 7.2 Delivery Requirements.........................................22 7.3 Post-Delivery Requirements....................................23 ARTICLE 8 DISCLAIMERS...................................................24 8.1 "As Is, Where Is".............................................24 8.2 Waiver of Warranty of Description.............................24 8.3 LESSEE Waiver.................................................25 8.4 Conclusive Proof..............................................25 8.5 No LESSOR Liability for Losses................................25 8.6 No Liability to Repair or Replace.............................25 8.7 No Waiver.....................................................26 ARTICLE 9 MANUFACTURERS' AND VENDORS' WARRANTIES........................27 9.1 Warranties....................................................27 9.2 Reassignment..................................................27 ARTICLE 10 OPERATION OF AIRCRAFT.........................................28 10.1 Costs of Operation............................................28 10.2 Compliance with Laws..........................................28 10.3 Training......................................................28 10.4 No Violation of Insurance Policies............................28 10.5 Flight Charges................................................29 ARTICLE 11 SUBLEASES.....................................................30 11.1 No Sublease without LESSOR Consent............................30 11.2 LESSOR Costs..................................................30 11.3 Any Approved Sublease.........................................30 11.4 Assignment of Sublease........................................30 11.5 Continued Responsibility of LESSEE............................30 ARTICLE 12 MAINTENANCE AND USE OF AIRCRAFT...............................31 12.1 General Obligation............................................31 12.2 Specific Obligations..........................................31 12.3 Replacement of Parts..........................................32 12.4 Removal of Engines............................................33 12.5 Pooling of Engines and Parts..................................34 12.6 Installation of Engines on other aircraft.....................34 12.7 Modifications.................................................35 12.8 Performance of Work by Third Parties..........................36 12.9 Reporting Requirements........................................36 12.10 Information Regarding Maintenance Program.....................36 12.11 LESSOR Rights to Inspect Aircraft.............................36 ARTICLE 13 TITLE AND REGISTRATION........................................37 13.1 Title to the Aircraft During Lease Term.......................37 13.2 Registration of Aircraft......................................37 13.3 Filing of this Lease..........................................37 13.4 Evidence of Registration and Filings..........................37 ARTICLE 14 IDENTIFICATION PLATES.........................................38 14.1 Airframe Identification Plates................................38 14.2 Engine Identification Plates..................................38 ARTICLE 15 TAXES.........................................................39 15.1 General Obligation of LESSEE..................................39 15.2 Exceptions to Indemnity.......................................39 15.3 After-Tax Basis...............................................40 15.4 Claims and Contests...........................................40 15.5 Refunds.......................................................41 15.6 Cooperation in Filing Tax Returns.............................41 ARTICLE 16 INDEMNITIES...................................................42 16.1 General Indemnity.............................................42 16.2 Exceptions to General Indemnities.............................43 16.3 After-Tax Basis...............................................44 16.4 Timing of Payment.............................................44 16.5 Subrogation...................................................44 16.6 Notice........................................................44 16.7 Refunds.......................................................44 16.8 Defense of Claims.............................................45 16.9 Survival of Obligation........................................45 ARTICLE 17 INSURANCE.....................................................46 17.1 Categories of Insurance.......................................46 17.2 Insurance for Indemnities.....................................46 17.3 Insurance required by Manufacturer............................46 17.4 Renewal.......................................................46 17.5 Assignment of Rights by LESSOR................................46 17.6 Deductibles...................................................46 17.7 Other Insurance...............................................47 17.8 Information...................................................47 17.9 Currency......................................................47 17.10 Grounding of Aircraft.........................................47 17.11 Failure to Insure.............................................47 17.12 Limit on Hull in favor of LESSEE..............................47 17.13 Marketplace Limitations.......................................48 ARTICLE 18 LOSS, DAMAGE AND REQUISITION..................................49 18.1 Definitions...................................................49 18.2 Notice of Total Loss..........................................50 18.3 Total Loss of Aircraft or Airframe............................50 18.4 Surviving Engine(s)...........................................51 18.5 Total Loss of Engine and not Airframe.........................51 18.6 Other Loss or Damage..........................................52 18.7 Copy of Insurance Policy......................................53 18.8 Government Requisition........................................53 18.9 Conveyance to LESSEE..........................................53 ARTICLE 19 CRAF PROGRAM..................................................54 19.1 Dedication to CRAF............................................54 19.2 Notice to LESSOR..............................................54 19.3 Requisition of Engine.........................................54 19.4 Government Indemnification....................................54 19.5 No Geographic Limits..........................................54 19.6 Notice of Default.............................................55 19.7 Receipt of Payments...........................................55 ARTICLE 20 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE...........56 20.1 Representations and Warranties................................56 20.2 Covenants.....................................................58 ARTICLE 21 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSOR...........61 21.1 Representations and Warranties................................61 21.2 Covenant of Quiet Enjoyment...................................62 ARTICLE 22 FINANCIAL AND RELATED INFORMATION.............................63 ARTICLE 23 RETURN OF AIRCRAFT............................................64 23.1 Date of Return................................................64 23.2 Technical Report..............................................64 23.3 Return Location...............................................64 23.4 Full Aircraft Documentation Review............................64 23.5 Aircraft Inspection...........................................64 23.6 Certificate of Airworthiness Matters..........................65 23.7 General Condition of Aircraft at Return.......................66 23.8 Checks Prior to Return........................................69 23.9 Part Lives....................................................72 23.10 Export and Deregistration of Aircraft.........................74 23.11 LESSEE's Continuing Obligations...............................75 23.12 Airport and Navigation Charges................................75 23.13 Return Acceptance Certificate.................................76 23.14 Indemnities and Insurance.....................................76 ARTICLE 24 ASSIGNMENT....................................................77 24.1 No Assignment by LESSEE.......................................77 24.2 Sale or Assignment by LESSOR..................................77 24.3 LESSOR's Lender...............................................79 24.4 LESSEE Cooperation............................................79 24.5 Protections...................................................79 ARTICLE 25 DEFAULT OF LESSEE.............................................80 25.1 LESSEE Notice to LESSOR.......................................80 25.2 Events of Default.............................................80 25.3 LESSOR's General Rights.......................................82 25.4 Deregistration and Export of Aircraft.........................83 25.5 LESSEE Liability for Damages..................................83 25.6 Waiver of Default.............................................84 25.7 Present Value of Payments.....................................84 25.8 Use of "Termination Date".....................................84 ARTICLE 26 NOTICES.......................................................85 26.1 Manner of Sending Notices.....................................85 26.2 Notice Information............................................85 ARTICLE 27 GOVERNING LAW AND JURISDICTION................................86 27.1 California Law................................................86 27.2 Non-Exclusive Jurisdiction in California......................86 27.3 Service of Process............................................86 27.4 Prevailing Party in Dispute...................................86 27.5 Waiver........................................................86 ARTICLE 28 MISCELLANEOUS.................................................87 28.1 Press Releases................................................87 28.2 LESSOR Performance for LESSEE.................................87 28.3 LESSOR's Payment Obligations..................................87 28.4 Application of Payments.......................................87 28.5 Usury Laws....................................................87 28.6 Delegation by LESSOR..........................................87 28.7 Confidentiality...............................................88 28.8 Rights of Parties.............................................88 28.9 Further Assurances............................................88 28.10 Use of Word "including".......................................88 28.11 Headings......................................................88 28.12 Invalidity of any Provision...................................88 28.13 Negotiation...................................................88 28.14 Time is of the Essence........................................89 28.15 Amendments in Writing.........................................89 28.16 Counterparts..................................................89 28.17 Delivery of Documents by Fax..................................89 28.18 Entire Agreement..............................................89 EXHIBIT A AIRCRAFT DESCRIPTION..........................................91 EXHIBIT B AGENCY AGREEMENT..............................................92 EXHIBIT C CERTIFICATE OF INSURANCE......................................96 EXHIBIT D BROKERS' LETTER OF UNDERTAKING...............................102 EXHIBIT E ESTOPPEL AND ACCEPTANCE CERTIFICATE..........................104 EXHIBIT F OPINION OF COUNSEL...........................................111 EXHIBIT G ASSIGNMENT OF RIGHTS (AIRFRAME)..............................114 EXHIBIT H ASSIGNMENT OF RIGHTS (ENGINES)...............................119 EXHIBIT I RETURN ACCEPTANCE RECEIPT....................................123 EXHIBIT J MONTHLY REPORT...............................................134 EXHIBIT K AIRCRAFT DOCUMENTATION.......................................138 EXHIBIT L TECHNICAL EVALUATION REPORT..................................140 AIRCRAFT LEASE AGREEMENT THIS AIRCRAFT LEASE AGREEMENT is made and entered into as of September 5, 2000. BETWEEN: AMERICAN TRANS AIR, INC., a Indiana corporation whose address and principal place of business is at 7337 West Washington Street, Indianapolis International Airport, Indianapolis, Indiana 46231, United States of America ("LESSEE") and INTERNATIONAL LEASE FINANCE CORPORATION, a California corporation whose address and principal place of business is at 1999 Avenue of the Stars, 39th Floor, Los Angeles, California 90067, United States of America ("LESSOR"). The subject matter of this Lease is one (1) new Boeing 737-800 aircraft. In consideration of and subject to the mutual covenants, terms and conditions contained in this Lease, LESSOR hereby agrees to lease to LESSEE and LESSEE hereby agrees to lease from LESSOR the aircraft and the parties further agree as follows: ARTICLE 1 SUMMARY OF TRANSACTION The information in this Article 1 is a summary of the lease transaction between LESSEE and LESSOR. It is set forth for the convenience of the parties only and will not be deemed in any way to amend, detract from or simplify the other provisions of this Lease. 1.1 DESCRIPTION OF AIRCRAFT One new Boeing 737-800 aircraft 1.2 SCHEDULED DELIVERY DATE AND LOCATION In the month of (CONFIDENTIAL MATERIAL OMITTED) at Seattle, Washington 1.3 LEASE TERM 15 years 1.4 SECURITY DEPOSIT (CONFIDENTIAL MATERIAL OMITTED) 1.5 TRANSACTION FEE (CONFIDENTIAL MATERIAL OMITTED) 1.6 RENT DURING LEASE TERM Payable monthly in advance and equal to the sum of: (a The following amounts for the following years of the Lease Term: LEASE PERIOD MONTHLY RENTAL AMOUNT* (CONFIDENTIAL MATERIAL OMITTED) *The above base rent is expressed in January 1999 U.S.Dollars and will increase in the following amounts for the following periods: PERIOD ESCALATION FACTOR (CONFIDENTIAL MATERIAL OMITTED) 1.7 COUNTRY OF AIRCRAFT REGISTRATION U.S. 1.8 MAINTENANCE PROGRAM LESSEE's Maintenance Program 1.9 AGREED VALUE OF AIRCRAFT (CONFIDENTIAL MATERIAL OMITTED) The Agreed Value is expressed in March 2001 U.S. Dollars and will increase in accordance with Manufacturer's announced escalation rate from March 1, 2001 to the Delivery Date. On each annual renewal date of LESSEE's insurance policy commencing on the renewal date following the first anniversary of the Lease Term, the Agreed Value will decrease by two percent (2.0%) of the then existing Agreed Value. 1.10 LESSOR'S BANK ACCOUNT (Confidential Material Omitted) ARTICLE 2 DEFINITIONS Except where the context otherwise requires, the following words have the following meanings for all purposes of this Lease. The definitions are equally applicable to the singular and plural forms of the words. Any agreement defined below includes each amendment, modification, supplement and waiver thereto in effect from time to time. 2.1 GENERAL DEFINITIONS. "ACT" means the Federal Aviation Act of 1958, as amended from time to time, or any successor act thereto. "AIRCRAFT" means the Airframe, two (2) Engines, Parts and Aircraft Documentation, collectively. As the context requires, "Aircraft" may also mean the Airframe, any Engine, any Part, the Aircraft Documentation or any part thereof individually. For example, in the context of return to LESSOR the term "Aircraft" means the Airframe, Engines, Parts and Aircraft Documentation collectively, yet in the context of LESSEE not creating any Security Interests other than Permitted Liens on the Aircraft, the term "Aircraft" means any of the Airframe, any Engine, any Part or the Aircraft Documentation individually. "AIRCRAFT DOCUMENTATION" means all (a) log books, Aircraft records, manuals and other documents provided to LESSEE in connection with the Aircraft, (b) documents listed in Exhibits E and K and (c) any other documents required to be maintained during the Lease Term by the Aviation Authority, LESSEE's Maintenance Program and this Lease. "AIRFRAME" means the airframe listed in the Estoppel and Acceptance Certificate executed at Delivery together with all Parts relating thereto (except Engines or engines). "AIRWORTHINESS DIRECTIVES" or "ADS" means all airworthiness directives (or equivalent) of the FAA and the Aviation Authority applicable to the Aircraft. "APU" means the auxiliary power unit of the Aircraft. "AVIATION AUTHORITY" means the FAA or any Government Entity which under the Laws of the U.S. from time to time has control over civil aviation or the registration, airworthiness or operation of aircraft in the U.S. If the Aircraft is registered in a country other than the U.S., "Aviation Authority" means the agency which regulates civil aviation in such other country. "AVIATION DOCUMENTS" means any or all of the following which at any time may be obtainable from the Aviation Authority: (a) if required, a temporary certificate of airworthiness from the Aviation Authority allowing the Aircraft to be flown after Delivery to the State of Registration, (b) an application for registration of the Aircraft with the appropriate authority in the State of Registration, (c) the certificate of registration for the Aircraft issued by the State of Registration, (d) a full certificate of airworthiness for the Aircraft specifying transport category (passenger), (e) an air transport license, (f) an air operator's certificate, (g) such recordation of LESSOR's title to the Aircraft and interest in this Lease as may be available in the State of Registration and (h) all such other authorizations, approvals, consents and certificates in the State of Registration as may be required to enable LESSEE lawfully to operate the Aircraft. "BANKRUPTCY CODE" means The Bankruptcy Reform Act of 1978 (11 U.S.C. ss.ss. 101-1330), as amended or supplemented from time to time, and any successor statute, and all of the rules and regulations issued or promulgated in connection therewith. "BASIC ENGINE" means those units and components of the Engine which are used to induce and convert fuel/air mixture into thrust/power; to transmit power to the fan and accessory drives; to supplement the function of other defined systems external to the Engine; and to control and direct the flow of internal lubrication, plus all essential accessories as supplied by the Engine manufacturer. The nacelle, installed components related to the Aircraft systems, thrust reversers, QEC and the primary flight nozzle are excluded. "BFE" means any equipment which is to be provided by the purchaser of the Aircraft (whether actually provided by LESSOR as buyer-furnished equipment or Manufacturer as seller-purchased equipment). "BUSINESS DAY" means a day other than a Saturday or Sunday on which the banks in Indianapolis, Indiana and in the city where LESSOR's Bank is located are open for the transaction of business of the type required by this Lease. "CREDITOR" means any lessor, owner, bank, lender, mortgagee or other Person which is the owner of or has any interest in an aircraft engine or aircraft operated by LESSEE. "CREDITOR AGREEMENT" means the applicable agreement between a Creditor and LESSEE or between Creditors pursuant to which such Creditor owns, leases or has an interest in either an aircraft operated by LESSEE on which an Engine may be installed or in an aircraft engine which may be installed on the Airframe. "DEFAULT" means any event which, upon the giving of notice, the lapse of time and/or a relevant determination, would constitute an Event of Default. "DELIVERY" means the delivery of the Aircraft from LESSOR to LESSEE pursuant to Articles 3 and 6. "DELIVERY DATE" means the date on which Delivery takes place. "DOLLARS" and "$" means the lawful currency of the U.S. "ENGINE" means (a) each of the engines listed on the Estoppel and Acceptance Certificate; or (b) any replacement engine acquired by LESSOR and leased to LESSEE pursuant to Article 18.5 following a Total Loss of an Engine; including in each case all Parts installed in or on any of such engines at Delivery (or substituted, renewed or replacement Parts in accordance with this Lease) so long as title thereto is or remains vested in LESSOR in accordance with the terms of Article 12.3. "EVENT OF DEFAULT" means any of the events referred to in Article 25.2. "FAA" means the Federal Aviation Administration of the Department of Transportation or any successor thereto under the Laws of the U.S. "FARS" means the U.S. Federal Aviation Regulations embodied in Title 14 of the U.S. Code of Federal Regulations, as amended from time to time, or any successor regulations thereto. "GENEVA CONVENTION" means the Convention on the International Recognition of Rights in Aircraft signed in Geneva, Switzerland on June 19, 1948. "GOVERNMENT ENTITY" means any (a) national, state or local government, (b) board, commission, department, division, instrumentality, court, agency or political subdivision thereof and (c) association, organization or institution of which any of the entities listed in (a) or (b) is a member or to whose jurisdiction any such entity is subject. "LANDING GEAR" means the installed main and nose landing gear, components and their associated actuators, side braces and parts. "LAW" means any (a) statute, decree, constitution, regulation, order or any directive of any Government Entity, (b) treaty, pact, compact or other agreement to which any Government Entity is a signatory or party and (c) judicial or administrative interpretation or application of any of the foregoing. "LEASE" means this Aircraft Lease Agreement, together with all Exhibits hereto. "LESSOR'S LIEN" means any Security Interest created by LESSOR, or arising from a claim against LESSOR completely unrelated to this Lease or the other Operative Documents. "MAINTENANCE PROGRAM" means LESSEE's maintenance program as approved by the Aviation Authority or such other maintenance program as LESSOR may, in its discretion, accept in writing. "MANUFACTURER" means The Boeing Company, a Delaware corporation. "MPD" means the Maintenance Planning Document published by Manufacturer and applicable to the Aircraft. "OVERHAUL" means the full reconditioning of the Aircraft, an Engine, APU, Landing Gear, module or Part, as the case may be, in which such equipment has been fully disassembled; cleaned; thoroughly inspected; and returned to the highest standard specified by the applicable manufacturer's manual. "PART" means the APU, any part, component, appliance, system module, engine module, accessory, material, instrument, communications equipment, furnishing, LESSEE-furnished or LESSOR-purchased equipment or other item of equipment (other than complete Engines or engines) for the time being installed in or attached to the Airframe or any Engine or which, having been removed from the Airframe or any Engine, remains the property of LESSOR. "PERMITTED INSTITUTION" means any Person (other than a commercial air carrier, a commercial aircraft operator, a freight forwarder, or an affiliate of any of the foregoing), with either: (a) a combined capital and surplus or net worth of at least; or (b) have a credit rating on the majority of its unsecured debt which is at least equal to BBB or its equivalent from Standard and Poor's Rating Group, a division of The McGraw-Hill Companies, Inc. or Moody's Investors Service, Inc. "PERMITTED LIEN" means (a) LESSOR's Liens; (b) Security Interests arising in the ordinary course of LESSEE's business for Taxes either not yet due and payable or, if due and payable, being contested in good faith in accordance with Article 15.4; (c) materialmen's, mechanics', workmen's, repairmen's, employees' liens or similar Security Interests arising by operation of Law after the Delivery Date in the ordinary course of LESSEE's business for amounts which are either not yet due or are being contested in good faith by appropriate proceedings (and for which adequate reserves have been made or, when required in order to pursue such proceedings, an adequate bond has been provided) so long as such proceedings do not involve any material danger of sale, forfeiture or loss of the Aircraft; (d) the rights of LESSOR and any LESSOR's Lender and the rights of LESSEE under this Lease and the other Operative Documents; (e) the rights of others under agreements or arrangements to the extent permitted by Articles 10 and 11.5; and (f) any Security Interest against which LESSEE causes to be provided a bond in such amount and under such terms and conditions as are reasonably satisfactory to LESSOR. "PERSON" means any individual, firm, partnership, joint venture, trust, corporation, limited liability company, Government Entity, committee, department, authority or any body, incorporated or unincorporated, whether having distinct legal personality or not. "PRIME RATE" means the rate of interest from time to time announced by Bank of America Illinois in Chicago, Illinois as its prime commercial lending rate. "SECURITY INTEREST" means any encumbrance or security interest, however and wherever created or arising including (without prejudice to the generality of the foregoing) any right of ownership, security, mortgage, pledge, charge, encumbrance, lease, lien, statutory or other right in rem, hypothecation, title retention, attachment, levy, claim or right of possession or detention. "STATE OF REGISTRATION" means the U.S. or such other country or state of registration of the Aircraft as LESSOR may, in its absolute discretion, approve in writing. "U.S." means the United States of America. "U.S. AIR CARRIER" means any U.S. air carrier who is a Citizen of the U.S. holding an air carrier operating certificate issued by the Secretary of Transportation pursuant to chapter 447 of the Act for aircraft capable of carrying 10 or more individuals or 6000 pounds or more of cargo, and as to whom there is in force an air carrier operating certificate issued pursuant to FAR Part 121, or who may operate as an air carrier by certification or otherwise under any successor or substitute provisions therefor or in the absence thereof. 2.2 SPECIFIC DEFINITIONS. The following terms are defined in the Articles referenced below: TERMS ARTICLE Agreed Value 18.1 CRAF Program 19.1 CRAF Program Requisition 19.1 Period Default Interest 5.5 Delivery Location 3.1 Expenses 16.1 Expiration Date 4.3 Indemnities 16.1 Lease Term 4.1 LESSEE Customization 5.3.1 Costs LESSOR's Assignee 24.2.1 LESSOR's Bank 5.4 LESSOR's Lender 24.3 Manufacturer's Escalation 5.3.1 Rate Modifications 12.7.2 Net Total Loss Proceeds 18.1 Operative Documents 20.1.3 Rent 5.3.1 Return Check 23.8.1 Scheduled Delivery Date 3.2 Security Deposit 5.1.1 Taxes 15.1 Termination Date 4.3 Total Loss 18.1 Total Loss Date 18.1 Total Loss Proceeds 18.1 Transaction Fee 5.2 ARTICLE 3 PLACE AND DATE OF DELIVERY 3.1 PLACE OF DELIVERY. LESSOR will deliver the Aircraft to LESSEE at Manufacturer's facility at Seattle, Washington or such other place as may be agreed in writing between the parties (the "DELIVERY LOCATION"). 3.2 SCHEDULED DELIVERY DATE. As of the date of this Lease, delivery of the Aircraft from Manufacturer to LESSOR is scheduled to occur in the month of (CONFIDENTIAL MATERIAL OMITTED). LESSOR will not agree to reschedule such delivery without LESSEE's prior written consent. LESSOR will notify LESSEE from time to time and in a timely manner of the exact date on which LESSOR expects such delivery to take place (the "SCHEDULED DELIVERY DATE"). 3.3 DELIVERY SUBJECT TO MANUFACTURER DELIVERY. LESSOR and LESSEE expressly acknowledge that Delivery of the Aircraft to LESSEE is subject to and conditioned upon, and is to occur simultaneously with, delivery of the Aircraft by Manufacturer to LESSOR. 3.4 NO LESSOR LIABILITY. LESSOR will not be liable for any loss or expense, or any loss of profit, arising from any delay or failure in Delivery to LESSEE unless such delay or failure arises as a consequence of the willful misconduct of LESSOR, and in no event will LESSOR be liable for any delay or failure which is caused by any breach or delay on the part of Manufacturer or any BFE supplier. 3.5 TOTAL LOSS OF AIRCRAFT PRIOR TO DELIVERY. If a Total Loss of the Aircraft occurs prior to Delivery, neither party will have any further liability to the other except that LESSOR will return to LESSEE the Security Deposit in accordance with Article 5.1.3 and any prepaid Rent. 3.6 CANCELLATION FOR DELAY. Promptly after LESSOR becomes aware that in Manufacturer's opinion a delay will cause Delivery to be delayed beyond (CONFIDENTIAL MATERIAL OMITTED) LESSOR will notify LESSEE. By written notice given within ten (10) Business Days after LESSEE's receipt of such LESSOR notice, either party may by written notice to the other party terminate this Lease and this Lease will terminate on the date of receipt of such notice. In the event of such termination, neither party will have any further liability to the other party except that LESSOR will return to LESSEE the Security Deposit in accordance with Article 5.1.3 and any prepaid Rent. If neither party gives notice of termination within such ten (10) Business Days, both parties lose all right to terminate under this Article 3.6 unless otherwise agreed in writing by the parties. ARTICLE 4 LEASE TERM 4.1 LEASE TERM. The term of leasing of the Aircraft will commence on the Delivery Date and continue for a term of fifteen (15) years ("LEASE TERM"). 4.2 "EXPIRATION DATE". "EXPIRATION DATE" means the date on which LESSEE is required to redeliver the Aircraft to LESSOR in the condition required by this Lease on the last day of the Lease Term. 4.3 "TERMINATION DATE". This Lease may in fact terminate on any of the dates set forth below: (a the Expiration Date, provided LESSEE returns the Aircraft to LESSOR on the Expiration Date in the condition required by Article 23; or (b a date earlier than the Expiration Date, if: (i there is a Total Loss of the Aircraft prior to Delivery pursuant to Article 3.5; (ii cancellation of this Lease occurs pursuant to Article 3.6; (iii there is a Total Loss of the Aircraft and payment is made to LESSOR in accordance with Article 18.3; or (iv an Event of Default occurs and LESSOR repossesses the Aircraft or otherwise terminates this Lease pursuant to Article 25.3. (c a date later than the Expiration Date, if: (i an Event of Default occurs hereunder by LESSEE returning the Aircraft in the condition required by this Lease after the Expiration Date; or (ii an Event of Default occurs and LESSOR repossesses the Aircraft or otherwise terminates this Lease pursuant to Article 25.3. The "TERMINATION DATE" is the date on which this Lease terminates because one of the above has occurred. ARTICLE 5 SECURITY DEPOSIT, TRANSACTION FEE, RENT AND OTHER PAYMENTS 5.1 SECURITY DEPOSIT. 5.1.1 (CONFIDENTIAL MATERIAL OMITTED) 5.1.2 The Security Deposit may be commingled with LESSOR's general funds and any interest earned on such Security Deposit will be for LESSOR's account. If the Security Deposit is reduced below the required amount by application to meet LESSEE's unperformed obligations under this Lease, LESSEE will replenish the Security Deposit within ten (10) days after LESSOR's demand therefor. The Security Deposit will serve as security for the performance by LESSEE of its obligations under this Lease and any other agreements between LESSEE and LESSOR relating to aircraft, engines, aircraft equipment or the extension of credit and may be applied by LESSOR upon the occurrence of a Default or Event of Default hereunder or of a default by LESSEE under any such other agreements. 5.1.3 Upon termination of this Lease in accordance with Article 4.3 other than if an Event of Default has occurred and is continuing, LESSOR will return to LESSEE the amount of the Security Deposit then held by LESSOR (so long as no default by LESSEE exists under any other agreement between LESSEE and LESSOR relating to aircraft, engines or aircraft equipment or the extension of credit by LESSOR to LESSEE), without interest, less an amount determined by LESSOR to be a reasonable estimate of the costs, if any, which LESSOR will incur to remedy any unperformed obligations of LESSEE under this Lease, including the correction of any discrepancies from the required condition of the Aircraft on return of the Aircraft. 5.2 TRANSACTION FEE. Within two (2) Business Days after execution of this Lease, LESSEE will pay LESSOR a nonrefundable transaction fee (CONFIDENTIAL MATERIAL OMITTED) 5.3 RENT. 5.3.1 LESSEE will pay LESSOR the following amounts monthly in advance as rent for the Aircraft (the "RENT"): (a The following amounts for the following years of the Lease Term: LEASE PERIOD MONTHLY RENTAL AMOUNT* ------------ --------------------- (CONFIDENTIAL MATERIAL OMITTED) *The above base rent is expressed in January 1999 U.S. dollars and will increase in the following amounts for the following periods (the "MANUFACTURER'S ESCALATION RATE"): PERIOD ESCALATION FACTOR ------------ --------------------- (CONFIDENTIAL MATERIAL OMITTED) Any increases to the above base Rent during the Lease Term will be calculated immediately prior to Delivery. 5.3.2 The first payment of Rent during the Lease Term will be paid prior to the Scheduled Delivery Date. Each subsequent payment of Rent will be due monthly thereafter no later than the same day of the month as the Delivery Date of the Aircraft except that, if such day is not a Business Day, the Rent will be due on the immediately preceding Business Day. If Delivery occurred on the 29th, 30th or 31st of the month and in any given month during the Lease Term there is no such corresponding date, Rent will be payable on the last Business Day of such month. 5.4 LESSOR'S BANK ACCOUNT. The Security Deposit, Transaction Fee, Rent and any other payment due under this Lease will be paid by wire transfer of immediately available U.S. Dollar funds to LESSOR's bank account at: (CONFIDENTIAL MATERIAL OMITTED) or to such other bank account in the U.S. as LESSOR may from time to time designate by written notice ("LESSOR'S BANK"). When it is stated in this Lease that an installment of the Security Deposit, the monthly Rent or any other payment is due or must be paid or made by LESSEE by a specific date, then such payment actually must be received by LESSOR's Bank on or before such specific date, even if, in order for such payment to be received by LESSOR's Bank by such specific date, LESSEE must initiate the wire transfer prior to such specific date. 5.5 DEFAULT INTEREST. If LESSOR's Bank does not receive the Rent or any other amount on or before the specific date when due, LESSOR will suffer loss and damage the exact nature and amount of which are difficult or impossible to ascertain. LESSEE will pay LESSOR as supplemental Rent (by way of agreed compensation and not as a penalty) interest on any due and unpaid amounts payable by LESSEE under this Lease. Interest will be calculated at a per annum rate (based on a 360 day year) which is equal to three percent (3%) plus the Prime Rate in effect on the date on which the amount was originally due for the period from the date the amount originally was due through the date the amount actually is received at LESSOR's Bank or, in the case of LESSOR's performance of LESSEE's obligations hereunder, from the date of payment by LESSOR through the date of LESSEE's repayment to LESSOR ("DEFAULT INTEREST"). Default Interest will accrue on a day-to-day basis and be compounded monthly. 5.6 NO DEDUCTIONS OR WITHHOLDINGS. All payments by LESSEE under this Lease, including the Security Deposit, Transaction Fee, Rent, Default Interest, fees, indemnities or any other item, will be made in full without any deduction or withholding whether in respect of set-off, counterclaim, duties, or Taxes (as defined in Article 15) imposed in the State of Registration or any jurisdiction from which such payments are made unless LESSEE is prohibited by Law from doing so, in which event LESSEE will gross up the payment amount such that the net payment received by LESSOR after any deduction or withholding equals the amounts called for under this Lease. LESSEE's requirement to pay the amounts required by this Article 5.6 is subject to the exceptions provided in Article 15.2. 5.7 VALUE ADDED TAXES. The Rent and other amounts payable by LESSEE under this Lease are exclusive of any value added tax, turnover tax or similar tax or duty. 5.8 NET LEASE. 5.8.1 This Lease is a net lease and LESSEE's obligation to pay Rent and make other payments in accordance with this Lease will be absolute and unconditional under any and all circumstances and regardless of other events, including the following: (a) any right of set-off, counterclaim, recoupment, defense or other right (including any right of reimbursement) which LESSEE may have against LESSOR, Manufacturer, the Engine manufacturer or any other person for any reason, including any claim LESSEE may have for the foregoing; (b) unavailability or interruption in use of the Aircraft for any reason, including a requisition thereof or any prohibition or interference with or other restriction against LESSEE's use, operation or possession of the Aircraft (whether by Law or otherwise), any defect in title, airworthiness, merchantability, fitness for any purpose, condition, design, specification or operation of any kind or nature of the Aircraft, the ineligibility of the Aircraft for any particular use or trade or for registration under the Laws of any jurisdiction or Total Loss of the Aircraft; (c) insolvency, bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, liquidation, receivership, administration or similar proceedings by or against LESSOR, LESSEE, Manufacturer, the Engine manufacturer or any other Person; (d) invalidity or unenforceability or lack of due authorization of or other defect in this Lease; (e) failure or delay on the part of any party to perform its obligations under this Lease; or (f) any other circumstance which but for this provision would or might have the effect of terminating or in any other way affecting any obligation of LESSEE hereunder. 5.8.2 Nothing in Article 5.8 will be construed to limit LESSEE's rights and remedies in the event of LESSOR's breach of its warranty of quiet enjoyment set forth in Article 21.2 or to limit LESSEE's rights and remedies to pursue in a court of law any claim it may have against LESSOR or any other Person. 5.9 LESSOR PERFORMANCE OF LESSEE OBLIGATION. If LESSEE fails to make any payment under this Lease to a third party in connection with the Aircraft or fails to perform any other obligation required under this Lease, LESSOR may (but is not required to) at its election and without waiver of its rights perform such obligation and/or pay such amount. Within five (5) Business Days after written notice to LESSEE of the amount paid by LESSOR on behalf of LESSEE, LESSEE will repay such amount to LESSOR together with Default Interest. Such payment to LESSOR will constitute additional Rent payable by LESSEE to LESSOR hereunder. Any payment, performance or compliance by LESSOR of a LESSEE obligation hereunder will not affect the occurrence or continuance of a Default or Event of Default, as the case may be. 5.10 CONSIDERATION FOR RENT AND OTHER AMOUNTS. The amount of the Rent and other payments contained herein are in consideration of LESSEE's waiver of warranties and indemnities set forth in Articles 8 and 16, respectively, and the other provisions of this Lease. ARTICLE 6 INVOLVEMENT WITH AIRCRAFT MANUFACTURER 6.1 LESSEE SELECTION OF AIRCRAFT. LESSEE ACKNOWLEDGES THAT THE DESCRIPTION OF THE AIRCRAFT SET FORTH IN THIS LEASE IS BASED UPON INFORMATION SUPPLIED BY MANUFACTURER. LESSEE COVENANTS TO LESSOR THAT LESSEE HAS USED ITS OWN JUDGMENT IN SELECTING THE AIRCRAFT AND HAS DONE SO BASED ON ITS SIZE, DESIGN AND TYPE. LESSEE ACKNOWLEDGES THAT LESSOR IS NOT A MANUFACTURER, REPAIRER OR SERVICING AGENT OF THE AIRCRAFT. 6.2 AGENCY AGREEMENT. Certain obligations remain to be performed by LESSOR in connection with the manufacture, fabrication and completion of the Aircraft by Manufacturer which will be performed by LESSEE (as provided in the Agency Agreement). LESSEE will act as LESSOR's agent with respect to some of these matters pursuant to the terms of an Agency Agreement to be entered into between LESSEE and LESSOR in the form set forth in Exhibit B. 6.3 PROCUREMENT OF BFE. LESSEE's and LESSOR's technical representatives will meet and determine which of LESSEE or LESSOR will provide specific items of BFE. Such BFE will then be provided to Manufacturer by LESSEE or LESSOR, as applicable, within the time frames required by Manufacturer. 6.4 ASSIGNMENT OF TRAINING. LESSOR hereby assigns to LESSEE all rights to training to which LESSOR is entitled as a result of LESSOR's purchase of the Aircraft and lease of the Aircraft to LESSEE. If LESSEE fails to take Delivery of the Aircraft when tendered in accordance with Article 6.7, LESSEE will immediately pay to LESSOR an amount equal to the Dollar value of such training based on what the training would have cost LESSEE had LESSEE purchased such training directly from Manufacturer. 6.5 LESSEE INSPECTION OF AIRCRAFT. During the course of final assembly of the Aircraft, and at Delivery, LESSEE will have its own representative present to inspect the Aircraft and to ensure its conformity with LESSEE's needs and the terms of this Lease. LESSEE will have ground inspection and acceptance flight rights with respect to the Aircraft. LESSEE acknowledges that, as between LESSEE and LESSOR, in accepting the Aircraft LESSEE is relying on its own inspection and knowledge of the Aircraft in determining whether the Aircraft meets the requirements of this Lease. 6.6 AIRCRAFT AT DELIVERY. At Delivery, the Aircraft will be as set forth in Exhibit A, as such description may be modified by any change requests agreed to among LESSEE, LESSOR and Manufacturer (which will be reflected in amendment(s) to this Lease). In the event of any discrepancies, LESSEE and LESSOR will cooperate in good faith with one another and with Manufacturer and Engine manufacturer, as applicable, in order to arrive at a mutually acceptable resolution of any such discrepancies. 6.7 DELIVERY OF THE AIRCRAFT TO LESSEE. Subject to LESSEE having performed all of the conditions precedent to Delivery set forth herein, immediately following delivery of the Aircraft from Manufacturer to LESSOR, LESSOR will deliver the Aircraft to LESSEE at the Delivery Location. Provided that the Aircraft is in the condition required by Article 6.6, upon the tender of the Aircraft by LESSOR to LESSEE, LESSEE will accept the Aircraft and the date of tender by LESSOR to LESSEE will be deemed to be the Delivery Date for all purposes under this Lease, including, but not limited to, the commencement of LESSEE's obligation to pay Rent hereunder. 6.8 LESSEE ACCEPTANCE OF AIRCRAFT. If LESSEE fails to (a) comply with its obligations set forth in Article 6.2, (b) comply with the conditions contained in Articles 7.1 and 7.2 so as to allow Delivery to take place immediately following delivery of the Aircraft by Manufacturer to LESSOR or (c) take delivery of the Aircraft when properly tendered for delivery by LESSOR in the condition required hereunder, LESSEE will indemnify LESSOR for all costs and expenses incurred by LESSOR as a result thereof including (but without limitation) any payments other than the purchase price which LESSOR becomes obliged to make to Manufacturer. ARTICLE 7 PRE-DELIVERY, DELIVERY AND POST-DELIVERY DOCUMENTARY AND OTHER REQUIREMENTS 7.1 PRE-DELIVERY REQUIREMENTS. LESSEE will do each of the following prior to the Scheduled Delivery Date of the Aircraft within the time frames set forth below: 7.1.1 Within one (1) month after execution of this Lease, LESSEE will deliver to LESSOR each of the following: (a) copies of resolutions of the Board of Directors of LESSEE or other written evidence of appropriate corporate action, duly certifying and authorizing the lease of the Aircraft hereunder and the execution, delivery and performance of this Lease, together with an incumbency certificate as to the person or persons authorized to execute and deliver documents on behalf of LESSEE hereunder; and (b) an opinion of counsel in the form and substance of Exhibit F. 7.1.2 At least three (3) days prior to the Scheduled Delivery Date, LESSEE will have delivered to LESSOR a Certificate of Insurance and Brokers' Letter of Undertaking in the form and substance of Exhibits C and D, respectively, from LESSEE's insurance brokers evidencing insurance of the Aircraft in accordance with this Lease from the Delivery Date. 7.1.3 At least three (3) Business Days prior to the Scheduled Delivery Date, LESSEE will do each of the following: (a) provide LESSOR with a copy of such Aviation Documents as may be available prior to the Scheduled Delivery Date; (b) provide LESSOR with a power of attorney empowering LESSEE's representative, who may be an officer or employee of LESSEE, to accept the Aircraft on behalf of LESSEE; and (c) provide LESSOR with such other documents as LESSOR may reasonably request. 7.1.4 Prior to the Scheduled Delivery Date, LESSEE will pay LESSOR the first monthly installment of Rent in accordance with Article 5.3.2. 7.2 DELIVERY REQUIREMENTS. On the Delivery Date of the Aircraft, each of the following will occur: 7.2.1 LESSEE will execute and deliver to LESSOR an Estoppel and Acceptance Certificate in the form of Exhibit E covering the Aircraft and effective as of the Delivery Date. 7.2.2 If not previously done, LESSEE and LESSOR will sign an amendment or supplement to Exhibit A evidencing all agreed-to changes to the specification of the Aircraft. 7.2.3 LESSEE will deliver a certificate signed on behalf of LESSEE by an officer of LESSEE stating all of the following: (a) the representations and warranties contained in Article 20 are true and accurate on and as of the Delivery Date as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date); (b) no Default has occurred and is continuing or will result from LESSEE's lease of the Aircraft hereunder; and (c) none of the Creditor Agreements contains terms which provide or contemplate that any Creditor will obtain any right, title or interest in an Engine which is installed on another aircraft (or, if this is not the case, such certificate will identify the parties, the aircraft and the Creditor Agreements for which this statement is untrue). 7.2.4 LESSEE's counsel will deliver opinions confirming the matters set forth in the opinion of counsel described in Article 7.1 and advising that all filing and other requirements have been met or concurrently are being met. 7.2.5 If any Creditor Agreement provides or contemplates that such Creditor will obtain any right, title or interest in an Engine which is installed on such Creditor's aircraft, LESSEE will deliver to LESSOR an engines cooperation agreement in form and substance acceptable to LESSOR which is executed by LESSEE and LESSEE's Creditors (as defined therein). 7.2.6 LESSOR will deliver to LESSEE an assignment of Manufacturer and Engine manufacturer rights in the form and substance of Exhibits G and H, respectively, and concurrently therewith LESSOR, to the extent it has not previously done so, will be deemed to have assigned all training, product assurance and product support applicable to the owner or operator of the Aircraft to LESSEE during the Lease Term. 7.3 POST-DELIVERY REQUIREMENTS. 7.3.1 Promptly after Delivery, LESSEE will do each of the following: (a) provide LESSOR with copies of all Aviation Documents not previously delivered; and (b) provide LESSOR with a follow-up opinion of counsel advising that the Aircraft has been registered in the State of Registration and that all necessary filings have been made. ARTICLE 8 DISCLAIMERS LESSOR HAS COMMITTED TO LESSEE THAT ON THE DELIVERY DATE THE AIRCRAFT WILL BE IN THE CONDITION REQUIRED BY ARTICLE 6. SUCH COMMITMENT OR COVENANT ON THE PART OF LESSOR EXPIRES AND THE DISCLAIMERS SET FORTH IN THIS ARTICLE 8 APPLY UPON LESSEE'S ACCEPTANCE OF THE AIRCRAFT AND EXECUTION OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATE. AFTER SUCH TIME, THEN AS BETWEEN LESSOR AND LESSEE: 8.1 "AS IS, WHERE IS". LESSEE AGREES THAT IT IS LEASING THE AIRCRAFT "AS IS, WHERE IS". LESSEE UNCONDITIONALLY ACKNOWLEDGES AND AGREES THAT NEITHER LESSOR NOR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES OR REPRESENTATIVES HAVE MADE OR WILL BE DEEMED TO HAVE MADE ANY TERM, CONDITION, REPRESENTATION, WARRANTY OR COVENANT EXPRESS OR IMPLIED (WHETHER STATUTORY OR OTHERWISE) AS TO (a) THE CAPACITY, AGE, AIRWORTHINESS, VALUE, QUALITY, DURABILITY, CONFORMITY TO THE PROVISIONS OF THIS LEASE, DESCRIPTION, CONDITION (WHETHER OF THE AIRCRAFT, ANY ENGINE, ANY PART THEREOF OR THE AIRCRAFT DOCUMENTATION), DESIGN, WORKMANSHIP, MATERIALS, MANUFACTURE, CONSTRUCTION, OPERATION, DESCRIPTION, STATE, MERCHANTABILITY, PERFORMANCE, FITNESS FOR ANY PARTICULAR USE OR PURPOSE (INCLUDING THE ABILITY TO OPERATE OR REGISTER THE AIRCRAFT OR USE THE AIRCRAFT DOCUMENTATION IN ANY OR ALL JURISDICTIONS) OR SUITABILITY OF THE AIRCRAFT OR ANY PART THEREOF, OR THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, KNOWN OR UNKNOWN, APPARENT OR CONCEALED, EXTERIOR OR INTERIOR, (b) THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK, COPYRIGHT OR OTHER INTELLECTUAL PROPERTY RIGHTS, (c) ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE OR (d) EXCEPT AS SET FORTH IN ARTICLE 21.1, ANY OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY PART THEREOF, ALL OF WHICH ARE HEREBY EXPRESSLY EXCLUDED AND EXTINGUISHED. 8.2 WAIVER OF WARRANTY OF DESCRIPTION. IN CONSIDERATION OF (a) LESSEE'S RIGHTS HEREUNDER TO INSPECT THE AIRCRAFT AND (b) LESSOR'S ASSIGNMENT TO LESSEE OF ANY EXISTING AND ASSIGNABLE WARRANTIES OF MANUFACTURER AND THE ENGINE MANUFACTURER, LESSEE HEREBY AGREES THAT ITS ACCEPTANCE OF THE AIRCRAFT AT DELIVERY AND ITS EXECUTION AND DELIVERY OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATE CONSTITUTE LESSEE'S WAIVER OF THE WARRANTY OF DESCRIPTION, ANY CLAIMS LESSEE MAY HAVE AGAINST LESSOR BASED UPON THE FAILURE OF THE AIRCRAFT TO CONFORM WITH SUCH DESCRIPTION AND ANY AND ALL RIGHTS IT MAY HAVE TO THE REMEDIES SET FORTH IN SECTIONS 10508 THROUGH 10522 OF THE CALIFORNIA COMMERCIAL CODE. EVEN IF AT ANY TIME THE FAILURE OF THE AIRCRAFT TO CONFORM TO SUCH DESCRIPTION SUBSTANTIALLY IMPAIRS THE VALUE AND UTILITY OF THE AIRCRAFT AND EITHER (i) LESSEE ACCEPTED THE AIRCRAFT BASED ON A REASONABLE ASSUMPTION THAT THE NONCONFORMITY WOULD BE CURED AND IT WAS NOT SEASONABLY CURED OR (ii) LESSEE ACCEPTED THE AIRCRAFT WITHOUT DISCOVERING THE NONCONFORMITY BUT LESSEE'S ACCEPTANCE OF THE AIRCRAFT WAS REASONABLY INDUCED EITHER BY LESSOR'S ASSURANCES OR BY THE DIFFICULTY OF DISCOVERING ANY DEFECT PRIOR TO ACCEPTANCE, LESSEE AGREES NOT TO LOOK TO LESSOR FOR DAMAGES OR RELIEF ARISING OUT OF THE FAILURE OF THE AIRCRAFT TO CONFORM TO SUCH DESCRIPTION. 8.3 LESSEE WAIVER. LESSEE hereby waives as between itself and LESSOR and agrees not to seek to establish or enforce any rights and remedies, express or implied (whether statutory or otherwise) against LESSOR or the Aircraft relating to any of the matters mentioned in Articles 8.1 or 8.2. 8.4 CONCLUSIVE PROOF. DELIVERY BY LESSEE TO LESSOR OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATE WILL BE CONCLUSIVE PROOF AS BETWEEN LESSOR AND LESSEE THAT LESSEE'S TECHNICAL EXPERTS HAVE EXAMINED AND INVESTIGATED THE AIRCRAFT AND ENGINES AND (a) EACH IS AIRWORTHY AND IN GOOD WORKING ORDER AND REPAIR AND (b) THE AIRCRAFT AND ENGINES AND THE AIRCRAFT DOCUMENTATION ARE WITHOUT DEFECT (WHETHER OR NOT DISCOVERABLE AT DELIVERY) AND IN EVERY WAY SATISFACTORY TO LESSEE. 8.5 NO LESSOR LIABILITY FOR LOSSES. LESSEE agrees that LESSOR will not be liable to LESSEE, any sublessee or any Person, whether in contract or tort and however arising, for any cost, loss or damage (consequential or otherwise) arising out of the condition of the Aircraft, whether or not due in whole or in part to an act or omission or the active or passive negligence of LESSOR. 8.6 NO LIABILITY TO REPAIR OR REPLACE. LESSOR will not be liable for any expense in repairing or replacing any item of the Aircraft or be liable to supply another aircraft or any item in lieu of the Aircraft or any Part thereof if the same is lost, confiscated, damaged, destroyed or otherwise rendered unfit for use. 8.7 NO WAIVER. Nothing in this Article 8 or elsewhere in this Lease will be deemed to be a waiver by LESSEE of any rights it may have against Manufacturer, the Engine manufacturer or any other Person. ARTICLE 9 MANUFACTURERS' AND VENDORS' WARRANTIES 9.1 WARRANTIES. As set forth in Article 7.2.6, at Delivery LESSOR will assign to LESSEE for the duration of the Lease Term the benefit of all warranties and indemnities given to LESSOR by Manufacturer and the Engine manufacturer. Effective on the Delivery Date, all other vendor warranties with respect to the Aircraft are hereby assigned by LESSOR to LESSEE. 9.2 REASSIGNMENT. On the Termination Date, the benefit of any warranty assigned by LESSOR to LESSEE pursuant to Article 7.2.6 will be reassigned automatically to LESSOR or its designee. ARTICLE 10 OPERATION OF AIRCRAFT 10.1 COSTS OF OPERATION. As between LESSEE and LESSOR, LESSEE will pay all costs incurred in the operation of the Aircraft during the Lease Term, for profit or otherwise, including the costs of flight crews, cabin personnel, fuel, oil, lubricants, maintenance, insurance, storage, landing and navigation fees, airport charges, passenger service and any and all other expenses of any kind or nature, directly or indirectly, in connection with or related to the use, movement and operation of the Aircraft. The obligations, covenants and liabilities of LESSEE under this paragraph arising prior to return of the Aircraft to LESSOR will continue in full force and effect, notwithstanding the termination of this Lease or expiration of the Lease Term. 10.2 COMPLIANCE WITH LAWS. LESSEE agrees throughout the Lease Term that all use of the Aircraft will be in accordance with applicable Laws of the State of Registration and of any country, state, territory or municipality into or over which LESSEE may operate. LESSEE will not employ, suffer or cause the Aircraft to be used in any business which is forbidden by Law or in any manner which may render it liable to condemnation, destruction, seizure, or confiscation by any authority. LESSEE will not permit the Aircraft to fly to any airport or country if so doing would cause LESSEE to be in violation of any Law applicable to LESSEE or the Aircraft. The foregoing provisions in this Article 10.2 shall not prohibit any violation of Law (a) during a good-faith contest of the validity, application, or alleged violation thereof in any reasonable manner so long as there is no material danger of sale, forfeiture, or loss of the Aircraft (however, this good faith exception shall not apply in the case of a mandatory grounding order, the good faith contest of which does not permit LESSEE to operate the Aircraft during such contest), and which does not extend beyond the end of the Lease Term if the pendency of such contest would adversely affect the Aircraft or the remarketing thereof in any material respect; and (b) for minor or non-recurring violations (with the understanding that minor violations may cease to be minor if recurring) that LESSEE is diligently trying to rectify which do not render the Aircraft liable to any risk of condemnation, destruction, seizure, or confiscation by any Government Entity. 10.3 TRAINING. LESSEE will not use the Aircraft for testing or for training of flight crew members other than LESSEE crew members and will not use the Aircraft for training any more than it utilizes for training the other aircraft in its fleet. 10.4 NO VIOLATION OF INSURANCE POLICIES. LESSEE will not use or permit the Aircraft to be used in any manner or for any purpose which is not covered by the insurance policies LESSEE is required to carry and maintain as set forth in this Lease. LESSEE will not carry any goods of any description that would invalidate or limit such policies or do any other act or permit to be done anything which could reasonably be expected to invalidate or limit any such insurance policy. 10.5 FLIGHT CHARGES. 10.5.1 LESSEE will pay promptly when due all enroute navigation charges, navigation service charges and all other charges payable by LESSEE for the use of or for services provided at any airport, whether in respect of the Aircraft or any other aircraft of LESSEE, and will indemnify and hold LESSOR harmless in respect of the same. This indemnity will continue in full force and effect notwithstanding the termination or expiration of the Lease Term for any reason or the return of the Aircraft. 10.5.2 If requested by LESSOR, LESSEE will provide LESSOR with a list of the airports to which LESSEE regularly operates the Aircraft or its other aircraft. LESSEE hereby authorizes Eurocontrol or another aviation authority or airport or creditor claiming rights on the Aircraft to confirm the status of LESSEE's payments to such creditor for the Aircraft and its other aircraft, as and when requested by LESSOR. ARTICLE 11 SUBLEASES 11.1 NO SUBLEASE WITHOUT LESSOR CONSENT. LESSEE WILL NOT SUBLEASE OR PART WITH POSSESSION OF THE AIRCRAFT (EXCEPT FOR MAINTENANCE AND REPAIR) AT ANY TIME WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR (NOT TO BE UNREASONABLY WITHHELD) AND IN ACCORDANCE WITH SUCH REQUIREMENTS AS MAY FROM TIME TO TIME BE AGREED IN WRITING BETWEEN LESSOR AND LESSEE. The wet leasing of the Aircraft during the Lease Term (in which LESSEE and its crews retain operational control of the Aircraft) will not be considered a sublease of the Aircraft. 11.2 LESSOR COSTS. LESSEE will indemnify LESSOR on demand for all out-of-pocket expenses (including legal fees) incurred in connection with LESSOR's assessment of the subleasing proposal (whether or not LESSOR's consent to such sublease is ultimately given) and implementation of the sublease. 11.3 ANY APPROVED SUBLEASE. Any sublease approved by LESSOR will be for a term no greater than the remaining Lease Term and contain provisions consistent with this Lease protecting LESSOR's title to the Aircraft, providing appropriate LESSOR indemnities, regarding the maintenance and repair standards for the Aircraft, concerning the insurances which will be carried by the sublessee and the circumstances which constitute a Total Loss of the Aircraft. Any such sublease will be subject and subordinate to this Lease. In its sole discretion, LESSOR may require an opinion of counsel in connection with such sublease, including LESSOR's right to repossess the Aircraft in the event of an Event of Default hereunder or under the sublease. LESSEE will not amend the terms of any approved sublease without the prior written consent of LESSOR, which will not be unreasonably withheld. 11.4 ASSIGNMENT OF SUBLEASE. Any approved sublease will be assigned to LESSOR as security. LESSEE will deliver the original counterpart of the sublease to LESSOR and make any filings necessary to protect LESSOR's security interest. 11.5 CONTINUED RESPONSIBILITY OF LESSEE. LESSEE will continue to be responsible for performance of its obligations under this Lease during any period of sublease. ARTICLE 12 MAINTENANCE AND USE OF AIRCRAFT 12.1 GENERAL OBLIGATION. 12.1.1 During the Lease Term and until the Aircraft is returned to LESSOR, LESSEE alone has the obligation, at its expense, to maintain and repair the Aircraft, Engines and all of the Parts (a) in accordance with the Maintenance Program, (b) in accordance with the rules and regulations of the Aviation Authority, (c) in accordance with Manufacturer's type design, (d) in accordance with any other regulations or requirements necessary in order to maintain a valid Certificate of Airworthiness for the Aircraft and meet the requirements at all times during the Lease Term and upon return of the Aircraft to LESSOR for issuance of a Standard Certificate of Airworthiness for transport category aircraft issued by the Aviation Authority (except during those periods when the Aircraft is undergoing maintenance or repairs as required or permitted by this Lease) and (e) in the same manner and with the same care as used by LESSEE or its sublessee with respect to similar aircraft and engines operated by LESSEE or its sublessee and without in any way discriminating against the Aircraft. 12.1.2 LESSEE will maintain and repair the Engines in the same manner and in the equivalent time frame to its other engines and LESSEE will not discriminate against any of the Engines in respect of the repair and maintenance. 12.1.3 LESSEE will not enter into any Engine maintenance cost per flight hour, power-by-the-hour or similar agreement with Engine manufacturer or any other Engine maintenance facility or organization without LESSOR's prior written consent. 12.2 SPECIFIC OBLIGATIONS. Without limiting Article 12.1, LESSEE agrees that such maintenance and repairs will include but will not be limited to each of the following specific items: (a) performance in accordance with the Maintenance Program of all routine and non-routine maintenance work; (b) incorporation in the Aircraft of all Airworthiness Directives; (c) incorporation in the Aircraft of all service bulletins of Manufacturer, the Engine manufacturer and other vendors which LESSEE schedules to adopt within the Lease Term for the rest of its Boeing 737-800 aircraft fleet. It is the intent of the parties that the Aircraft will not be discriminated from the rest of LESSEE's fleet in service bulletin compliance (including method of compliance) or other maintenance matters. LESSEE will not discriminate against the Engines with respect to Overhaul build standards and life-limited part replacements; (d) incorporation in the Maintenance Program for the Aircraft of a corrosion prevention and control program; (e) maintaining in English and keeping in an up-to-date status the records and historical documents set forth in Attachment 1 of Exhibit I; (f) maintaining historical records, in English, for on condition, condition-monitored, hard time and life-limited Parts (including tags from the manufacturer of such Part or a repair facility which evidence that such Part is new or overhauled and establish authenticity, total time in service and time since overhaul for such Part), the hours and cycles the Aircraft and Engines operate and all maintenance and repairs performed on the Aircraft; and (g) properly documenting all repairs, Modifications and alterations and the addition, removal or replacement of equipment, systems or components in accordance with the rules and regulations of the Aviation Authority and reflecting such items in the Aircraft Documentation. In addition, all repairs to the Aircraft will be accomplished in accordance with Manufacturer's Structural Repair Manual (or FAA-approved data supported by FAA Form 8110-3 or equivalent). All Modifications and alterations will also be accomplished in accordance with FAA-approved data supported by FAA Form 8110-3 or equivalent. 12.3 REPLACEMENT OF PARTS. 12.3.1 LESSEE, at its own cost and expense, will promptly replace all Parts which may from time to time become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or rendered unfit or beyond economical repair (BER) for any reason. In the ordinary course of maintenance, service, repair, overhaul or testing, LESSEE may remove any Part provided that LESSEE replaces such Part as promptly as practicable. All replacement Parts will (a) be free and clear of all Security Interests (except Permitted Liens) of any kind or description, (b) be in airworthy condition and of at least equivalent model, service bulletin and modification status and have a value and utility at least equal to the Parts replaced, assuming such replaced Parts were in the condition and repair required to be maintained by the terms hereof and (c) have a current "serviceable tag" of the manufacturer or maintenance facility providing such items to LESSEE, indicating that such Parts are new, serviceable or Overhauled. So long as a substitution meets the requirements of the Maintenance Program and Aviation Authority, LESSEE may substitute for any Part a part that does not meet the requirements of the foregoing sentence if a complying Part cannot be procured or installed within the available groundtime of the Aircraft and as soon as practicable the noncomplying part is removed and replaced by a complying Part. 12.3.2 All Parts removed from the Airframe or any Engine will remain the property of LESSOR and subject to this Lease no matter where located, until such time as such Parts have been replaced by Parts (which have been incorporated or installed in or attached to the Airframe or such Engine) which meet the requirements for replacement Parts specified above and title to such replacement Parts has passed to LESSOR under the Laws of the State of Registration and LEX SITUS. To the extent permitted by the Laws of the State of --- ----- Registration and the LEX SITUS it is the intent of LESSOR and LESSEE that without further --- ----- act and immediately upon any replacement Part becoming incorporated, installed or attached to the Airframe or an Engine as above provided, (a) title to the removed Part will thereupon vest in LESSEE, free and clear of all rights of LESSOR, (b) title to the replacement Part will thereupon vest in LESSOR free and clear of all rights of LESSEE and (c) such replacement Part will become subject to this Lease and be deemed to be a Part hereunder to the same extent as the Parts originally incorporated or installed in or attached to the Airframe or such Engine. 12.4 REMOVAL OF ENGINES. 12.4.1 If an Engine is removed for testing, service, repair, maintenance, Overhaul work, alterations or modifications, title to such Engine will remain vested in LESSOR. 12.4.2 LESSEE will be entitled to remove any of the Engines from the Aircraft and install another engine or engines on the Aircraft, provided that LESSEE complies with each of the following obligations: (a) the insurance requirements set forth in Article 17 and Exhibit C are in place; (b) LESSEE ensures that the identification plates referred to in Article 14 are not removed from any Engine upon such Engine being detached from the Aircraft; and (c) title to the Engine remains with LESSOR free from all Security Interests (except Permitted Liens) regardless of the location of the Engine or its attachment to or detachment from the Aircraft. 12.5 POOLING OF ENGINES AND PARTS. With LESSOR's prior written consent, not to be unreasonably withheld, LESSEE may subject the Engines and Parts to normal interchange or pooling agreements with responsible commercial air carriers customary in the airline industry and entered into by LESSEE in the ordinary course of its business with respect to its Boeing 737-800 fleet generally, so long as (a) in the case of pooling of an Engine, such Engine is returned to LESSEE within two (2) months, (b) no transfer of title to the Engine occurs, (c) all other terms of this Lease continue to be observed with respect to the Engines or Parts, including but not limited to Articles 8, 10, 12, 13, 14, 15, 16, 17 and 18 and (d) LESSEE continues to be fully responsible to LESSOR for the performance of all of its obligations hereunder. 12.6 INSTALLATION OF ENGINES ON OTHER AIRCRAFT. Any Engine removed from the Aircraft may be installed on another airframe in LESSEE's fleet which utilizes engines of the same type as the Engine only if one of the situations described in this Article 12.6 exists: 12.6.1 LESSEE or LESSOR has title to such other aircraft free and clear of all Security Interests (except Permitted Liens). 12.6.2 LESSEE, LESSOR and all of the Creditors of LESSEE of such aircraft enter into an engines cooperation agreement in form and substance acceptable to LESSOR in which each party agrees to recognize one another's rights in the engines. LESSEE will reimburse LESSOR and LESSOR's Lender for their reasonable attorneys' fees and costs in negotiating and finalizing engine cooperation agreement arrangements with LESSEE and its Creditors. 12.6.3 Such other aircraft is subject to a Creditor Agreement (but no other Security Interests except Permitted Liens) which by its terms expressly or effectively states that such Creditor and its successors and assigns will not acquire any right, title or interest in any Engine by reason of such Engine being installed on such aircraft. LESSEE hereby agrees that if LESSOR's title to an Engine is in fact impaired under any such Creditor Agreement, such impairment will be a Total Loss of such Engine and the provisions of Article 18.5 will apply. To the extent another Creditor Agreement contains such provisions, then LESSOR hereby agrees for the benefit of the Creditor of such Creditor Agreement that neither LESSOR nor its successors or assigns will acquire or claim any right, title or interest in any engine in which LESSEE or another Creditor has an interest as a result of such engine being installed on the Airframe. 12.7 MODIFICATIONS. 12.7.1 No modification, alteration, addition or removal to the Aircraft ("MODIFICATION") expected to cost over Five Hundred Thousand U.S. Dollars (US$500,000) or deviation from the Aircraft's original type design or configuration will be made without the prior written consent of LESSOR, which consent will not be unreasonably withheld. "Modifications" do not include Airworthiness Directives or Manufacturer's recommended service bulletins, for which LESSOR's consent is not required. 12.7.2 LESSOR may review LESSEE's proposed designs, plans, engineering drawings and diagrams, and flight and maintenance manual revisions for any proposed Modification. If requested by LESSOR, LESSEE will furnish LESSOR (at LESSEE's expense) with such documents in final form and any other documents required by Law, as a result of such Modification. All Modifications incorporated on the Aircraft will be properly documented in the Aircraft Documentation and be fully approved by the Aviation Authority. 12.7.3 Notwithstanding any other provision of this Lease, no Modification will be made which has the effect of decreasing the utility or value of the Aircraft. 12.7.4 No Modification will be made by LESSEE if an Event of Default exists and is continuing hereunder. 12.7.5 Unless otherwise agreed by LESSOR in writing, all non-severable or structural Modifications will forthwith become a part of the Aircraft and LESSEE relinquishes to LESSOR all rights and title thereto. However, all severable Modifications will remain the property of LESSEE or the third-party owner and, at LESSOR's request and LESSEE's cost, will be removed from the Aircraft prior to return of the Aircraft, with LESSEE restoring the Aircraft to the condition it was in prior to the Modification. Notwithstanding the foregoing, no such removal will be permitted without LESSOR's permission after the occurrence of an Event of Default hereunder and immediately upon the occurrence of an Event of Default hereunder, without the requirement of any further act or notice, all right, title and interest in such Modifications will immediately vest in LESSOR. 12.7.6 LESSOR will bear no liability for the cost of Modifications of the Aircraft whether in the event of grounding or suspensions of certification, or for any other cause. 12.8 PERFORMANCE OF WORK BY THIRD PARTIES. Whenever maintenance and repair work on the Aircraft or Engines will be regularly performed by a Person other than LESSEE, such Person will be an FAA-authorized repair station. 12.9 REPORTING REQUIREMENTS. 12.9.1 Commencing with a report furnished ten (10) days after the end of the calendar month in which Delivery occurs, LESSEE will furnish to LESSOR a Monthly Report in English in the form attached hereto as Exhibit J. Each Monthly Report will be furnished within ten (10) days after the end of each calendar month, except that the Monthly Report pertaining to the last month (or any portion thereof) of the Lease Term will be furnished to LESSOR on the Termination Date. 12.9.2 On each anniversary of the Delivery Date, LESSEE will provide LESSOR with a Technical Evaluation Report for the Aircraft in the form and substance of Exhibit L, as revised. 12.10 INFORMATION REGARDING MAINTENANCE PROGRAM. LESSEE will provide LESSOR with a copy of or information regarding the Maintenance Program for the Aircraft, as requested by LESSOR. 12.11 LESSOR RIGHTS TO INSPECT AIRCRAFT. On reasonable notice, LESSOR and/or its authorized agents or representatives will have the right to inspect the Aircraft and Aircraft Documentation. LESSOR agrees that such requests will be coordinated with LESSEE so as to cause the minimum practical disturbance to LESSEE's operation or its personnel. LESSEE agrees to cooperate with LESSOR in making the Aircraft and Aircraft Documentation available to such authorized technical teams. No such inspection shall include opening panels, bays, or the like (although LESSOR may observe those that are then open), or disassembling any item. LESSOR will have no duty to make any such inspection and will not incur any liability or obligation by reason of (and LESSEE's indemnity obligations pursuant to Article 16 will apply notwithstanding) not making any such inspection or by reason of any reports it receives or any reviews it may make of the Aircraft records. ARTICLE 13 TITLE AND REGISTRATION 13.1 TITLE TO THE AIRCRAFT DURING LEASE TERM. Title to the Aircraft will be and remain vested in LESSOR. LESSOR and LESSEE intend this Lease to be a "true lease". LESSEE will have no right, title or interest in the Aircraft except as provided in this Lease. 13.2 REGISTRATION OF AIRCRAFT. LESSEE at its sole cost and expense will (a) register and maintain registration of the Aircraft in the name of LESSOR at the register of aircraft in the State of Registration and (b) from time to time take all other steps then required by Law (including the Geneva Convention if applicable) or by practice, custom or understanding or as LESSOR may reasonably request to protect and perfect LESSOR's interest in the Aircraft and this Lease in the State of Registration or in any other jurisdictions in or over which LESSEE may operate the Aircraft. 13.3 FILING OF THIS LEASE. To the extent permitted by Law and in accordance with the requirements of the Law from time to time, LESSEE at its sole cost and expense will cause this Lease to be kept, filed, recorded and refiled or rerecorded in the State of Registration and in any other offices necessary to protect LESSOR's rights hereunder. 13.4 EVIDENCE OF REGISTRATION AND FILINGS. As LESSOR may reasonably request from time to time, LESSEE will furnish to LESSOR an opinion of counsel or other evidence reasonably satisfactory to LESSOR of the registrations and filings required hereunder. ARTICLE 14 IDENTIFICATION PLATES LESSOR will affix and LESSEE will at all times maintain on the Airframe and each Engine the identification plates containing the following legends or any other legend reasonably requested by LESSOR in writing: 14.1 AIRFRAME IDENTIFICATION PLATES. Location: One to be affixed to the Aircraft structure above the forward entry door adjacent to and not less prominent than that of Manufacturer's data plate and another in a prominent place on the flight deck. Size: No smaller than 4" x 6". Legend: "THIS AIRCRAFT IS OWNED BY INTERNATIONAL LEASE FINANCE CORPORATION. MANUFACTURER'S SERIAL NO: 30640 OWNER'S ADDRESS: INTERNATIONAL LEASE FINANCE CORPORATION 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States of America Fax: (310) 788-1990" 14.2 ENGINE IDENTIFICATION PLATES. Location: The legend on the plate must be visible. Size: No smaller than 2" x 6". "THIS ENGINE IS OWNED BY INTERNATIONAL LEASE FINANCE CORPORATION, LOS ANGELES, CALIFORNIA, USA." ARTICLE 15 TAXES 15.1 GENERAL OBLIGATION OF LESSEE. Except as set forth in Article 15.2, LESSEE agrees to pay promptly when due, and to indemnify and hold harmless LESSOR on a full indemnity basis from, all license and registration fees and all taxes, fees, levies, imposts, duties, charges or withholdings of any nature whatsoever (including without limitation any value added, franchise, transfer, sales, gross receipts, use, business, occupation, excise, personal property, real property, stamp or other tax) together with any assessments, penalties, fines, additions to tax or interest thereon, however or wherever imposed (whether imposed upon LESSEE, LESSOR, on all or part of the Aircraft, the Engines or otherwise), by any Government Entity or taxing authority in the U.S., any State thereof, or any foreign country or by any international taxing authority, upon or with respect to, based upon or measured by any of the following (collectively, "TAXES"): (a) the Aircraft, the Engines or any Parts. (b) the use, operation or maintenance of the Aircraft or carriage of passengers or freight during the Lease Term. (c) this Lease, the payments due hereunder and the terms and conditions hereof. (d) the return of the Aircraft to LESSOR or other use or disposition of the Aircraft by LESSEE. 15.2 EXCEPTIONS TO INDEMNITY. The indemnity provided in Article 15.1 does not extend to any of the following Taxes: (a) Imposed by the U.S. (including without limitation any taxes collected by withholding) or any state or local government or governmental subdivision or state or local taxing authority in the U.S. (including any possession or territory of the U.S.) or by any foreign government, taxing authority or governmental subdivision of a foreign country which are based on, or measured by, the receipts, gross or net income, capital, net worth, franchises, excess profits, or conduct of business (including minimum taxes, withholding taxes and taxes on or measured by any items of tax preference) of LESSOR, except to the extent that such Tax would not have been imposed on or payable by LESSOR but for the location, use, registration or operation of the Aircraft or any part thereof, or any place of business or any activity of LESSEE in the jurisdiction imposing such Tax. (b) Imposed as a result of LESSOR's transfer, mortgage, pledge, financing or other disposition by LESSOR of all or a portion of its interest in the Aircraft or this Lease except a transfer or sale resulting from an exercise of remedies pursuant to Article 25.3 hereunder or in connection with a termination of the Lease pursuant to Article 18 hereof. (c) Attributable to the period prior to the Delivery Date or after return of the Aircraft to LESSOR in accordance with this Lease. (d) Attributable to LESSOR's gross negligence, willful misconduct or breach of this Lease. 15.3 AFTER-TAX BASIS. The amount which LESSEE is required to pay with respect to any Taxes indemnified against under Article 15.1 is an amount sufficient to restore LESSOR on an after-tax basis to the same position LESSOR would have been in had such Taxes not been incurred. 15.4 CLAIMS AND CONTESTS. If a written claim is received by LESSOR for Taxes, which claim, if sustained, would require the payment of an indemnity by LESSEE pursuant to this Article 15, LESSOR shall notify LESSEE of such claim within thirty (30) days after its receipt, provided that failure to provide such notice within thirty (30) days will not relieve LESSEE of any indemnification obligation pursuant to this Article 15 if such failure does not preclude LESSEE from exercising its contest rights hereunder. Payments due from LESSEE to LESSOR pursuant to this Article 15 shall be made directly to LESSOR within thirty (30) days of written demand by LESSOR to LESSEE. If requested by LESSEE in writing, LESSOR shall upon receipt of indemnity reasonably satisfactory to it and at the expense of LESSEE (including, without limitation, all reasonable costs, expenses, legal and accountants' fees, and disbursements, penalties, interest incurred in contesting such claim, and additions to tax) in good faith, in the name of LESSOR or, if requested by LESSEE, in the name of LESSEE (or permit LESSEE, if desired by LESSEE, to contest in the name of LESSEE) if permissible under applicable laws, the validity, applicability or amount of such Taxes by (i) resisting payment thereof if practicable only if adequate reserves have been made for such Taxes or, if required, an adequate bond has been posted, (ii) paying the same under protest, if protest shall be necessary and proper, (iii) if payment shall be made, using reasonable efforts to obtain a refund thereof in appropriate administrative and judicial proceedings, and (iv) taking such other action as is reasonably requested by LESSEE from time to time including not paying such Taxes only if adequate reserves have been made for such Taxes or, if required, an adequate bond has been posted. LESSOR shall determine the method of any contest and (in good faith consultation with LESSEE) control the conduct thereof. Notwithstanding anything contained in this Article 15.4, LESSOR will not be required to contest, or to continue to contest, the validity, applicability or amount of any Tax (or portion thereof) (x) if such contest would result in any material risk of criminal penalties or any material risk of sale, forfeiture or loss of the Aircraft, (y) if an Event of Default has occurred and is continuing, or (z) in the case of a contest of a Tax reflected on a return of LESSOR with other taxes of LESSOR that are not indemnified by the LESSEE hereunder, if LESSEE shall not have furnished an opinion of independent tax counsel selected by the LESSEE, and reasonably satisfactory to LESSOR, that a reasonable basis exists for such contest. If LESSOR shall obtain a refund of all or any part of such Taxes for which an indemnity was paid by LESSEE, LESSOR shall pay LESSEE the amount of such refund; PROVIDED, HOWEVER, that such amount shall not be payable before such time as LESSEE shall have made all payments or indemnities to LESSOR then due under this Article 15 and under the Lease or while an Event of Default shall have occurred and be continuing. If in addition to such refund LESSOR shall receive an amount representing interest on the amount of such refund, LESSEE shall be paid that proportion of such interest which is fairly attributable to Taxes paid with an indemnity payment by LESSEE prior to the receipt of such refund or interest and increased by any taxes saved by reason of the deductibility of such payment by LESSOR. LESSEE shall not be deemed to be in default under any of the indemnification provisions under this Article 15 so long as it or LESSOR shall diligently prosecute such contest and LESSEE has indemnified LESSOR to LESSOR's reasonable satisfaction. In case any report or return is required to be made with respect to any obligation of LESSEE under this Article 15.4 or arising out of this Article 15.4, LESSEE will either timely make such report or return in such manner as will show the ownership of the Aircraft in LESSOR, and will as soon as possible send a copy of such report or return to LESSOR, or will notify LESSOR of such requirement and prepare and deliver such report or return to LESSOR in such manner as shall be satisfactory to LESSOR. 15.5 REFUNDS. Upon receipt by LESSOR of a refund of all or any part of any Taxes (including any deductions or withholdings referred to in Article 15.1) which LESSEE has paid, LESSOR will pay to LESSEE the net amount of such Taxes refunded. 15.6 COOPERATION IN FILING TAX RETURNS. LESSEE and LESSOR will cooperate with one another in providing information which may be reasonably required to fulfill each party's tax filing requirements and any audit information request arising from such filing. ARTICLE 16 INDEMNITIES 16.1 GENERAL INDEMNITY. Except as set forth in Article 16.2, LESSEE agrees to indemnify and hold harmless LESSOR and its officers, directors, employees, agents and shareholders (individually an "INDEMNITEE" and collectively "INDEMNITEES") from any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs, disbursements and expenses (including legal fees, costs and related expenses) of every kind and nature, whether or not any of the transactions contemplated by this Lease are consummated (collectively "EXPENSES"), which are imposed on, incurred by or asserted against any Indemnitee and which are in any way relating to, based on or arising out of any of the following: (a) this Lease or any transactions contemplated hereby; (b) the operation, possession, use, non-use, control, leasing, subleasing, maintenance, storage, overhaul, testing, inspections or acceptance flights at return of the Aircraft, any Engine or any Part during the Lease Term by LESSEE, any sublessee or any other Person, whether or not the same is in compliance with the terms of this Lease, including without limitation claims for death, personal injury, property damage, other loss or harm to any Person and claims relating to any Laws, including without limitation environmental control, noise and pollution laws, rules or regulations; (c) the manufacture, design, acceptance, rejection, delivery, return, sale in connection with an Event of Default, import, export, condition, repair, modification, servicing, rebuilding, enforcement of warranties whether in LESSOR's or LESSEE's name, customer and product support provided by Manufacturer and other vendors, airworthiness, registration, reregistration, performance, sublease, merchantability, fitness for use, substitution or replacement of the Aircraft, Engine or any Part under this Lease or other transfer of use or possession of the Aircraft, Engine or any Part, including under a pooling or interchange arrangement, including without limitation latent and other defects, whether or not discoverable and patent, trademark or copyright infringement; (d) any non-compliance by LESSEE with any term of this Lease or the falsity or inaccuracy of any representation or warranty of LESSEE set forth herein; (e) the prevention or attempt to prevent the arrest, confiscation, seizure, taking in execution, impounding, forfeiture or detention of the Aircraft, or in securing the release of the Aircraft; or (f) as a consequence of any Default in payment by LESSEE of any sum to be paid by LESSEE when due under this Lease or any other Default by LESSEE in the due and punctual performance of its obligations under this Lease. The foregoing indemnity by LESSEE is intended to include and cover any Expense to which an Indemnitee may be subject (in contract, tort, strict liability or under any other theory) regardless of the negligence, active or passive or any other type, of such Indemnitee, so long as such Expense does not fall within any of the exceptions listed in Article 16.2. 16.2 EXCEPTIONS TO GENERAL INDEMNITIES. The indemnity provided for in Article 16.1 will not extend to Expenses of any Indemnitee to the extent resulting from or arising out of any of the following: (a) Expenses which have resulted from the willful misconduct of such Indemnitee; (b) Expenses which LESSEE and LESSOR mutually agree or, absent mutual agreement, are judicially determined to be attributable to acts or events which occur after the Termination Date and return of the Aircraft to LESSOR in the condition required hereunder, but in any such case only to the extent not attributable to acts or omissions of LESSEE; (c) Expenses representing Taxes, it being acknowledged that the terms of Article 15 apply exclusively to LESSEE's indemnity obligations with respect to Taxes; (d) Expenses due to the breach by LESSOR of its covenant of quiet enjoyment pursuant to Article 21.2 (except to the extent covered by LESSEE's insurances); (e) Expenses which arise in connection with the transfer by LESSOR of any interest in the Aircraft or this Lease, except for any transfer in connection with any Event of Default or a Total Loss of the Aircraft or an Engine. (f) Expenses which are solely attributable to the representation or warranty of LESSOR contained in or made pursuant to any Operative Document being untrue; (g) Expenses which are solely related to the failure of such Indemnitees to perform or observe any agreement, covenant, or condition on its part to be performed or observed in any Operative Document; (h) Expenses which are solely an ordinary and usual internal customary operating expense; or (i) Expenses which are solely related to a breach of Article 21.1.6, or (j) Expenses which are solely related to a LESSOR's Lien. 16.3 AFTER-TAX BASIS. The amount which LESSEE will be required to pay with respect to any Expense indemnified against under Article 16.1 will be an amount sufficient to restore the Indemnitee, on an after-tax basis, to the same position such Indemnitee would have been in had such Expense not been incurred. 16.4 TIMING OF PAYMENT. It is the intent of the parties that each Indemnitee will have the right to indemnification for Expenses hereunder as soon as a claim is made and as soon as an Expense is incurred, whether or not such claim is meritorious and whether or not liability is established (but subject to Articles 16.2 and 16.8). LESSEE will pay an Indemnitee for Expenses pursuant to this Article 16 within ten (10) days after receipt of a written demand therefor from such Indemnitee accompanied by a written statement describing in reasonable detail the basis for such indemnity (but not before payment is due from such Indemnitee). 16.5 SUBROGATION. Upon the payment in full of any indemnity pursuant to this Article 16 by LESSEE, LESSEE will be subrogated to any right of the Indemnitee in respect of the matter against which such indemnity has been made. 16.6 NOTICE. Each Indemnitee and LESSEE will give prompt written notice one to the other of any liability of which such party has knowledge for which LESSEE is, or may be, liable under Article 16.1; provided, however, that failure to give such notice will not terminate any of the rights of Indemnitees under this Article 16 except to the extent that LESSEE has been materially prejudiced by the failure to provide such notice. 16.7 REFUNDS. If any Indemnitee obtains a recovery of all or any part of any amount which LESSEE has paid to such Indemnitee, such Indemnitee will pay to LESSEE the net amount recovered by such Indemnitee. 16.8 DEFENSE OF CLAIMS. (a) LESSEE and its insurers will have the right (in each such case at LESSEE's sole expense) to investigate or, provided that LESSEE or its insurers have not reserved the right to dispute liability with respect to any insurance policies pursuant to which coverage is sought, defend or compromise any claim covered by insurance for which indemnification is sought pursuant to Article 16.1 and each Indemnitee will cooperate with LESSEE or its insurers with respect thereto. If LESSEE or its insurers are retaining attorneys to handle such claim, such counsel must be reasonably satisfactory to the Indemnitees. If not, the Indemnitees will have the right to retain counsel of their choice at LESSEE's expense. (b) Unless LESSOR agrees in writing otherwise, no settlement of any claim hereunder may require LESSOR to agree to any remedy apart from the payment of money damages (for which such payment of money damages LESSEE will in any event indemnify the Indemnitees). (c) In no event shall any Indemnitee enter into a settlement or other compromise with respect to any Expense without LESSEE's prior written consent (which shall not be unreasonably withheld or delayed), unless such Indemnitee waives its right to be indemnified with respect to such Expense under this Article 16. (d) To the extent that any Expense indemnified by LESSEE hereunder may be covered by insurance maintained by LESSEE, at LESSEE's expense, each Indemnitee agrees to cooperate with the insurers in the exercise of their rights to investigate, defend, or compromise that Expense as may be required to retain the benefits of the insurance for that Expense. (e) If an Indemnitee is not a party to this Lease, LESSEE may require that Indemnitee to agree in writing to the terms of this Article 16 before making any payment to such Indemnitee under this Article 16. 16.9 SURVIVAL OF OBLIGATION. Notwithstanding anything in this Lease to the contrary, the provisions of this Article 16 will survive the Termination Date and continue in full force and effect notwithstanding any breach by LESSOR or LESSEE of the terms of this Lease, the termination of the lease of the Aircraft to LESSEE under this Lease or the repudiation by LESSOR or LESSEE of this Lease. ARTICLE 17 INSURANCE 17.1 CATEGORIES OF INSURANCE. Throughout the Lease Term and until the Termination Date LESSEE will, at its own expense, effect and maintain in full force and effect the types of insurance and amounts of insurance (including deductibles) described in Exhibit C through such brokers and with such insurers favorably regarded in the airline industry. 17.2 INSURANCE FOR INDEMNITIES. The insurance referred to in Article 17.1 will in each case include and insure (to the extent of the risks covered by the policies) the indemnity provisions of Article 16 and LESSEE will maintain such insurance of the indemnities for a minimum of two (2) years following the Termination Date. 17.3 INSURANCE REQUIRED BY MANUFACTURER. During the Lease Term, LESSEE will carry the insurance required by Manufacturer in connection with LESSOR's assignment of Manufacturer's warranties and product support to LESSEE. 17.4 RENEWAL. Not less than two (2) Business Days before the expiration or termination date of any insurance required hereunder, LESSEE will provide LESSOR with fax confirmation from LESSEE's insurance brokers that renewed certificates of insurance evidencing the renewal or replacement of such insurance and complying with Exhibit C will be issued on the termination date of the prior certificate. Within seven (7) days after such renewal, LESSEE will furnish its brokers' certificates of insurance to LESSOR. 17.5 ASSIGNMENT OF RIGHTS BY LESSOR. If LESSOR assigns all or any of its rights under this Lease as permitted by this Lease or otherwise disposes of any interest in the Aircraft to any other Person, LESSEE will, upon request, procure that (to the extent of the assignment or disposition) such Person hereunder be added as loss payee and/or additional assured in the policies effected hereunder and enjoy the same rights and insurance enjoyed by LESSOR under such policies. To the extent of its retained interest or as provided in Article 24.2.1, LESSOR will nevertheless continue to be covered by such policies. 17.6 DEDUCTIBLES. If there is a material adverse change in the financial condition of LESSEE which LESSOR reasonably believes will not enable LESSEE to pay the deductible upon the occurrence of a partial loss of the Aircraft or an Engine, then LESSOR may require LESSEE at LESSEE's expense to lower its deductibles on the insurance maintained hereunder to a level which is available on commercially reasonable terms in the insurance market. 17.7 OTHER INSURANCE. LESSOR may from time to time by notice to LESSEE require LESSEE at LESSEE's expense to effect such other insurance or such variations to the terms of the existing insurance as may then be customary in the airline industry for aircraft of the same type as the Aircraft and at the time commonly available in the insurance market. 17.8 INFORMATION. LESSEE will provide LESSOR with any information reasonably requested by LESSOR from time to time concerning the insurance maintained with respect to the Aircraft or in connection with any claim being made or proposed to be made thereunder. 17.9 CURRENCY. All proceeds of insurance pursuant to this Lease will be payable in Dollars except as may be otherwise agreed by LESSOR. 17.10 GROUNDING OF AIRCRAFT. If at any time any of the insurance required pursuant to this Lease will cease to be in full force and effect, LESSEE will forthwith ground the Aircraft and keep the Aircraft grounded until such time as such insurance is in full force and effect again. 17.11 FAILURE TO INSURE. If at any time LESSEE fails to maintain insurance in compliance with this Article 17, LESSOR will be entitled but not bound to do any of the following (without prejudice to any other rights which it may have under this Lease by reason of such failure): (a) to pay any premiums due or to effect or maintain substitute insurance or otherwise remedy such failure in any reasonable manner (and LESSEE will upon demand reimburse LESSOR in full for any amount so expended in that connection); or (b) at any time while such failure is continuing, to require the Aircraft to remain at any airport or (as the case may be), proceed to and remain at any airport designated by LESSOR. 17.12 LIMIT ON HULL IN FAVOR OF LESSEE. LESSEE may carry hull all risks or hull war and allied perils on the Aircraft in excess of the Agreed Value (which Agreed Value is payable to LESSOR) only to the extent such excess insurance which would be payable to LESSEE in the event of a Total Loss does not exceed fifteen percent (15%) of the Agreed Value and only to the extent that such additional insurance will not prejudice the insurances required herein or the recovery by LESSOR thereunder. LESSEE agrees that it will not create or permit to exist any liens or encumbrances over the insurances, or its interest therein, except as constituted by this Lease. 17.13 MARKETPLACE LIMITATIONS. The insurance required by this Lease may be subject to any limitations generally prevailing in the airline insurance marketplace at the time (e.g., AVN67B). ARTICLE 18 LOSS, DAMAGE AND REQUISITION Throughout the Lease Term and until the Termination Date, LESSEE will bear all risk of loss, theft, damage and destruction to the Aircraft. 18.1 DEFINITIONS. In this Article 18: "AGREED VALUE" (CONFIDENTIAL MATERIAL OMITTED) The Agreed Value is set forth in March 2001 U.S. Dollars and will be increased in accordance with Manufacturer's announced escalation rate from March 1, 2001 to the Delivery Date. On each annual renewal date of LESSEE's insurance policy commencing on the renewal date following the first anniversary of the Lease Term, the Agreed Value will decrease by two percent (2.0%) of the then-existing Agreed Value. "NET TOTAL LOSS PROCEEDS" means the Total Loss Proceeds actually received by LESSOR following a Total Loss, less any legal and other out-of-pocket expenses or duties incurred by LESSOR in connection with the collection of such proceeds. "TOTAL LOSS" means any of the following in relation to the Aircraft, Airframe or any Engine and "TOTAL LOSS DATE" means the date set forth in parenthesis after each Total Loss: (a) destruction, damage beyond repair or being rendered permanently unfit for normal use for any reason (the date such event occurs or, if not known, the date on which the Aircraft, Airframe or Engine was last heard of); (b) actual, constructive, compromised, arranged or agreed total loss (the earlier of the date on which the loss is agreed or compromised by the insurers or thirty (30) days after the date of notice to LESSEE's brokers or insurers claiming such total loss); (c) requisition of title, confiscation, forfeiture or any compulsory acquisition of title or other similar event (the date on which the same takes effect); (d) sequestration, detention, seizure or any similar event for more than one hundred eighty (180) consecutive days (the earlier of the date on which insurers make payment on the basis of a total loss or the date of expiration of such period); (e) requisition for use for more than one hundred eighty (180) consecutive days, except as set forth in Article 18.8 (the earlier of the date on which the insurers make payment on the basis of a total loss or the date of expiration of such period); (f) in the case of an Engine, the event described in Article 12.6.3 (the date on which the same takes effect); "TOTAL LOSS PROCEEDS" means the proceeds of any insurance or any compensation or similar payment arising in respect of a Total Loss. 18.2 NOTICE OF TOTAL LOSS. LESSEE will notify LESSOR in writing within two (2) Business Days after a Total Loss Date of the Aircraft, Airframe or any Engine. 18.3 TOTAL LOSS OF AIRCRAFT OR AIRFRAME. If the Total Loss of the Aircraft or Airframe occurs during the Lease Term, the following will occur: 18.3.1 After the Total Loss Date and until receipt by LESSOR of the Agreed Value and all other amounts then due under this Lease, LESSEE will continue to pay Rent and the parties will perform all of their other obligations under this Lease. 18.3.2 On the date which is the earlier of the following dates: (a) the date on which the Total Loss Proceeds of the Aircraft or the Airframe are paid by LESSEE's insurance underwriters or brokers and (b) the date which falls sixty (60) days after the Total Loss Date, LESSEE will pay to LESSOR an amount equal to the sum of: (a) the Agreed Value and (b) all other amounts then due and payable under this Lease, less an amount equal to the Net Total Loss Proceeds received by LESSOR by such date. 18.3.3 LESSOR will apply the Net Total Loss Proceeds and any amounts received from LESSEE pursuant to Article 18.3.2 as follows: (a) first, in discharge of any unpaid Rent and any other amounts accrued and unpaid up to the date of LESSOR's receipt of the Agreed Value; (b) second, in discharge of the Agreed Value; and (c) third, payment of the balance, if any, to LESSEE. 18.3.4 Upon receipt by LESSOR of all monies payable by LESSEE in Article 18.3, provided no Default has occurred and is continuing, this Lease will terminate except for LESSEE's obligations under Articles 10.5, 15 and 16 which survive the Termination Date and the Security Deposit will be returned to LESSEE in accordance with Article 5.3.1. FOR AVOIDANCE OF DOUBT, THE AGREED VALUE OF THE AIRCRAFT WILL BE PAYABLE TO LESSOR PURSUANT TO THIS ARTICLE 18.3 IF A TOTAL LOSS OF THE AIRFRAME OCCURS EVEN IF THERE HAS NOT BEEN A TOTAL LOSS OF AN ENGINE OR ENGINES. 18.4 SURVIVING ENGINE(S). If a Total Loss of the Airframe occurs and there has not been a Total Loss of an Engine or Engines, then provided no Default has occurred and is continuing, at the request of LESSEE (subject to agreement of relevant insurers) and on receipt of all monies due under Article 18.3 and payment by LESSEE of all airport, navigation and other charges on the Aircraft, LESSOR will transfer all of its right, title and interest in the surviving Engine(s) to LESSEE, but without any responsibility, condition or warranty on the part of LESSOR other than as to freedom from any LESSOR's Lien. 18.5 TOTAL LOSS OF ENGINE AND NOT AIRFRAME. 18.5.1 Upon a Total Loss of any Engine not installed on the Airframe or a Total Loss of an Engine installed on the Airframe not involving a Total Loss of the Airframe, LESSEE will replace such Engine as soon as reasonably possible by duly conveying to LESSOR title to another engine (a) free and clear of all Security Interests (except Permitted Liens) of any kind or description, (b) in airworthy condition and of the same or improved model, service bulletin and modification status and having a value and utility at least equal to the Engine which sustained the Total Loss, and (c) not older (by reference to serial number or manufacture date) than three (3) years older than the oldest of the two Engines delivered by LESSOR to LESSEE with the Aircraft on the Delivery Date. Such replacement engine will be an Engine as defined herein and the Engine which sustained such Total Loss will cease to be an Engine. 18.5.2 LESSEE agrees at its own expense to take such action as LESSOR may reasonably request in order that any such replacement Engine becomes the property of LESSOR and is leased hereunder on the same terms as the destroyed Engine. LESSEE's obligation to pay Rent will continue in full force and effect, but an amount equal to the Net Total Loss Proceeds received by LESSOR with respect to such destroyed Engine will, subject to LESSOR's right to deduct therefrom any amounts then due and payable by LESSEE under this Lease, be paid to LESSEE. 18.6 OTHER LOSS OR DAMAGE. 18.6.1 If the Aircraft or any Part thereof suffers loss or damage not constituting a Total Loss of the Aircraft or the Airframe or any Engine, all the obligations of LESSEE under this Lease (including payment of Rent) will continue in full force. 18.6.2 In the event of any loss or damage to the Aircraft or Airframe which does not constitute a Total Loss of the Aircraft or the Airframe, or any loss or damage to an Engine which does not constitute a Total Loss of such Engine, LESSEE will at its sole cost and expense fully repair the Aircraft or Engine in order that the Aircraft or Engine is placed in an airworthy condition and substantially the same condition as it was prior to such loss or damage. All repairs will be performed in accordance with sound airline procedures. LESSEE will notify LESSOR forthwith of any loss, theft or damage to the Aircraft for which the cost of repairs is estimated to exceed Seven Hundred Fifty Thousand U.S. Dollars (US$750,000), together with LESSEE's proposal for carrying out the repair. In the event that LESSOR does not agree with LESSEE's proposals for repair, LESSOR will so notify LESSEE within two (2) Business Days after its receipt of such proposal. LESSEE and LESSOR will then consult with Manufacturer and LESSEE and LESSOR agree to accept as conclusive, and be bound by, Manufacturer's directions or recommendations as to the manner in which to carry out such repairs. If Manufacturer declines to give directions or recommendations, LESSEE will carry out the repairs in accordance with the directions of LESSOR. 18.6.3 To the extent that LESSOR has received insurance proceeds from LESSEE's insurers with respect to any loss or damage, LESSOR will (subject to LESSOR's right to deduct therefrom any amounts then due and payable by LESSEE under this Lease and submission by LESSEE of reasonable documentation confirming the completion of the repairs in accordance with the requirements of this Lease) pay to LESSEE insurance proceeds received by LESSOR as and when such repair work is performed on the Aircraft. 18.7 COPY OF INSURANCE POLICY. Promptly after LESSOR's request following the occurrence of a partial loss or Total Loss of the Aircraft or an Engine, LESSEE will provide LESSOR with a copy of LESSEE's insurance policy. 18.8 GOVERNMENT REQUISITION. If the Aircraft, Airframe or any Engine is requisitioned for use by any Government Entity, LESSEE will promptly notify LESSOR of such requisition. All of LESSEE's obligations hereunder will continue as if such requisition had not occurred. Except if a Default or an Event of Default has occurred and is continuing, all payments received by LESSOR or LESSEE from such Government Entity will be paid over to or retained by LESSEE. 18.9 CONVEYANCE TO LESSEE. Upon compliance by LESSEE with the applicable terms of Article 18.3 or 18.5, LESSOR will transfer to LESSEE the Airframe or Engine(s), as applicable, with respect to which such Total Loss. ARTICLE 19 CRAF PROGRAM 19.1 DEDICATION TO CRAF. LESSEE may transfer possession of the Airframe or any Engine to the United States of America or any instrumentality or agency thereof as part of the Civil Reserve Air Fleet Program authorized under 10 U.S.C. ss. 9511 ET SEQ. (or any substantially similar program) ("CRAF PROGRAM") for a period which includes (collectively, the "CRAF PROGRAM REQUISITION PERIOD") the entire period of requisition under the CRAF Program. If the CRAF Program Requisition Period extends beyond the Expiration Date provided by this Lease, then the Lease will be deemed to continue for six (6) months after the end of the CRAF Program Requisition Period at a monthly rental rate equal to the monthly rental rate during the Lease Term. If such extension extends beyond the Lease Term, then LESSEE will provide LESSOR with written notice of the proposed redelivery by the earlier of six (6) months prior to the proposed redelivery date or five (5) Business Days after the date of receipt of the actual notice given to LESSEE by the government prior to the government's redelivery date and LESSEE will return the Aircraft to LESSOR in the condition required by Article 23 on LESSEE's proposed redelivery date set forth in such notice. 19.2 NOTICE TO LESSOR. LESSEE will promptly notify LESSOR in writing in the event of the requisition for use of the Aircraft under CRAF activation by the U.S. Government. All of LESSEE's obligations under this Lease will continue to the same extent as if such requisition had not occurred. 19.3 REQUISITION OF ENGINE. If there is a requisition for use of any Engine (but not the Airframe) by the U.S. Government in connection with the CRAF Program, LESSEE will replace such Engine by complying with the terms of Article 18.5 hereof. 19.4 GOVERNMENT INDEMNIFICATION. Any provisions of this Lease to the contrary notwithstanding, if there is a requisition for use of the Aircraft pursuant to the CRAF Program and/or CRAF activation, LESSOR agrees that LESSEE's insurances described in Exhibit C may be supplemented by insurances provided under Title XIII of the Act, and/or U.S. Government indemnification (which Title XIII insurances and indemnification will be in amounts not less than those established in Exhibit C); provided, however, that LESSEE will remain responsible for full compliance with all the provisions of this Lease, including Articles 14 and 16, to the extent Title XIII and/or the U.S. Government indemnification do not satisfy LESSEE's obligations under this Lease. 19.5 NO GEOGRAPHIC LIMITS. If there is a requisition for use of the Aircraft pursuant to the CRAF Program and/or CRAF activation, there will be no limitation on the geographic area in which the Aircraft may be operated so long as, taken as a whole, LESSEE's insurance, the Title XIII insurance and/or the indemnification provided by the U.S. Government fully cover (without any geographic exclusions) LESSEE's Exhibit C insurance requirements. 19.6 NOTICE OF DEFAULT. If an Event of Default occurs under this Lease and LESSOR elects to pursue its remedies under Article 25.3(e) to terminate this Lease and repossess the Aircraft, LESSOR will so notify the U.S. Government by sending a written communication as follows: Headquarters Air Mobility Command AMC Contracting Office -- XOKA Scott Air Force Base, Illinois 62225-5007 19.7 RECEIPT OF PAYMENTS. Subject to the following sentence, all payments received by LESSOR or LESSEE from such Government Entity in connection with the requisition of the Aircraft under the CRAF Program will be paid over to or retained by LESSEE. If a Default has occurred and is continuing, all payments received by LESSEE or LESSOR from such Government Entity in connection with the requisition of the Aircraft under the CRAF Program may be used by LESSOR to satisfy any obligations owing by LESSEE. ARTICLE 20 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE 20.1 REPRESENTATIONS AND WARRANTIES. LESSEE represents and warrants the following to LESSOR as of the date of execution of this Lease and as of the Delivery Date: 20.1.1 CORPORATE STATUS. LESSEE is a corporation duly incorporated, validly existing and in good standing under the Laws of Indiana (or, on the Delivery Date, the state of its incorporation). It has the corporate power and authority to carry on its business as presently conducted and to perform its obligations hereunder. 20.1.2 GOVERNMENTAL APPROVALS. No authorization, approval, consent, license or order of, or registration with, or the giving of notice to the Aviation Authority or any other Government Entity is required for the valid authorization, execution, delivery and performance by LESSEE of this Lease, except as will have been duly effected as of the Delivery Date. 20.1.3 BINDING. LESSEE's Board of Directors has authorized LESSEE to enter into this Lease, any Side Letters hereto and any other documentation in connection with the leasing of the Aircraft from LESSOR (collectively, the "OPERATIVE DOCUMENTS") and perform its obligations under the Operative Documents. This Lease and the other Operative Documents have been duly executed and delivered by LESSEE and represent the valid, binding and enforceable obligations of LESSEE except as enforceability may be limited by bankruptcy, insolvency, reorganization or other Laws of general application affecting the enforcement of creditors' rights. When executed by LESSEE at Delivery, the same will apply to the Estoppel and Acceptance Certificate. 20.1.4 NO BREACH. The execution and delivery of the Operative Documents, the consummation by LESSEE of the transactions contemplated herein and compliance by LESSEE with the terms and provisions hereof do not and will not contravene any Law applicable to LESSEE, or result in any breach of or constitute any default under or result in the creation of any Security Interest upon any property of LESSEE, pursuant to any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which LESSEE is a party or by which LESSEE or its properties or assets may be bound or affected. When executed by LESSEE at Delivery, the same will apply to the Estoppel and Acceptance Certificate. 20.1.5 FILINGS. Except for any filing or recording that may be required by the FARs, no filing or recording of any instrument or document (including the filing of any financial statement) is necessary under the Laws of the State of Registration in order for this Lease to constitute a valid and perfected lease of record relating to the Aircraft. 20.1.6 LICENSES. LESSEE holds all licenses, certificates and permits from applicable Government Entities in the U.S. for the conduct of its business as a certificated air carrier and performance of its obligations under this Lease. 20.1.7 NO SUITS. There are no suits, arbitrations or other proceedings pending or threatened before any court or administrative agency against LESSEE which are reasonably likely to be determined adversely and, if adversely determined, would have a material adverse effect on the business, assets or condition (financial or otherwise) of LESSEE or its ability to perform under this Lease, except as described in the filings provided to LESSOR pursuant to Article 22. 20.1.8 GENERAL OBLIGATIONS. The obligations of LESSEE under this Lease are direct, general and unconditional obligations of LESSEE and rank or will rank at least PARI PASSU with all other present and future unsecured and unsubordinated obligations (including contingent obligations) of LESSEE, with the exception of such obligations as are mandatorily preferred by law and not by reason of any encumbrance. 20.1.9 NO SOVEREIGN IMMUNITY. LESSEE, under the Laws of the U.S. or of any other jurisdiction affecting LESSEE, is subject to private commercial law and suit. Neither LESSEE nor its properties or assets is entitled to sovereign immunity under any such Laws. LESSEE's performance of its obligations hereunder constitute commercial acts done for commercial purposes. 20.1.10 TAX RETURNS. All necessary federal and state income tax returns have been delivered by LESSEE to all relevant taxation authorities in the U.S. or any state thereof and LESSEE is not in default in the payment of any taxes due and payable as shown on any such returns or on any assessment received by LESSEE. 20.1.11 NO MATERIAL ADVERSE EFFECT. LESSEE is not in default under any agreement to which it is a party or by which it may be bound which would have a material adverse effect on its business, assets or condition. 20.1.12 NO DEFAULT UNDER THIS LEASE. At the time of execution of this Lease, no Default has occurred and is continuing and the financial statements provided to LESSOR pursuant to Article 22 fairly present the financial condition of LESSEE. 20.2 COVENANTS. LESSEE covenants to LESSOR that it will comply with the following throughout the entire Lease Term: 20.2.1 LICENSING. LESSEE will hold all licenses, certificates and permits from applicable Government Entities in the U.S. for the conduct of its business as a certificated air carrier and performance of its obligations under this Lease. LESSEE will advise LESSOR promptly in the event any such licenses, certificates or permits are cancelled, terminated, revoked or not renewed. 20.2.2 SOVEREIGN IMMUNITY. LESSEE, under the Laws of the U.S. or of any other jurisdiction affecting LESSEE, will continue to be subject to private commercial law and suit. Neither LESSEE nor its properties or assets will be entitled to sovereign immunity under any such Laws. LESSEE's performance of its obligations hereunder will constitute commercial acts done for commercial purposes. LESSEE will advise LESSOR promptly of any change in the foregoing. 20.2.3 INFORMATION ABOUT SUITS. LESSEE will promptly give to LESSOR a notice in writing of any suit, arbitration or proceeding against LESSEE before any court, administrative agency or Government Entity which is reasonably likely to be determined adversely and, if adversely determined, would materially adversely affect LESSEE's financial condition, affairs, operations or its ability to perform under this Lease. 20.2.4 MERGER OF LESSEE. (a) LESSEE shall not consolidate with or merge into any other Person under circumstances in which LESSEE is not the surviving corporation, or convey, transfer, or lease in one or more transactions all or substantially all of its assets to any other Person, unless: (i) such Person is organized, existing, and in good standing under the Laws of the U.S., any state of the U.S., or the District of Columbia, and, upon consummation of such transaction, such Person will be a U.S. Air Carrier; (ii) such Person executes and delivers to LESSOR a duly authorized, legal, valid, binding and enforceable agreement, reasonably satisfactory in form and substance to LESSOR, containing an effective assumption by such Person of the due and punctual performance and observance of each covenant, agreement and condition in the Operative Documents to be performed or observed by LESSEE; (iii) such Person makes such filings and recordings with the FAA pursuant to the Act as shall be necessary to evidence such consolidation or merger; (iv) LESSEE furnishes LESSOR an opinion of counsel reasonably satisfactory to LESSOR to the effect that such consolidation or merger has satisfied at the closing of such consolidation or merger items (i), (ii) and (iii) above; (v) immediately after giving effect to such consolidation or merger, no Default or Event of Default exists; (vi) unless LESSOR otherwise consents, immediately after giving effect to such consolidation or merger, such Person will have a tangible net worth of not less than sixty-five percent (65%) of the LESSEE's tangible net worth immediately prior to such merger; and (vii) upon such merger becoming effective, LESSOR will enjoy the same degree of protection under ss. 1110 of the Bankruptcy Code with respect to the Aircraft as LESSOR enjoyed prior to such merger. (b) Upon any such consolidation or merger of LESSEE with or into, or the conveyance, transfer, or lease by LESSEE of all or substantially all of its assets to, any Person in accordance with this Article 20.2.4, such Person will succeed to, and be substituted for, and may exercise every right and power of, LESSEE under the Operative Documents with the same effect as if such Person had been named as "LESSEE" therein. No such consolidation, merger, conveyance, transfer, or lease shall have the effect of releasing LESSEE or such Person from any of LESSEE's obligations, liabilities, covenants, or undertakings under this Lease. 20.2.5 RESTRICTION ON RELINQUISHMENT OF POSSESSION. LESSEE will not, without the prior consent of LESSOR, deliver, transfer or relinquish possession of the Aircraft except in accordance with Articles 11 and 12. 20.2.6 NO SECURITY INTERESTS. LESSEE will not create or agree to or permit to arise any Security Interest (other than Permitted Liens) on or with respect to the Aircraft, title thereto or any interest therein. LESSEE will forthwith, at its own expense, take all action as may be necessary to discharge or remove any such Security Interest if it exists at any time. LESSEE will within five (5) Business Days after becoming aware of the existence of any such Security Interest give written notice thereof to LESSOR. 20.2.7 REPRESENTATIONS TO OTHER PARTIES. LESSEE will not represent or hold out LESSOR as carrying goods or passengers on the Aircraft or as being in any way connected or associated with any operation of the Aircraft. ARTICLE 21 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSOR 21.1 REPRESENTATIONS AND WARRANTIES. LESSOR represents and warrants the following to LESSEE as of the date of execution of the Lease and as of the Delivery Date and ALL OTHER WARRANTIES, EXPRESS OR IMPLIED HAVE BEEN WAIVED IN ACCORDANCE WITH ARTICLE 8: 21.1.1 CORPORATE STATUS. LESSOR is a corporation duly incorporated, validly existing and in good standing under the Laws of the State of California. It has the corporate power and authority to carry on its business as presently conducted and to perform its obligations hereunder. 21.1.2 GOVERNMENTAL APPROVALS. No authorization, approval, consent, license or order of, or registration with, or the giving of notice to any U.S. Government Entity is required for the valid authorization, execution, delivery and performance by LESSOR of this Lease. 21.1.3 BINDING. This Lease and the other Operative Documents have been duly authorized, executed and delivered by LESSOR and represent the valid, enforceable and binding obligations of LESSOR except as enforceability may be limited by bankruptcy, insolvency, reorganization or other Laws of general application affecting the enforcement of creditors' rights. 21.1.4 NO BREACH. The execution and delivery of the Operative Documents, the consummation by LESSOR of the transactions contemplated herein and compliance by LESSOR with the terms and provisions hereof do not and will not contravene any Law applicable to LESSOR, or result in any breach of or constitute any default under any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which LESSOR is a party or by which LESSOR or its properties or assets may be bound or affected. 21.1.5 TITLE TO AIRCRAFT. On the Delivery Date LESSOR will have good and valid title to the Aircraft. 21.1.6 CITIZENSHIP. LESSOR is a "citizen of the United States" within the meaning of 49 U.S. Code 40102(a)(15). 21.1.7 INVESTMENT BY LESSOR. LESSOR is acquiring its interest in the Aircraft for its own account from its corporate funds, for investment and not with a view to any resale or distribution thereof that would require registration under the Securities Act of 1933; PROVIDED, HOWEVER, that subject to the transfer restrictions in Article 24.2, its disposition of its interest in the Aircraft shall at all times be within its control. 21.2 COVENANT OF QUIET ENJOYMENT. So long as no Event of Default has occurred and is continuing hereunder, LESSOR covenants that neither LESSOR nor any person lawfully claiming through LESSOR will interfere with LESSEE's quiet, peaceful use and enjoyment of the Aircraft. ARTICLE 22 FINANCIAL AND RELATED INFORMATION LESSEE agrees to furnish each of the following to LESSOR: (a) within sixty (60) days after the end of each fiscal quarter of LESSEE, the unaudited consolidated financial statements (including a balance sheet and profit and loss statement) prepared for such quarter in accordance with generally accepted accounting principles in the U.S.; (b) within one hundred twenty (120) days after the end of each fiscal year of LESSEE, the audited consolidated financial statements (including a balance sheet and profit and loss statement) prepared as of the close of such fiscal year in accordance with generally accepted accounting principles in the U.S. LESSEE's chief financial officer will also provide a certificate of LESSEE stating that, to such officer's knowledge, no Default exists under this Lease (or if, to such officer's knowledge, a Default does exist, identifying it); (c) promptly after distribution, all reports and financial statements which Amtran, Inc. sends or makes generally available to its stockholders or creditors; and (d) from time to time, such other reasonable information as LESSOR or LESSOR's Lender may reasonably request concerning the location, condition, use and operation of the Aircraft or the financial condition of LESSEE. ARTICLE 23 RETURN OF AIRCRAFT 23.1 DATE OF RETURN. LESSEE is obligated to return the Aircraft, Engines Parts and Aircraft Documentation to LESSOR on the Expiration Date, unless a Total Loss of the Aircraft occurred prior to the Expiration Date and this Lease was terminated early in accordance with Article 18.3. If LESSEE is in Default hereunder by failing to return the Aircraft on the Expiration Date or if an Event of Default occurs prior to the Expiration Date and LESSOR repossesses the Aircraft, the return requirements set forth in this Article 23 nonetheless must be met on the date the Aircraft is actually returned to LESSOR or repossessed by LESSOR. 23.2 TECHNICAL REPORT. Six (6) months prior to the Expiration Date (and in an updated form at return of the Aircraft), LESSEE will provide LESSOR with a Technical Evaluation Report in the form and substance of Exhibit L, as revised, and, in addition upon LESSOR's request, will make copies available of (a) drawings of the interior configuration of the Aircraft both as it presently exists and as it will exist at return, (b) an Airworthiness Directive status list, (c) a service bulletin incorporation list, (d) rotable tracked, hard-time and life-limited component listings, (e) a list of LESSEE-initiated modifications and alterations, (f) interior material burn certificates, (g) the Aircraft Maintenance Program, (h) the complete workscope for the checks, inspections and other work to be performed prior to return, (i) a list of all no-charge service bulletin kits with respect to the Aircraft which were ordered by LESSEE from Manufacturer or Engine manufacturer, (j) current Engine disk sheets and a description of the last shop visit for each Engine and (k) any other data which is reasonably requested by LESSOR. 23.3 RETURN LOCATION. LESSEE at its expense will return the Aircraft, Engines, Parts and Aircraft Documentation to LESSOR at Indianapolis International Airport, Indianapolis, Indiana or to such other airport as may be mutually agreed to by LESSEE and LESSOR. 23.4 FULL AIRCRAFT DOCUMENTATION REVIEW. For the period commencing at least ten (10) Business Days prior to the proposed redelivery date and continuing until the date on which the Aircraft is returned to LESSOR in the condition required by this Lease, LESSEE will provide for the review of LESSOR and/or its representative all of the Aircraft records and historical documents described in Exhibit K in one central room at the Aircraft return location. 23.5 AIRCRAFT INSPECTION. 23.5.1 During the maintenance checks performed immediately prior to the proposed redelivery and at the actual return of the Aircraft, LESSOR and/or its representatives will have an opportunity to conduct a full systems functional and operational inspection of the Aircraft (and other types of reasonable inspections based upon the Aircraft type, age, use and other known factors with respect to the Aircraft) and a full inspection of the Aircraft Documentation (including records and manuals), all to LESSOR's satisfaction. The inspection will occur during the Return Check when the panels, bays or the like are open and certain Parts are disassembled. LESSOR may inspect such opened panels, bays or the like and the disassembled Parts so long as LESSOR does not disrupt the Return Check or cause such Return Check to be extended beyond the anticipated completion date of such Return Check. Any deficiencies from the Aircraft return condition requirements set forth in this Article 23 will be corrected by LESSEE at its cost prior to the acceptance flight described in Article 23.5.2. 23.5.2 Immediately prior to the proposed redelivery of the Aircraft, LESSEE will carry out for LESSOR and/or LESSOR's representatives an Aircraft acceptance flight in accordance with Manufacturer's standard flight operation check flight procedures or, if agreed to in writing by LESSOR, in accordance with an airline acceptance flight procedure, either of which will be for the duration necessary to perform such check flight procedures but in any event not less than two (2) hours. Flight costs and fuel will be furnished by and at the expense of LESSEE. Any deficiencies from the Aircraft return condition requirements set forth in this Article 23 will be corrected by LESSEE at its cost prior to return of the Aircraft. 23.5.3 To the extent that the ground inspection and acceptance flight extend beyond the Expiration Date, the Lease Term will be deemed to have been automatically extended and the obligations of LESSEE hereunder (including Article 23.11.3) will continue on a day-to-day basis until the Aircraft is accepted by LESSOR executing the Return Acceptance Receipt in the form of Exhibit I. 23.6 CERTIFICATE OF AIRWORTHINESS MATTERS. 23.6.1 The Aircraft will possess a current Certificate of Airworthiness issued by the Aviation Authority (although this Certificate of Airworthiness may later be substituted by the Export Certificate of Airworthiness or equivalent if requested by LESSOR pursuant to Article 23.10). The Aircraft at return must be in the condition required in order to meet the requirements of a U.S. Standard Certificate of Airworthiness for transport category aircraft issued by the FAA in accordance with FAR Part 21 and, in addition, to meet the operating requirements of FAR Part 121. 23.6.2 LESSEE at its cost will demonstrate that the Aircraft meets the requirements for issuance of the U.S. Standard Certificate of Airworthiness for transport category aircraft specified in Article 23.6.1 by delivering to LESSOR an actual U.S. Standard Certificate of Airworthiness. If there is a dispute in regards to the condition of the Aircraft or the Aircraft Documentation, then LESSEE will provide LESSOR with a letter acceptable to LESSOR signed by an FAA Designated Airworthiness Representative (DAR) or another Person acceptable to LESSOR stating that the DAR or such Person has inspected the Aircraft and Aircraft Documentation (including records and manuals) and has found that the Aircraft meets the requirements for issuance of a U.S. Standard Certificate of Airworthiness for transport category aircraft in accordance with FAR Part 21 and, in addition, meets the operating requirements of FAR Part 121. 23.6.3 If the Aircraft is to be registered in a country other than in the U.S. after return from LESSEE, LESSOR may in its sole discretion waive the requirements of Article 23.6.2 and instead require that LESSEE at its expense (to the extent such expense is no greater than that which LESSEE would have incurred pursuant to Articles 23.6.1 and 23.6.2, with any additional expenses being for LESSOR's account) put the Aircraft in a condition to meet the requirements for issuance of a Certificate of Airworthiness of the Aviation Authority of the next country of register. 23.7 GENERAL CONDITION OF AIRCRAFT AT RETURN. 23.7.1 The Aircraft, Engines and Parts will have been maintained and repaired in accordance with the Maintenance Program, the rules and regulations of the Aviation Authority and this Lease. 23.7.2 Aircraft Documentation (including records and manuals) will have been maintained in an up-to-date status, in accordance with the rules and regulations of the Aviation Authority and the FAA and this Lease and in a form necessary in order to meet the requirements of Article 23.6.2. The records and historical documents set forth in Attachment 1 of Exhibit I will be in English. 23.7.3 The Aircraft will be in the same working order and condition as at Delivery (subject to the other provisions of this Article 23, reasonable wear and tear from normal flight operations excepted), with all pilot discrepancies and deferred maintenance items cleared on a terminating action basis. 23.7.4 The Aircraft will be airworthy (conform to type design and be in a condition for safe operation), with all Aircraft equipment, components and systems operating in accordance with their intended use and within limits approved by the Manufacturer, Aviation Authority and FAA. 23.7.5 The Aircraft interior (including cabin and windows) and exterior will be clean and all compartments will be reasonably free of foreign objects, dirt, grease, fluids, stains, grime, cracks, tears and rips (with the exception of normal wear and tear) and ready to be placed into immediate commercial airline operations. 23.7.6 No special or unique Manufacturer, Engine manufacturer or Aviation Authority inspection or check requirements which are specific to the Aircraft or Engines (as opposed to all aircraft or engines of their types) will exist with respect to the Airframe, Engines and Aircraft equipment, components and systems. 23.7.7 All repairs, modifications and alterations to the Aircraft will have been accomplished in accordance with Manufacturer's Structural Repair Manual (or FAA-approved data supported by FAA Form 8110-3) for the Aircraft. 23.7.8 The Aircraft will be returned with LESSOR's Engines installed and with the same equipment as at Delivery, subject only to those replacements, additions and Modifications permitted under this Lease. LESSEE will inform LESSOR of whether LESSEE will be able to redeliver the Engines with the Aircraft and the proposed replacement engines that LESSEE wants to provide LESSOR in place of the Engines. LESSEE will provide LESSOR with whatever data, records and information that LESSOR reasonably requests in order to evaluate the proposed replacement engines. In the event that LESSEE is unable to return either of the Engines in the conditions required by this Article 23, then LESSEE may provide a replacement engine (a "REPLACEMENT ENGINE") for such Engine to LESSOR by duly conveying to LESSOR as owner hereunder title to another engine of the same manufacturer and of the same or an improved model as the Engine being replaced and suitable for installation and use on the Aircraft, which engine shall be free and clear of all Security Interests, and shall be no more than three (3) years older by reference to serial number than the replaced Engine and have a modification status, value and utility at least equal to the Engine which such Replacement Engine is replacing on the Aircraft assuming that such Engine which such Replacement Engine is replacing was then of the value, utility, condition, and airworthiness required to be maintained by the terms of this Lease. Such Replacement Engine, after approval and acceptance by LESSOR, shall be deemed an "Engine" as defined herein for all purposes hereunder. LESSEE agrees to take such action as LESSOR may reasonably request in order that such Replacement Engine shall be duly and properly titled in the name of LESSOR. Prior to or at the time of any such conveyance, LESSEE, at its own expense, will promptly: (a) furnish LESSOR with a warranty bill of sale, in form and substance satisfactory to LESSOR, with respect to such Replacement Engine, (b) furnish LESSOR with such evidence of title to such Replacement Engine as reasonably requested by LESSOR, and (c) furnish LESSOR with an opinion of LESSEE's counsel to the effect that title to such Replacement Engine has been duly conveyed to LESSOR free and clear of all Security Interests of any kind or nature and that such exchange qualifies for tax free treatment under the Internal Revenue Code of 1986, as amended. Upon full compliance with this Article, LESSOR shall transfer to LESSEE all of LESSOR's right, title and interest, on an "AS-IS", "WHERE-IS" basis in and to the Engine being replaced by such Replacement Engine, without recourse or warranty, express or implied, except that LESSOR has good and marketable title to such Engine and such Engine shall be free and clear of LESSOR's Liens. 23.7.9 All Airworthiness Directives which are issued prior to the date of return of the Aircraft and require compliance (either by means of repetitive inspections, modifications or terminating action) prior to return of the Aircraft to LESSOR or within one (1) year after the Termination Date will have been complied with on the Aircraft on a terminating action basis at LESSEE's cost. Airworthiness Directives which do not have a terminating action will be accomplished at the highest level of inspection or modification possible. If, after using best efforts, LESSEE is unable to acquire the material, parts or components necessary to accomplish such Airworthiness Directive, LESSEE will pay to LESSOR upon return of the Aircraft the estimated cost of terminating such Airworthiness Directive. If the estimated cost cannot be mutually agreed upon by LESSEE and LESSOR, LESSEE and LESSOR will each obtain an estimate from a reputable FAA-approved maintenance facility (unaffiliated with LESSEE or LESSOR) and the estimated cost will be the average of the two estimates. 23.7.10 The Aircraft will be in compliance with the Corrosion Prevention and Control Program (CPCP) specified in LESSEE's Maintenance Program. 23.7.11 If any waivers, deviations, dispensations, alternate means of compliance, extensions or carry-overs with respect to maintenance or operating requirements, repairs or Airworthiness Directives are granted by the Aviation Authority or permitted by the Maintenance Program, LESSEE at its sole cost and expense will nonetheless perform such maintenance or operating requirements, repairs or Airworthiness Directives as if such waivers, deviations, dispensations, alternate means of compliance, or extensions or carry-overs did not exist. 23.7.12 The Aircraft will be free from any Security Interest except LESSOR's Liens and no circumstance will have so arisen whereby the Aircraft is or could become subject to any Security Interest or right of detention or sale in favor of the Aviation Authority, any airport authority, or any other authority. 23.7.13 All no-charge vendor and Manufacturer's service bulletin kits received by LESSEE for the Aircraft but not installed thereon will be on board the Aircraft as cargo. At LESSOR's request, any other service bulletin kit which LESSEE paid for will also be delivered to LESSOR on board the Aircraft, but LESSOR will reimburse LESSEE for its actual out-of-pocket costs for such kit, unless LESSEE purchased such kit as part of its implementation of a service bulletin on its fleet of aircraft of the same type as the Aircraft but had not yet installed such kit on the Aircraft, in which case such kit will be furnished free of charge to LESSOR. 23.7.14 The Aircraft will be free of any leaks and any damage resulting therefrom. All repairs will have been performed on a permanent basis in accordance with the applicable manufacturer's instructions. 23.7.15 The Aircraft fluid reservoirs (including oil, oxygen, hydraulic and water) will be serviced to full and the waste tank serviced in accordance with Manufacturer's instructions. (Fuel tanks will be at least as full as at Delivery.) 23.8 CHECKS PRIOR TO RETURN. Immediately prior to return of the Aircraft to LESSOR, LESSEE at its expense will do each of the following: 23.8.1 Have performed, and completed, by an FAA-approved repair station, all maintenance tasks specified in LESSEE's Maintenance Program and the MPD which (a) are necessary to clear the Aircraft of all such tasks for eighteen (18) months, five thousand (5,000) hours, and three thousand (3,000) cycles from the date of return of the Aircraft, and (b) are required to be performed at lesser intervals than eighteen (18) months, five thousand (5,000) hours or three thousand (3,000) cycles (all such work collectively referred to as the "RETURN CHECK"). If a maintenance task is specific to LESSEE's Maintenance Program and not required or recommended to be performed by the MPD, then LESSEE will not be required to perform such maintenance task so long as the Return Check is performed in such a manner that clears the Aircraft of all maintenance tasks in accordance with the requirements of the preceding sentence. As part of the Return Check, all non-routine tasks generated as a result of the performance of the work included in the Return Check and any other discrepancies revealed during the Return Check must also be performed in accordance with the FAA approved procedures. LESSEE will also weigh the Aircraft. LESSEE agrees to perform during the Return Check any other work reasonably required by LESSOR (and not otherwise required under this Lease) and LESSOR will, promptly upon receipt of an invoice from LESSEE, reimburse LESSEE for such work at LESSEE's preferred customer rates. 23.8.2 Have the Aircraft in compliance with Corrosion Prevention and Control Program (CPCP) as specified in the MPD and LESSEE's Maintenance Program. 23.8.3 Remove LESSEE's exterior markings, including all exterior paint, by stripping (or, at LESSOR's option, pneumatically scuff/sanding) the paint from the fuselage, empennage, wings and Engine cowlings, and clean, reseal, refinish, prepare (including application of alodine or another corrosion inhibitor) and prime the surfaces to be painted, all in accordance with Manufacturer's and paint manufacturer's recommendations. LESSEE will then repaint the fuselage, empennage, wings and Engine cowlings in the colors and logo specified by LESSOR ; PROVIDED, HOWEVER, that LESSEE will be responsible for only paying the amount that it would cost to strip or scuff/sand (whichever is performed on the Aircraft at return) and properly paint the Aircraft in LESSEE's colors and logo and LESSOR will be responsible for the excess cost to paint the Aircraft in the next lessee's colors and logo. Such painting will be accomplished in such a manner as to result in a uniformly smooth and cosmetically acceptable aerodynamic surface. All external placards, signs and markings will be properly attached, free from damage, clean and legible. 23.8.4 Clean the exterior and interior of the Aircraft. 23.8.5 If reasonably required by LESSOR, apply touch up to paint to the interior of the Aircraft, including flight deck, and replace any missing or broken placards. 23.8.6 In accordance with Article 23.7.7, permanently repair damage to the Aircraft that exceeds Manufacturer's limits and replace any non-flush structural patch repairs installed on the Aircraft with flush-type repairs, so long as the Manufacturer or the Manufacturer's Structural Repair Manual permits flush-type repairs on the portion of the Aircraft where the non-flush structural repairs were made. 23.8.7 With LESSOR or its representatives present, perform a full and complete hot and cold section videotape borescope on each Engine and its modules in accordance with the Engine manufacturer's maintenance manual. 23.8.8 If the Engine historical and technical records and/or condition trend monitoring data of any Engine (including the APU) indicate an acceleration in the rate of deterioration in the performance of an Engine, LESSEE will correct, to LESSOR's satisfaction, such conditions which are determined to be causing such accelerated rate of deterioration. 23.8.9 With LESSOR or its representatives present, accomplish a maximum power assurance run on the Engines. LESSEE will evaluate the Engine performance and record the Engine maximum power assurance test conditions and results on the Return Acceptance Receipt. 23.8.10 LESSEE will provide evidence to LESSOR's satisfaction that the Engine historical and technical records, borescope inspection, trend monitoring and other checks specified in Article 23.8.9 do not reveal any condition which would cause the Engines or any module to be unserviceable, beyond serviceable limits or serviceable with an increased frequency of inspection or with calendar time, flight hour or flight cycle restrictions under the Engine manufacturer's maintenance manual. LESSEE will correct any discrepancies in accordance with the guidelines set out by the Engine manufacturer which may be discovered during such inspection. 23.8.11 In the event the Engine historical and technical records, borescope inspection, trend monitoring and other checks specified in Article 23.8.9 result in a dispute regarding the conformity of an Engine with the requirements of this Article 23, LESSEE and LESSOR will consult with Engine manufacturer and follow Engine manufacturer's recommendations (including the accomplishment of an Engine test cell operational check) with regard to determining if such Engine complies with the requirements of this Article 23 and the manner in which any discrepancies from the requirements of this Article 23 will be rectified. 23.9 PART LIVES. At return, the condition of the Aircraft will be as follows: (CONFIDENTIAL MATERIAL OMITTED) 23.10 EXPORT AND DEREGISTRATION OF AIRCRAFT. At LESSOR's request, LESSEE at its cost will (a) provide an Export Certificate of Airworthiness or its equivalent from the State of Registration so that the Aircraft can be exported to the country designated by LESSOR, (b) assist with deregistration of the Aircraft from the register of aircraft in the State of Registration, (c) assist with arranging for prompt confirmation of such deregistration to be sent by the registry in the State of Registration to the next country of registration and (d) perform any other acts reasonably required by LESSOR in connection with the foregoing. If any Aircraft work which LESSEE is not otherwise required to perform hereunder, including engineering, is required in order to obtain such Export Certificate of Airworthiness, LESSEE will perform such work and LESSOR will reimburse LESSEE for such work at LESSEE's preferred customer rates. 23.11 LESSEE'S CONTINUING OBLIGATIONS. In the event that LESSEE does not return the Aircraft to LESSOR on the Expiration Date and in the condition required by this Article 23 for any reason (whether or not the reason is within LESSEE's control): 23.11.1 the obligations of LESSEE under this Lease will continue in full force and effect on a day-to-day basis until such return. This will not be considered a waiver of LESSEE's Event of Default or any right of LESSOR hereunder. 23.11.2 Until such return, the Agreed Value will be an amount equal to the Agreed Value on the day the Aircraft should have been returned to LESSOR pursuant to this Lease. 23.11.3 LESSEE will fully indemnify LESSOR on demand for all losses (including consequential damages), liabilities, actions, proceedings, costs and expenses thereby suffered or incurred by LESSOR and, in addition, if a delay in return of the Aircraft was due to reasons within LESSEE's reasonable control, then until such time as the Aircraft is redelivered to LESSOR and put into the condition required by this Article 23, instead of paying the Rent specified in Article 5.3, LESSEE will pay twice the amount of Rent for each day from the scheduled Expiration Date until the Termination Date (the monthly Rent payable under Article 5.3.1 will be prorated based on the actual number of days in the applicable month). Payment will be made upon presentation of LESSOR's invoice. 23.11.4 LESSOR may elect, in its sole and absolute discretion, to accept the return of the Aircraft prior to the Aircraft being put in the condition required by this Article 23 and thereafter have any such non-conformance corrected at such time as LESSOR may deem appropriate (but within ninety (90) days following the return of the Aircraft) and at commercial rates then-charged by the Person selected by LESSOR to perform such correction. Any direct expenses incurred by LESSOR for such correction will become additional Rent payable by LESSEE within fifteen (15) days following the submission of a written statement by LESSOR to LESSEE, identifying the items corrected and setting forth the expense of such corrections. LESSEE's obligation to pay such supplemental Rent will survive the Termination Date. 23.12 AIRPORT AND NAVIGATION CHARGES. LESSEE will ensure that at return of the Aircraft any and all airport, navigation and other charges which give rise or may if unpaid give rise to any lien, right of detention, right of sale or other Security Interest in relation to the Aircraft, Engine or any Part have been paid and discharged in full and will at LESSOR's request produce evidence thereof satisfactory to LESSOR. 23.13 RETURN ACCEPTANCE CERTIFICATE. Upon return of the Aircraft in accordance with the terms of this Lease, LESSEE will prepare and execute two (2) Return Acceptance Certificates in the form and substance of Exhibit I and LESSOR will countersign and return one such Return Acceptance Certificate to LESSEE. In addition, LESSEE and LESSOR will execute a Lease Termination for filing with the FAA evidencing termination of this Lease. 23.14 INDEMNITIES AND INSURANCE. The indemnities and insurance requirements set forth in Articles 16 and 17, respectively, will apply to Indemnitees and LESSOR's representatives during return of the Aircraft, including the ground inspection and acceptance flight. With respect to the acceptance flight, LESSOR's representatives will receive the same protections as LESSOR on LESSEE's Aviation and Airline General Third Party Liability Insurance. ARTICLE 24 ASSIGNMENT 24.1 NO ASSIGNMENT BY LESSEE. EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED BY THE TERMS OF THIS LEASE, NO ASSIGNMENT, NOVATION, TRANSFER, MORTGAGE OR OTHER CHARGE MAY BE MADE BY LESSEE OF ANY OF ITS RIGHTS WITH RESPECT TO THE AIRCRAFT, ENGINE OR PART OF THIS LEASE. 24.2 SALE OR ASSIGNMENT BY LESSOR. 24.2.1 Subject to LESSEE's rights pursuant to this Lease, LESSOR may at any time and without LESSEE's consent sell, assign or transfer its rights, interest and obligations hereunder or with respect to the Aircraft to a third party ("LESSOR'S ASSIGNEE"), but only if: (a) LESSOR's Assignee has full power, authority, and legal right to execute, deliver, and perform the obligations of LESSOR under the Operative Documents and provides reasonably satisfactory evidence of such power and authority to LESSEE; (b) LESSOR's Assignee enters into one or more legal, valid, binding and enforceable agreements effective to confirm that LESSOR's Assignee agrees to be bound by all the terms of, and to undertake all of the obligations arising after such transfer of LESSOR in, the Operative Documents, and in which it makes representations and warranties substantially the same as those in Article 21.1 of this Lease; (c) upon such transfer LESSEE shall not be obligated to pay any greater amount or incur any greater obligation (other than indemnifying additional indemnitees, insuring additional insureds and other minor ministerial matters) than that which it would have been obliged to pay or incur under the Operative Documents if no transfer or assignment had taken place, and upon such transfer the terms and conditions of the Operative Documents insofar as they relate to the rights and obligations of LESSEE are not altered; (d) LESSOR shall cause LESSOR's Assignee to deliver to LESSEE an opinion of counsel reasonably satisfactory to LESSEE to the effect that such agreement or agreements referred to in clause (2) and, if applicable, clause (6) are legal, binding, and enforceable in accordance with its or their terms, subject to the typical exceptions. (e) the transfer shall relate to LESSOR's entire interest as owner or lessor; (f) LESSOR's Assignee is a citizen of the United States under 49 U.S. Code ss.40102(a)(15) (such status to be determined without considering FAR ss.47.9 or any other provision that may restrict LESSEE's use or operation of the Aircraft), or shall use a voting powers trust or similar arrangement in order to hold an interest in the Aircraft such that the Aircraft can be registered in the U.S. (without considering FAR ss.47.9 or any other provision that may restrict LESSEE's use or operation of the Aircraft); (g) LESSOR's Assignee is a single Person and is either (i) a Permitted Institution, or (ii) or an affiliate of a Permitted Institution, if such affiliate's obligations under the Operative Documents are guaranteed by such Permitted Institution pursuant to a written guaranty, in form and substance reasonably satisfactory to LESSEE; and (h) LESSOR shall give written notice to LESSEE at least five (5) days before any such transfer, specifying the name and address of the proposed LESSOR's Assignee, and providing reasonably satisfactory evidence that the proposed LESSOR's Assignee meets the requirements described in Article 24.2.1(g)(i) or (ii). For a period of two (2) years after such sale or assignment and at LESSEE's cost, LESSEE will continue to name LESSOR as an additional insured under the Aviation and Airline General Third Party Liability Insurance required pursuant to Article 17 and Exhibit C. 24.2.2 The term "LESSOR" as used in this Lease means the lessor of the Aircraft at the time in question. In the event of the sale of the Aircraft and transfer of LESSOR's rights and obligations under this Lease, LESSOR's Assignee will become "LESSOR" of the Aircraft under this Lease and the transferring party (the prior "LESSOR") will be relieved of all liability to LESSEE under this Lease for obligations arising on and after the date the Aircraft is sold. LESSEE will acknowledge and accept LESSOR's Assignee as the new "LESSOR" under this Lease and will look solely to LESSOR's Assignee for the performance of all LESSOR obligations and covenants under this Lease arising on and after the Aircraft sale date. 24.3 LESSOR'S LENDER. Subject to LESSEE's rights pursuant to this Lease, LESSOR may at any time and without LESSEE's consent grant security interests over the Aircraft and assign the benefit of this Lease to a lender ("LESSOR'S LENDER") as security for LESSOR's obligations to LESSOR's Lender. Accordingly, if LESSOR's Lender requires, as a condition to providing financing, any nonsubstantive modification of this Lease, LESSEE agrees to enter into an agreement so modifying this Lease. 24.4 LESSEE COOPERATION. On request by LESSOR, LESSOR's Assignee or LESSOR's Lender, LESSEE will execute all such documents (such as a lease assignment agreement) as LESSOR, LESSOR's Assignee or LESSOR's Lender may reasonably require to confirm LESSEE's obligations under this Lease and obtain LESSEE's acknowledgment that to the best of LESSEE's knowledge, LESSOR is not in breach of this Lease. LESSEE will provide all other reasonable assistance and cooperation to LESSOR, LESSOR's Assignee and LESSOR's Lender in connection with any such sale or assignment or the perfection and maintenance of any such security interest, at LESSOR's cost, including making all necessary filings and registrations in the State of Registration and providing all opinions of counsel with respect to matters reasonably requested by LESSOR, LESSOR's Lender or LESSOR's Assignee. LESSOR will reimburse LESSEE for its reasonable out-of-pocket costs in reviewing documents required by LESSOR or LESSOR's Lender. 24.5 PROTECTIONS. 24.5.1 LESSOR will obtain for the benefit of LESSEE an acknowledgment from any LESSOR's Assignee or LESSOR's Lender that, so long as no Event of Default has occurred and is continuing hereunder, such Person will not interfere with LESSEE's quiet, peaceful use and enjoyment of the Aircraft. 24.5.2 Wherever the term "LESSOR" is used in this Lease in relation to any of the provisions relating to disclaimer, title and registration, indemnity and insurance contained in Articles 8, 13, 16 and 17, respectively, or with respect to Article 20.2.7, the term "LESSOR" will be deemed to include LESSOR's Assignee and LESSOR's Lender, if applicable. For avoidance of doubt, in the event of LESSOR's sale or financing of the Aircraft, the disclaimer and indemnity provisions contained in Articles 8 and 16 will continue to be applicable after the sale or assignment to International Lease Finance Corporation, as well as being applicable to LESSOR's Assignee and LESSOR's Lender. ARTICLE 25 DEFAULT OF LESSEE 25.1 LESSEE NOTICE TO LESSOR. LESSEE will promptly notify LESSOR if LESSEE becomes aware of the occurrence of any Default. 25.2 EVENTS OF DEFAULT. The occurrence of any of the following will constitute an Event of Default and material breach of this Lease by LESSEE: (a) LESSEE fails to take delivery of the Aircraft when obligated to do so under the terms of this Lease; (b) LESSEE fails to make a Rent or other payment due hereunder in the manner and by the date provided herein and fails to make such payment within five (5) Business Days after its receipt of notice that such payment is due; (c) LESSEE fails to obtain or maintain the insurance required by Article 17; (d) LESSEE fails to return the Aircraft to LESSOR on the Expiration Date in accordance with Article 23; (e) LESSEE fails to observe or perform any of its other obligations hereunder and fails to cure the same within thirty (30) days after written notice thereof to LESSEE; provided, that LESSEE will have up to a total of sixty (60) days to cure such failure so long as it uses diligent efforts to do so; (f) any representation or warranty of LESSEE herein proves to have been untrue in any material respect when made; provided, that, if the effect of such falsity is curable, LESSEE shall have thirty (30) days after LESSEE has knowledge that the representation or warranty is untrue; (g) the registration of the Aircraft is cancelled other than as a result of an act or omission of LESSOR; (h) LESSEE abandons the Aircraft or Engines; (i) LESSEE or an approved sublessee no longer has unencumbered control (other than Permitted Liens) or possession of the Aircraft or Engines, except as otherwise permitted by this Lease; (j) LESSEE temporarily or permanently discontinues business or (except as permitted by Article 20.2.4) sells or otherwise disposes of all or substantially all of its assets; (k) a material adverse change occurs in the financial condition of LESSEE; (l) LESSEE no longer possesses the licenses, certificates and permits required for the conduct of its business as a certificated air carrier in the U.S.; (m) LESSEE (i) suspends payment on its debts or other obligations generally, (ii) is unable to or admits its inability to pay its debts or other obligations generally as they fall due, (iii) is adjudicated or becomes bankrupt or insolvent or (iv) enters into any composition or other arrangement for the benefit of its creditors generally; (n) any proceedings, resolutions, filings or other steps are instituted with respect to LESSEE relating to the bankruptcy, liquidation, reorganization or protection from creditors of LESSEE or at least half of LESSEE's property. If instituted by LESSEE, the same will be an immediate Event of Default. If instituted by another Person, the same will be an Event of Default if not dismissed, remedied or relinquished within sixty (60) days; (o) any order, judgment or decree is entered by any court of competent jurisdiction appointing a receiver, trustee or liquidator of LESSEE or at least half of its property, or if at least half of LESSEE's property is to be sequestered. If instituted by or done with the consent of LESSEE, the same will be an immediate Event of Default. If instituted by another Person, the same will be an Event of Default if not dismissed, stayed, remedied or relinquished within sixty (60) days; PROVIDED, HOWEVER, that if such proceeding is stayed, then such proceeding will become an immediate Event of Default if such stay is removed or terminates and the proceeding is not dismissed, remedied or relinquished when such stay is removed or terminates. (p) any indebtedness for borrowed moneys or a guarantee or similar obligation owed by LESSEE with an unpaid balance of CONFIDENTIAL MATERIAL OMITTED is declared due before its stated maturity or LESSEE is in default of payment obligations CONFIDENTIAL MATERIAL OMITTED under any other purchase agreement, lease, conditional sale agreement or other agreement pursuant to which LESSEE has possession of any aircraft; (q) Eurocontrol has notified LESSOR that there are unpaid Eurocontrol charges due from LESSEE (unless such charges are being contested in good faith and by appropriate proceedings, an adequate bond has been provided and such proceedings do not involve any danger of the detention, interference with the use or operation, sale, forfeiture or loss of the Aircraft) and such charges remain outstanding for a period of thirty (30) days from the date of Eurocontrol's notice to LESSOR provided that such thirty (30) day grace period will not apply if there is a danger of detention, interference with the use or operation, sale, forfeiture or loss of the Aircraft; or (r) LESSEE is in default under any other lease or agreement between LESSEE and LESSOR and the same is not cured within its specified cure period. 25.3 LESSOR'S GENERAL RIGHTS. Upon the occurrence of any Event of Default, LESSOR may do all or any of the following at its option (in addition to such other rights and remedies which LESSOR may have by statute or otherwise but subject to any requirements of applicable Law): (a) terminate this Lease by giving written notice to LESSEE; (b) require that LESSEE immediately move the Aircraft to an airport or other location designated by LESSOR; (c) for LESSEE's account, do anything that may reasonably be required to cure any default and recover from LESSEE all reasonable costs, including legal fees and expenses incurred in doing so and Default Interest; (d) proceed as appropriate to enforce performance of this Lease and to recover any damages for the breach hereof, including the amounts specified in Article 25.5; (e) terminate this Lease by taking possession of the Aircraft or by serving notice requiring LESSEE to return the Aircraft to LESSOR at the location specified by LESSOR. If LESSOR takes possession of the Aircraft, it may enter upon LESSEE's premises where the Aircraft is located without liability. Upon repossession of the Aircraft, LESSOR will then be entitled to sell, lease or otherwise deal with the Aircraft as if this Lease had never been made. LESSOR will be entitled to the full benefit of its bargain with LESSEE; or (f) apply all or any portion of the Security Deposit and any other security deposits held by LESSOR pursuant to any other agreements between LESSOR and LESSEE to any amounts due. 25.4 DEREGISTRATION AND EXPORT OF AIRCRAFT. If an Event of Default has occurred and is continuing, LESSOR may take all steps necessary to deregister the Aircraft in and export the Aircraft from the State of Registration. 25.5 LESSEE LIABILITY FOR DAMAGES. If an Event of Default occurs, in addition to all other remedies available at law or in equity, LESSOR has the right to recover from LESSEE and LESSEE will pay LESSOR within two (2) Business Days after LESSOR's written demand, all of the following: (a) all amounts which are then due and unpaid hereunder and which become due prior to the earlier of LESSOR's recovery of possession of the Aircraft or LESSEE making an effective tender thereof; (b) any losses suffered by LESSOR because of LESSOR's inability to place the Aircraft on lease with another lessee or to otherwise utilize the Aircraft on financial terms as favorable to LESSOR as the terms hereof or, if LESSOR elects to dispose of the Aircraft, the funds arising from a sale or other disposition of the Aircraft are not as profitable to LESSOR as leasing the Aircraft in accordance with the terms hereof would have been (and LESSOR will be entitled to accelerate any and all Rent which would have been due from the date of LESSOR's recovery or repossession of the Aircraft through the Expiration Date); (c) all costs associated with LESSOR's exercise of its remedies hereunder, including but not limited to repossession costs, legal fees, Aircraft storage costs, Aircraft re-lease or sale costs and LESSOR's internal costs and expenses (including the cost of personnel time calculated based upon the compensation paid to the individuals involved on an annual basis and a general LESSOR overhead allocation); (d) any amount of principal, interest, fees or other sums paid or payable on account of funds borrowed in order to carry any unpaid amount; (e) any loss, premium, penalty or expense which may be incurred in repaying funds raised to finance the Aircraft or in unwinding any financial instrument relating in whole or in part to LESSOR's financing of the Aircraft; (f) any loss, cost, expense or liability sustained by LESSOR due to LESSEE's failure to redeliver the Aircraft in the condition required by this Lease; and (g) any other loss, damage, expense, cost or liability which LESSOR suffers or incurs as a result of the Event of Default and/or termination of this Lease, including an amount sufficient to fully compensate LESSOR for any loss of or damage to LESSOR's residual interest in the Aircraft caused by LESSEE's default. 25.6 WAIVER OF DEFAULT. By written notice to LESSEE, LESSOR may at its election waive any Default or Event of Default and its consequences and rescind and annul any prior notice of termination of this Lease. The respective rights of the parties will then be as they would have been had no Default or Event of Default occurred and no such notice been given. 25.7 PRESENT VALUE OF PAYMENTS. In calculating LESSOR's damages hereunder, upon an Event of Default all Rent and other amounts which would have been due hereunder during the Lease Term if an Event of Default had not occurred will be calculated on a present value basis using a discounting rate of six percent (6%) per annum discounted to the earlier of the date on which LESSOR obtains possession of the Aircraft or LESSEE makes an effective tender thereof. 25.8 USE OF "TERMINATION DATE". For avoidance of doubt, it is agreed that if this Lease terminates and the Aircraft is repossessed by LESSOR due to an Event of Default, then, notwithstanding the use of the term "Termination Date" in this Lease, the period of the Lease Term and the "Expiration Date" will be utilized in calculating the damages to which LESSOR is entitled pursuant to Article 25.5. For example, it is agreed and understood that LESSOR is entitled to receive from LESSEE the Rent and the benefit of LESSEE's insurance and maintenance of the Aircraft until expiration of the Lease Term. ARTICLE 26 NOTICES 26.1 MANNER OF SENDING NOTICES. Any notice, request or information required or permissible under this Lease will be in writing and in English. Notices will be delivered in person or sent by fax, letter (mailed airmail, certified and return receipt requested), or by expedited delivery addressed to the parties as set forth in Article 26.2. In the case of a fax, notice will be deemed received upon actual receipt (and the date of actual receipt will be deemed to be the date set forth on the confirmation of receipt produced by the sender's fax machine immediately after the fax is sent). In the case of a notice sent by expedited delivery, notice will be deemed received on the date of delivery set forth in the records of the Person which accomplished the delivery. If any notice is sent by more than one of the above listed methods, notice will be deemed received on the earliest possible date in accordance with the above provisions. 26.2 NOTICE INFORMATION. Notices will be sent: If to LESSOR: INTERNATIONAL LEASE FINANCE CORPORATION 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067, U.S.A. Attention: Legal Department Fax: 310-788-1990 Telephone: 310-788-1999 If to LESSEE: AMERICAN TRANS AIR, INC. 7337 West Washington Street Indianapolis International Airport Indianapolis, Indiana 46231 United States of America Attention: Ken Wolff Executive Vice President and Chief Financial Officer Fax: 317-240-7091 Telephone: 317-247-4000 or to such other places and numbers as either party directs in writing to the other party. ARTICLE 27 GOVERNING LAW AND JURISDICTION 27.1 CALIFORNIA LAW. This Lease is being delivered in the State of California and will in all respects be governed by and construed in accordance with the Laws of the State of California (notwithstanding the conflict Laws of the State of California). 27.2 NON-EXCLUSIVE JURISDICTION IN CALIFORNIA. As permitted by Section 410.40 of the California Code of Civil Procedure, the parties hereby irrevocably submit to the non-exclusive jurisdiction of the Federal District Court for the Central District of California and the State of California Superior or Municipal Court in Los Angeles, California. Nothing herein will prevent either party from bringing suit in any other appropriate jurisdiction. 27.3 SERVICE OF PROCESS. The parties hereby consent to the service of process (a) out of any of the courts referred to above, (b) in accordance with Section 415.40 of the California Code of Civil Procedure by mailing copies of the summons and complaint to the person to be served by certified or registered mail to the address set forth in Article 26.2, postage prepaid, return receipt requested or (c) in accordance with the Hague Convention, if applicable. 27.4 PREVAILING PARTY IN DISPUTE. If any legal action or other proceeding is brought in connection with or arises out of any provisions in this Lease, the prevailing party will be entitled to recover reasonable attorneys' fees and other costs incurred in such action or proceedings. The prevailing party will also, to the extent permissible by Law, be entitled to receive pre- and post-judgment Default Interest. 27.5 WAIVER. LESSEE AND LESSOR HEREBY WAIVE THE RIGHT TO A TRIAL BY JURY. LESSEE AND LESSOR HEREBY IRREVOCABLY WAIVE ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATED TO THIS LEASE BROUGHT IN ANY OF THE COURTS REFERRED TO IN ARTICLE 27.2, AND HEREBY FURTHER IRREVOCABLY WAIVE ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. ARTICLE 28 MISCELLANEOUS 28.1 PRESS RELEASES. The parties will give copies to one another, in advance if possible, of all news, articles and other releases provided to the public media regarding this Lease. 28.2 LESSOR PERFORMANCE FOR LESSEE. The exercise by LESSOR of its remedy of performing a LESSEE obligation hereunder is not a waiver of and will not relieve LESSEE from the performance of such obligation at any subsequent time or from the performance of any of its other obligations hereunder. 28.3 LESSOR'S PAYMENT OBLIGATIONS. Any obligation of LESSOR under this Lease to pay or release any amount to LESSEE is conditioned upon (a) all amounts then due and payable by LESSEE to LESSOR under this Lease or under any other agreement between LESSOR and LESSEE having been paid in full and (b) no Default or Event of Default having occurred and continuing hereunder at the time such payment or release of payment is payable to LESSEE. 28.4 APPLICATION OF PAYMENTS. Any amounts paid or recovered in respect of LESSEE liabilities hereunder may be applied to Rent, Default Interest, fees or any other amount due hereunder in such proportions, order and manner as LESSOR determines. 28.5 USURY LAWS. The parties intend to contract in strict compliance with the usury Laws of the State of California and, to the extent applicable, the U.S. Notwithstanding anything to the contrary in the Operative Documents, LESSEE will not be obligated to pay Default Interest or other interest in excess of the maximum non-usurious interest rate, as in effect from time to time, which may by applicable Law be charged, contracted for, reserved, received or collected by LESSOR in connection with the Operative Documents. During any period of time in which the then-applicable highest lawful rate is lower than the Default Interest rate, Default Interest will accrue and be payable at such highest lawful rate; however, if at later times such highest lawful rate is greater than the Default Interest rate, then LESSEE will pay Default Interest at the highest lawful rate until the Default Interest which is paid by LESSEE equals the amount of interest that would have been payable in accordance with the interest rate set forth in Article 5.5. 28.6 DELEGATION BY LESSOR. LESSOR may delegate to any Person(s) all or any of the rights, powers or discretion vested in it by this Lease and any such delegation may be made upon such terms and conditions as LESSOR in its absolute discretion thinks fit. 28.7 CONFIDENTIALITY. The Operative Documents and all non-public information obtained by either party about the other are confidential and are between LESSOR and LESSEE only and will not be disclosed by a party to third parties (other than to such party's auditors or legal advisors or as required in connection with any filings of this Lease in accordance with Article 13) without the prior written consent of the other party. If disclosure is required as a result of applicable Law, LESSEE and LESSOR will cooperate with one another to obtain confidential treatment as to the commercial terms and other material provisions of this Lease. 28.8 RIGHTS OF PARTIES. The rights of the parties hereunder are cumulative, not exclusive, may be exercised as often as each party considers appropriate and are in addition to its rights under general Law. The rights of one party against the other party are not capable of being waived or amended except by an express waiver or amendment in writing. Any failure to exercise or any delay in exercising any of such rights will not operate as a waiver or amendment of that or any other such right any defective or partial exercise of any such rights will not preclude any other or further exercise of that or any other such right and no act or course of conduct or negotiation on a party's part or on its behalf will in any way preclude such party from exercising any such right or constitute a suspension or any amendment of any such right. 28.9 FURTHER ASSURANCES. Each party agrees from time to time to do and perform such other and further acts and execute and deliver any and all such other instruments as may be required by Law, reasonably requested by the auditors of the other party or requested by the other party to establish, maintain or protect the rights and remedies of the requesting party or to carry out and effect the intent and purpose of this Lease. 28.10 USE OF WORD "INCLUDING". The term "INCLUDING" is used herein without limitation. 28.11 HEADINGS. All article and paragraph headings and captions are purely for convenience and will not affect the interpretation of this Lease. Any reference to a specific article, paragraph or section will be interpreted as a reference to such article, paragraph or section of this Lease. 28.12 INVALIDITY OF ANY PROVISION. If any of the provisions of this Lease become invalid, illegal or unenforceable in any respect under any Law, the validity, legality and enforceability of the remaining provisions will not in any way be affected or impaired. 28.13 NEGOTIATION. The terms of this Lease are agreed by LESSOR from its principal place of business in Los Angeles, California. 28.14 TIME IS OF THE ESSENCE. Time is of the essence in the performance of all obligations of the parties under this Lease and, consequently, all time limitations set forth in the provisions of this Lease will be strictly observed. 28.15 AMENDMENTS IN WRITING. The provisions of this Lease may only be amended or modified by a writing executed by LESSOR and LESSEE. 28.16 COUNTERPARTS. This Lease may be executed in any number of identical counterparts, each of which will be deemed to be an original, and all of which together will be deemed to be one and the same instrument when each party has signed and delivered one such counterpart to the other party. 28.17 DELIVERY OF DOCUMENTS BY FAX. Delivery of an executed counterpart of this Lease or of any other documents in connection with this Lease by fax will be deemed as effective as delivery of an originally executed counterpart. Any party delivering an executed counterpart of this Lease or other document by fax will also deliver an originally executed counterpart, but the failure of any party to deliver an originally executed counterpart of this Lease or such other document will not affect the validity or effectiveness of this Lease or such other document. 28.18 ENTIRE AGREEMENT. The Operative Documents constitute the entire agreement between the parties in relation to the leasing of the Aircraft by LESSOR to LESSEE and supersede all previous proposals, agreements and other written and oral communications in relation hereto. The parties acknowledge that there have been no representations, warranties, promises, guarantees or agreements, express or implied, except as set forth herein and in the other Operative Documents. IN WITNESS WHEREOF, LESSEE and LESSOR have caused this Lease to be executed by their respective officers as of September 5, 2000. INTERNATIONAL LEASE FINANCE AMERICAN TRANS AIR, INC. CORPORATION By: /s/ Grant Levy By: /s/ Kenneth K. Wolff Its: Vice President Its: Executive Vice President & CFO EXHIBIT A AIRCRAFT DESCRIPTION Aircraft Manufacturer and Model: Boeing 737-800 Specification: Seating Configuration: Manufacturer's Serial Number: 30640 Registration Mark: ____ Engine Manufacturer and Model: CFM56-7B-27 Engine Serial Numbers: _______ and ________ Engine Thrust Rating: 27,300 pounds Maximum Gross Takeoff Weight: 160,000 pounds EXHIBIT B AGENCY AGREEMENT (Limited Authority) Relating to Boeing 737-800 Aircraft THIS AGENCY AGREEMENT ("AGREEMENT") is made and entered into as of ____________________. BETWEEN: AMERICAN TRANS AIR, INC., a Indiana corporation whose address and principal place of business is at 7337 West Washington Street, Indianapolis International Airport, Indianapolis, Indiana 46231, United States of America ("AGENT") and INTERNATIONAL LEASE FINANCE CORPORATION, a California corporation, whose address and principal place of business is at 1999 Avenue of the Stars, 39th Floor, Los Angeles, California 90067, U.S.A. ("BUYER"). RECITAL The Boeing Company ("MANUFACTURER") and Buyer have entered into Purchase Agreement 2241, dated as of July 30, 1999 (such purchase agreement as may be amended in accordance with the provisions thereof is hereinafter referred to as the "PURCHASE AGREEMENT") under which Manufacturer has agreed to manufacture and sell and Buyer has agreed to purchase certain Boeing 737-800 aircraft. Buyer has agreed to lease one (1) of such aircraft bearing manufacturer's serial number 30640 (the "AIRCRAFT") to the Agent pursuant to an Aircraft Lease Agreement between Buyer and Agent dated as of September 5, 2000 (the "LEASE"). The Agent is engaged in business as a commercial air carrier and intends to lease the Aircraft from Buyer, and Buyer is desirous of utilizing the expertise of the Agent as Buyer's agent in all matters to which the Purchase Agreement relates with respect to the Aircraft except certain items as indicated below, and the Agent, as Buyer's agent, is willing to make such expertise available to Buyer. Accordingly, the parties agree as follows: 1. Buyer hereby appoints the Agent as Buyer's sole and exclusive agent with authority to perform the following, on behalf of Buyer, as the Agent may in its discretion determine to be necessary or desirable: (a) monitor Manufacturer's production, testing and delivery of the Aircraft in accordance with the Purchase Agreement and (b) do all such other things permitted by the Purchase Agreement related to the technical and engineering aspects of Manufacturer's production of the Aircraft, except Buyer limits Agent's authority to perform on behalf of Buyer on any defect that occurs during manufacture that is considered significant in nature by Buyer as measured by the criteria set forth below. Buyer retains the sole authority to perform on any defect meeting such criteria. (i) Deviations from the drawing configuration that could affect future modifications, maintenance, repair or overhaul of the Aircraft; (ii) Defects that are obvious appearance items; (iii) Rework that requires stress concurrence to satisfy Manufacturer's Material Review Board (MRB) requirements; (iv) A high quantity of defects normally considered minor on a singular basis; (v) Major rework requiring extensive repair or modification, E.G. replacement of ---- skin panels, extensive use of oversize fasteners, repair of damaged areas and significant structural modifications; (vi) Rework that affects the aerodynamic drag coefficient of the Aircraft; or (vii) Rework that involves areas known to be sensitive to Buyer. 2. Notwithstanding anything in the provisions of paragraph 1, nothing in this Agreement will confer authority upon or otherwise permit the Agent: (a) to exercise any power of termination under the Purchase Agreement or (b) to make any payments due from Buyer to Manufacturer or to receive on behalf of Buyer any payments due from Manufacturer under the Purchase Agreement, or to alter any of the terms and conditions of the Purchase Agreement or the Detail Specifications of the Aircraft. 3. Buyer will not revoke the appointment of and authority granted under this Agreement to the Agent unless a termination of the Purchase Agreement or Lease has occurred with respect to the Aircraft or the Agent has failed to perform a material obligation under this Agreement. Notice of any such revocation will be provided in accordance with the provisions of Article 14 of the Purchase Agreement and given to both Manufacturer and the Agent. 4. Manufacturer acknowledges the appointment of the Agent for the purpose set forth hereunder and Manufacturer and Buyer agree that due performance by Manufacturer or Agent of an obligation under the Purchase Agreement will constitute due satisfaction of such obligation by such party and Buyer agrees to be bound by the acts of the Agent. 5. Buyer and Agent agree to identify the technical organization and/or person(s) with the limited authority to act for Agent during production of the Aircraft. Buyer will, if possible, provide such identification to Manufacturer in writing, along with office space requirements for Agent, if required, prior to or at the time of Manufacturer's acknowledgment of this Agreement. 6. Nothing in this Agreement will subject Manufacturer to any liability under the Purchase Agreement which it would not otherwise be subject to, or modify Manufacturer's rights thereunder, or require Manufacturer to divest itself of title to or possession of Aircraft or any other property which is subject to the Purchase Agreement until payment therefor and delivery thereof in accordance with the Purchase Agreement. 7. None of the parties hereto will be entitled to assign to any third party any of their rights under this Agreement. 8. The Agent will not delegate to any third party the performance of the obligations imposed on it by this Agreement or appoint a sub-agent. 9. References to Manufacturer in this Agreement will include any wholly-owned subsidiary of Manufacturer to which Manufacturer assigns any of its rights and obligations under the Purchase Agreement pursuant to the terms and conditions thereof. 10. This Agreement will be governed by the laws of the State of California; however, the Purchase Agreement shall remain governed by the laws of the State of Washington. This Agreement has been executed by the parties hereto as of the day and year first above written. INTERNATIONAL LEASE FINANCE CORPORATION AMERICAN TRANS AIR, INC. By: By: Its: Its: The Boeing Company acknowledges the appointment of AMERICAN TRANS AIR, INC. as agent of International Lease Finance Corporation in connection with the above referenced Aircraft as set forth in this Agreement. THE BOEING COMPANY By: Its: EXHIBIT C CERTIFICATE OF INSURANCE [Refer to Aircraft Lease Agreement dated as of September 5, 2000 between LESSEE and LESSOR (the "Lease"). If applicable, insurance certificates from both the insurers and reinsurers will be provided. If there is a LESSOR's Lender, include references to it where appropriate after references to LESSOR.] To: INTERNATIONAL LEASE FINANCE CORPORATION ("LESSOR") ------ 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States Re: AMERICAN TRANS AIR, INC. ("LESSEE") Boeing 737-800 Manufacturer's Serial No.: 30640 Registration Mark: ____ (the "AIRCRAFT") The following security has subscribed to the insurance and/or reinsurance policies: [LIST COMPANIES & PERCENTAGES] THIS IS TO CERTIFY THAT, as Insurance Brokers, we have effected Fleet Insurance in respect of aircraft owned or operated by LESSEE (including the Aircraft), and that insurance in respect of the Aircraft is as specified below. AIRCRAFT HULL ALL RISKS COVERING: All risks of physical loss or damage to the Aircraft from any cause (subject only to the exclusions as specified below), for an Agreed Value of Aircraft in the amount of [list amount calculated in accordance with Article 18.1] DEDUCTIBLES: (CONFIDENTIAL MATERIAL OMITTED) each and every loss (or such lesser amount as generally applicable to the rest of LESSEE's 737-800 fleet). Not applicable to Total Loss/Constructive Total Loss or Arranged Total Loss GEOGRAPHICAL COVERAGE: Worldwide [subject to customary exclusions] AVIATION AND AIRLINE GENERAL THIRD PARTY LIABILITY COVERING: Aircraft Third Party, Passenger, Baggage, Cargo and Mail Liability and Airline General Third Party Liability (including Premises, Hangarkeepers and Products Liability) for combined single limit of not less than (CONFIDENTIAL MATERIAL OMITTED) (or such higher amount as LESSEE may carry generally on other 737-800 aircraft in its fleet) any one accident/occurrence (but in the aggregate in relation to Products Liability), extended to cover LESSEE's liability under the Lease to the extent of the risks covered by the policy including war and allied perils under Extended Coverage Endorsement as per AVN 52 subject only to exclusions as specified below GEOGRAPHICAL LIMITS: Worldwide [subject to customary exclusions] HULL WAR AND ALLIED PERILS COVERING: Hull War Risks as per LSW555.B, but including (a) confiscation or requisition (including by State of Registration and state where airline is domiciled), (b) hijacking or other unlawful seizure or wrongful exercise of control of the Aircraft or crew in flight (including any attempt at such seizure or control) and including "All Risks" Continuation Clause and Extortion Risks (including expenses) and covering claims excluded from Hull All Risks Policy while Aircraft outside Assured's control by reason of perils insured under this policy, for an Agreed Value of Aircraft in the amount of [list amount calculated in accordance with Article 18.1] DEDUCTIBLE: No deductible GEOGRAPHICAL LIMITS: Worldwide AIRCRAFT SPARES ALL RISKS INSURANCE COVERING: All risks of physical loss or damage to Aircraft Parts or spares or Engines at all times when removed from the Aircraft from whatever cause, subject only to the exclusions specified below, including the risks set down in AVN 48B other than paragraphs (a) and (b) thereof (but including paragraph (a) in respect of transit risks) for limits of not less than: CONFIDENTIAL MATERIAL OMITTED and covering: With respect to an Engine, an agreed value (CONFIDENTIAL MATERIAL OMITTED) or, with LESSOR's written concurrence, replacement cost With respect to Parts, replacement cost DEDUCTIBLE: (CONFIDENTIAL MATERIAL OMITTED) GEOGRAPHICAL COVERAGE: Worldwide INSURANCE REQUIRED BY MANUFACTURER LESSEE will carry the insurance required by Manufacturer in connection with LESSOR's assignment of Manufacturer's warranties and product support to LESSEE CONTRACTUAL INDEMNITY To the extent of the risks covered by the policies, LESSEE has insurance coverage for the indemnities agreed to by LESSEE pursuant to Article 16 of the Lease, subject to AVN67B or equivalent PERIOD OF COVERAGE (ALL POLICIES) From the Delivery Date of Aircraft to [END OF POLICY PERIOD] It is further certified that LESSOR has an interest in respect of the Aircraft under the Lease. Accordingly, with respect to losses occurring during the period from the Effective Date until the expiry of the Insurance or until the expiry or agreed termination of the Lease or until the obligations under the Lease are terminated by any action of the Insured or LESSOR and in consideration of the Additional Premium it is confirmed that the Insurance afforded by the Policy is in full force and effect and it is further agreed that the following provisions are specifically endorsed to the Policy. 1. UNDER THE HULL (ALL RISKS AND HULL WAR AND ALLIED RISKS) AND AIRCRAFT SPARES INSURANCES (a) In respect of any claim on the Aircraft that becomes payable on the basis of a Total Loss, payment of any settlement will be made to, or to the order of LESSOR as sole loss payee, up to the Agreed Value. With respect to repairable damage to an Aircraft or Engine, LESSOR will receive all insurance proceeds in excess of CONFIDENTIAL MATERIAL OMITTED provided that upon receipt by the insurance broker of written notice of a material default on the part of LESSEE (and until notice that it has been cured), all insurance proceeds which otherwise would be payable to LESSEE will be made directly to LESSOR. In respect of any other claim, payment of any settlement (net of any relevant policy deductible) will be made with such party(ies) as may be necessary to repair the Aircraft unless otherwise agreed after consultation between the Insurers and the Insured and, where necessary under the terms of the Lease, LESSOR. Such payments will only be made provided they are in compliance with all applicable laws and regulations. (b) Insurers agree on a 50/50 settlement in terms of AVS 103. (c) Insurers have no right to replace the Aircraft on a Total Loss (arranged, constructive or otherwise). (d) Insurers confirm that under the insurance policies, if the Insured installs an engine owned by a third party on the Aircraft, either (i) the hull insurance will automatically increase to such higher amount as is necessary in order to satisfy both LESSOR's requirement to receive the Agreed Value in the event of a Total Loss, Constructive Total Loss or Arranged Total Loss and the amount required by the third party engine owner, or (ii) separate additional insurance on such engine will attach in order to satisfy separately the requirements of the Insured to such third party engine owner. 2. UNDER THE LEGAL LIABILITY INSURANCE (a) Subject to the provisions of this Endorsement, the Insurance will operate in all respects as if a separate Policy had been issued covering each party insured hereunder, but this provision will not operate to include any claim arising howsoever in respect of loss or damage to the Aircraft insured under the Hull or Spares Insurance of the Insured. Notwithstanding the foregoing the total liability of Insurers in respect of any and all Insureds will not exceed the limits of liability stated in the Policy. (b) The Insurance provided hereunder will be primary and without right of contribution from any other insurance which may be available to LESSOR. 3. UNDER ALL INSURANCES (a) LESSOR, its successors and assigns, and (with respect to Aviation and Airline General Third Party Liability only) its directors, officers and employees for their respective rights and interests, are included as Additional Insureds. (b) The cover afforded to LESSOR by the Policy in accordance with this Endorsement will 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 Policy. (c) LESSOR will have no responsibility for premium and insurers will waive any right of set-off or counterclaim against LESSOR except in respect of outstanding premium in respect of the Aircraft, provided that Insurer may only set-off for premiums against the proceeds of the hull insurance for outstanding premiums in connection with hull all risks and hull war and allied perils insurance. (d) Upon payment of any loss or claim to or on behalf of LESSOR, Insurers will to the extent and in respect of such payment be thereupon subrogated to all legal and equitable rights of LESSOR indemnified hereby (but not against LESSOR). Insurers will not exercise such rights without the consent of those indemnified, such consent not to be unreasonably withheld. At the expense of Insurers LESSOR will do all things reasonably necessary to assist the Insurers to exercise said rights. (e) Except in respect of any provision for Cancellation or Automatic Termination specified in the Policy or any endorsement thereof, cover provided by this Endorsement may only be cancelled or materially altered in a manner adverse to LESSOR by the giving of not less than thirty (30) days notice in writing to LESSOR. Notice will be deemed to commence from the date such notice is given by the Insurers. Such notice will NOT, however, be given at normal expiry date of the Policy or any endorsement. 4. EXCEPT AS SPECIFICALLY VARIED OR PROVIDED BY THE TERMS OF THIS CERTIFICATE (a) LESSOR IS COVERED BY THE POLICY SUBJECT TO ALL TERMS, CONDITIONS, LIMITATIONS,WARRANTIES, EXCLUSIONS AND CANCELLATION PROVISIONS THEREOF. (b) THE POLICY WILL NOT BE VARIED BY ANY PROVISIONS CONTAINED IN THE LEASE WHICH PURPORT TO SERVE AS AN ENDORSEMENT OR AMENDMENT TO THE POLICY. SUBJECT (save as specifically stated in this Certificate) to policy terms, conditions, limitations and exclusions. Yours faithfully, [BROKERS] EXHIBIT D BROKERS' LETTER OF UNDERTAKING To: INTERNATIONAL LEASE FINANCE CORPORATION 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States Date: Our Ref: Re: AMERICAN TRANS AIR, INC. ("LESSEE") ------ Boeing 737-800 Manufacturer's Serial No.: ____ Registration Mark: ____ (the "AIRCRAFT") Dear Sirs: We confirm that insurance has been effected for the account of [LESSEE] (the "OPERATOR") covering all aircraft owned or operated by them, including the above-referenced aircraft (the "Aircraft"). [Also confirm, if applicable, the amount of any hull all risks or hull war and allied perils on the Aircraft which LESSEE is carrying in excess of the Agreed Value (which excess insurance would be payable to LESSEE). Such excess insurance may not exceed ten percent (10%) of the Agreed Value.] Pursuant to instructions received from the Operator and in consideration of your approving the arrangement of the Operator's "Fleet Policy" (under which the above-referenced Aircraft is insured) through the intermediary of ourselves as Brokers in connection with the insurance (the "INSURANCE") mentioned in our Certificate of Insurance (Reference No. [ ] dated [ ] and attached hereto), we undertake as follows: 1. In relation to the Hull and War Risks Insurance to hold to your order the insurance Slips or Contracts and any Policies which may be issued or any policies substituted (with your consent) therefor (but only insofar as the same relate to the Aircraft only) and the benefit of the Hull and War Risks Insurance thereunder, but subject to our requirements to operate the Fleet Policy insofar as it relates to any other aircraft insured thereunder. 2. To advise you of any of the following: (a) If any insurer cancels or gives notice of cancellation of any of the Insurance at least thirty (30) days (or such lesser period as may be available in the case of War and Allied Perils) before such cancellation is to take effect in respect of the Aircraft. (b) Of any act or omission or of any event (including non-payment of premium) of which we have knowledge or are notified and which might invalidate or render unenforceable in whole or in part any of the Insurance, insofar as the same relate to the Aircraft. (c) If we do not receive instructions to renew all or any of the Insurance at least thirty (30) days prior to their expiration. (d) If any of the Insurance are not renewed on the same terms (save as to premium and period of cover and as you might otherwise have notified us to be acceptable to you) seven (7) days prior to expiry thereof. The above undertakings are given subject to our continuing appointment for the time being as Insurance Brokers to the Operator. We also undertake to advise you if we cease to be Insurance Brokers to the Operator. Yours faithfully, EXHIBIT E ESTOPPEL AND ACCEPTANCE CERTIFICATE AMERICAN TRANS AIR, INC. ("LESSEE"), a corporation organized under the laws of Indiana does hereby represent, acknowledge, warrant and agree as follows: 1. LESSEE and INTERNATIONAL LEASE FINANCE CORPORATION, as LESSOR, have entered into an Aircraft Lease Agreement dated as of September 5, 2000 (hereinafter referred to as the "LEASE"). Words used herein with capital letters and not otherwise defined will have the meanings set forth in the Lease. 2. LESSEE has this ____ day of __________, ____ (Time: __________) at ____________________ received from LESSOR possession of: (a) One (1) Boeing 737-800 aircraft bearing Manufacturer's serial number ____ and U.S. registration mark ____, together with two (2) CFM56-7B-27 engines bearing manufacturer's serial numbers _______ and ________ (each of which has 750 or more rated take-off horsepower), all in airworthy condition. (b) All Aircraft Documentation, including the usual and customary manuals, logbooks, flight records and historical information regarding the Aircraft, Engines and Parts. 3. All of the foregoing has been delivered and accepted on the date set forth above to LESSEE's full satisfaction and pursuant to the terms and provisions of the Lease. 4. The Agreed Value of the Aircraft is US$_______________. 5. The amount of fuel on board at Delivery is __________ (circle one) pounds/kilos (________ gallons). 6. The Aircraft, Engines, Parts and Aircraft Documentation as described in the Lease have been fully examined by LESSEE and have been received in a condition fully satisfactory to LESSEE and in full conformity with the Lease in every respect. 7. The Lease is in full force and effect, LESSEE has no claims, offsets, deductions or set-off of any kind or nature in connection with the Lease, except for any claims against LESSOR set forth on the attached List of Discrepancies. 8. LESSOR's Lender may rely upon all of the foregoing in granting substantial financial accommodations to LESSOR and LESSEE understands and agrees that any funds being advanced by LESSOR's Lender will be made in reliance upon the foregoing. 9. LESSEE has obtained all required permits, authorizations, licenses and fees of the State of Registration or any Government Entity thereof necessary in order for LESSEE to operate the Aircraft as permitted by the terms of the Lease. Dated on the date set forth above AMERICAN TRANS AIR, INC. By: Title: ATTACHMENTS: 1. List of Aircraft Documentation 2. List of Loose Equipment 3. List of Discrepancies ATTACHMENT 1 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE LIST OF AIRCRAFT DOCUMENTATION MANUALS 1. FAA Approved Flight Manual 2. Airplane Flight Operation Manual 3. Aircraft Recover Manual 4. Quick Reference Handbook (QRH) 5. Weight and Balance Manual 6. Aircraft Fueling Manual 7. Aircraft Maintenance Manual (MM) 8. Aircraft Maintenance Manual Supplement 9. Ramp Maintenance Manual (RMM) 10. Cargo Loading Manual 11. Fault Reporting Manual (FRM) 12. Fault Isolation Manual (FIM) 13. Illustrated Parts Catalog (IPC) 14. Life Limited Parts Manual 15. Structural Repair Manual (SRM) 16. Master Minimum Equipment List 17. Wiring Diagram Manual (WD) 18. Wiring Practices Manual 19. System Schematics Manual 20. B.I.T.E. Manual 21. Non-Destructive Test Manual 22. Corrosion Prevention Manual 23. Component Maintenance Manual 24. APU Log Book 25. Engine Maintenance Manual 26. Engine Log Book 27. Engine Illustrated Parts Catalog 28. Engine Data Submittal Book 29. Engine Overhaul Manual 30. Power Plant Build-up Manual AIRCRAFT RECORDS AND HISTORICAL DOCUMENTS 1. Copies of original Certificates delivered by Boeing: a. Airworthiness Certificate for Export b. Radio installation conformity certificate c. Noise limitation certificate 2. Copies of original Documents delivered by Boeing: a. Airworthiness Directive Compliance list b. Aircraft inspection report c. Aircraft Readiness Log d. Weighing report 3. Copies of current Certificates: a. Airworthiness Certificate b. Noise limitation c. Radio license d. Interior material burn certificates e. Certificate of Export f. Aircraft deregistration confirmation e. Aircraft Registration 4. Letters signed and stamped by Quality Assurance: a. Current aircraft hours and cycles b. Current engines hours and cycles c. Accident and Incident report d. Summary of Maintenance Program e. AD compliance during the lease term 5. Aircraft log books and Aircraft readiness log. 6. Aircraft Hard Time (HT) inspection status. 7. One year forecast for HT inspection. 8. Aircraft Modification status, including service bulletins. 9. Last weighing report prior to redelivery. 10. AD compliance report with original signoffs. 11. Routine and non-routine job cards of the last "C" and "D" checks. 12. Past year pilots and maintenance discrepancies. 13. Major and Minor structural repairs with applicable approvals. 14. Compass Swing report of the last three years. 15. Cabin Configuration drawing (LOPA). 16. Emergency equipment location drawing. 17. Last X-RAYs ENGINES RECORDS 1. Last test cell run reports. 2. Life Limited Parts status and traceability. 3. AD compliance report with original signoffs. 4. Engine Modification/service bulletin/inspection report and applicableforms. 5. Last heavy maintenance records for each module. 6. Engine log books. 7. Engine removal history. 8. Past year trend monitoring reports. 9. Historical borescope reports. 10. Engine component report. APU RECORDS 1. APU status (FH, FC, limits). 2. Life limited Part status and traceability. 3. AD compliance with original signoffs. 4. Modification status. 5. Last heavy maintenance documents. 6. APU log books. 7. Last test cell report. COMPONENT RECORDS 1. Aircraft component inventory. 2. Hard time component inventory. 3. All serviceable tags. 4. Landing Gear status with last overhaul and life limited Part status. 5. AD compliance with original signoffs. 6. Modification status. ATTACHMENT 2 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE LIST OF LOOSE EQUIPMENT ATTACHMENT 3 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE LIST OF DISCREPANCIES EXHIBIT F OPINION OF COUNSEL TO BE GIVEN BY INDEPENDENT OUTSIDE COUNSEL OF LESSEE OR OTHER LAWYERS ACCEPTABLE TO LESSOR To: International Lease Finance Corporation 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States Gentlemen: This opinion is furnished to you pursuant to Article 7 of the Aircraft Lease Agreement dated as of September 5, 2000 (the "LEASE") between AMERICAN TRANS AIR, INC. ("LESSEE") and INTERNATIONAL LEASE FINANCE CORPORATION ("LESSOR"). Defined terms in this opinion are used herein as defined in the Lease. I have acted as counsel for LESSEE in connection with the preparation, execution and delivery of the Lease. In that connection I have examined: (a) The Lease and Estoppel and Acceptance Certificate; (b) The charter of LESSEE and all amendments thereto (the "CHARTER"); and (c) Such other documents, agreements and instruments, and such treaties, laws, rules, regulations, decrees and the like, as I have deemed necessary as a basis for the opinions hereinafter expressed. [ (d) All of the agreements and any amendments thereto between LESSEE and all other lessors and lenders of LESSEE covering other aircraft operated by LESSEE on which the Engines can be installed.] Based upon the foregoing and having regard for legal considerations which I deem relevant, I am of the opinion that: 1. LESSEE is a corporation duly incorporated, validly existing and in good standing under the Laws of Indiana. It has the corporate power and authority to carry on its business as presently conducted and to perform its obligations under the Lease. 2. No authorization, approval, consent, license or order of, or registration with, or the giving of notice to the Aviation Authority or any other regulatory body or authority is required for the valid authorization, execution, delivery and performance by LESSEE of the Lease. 3. The Lease and the Estoppel and Acceptance Certificate have each been duly authorized, executed and delivered by LESSEE. Each such instrument is a valid, enforceable and binding obligation of LESSEE except as enforceability may be limited by bankruptcy, insolvency, reorganization or other Laws of general application affecting the enforcement of creditors' rights. 4. The execution and delivery of the Lease and the Estoppel and Acceptance Certificate, the consummation by LESSEE of the transactions contemplated therein and compliance by LESSEE with the terms and provisions thereof do not contravene any Law applicable to LESSEE, or result in any breach of or constitute any default under or result in the creation of any lien, charge or encumbrance upon any property of LESSEE, under any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which LESSEE is a party or by which LESSEE or its properties or assets is bound. 5. Except for any filing or recording that may be required with the [NAME OF AIRCRAFT REGISTER] and except for [DESCRIBE SUCH OTHER FILINGS OR RECORDINGS], no filing or recording of any instrument or document (including the filing of any financial statement) is necessary under the laws of the U.S. in order for the Lease to constitute a valid and perfected lease of record relating to the Aircraft, it being understood that such counsel expresses no opinion as to the nature of LESSOR's title to the Aircraft on the Delivery Date. 6. LESSEE holds all licenses, certificates and permits from applicable governmental authorities in the U.S. necessary for the conduct of its business as a certificated air carrier and performance of its obligations under the Lease. 7. To my knowledge, there are no suits or proceedings pending or threatened against LESSEE before any Government Entity against or affecting LESSEE which are reasonably likely to be adversely determined and, if adversely determined, would have a material adverse effect on the financial condition or business of LESSEE or its ability to perform under the Lease, except as described in the filings provided to LESSOR pursuant to Article 22. 8. The obligations of LESSEE under the Lease are direct, general and unconditional obligations of LESSEE and rank or will rank at least PARI PASSU with all other present and future unsecured and unsubordinated obligations (including contingent obligations) of LESSEE, with the exception of such obligations as are mandatorily preferred by law. 9. LESSEE, under the laws of the U.S. or of any other jurisdiction affecting LESSEE, is subject to private commercial law and suit. Neither LESSEE nor its properties or assets have the right of immunity from suit or execution on the grounds of sovereignty in such jurisdictions and the performance by LESSEE of its obligations under the Lease constitute commercial acts done for commercial purposes. 10. There is no applicable usury or interest limitation Law in Indiana which may restrict the recovery of payments in accordance with the Lease. 11. LESSOR will not violate any Law or become liable to any tax in Indiana or the U.S. by reason of entering into or performing its obligations under the Lease and it is not necessary to establish a place of business in Indiana in order to enforce any provisions of the Lease. Very truly yours, EXHIBIT G ASSIGNMENT OF RIGHTS (AIRFRAME) [DATE] Boeing Commercial Airplane Group P.O. Box 3707 Seattle, Washington 98124-2207 Attention: Vice President-Contracts Mail Code 21-34 Subject: Full Assignment of Rights and Obligations - International Lease Finance Corporation as Lessor and AMERICAN TRANS AIR, INC. as Lessee of Model Boeing 737-800 aircraft bearing manufacturer's serial number 30640 Ladies and Gentlemen: In connection with International Lease Finance Corporation's lease to AMERICAN TRANS AIR, INC. ("Lessee") of a Boeing aircraft (more fully described below), reference is made to the following documents: A. Purchase Agreement 2241, dated as of July 30, 1999, between The Boeing Company ("Boeing") and International Lease Finance Corporation ("ILFC") (the "Boeing Agreement") under which ILFC purchased a certain Boeing Model 737-800 aircraft bearing manufacturer's serial number 30640 (the "Aircraft"). B. Aircraft Lease Agreement (the "Lease") for the Aircraft dated as of September 5, 2000 between ILFC and Lessee. Capitalized terms used herein without definition will have the same meaning as in the Boeing Agreement. In connection with ILFC's lease of the Aircraft under the Lease, ILFC is transferring to Lessee certain rights of ILFC related to the Aircraft under the Boeing Agreement. To accomplish this transfer of rights, as authorized by the provisions of the Boeing Agreement: 1. Lessee acknowledges that it has received copies of the following specific provisions of the Boeing Agreement applicable to the Aircraft and agrees to be bound by and comply with all the terms, conditions, and limitations contained in such provisions, including without limitation the disclaimer and release, exclusion of liabilities, indemnity and insurance provisions thereof: Boeing Agreement Article 6 - Excusable Delay 6.1 General Article 10 - Assignment, Resale or Lease 10.1 Assignment 10.3 Sale by Buyer after Delivery 10.4 Lease by Buyer after Delivery 10.5 No Increase in Boeing Liability 10.6 Exculpatory or Indemnity Clause in Post-delivery Sale or Lease Article 12 - Product Assurance; Disclaimer and Release; Exclusion of Liabilities; Customer Support; Indemnification and Insurance (in its entirety) Article 14 - Contractual Notices and Requests Article 15 - Miscellaneous 15.4 Governing Law Exhibit B - Product Assurance Document Part A Boeing Warrant Part B Warranty Repairs and Modifications by Buyer Part C Boeing Service Life Policy Part D Boeing Indemnity Against Patent Infringement Part D-1 Boeing Indemnity Against Copyright Infringement Part E Supplier Warranties and Patent Indemnities Part G Boeing Interface Commitment Part H General Exhibit C-1 - Customer Support Document Part B Boeing Customer Support Services Part D Technical Data and Documents Part E Buyer's Indemnification of Boeing and Insurance Part F Alleviation or Cessation of Performance Exhibit E - Buyer Furnished Equipment Provisions Document Paragraph 8 Indemnification of Boeing Paragraph 9 Patent Indemnity Paragraph 10 Definitions Letter Agreement No. 1830-3 - Seller Purchased Equipment Paragraph 6 Buyer's Indemnification of Boeing 2. Lessee recognizes that Boeing's obligation to provide training, support and services to Lessee pursuant to Exhibit C of the Boeing Agreement is conditioned on the receipt by Boeing of evidence of compliance by Lessee with the insurance requirements set forth in paragraph 2 of Part E of Exhibit C or in such other form as may be satisfactory to Boeing, prior to the commencement of such training, support and services. 3. ILFC reserves to itself all rights, claims and interests it may have under the Boeing Agreement not expressly assigned to Lessee hereunder. ILFC will remain responsible to Boeing for any amounts with respect to the Aircraft owed to Boeing under the Boeing Agreement prior to the effective date of this letter, including any amounts owed by ILFC to Boeing under the specific articles and paragraphs of the Boeing Agreement referenced in paragraph 1 above based upon events or incidents relating to the Aircraft occurring prior to the effective date of this letter. 4. ILFC hereby assigns to Lessee the sole authority to exercise in Lessee's name all rights and powers of ILFC with respect to the Aircraft under the specific portions of the Boeing Agreement referenced in paragraph 1 above. Such authorization will continue until Boeing receives from ILFC written notice that the Lease has been cancelled or terminated, addressed to Boeing's Vice President, Contracts, P.O. Box 3707, MC 21-34, Seattle, Washington 98124-2207, U.S.A. Until Boeing receives such notice, Boeing will be entitled to deal exclusively with Lessee with respect to the Aircraft under the specific portions of the Boeing Agreement referenced in paragraph 1 above and, with respect to the rights, powers, duties or obligations under such portions of the Boeing Agreement, any and all actions taken by Lessee or agreements entered into by Lessee during the period prior to Boeing's receipt of such notice will be final and binding on ILFC. 5. Lessee hereby accepts the authorization set forth in paragraph 4 above and agrees to be bound by and to comply with all the terms, conditions and limitations of the portion of the Boeing Agreement referenced in paragraph 1 above. 6. This Assignment may be signed by the parties hereto in separate counterparts, each of which when executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. 7. This Assignment shall be governed by, and construed in accordance with,the laws of the State of Washington, including all matters of construction, validity and performance. We request that Boeing, upon receipt of this letter, acknowledge receipt thereof and the transfer of rights set forth above by signing the acknowledgment and forwarding one copy of this letter to each of the undersigned. IN WITNESS WHEREOF, the parties hereto have caused this Assignment Agreement to be duly executed as of the dates written below. INTERNATIONAL LEASE FINANCE AMERICAN TRANS AIR, INC., as Lessee CORPORATION, as Lessor and Buyer By: By: Its: Its: BOEING ACKNOWLEDGMENT AND CONSENT TO ASSIGNMENT Receipt of the above letter is acknowledged and transfer of certain rights as described above under the Boeing Agreement is confirmed, effective as of this date. THE BOEING COMPANY By: Its: Date: EXHIBIT H ASSIGNMENT OF RIGHTS (ENGINES) [DATE] CFM INTERNATIONAL, INC. 1 Neumann Way, F-17 Cincinnati, Ohio 45215 Attention: Commercial Contracts - Warranty Assignment Administrator Dear Warranty Assignment Administrator: Reference is hereby made to that Consent to Assignment made as of April 29, 1988 (the "CONSENT TO ASSIGNMENT"), by and between CFM INTERNATIONAL, INC. ("CFMI") and INTERNATIONAL LEASE FINANCE CORPORATION ("ILFC"). Terms defined in the Consent to Assignment are used herein with the same meaning as in the Consent to Assignment. As of ________________ ___, ______, ILFC has assigned all of its rights and interest in, to and under the Engine Warranties to AMERICAN TRANS AIR, INC. ("ASSIGNEE") in connection with its lease to Assignee of a Boeing 737-800 aircraft (the "AIRCRAFT") together with two (2) CFMI Model CFM56-7B-27 engines bearing Manufacturer's Serial Numbers _______ and ________ (the "ENGINES") as of the date each such Engine was delivered to Assignee. Such assignment shall be effective from such date until ILFC notifies CFMI that the Lease has been cancelled or terminated. The Assignee has accepted such assignment and all the limitations and liabilities pertaining to the Engine Warranties as stated in the provisions of the GTA listed in Schedule 2 to the Consent to Assignment. A copy of the aforesaid assignment is attached hereto. Very truly yours, INTERNATIONAL LEASE FINANCE CORPORATION By: Title: cc: Ruben M. Cabrera Director, Commercial Contracts ASSIGNMENT OF WARRANTIES [DATE] In consideration of AMERICAN TRANS AIR, INC. ("LESSEE") leasing from International Lease Finance Corporation ("ILFC") one (1) Boeing 737-800 aircraft together with two (2) CFMI Model CFM56-7B-27 engines bearing manufacturer's serial numbers _______ and ________, it is hereby agreed as follows: 1. ILFC hereby assigns and transfers to Lessee all of ILFC's respective rights and interest in and to and in and under the Engine Warranties set forth in and subject to the limitations and liabilities set forth in Exhibit B Warranty, Section X (the "ENGINE WARRANTIES") of CFM International, Inc. - ILFC General Terms Agreement No. 6-3987 dated 22 June 1984 (the "GTA") during the term of such leases so long as Lessee is not in default thereunder. 2. Lessee hereby accepts such assignment including all the limitations and liabilities pertaining to said Engine Warranties as stated in the provisions of Exhibit B Warranty, Section X of the GTA. 3. This Agreement shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors and assigns to the extent permitted by the GTA and hereunder. 4. This Agreement shall be governed by and construed in accordance with the laws of the State of California. 5. This Agreement may be executed in any number of counterparts, each of which when executed and delivered is an original but all of which taken together constitute one and the same instrument and any party may execute this Agreement by signing any counterpart. IN WITNESS WHEREOF, the authorized representative of the parties hereto have executed this Agreement as of the day and year first above written. For and on behalf of For and on behalf of INTERNATIONAL LEASE FINANCE AMERICAN TRANS AIR, INC. CORPORATION By: By: Its: Its: EXHIBIT I RETURN ACCEPTANCE RECEIPT Date: _________________ ___, ____ 1. AMERICAN TRANS AIR, INC., as LESSEE, and INTERNATIONAL LEASE FINANCE CORPORATION, as LESSOR, have entered into an Aircraft Lease Agreement dated as of September 5, 2000 (the "LEASE"). Words used herein with capital letters and not otherwise defined will have the meanings set forth in the Lease. 2. LESSOR has this ____ day of __________, ____ (Time: __________) at ____________________ received from LESSEE possession of: (a) One (1) Boeing 737-800 Aircraft bearing Manufacturer's serial number ____, together with two (2) CFM56-7B-27 engines bearing manufacturer's serial numbers _______ and ________, and all Parts attached thereto and thereon in an airworthy condition and (b) All Aircraft Documentation, including the usual and customary manuals, logbooks, flight records and historical information regarding the Aircraft, Engines and Parts, as listed in the Document Receipt attached hereto. 3. The Airframe, Engines and Parts had the following hours/cycles at return: (a) AIRFRAME: Total hours: _______________ Total Landings: _______________ (b) ENGINES: POSITION SERIAL NO. TOTAL HOURS TOTAL CYCLES HRS/CYCLES SINCE LAST SHOP VISIT Time Remaining to Next LIFE LIMITED PART REMOVAL PART NAME HOURS CYCLES MSN MSN (c) APU: MSN __________ Total hours: __________ ______ hours/ ______ cycles since last Overhaul ______ hours/ ______ cycles remaining on APU life-limited Parts (d) LANDING GEARS: POSITION SERIAL NO. Total Hrs/Cycles since Date of last HRS/CYCLES LAST OVERHAUL OVERHAUL Nose Right Main Left Main (e) FUEL ON BOARD AT RETURN: ______ (circle one) pounds/kilos (______ gallons) 4. Other technical information regarding the Aircraft and its components are correctly set forth on the Technical Evaluation Report (in the form of Exhibit L) attached hereto. 5. The above specified aircraft, engines and documentation are hereby accepted by LESSOR subject to correction by LESSEE (or procurement by LESSEE at LESSEE's cost) as soon as reasonably possible of the discrepancies specified in Attachment 2 hereto. 6. Subject to the following paragraph, the leasing of the Aircraft by LESSOR to LESSEE pursuant to the Lease is hereby terminated without prejudice to LESSEE's continuing obligations under the Lease including, without limitation, paragraph 6 above and Articles 10.5, 15 and 16. 7. LESSEE represents and warrants that during the term of the Lease all maintenance and repairs to the Airframe and Engines were performed in accordance with the requirements contained in the Lease. LESSEE further confirms that all of its obligations under the Lease whether accruing prior to the date hereof or which survive the termination of the Lease by their terms and accrue after the date hereof, will remain in full force and effect until all such obligations have been satisfactorily completed. 8. This Return Acceptance Supplement is executed and delivered by the parties in [place]. IN WITNESS WHEREOF, the parties hereto have caused this Return Acceptance Receipt to be executed in their respective corporate names by their duly authorized representatives as of the day and year first above written. INTERNATIONAL LEASE FINANCE CORPORATION AMERICAN TRANS AIR, INC. By: By: Its: Its: ATTACHMENTS: 1. List of Aircraft Documentation 2. List of Loose Equipment 3. List of Discrepancies 4. Engine Maximum Power Assurance Test Conditions and Results 5. Dent and Damage Chart 6. Form of No Accident/Incident Letter 7. Technical Evaluation Report (in the form of Exhibit L) ATTACHMENT 1 TO RETURN ACCEPTANCE RECEIPT LIST OF AIRCRAFT DOCUMENTATION [The (a) manuals and (b) Aircraft records and historical documents set forth below are to be returned with the Aircraft in a current, up-to-date and correct status] MANUALS 1. FAA Approved Flight Manual 2. Airplane Flight Operation Manual 3. Aircraft Recover Manual 4. Quick Reference Handbook (QRH) 5. Weight and Balance Manual 6. Aircraft Fueling Manual 7. Aircraft Maintenance Manual (MM) 8. Aircraft Maintenance Manual Supplement 9. Ramp Maintenance Manual (RMM) 10. Cargo Loading Manual 11. Fault Reporting Manual (FRM) 12. Fault Isolation Manual (FIM) 13. Illustrated Parts Catalog (IPC) 14. Life Limited Parts Manual 15. Structural Repair Manual (SRM) 16. Master Minimum Equipment List 17. Wiring Diagram Manual (WD) 18. Wiring Practices Manual 19. System Schematics Manual 20. B.I.T.E. Manual 21. Non-Destructive Test Manual 22. Corrosion Prevention Manual 23. Component Maintenance Manual 24. APU Log Book 25. Engine Maintenance Manual 26. Engine Log Book 27. Engine Illustrated Parts Catalog 28. Engine Data Submittal Book 29. Engine Overhaul Manual 30. Power Plant Build-up Manual AIRCRAFT RECORDS AND HISTORICAL DOCUMENTS 1. Copies of original Certificates delivered by Boeing: a. Airworthiness Certificate for Export b. Radio installation conformity certificate c. Noise limitation certificate 2. Copies of original Documents delivered by Boeing: a. Airworthiness Directive Compliance list b. Aircraft inspection report c. Aircraft Readiness Log d. Weighing report 3. Copies of current Certificates: a. Airworthiness Certificate b. Noise limitation c. Radio license d. Interior material burn certificates e. Certificate of Export f. Aircraft deregistration confirmation e. Aircraft Registration 4. Letters signed and stamped by Quality Assurance: a. Current aircraft hours and cycles b. Current engines hours and cycles c. Accident and Incident report d. Summary of Maintenance Program e. AD compliance during the lease term 5. Aircraft log books and Aircraft readiness log. 6. Aircraft Hard Time (HT) inspection status. 7. One year forecast for HT inspection. 8. Aircraft Modification status, including service bulletins. 9. Last weighing report prior to redelivery. 10. AD compliance report with original signoffs. 11. Routine and non-routine job cards of the last "C" and "D" checks. 12. Past year pilots and maintenance discrepancies. 13. Major and Minor structural repairs with applicable approvals. 14. Compass Swing report of the last three years. 15. Cabin Configuration drawing (LOPA). 16. Emergency equipment location drawing. 17. Last X-RAYs ENGINES RECORDS 1. Last test cell run reports. 2. Life Limited Parts status and traceability. 3. AD compliance report with original signoffs. 4. Engine Modification/service bulletin/inspection report and applicable forms. 5. Last heavy maintenance records for each module. 6. Engine log books. 7. Engine removal history. 8. Past year trend monitoring reports. 9. Historical borescope reports. 10. Engine component report. APU RECORDS 1. APU status (FH, FC, limits). 2. Life limited Part status and traceability. 3. AD compliance with original signoffs. 4. Modification status. 5. Last heavy maintenance documents. 6. APU log books. 7. Last test cell report. COMPONENT RECORDS 1. Aircraft component inventory. 2. Hard time component inventory. 3. All serviceable tags. 4. Landing Gear status with last overhaul and life limited Part status. 5. AD compliance with original signoffs. 6. Modification status. ATTACHMENT 2 TO RETURN ACCEPTANCE RECEIPT LIST OF LOOSE EQUIPMENT ATTACHMENT 3 TO RETURN ACCEPTANCE RECEIPT LIST OF DISCREPANCIES ATTACHMENT 4 TO RETURN ACCEPTANCE RECEIPT ENGINE MAXIMUM POWER ASSURANCE TEST CONDITIONS AND RESULTS ATTACHMENT 5 TO RETURN ACCEPTANCE RECEIPT DENT AND DAMAGE CHART ATTACHMENT 6 TO RETURN ACCEPTANCE RECEIPT FORM OF NO ACCIDENT/INCIDENT LETTER EXHIBIT J MONTHLY REPORT (SEE FOLLOWING SHEET) MONTHLY AIRCRAFT UTILIZATION AND STATUS REPORT Page 1 of 2 Report Due Date: To: INTERNATIONAL LEASE FINANCE CORPORATION Fax: (310) 788-1990 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067, United States Attn: Finance Department From: AMERICAN TRANS AIR, INC. Contact: Fax: AIRCRAFT TYPE: BOEING 737-800 ENGINE TYPE: CFM56-7B-27 REGISTRATION: ____ SERIAL NUMBER: ____ MONTH OF: NOTE: PLEASE RECORD TIME IN HOURS AND MINUTES NOT DECIMALS. Aircraft Total Time Since New As Of Last Month: Hours: Min: Aircraft Total Time Since New: Hours: Min: Aircraft Total Cycles Since New: Cycles: Airframe Hours Flown During Month: Hours: Min: Airframe Cycles/Landings During Month: Cycles: Time Remaining to "D" or Heavy Maintenance Check: HOURS OR US$ PER CYCLES FLOWN HOUR OR DURING MONTH (AS CYCLE (AS APPLICABLE) X APPLICABLE) = RESERVES TOTAL AIRFRAME: HRS: X = TOTAL LANDING GEAR: HRS: X = TOTAL APU: HRS: X = ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles(for Engine LLP Reserves): x = ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles (for Engine LLP Reserves): x = ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles (for LLP x = Reserves): ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles (for Engine LLP Reserves): x = TOTAL AMOUNT OF RESERVES (US$) PAID THIS MONTH: US$ Monthly Aircraft Utilization and Status Report From: AMERICAN TRANS AIR, INC. PAGE 2 OF 2 ENGINE SERIAL NUMBER: ENGINE SERIAL NUMBER: ORIGINAL POSITION: ORIGINAL POSITION: ACTUAL LOCATION: ACTUAL LOCATION: CURRENT THRUST RATING: CURRENT THRUST RATING: HOURS:/MIN: HOURS:/MIN: Total Time Since New As Of Total Time Since New As Of Last Month: Last Month: Total Time Since New: Total Time Since New: Total Cycles Since New: Total Cycles Since New: Hours Flown During Month: Hours Flown During Month: Cycles During Month: Cycles During Month: IMPORTANT: IF ILFC-OWNED ENGINE IS REMOVED OR INSTALLED ON ANOTHER AIRCRAFT, IT MUST BE REPORTED MONTHLY ON THIS FORM. EXHIBIT K AIRCRAFT DOCUMENTATION AIRCRAFT RECORDS 1. Copies of original Certificates delivered by Boeing: a. Airworthiness Certificate for Export b. Radio installation conformity certificate c. Noise limitation certificate 2. Copies of original Documents delivered by Boeing: a. Airworthiness Directive Compliance list b. Aircraft inspection report c. Aircraft Readiness Log d. Weighing report 3. Copies of current Certificates: a. Airworthiness Certificate b. Noise limitation c. Radio license d. Interior material burn certificates e. Certificate of Export f. Aircraft deregistration confirmation e. Aircraft Registration 4. Letters signed and stamped by Quality Assurance: a. Current aircraft hours and cycles b. Current engines hours and cycles c. Accident and Incident report d. Summary of Maintenance Program e. AD compliance during the lease term 5. Aircraft log books and Aircraft readiness log. 6. Aircraft Hard Time (HT) inspection status. 7. One year forecast for HT inspection. 8. Aircraft Modification status, including service bulletins. 9. Last weighing report prior to redelivery. 10. AD compliance report with original signoffs. 11. Routine and non-routine job cards of the last "C" and "D" checks. 12. Past year pilots and maintenance discrepancies. 13. Major and Minor structural repairs with applicable approvals. 14. Compass Swing report of the last three years. 15. Cabin Configuration drawing (LOPA). 16. Emergency equipment location drawing. 17. Last X-RAYs ENGINES RECORDS 1. Last test cell run reports. 2. Life Limited Parts status and traceability. 3. AD compliance report with original signoffs. 4. Engine Modification/service bulletin/inspection report and applicable forms. 5. Last heavy maintenance records for each module. 6. Engine log books. 7. Engine removal history. 8. Past year trend monitoring reports. 9. Historical borescope reports. 10. Engine component report. APU RECORDS 1. APU status (FH, FC, limits). 2. Life limited Part status and traceability. 3. AD compliance with original signoffs. 4. Modification status. 5. Last heavy maintenance documents. 6. APU log books. 7. Last test cell report. COMPONENT RECORDS 1. Aircraft component inventory. 2. Hard time component inventory. 3. All serviceable tags. 4. Landing Gear status with last overhaul and life limited Part status. 5. AD compliance with original signoffs. 6. Modification status. EXHIBIT L TECHNICAL EVALUATION REPORT (SEE FOLLOWING SHEETS) EX-10.6(F) 21 file067.txt AMTRAN, INC., 2000 10-K, EXHIBIT 10.6(F) AIRCRAFT LEASE AGREEMENT Dated as of September 5, 2000 BETWEEN AMERICAN TRANS AIR, INC. as LESSEE and INTERNATIONAL LEASE FINANCE CORPORATION as LESSOR ------------------------------------------------------------------------------- Aircraft Make and Model: New Boeing 737-800 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Aircraft Manufacturer's Serial Number: 28245 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Aircraft Registration Mark: Per Estoppel and Acceptance Certificate ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Make and Model of Engines: CFM56-7B-27 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Serial Numbers of Engines: Per Estoppel and Acceptance Certificate ------------------------------------------------------------------------------- NEW BOEING 737-800 AIRCRAFT NO. 7 TABLE OF CONTENTS ARTICLE 1 SUMMARY OF TRANSACTION.........................................2 1.1 Description of Aircraft........................................2 1.2 Scheduled Delivery Date and Location...........................2 1.3 Lease Term.....................................................2 1.4 Security Deposit...............................................2 1.5 Transaction Fee................................................2 1.6 Rent During Lease Term.........................................2 1.7 Country of Aircraft Registration...............................4 1.8 Maintenance Program............................................4 1.9 Agreed Value of Aircraft.......................................4 1.10 LESSOR's Bank Account..........................................4 ARTICLE 2 DEFINITIONS....................................................5 2.1 General Definitions............................................5 2.2 Specific Definitions...........................................9 ARTICLE 3 PLACE AND DATE OF DELIVERY....................................11 3.1 Place of Delivery.............................................11 3.2 Scheduled Delivery Date.......................................11 3.3 Delivery subject to Manufacturer Delivery.....................11 3.4 No LESSOR Liability...........................................11 3.5 Total Loss of Aircraft prior to Delivery......................11 3.6 Cancellation for Delay........................................11 ARTICLE 4 LEASE TERM....................................................12 4.1 Lease Term....................................................12 4.2 "Expiration Date".............................................12 4.3 "Termination Date"............................................12 ARTICLE 5 SECURITY DEPOSIT, TRANSACTION FEE, RENT AND OTHER PAYMENTS......................................................13 5.1 Security Deposit..............................................13 5.2 Transaction Fee...............................................14 5.3 Rent..........................................................14 5.4 LESSOR's Bank Account.........................................15 5.5 Default Interest..............................................16 5.6 No Deductions or Withholdings.................................16 5.7 Value Added Taxes.............................................16 5.8 Net Lease.....................................................17 5.9 LESSOR Performance of LESSEE Obligation.......................18 5.10 Consideration for Rent and other Amounts......................18 ARTICLE 6 INVOLVEMENT WITH AIRCRAFT MANUFACTURER........................19 6.1 LESSEE Selection of Aircraft..................................19 6.2 Agency Agreement..............................................19 6.3 Procurement of BFE............................................19 6.4 Assignment of Training........................................19 6.5 LESSEE Inspection of Aircraft.................................19 6.6 Aircraft at Delivery..........................................19 6.7 Delivery of the Aircraft to LESSEE............................20 6.8 LESSEE Acceptance of Aircraft.................................20 ARTICLE 7 PRE-DELIVERY, DELIVERY AND POST-DELIVERY DOCUMENTARY AND OTHER REQUIREMENTS............................21 7.1 Pre-Delivery Requirements.....................................21 7.2 Delivery Requirements.........................................22 7.3 Post-Delivery Requirements....................................23 ARTICLE 8 DISCLAIMERS...................................................24 8.1 "As Is, Where Is".............................................24 8.2 Waiver of Warranty of Description.............................24 8.3 LESSEE Waiver.................................................25 8.4 Conclusive Proof..............................................25 8.5 No LESSOR Liability for Losses................................25 8.6 No Liability to Repair or Replace.............................25 8.7 No Waiver.....................................................26 ARTICLE 9 MANUFACTURERS' AND VENDORS' WARRANTIES........................27 9.1 Warranties....................................................27 9.2 Reassignment..................................................27 ARTICLE 10 OPERATION OF AIRCRAFT.........................................28 10.1 Costs of Operation............................................28 10.2 Compliance with Laws..........................................28 10.3 Training......................................................28 10.4 No Violation of Insurance Policies............................28 10.5 Flight Charges................................................29 ARTICLE 11 SUBLEASES.....................................................30 11.1 No Sublease without LESSOR Consent............................30 11.2 LESSOR Costs..................................................30 11.3 Any Approved Sublease.........................................30 11.4 Assignment of Sublease........................................30 11.5 Continued Responsibility of LESSEE............................30 ARTICLE 12 MAINTENANCE AND USE OF AIRCRAFT...............................31 12.1 General Obligation............................................31 12.2 Specific Obligations..........................................31 12.3 Replacement of Parts..........................................32 12.4 Removal of Engines............................................33 12.5 Pooling of Engines and Parts..................................34 12.6 Installation of Engines on other aircraft.....................34 12.7 Modifications.................................................35 12.8 Performance of Work by Third Parties..........................36 12.9 Reporting Requirements........................................36 12.10 Information Regarding Maintenance Program.....................36 12.11 LESSOR Rights to Inspect Aircraft.............................36 ARTICLE 13 TITLE AND REGISTRATION........................................37 13.1 Title to the Aircraft During Lease Term.......................37 13.2 Registration of Aircraft......................................37 13.3 Filing of this Lease..........................................37 13.4 Evidence of Registration and Filings..........................37 ARTICLE 14 IDENTIFICATION PLATES.........................................38 14.1 Airframe Identification Plates................................38 14.2 Engine Identification Plates..................................38 ARTICLE 15 TAXES.........................................................39 15.1 General Obligation of LESSEE..................................39 15.2 Exceptions to Indemnity.......................................39 15.3 After-Tax Basis...............................................40 15.4 Claims and Contests...........................................40 15.5 Refunds.......................................................41 15.6 Cooperation in Filing Tax Returns.............................41 ARTICLE 16 INDEMNITIES...................................................42 16.1 General Indemnity.............................................42 16.2 Exceptions to General Indemnities.............................43 16.3 After-Tax Basis...............................................44 16.4 Timing of Payment.............................................44 16.5 Subrogation...................................................44 16.6 Notice........................................................44 16.7 Refunds.......................................................44 16.8 Defense of Claims.............................................45 16.9 Survival of Obligation........................................45 ARTICLE 17 INSURANCE.....................................................46 17.1 Categories of Insurance.......................................46 17.2 Insurance for Indemnities.....................................46 17.3 Insurance required by Manufacturer............................46 17.4 Renewal.......................................................46 17.5 Assignment of Rights by LESSOR................................46 17.6 Deductibles...................................................46 17.7 Other Insurance...............................................47 17.8 Information...................................................47 17.9 Currency......................................................47 17.10 Grounding of Aircraft.........................................47 17.11 Failure to Insure.............................................47 17.12 Limit on Hull in favor of LESSEE..............................47 17.13 Marketplace Limitations.......................................48 ARTICLE 18 LOSS, DAMAGE AND REQUISITION..................................49 18.1 Definitions...................................................49 18.2 Notice of Total Loss..........................................50 18.3 Total Loss of Aircraft or Airframe............................50 18.4 Surviving Engine(s)...........................................51 18.5 Total Loss of Engine and not Airframe.........................51 18.6 Other Loss or Damage..........................................52 18.7 Copy of Insurance Policy......................................53 18.8 Government Requisition........................................53 18.9 Conveyance to LESSEE..........................................53 ARTICLE 19 CRAF PROGRAM..................................................54 19.1 Dedication to CRAF............................................54 19.2 Notice to LESSOR..............................................54 19.3 Requisition of Engine.........................................54 19.4 Government Indemnification....................................54 19.5 No Geographic Limits..........................................54 19.6 Notice of Default.............................................55 19.7 Receipt of Payments...........................................55 ARTICLE 20 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE...........56 20.1 Representations and Warranties................................56 20.2 Covenants.....................................................58 ARTICLE 21 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSOR...........61 21.1 Representations and Warranties................................61 21.2 Covenant of Quiet Enjoyment...................................62 ARTICLE 22 FINANCIAL AND RELATED INFORMATION.............................63 ARTICLE 23 RETURN OF AIRCRAFT............................................64 23.1 Date of Return................................................64 23.2 Technical Report..............................................64 23.3 Return Location...............................................64 23.4 Full Aircraft Documentation Review............................64 23.5 Aircraft Inspection...........................................64 23.6 Certificate of Airworthiness Matters..........................65 23.7 General Condition of Aircraft at Return.......................66 23.8 Checks Prior to Return........................................69 23.9 Part Lives....................................................72 23.10 Export and Deregistration of Aircraft.........................74 23.11 LESSEE's Continuing Obligations...............................75 23.12 Airport and Navigation Charges................................75 23.13 Return Acceptance Certificate.................................76 23.14 Indemnities and Insurance.....................................76 ARTICLE 24 ASSIGNMENT....................................................77 24.1 No Assignment by LESSEE.......................................77 24.2 Sale or Assignment by LESSOR..................................77 24.3 LESSOR's Lender...............................................79 24.4 LESSEE Cooperation............................................79 24.5 Protections...................................................79 ARTICLE 25 DEFAULT OF LESSEE.............................................80 25.1 LESSEE Notice to LESSOR.......................................80 25.2 Events of Default.............................................80 25.3 LESSOR's General Rights.......................................82 25.4 Deregistration and Export of Aircraft.........................83 25.5 LESSEE Liability for Damages..................................83 25.6 Waiver of Default.............................................84 25.7 Present Value of Payments.....................................84 25.8 Use of "Termination Date".....................................84 ARTICLE 26 NOTICES.......................................................85 26.1 Manner of Sending Notices.....................................85 26.2 Notice Information............................................85 ARTICLE 27 GOVERNING LAW AND JURISDICTION................................86 27.1 California Law................................................86 27.2 Non-Exclusive Jurisdiction in California......................86 27.3 Service of Process............................................86 27.4 Prevailing Party in Dispute...................................86 27.5 Waiver........................................................86 ARTICLE 28 MISCELLANEOUS.................................................87 28.1 Press Releases................................................87 28.2 LESSOR Performance for LESSEE.................................87 28.3 LESSOR's Payment Obligations..................................87 28.4 Application of Payments.......................................87 28.5 Usury Laws....................................................87 28.6 Delegation by LESSOR..........................................87 28.7 Confidentiality...............................................88 28.8 Rights of Parties.............................................88 28.9 Further Assurances............................................88 28.10 Use of Word "including".......................................88 28.11 Headings......................................................88 28.12 Invalidity of any Provision...................................88 28.13 Negotiation...................................................88 28.14 Time is of the Essence........................................89 28.15 Amendments in Writing.........................................89 28.16 Counterparts..................................................89 28.17 Delivery of Documents by Fax..................................89 28.18 Entire Agreement..............................................89 EXHIBIT A AIRCRAFT DESCRIPTION..........................................91 EXHIBIT B AGENCY AGREEMENT..............................................92 EXHIBIT C CERTIFICATE OF INSURANCE......................................96 EXHIBIT D BROKERS' LETTER OF UNDERTAKING...............................102 EXHIBIT E ESTOPPEL AND ACCEPTANCE CERTIFICATE..........................104 EXHIBIT F OPINION OF COUNSEL...........................................111 EXHIBIT G ASSIGNMENT OF RIGHTS (AIRFRAME)..............................114 EXHIBIT H ASSIGNMENT OF RIGHTS (ENGINES)...............................119 EXHIBIT I RETURN ACCEPTANCE RECEIPT....................................123 EXHIBIT J MONTHLY REPORT...............................................134 EXHIBIT K AIRCRAFT DOCUMENTATION.......................................138 EXHIBIT L TECHNICAL EVALUATION REPORT..................................140 AIRCRAFT LEASE AGREEMENT THIS AIRCRAFT LEASE AGREEMENT is made and entered into as of September 5, 2000. BETWEEN: AMERICAN TRANS AIR, INC., a Indiana corporation whose address and principal place of business is at 7337 West Washington Street, Indianapolis International Airport, Indianapolis, Indiana 46231, United States of America ("LESSEE") and INTERNATIONAL LEASE FINANCE CORPORATION, a California corporation whose address and principal place of business is at 1999 Avenue of the Stars, 39th Floor, Los Angeles, California 90067, United States of America ("LESSOR"). The subject matter of this Lease is one (1) new Boeing 737-800 aircraft. In consideration of and subject to the mutual covenants, terms and conditions contained in this Lease, LESSOR hereby agrees to lease to LESSEE and LESSEE hereby agrees to lease from LESSOR the aircraft and the parties further agree as follows: ARTICLE 1 SUMMARY OF TRANSACTION The information in this Article 1 is a summary of the lease transaction between LESSEE and LESSOR. It is set forth for the convenience of the parties only and will not be deemed in any way to amend, detract from or simplify the other provisions of this Lease. 1.1 DESCRIPTION OF AIRCRAFT One new Boeing 737-800 aircraft 1.2 SCHEDULED DELIVERY DATE AND LOCATION In the month of (CONFIDENTIAL MATERIAL OMITTED) at Seattle, Washington 1.3 LEASE TERM 15 years 1.4 SECURITY DEPOSIT (CONFIDENTIAL MATERIAL OMITTED) 1.5 TRANSACTION FEE (CONFIDENTIAL MATERIAL OMITTED) 1.6 RENT DURING LEASE TERM Payable monthly in advance and equal to the sum of: (a The following amounts for the following years of the Lease Term: LEASE PERIOD MONTHLY RENTAL AMOUNT* (CONFIDENTIAL MATERIAL OMITTED) *The above base rent is expressed in January 1999 U.S.Dollars and will increase in the following amounts for the following periods: PERIOD ESCALATION FACTOR (CONFIDENTIAL MATERIAL OMITTED) 1.7 COUNTRY OF AIRCRAFT REGISTRATION U.S. 1.8 MAINTENANCE PROGRAM LESSEE's Maintenance Program 1.9 AGREED VALUE OF AIRCRAFT (CONFIDENTIAL MATERIAL OMITTED) The Agreed Value is expressed in March 2001 U.S. Dollars and will increase in accordance with Manufacturer's announced escalation rate from March 1, 2001 to the Delivery Date. On each annual renewal date of LESSEE's insurance policy commencing on the renewal date following the first anniversary of the Lease Term, the Agreed Value will decrease by two percent (2.0%) of the then existing Agreed Value. 1.10 LESSOR'S BANK ACCOUNT (Confidential Material Omitted) ARTICLE 2 DEFINITIONS Except where the context otherwise requires, the following words have the following meanings for all purposes of this Lease. The definitions are equally applicable to the singular and plural forms of the words. Any agreement defined below includes each amendment, modification, supplement and waiver thereto in effect from time to time. 2.1 GENERAL DEFINITIONS. "ACT" means the Federal Aviation Act of 1958, as amended from time to time, or any successor act thereto. "AIRCRAFT" means the Airframe, two (2) Engines, Parts and Aircraft Documentation, collectively. As the context requires, "Aircraft" may also mean the Airframe, any Engine, any Part, the Aircraft Documentation or any part thereof individually. For example, in the context of return to LESSOR the term "Aircraft" means the Airframe, Engines, Parts and Aircraft Documentation collectively, yet in the context of LESSEE not creating any Security Interests other than Permitted Liens on the Aircraft, the term "Aircraft" means any of the Airframe, any Engine, any Part or the Aircraft Documentation individually. "AIRCRAFT DOCUMENTATION" means all (a) log books, Aircraft records, manuals and other documents provided to LESSEE in connection with the Aircraft, (b) documents listed in Exhibits E and K and (c) any other documents required to be maintained during the Lease Term by the Aviation Authority, LESSEE's Maintenance Program and this Lease. "AIRFRAME" means the airframe listed in the Estoppel and Acceptance Certificate executed at Delivery together with all Parts relating thereto (except Engines or engines). "AIRWORTHINESS DIRECTIVES" or "ADS" means all airworthiness directives (or equivalent) of the FAA and the Aviation Authority applicable to the Aircraft. "APU" means the auxiliary power unit of the Aircraft. "AVIATION AUTHORITY" means the FAA or any Government Entity which under the Laws of the U.S. from time to time has control over civil aviation or the registration, airworthiness or operation of aircraft in the U.S. If the Aircraft is registered in a country other than the U.S., "Aviation Authority" means the agency which regulates civil aviation in such other country. "AVIATION DOCUMENTS" means any or all of the following which at any time may be obtainable from the Aviation Authority: (a) if required, a temporary certificate of airworthiness from the Aviation Authority allowing the Aircraft to be flown after Delivery to the State of Registration, (b) an application for registration of the Aircraft with the appropriate authority in the State of Registration, (c) the certificate of registration for the Aircraft issued by the State of Registration, (d) a full certificate of airworthiness for the Aircraft specifying transport category (passenger), (e) an air transport license, (f) an air operator's certificate, (g) such recordation of LESSOR's title to the Aircraft and interest in this Lease as may be available in the State of Registration and (h) all such other authorizations, approvals, consents and certificates in the State of Registration as may be required to enable LESSEE lawfully to operate the Aircraft. "BANKRUPTCY CODE" means The Bankruptcy Reform Act of 1978 (11 U.S.C. ss.ss. 101-1330), as amended or supplemented from time to time, and any successor statute, and all of the rules and regulations issued or promulgated in connection therewith. "BASIC ENGINE" means those units and components of the Engine which are used to induce and convert fuel/air mixture into thrust/power; to transmit power to the fan and accessory drives; to supplement the function of other defined systems external to the Engine; and to control and direct the flow of internal lubrication, plus all essential accessories as supplied by the Engine manufacturer. The nacelle, installed components related to the Aircraft systems, thrust reversers, QEC and the primary flight nozzle are excluded. "BFE" means any equipment which is to be provided by the purchaser of the Aircraft (whether actually provided by LESSOR as buyer-furnished equipment or Manufacturer as seller-purchased equipment). "BUSINESS DAY" means a day other than a Saturday or Sunday on which the banks in Indianapolis, Indiana and in the city where LESSOR's Bank is located are open for the transaction of business of the type required by this Lease. "CREDITOR" means any lessor, owner, bank, lender, mortgagee or other Person which is the owner of or has any interest in an aircraft engine or aircraft operated by LESSEE. "CREDITOR AGREEMENT" means the applicable agreement between a Creditor and LESSEE or between Creditors pursuant to which such Creditor owns, leases or has an interest in either an aircraft operated by LESSEE on which an Engine may be installed or in an aircraft engine which may be installed on the Airframe. "DEFAULT" means any event which, upon the giving of notice, the lapse of time and/or a relevant determination, would constitute an Event of Default. "DELIVERY" means the delivery of the Aircraft from LESSOR to LESSEE pursuant to Articles 3 and 6. "DELIVERY DATE" means the date on which Delivery takes place. "DOLLARS" and "$" means the lawful currency of the U.S. "ENGINE" means (a) each of the engines listed on the Estoppel and Acceptance Certificate; or (b) any replacement engine acquired by LESSOR and leased to LESSEE pursuant to Article 18.5 following a Total Loss of an Engine; including in each case all Parts installed in or on any of such engines at Delivery (or substituted, renewed or replacement Parts in accordance with this Lease) so long as title thereto is or remains vested in LESSOR in accordance with the terms of Article 12.3. "EVENT OF DEFAULT" means any of the events referred to in Article 25.2. "FAA" means the Federal Aviation Administration of the Department of Transportation or any successor thereto under the Laws of the U.S. "FARS" means the U.S. Federal Aviation Regulations embodied in Title 14 of the U.S. Code of Federal Regulations, as amended from time to time, or any successor regulations thereto. "GENEVA CONVENTION" means the Convention on the International Recognition of Rights in Aircraft signed in Geneva, Switzerland on June 19, 1948. "GOVERNMENT ENTITY" means any (a) national, state or local government, (b) board, commission, department, division, instrumentality, court, agency or political subdivision thereof and (c) association, organization or institution of which any of the entities listed in (a) or (b) is a member or to whose jurisdiction any such entity is subject. "LANDING GEAR" means the installed main and nose landing gear, components and their associated actuators, side braces and parts. "LAW" means any (a) statute, decree, constitution, regulation, order or any directive of any Government Entity, (b) treaty, pact, compact or other agreement to which any Government Entity is a signatory or party and (c) judicial or administrative interpretation or application of any of the foregoing. "LEASE" means this Aircraft Lease Agreement, together with all Exhibits hereto. "LESSOR'S LIEN" means any Security Interest created by LESSOR, or arising from a claim against LESSOR completely unrelated to this Lease or the other Operative Documents. "MAINTENANCE PROGRAM" means LESSEE's maintenance program as approved by the Aviation Authority or such other maintenance program as LESSOR may, in its discretion, accept in writing. "MANUFACTURER" means The Boeing Company, a Delaware corporation. "MPD" means the Maintenance Planning Document published by Manufacturer and applicable to the Aircraft. "OVERHAUL" means the full reconditioning of the Aircraft, an Engine, APU, Landing Gear, module or Part, as the case may be, in which such equipment has been fully disassembled; cleaned; thoroughly inspected; and returned to the highest standard specified by the applicable manufacturer's manual. "PART" means the APU, any part, component, appliance, system module, engine module, accessory, material, instrument, communications equipment, furnishing, LESSEE-furnished or LESSOR-purchased equipment or other item of equipment (other than complete Engines or engines) for the time being installed in or attached to the Airframe or any Engine or which, having been removed from the Airframe or any Engine, remains the property of LESSOR. "PERMITTED INSTITUTION" means any Person (other than a commercial air carrier, a commercial aircraft operator, a freight forwarder, or an affiliate of any of the foregoing), with either: (a) a combined capital and surplus or net worth of at least; or (b) have a credit rating on the majority of its unsecured debt which is at least equal to BBB or its equivalent from Standard and Poor's Rating Group, a division of The McGraw-Hill Companies, Inc. or Moody's Investors Service, Inc. "PERMITTED LIEN" means (a) LESSOR's Liens; (b) Security Interests arising in the ordinary course of LESSEE's business for Taxes either not yet due and payable or, if due and payable, being contested in good faith in accordance with Article 15.4; (c) materialmen's, mechanics', workmen's, repairmen's, employees' liens or similar Security Interests arising by operation of Law after the Delivery Date in the ordinary course of LESSEE's business for amounts which are either not yet due or are being contested in good faith by appropriate proceedings (and for which adequate reserves have been made or, when required in order to pursue such proceedings, an adequate bond has been provided) so long as such proceedings do not involve any material danger of sale, forfeiture or loss of the Aircraft; (d) the rights of LESSOR and any LESSOR's Lender and the rights of LESSEE under this Lease and the other Operative Documents; (e) the rights of others under agreements or arrangements to the extent permitted by Articles 10 and 11.5; and (f) any Security Interest against which LESSEE causes to be provided a bond in such amount and under such terms and conditions as are reasonably satisfactory to LESSOR. "PERSON" means any individual, firm, partnership, joint venture, trust, corporation, limited liability company, Government Entity, committee, department, authority or any body, incorporated or unincorporated, whether having distinct legal personality or not. "PRIME RATE" means the rate of interest from time to time announced by Bank of America Illinois in Chicago, Illinois as its prime commercial lending rate. "SECURITY INTEREST" means any encumbrance or security interest, however and wherever created or arising including (without prejudice to the generality of the foregoing) any right of ownership, security, mortgage, pledge, charge, encumbrance, lease, lien, statutory or other right in rem, hypothecation, title retention, attachment, levy, claim or right of possession or detention. "STATE OF REGISTRATION" means the U.S. or such other country or state of registration of the Aircraft as LESSOR may, in its absolute discretion, approve in writing. "U.S." means the United States of America. "U.S. AIR CARRIER" means any U.S. air carrier who is a Citizen of the U.S. holding an air carrier operating certificate issued by the Secretary of Transportation pursuant to chapter 447 of the Act for aircraft capable of carrying 10 or more individuals or 6000 pounds or more of cargo, and as to whom there is in force an air carrier operating certificate issued pursuant to FAR Part 121, or who may operate as an air carrier by certification or otherwise under any successor or substitute provisions therefor or in the absence thereof. 2.2 SPECIFIC DEFINITIONS. The following terms are defined in the Articles referenced below: TERMS ARTICLE Agreed Value 18.1 CRAF Program 19.1 CRAF Program Requisition 19.1 Period Default Interest 5.5 Delivery Location 3.1 Expenses 16.1 Expiration Date 4.3 Indemnities 16.1 Lease Term 4.1 LESSEE Customization 5.3.1 Costs LESSOR's Assignee 24.2.1 LESSOR's Bank 5.4 LESSOR's Lender 24.3 Manufacturer's Escalation 5.3.1 Rate Modifications 12.7.2 Net Total Loss Proceeds 18.1 Operative Documents 20.1.3 Rent 5.3.1 Return Check 23.8.1 Scheduled Delivery Date 3.2 Security Deposit 5.1.1 Taxes 15.1 Termination Date 4.3 Total Loss 18.1 Total Loss Date 18.1 Total Loss Proceeds 18.1 Transaction Fee 5.2 ARTICLE 3 PLACE AND DATE OF DELIVERY 3.1 PLACE OF DELIVERY. LESSOR will deliver the Aircraft to LESSEE at Manufacturer's facility at Seattle, Washington or such other place as may be agreed in writing between the parties (the "DELIVERY LOCATION"). 3.2 SCHEDULED DELIVERY DATE. As of the date of this Lease, delivery of the Aircraft from Manufacturer to LESSOR is scheduled to occur in the month of (CONFIDENTIAL MATERIAL OMITTED). LESSOR will not agree to reschedule such delivery without LESSEE's prior written consent. LESSOR will notify LESSEE from time to time and in a timely manner of the exact date on which LESSOR expects such delivery to take place (the "SCHEDULED DELIVERY DATE"). 3.3 DELIVERY SUBJECT TO MANUFACTURER DELIVERY. LESSOR and LESSEE expressly acknowledge that Delivery of the Aircraft to LESSEE is subject to and conditioned upon, and is to occur simultaneously with, delivery of the Aircraft by Manufacturer to LESSOR. 3.4 NO LESSOR LIABILITY. LESSOR will not be liable for any loss or expense, or any loss of profit, arising from any delay or failure in Delivery to LESSEE unless such delay or failure arises as a consequence of the willful misconduct of LESSOR, and in no event will LESSOR be liable for any delay or failure which is caused by any breach or delay on the part of Manufacturer or any BFE supplier. 3.5 TOTAL LOSS OF AIRCRAFT PRIOR TO DELIVERY. If a Total Loss of the Aircraft occurs prior to Delivery, neither party will have any further liability to the other except that LESSOR will return to LESSEE the Security Deposit in accordance with Article 5.1.3 and any prepaid Rent. 3.6 CANCELLATION FOR DELAY. Promptly after LESSOR becomes aware that in Manufacturer's opinion a delay will cause Delivery to be delayed beyond (CONFIDENTIAL MATERIAL OMITTED) LESSOR will notify LESSEE. By written notice given within ten (10) Business Days after LESSEE's receipt of such LESSOR notice, either party may by written notice to the other party terminate this Lease and this Lease will terminate on the date of receipt of such notice. In the event of such termination, neither party will have any further liability to the other party except that LESSOR will return to LESSEE the Security Deposit in accordance with Article 5.1.3 and any prepaid Rent. If neither party gives notice of termination within such ten (10) Business Days, both parties lose all right to terminate under this Article 3.6 unless otherwise agreed in writing by the parties. ARTICLE 4 LEASE TERM 4.1 LEASE TERM. The term of leasing of the Aircraft will commence on the Delivery Date and continue for a term of fifteen (15) years ("LEASE TERM"). 4.2 "EXPIRATION DATE". "EXPIRATION DATE" means the date on which LESSEE is required to redeliver the Aircraft to LESSOR in the condition required by this Lease on the last day of the Lease Term. 4.3 "TERMINATION DATE". This Lease may in fact terminate on any of the dates set forth below: (a the Expiration Date, provided LESSEE returns the Aircraft to LESSOR on the Expiration Date in the condition required by Article 23; or (b a date earlier than the Expiration Date, if: (i there is a Total Loss of the Aircraft prior to Delivery pursuant to Article 3.5; (ii cancellation of this Lease occurs pursuant to Article 3.6; (iii there is a Total Loss of the Aircraft and payment is made to LESSOR in accordance with Article 18.3; or (iv an Event of Default occurs and LESSOR repossesses the Aircraft or otherwise terminates this Lease pursuant to Article 25.3. (c a date later than the Expiration Date, if: (i an Event of Default occurs hereunder by LESSEE returning the Aircraft in the condition required by this Lease after the Expiration Date; or (ii an Event of Default occurs and LESSOR repossesses the Aircraft or otherwise terminates this Lease pursuant to Article 25.3. The "TERMINATION DATE" is the date on which this Lease terminates because one of the above has occurred. ARTICLE 5 SECURITY DEPOSIT, TRANSACTION FEE, RENT AND OTHER PAYMENTS 5.1 SECURITY DEPOSIT. 5.1.1 (CONFIDENTIAL MATERIAL OMITTED) 5.1.2 The Security Deposit may be commingled with LESSOR's general funds and any interest earned on such Security Deposit will be for LESSOR's account. If the Security Deposit is reduced below the required amount by application to meet LESSEE's unperformed obligations under this Lease, LESSEE will replenish the Security Deposit within ten (10) days after LESSOR's demand therefor. The Security Deposit will serve as security for the performance by LESSEE of its obligations under this Lease and any other agreements between LESSEE and LESSOR relating to aircraft, engines, aircraft equipment or the extension of credit and may be applied by LESSOR upon the occurrence of a Default or Event of Default hereunder or of a default by LESSEE under any such other agreements. 5.1.3 Upon termination of this Lease in accordance with Article 4.3 other than if an Event of Default has occurred and is continuing, LESSOR will return to LESSEE the amount of the Security Deposit then held by LESSOR (so long as no default by LESSEE exists under any other agreement between LESSEE and LESSOR relating to aircraft, engines or aircraft equipment or the extension of credit by LESSOR to LESSEE), without interest, less an amount determined by LESSOR to be a reasonable estimate of the costs, if any, which LESSOR will incur to remedy any unperformed obligations of LESSEE under this Lease, including the correction of any discrepancies from the required condition of the Aircraft on return of the Aircraft. 5.2 TRANSACTION FEE. Within two (2) Business Days after execution of this Lease, LESSEE will pay LESSOR a nonrefundable transaction fee (CONFIDENTIAL MATERIAL OMITTED) 5.3 RENT. 5.3.1 LESSEE will pay LESSOR the following amounts monthly in advance as rent for the Aircraft (the "RENT"): (a The following amounts for the following years of the Lease Term: LEASE PERIOD MONTHLY RENTAL AMOUNT* ------------ --------------------- (CONFIDENTIAL MATERIAL OMITTED) *The above base rent is expressed in January 1999 U.S. dollars and will increase in the following amounts for the following periods (the "MANUFACTURER'S ESCALATION RATE"): PERIOD ESCALATION FACTOR ------------ --------------------- (CONFIDENTIAL MATERIAL OMITTED) Any increases to the above base Rent during the Lease Term will be calculated immediately prior to Delivery. 5.3.2 The first payment of Rent during the Lease Term will be paid prior to the Scheduled Delivery Date. Each subsequent payment of Rent will be due monthly thereafter no later than the same day of the month as the Delivery Date of the Aircraft except that, if such day is not a Business Day, the Rent will be due on the immediately preceding Business Day. If Delivery occurred on the 29th, 30th or 31st of the month and in any given month during the Lease Term there is no such corresponding date, Rent will be payable on the last Business Day of such month. 5.4 LESSOR'S BANK ACCOUNT. The Security Deposit, Transaction Fee, Rent and any other payment due under this Lease will be paid by wire transfer of immediately available U.S. Dollar funds to LESSOR's bank account at: (CONFIDENTIAL MATERIAL OMITTED) or to such other bank account in the U.S. as LESSOR may from time to time designate by written notice ("LESSOR'S BANK"). When it is stated in this Lease that an installment of the Security Deposit, the monthly Rent or any other payment is due or must be paid or made by LESSEE by a specific date, then such payment actually must be received by LESSOR's Bank on or before such specific date, even if, in order for such payment to be received by LESSOR's Bank by such specific date, LESSEE must initiate the wire transfer prior to such specific date. 5.5 DEFAULT INTEREST. If LESSOR's Bank does not receive the Rent or any other amount on or before the specific date when due, LESSOR will suffer loss and damage the exact nature and amount of which are difficult or impossible to ascertain. LESSEE will pay LESSOR as supplemental Rent (by way of agreed compensation and not as a penalty) interest on any due and unpaid amounts payable by LESSEE under this Lease. Interest will be calculated at a per annum rate (based on a 360 day year) which is equal to three percent (3%) plus the Prime Rate in effect on the date on which the amount was originally due for the period from the date the amount originally was due through the date the amount actually is received at LESSOR's Bank or, in the case of LESSOR's performance of LESSEE's obligations hereunder, from the date of payment by LESSOR through the date of LESSEE's repayment to LESSOR ("DEFAULT INTEREST"). Default Interest will accrue on a day-to-day basis and be compounded monthly. 5.6 NO DEDUCTIONS OR WITHHOLDINGS. All payments by LESSEE under this Lease, including the Security Deposit, Transaction Fee, Rent, Default Interest, fees, indemnities or any other item, will be made in full without any deduction or withholding whether in respect of set-off, counterclaim, duties, or Taxes (as defined in Article 15) imposed in the State of Registration or any jurisdiction from which such payments are made unless LESSEE is prohibited by Law from doing so, in which event LESSEE will gross up the payment amount such that the net payment received by LESSOR after any deduction or withholding equals the amounts called for under this Lease. LESSEE's requirement to pay the amounts required by this Article 5.6 is subject to the exceptions provided in Article 15.2. 5.7 VALUE ADDED TAXES. The Rent and other amounts payable by LESSEE under this Lease are exclusive of any value added tax, turnover tax or similar tax or duty. 5.8 NET LEASE. 5.8.1 This Lease is a net lease and LESSEE's obligation to pay Rent and make other payments in accordance with this Lease will be absolute and unconditional under any and all circumstances and regardless of other events, including the following: (a) any right of set-off, counterclaim, recoupment, defense or other right (including any right of reimbursement) which LESSEE may have against LESSOR, Manufacturer, the Engine manufacturer or any other person for any reason, including any claim LESSEE may have for the foregoing; (b) unavailability or interruption in use of the Aircraft for any reason, including a requisition thereof or any prohibition or interference with or other restriction against LESSEE's use, operation or possession of the Aircraft (whether by Law or otherwise), any defect in title, airworthiness, merchantability, fitness for any purpose, condition, design, specification or operation of any kind or nature of the Aircraft, the ineligibility of the Aircraft for any particular use or trade or for registration under the Laws of any jurisdiction or Total Loss of the Aircraft; (c) insolvency, bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, liquidation, receivership, administration or similar proceedings by or against LESSOR, LESSEE, Manufacturer, the Engine manufacturer or any other Person; (d) invalidity or unenforceability or lack of due authorization of or other defect in this Lease; (e) failure or delay on the part of any party to perform its obligations under this Lease; or (f) any other circumstance which but for this provision would or might have the effect of terminating or in any other way affecting any obligation of LESSEE hereunder. 5.8.2 Nothing in Article 5.8 will be construed to limit LESSEE's rights and remedies in the event of LESSOR's breach of its warranty of quiet enjoyment set forth in Article 21.2 or to limit LESSEE's rights and remedies to pursue in a court of law any claim it may have against LESSOR or any other Person. 5.9 LESSOR PERFORMANCE OF LESSEE OBLIGATION. If LESSEE fails to make any payment under this Lease to a third party in connection with the Aircraft or fails to perform any other obligation required under this Lease, LESSOR may (but is not required to) at its election and without waiver of its rights perform such obligation and/or pay such amount. Within five (5) Business Days after written notice to LESSEE of the amount paid by LESSOR on behalf of LESSEE, LESSEE will repay such amount to LESSOR together with Default Interest. Such payment to LESSOR will constitute additional Rent payable by LESSEE to LESSOR hereunder. Any payment, performance or compliance by LESSOR of a LESSEE obligation hereunder will not affect the occurrence or continuance of a Default or Event of Default, as the case may be. 5.10 CONSIDERATION FOR RENT AND OTHER AMOUNTS. The amount of the Rent and other payments contained herein are in consideration of LESSEE's waiver of warranties and indemnities set forth in Articles 8 and 16, respectively, and the other provisions of this Lease. ARTICLE 6 INVOLVEMENT WITH AIRCRAFT MANUFACTURER 6.1 LESSEE SELECTION OF AIRCRAFT. LESSEE ACKNOWLEDGES THAT THE DESCRIPTION OF THE AIRCRAFT SET FORTH IN THIS LEASE IS BASED UPON INFORMATION SUPPLIED BY MANUFACTURER. LESSEE COVENANTS TO LESSOR THAT LESSEE HAS USED ITS OWN JUDGMENT IN SELECTING THE AIRCRAFT AND HAS DONE SO BASED ON ITS SIZE, DESIGN AND TYPE. LESSEE ACKNOWLEDGES THAT LESSOR IS NOT A MANUFACTURER, REPAIRER OR SERVICING AGENT OF THE AIRCRAFT. 6.2 AGENCY AGREEMENT. Certain obligations remain to be performed by LESSOR in connection with the manufacture, fabrication and completion of the Aircraft by Manufacturer which will be performed by LESSEE (as provided in the Agency Agreement). LESSEE will act as LESSOR's agent with respect to some of these matters pursuant to the terms of an Agency Agreement to be entered into between LESSEE and LESSOR in the form set forth in Exhibit B. 6.3 PROCUREMENT OF BFE. LESSEE's and LESSOR's technical representatives will meet and determine which of LESSEE or LESSOR will provide specific items of BFE. Such BFE will then be provided to Manufacturer by LESSEE or LESSOR, as applicable, within the time frames required by Manufacturer. 6.4 ASSIGNMENT OF TRAINING. LESSOR hereby assigns to LESSEE all rights to training to which LESSOR is entitled as a result of LESSOR's purchase of the Aircraft and lease of the Aircraft to LESSEE. If LESSEE fails to take Delivery of the Aircraft when tendered in accordance with Article 6.7, LESSEE will immediately pay to LESSOR an amount equal to the Dollar value of such training based on what the training would have cost LESSEE had LESSEE purchased such training directly from Manufacturer. 6.5 LESSEE INSPECTION OF AIRCRAFT. During the course of final assembly of the Aircraft, and at Delivery, LESSEE will have its own representative present to inspect the Aircraft and to ensure its conformity with LESSEE's needs and the terms of this Lease. LESSEE will have ground inspection and acceptance flight rights with respect to the Aircraft. LESSEE acknowledges that, as between LESSEE and LESSOR, in accepting the Aircraft LESSEE is relying on its own inspection and knowledge of the Aircraft in determining whether the Aircraft meets the requirements of this Lease. 6.6 AIRCRAFT AT DELIVERY. At Delivery, the Aircraft will be as set forth in Exhibit A, as such description may be modified by any change requests agreed to among LESSEE, LESSOR and Manufacturer (which will be reflected in amendment(s) to this Lease). In the event of any discrepancies, LESSEE and LESSOR will cooperate in good faith with one another and with Manufacturer and Engine manufacturer, as applicable, in order to arrive at a mutually acceptable resolution of any such discrepancies. 6.7 DELIVERY OF THE AIRCRAFT TO LESSEE. Subject to LESSEE having performed all of the conditions precedent to Delivery set forth herein, immediately following delivery of the Aircraft from Manufacturer to LESSOR, LESSOR will deliver the Aircraft to LESSEE at the Delivery Location. Provided that the Aircraft is in the condition required by Article 6.6, upon the tender of the Aircraft by LESSOR to LESSEE, LESSEE will accept the Aircraft and the date of tender by LESSOR to LESSEE will be deemed to be the Delivery Date for all purposes under this Lease, including, but not limited to, the commencement of LESSEE's obligation to pay Rent hereunder. 6.8 LESSEE ACCEPTANCE OF AIRCRAFT. If LESSEE fails to (a) comply with its obligations set forth in Article 6.2, (b) comply with the conditions contained in Articles 7.1 and 7.2 so as to allow Delivery to take place immediately following delivery of the Aircraft by Manufacturer to LESSOR or (c) take delivery of the Aircraft when properly tendered for delivery by LESSOR in the condition required hereunder, LESSEE will indemnify LESSOR for all costs and expenses incurred by LESSOR as a result thereof including (but without limitation) any payments other than the purchase price which LESSOR becomes obliged to make to Manufacturer. ARTICLE 7 PRE-DELIVERY, DELIVERY AND POST-DELIVERY DOCUMENTARY AND OTHER REQUIREMENTS 7.1 PRE-DELIVERY REQUIREMENTS. LESSEE will do each of the following prior to the Scheduled Delivery Date of the Aircraft within the time frames set forth below: 7.1.1 Within one (1) month after execution of this Lease, LESSEE will deliver to LESSOR each of the following: (a) copies of resolutions of the Board of Directors of LESSEE or other written evidence of appropriate corporate action, duly certifying and authorizing the lease of the Aircraft hereunder and the execution, delivery and performance of this Lease, together with an incumbency certificate as to the person or persons authorized to execute and deliver documents on behalf of LESSEE hereunder; and (b) an opinion of counsel in the form and substance of Exhibit F. 7.1.2 At least three (3) days prior to the Scheduled Delivery Date, LESSEE will have delivered to LESSOR a Certificate of Insurance and Brokers' Letter of Undertaking in the form and substance of Exhibits C and D, respectively, from LESSEE's insurance brokers evidencing insurance of the Aircraft in accordance with this Lease from the Delivery Date. 7.1.3 At least three (3) Business Days prior to the Scheduled Delivery Date, LESSEE will do each of the following: (a) provide LESSOR with a copy of such Aviation Documents as may be available prior to the Scheduled Delivery Date; (b) provide LESSOR with a power of attorney empowering LESSEE's representative, who may be an officer or employee of LESSEE, to accept the Aircraft on behalf of LESSEE; and (c) provide LESSOR with such other documents as LESSOR may reasonably request. 7.1.4 Prior to the Scheduled Delivery Date, LESSEE will pay LESSOR the first monthly installment of Rent in accordance with Article 5.3.2. 7.2 DELIVERY REQUIREMENTS. On the Delivery Date of the Aircraft, each of the following will occur: 7.2.1 LESSEE will execute and deliver to LESSOR an Estoppel and Acceptance Certificate in the form of Exhibit E covering the Aircraft and effective as of the Delivery Date. 7.2.2 If not previously done, LESSEE and LESSOR will sign an amendment or supplement to Exhibit A evidencing all agreed-to changes to the specification of the Aircraft. 7.2.3 LESSEE will deliver a certificate signed on behalf of LESSEE by an officer of LESSEE stating all of the following: (a) the representations and warranties contained in Article 20 are true and accurate on and as of the Delivery Date as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date); (b) no Default has occurred and is continuing or will result from LESSEE's lease of the Aircraft hereunder; and (c) none of the Creditor Agreements contains terms which provide or contemplate that any Creditor will obtain any right, title or interest in an Engine which is installed on another aircraft (or, if this is not the case, such certificate will identify the parties, the aircraft and the Creditor Agreements for which this statement is untrue). 7.2.4 LESSEE's counsel will deliver opinions confirming the matters set forth in the opinion of counsel described in Article 7.1 and advising that all filing and other requirements have been met or concurrently are being met. 7.2.5 If any Creditor Agreement provides or contemplates that such Creditor will obtain any right, title or interest in an Engine which is installed on such Creditor's aircraft, LESSEE will deliver to LESSOR an engines cooperation agreement in form and substance acceptable to LESSOR which is executed by LESSEE and LESSEE's Creditors (as defined therein). 7.2.6 LESSOR will deliver to LESSEE an assignment of Manufacturer and Engine manufacturer rights in the form and substance of Exhibits G and H, respectively, and concurrently therewith LESSOR, to the extent it has not previously done so, will be deemed to have assigned all training, product assurance and product support applicable to the owner or operator of the Aircraft to LESSEE during the Lease Term. 7.3 POST-DELIVERY REQUIREMENTS. 7.3.1 Promptly after Delivery, LESSEE will do each of the following: (a) provide LESSOR with copies of all Aviation Documents not previously delivered; and (b) provide LESSOR with a follow-up opinion of counsel advising that the Aircraft has been registered in the State of Registration and that all necessary filings have been made. ARTICLE 8 DISCLAIMERS LESSOR HAS COMMITTED TO LESSEE THAT ON THE DELIVERY DATE THE AIRCRAFT WILL BE IN THE CONDITION REQUIRED BY ARTICLE 6. SUCH COMMITMENT OR COVENANT ON THE PART OF LESSOR EXPIRES AND THE DISCLAIMERS SET FORTH IN THIS ARTICLE 8 APPLY UPON LESSEE'S ACCEPTANCE OF THE AIRCRAFT AND EXECUTION OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATE. AFTER SUCH TIME, THEN AS BETWEEN LESSOR AND LESSEE: 8.1 "AS IS, WHERE IS". LESSEE AGREES THAT IT IS LEASING THE AIRCRAFT "AS IS, WHERE IS". LESSEE UNCONDITIONALLY ACKNOWLEDGES AND AGREES THAT NEITHER LESSOR NOR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES OR REPRESENTATIVES HAVE MADE OR WILL BE DEEMED TO HAVE MADE ANY TERM, CONDITION, REPRESENTATION, WARRANTY OR COVENANT EXPRESS OR IMPLIED (WHETHER STATUTORY OR OTHERWISE) AS TO (a) THE CAPACITY, AGE, AIRWORTHINESS, VALUE, QUALITY, DURABILITY, CONFORMITY TO THE PROVISIONS OF THIS LEASE, DESCRIPTION, CONDITION (WHETHER OF THE AIRCRAFT, ANY ENGINE, ANY PART THEREOF OR THE AIRCRAFT DOCUMENTATION), DESIGN, WORKMANSHIP, MATERIALS, MANUFACTURE, CONSTRUCTION, OPERATION, DESCRIPTION, STATE, MERCHANTABILITY, PERFORMANCE, FITNESS FOR ANY PARTICULAR USE OR PURPOSE (INCLUDING THE ABILITY TO OPERATE OR REGISTER THE AIRCRAFT OR USE THE AIRCRAFT DOCUMENTATION IN ANY OR ALL JURISDICTIONS) OR SUITABILITY OF THE AIRCRAFT OR ANY PART THEREOF, OR THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, KNOWN OR UNKNOWN, APPARENT OR CONCEALED, EXTERIOR OR INTERIOR, (b) THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK, COPYRIGHT OR OTHER INTELLECTUAL PROPERTY RIGHTS, (c) ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE OR (d) EXCEPT AS SET FORTH IN ARTICLE 21.1, ANY OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY PART THEREOF, ALL OF WHICH ARE HEREBY EXPRESSLY EXCLUDED AND EXTINGUISHED. 8.2 WAIVER OF WARRANTY OF DESCRIPTION. IN CONSIDERATION OF (a) LESSEE'S RIGHTS HEREUNDER TO INSPECT THE AIRCRAFT AND (b) LESSOR'S ASSIGNMENT TO LESSEE OF ANY EXISTING AND ASSIGNABLE WARRANTIES OF MANUFACTURER AND THE ENGINE MANUFACTURER, LESSEE HEREBY AGREES THAT ITS ACCEPTANCE OF THE AIRCRAFT AT DELIVERY AND ITS EXECUTION AND DELIVERY OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATE CONSTITUTE LESSEE'S WAIVER OF THE WARRANTY OF DESCRIPTION, ANY CLAIMS LESSEE MAY HAVE AGAINST LESSOR BASED UPON THE FAILURE OF THE AIRCRAFT TO CONFORM WITH SUCH DESCRIPTION AND ANY AND ALL RIGHTS IT MAY HAVE TO THE REMEDIES SET FORTH IN SECTIONS 10508 THROUGH 10522 OF THE CALIFORNIA COMMERCIAL CODE. EVEN IF AT ANY TIME THE FAILURE OF THE AIRCRAFT TO CONFORM TO SUCH DESCRIPTION SUBSTANTIALLY IMPAIRS THE VALUE AND UTILITY OF THE AIRCRAFT AND EITHER (i) LESSEE ACCEPTED THE AIRCRAFT BASED ON A REASONABLE ASSUMPTION THAT THE NONCONFORMITY WOULD BE CURED AND IT WAS NOT SEASONABLY CURED OR (ii) LESSEE ACCEPTED THE AIRCRAFT WITHOUT DISCOVERING THE NONCONFORMITY BUT LESSEE'S ACCEPTANCE OF THE AIRCRAFT WAS REASONABLY INDUCED EITHER BY LESSOR'S ASSURANCES OR BY THE DIFFICULTY OF DISCOVERING ANY DEFECT PRIOR TO ACCEPTANCE, LESSEE AGREES NOT TO LOOK TO LESSOR FOR DAMAGES OR RELIEF ARISING OUT OF THE FAILURE OF THE AIRCRAFT TO CONFORM TO SUCH DESCRIPTION. 8.3 LESSEE WAIVER. LESSEE hereby waives as between itself and LESSOR and agrees not to seek to establish or enforce any rights and remedies, express or implied (whether statutory or otherwise) against LESSOR or the Aircraft relating to any of the matters mentioned in Articles 8.1 or 8.2. 8.4 CONCLUSIVE PROOF. DELIVERY BY LESSEE TO LESSOR OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATE WILL BE CONCLUSIVE PROOF AS BETWEEN LESSOR AND LESSEE THAT LESSEE'S TECHNICAL EXPERTS HAVE EXAMINED AND INVESTIGATED THE AIRCRAFT AND ENGINES AND (a) EACH IS AIRWORTHY AND IN GOOD WORKING ORDER AND REPAIR AND (b) THE AIRCRAFT AND ENGINES AND THE AIRCRAFT DOCUMENTATION ARE WITHOUT DEFECT (WHETHER OR NOT DISCOVERABLE AT DELIVERY) AND IN EVERY WAY SATISFACTORY TO LESSEE. 8.5 NO LESSOR LIABILITY FOR LOSSES. LESSEE agrees that LESSOR will not be liable to LESSEE, any sublessee or any Person, whether in contract or tort and however arising, for any cost, loss or damage (consequential or otherwise) arising out of the condition of the Aircraft, whether or not due in whole or in part to an act or omission or the active or passive negligence of LESSOR. 8.6 NO LIABILITY TO REPAIR OR REPLACE. LESSOR will not be liable for any expense in repairing or replacing any item of the Aircraft or be liable to supply another aircraft or any item in lieu of the Aircraft or any Part thereof if the same is lost, confiscated, damaged, destroyed or otherwise rendered unfit for use. 8.7 NO WAIVER. Nothing in this Article 8 or elsewhere in this Lease will be deemed to be a waiver by LESSEE of any rights it may have against Manufacturer, the Engine manufacturer or any other Person. ARTICLE 9 MANUFACTURERS' AND VENDORS' WARRANTIES 9.1 WARRANTIES. As set forth in Article 7.2.6, at Delivery LESSOR will assign to LESSEE for the duration of the Lease Term the benefit of all warranties and indemnities given to LESSOR by Manufacturer and the Engine manufacturer. Effective on the Delivery Date, all other vendor warranties with respect to the Aircraft are hereby assigned by LESSOR to LESSEE. 9.2 REASSIGNMENT. On the Termination Date, the benefit of any warranty assigned by LESSOR to LESSEE pursuant to Article 7.2.6 will be reassigned automatically to LESSOR or its designee. ARTICLE 10 OPERATION OF AIRCRAFT 10.1 COSTS OF OPERATION. As between LESSEE and LESSOR, LESSEE will pay all costs incurred in the operation of the Aircraft during the Lease Term, for profit or otherwise, including the costs of flight crews, cabin personnel, fuel, oil, lubricants, maintenance, insurance, storage, landing and navigation fees, airport charges, passenger service and any and all other expenses of any kind or nature, directly or indirectly, in connection with or related to the use, movement and operation of the Aircraft. The obligations, covenants and liabilities of LESSEE under this paragraph arising prior to return of the Aircraft to LESSOR will continue in full force and effect, notwithstanding the termination of this Lease or expiration of the Lease Term. 10.2 COMPLIANCE WITH LAWS. LESSEE agrees throughout the Lease Term that all use of the Aircraft will be in accordance with applicable Laws of the State of Registration and of any country, state, territory or municipality into or over which LESSEE may operate. LESSEE will not employ, suffer or cause the Aircraft to be used in any business which is forbidden by Law or in any manner which may render it liable to condemnation, destruction, seizure, or confiscation by any authority. LESSEE will not permit the Aircraft to fly to any airport or country if so doing would cause LESSEE to be in violation of any Law applicable to LESSEE or the Aircraft. The foregoing provisions in this Article 10.2 shall not prohibit any violation of Law (a) during a good-faith contest of the validity, application, or alleged violation thereof in any reasonable manner so long as there is no material danger of sale, forfeiture, or loss of the Aircraft (however, this good faith exception shall not apply in the case of a mandatory grounding order, the good faith contest of which does not permit LESSEE to operate the Aircraft during such contest), and which does not extend beyond the end of the Lease Term if the pendency of such contest would adversely affect the Aircraft or the remarketing thereof in any material respect; and (b) for minor or non-recurring violations (with the understanding that minor violations may cease to be minor if recurring) that LESSEE is diligently trying to rectify which do not render the Aircraft liable to any risk of condemnation, destruction, seizure, or confiscation by any Government Entity. 10.3 TRAINING. LESSEE will not use the Aircraft for testing or for training of flight crew members other than LESSEE crew members and will not use the Aircraft for training any more than it utilizes for training the other aircraft in its fleet. 10.4 NO VIOLATION OF INSURANCE POLICIES. LESSEE will not use or permit the Aircraft to be used in any manner or for any purpose which is not covered by the insurance policies LESSEE is required to carry and maintain as set forth in this Lease. LESSEE will not carry any goods of any description that would invalidate or limit such policies or do any other act or permit to be done anything which could reasonably be expected to invalidate or limit any such insurance policy. 10.5 FLIGHT CHARGES. 10.5.1 LESSEE will pay promptly when due all enroute navigation charges, navigation service charges and all other charges payable by LESSEE for the use of or for services provided at any airport, whether in respect of the Aircraft or any other aircraft of LESSEE, and will indemnify and hold LESSOR harmless in respect of the same. This indemnity will continue in full force and effect notwithstanding the termination or expiration of the Lease Term for any reason or the return of the Aircraft. 10.5.2 If requested by LESSOR, LESSEE will provide LESSOR with a list of the airports to which LESSEE regularly operates the Aircraft or its other aircraft. LESSEE hereby authorizes Eurocontrol or another aviation authority or airport or creditor claiming rights on the Aircraft to confirm the status of LESSEE's payments to such creditor for the Aircraft and its other aircraft, as and when requested by LESSOR. ARTICLE 11 SUBLEASES 11.1 NO SUBLEASE WITHOUT LESSOR CONSENT. LESSEE WILL NOT SUBLEASE OR PART WITH POSSESSION OF THE AIRCRAFT (EXCEPT FOR MAINTENANCE AND REPAIR) AT ANY TIME WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR (NOT TO BE UNREASONABLY WITHHELD) AND IN ACCORDANCE WITH SUCH REQUIREMENTS AS MAY FROM TIME TO TIME BE AGREED IN WRITING BETWEEN LESSOR AND LESSEE. The wet leasing of the Aircraft during the Lease Term (in which LESSEE and its crews retain operational control of the Aircraft) will not be considered a sublease of the Aircraft. 11.2 LESSOR COSTS. LESSEE will indemnify LESSOR on demand for all out-of-pocket expenses (including legal fees) incurred in connection with LESSOR's assessment of the subleasing proposal (whether or not LESSOR's consent to such sublease is ultimately given) and implementation of the sublease. 11.3 ANY APPROVED SUBLEASE. Any sublease approved by LESSOR will be for a term no greater than the remaining Lease Term and contain provisions consistent with this Lease protecting LESSOR's title to the Aircraft, providing appropriate LESSOR indemnities, regarding the maintenance and repair standards for the Aircraft, concerning the insurances which will be carried by the sublessee and the circumstances which constitute a Total Loss of the Aircraft. Any such sublease will be subject and subordinate to this Lease. In its sole discretion, LESSOR may require an opinion of counsel in connection with such sublease, including LESSOR's right to repossess the Aircraft in the event of an Event of Default hereunder or under the sublease. LESSEE will not amend the terms of any approved sublease without the prior written consent of LESSOR, which will not be unreasonably withheld. 11.4 ASSIGNMENT OF SUBLEASE. Any approved sublease will be assigned to LESSOR as security. LESSEE will deliver the original counterpart of the sublease to LESSOR and make any filings necessary to protect LESSOR's security interest. 11.5 CONTINUED RESPONSIBILITY OF LESSEE. LESSEE will continue to be responsible for performance of its obligations under this Lease during any period of sublease. ARTICLE 12 MAINTENANCE AND USE OF AIRCRAFT 12.1 GENERAL OBLIGATION. 12.1.1 During the Lease Term and until the Aircraft is returned to LESSOR, LESSEE alone has the obligation, at its expense, to maintain and repair the Aircraft, Engines and all of the Parts (a) in accordance with the Maintenance Program, (b) in accordance with the rules and regulations of the Aviation Authority, (c) in accordance with Manufacturer's type design, (d) in accordance with any other regulations or requirements necessary in order to maintain a valid Certificate of Airworthiness for the Aircraft and meet the requirements at all times during the Lease Term and upon return of the Aircraft to LESSOR for issuance of a Standard Certificate of Airworthiness for transport category aircraft issued by the Aviation Authority (except during those periods when the Aircraft is undergoing maintenance or repairs as required or permitted by this Lease) and (e) in the same manner and with the same care as used by LESSEE or its sublessee with respect to similar aircraft and engines operated by LESSEE or its sublessee and without in any way discriminating against the Aircraft. 12.1.2 LESSEE will maintain and repair the Engines in the same manner and in the equivalent time frame to its other engines and LESSEE will not discriminate against any of the Engines in respect of the repair and maintenance. 12.1.3 LESSEE will not enter into any Engine maintenance cost per flight hour, power-by-the-hour or similar agreement with Engine manufacturer or any other Engine maintenance facility or organization without LESSOR's prior written consent. 12.2 SPECIFIC OBLIGATIONS. Without limiting Article 12.1, LESSEE agrees that such maintenance and repairs will include but will not be limited to each of the following specific items: (a) performance in accordance with the Maintenance Program of all routine and non-routine maintenance work; (b) incorporation in the Aircraft of all Airworthiness Directives; (c) incorporation in the Aircraft of all service bulletins of Manufacturer, the Engine manufacturer and other vendors which LESSEE schedules to adopt within the Lease Term for the rest of its Boeing 737-800 aircraft fleet. It is the intent of the parties that the Aircraft will not be discriminated from the rest of LESSEE's fleet in service bulletin compliance (including method of compliance) or other maintenance matters. LESSEE will not discriminate against the Engines with respect to Overhaul build standards and life-limited part replacements; (d) incorporation in the Maintenance Program for the Aircraft of a corrosion prevention and control program; (e) maintaining in English and keeping in an up-to-date status the records and historical documents set forth in Attachment 1 of Exhibit I; (f) maintaining historical records, in English, for on condition, condition-monitored, hard time and life-limited Parts (including tags from the manufacturer of such Part or a repair facility which evidence that such Part is new or overhauled and establish authenticity, total time in service and time since overhaul for such Part), the hours and cycles the Aircraft and Engines operate and all maintenance and repairs performed on the Aircraft; and (g) properly documenting all repairs, Modifications and alterations and the addition, removal or replacement of equipment, systems or components in accordance with the rules and regulations of the Aviation Authority and reflecting such items in the Aircraft Documentation. In addition, all repairs to the Aircraft will be accomplished in accordance with Manufacturer's Structural Repair Manual (or FAA-approved data supported by FAA Form 8110-3 or equivalent). All Modifications and alterations will also be accomplished in accordance with FAA-approved data supported by FAA Form 8110-3 or equivalent. 12.3 REPLACEMENT OF PARTS. 12.3.1 LESSEE, at its own cost and expense, will promptly replace all Parts which may from time to time become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or rendered unfit or beyond economical repair (BER) for any reason. In the ordinary course of maintenance, service, repair, overhaul or testing, LESSEE may remove any Part provided that LESSEE replaces such Part as promptly as practicable. All replacement Parts will (a) be free and clear of all Security Interests (except Permitted Liens) of any kind or description, (b) be in airworthy condition and of at least equivalent model, service bulletin and modification status and have a value and utility at least equal to the Parts replaced, assuming such replaced Parts were in the condition and repair required to be maintained by the terms hereof and (c) have a current "serviceable tag" of the manufacturer or maintenance facility providing such items to LESSEE, indicating that such Parts are new, serviceable or Overhauled. So long as a substitution meets the requirements of the Maintenance Program and Aviation Authority, LESSEE may substitute for any Part a part that does not meet the requirements of the foregoing sentence if a complying Part cannot be procured or installed within the available groundtime of the Aircraft and as soon as practicable the noncomplying part is removed and replaced by a complying Part. 12.3.2 All Parts removed from the Airframe or any Engine will remain the property of LESSOR and subject to this Lease no matter where located, until such time as such Parts have been replaced by Parts (which have been incorporated or installed in or attached to the Airframe or such Engine) which meet the requirements for replacement Parts specified above and title to such replacement Parts has passed to LESSOR under the Laws of the State of Registration and LEX SITUS. To the extent permitted by the Laws of the State of --- ----- Registration and the LEX SITUS it is the intent of LESSOR and LESSEE that without further --- ----- act and immediately upon any replacement Part becoming incorporated, installed or attached to the Airframe or an Engine as above provided, (a) title to the removed Part will thereupon vest in LESSEE, free and clear of all rights of LESSOR, (b) title to the replacement Part will thereupon vest in LESSOR free and clear of all rights of LESSEE and (c) such replacement Part will become subject to this Lease and be deemed to be a Part hereunder to the same extent as the Parts originally incorporated or installed in or attached to the Airframe or such Engine. 12.4 REMOVAL OF ENGINES. 12.4.1 If an Engine is removed for testing, service, repair, maintenance, Overhaul work, alterations or modifications, title to such Engine will remain vested in LESSOR. 12.4.2 LESSEE will be entitled to remove any of the Engines from the Aircraft and install another engine or engines on the Aircraft, provided that LESSEE complies with each of the following obligations: (a) the insurance requirements set forth in Article 17 and Exhibit C are in place; (b) LESSEE ensures that the identification plates referred to in Article 14 are not removed from any Engine upon such Engine being detached from the Aircraft; and (c) title to the Engine remains with LESSOR free from all Security Interests (except Permitted Liens) regardless of the location of the Engine or its attachment to or detachment from the Aircraft. 12.5 POOLING OF ENGINES AND PARTS. With LESSOR's prior written consent, not to be unreasonably withheld, LESSEE may subject the Engines and Parts to normal interchange or pooling agreements with responsible commercial air carriers customary in the airline industry and entered into by LESSEE in the ordinary course of its business with respect to its Boeing 737-800 fleet generally, so long as (a) in the case of pooling of an Engine, such Engine is returned to LESSEE within two (2) months, (b) no transfer of title to the Engine occurs, (c) all other terms of this Lease continue to be observed with respect to the Engines or Parts, including but not limited to Articles 8, 10, 12, 13, 14, 15, 16, 17 and 18 and (d) LESSEE continues to be fully responsible to LESSOR for the performance of all of its obligations hereunder. 12.6 INSTALLATION OF ENGINES ON OTHER AIRCRAFT. Any Engine removed from the Aircraft may be installed on another airframe in LESSEE's fleet which utilizes engines of the same type as the Engine only if one of the situations described in this Article 12.6 exists: 12.6.1 LESSEE or LESSOR has title to such other aircraft free and clear of all Security Interests (except Permitted Liens). 12.6.2 LESSEE, LESSOR and all of the Creditors of LESSEE of such aircraft enter into an engines cooperation agreement in form and substance acceptable to LESSOR in which each party agrees to recognize one another's rights in the engines. LESSEE will reimburse LESSOR and LESSOR's Lender for their reasonable attorneys' fees and costs in negotiating and finalizing engine cooperation agreement arrangements with LESSEE and its Creditors. 12.6.3 Such other aircraft is subject to a Creditor Agreement (but no other Security Interests except Permitted Liens) which by its terms expressly or effectively states that such Creditor and its successors and assigns will not acquire any right, title or interest in any Engine by reason of such Engine being installed on such aircraft. LESSEE hereby agrees that if LESSOR's title to an Engine is in fact impaired under any such Creditor Agreement, such impairment will be a Total Loss of such Engine and the provisions of Article 18.5 will apply. To the extent another Creditor Agreement contains such provisions, then LESSOR hereby agrees for the benefit of the Creditor of such Creditor Agreement that neither LESSOR nor its successors or assigns will acquire or claim any right, title or interest in any engine in which LESSEE or another Creditor has an interest as a result of such engine being installed on the Airframe. 12.7 MODIFICATIONS. 12.7.1 No modification, alteration, addition or removal to the Aircraft ("MODIFICATION") expected to cost over Five Hundred Thousand U.S. Dollars (US$500,000) or deviation from the Aircraft's original type design or configuration will be made without the prior written consent of LESSOR, which consent will not be unreasonably withheld. "Modifications" do not include Airworthiness Directives or Manufacturer's recommended service bulletins, for which LESSOR's consent is not required. 12.7.2 LESSOR may review LESSEE's proposed designs, plans, engineering drawings and diagrams, and flight and maintenance manual revisions for any proposed Modification. If requested by LESSOR, LESSEE will furnish LESSOR (at LESSEE's expense) with such documents in final form and any other documents required by Law, as a result of such Modification. All Modifications incorporated on the Aircraft will be properly documented in the Aircraft Documentation and be fully approved by the Aviation Authority. 12.7.3 Notwithstanding any other provision of this Lease, no Modification will be made which has the effect of decreasing the utility or value of the Aircraft. 12.7.4 No Modification will be made by LESSEE if an Event of Default exists and is continuing hereunder. 12.7.5 Unless otherwise agreed by LESSOR in writing, all non-severable or structural Modifications will forthwith become a part of the Aircraft and LESSEE relinquishes to LESSOR all rights and title thereto. However, all severable Modifications will remain the property of LESSEE or the third-party owner and, at LESSOR's request and LESSEE's cost, will be removed from the Aircraft prior to return of the Aircraft, with LESSEE restoring the Aircraft to the condition it was in prior to the Modification. Notwithstanding the foregoing, no such removal will be permitted without LESSOR's permission after the occurrence of an Event of Default hereunder and immediately upon the occurrence of an Event of Default hereunder, without the requirement of any further act or notice, all right, title and interest in such Modifications will immediately vest in LESSOR. 12.7.6 LESSOR will bear no liability for the cost of Modifications of the Aircraft whether in the event of grounding or suspensions of certification, or for any other cause. 12.8 PERFORMANCE OF WORK BY THIRD PARTIES. Whenever maintenance and repair work on the Aircraft or Engines will be regularly performed by a Person other than LESSEE, such Person will be an FAA-authorized repair station. 12.9 REPORTING REQUIREMENTS. 12.9.1 Commencing with a report furnished ten (10) days after the end of the calendar month in which Delivery occurs, LESSEE will furnish to LESSOR a Monthly Report in English in the form attached hereto as Exhibit J. Each Monthly Report will be furnished within ten (10) days after the end of each calendar month, except that the Monthly Report pertaining to the last month (or any portion thereof) of the Lease Term will be furnished to LESSOR on the Termination Date. 12.9.2 On each anniversary of the Delivery Date, LESSEE will provide LESSOR with a Technical Evaluation Report for the Aircraft in the form and substance of Exhibit L, as revised. 12.10 INFORMATION REGARDING MAINTENANCE PROGRAM. LESSEE will provide LESSOR with a copy of or information regarding the Maintenance Program for the Aircraft, as requested by LESSOR. 12.11 LESSOR RIGHTS TO INSPECT AIRCRAFT. On reasonable notice, LESSOR and/or its authorized agents or representatives will have the right to inspect the Aircraft and Aircraft Documentation. LESSOR agrees that such requests will be coordinated with LESSEE so as to cause the minimum practical disturbance to LESSEE's operation or its personnel. LESSEE agrees to cooperate with LESSOR in making the Aircraft and Aircraft Documentation available to such authorized technical teams. No such inspection shall include opening panels, bays, or the like (although LESSOR may observe those that are then open), or disassembling any item. LESSOR will have no duty to make any such inspection and will not incur any liability or obligation by reason of (and LESSEE's indemnity obligations pursuant to Article 16 will apply notwithstanding) not making any such inspection or by reason of any reports it receives or any reviews it may make of the Aircraft records. ARTICLE 13 TITLE AND REGISTRATION 13.1 TITLE TO THE AIRCRAFT DURING LEASE TERM. Title to the Aircraft will be and remain vested in LESSOR. LESSOR and LESSEE intend this Lease to be a "true lease". LESSEE will have no right, title or interest in the Aircraft except as provided in this Lease. 13.2 REGISTRATION OF AIRCRAFT. LESSEE at its sole cost and expense will (a) register and maintain registration of the Aircraft in the name of LESSOR at the register of aircraft in the State of Registration and (b) from time to time take all other steps then required by Law (including the Geneva Convention if applicable) or by practice, custom or understanding or as LESSOR may reasonably request to protect and perfect LESSOR's interest in the Aircraft and this Lease in the State of Registration or in any other jurisdictions in or over which LESSEE may operate the Aircraft. 13.3 FILING OF THIS LEASE. To the extent permitted by Law and in accordance with the requirements of the Law from time to time, LESSEE at its sole cost and expense will cause this Lease to be kept, filed, recorded and refiled or rerecorded in the State of Registration and in any other offices necessary to protect LESSOR's rights hereunder. 13.4 EVIDENCE OF REGISTRATION AND FILINGS. As LESSOR may reasonably request from time to time, LESSEE will furnish to LESSOR an opinion of counsel or other evidence reasonably satisfactory to LESSOR of the registrations and filings required hereunder. ARTICLE 14 IDENTIFICATION PLATES LESSOR will affix and LESSEE will at all times maintain on the Airframe and each Engine the identification plates containing the following legends or any other legend reasonably requested by LESSOR in writing: 14.1 AIRFRAME IDENTIFICATION PLATES. Location: One to be affixed to the Aircraft structure above the forward entry door adjacent to and not less prominent than that of Manufacturer's data plate and another in a prominent place on the flight deck. Size: No smaller than 4" x 6". Legend: "THIS AIRCRAFT IS OWNED BY INTERNATIONAL LEASE FINANCE CORPORATION. MANUFACTURER'S SERIAL NO: 28245 OWNER'S ADDRESS: INTERNATIONAL LEASE FINANCE CORPORATION 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States of America Fax: (310) 788-1990" 14.2 ENGINE IDENTIFICATION PLATES. Location: The legend on the plate must be visible. Size: No smaller than 2" x 6". "THIS ENGINE IS OWNED BY INTERNATIONAL LEASE FINANCE CORPORATION, LOS ANGELES, CALIFORNIA, USA." ARTICLE 15 TAXES 15.1 GENERAL OBLIGATION OF LESSEE. Except as set forth in Article 15.2, LESSEE agrees to pay promptly when due, and to indemnify and hold harmless LESSOR on a full indemnity basis from, all license and registration fees and all taxes, fees, levies, imposts, duties, charges or withholdings of any nature whatsoever (including without limitation any value added, franchise, transfer, sales, gross receipts, use, business, occupation, excise, personal property, real property, stamp or other tax) together with any assessments, penalties, fines, additions to tax or interest thereon, however or wherever imposed (whether imposed upon LESSEE, LESSOR, on all or part of the Aircraft, the Engines or otherwise), by any Government Entity or taxing authority in the U.S., any State thereof, or any foreign country or by any international taxing authority, upon or with respect to, based upon or measured by any of the following (collectively, "TAXES"): (a) the Aircraft, the Engines or any Parts. (b) the use, operation or maintenance of the Aircraft or carriage of passengers or freight during the Lease Term. (c) this Lease, the payments due hereunder and the terms and conditions hereof. (d) the return of the Aircraft to LESSOR or other use or disposition of the Aircraft by LESSEE. 15.2 EXCEPTIONS TO INDEMNITY. The indemnity provided in Article 15.1 does not extend to any of the following Taxes: (a) Imposed by the U.S. (including without limitation any taxes collected by withholding) or any state or local government or governmental subdivision or state or local taxing authority in the U.S. (including any possession or territory of the U.S.) or by any foreign government, taxing authority or governmental subdivision of a foreign country which are based on, or measured by, the receipts, gross or net income, capital, net worth, franchises, excess profits, or conduct of business (including minimum taxes, withholding taxes and taxes on or measured by any items of tax preference) of LESSOR, except to the extent that such Tax would not have been imposed on or payable by LESSOR but for the location, use, registration or operation of the Aircraft or any part thereof, or any place of business or any activity of LESSEE in the jurisdiction imposing such Tax. (b) Imposed as a result of LESSOR's transfer, mortgage, pledge, financing or other disposition by LESSOR of all or a portion of its interest in the Aircraft or this Lease except a transfer or sale resulting from an exercise of remedies pursuant to Article 25.3 hereunder or in connection with a termination of the Lease pursuant to Article 18 hereof. (c) Attributable to the period prior to the Delivery Date or after return of the Aircraft to LESSOR in accordance with this Lease. (d) Attributable to LESSOR's gross negligence, willful misconduct or breach of this Lease. 15.3 AFTER-TAX BASIS. The amount which LESSEE is required to pay with respect to any Taxes indemnified against under Article 15.1 is an amount sufficient to restore LESSOR on an after-tax basis to the same position LESSOR would have been in had such Taxes not been incurred. 15.4 CLAIMS AND CONTESTS. If a written claim is received by LESSOR for Taxes, which claim, if sustained, would require the payment of an indemnity by LESSEE pursuant to this Article 15, LESSOR shall notify LESSEE of such claim within thirty (30) days after its receipt, provided that failure to provide such notice within thirty (30) days will not relieve LESSEE of any indemnification obligation pursuant to this Article 15 if such failure does not preclude LESSEE from exercising its contest rights hereunder. Payments due from LESSEE to LESSOR pursuant to this Article 15 shall be made directly to LESSOR within thirty (30) days of written demand by LESSOR to LESSEE. If requested by LESSEE in writing, LESSOR shall upon receipt of indemnity reasonably satisfactory to it and at the expense of LESSEE (including, without limitation, all reasonable costs, expenses, legal and accountants' fees, and disbursements, penalties, interest incurred in contesting such claim, and additions to tax) in good faith, in the name of LESSOR or, if requested by LESSEE, in the name of LESSEE (or permit LESSEE, if desired by LESSEE, to contest in the name of LESSEE) if permissible under applicable laws, the validity, applicability or amount of such Taxes by (i) resisting payment thereof if practicable only if adequate reserves have been made for such Taxes or, if required, an adequate bond has been posted, (ii) paying the same under protest, if protest shall be necessary and proper, (iii) if payment shall be made, using reasonable efforts to obtain a refund thereof in appropriate administrative and judicial proceedings, and (iv) taking such other action as is reasonably requested by LESSEE from time to time including not paying such Taxes only if adequate reserves have been made for such Taxes or, if required, an adequate bond has been posted. LESSOR shall determine the method of any contest and (in good faith consultation with LESSEE) control the conduct thereof. Notwithstanding anything contained in this Article 15.4, LESSOR will not be required to contest, or to continue to contest, the validity, applicability or amount of any Tax (or portion thereof) (x) if such contest would result in any material risk of criminal penalties or any material risk of sale, forfeiture or loss of the Aircraft, (y) if an Event of Default has occurred and is continuing, or (z) in the case of a contest of a Tax reflected on a return of LESSOR with other taxes of LESSOR that are not indemnified by the LESSEE hereunder, if LESSEE shall not have furnished an opinion of independent tax counsel selected by the LESSEE, and reasonably satisfactory to LESSOR, that a reasonable basis exists for such contest. If LESSOR shall obtain a refund of all or any part of such Taxes for which an indemnity was paid by LESSEE, LESSOR shall pay LESSEE the amount of such refund; PROVIDED, HOWEVER, that such amount shall not be payable before such time as LESSEE shall have made all payments or indemnities to LESSOR then due under this Article 15 and under the Lease or while an Event of Default shall have occurred and be continuing. If in addition to such refund LESSOR shall receive an amount representing interest on the amount of such refund, LESSEE shall be paid that proportion of such interest which is fairly attributable to Taxes paid with an indemnity payment by LESSEE prior to the receipt of such refund or interest and increased by any taxes saved by reason of the deductibility of such payment by LESSOR. LESSEE shall not be deemed to be in default under any of the indemnification provisions under this Article 15 so long as it or LESSOR shall diligently prosecute such contest and LESSEE has indemnified LESSOR to LESSOR's reasonable satisfaction. In case any report or return is required to be made with respect to any obligation of LESSEE under this Article 15.4 or arising out of this Article 15.4, LESSEE will either timely make such report or return in such manner as will show the ownership of the Aircraft in LESSOR, and will as soon as possible send a copy of such report or return to LESSOR, or will notify LESSOR of such requirement and prepare and deliver such report or return to LESSOR in such manner as shall be satisfactory to LESSOR. 15.5 REFUNDS. Upon receipt by LESSOR of a refund of all or any part of any Taxes (including any deductions or withholdings referred to in Article 15.1) which LESSEE has paid, LESSOR will pay to LESSEE the net amount of such Taxes refunded. 15.6 COOPERATION IN FILING TAX RETURNS. LESSEE and LESSOR will cooperate with one another in providing information which may be reasonably required to fulfill each party's tax filing requirements and any audit information request arising from such filing. ARTICLE 16 INDEMNITIES 16.1 GENERAL INDEMNITY. Except as set forth in Article 16.2, LESSEE agrees to indemnify and hold harmless LESSOR and its officers, directors, employees, agents and shareholders (individually an "INDEMNITEE" and collectively "INDEMNITEES") from any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs, disbursements and expenses (including legal fees, costs and related expenses) of every kind and nature, whether or not any of the transactions contemplated by this Lease are consummated (collectively "EXPENSES"), which are imposed on, incurred by or asserted against any Indemnitee and which are in any way relating to, based on or arising out of any of the following: (a) this Lease or any transactions contemplated hereby; (b) the operation, possession, use, non-use, control, leasing, subleasing, maintenance, storage, overhaul, testing, inspections or acceptance flights at return of the Aircraft, any Engine or any Part during the Lease Term by LESSEE, any sublessee or any other Person, whether or not the same is in compliance with the terms of this Lease, including without limitation claims for death, personal injury, property damage, other loss or harm to any Person and claims relating to any Laws, including without limitation environmental control, noise and pollution laws, rules or regulations; (c) the manufacture, design, acceptance, rejection, delivery, return, sale in connection with an Event of Default, import, export, condition, repair, modification, servicing, rebuilding, enforcement of warranties whether in LESSOR's or LESSEE's name, customer and product support provided by Manufacturer and other vendors, airworthiness, registration, reregistration, performance, sublease, merchantability, fitness for use, substitution or replacement of the Aircraft, Engine or any Part under this Lease or other transfer of use or possession of the Aircraft, Engine or any Part, including under a pooling or interchange arrangement, including without limitation latent and other defects, whether or not discoverable and patent, trademark or copyright infringement; (d) any non-compliance by LESSEE with any term of this Lease or the falsity or inaccuracy of any representation or warranty of LESSEE set forth herein; (e) the prevention or attempt to prevent the arrest, confiscation, seizure, taking in execution, impounding, forfeiture or detention of the Aircraft, or in securing the release of the Aircraft; or (f) as a consequence of any Default in payment by LESSEE of any sum to be paid by LESSEE when due under this Lease or any other Default by LESSEE in the due and punctual performance of its obligations under this Lease. The foregoing indemnity by LESSEE is intended to include and cover any Expense to which an Indemnitee may be subject (in contract, tort, strict liability or under any other theory) regardless of the negligence, active or passive or any other type, of such Indemnitee, so long as such Expense does not fall within any of the exceptions listed in Article 16.2. 16.2 EXCEPTIONS TO GENERAL INDEMNITIES. The indemnity provided for in Article 16.1 will not extend to Expenses of any Indemnitee to the extent resulting from or arising out of any of the following: (a) Expenses which have resulted from the willful misconduct of such Indemnitee; (b) Expenses which LESSEE and LESSOR mutually agree or, absent mutual agreement, are judicially determined to be attributable to acts or events which occur after the Termination Date and return of the Aircraft to LESSOR in the condition required hereunder, but in any such case only to the extent not attributable to acts or omissions of LESSEE; (c) Expenses representing Taxes, it being acknowledged that the terms of Article 15 apply exclusively to LESSEE's indemnity obligations with respect to Taxes; (d) Expenses due to the breach by LESSOR of its covenant of quiet enjoyment pursuant to Article 21.2 (except to the extent covered by LESSEE's insurances); (e) Expenses which arise in connection with the transfer by LESSOR of any interest in the Aircraft or this Lease, except for any transfer in connection with any Event of Default or a Total Loss of the Aircraft or an Engine. (f) Expenses which are solely attributable to the representation or warranty of LESSOR contained in or made pursuant to any Operative Document being untrue; (g) Expenses which are solely related to the failure of such Indemnitees to perform or observe any agreement, covenant, or condition on its part to be performed or observed in any Operative Document; (h) Expenses which are solely an ordinary and usual internal customary operating expense; or (i) Expenses which are solely related to a breach of Article 21.1.6, or (j) Expenses which are solely related to a LESSOR's Lien. 16.3 AFTER-TAX BASIS. The amount which LESSEE will be required to pay with respect to any Expense indemnified against under Article 16.1 will be an amount sufficient to restore the Indemnitee, on an after-tax basis, to the same position such Indemnitee would have been in had such Expense not been incurred. 16.4 TIMING OF PAYMENT. It is the intent of the parties that each Indemnitee will have the right to indemnification for Expenses hereunder as soon as a claim is made and as soon as an Expense is incurred, whether or not such claim is meritorious and whether or not liability is established (but subject to Articles 16.2 and 16.8). LESSEE will pay an Indemnitee for Expenses pursuant to this Article 16 within ten (10) days after receipt of a written demand therefor from such Indemnitee accompanied by a written statement describing in reasonable detail the basis for such indemnity (but not before payment is due from such Indemnitee). 16.5 SUBROGATION. Upon the payment in full of any indemnity pursuant to this Article 16 by LESSEE, LESSEE will be subrogated to any right of the Indemnitee in respect of the matter against which such indemnity has been made. 16.6 NOTICE. Each Indemnitee and LESSEE will give prompt written notice one to the other of any liability of which such party has knowledge for which LESSEE is, or may be, liable under Article 16.1; provided, however, that failure to give such notice will not terminate any of the rights of Indemnitees under this Article 16 except to the extent that LESSEE has been materially prejudiced by the failure to provide such notice. 16.7 REFUNDS. If any Indemnitee obtains a recovery of all or any part of any amount which LESSEE has paid to such Indemnitee, such Indemnitee will pay to LESSEE the net amount recovered by such Indemnitee. 16.8 DEFENSE OF CLAIMS. (a) LESSEE and its insurers will have the right (in each such case at LESSEE's sole expense) to investigate or, provided that LESSEE or its insurers have not reserved the right to dispute liability with respect to any insurance policies pursuant to which coverage is sought, defend or compromise any claim covered by insurance for which indemnification is sought pursuant to Article 16.1 and each Indemnitee will cooperate with LESSEE or its insurers with respect thereto. If LESSEE or its insurers are retaining attorneys to handle such claim, such counsel must be reasonably satisfactory to the Indemnitees. If not, the Indemnitees will have the right to retain counsel of their choice at LESSEE's expense. (b) Unless LESSOR agrees in writing otherwise, no settlement of any claim hereunder may require LESSOR to agree to any remedy apart from the payment of money damages (for which such payment of money damages LESSEE will in any event indemnify the Indemnitees). (c) In no event shall any Indemnitee enter into a settlement or other compromise with respect to any Expense without LESSEE's prior written consent (which shall not be unreasonably withheld or delayed), unless such Indemnitee waives its right to be indemnified with respect to such Expense under this Article 16. (d) To the extent that any Expense indemnified by LESSEE hereunder may be covered by insurance maintained by LESSEE, at LESSEE's expense, each Indemnitee agrees to cooperate with the insurers in the exercise of their rights to investigate, defend, or compromise that Expense as may be required to retain the benefits of the insurance for that Expense. (e) If an Indemnitee is not a party to this Lease, LESSEE may require that Indemnitee to agree in writing to the terms of this Article 16 before making any payment to such Indemnitee under this Article 16. 16.9 SURVIVAL OF OBLIGATION. Notwithstanding anything in this Lease to the contrary, the provisions of this Article 16 will survive the Termination Date and continue in full force and effect notwithstanding any breach by LESSOR or LESSEE of the terms of this Lease, the termination of the lease of the Aircraft to LESSEE under this Lease or the repudiation by LESSOR or LESSEE of this Lease. ARTICLE 17 INSURANCE 17.1 CATEGORIES OF INSURANCE. Throughout the Lease Term and until the Termination Date LESSEE will, at its own expense, effect and maintain in full force and effect the types of insurance and amounts of insurance (including deductibles) described in Exhibit C through such brokers and with such insurers favorably regarded in the airline industry. 17.2 INSURANCE FOR INDEMNITIES. The insurance referred to in Article 17.1 will in each case include and insure (to the extent of the risks covered by the policies) the indemnity provisions of Article 16 and LESSEE will maintain such insurance of the indemnities for a minimum of two (2) years following the Termination Date. 17.3 INSURANCE REQUIRED BY MANUFACTURER. During the Lease Term, LESSEE will carry the insurance required by Manufacturer in connection with LESSOR's assignment of Manufacturer's warranties and product support to LESSEE. 17.4 RENEWAL. Not less than two (2) Business Days before the expiration or termination date of any insurance required hereunder, LESSEE will provide LESSOR with fax confirmation from LESSEE's insurance brokers that renewed certificates of insurance evidencing the renewal or replacement of such insurance and complying with Exhibit C will be issued on the termination date of the prior certificate. Within seven (7) days after such renewal, LESSEE will furnish its brokers' certificates of insurance to LESSOR. 17.5 ASSIGNMENT OF RIGHTS BY LESSOR. If LESSOR assigns all or any of its rights under this Lease as permitted by this Lease or otherwise disposes of any interest in the Aircraft to any other Person, LESSEE will, upon request, procure that (to the extent of the assignment or disposition) such Person hereunder be added as loss payee and/or additional assured in the policies effected hereunder and enjoy the same rights and insurance enjoyed by LESSOR under such policies. To the extent of its retained interest or as provided in Article 24.2.1, LESSOR will nevertheless continue to be covered by such policies. 17.6 DEDUCTIBLES. If there is a material adverse change in the financial condition of LESSEE which LESSOR reasonably believes will not enable LESSEE to pay the deductible upon the occurrence of a partial loss of the Aircraft or an Engine, then LESSOR may require LESSEE at LESSEE's expense to lower its deductibles on the insurance maintained hereunder to a level which is available on commercially reasonable terms in the insurance market. 17.7 OTHER INSURANCE. LESSOR may from time to time by notice to LESSEE require LESSEE at LESSEE's expense to effect such other insurance or such variations to the terms of the existing insurance as may then be customary in the airline industry for aircraft of the same type as the Aircraft and at the time commonly available in the insurance market. 17.8 INFORMATION. LESSEE will provide LESSOR with any information reasonably requested by LESSOR from time to time concerning the insurance maintained with respect to the Aircraft or in connection with any claim being made or proposed to be made thereunder. 17.9 CURRENCY. All proceeds of insurance pursuant to this Lease will be payable in Dollars except as may be otherwise agreed by LESSOR. 17.10 GROUNDING OF AIRCRAFT. If at any time any of the insurance required pursuant to this Lease will cease to be in full force and effect, LESSEE will forthwith ground the Aircraft and keep the Aircraft grounded until such time as such insurance is in full force and effect again. 17.11 FAILURE TO INSURE. If at any time LESSEE fails to maintain insurance in compliance with this Article 17, LESSOR will be entitled but not bound to do any of the following (without prejudice to any other rights which it may have under this Lease by reason of such failure): (a) to pay any premiums due or to effect or maintain substitute insurance or otherwise remedy such failure in any reasonable manner (and LESSEE will upon demand reimburse LESSOR in full for any amount so expended in that connection); or (b) at any time while such failure is continuing, to require the Aircraft to remain at any airport or (as the case may be), proceed to and remain at any airport designated by LESSOR. 17.12 LIMIT ON HULL IN FAVOR OF LESSEE. LESSEE may carry hull all risks or hull war and allied perils on the Aircraft in excess of the Agreed Value (which Agreed Value is payable to LESSOR) only to the extent such excess insurance which would be payable to LESSEE in the event of a Total Loss does not exceed fifteen percent (15%) of the Agreed Value and only to the extent that such additional insurance will not prejudice the insurances required herein or the recovery by LESSOR thereunder. LESSEE agrees that it will not create or permit to exist any liens or encumbrances over the insurances, or its interest therein, except as constituted by this Lease. 17.13 MARKETPLACE LIMITATIONS. The insurance required by this Lease may be subject to any limitations generally prevailing in the airline insurance marketplace at the time (e.g., AVN67B). ARTICLE 18 LOSS, DAMAGE AND REQUISITION Throughout the Lease Term and until the Termination Date, LESSEE will bear all risk of loss, theft, damage and destruction to the Aircraft. 18.1 DEFINITIONS. In this Article 18: "AGREED VALUE" (CONFIDENTIAL MATERIAL OMITTED) The Agreed Value is set forth in March 2001 U.S. Dollars and will be increased in accordance with Manufacturer's announced escalation rate from March 1, 2001 to the Delivery Date. On each annual renewal date of LESSEE's insurance policy commencing on the renewal date following the first anniversary of the Lease Term, the Agreed Value will decrease by two percent (2.0%) of the then-existing Agreed Value. "NET TOTAL LOSS PROCEEDS" means the Total Loss Proceeds actually received by LESSOR following a Total Loss, less any legal and other out-of-pocket expenses or duties incurred by LESSOR in connection with the collection of such proceeds. "TOTAL LOSS" means any of the following in relation to the Aircraft, Airframe or any Engine and "TOTAL LOSS DATE" means the date set forth in parenthesis after each Total Loss: (a) destruction, damage beyond repair or being rendered permanently unfit for normal use for any reason (the date such event occurs or, if not known, the date on which the Aircraft, Airframe or Engine was last heard of); (b) actual, constructive, compromised, arranged or agreed total loss (the earlier of the date on which the loss is agreed or compromised by the insurers or thirty (30) days after the date of notice to LESSEE's brokers or insurers claiming such total loss); (c) requisition of title, confiscation, forfeiture or any compulsory acquisition of title or other similar event (the date on which the same takes effect); (d) sequestration, detention, seizure or any similar event for more than one hundred eighty (180) consecutive days (the earlier of the date on which insurers make payment on the basis of a total loss or the date of expiration of such period); (e) requisition for use for more than one hundred eighty (180) consecutive days, except as set forth in Article 18.8 (the earlier of the date on which the insurers make payment on the basis of a total loss or the date of expiration of such period); (f) in the case of an Engine, the event described in Article 12.6.3 (the date on which the same takes effect); "TOTAL LOSS PROCEEDS" means the proceeds of any insurance or any compensation or similar payment arising in respect of a Total Loss. 18.2 NOTICE OF TOTAL LOSS. LESSEE will notify LESSOR in writing within two (2) Business Days after a Total Loss Date of the Aircraft, Airframe or any Engine. 18.3 TOTAL LOSS OF AIRCRAFT OR AIRFRAME. If the Total Loss of the Aircraft or Airframe occurs during the Lease Term, the following will occur: 18.3.1 After the Total Loss Date and until receipt by LESSOR of the Agreed Value and all other amounts then due under this Lease, LESSEE will continue to pay Rent and the parties will perform all of their other obligations under this Lease. 18.3.2 On the date which is the earlier of the following dates: (a) the date on which the Total Loss Proceeds of the Aircraft or the Airframe are paid by LESSEE's insurance underwriters or brokers and (b) the date which falls sixty (60) days after the Total Loss Date, LESSEE will pay to LESSOR an amount equal to the sum of: (a) the Agreed Value and (b) all other amounts then due and payable under this Lease, less an amount equal to the Net Total Loss Proceeds received by LESSOR by such date. 18.3.3 LESSOR will apply the Net Total Loss Proceeds and any amounts received from LESSEE pursuant to Article 18.3.2 as follows: (a) first, in discharge of any unpaid Rent and any other amounts accrued and unpaid up to the date of LESSOR's receipt of the Agreed Value; (b) second, in discharge of the Agreed Value; and (c) third, payment of the balance, if any, to LESSEE. 18.3.4 Upon receipt by LESSOR of all monies payable by LESSEE in Article 18.3, provided no Default has occurred and is continuing, this Lease will terminate except for LESSEE's obligations under Articles 10.5, 15 and 16 which survive the Termination Date and the Security Deposit will be returned to LESSEE in accordance with Article 5.3.1. FOR AVOIDANCE OF DOUBT, THE AGREED VALUE OF THE AIRCRAFT WILL BE PAYABLE TO LESSOR PURSUANT TO THIS ARTICLE 18.3 IF A TOTAL LOSS OF THE AIRFRAME OCCURS EVEN IF THERE HAS NOT BEEN A TOTAL LOSS OF AN ENGINE OR ENGINES. 18.4 SURVIVING ENGINE(S). If a Total Loss of the Airframe occurs and there has not been a Total Loss of an Engine or Engines, then provided no Default has occurred and is continuing, at the request of LESSEE (subject to agreement of relevant insurers) and on receipt of all monies due under Article 18.3 and payment by LESSEE of all airport, navigation and other charges on the Aircraft, LESSOR will transfer all of its right, title and interest in the surviving Engine(s) to LESSEE, but without any responsibility, condition or warranty on the part of LESSOR other than as to freedom from any LESSOR's Lien. 18.5 TOTAL LOSS OF ENGINE AND NOT AIRFRAME. 18.5.1 Upon a Total Loss of any Engine not installed on the Airframe or a Total Loss of an Engine installed on the Airframe not involving a Total Loss of the Airframe, LESSEE will replace such Engine as soon as reasonably possible by duly conveying to LESSOR title to another engine (a) free and clear of all Security Interests (except Permitted Liens) of any kind or description, (b) in airworthy condition and of the same or improved model, service bulletin and modification status and having a value and utility at least equal to the Engine which sustained the Total Loss, and (c) not older (by reference to serial number or manufacture date) than three (3) years older than the oldest of the two Engines delivered by LESSOR to LESSEE with the Aircraft on the Delivery Date. Such replacement engine will be an Engine as defined herein and the Engine which sustained such Total Loss will cease to be an Engine. 18.5.2 LESSEE agrees at its own expense to take such action as LESSOR may reasonably request in order that any such replacement Engine becomes the property of LESSOR and is leased hereunder on the same terms as the destroyed Engine. LESSEE's obligation to pay Rent will continue in full force and effect, but an amount equal to the Net Total Loss Proceeds received by LESSOR with respect to such destroyed Engine will, subject to LESSOR's right to deduct therefrom any amounts then due and payable by LESSEE under this Lease, be paid to LESSEE. 18.6 OTHER LOSS OR DAMAGE. 18.6.1 If the Aircraft or any Part thereof suffers loss or damage not constituting a Total Loss of the Aircraft or the Airframe or any Engine, all the obligations of LESSEE under this Lease (including payment of Rent) will continue in full force. 18.6.2 In the event of any loss or damage to the Aircraft or Airframe which does not constitute a Total Loss of the Aircraft or the Airframe, or any loss or damage to an Engine which does not constitute a Total Loss of such Engine, LESSEE will at its sole cost and expense fully repair the Aircraft or Engine in order that the Aircraft or Engine is placed in an airworthy condition and substantially the same condition as it was prior to such loss or damage. All repairs will be performed in accordance with sound airline procedures. LESSEE will notify LESSOR forthwith of any loss, theft or damage to the Aircraft for which the cost of repairs is estimated to exceed Seven Hundred Fifty Thousand U.S. Dollars (US$750,000), together with LESSEE's proposal for carrying out the repair. In the event that LESSOR does not agree with LESSEE's proposals for repair, LESSOR will so notify LESSEE within two (2) Business Days after its receipt of such proposal. LESSEE and LESSOR will then consult with Manufacturer and LESSEE and LESSOR agree to accept as conclusive, and be bound by, Manufacturer's directions or recommendations as to the manner in which to carry out such repairs. If Manufacturer declines to give directions or recommendations, LESSEE will carry out the repairs in accordance with the directions of LESSOR. 18.6.3 To the extent that LESSOR has received insurance proceeds from LESSEE's insurers with respect to any loss or damage, LESSOR will (subject to LESSOR's right to deduct therefrom any amounts then due and payable by LESSEE under this Lease and submission by LESSEE of reasonable documentation confirming the completion of the repairs in accordance with the requirements of this Lease) pay to LESSEE insurance proceeds received by LESSOR as and when such repair work is performed on the Aircraft. 18.7 COPY OF INSURANCE POLICY. Promptly after LESSOR's request following the occurrence of a partial loss or Total Loss of the Aircraft or an Engine, LESSEE will provide LESSOR with a copy of LESSEE's insurance policy. 18.8 GOVERNMENT REQUISITION. If the Aircraft, Airframe or any Engine is requisitioned for use by any Government Entity, LESSEE will promptly notify LESSOR of such requisition. All of LESSEE's obligations hereunder will continue as if such requisition had not occurred. Except if a Default or an Event of Default has occurred and is continuing, all payments received by LESSOR or LESSEE from such Government Entity will be paid over to or retained by LESSEE. 18.9 CONVEYANCE TO LESSEE. Upon compliance by LESSEE with the applicable terms of Article 18.3 or 18.5, LESSOR will transfer to LESSEE the Airframe or Engine(s), as applicable, with respect to which such Total Loss. ARTICLE 19 CRAF PROGRAM 19.1 DEDICATION TO CRAF. LESSEE may transfer possession of the Airframe or any Engine to the United States of America or any instrumentality or agency thereof as part of the Civil Reserve Air Fleet Program authorized under 10 U.S.C. ss. 9511 ET SEQ. (or any substantially similar program) ("CRAF PROGRAM") for a period which includes (collectively, the "CRAF PROGRAM REQUISITION PERIOD") the entire period of requisition under the CRAF Program. If the CRAF Program Requisition Period extends beyond the Expiration Date provided by this Lease, then the Lease will be deemed to continue for six (6) months after the end of the CRAF Program Requisition Period at a monthly rental rate equal to the monthly rental rate during the Lease Term. If such extension extends beyond the Lease Term, then LESSEE will provide LESSOR with written notice of the proposed redelivery by the earlier of six (6) months prior to the proposed redelivery date or five (5) Business Days after the date of receipt of the actual notice given to LESSEE by the government prior to the government's redelivery date and LESSEE will return the Aircraft to LESSOR in the condition required by Article 23 on LESSEE's proposed redelivery date set forth in such notice. 19.2 NOTICE TO LESSOR. LESSEE will promptly notify LESSOR in writing in the event of the requisition for use of the Aircraft under CRAF activation by the U.S. Government. All of LESSEE's obligations under this Lease will continue to the same extent as if such requisition had not occurred. 19.3 REQUISITION OF ENGINE. If there is a requisition for use of any Engine (but not the Airframe) by the U.S. Government in connection with the CRAF Program, LESSEE will replace such Engine by complying with the terms of Article 18.5 hereof. 19.4 GOVERNMENT INDEMNIFICATION. Any provisions of this Lease to the contrary notwithstanding, if there is a requisition for use of the Aircraft pursuant to the CRAF Program and/or CRAF activation, LESSOR agrees that LESSEE's insurances described in Exhibit C may be supplemented by insurances provided under Title XIII of the Act, and/or U.S. Government indemnification (which Title XIII insurances and indemnification will be in amounts not less than those established in Exhibit C); provided, however, that LESSEE will remain responsible for full compliance with all the provisions of this Lease, including Articles 14 and 16, to the extent Title XIII and/or the U.S. Government indemnification do not satisfy LESSEE's obligations under this Lease. 19.5 NO GEOGRAPHIC LIMITS. If there is a requisition for use of the Aircraft pursuant to the CRAF Program and/or CRAF activation, there will be no limitation on the geographic area in which the Aircraft may be operated so long as, taken as a whole, LESSEE's insurance, the Title XIII insurance and/or the indemnification provided by the U.S. Government fully cover (without any geographic exclusions) LESSEE's Exhibit C insurance requirements. 19.6 NOTICE OF DEFAULT. If an Event of Default occurs under this Lease and LESSOR elects to pursue its remedies under Article 25.3(e) to terminate this Lease and repossess the Aircraft, LESSOR will so notify the U.S. Government by sending a written communication as follows: Headquarters Air Mobility Command AMC Contracting Office -- XOKA Scott Air Force Base, Illinois 62225-5007 19.7 RECEIPT OF PAYMENTS. Subject to the following sentence, all payments received by LESSOR or LESSEE from such Government Entity in connection with the requisition of the Aircraft under the CRAF Program will be paid over to or retained by LESSEE. If a Default has occurred and is continuing, all payments received by LESSEE or LESSOR from such Government Entity in connection with the requisition of the Aircraft under the CRAF Program may be used by LESSOR to satisfy any obligations owing by LESSEE. ARTICLE 20 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE 20.1 REPRESENTATIONS AND WARRANTIES. LESSEE represents and warrants the following to LESSOR as of the date of execution of this Lease and as of the Delivery Date: 20.1.1 CORPORATE STATUS. LESSEE is a corporation duly incorporated, validly existing and in good standing under the Laws of Indiana (or, on the Delivery Date, the state of its incorporation). It has the corporate power and authority to carry on its business as presently conducted and to perform its obligations hereunder. 20.1.2 GOVERNMENTAL APPROVALS. No authorization, approval, consent, license or order of, or registration with, or the giving of notice to the Aviation Authority or any other Government Entity is required for the valid authorization, execution, delivery and performance by LESSEE of this Lease, except as will have been duly effected as of the Delivery Date. 20.1.3 BINDING. LESSEE's Board of Directors has authorized LESSEE to enter into this Lease, any Side Letters hereto and any other documentation in connection with the leasing of the Aircraft from LESSOR (collectively, the "OPERATIVE DOCUMENTS") and perform its obligations under the Operative Documents. This Lease and the other Operative Documents have been duly executed and delivered by LESSEE and represent the valid, binding and enforceable obligations of LESSEE except as enforceability may be limited by bankruptcy, insolvency, reorganization or other Laws of general application affecting the enforcement of creditors' rights. When executed by LESSEE at Delivery, the same will apply to the Estoppel and Acceptance Certificate. 20.1.4 NO BREACH. The execution and delivery of the Operative Documents, the consummation by LESSEE of the transactions contemplated herein and compliance by LESSEE with the terms and provisions hereof do not and will not contravene any Law applicable to LESSEE, or result in any breach of or constitute any default under or result in the creation of any Security Interest upon any property of LESSEE, pursuant to any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which LESSEE is a party or by which LESSEE or its properties or assets may be bound or affected. When executed by LESSEE at Delivery, the same will apply to the Estoppel and Acceptance Certificate. 20.1.5 FILINGS. Except for any filing or recording that may be required by the FARs, no filing or recording of any instrument or document (including the filing of any financial statement) is necessary under the Laws of the State of Registration in order for this Lease to constitute a valid and perfected lease of record relating to the Aircraft. 20.1.6 LICENSES. LESSEE holds all licenses, certificates and permits from applicable Government Entities in the U.S. for the conduct of its business as a certificated air carrier and performance of its obligations under this Lease. 20.1.7 NO SUITS. There are no suits, arbitrations or other proceedings pending or threatened before any court or administrative agency against LESSEE which are reasonably likely to be determined adversely and, if adversely determined, would have a material adverse effect on the business, assets or condition (financial or otherwise) of LESSEE or its ability to perform under this Lease, except as described in the filings provided to LESSOR pursuant to Article 22. 20.1.8 GENERAL OBLIGATIONS. The obligations of LESSEE under this Lease are direct, general and unconditional obligations of LESSEE and rank or will rank at least PARI PASSU with all other present and future unsecured and unsubordinated obligations (including contingent obligations) of LESSEE, with the exception of such obligations as are mandatorily preferred by law and not by reason of any encumbrance. 20.1.9 NO SOVEREIGN IMMUNITY. LESSEE, under the Laws of the U.S. or of any other jurisdiction affecting LESSEE, is subject to private commercial law and suit. Neither LESSEE nor its properties or assets is entitled to sovereign immunity under any such Laws. LESSEE's performance of its obligations hereunder constitute commercial acts done for commercial purposes. 20.1.10 TAX RETURNS. All necessary federal and state income tax returns have been delivered by LESSEE to all relevant taxation authorities in the U.S. or any state thereof and LESSEE is not in default in the payment of any taxes due and payable as shown on any such returns or on any assessment received by LESSEE. 20.1.11 NO MATERIAL ADVERSE EFFECT. LESSEE is not in default under any agreement to which it is a party or by which it may be bound which would have a material adverse effect on its business, assets or condition. 20.1.12 NO DEFAULT UNDER THIS LEASE. At the time of execution of this Lease, no Default has occurred and is continuing and the financial statements provided to LESSOR pursuant to Article 22 fairly present the financial condition of LESSEE. 20.2 COVENANTS. LESSEE covenants to LESSOR that it will comply with the following throughout the entire Lease Term: 20.2.1 LICENSING. LESSEE will hold all licenses, certificates and permits from applicable Government Entities in the U.S. for the conduct of its business as a certificated air carrier and performance of its obligations under this Lease. LESSEE will advise LESSOR promptly in the event any such licenses, certificates or permits are cancelled, terminated, revoked or not renewed. 20.2.2 SOVEREIGN IMMUNITY. LESSEE, under the Laws of the U.S. or of any other jurisdiction affecting LESSEE, will continue to be subject to private commercial law and suit. Neither LESSEE nor its properties or assets will be entitled to sovereign immunity under any such Laws. LESSEE's performance of its obligations hereunder will constitute commercial acts done for commercial purposes. LESSEE will advise LESSOR promptly of any change in the foregoing. 20.2.3 INFORMATION ABOUT SUITS. LESSEE will promptly give to LESSOR a notice in writing of any suit, arbitration or proceeding against LESSEE before any court, administrative agency or Government Entity which is reasonably likely to be determined adversely and, if adversely determined, would materially adversely affect LESSEE's financial condition, affairs, operations or its ability to perform under this Lease. 20.2.4 MERGER OF LESSEE. (a) LESSEE shall not consolidate with or merge into any other Person under circumstances in which LESSEE is not the surviving corporation, or convey, transfer, or lease in one or more transactions all or substantially all of its assets to any other Person, unless: (i) such Person is organized, existing, and in good standing under the Laws of the U.S., any state of the U.S., or the District of Columbia, and, upon consummation of such transaction, such Person will be a U.S. Air Carrier; (ii) such Person executes and delivers to LESSOR a duly authorized, legal, valid, binding and enforceable agreement, reasonably satisfactory in form and substance to LESSOR, containing an effective assumption by such Person of the due and punctual performance and observance of each covenant, agreement and condition in the Operative Documents to be performed or observed by LESSEE; (iii) such Person makes such filings and recordings with the FAA pursuant to the Act as shall be necessary to evidence such consolidation or merger; (iv) LESSEE furnishes LESSOR an opinion of counsel reasonably satisfactory to LESSOR to the effect that such consolidation or merger has satisfied at the closing of such consolidation or merger items (i), (ii) and (iii) above; (v) immediately after giving effect to such consolidation or merger, no Default or Event of Default exists; (vi) unless LESSOR otherwise consents, immediately after giving effect to such consolidation or merger, such Person will have a tangible net worth of not less than sixty-five percent (65%) of the LESSEE's tangible net worth immediately prior to such merger; and (vii) upon such merger becoming effective, LESSOR will enjoy the same degree of protection under ss. 1110 of the Bankruptcy Code with respect to the Aircraft as LESSOR enjoyed prior to such merger. (b) Upon any such consolidation or merger of LESSEE with or into, or the conveyance, transfer, or lease by LESSEE of all or substantially all of its assets to, any Person in accordance with this Article 20.2.4, such Person will succeed to, and be substituted for, and may exercise every right and power of, LESSEE under the Operative Documents with the same effect as if such Person had been named as "LESSEE" therein. No such consolidation, merger, conveyance, transfer, or lease shall have the effect of releasing LESSEE or such Person from any of LESSEE's obligations, liabilities, covenants, or undertakings under this Lease. 20.2.5 RESTRICTION ON RELINQUISHMENT OF POSSESSION. LESSEE will not, without the prior consent of LESSOR, deliver, transfer or relinquish possession of the Aircraft except in accordance with Articles 11 and 12. 20.2.6 NO SECURITY INTERESTS. LESSEE will not create or agree to or permit to arise any Security Interest (other than Permitted Liens) on or with respect to the Aircraft, title thereto or any interest therein. LESSEE will forthwith, at its own expense, take all action as may be necessary to discharge or remove any such Security Interest if it exists at any time. LESSEE will within five (5) Business Days after becoming aware of the existence of any such Security Interest give written notice thereof to LESSOR. 20.2.7 REPRESENTATIONS TO OTHER PARTIES. LESSEE will not represent or hold out LESSOR as carrying goods or passengers on the Aircraft or as being in any way connected or associated with any operation of the Aircraft. ARTICLE 21 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSOR 21.1 REPRESENTATIONS AND WARRANTIES. LESSOR represents and warrants the following to LESSEE as of the date of execution of the Lease and as of the Delivery Date and ALL OTHER WARRANTIES, EXPRESS OR IMPLIED HAVE BEEN WAIVED IN ACCORDANCE WITH ARTICLE 8: 21.1.1 CORPORATE STATUS. LESSOR is a corporation duly incorporated, validly existing and in good standing under the Laws of the State of California. It has the corporate power and authority to carry on its business as presently conducted and to perform its obligations hereunder. 21.1.2 GOVERNMENTAL APPROVALS. No authorization, approval, consent, license or order of, or registration with, or the giving of notice to any U.S. Government Entity is required for the valid authorization, execution, delivery and performance by LESSOR of this Lease. 21.1.3 BINDING. This Lease and the other Operative Documents have been duly authorized, executed and delivered by LESSOR and represent the valid, enforceable and binding obligations of LESSOR except as enforceability may be limited by bankruptcy, insolvency, reorganization or other Laws of general application affecting the enforcement of creditors' rights. 21.1.4 NO BREACH. The execution and delivery of the Operative Documents, the consummation by LESSOR of the transactions contemplated herein and compliance by LESSOR with the terms and provisions hereof do not and will not contravene any Law applicable to LESSOR, or result in any breach of or constitute any default under any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which LESSOR is a party or by which LESSOR or its properties or assets may be bound or affected. 21.1.5 TITLE TO AIRCRAFT. On the Delivery Date LESSOR will have good and valid title to the Aircraft. 21.1.6 CITIZENSHIP. LESSOR is a "citizen of the United States" within the meaning of 49 U.S. Code 40102(a)(15). 21.1.7 INVESTMENT BY LESSOR. LESSOR is acquiring its interest in the Aircraft for its own account from its corporate funds, for investment and not with a view to any resale or distribution thereof that would require registration under the Securities Act of 1933; PROVIDED, HOWEVER, that subject to the transfer restrictions in Article 24.2, its disposition of its interest in the Aircraft shall at all times be within its control. 21.2 COVENANT OF QUIET ENJOYMENT. So long as no Event of Default has occurred and is continuing hereunder, LESSOR covenants that neither LESSOR nor any person lawfully claiming through LESSOR will interfere with LESSEE's quiet, peaceful use and enjoyment of the Aircraft. ARTICLE 22 FINANCIAL AND RELATED INFORMATION LESSEE agrees to furnish each of the following to LESSOR: (a) within sixty (60) days after the end of each fiscal quarter of LESSEE, the unaudited consolidated financial statements (including a balance sheet and profit and loss statement) prepared for such quarter in accordance with generally accepted accounting principles in the U.S.; (b) within one hundred twenty (120) days after the end of each fiscal year of LESSEE, the audited consolidated financial statements (including a balance sheet and profit and loss statement) prepared as of the close of such fiscal year in accordance with generally accepted accounting principles in the U.S. LESSEE's chief financial officer will also provide a certificate of LESSEE stating that, to such officer's knowledge, no Default exists under this Lease (or if, to such officer's knowledge, a Default does exist, identifying it); (c) promptly after distribution, all reports and financial statements which Amtran, Inc. sends or makes generally available to its stockholders or creditors; and (d) from time to time, such other reasonable information as LESSOR or LESSOR's Lender may reasonably request concerning the location, condition, use and operation of the Aircraft or the financial condition of LESSEE. ARTICLE 23 RETURN OF AIRCRAFT 23.1 DATE OF RETURN. LESSEE is obligated to return the Aircraft, Engines Parts and Aircraft Documentation to LESSOR on the Expiration Date, unless a Total Loss of the Aircraft occurred prior to the Expiration Date and this Lease was terminated early in accordance with Article 18.3. If LESSEE is in Default hereunder by failing to return the Aircraft on the Expiration Date or if an Event of Default occurs prior to the Expiration Date and LESSOR repossesses the Aircraft, the return requirements set forth in this Article 23 nonetheless must be met on the date the Aircraft is actually returned to LESSOR or repossessed by LESSOR. 23.2 TECHNICAL REPORT. Six (6) months prior to the Expiration Date (and in an updated form at return of the Aircraft), LESSEE will provide LESSOR with a Technical Evaluation Report in the form and substance of Exhibit L, as revised, and, in addition upon LESSOR's request, will make copies available of (a) drawings of the interior configuration of the Aircraft both as it presently exists and as it will exist at return, (b) an Airworthiness Directive status list, (c) a service bulletin incorporation list, (d) rotable tracked, hard-time and life-limited component listings, (e) a list of LESSEE-initiated modifications and alterations, (f) interior material burn certificates, (g) the Aircraft Maintenance Program, (h) the complete workscope for the checks, inspections and other work to be performed prior to return, (i) a list of all no-charge service bulletin kits with respect to the Aircraft which were ordered by LESSEE from Manufacturer or Engine manufacturer, (j) current Engine disk sheets and a description of the last shop visit for each Engine and (k) any other data which is reasonably requested by LESSOR. 23.3 RETURN LOCATION. LESSEE at its expense will return the Aircraft, Engines, Parts and Aircraft Documentation to LESSOR at Indianapolis International Airport, Indianapolis, Indiana or to such other airport as may be mutually agreed to by LESSEE and LESSOR. 23.4 FULL AIRCRAFT DOCUMENTATION REVIEW. For the period commencing at least ten (10) Business Days prior to the proposed redelivery date and continuing until the date on which the Aircraft is returned to LESSOR in the condition required by this Lease, LESSEE will provide for the review of LESSOR and/or its representative all of the Aircraft records and historical documents described in Exhibit K in one central room at the Aircraft return location. 23.5 AIRCRAFT INSPECTION. 23.5.1 During the maintenance checks performed immediately prior to the proposed redelivery and at the actual return of the Aircraft, LESSOR and/or its representatives will have an opportunity to conduct a full systems functional and operational inspection of the Aircraft (and other types of reasonable inspections based upon the Aircraft type, age, use and other known factors with respect to the Aircraft) and a full inspection of the Aircraft Documentation (including records and manuals), all to LESSOR's satisfaction. The inspection will occur during the Return Check when the panels, bays or the like are open and certain Parts are disassembled. LESSOR may inspect such opened panels, bays or the like and the disassembled Parts so long as LESSOR does not disrupt the Return Check or cause such Return Check to be extended beyond the anticipated completion date of such Return Check. Any deficiencies from the Aircraft return condition requirements set forth in this Article 23 will be corrected by LESSEE at its cost prior to the acceptance flight described in Article 23.5.2. 23.5.2 Immediately prior to the proposed redelivery of the Aircraft, LESSEE will carry out for LESSOR and/or LESSOR's representatives an Aircraft acceptance flight in accordance with Manufacturer's standard flight operation check flight procedures or, if agreed to in writing by LESSOR, in accordance with an airline acceptance flight procedure, either of which will be for the duration necessary to perform such check flight procedures but in any event not less than two (2) hours. Flight costs and fuel will be furnished by and at the expense of LESSEE. Any deficiencies from the Aircraft return condition requirements set forth in this Article 23 will be corrected by LESSEE at its cost prior to return of the Aircraft. 23.5.3 To the extent that the ground inspection and acceptance flight extend beyond the Expiration Date, the Lease Term will be deemed to have been automatically extended and the obligations of LESSEE hereunder (including Article 23.11.3) will continue on a day-to-day basis until the Aircraft is accepted by LESSOR executing the Return Acceptance Receipt in the form of Exhibit I. 23.6 CERTIFICATE OF AIRWORTHINESS MATTERS. 23.6.1 The Aircraft will possess a current Certificate of Airworthiness issued by the Aviation Authority (although this Certificate of Airworthiness may later be substituted by the Export Certificate of Airworthiness or equivalent if requested by LESSOR pursuant to Article 23.10). The Aircraft at return must be in the condition required in order to meet the requirements of a U.S. Standard Certificate of Airworthiness for transport category aircraft issued by the FAA in accordance with FAR Part 21 and, in addition, to meet the operating requirements of FAR Part 121. 23.6.2 LESSEE at its cost will demonstrate that the Aircraft meets the requirements for issuance of the U.S. Standard Certificate of Airworthiness for transport category aircraft specified in Article 23.6.1 by delivering to LESSOR an actual U.S. Standard Certificate of Airworthiness. If there is a dispute in regards to the condition of the Aircraft or the Aircraft Documentation, then LESSEE will provide LESSOR with a letter acceptable to LESSOR signed by an FAA Designated Airworthiness Representative (DAR) or another Person acceptable to LESSOR stating that the DAR or such Person has inspected the Aircraft and Aircraft Documentation (including records and manuals) and has found that the Aircraft meets the requirements for issuance of a U.S. Standard Certificate of Airworthiness for transport category aircraft in accordance with FAR Part 21 and, in addition, meets the operating requirements of FAR Part 121. 23.6.3 If the Aircraft is to be registered in a country other than in the U.S. after return from LESSEE, LESSOR may in its sole discretion waive the requirements of Article 23.6.2 and instead require that LESSEE at its expense (to the extent such expense is no greater than that which LESSEE would have incurred pursuant to Articles 23.6.1 and 23.6.2, with any additional expenses being for LESSOR's account) put the Aircraft in a condition to meet the requirements for issuance of a Certificate of Airworthiness of the Aviation Authority of the next country of register. 23.7 GENERAL CONDITION OF AIRCRAFT AT RETURN. 23.7.1 The Aircraft, Engines and Parts will have been maintained and repaired in accordance with the Maintenance Program, the rules and regulations of the Aviation Authority and this Lease. 23.7.2 Aircraft Documentation (including records and manuals) will have been maintained in an up-to-date status, in accordance with the rules and regulations of the Aviation Authority and the FAA and this Lease and in a form necessary in order to meet the requirements of Article 23.6.2. The records and historical documents set forth in Attachment 1 of Exhibit I will be in English. 23.7.3 The Aircraft will be in the same working order and condition as at Delivery (subject to the other provisions of this Article 23, reasonable wear and tear from normal flight operations excepted), with all pilot discrepancies and deferred maintenance items cleared on a terminating action basis. 23.7.4 The Aircraft will be airworthy (conform to type design and be in a condition for safe operation), with all Aircraft equipment, components and systems operating in accordance with their intended use and within limits approved by the Manufacturer, Aviation Authority and FAA. 23.7.5 The Aircraft interior (including cabin and windows) and exterior will be clean and all compartments will be reasonably free of foreign objects, dirt, grease, fluids, stains, grime, cracks, tears and rips (with the exception of normal wear and tear) and ready to be placed into immediate commercial airline operations. 23.7.6 No special or unique Manufacturer, Engine manufacturer or Aviation Authority inspection or check requirements which are specific to the Aircraft or Engines (as opposed to all aircraft or engines of their types) will exist with respect to the Airframe, Engines and Aircraft equipment, components and systems. 23.7.7 All repairs, modifications and alterations to the Aircraft will have been accomplished in accordance with Manufacturer's Structural Repair Manual (or FAA-approved data supported by FAA Form 8110-3) for the Aircraft. 23.7.8 The Aircraft will be returned with LESSOR's Engines installed and with the same equipment as at Delivery, subject only to those replacements, additions and Modifications permitted under this Lease. LESSEE will inform LESSOR of whether LESSEE will be able to redeliver the Engines with the Aircraft and the proposed replacement engines that LESSEE wants to provide LESSOR in place of the Engines. LESSEE will provide LESSOR with whatever data, records and information that LESSOR reasonably requests in order to evaluate the proposed replacement engines. In the event that LESSEE is unable to return either of the Engines in the conditions required by this Article 23, then LESSEE may provide a replacement engine (a "REPLACEMENT ENGINE") for such Engine to LESSOR by duly conveying to LESSOR as owner hereunder title to another engine of the same manufacturer and of the same or an improved model as the Engine being replaced and suitable for installation and use on the Aircraft, which engine shall be free and clear of all Security Interests, and shall be no more than three (3) years older by reference to serial number than the replaced Engine and have a modification status, value and utility at least equal to the Engine which such Replacement Engine is replacing on the Aircraft assuming that such Engine which such Replacement Engine is replacing was then of the value, utility, condition, and airworthiness required to be maintained by the terms of this Lease. Such Replacement Engine, after approval and acceptance by LESSOR, shall be deemed an "Engine" as defined herein for all purposes hereunder. LESSEE agrees to take such action as LESSOR may reasonably request in order that such Replacement Engine shall be duly and properly titled in the name of LESSOR. Prior to or at the time of any such conveyance, LESSEE, at its own expense, will promptly: (a) furnish LESSOR with a warranty bill of sale, in form and substance satisfactory to LESSOR, with respect to such Replacement Engine, (b) furnish LESSOR with such evidence of title to such Replacement Engine as reasonably requested by LESSOR, and (c) furnish LESSOR with an opinion of LESSEE's counsel to the effect that title to such Replacement Engine has been duly conveyed to LESSOR free and clear of all Security Interests of any kind or nature and that such exchange qualifies for tax free treatment under the Internal Revenue Code of 1986, as amended. Upon full compliance with this Article, LESSOR shall transfer to LESSEE all of LESSOR's right, title and interest, on an "AS-IS", "WHERE-IS" basis in and to the Engine being replaced by such Replacement Engine, without recourse or warranty, express or implied, except that LESSOR has good and marketable title to such Engine and such Engine shall be free and clear of LESSOR's Liens. 23.7.9 All Airworthiness Directives which are issued prior to the date of return of the Aircraft and require compliance (either by means of repetitive inspections, modifications or terminating action) prior to return of the Aircraft to LESSOR or within one (1) year after the Termination Date will have been complied with on the Aircraft on a terminating action basis at LESSEE's cost. Airworthiness Directives which do not have a terminating action will be accomplished at the highest level of inspection or modification possible. If, after using best efforts, LESSEE is unable to acquire the material, parts or components necessary to accomplish such Airworthiness Directive, LESSEE will pay to LESSOR upon return of the Aircraft the estimated cost of terminating such Airworthiness Directive. If the estimated cost cannot be mutually agreed upon by LESSEE and LESSOR, LESSEE and LESSOR will each obtain an estimate from a reputable FAA-approved maintenance facility (unaffiliated with LESSEE or LESSOR) and the estimated cost will be the average of the two estimates. 23.7.10 The Aircraft will be in compliance with the Corrosion Prevention and Control Program (CPCP) specified in LESSEE's Maintenance Program. 23.7.11 If any waivers, deviations, dispensations, alternate means of compliance, extensions or carry-overs with respect to maintenance or operating requirements, repairs or Airworthiness Directives are granted by the Aviation Authority or permitted by the Maintenance Program, LESSEE at its sole cost and expense will nonetheless perform such maintenance or operating requirements, repairs or Airworthiness Directives as if such waivers, deviations, dispensations, alternate means of compliance, or extensions or carry-overs did not exist. 23.7.12 The Aircraft will be free from any Security Interest except LESSOR's Liens and no circumstance will have so arisen whereby the Aircraft is or could become subject to any Security Interest or right of detention or sale in favor of the Aviation Authority, any airport authority, or any other authority. 23.7.13 All no-charge vendor and Manufacturer's service bulletin kits received by LESSEE for the Aircraft but not installed thereon will be on board the Aircraft as cargo. At LESSOR's request, any other service bulletin kit which LESSEE paid for will also be delivered to LESSOR on board the Aircraft, but LESSOR will reimburse LESSEE for its actual out-of-pocket costs for such kit, unless LESSEE purchased such kit as part of its implementation of a service bulletin on its fleet of aircraft of the same type as the Aircraft but had not yet installed such kit on the Aircraft, in which case such kit will be furnished free of charge to LESSOR. 23.7.14 The Aircraft will be free of any leaks and any damage resulting therefrom. All repairs will have been performed on a permanent basis in accordance with the applicable manufacturer's instructions. 23.7.15 The Aircraft fluid reservoirs (including oil, oxygen, hydraulic and water) will be serviced to full and the waste tank serviced in accordance with Manufacturer's instructions. (Fuel tanks will be at least as full as at Delivery.) 23.8 CHECKS PRIOR TO RETURN. Immediately prior to return of the Aircraft to LESSOR, LESSEE at its expense will do each of the following: 23.8.1 Have performed, and completed, by an FAA-approved repair station, all maintenance tasks specified in LESSEE's Maintenance Program and the MPD which (a) are necessary to clear the Aircraft of all such tasks for eighteen (18) months, five thousand (5,000) hours, and three thousand (3,000) cycles from the date of return of the Aircraft, and (b) are required to be performed at lesser intervals than eighteen (18) months, five thousand (5,000) hours or three thousand (3,000) cycles (all such work collectively referred to as the "RETURN CHECK"). If a maintenance task is specific to LESSEE's Maintenance Program and not required or recommended to be performed by the MPD, then LESSEE will not be required to perform such maintenance task so long as the Return Check is performed in such a manner that clears the Aircraft of all maintenance tasks in accordance with the requirements of the preceding sentence. As part of the Return Check, all non-routine tasks generated as a result of the performance of the work included in the Return Check and any other discrepancies revealed during the Return Check must also be performed in accordance with the FAA approved procedures. LESSEE will also weigh the Aircraft. LESSEE agrees to perform during the Return Check any other work reasonably required by LESSOR (and not otherwise required under this Lease) and LESSOR will, promptly upon receipt of an invoice from LESSEE, reimburse LESSEE for such work at LESSEE's preferred customer rates. 23.8.2 Have the Aircraft in compliance with Corrosion Prevention and Control Program (CPCP) as specified in the MPD and LESSEE's Maintenance Program. 23.8.3 Remove LESSEE's exterior markings, including all exterior paint, by stripping (or, at LESSOR's option, pneumatically scuff/sanding) the paint from the fuselage, empennage, wings and Engine cowlings, and clean, reseal, refinish, prepare (including application of alodine or another corrosion inhibitor) and prime the surfaces to be painted, all in accordance with Manufacturer's and paint manufacturer's recommendations. LESSEE will then repaint the fuselage, empennage, wings and Engine cowlings in the colors and logo specified by LESSOR ; PROVIDED, HOWEVER, that LESSEE will be responsible for only paying the amount that it would cost to strip or scuff/sand (whichever is performed on the Aircraft at return) and properly paint the Aircraft in LESSEE's colors and logo and LESSOR will be responsible for the excess cost to paint the Aircraft in the next lessee's colors and logo. Such painting will be accomplished in such a manner as to result in a uniformly smooth and cosmetically acceptable aerodynamic surface. All external placards, signs and markings will be properly attached, free from damage, clean and legible. 23.8.4 Clean the exterior and interior of the Aircraft. 23.8.5 If reasonably required by LESSOR, apply touch up to paint to the interior of the Aircraft, including flight deck, and replace any missing or broken placards. 23.8.6 In accordance with Article 23.7.7, permanently repair damage to the Aircraft that exceeds Manufacturer's limits and replace any non-flush structural patch repairs installed on the Aircraft with flush-type repairs, so long as the Manufacturer or the Manufacturer's Structural Repair Manual permits flush-type repairs on the portion of the Aircraft where the non-flush structural repairs were made. 23.8.7 With LESSOR or its representatives present, perform a full and complete hot and cold section videotape borescope on each Engine and its modules in accordance with the Engine manufacturer's maintenance manual. 23.8.8 If the Engine historical and technical records and/or condition trend monitoring data of any Engine (including the APU) indicate an acceleration in the rate of deterioration in the performance of an Engine, LESSEE will correct, to LESSOR's satisfaction, such conditions which are determined to be causing such accelerated rate of deterioration. 23.8.9 With LESSOR or its representatives present, accomplish a maximum power assurance run on the Engines. LESSEE will evaluate the Engine performance and record the Engine maximum power assurance test conditions and results on the Return Acceptance Receipt. 23.8.10 LESSEE will provide evidence to LESSOR's satisfaction that the Engine historical and technical records, borescope inspection, trend monitoring and other checks specified in Article 23.8.9 do not reveal any condition which would cause the Engines or any module to be unserviceable, beyond serviceable limits or serviceable with an increased frequency of inspection or with calendar time, flight hour or flight cycle restrictions under the Engine manufacturer's maintenance manual. LESSEE will correct any discrepancies in accordance with the guidelines set out by the Engine manufacturer which may be discovered during such inspection. 23.8.11 In the event the Engine historical and technical records, borescope inspection, trend monitoring and other checks specified in Article 23.8.9 result in a dispute regarding the conformity of an Engine with the requirements of this Article 23, LESSEE and LESSOR will consult with Engine manufacturer and follow Engine manufacturer's recommendations (including the accomplishment of an Engine test cell operational check) with regard to determining if such Engine complies with the requirements of this Article 23 and the manner in which any discrepancies from the requirements of this Article 23 will be rectified. 23.9 PART LIVES. At return, the condition of the Aircraft will be as follows: (CONFIDENTIAL MATERIAL OMITTED) 23.10 EXPORT AND DEREGISTRATION OF AIRCRAFT. At LESSOR's request, LESSEE at its cost will (a) provide an Export Certificate of Airworthiness or its equivalent from the State of Registration so that the Aircraft can be exported to the country designated by LESSOR, (b) assist with deregistration of the Aircraft from the register of aircraft in the State of Registration, (c) assist with arranging for prompt confirmation of such deregistration to be sent by the registry in the State of Registration to the next country of registration and (d) perform any other acts reasonably required by LESSOR in connection with the foregoing. If any Aircraft work which LESSEE is not otherwise required to perform hereunder, including engineering, is required in order to obtain such Export Certificate of Airworthiness, LESSEE will perform such work and LESSOR will reimburse LESSEE for such work at LESSEE's preferred customer rates. 23.11 LESSEE'S CONTINUING OBLIGATIONS. In the event that LESSEE does not return the Aircraft to LESSOR on the Expiration Date and in the condition required by this Article 23 for any reason (whether or not the reason is within LESSEE's control): 23.11.1 the obligations of LESSEE under this Lease will continue in full force and effect on a day-to-day basis until such return. This will not be considered a waiver of LESSEE's Event of Default or any right of LESSOR hereunder. 23.11.2 Until such return, the Agreed Value will be an amount equal to the Agreed Value on the day the Aircraft should have been returned to LESSOR pursuant to this Lease. 23.11.3 LESSEE will fully indemnify LESSOR on demand for all losses (including consequential damages), liabilities, actions, proceedings, costs and expenses thereby suffered or incurred by LESSOR and, in addition, if a delay in return of the Aircraft was due to reasons within LESSEE's reasonable control, then until such time as the Aircraft is redelivered to LESSOR and put into the condition required by this Article 23, instead of paying the Rent specified in Article 5.3, LESSEE will pay twice the amount of Rent for each day from the scheduled Expiration Date until the Termination Date (the monthly Rent payable under Article 5.3.1 will be prorated based on the actual number of days in the applicable month). Payment will be made upon presentation of LESSOR's invoice. 23.11.4 LESSOR may elect, in its sole and absolute discretion, to accept the return of the Aircraft prior to the Aircraft being put in the condition required by this Article 23 and thereafter have any such non-conformance corrected at such time as LESSOR may deem appropriate (but within ninety (90) days following the return of the Aircraft) and at commercial rates then-charged by the Person selected by LESSOR to perform such correction. Any direct expenses incurred by LESSOR for such correction will become additional Rent payable by LESSEE within fifteen (15) days following the submission of a written statement by LESSOR to LESSEE, identifying the items corrected and setting forth the expense of such corrections. LESSEE's obligation to pay such supplemental Rent will survive the Termination Date. 23.12 AIRPORT AND NAVIGATION CHARGES. LESSEE will ensure that at return of the Aircraft any and all airport, navigation and other charges which give rise or may if unpaid give rise to any lien, right of detention, right of sale or other Security Interest in relation to the Aircraft, Engine or any Part have been paid and discharged in full and will at LESSOR's request produce evidence thereof satisfactory to LESSOR. 23.13 RETURN ACCEPTANCE CERTIFICATE. Upon return of the Aircraft in accordance with the terms of this Lease, LESSEE will prepare and execute two (2) Return Acceptance Certificates in the form and substance of Exhibit I and LESSOR will countersign and return one such Return Acceptance Certificate to LESSEE. In addition, LESSEE and LESSOR will execute a Lease Termination for filing with the FAA evidencing termination of this Lease. 23.14 INDEMNITIES AND INSURANCE. The indemnities and insurance requirements set forth in Articles 16 and 17, respectively, will apply to Indemnitees and LESSOR's representatives during return of the Aircraft, including the ground inspection and acceptance flight. With respect to the acceptance flight, LESSOR's representatives will receive the same protections as LESSOR on LESSEE's Aviation and Airline General Third Party Liability Insurance. ARTICLE 24 ASSIGNMENT 24.1 NO ASSIGNMENT BY LESSEE. EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED BY THE TERMS OF THIS LEASE, NO ASSIGNMENT, NOVATION, TRANSFER, MORTGAGE OR OTHER CHARGE MAY BE MADE BY LESSEE OF ANY OF ITS RIGHTS WITH RESPECT TO THE AIRCRAFT, ENGINE OR PART OF THIS LEASE. 24.2 SALE OR ASSIGNMENT BY LESSOR. 24.2.1 Subject to LESSEE's rights pursuant to this Lease, LESSOR may at any time and without LESSEE's consent sell, assign or transfer its rights, interest and obligations hereunder or with respect to the Aircraft to a third party ("LESSOR'S ASSIGNEE"), but only if: (a) LESSOR's Assignee has full power, authority, and legal right to execute, deliver, and perform the obligations of LESSOR under the Operative Documents and provides reasonably satisfactory evidence of such power and authority to LESSEE; (b) LESSOR's Assignee enters into one or more legal, valid, binding and enforceable agreements effective to confirm that LESSOR's Assignee agrees to be bound by all the terms of, and to undertake all of the obligations arising after such transfer of LESSOR in, the Operative Documents, and in which it makes representations and warranties substantially the same as those in Article 21.1 of this Lease; (c) upon such transfer LESSEE shall not be obligated to pay any greater amount or incur any greater obligation (other than indemnifying additional indemnitees, insuring additional insureds and other minor ministerial matters) than that which it would have been obliged to pay or incur under the Operative Documents if no transfer or assignment had taken place, and upon such transfer the terms and conditions of the Operative Documents insofar as they relate to the rights and obligations of LESSEE are not altered; (d) LESSOR shall cause LESSOR's Assignee to deliver to LESSEE an opinion of counsel reasonably satisfactory to LESSEE to the effect that such agreement or agreements referred to in clause (2) and, if applicable, clause (6) are legal, binding, and enforceable in accordance with its or their terms, subject to the typical exceptions. (e) the transfer shall relate to LESSOR's entire interest as owner or lessor; (f) LESSOR's Assignee is a citizen of the United States under 49 U.S. Code ss.40102(a)(15) (such status to be determined without considering FAR ss.47.9 or any other provision that may restrict LESSEE's use or operation of the Aircraft), or shall use a voting powers trust or similar arrangement in order to hold an interest in the Aircraft such that the Aircraft can be registered in the U.S. (without considering FAR ss.47.9 or any other provision that may restrict LESSEE's use or operation of the Aircraft); (g) LESSOR's Assignee is a single Person and is either (i) a Permitted Institution, or (ii) or an affiliate of a Permitted Institution, if such affiliate's obligations under the Operative Documents are guaranteed by such Permitted Institution pursuant to a written guaranty, in form and substance reasonably satisfactory to LESSEE; and (h) LESSOR shall give written notice to LESSEE at least five (5) days before any such transfer, specifying the name and address of the proposed LESSOR's Assignee, and providing reasonably satisfactory evidence that the proposed LESSOR's Assignee meets the requirements described in Article 24.2.1(g)(i) or (ii). For a period of two (2) years after such sale or assignment and at LESSEE's cost, LESSEE will continue to name LESSOR as an additional insured under the Aviation and Airline General Third Party Liability Insurance required pursuant to Article 17 and Exhibit C. 24.2.2 The term "LESSOR" as used in this Lease means the lessor of the Aircraft at the time in question. In the event of the sale of the Aircraft and transfer of LESSOR's rights and obligations under this Lease, LESSOR's Assignee will become "LESSOR" of the Aircraft under this Lease and the transferring party (the prior "LESSOR") will be relieved of all liability to LESSEE under this Lease for obligations arising on and after the date the Aircraft is sold. LESSEE will acknowledge and accept LESSOR's Assignee as the new "LESSOR" under this Lease and will look solely to LESSOR's Assignee for the performance of all LESSOR obligations and covenants under this Lease arising on and after the Aircraft sale date. 24.3 LESSOR'S LENDER. Subject to LESSEE's rights pursuant to this Lease, LESSOR may at any time and without LESSEE's consent grant security interests over the Aircraft and assign the benefit of this Lease to a lender ("LESSOR'S LENDER") as security for LESSOR's obligations to LESSOR's Lender. Accordingly, if LESSOR's Lender requires, as a condition to providing financing, any nonsubstantive modification of this Lease, LESSEE agrees to enter into an agreement so modifying this Lease. 24.4 LESSEE COOPERATION. On request by LESSOR, LESSOR's Assignee or LESSOR's Lender, LESSEE will execute all such documents (such as a lease assignment agreement) as LESSOR, LESSOR's Assignee or LESSOR's Lender may reasonably require to confirm LESSEE's obligations under this Lease and obtain LESSEE's acknowledgment that to the best of LESSEE's knowledge, LESSOR is not in breach of this Lease. LESSEE will provide all other reasonable assistance and cooperation to LESSOR, LESSOR's Assignee and LESSOR's Lender in connection with any such sale or assignment or the perfection and maintenance of any such security interest, at LESSOR's cost, including making all necessary filings and registrations in the State of Registration and providing all opinions of counsel with respect to matters reasonably requested by LESSOR, LESSOR's Lender or LESSOR's Assignee. LESSOR will reimburse LESSEE for its reasonable out-of-pocket costs in reviewing documents required by LESSOR or LESSOR's Lender. 24.5 PROTECTIONS. 24.5.1 LESSOR will obtain for the benefit of LESSEE an acknowledgment from any LESSOR's Assignee or LESSOR's Lender that, so long as no Event of Default has occurred and is continuing hereunder, such Person will not interfere with LESSEE's quiet, peaceful use and enjoyment of the Aircraft. 24.5.2 Wherever the term "LESSOR" is used in this Lease in relation to any of the provisions relating to disclaimer, title and registration, indemnity and insurance contained in Articles 8, 13, 16 and 17, respectively, or with respect to Article 20.2.7, the term "LESSOR" will be deemed to include LESSOR's Assignee and LESSOR's Lender, if applicable. For avoidance of doubt, in the event of LESSOR's sale or financing of the Aircraft, the disclaimer and indemnity provisions contained in Articles 8 and 16 will continue to be applicable after the sale or assignment to International Lease Finance Corporation, as well as being applicable to LESSOR's Assignee and LESSOR's Lender. ARTICLE 25 DEFAULT OF LESSEE 25.1 LESSEE NOTICE TO LESSOR. LESSEE will promptly notify LESSOR if LESSEE becomes aware of the occurrence of any Default. 25.2 EVENTS OF DEFAULT. The occurrence of any of the following will constitute an Event of Default and material breach of this Lease by LESSEE: (a) LESSEE fails to take delivery of the Aircraft when obligated to do so under the terms of this Lease; (b) LESSEE fails to make a Rent or other payment due hereunder in the manner and by the date provided herein and fails to make such payment within five (5) Business Days after its receipt of notice that such payment is due; (c) LESSEE fails to obtain or maintain the insurance required by Article 17; (d) LESSEE fails to return the Aircraft to LESSOR on the Expiration Date in accordance with Article 23; (e) LESSEE fails to observe or perform any of its other obligations hereunder and fails to cure the same within thirty (30) days after written notice thereof to LESSEE; provided, that LESSEE will have up to a total of sixty (60) days to cure such failure so long as it uses diligent efforts to do so; (f) any representation or warranty of LESSEE herein proves to have been untrue in any material respect when made; provided, that, if the effect of such falsity is curable, LESSEE shall have thirty (30) days after LESSEE has knowledge that the representation or warranty is untrue; (g) the registration of the Aircraft is cancelled other than as a result of an act or omission of LESSOR; (h) LESSEE abandons the Aircraft or Engines; (i) LESSEE or an approved sublessee no longer has unencumbered control (other than Permitted Liens) or possession of the Aircraft or Engines, except as otherwise permitted by this Lease; (j) LESSEE temporarily or permanently discontinues business or (except as permitted by Article 20.2.4) sells or otherwise disposes of all or substantially all of its assets; (k) a material adverse change occurs in the financial condition of LESSEE; (l) LESSEE no longer possesses the licenses, certificates and permits required for the conduct of its business as a certificated air carrier in the U.S.; (m) LESSEE (i) suspends payment on its debts or other obligations generally, (ii) is unable to or admits its inability to pay its debts or other obligations generally as they fall due, (iii) is adjudicated or becomes bankrupt or insolvent or (iv) enters into any composition or other arrangement for the benefit of its creditors generally; (n) any proceedings, resolutions, filings or other steps are instituted with respect to LESSEE relating to the bankruptcy, liquidation, reorganization or protection from creditors of LESSEE or at least half of LESSEE's property. If instituted by LESSEE, the same will be an immediate Event of Default. If instituted by another Person, the same will be an Event of Default if not dismissed, remedied or relinquished within sixty (60) days; (o) any order, judgment or decree is entered by any court of competent jurisdiction appointing a receiver, trustee or liquidator of LESSEE or at least half of its property, or if at least half of LESSEE's property is to be sequestered. If instituted by or done with the consent of LESSEE, the same will be an immediate Event of Default. If instituted by another Person, the same will be an Event of Default if not dismissed, stayed, remedied or relinquished within sixty (60) days; PROVIDED, HOWEVER, that if such proceeding is stayed, then such proceeding will become an immediate Event of Default if such stay is removed or terminates and the proceeding is not dismissed, remedied or relinquished when such stay is removed or terminates. (p) any indebtedness for borrowed moneys or a guarantee or similar obligation owed by LESSEE with an unpaid balance of CONFIDENTIAL MATERIAL OMITTED is declared due before its stated maturity or LESSEE is in default of payment obligations CONFIDENTIAL MATERIAL OMITTED under any other purchase agreement, lease, conditional sale agreement or other agreement pursuant to which LESSEE has possession of any aircraft; (q) Eurocontrol has notified LESSOR that there are unpaid Eurocontrol charges due from LESSEE (unless such charges are being contested in good faith and by appropriate proceedings, an adequate bond has been provided and such proceedings do not involve any danger of the detention, interference with the use or operation, sale, forfeiture or loss of the Aircraft) and such charges remain outstanding for a period of thirty (30) days from the date of Eurocontrol's notice to LESSOR provided that such thirty (30) day grace period will not apply if there is a danger of detention, interference with the use or operation, sale, forfeiture or loss of the Aircraft; or (r) LESSEE is in default under any other lease or agreement between LESSEE and LESSOR and the same is not cured within its specified cure period. 25.3 LESSOR'S GENERAL RIGHTS. Upon the occurrence of any Event of Default, LESSOR may do all or any of the following at its option (in addition to such other rights and remedies which LESSOR may have by statute or otherwise but subject to any requirements of applicable Law): (a) terminate this Lease by giving written notice to LESSEE; (b) require that LESSEE immediately move the Aircraft to an airport or other location designated by LESSOR; (c) for LESSEE's account, do anything that may reasonably be required to cure any default and recover from LESSEE all reasonable costs, including legal fees and expenses incurred in doing so and Default Interest; (d) proceed as appropriate to enforce performance of this Lease and to recover any damages for the breach hereof, including the amounts specified in Article 25.5; (e) terminate this Lease by taking possession of the Aircraft or by serving notice requiring LESSEE to return the Aircraft to LESSOR at the location specified by LESSOR. If LESSOR takes possession of the Aircraft, it may enter upon LESSEE's premises where the Aircraft is located without liability. Upon repossession of the Aircraft, LESSOR will then be entitled to sell, lease or otherwise deal with the Aircraft as if this Lease had never been made. LESSOR will be entitled to the full benefit of its bargain with LESSEE; or (f) apply all or any portion of the Security Deposit and any other security deposits held by LESSOR pursuant to any other agreements between LESSOR and LESSEE to any amounts due. 25.4 DEREGISTRATION AND EXPORT OF AIRCRAFT. If an Event of Default has occurred and is continuing, LESSOR may take all steps necessary to deregister the Aircraft in and export the Aircraft from the State of Registration. 25.5 LESSEE LIABILITY FOR DAMAGES. If an Event of Default occurs, in addition to all other remedies available at law or in equity, LESSOR has the right to recover from LESSEE and LESSEE will pay LESSOR within two (2) Business Days after LESSOR's written demand, all of the following: (a) all amounts which are then due and unpaid hereunder and which become due prior to the earlier of LESSOR's recovery of possession of the Aircraft or LESSEE making an effective tender thereof; (b) any losses suffered by LESSOR because of LESSOR's inability to place the Aircraft on lease with another lessee or to otherwise utilize the Aircraft on financial terms as favorable to LESSOR as the terms hereof or, if LESSOR elects to dispose of the Aircraft, the funds arising from a sale or other disposition of the Aircraft are not as profitable to LESSOR as leasing the Aircraft in accordance with the terms hereof would have been (and LESSOR will be entitled to accelerate any and all Rent which would have been due from the date of LESSOR's recovery or repossession of the Aircraft through the Expiration Date); (c) all costs associated with LESSOR's exercise of its remedies hereunder, including but not limited to repossession costs, legal fees, Aircraft storage costs, Aircraft re-lease or sale costs and LESSOR's internal costs and expenses (including the cost of personnel time calculated based upon the compensation paid to the individuals involved on an annual basis and a general LESSOR overhead allocation); (d) any amount of principal, interest, fees or other sums paid or payable on account of funds borrowed in order to carry any unpaid amount; (e) any loss, premium, penalty or expense which may be incurred in repaying funds raised to finance the Aircraft or in unwinding any financial instrument relating in whole or in part to LESSOR's financing of the Aircraft; (f) any loss, cost, expense or liability sustained by LESSOR due to LESSEE's failure to redeliver the Aircraft in the condition required by this Lease; and (g) any other loss, damage, expense, cost or liability which LESSOR suffers or incurs as a result of the Event of Default and/or termination of this Lease, including an amount sufficient to fully compensate LESSOR for any loss of or damage to LESSOR's residual interest in the Aircraft caused by LESSEE's default. 25.6 WAIVER OF DEFAULT. By written notice to LESSEE, LESSOR may at its election waive any Default or Event of Default and its consequences and rescind and annul any prior notice of termination of this Lease. The respective rights of the parties will then be as they would have been had no Default or Event of Default occurred and no such notice been given. 25.7 PRESENT VALUE OF PAYMENTS. In calculating LESSOR's damages hereunder, upon an Event of Default all Rent and other amounts which would have been due hereunder during the Lease Term if an Event of Default had not occurred will be calculated on a present value basis using a discounting rate of six percent (6%) per annum discounted to the earlier of the date on which LESSOR obtains possession of the Aircraft or LESSEE makes an effective tender thereof. 25.8 USE OF "TERMINATION DATE". For avoidance of doubt, it is agreed that if this Lease terminates and the Aircraft is repossessed by LESSOR due to an Event of Default, then, notwithstanding the use of the term "Termination Date" in this Lease, the period of the Lease Term and the "Expiration Date" will be utilized in calculating the damages to which LESSOR is entitled pursuant to Article 25.5. For example, it is agreed and understood that LESSOR is entitled to receive from LESSEE the Rent and the benefit of LESSEE's insurance and maintenance of the Aircraft until expiration of the Lease Term. ARTICLE 26 NOTICES 26.1 MANNER OF SENDING NOTICES. Any notice, request or information required or permissible under this Lease will be in writing and in English. Notices will be delivered in person or sent by fax, letter (mailed airmail, certified and return receipt requested), or by expedited delivery addressed to the parties as set forth in Article 26.2. In the case of a fax, notice will be deemed received upon actual receipt (and the date of actual receipt will be deemed to be the date set forth on the confirmation of receipt produced by the sender's fax machine immediately after the fax is sent). In the case of a notice sent by expedited delivery, notice will be deemed received on the date of delivery set forth in the records of the Person which accomplished the delivery. If any notice is sent by more than one of the above listed methods, notice will be deemed received on the earliest possible date in accordance with the above provisions. 26.2 NOTICE INFORMATION. Notices will be sent: If to LESSOR: INTERNATIONAL LEASE FINANCE CORPORATION 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067, U.S.A. Attention: Legal Department Fax: 310-788-1990 Telephone: 310-788-1999 If to LESSEE: AMERICAN TRANS AIR, INC. 7337 West Washington Street Indianapolis International Airport Indianapolis, Indiana 46231 United States of America Attention: Ken Wolff Executive Vice President and Chief Financial Officer Fax: 317-240-7091 Telephone: 317-247-4000 or to such other places and numbers as either party directs in writing to the other party. ARTICLE 27 GOVERNING LAW AND JURISDICTION 27.1 CALIFORNIA LAW. This Lease is being delivered in the State of California and will in all respects be governed by and construed in accordance with the Laws of the State of California (notwithstanding the conflict Laws of the State of California). 27.2 NON-EXCLUSIVE JURISDICTION IN CALIFORNIA. As permitted by Section 410.40 of the California Code of Civil Procedure, the parties hereby irrevocably submit to the non-exclusive jurisdiction of the Federal District Court for the Central District of California and the State of California Superior or Municipal Court in Los Angeles, California. Nothing herein will prevent either party from bringing suit in any other appropriate jurisdiction. 27.3 SERVICE OF PROCESS. The parties hereby consent to the service of process (a) out of any of the courts referred to above, (b) in accordance with Section 415.40 of the California Code of Civil Procedure by mailing copies of the summons and complaint to the person to be served by certified or registered mail to the address set forth in Article 26.2, postage prepaid, return receipt requested or (c) in accordance with the Hague Convention, if applicable. 27.4 PREVAILING PARTY IN DISPUTE. If any legal action or other proceeding is brought in connection with or arises out of any provisions in this Lease, the prevailing party will be entitled to recover reasonable attorneys' fees and other costs incurred in such action or proceedings. The prevailing party will also, to the extent permissible by Law, be entitled to receive pre- and post-judgment Default Interest. 27.5 WAIVER. LESSEE AND LESSOR HEREBY WAIVE THE RIGHT TO A TRIAL BY JURY. LESSEE AND LESSOR HEREBY IRREVOCABLY WAIVE ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATED TO THIS LEASE BROUGHT IN ANY OF THE COURTS REFERRED TO IN ARTICLE 27.2, AND HEREBY FURTHER IRREVOCABLY WAIVE ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. ARTICLE 28 MISCELLANEOUS 28.1 PRESS RELEASES. The parties will give copies to one another, in advance if possible, of all news, articles and other releases provided to the public media regarding this Lease. 28.2 LESSOR PERFORMANCE FOR LESSEE. The exercise by LESSOR of its remedy of performing a LESSEE obligation hereunder is not a waiver of and will not relieve LESSEE from the performance of such obligation at any subsequent time or from the performance of any of its other obligations hereunder. 28.3 LESSOR'S PAYMENT OBLIGATIONS. Any obligation of LESSOR under this Lease to pay or release any amount to LESSEE is conditioned upon (a) all amounts then due and payable by LESSEE to LESSOR under this Lease or under any other agreement between LESSOR and LESSEE having been paid in full and (b) no Default or Event of Default having occurred and continuing hereunder at the time such payment or release of payment is payable to LESSEE. 28.4 APPLICATION OF PAYMENTS. Any amounts paid or recovered in respect of LESSEE liabilities hereunder may be applied to Rent, Default Interest, fees or any other amount due hereunder in such proportions, order and manner as LESSOR determines. 28.5 USURY LAWS. The parties intend to contract in strict compliance with the usury Laws of the State of California and, to the extent applicable, the U.S. Notwithstanding anything to the contrary in the Operative Documents, LESSEE will not be obligated to pay Default Interest or other interest in excess of the maximum non-usurious interest rate, as in effect from time to time, which may by applicable Law be charged, contracted for, reserved, received or collected by LESSOR in connection with the Operative Documents. During any period of time in which the then-applicable highest lawful rate is lower than the Default Interest rate, Default Interest will accrue and be payable at such highest lawful rate; however, if at later times such highest lawful rate is greater than the Default Interest rate, then LESSEE will pay Default Interest at the highest lawful rate until the Default Interest which is paid by LESSEE equals the amount of interest that would have been payable in accordance with the interest rate set forth in Article 5.5. 28.6 DELEGATION BY LESSOR. LESSOR may delegate to any Person(s) all or any of the rights, powers or discretion vested in it by this Lease and any such delegation may be made upon such terms and conditions as LESSOR in its absolute discretion thinks fit. 28.7 CONFIDENTIALITY. The Operative Documents and all non-public information obtained by either party about the other are confidential and are between LESSOR and LESSEE only and will not be disclosed by a party to third parties (other than to such party's auditors or legal advisors or as required in connection with any filings of this Lease in accordance with Article 13) without the prior written consent of the other party. If disclosure is required as a result of applicable Law, LESSEE and LESSOR will cooperate with one another to obtain confidential treatment as to the commercial terms and other material provisions of this Lease. 28.8 RIGHTS OF PARTIES. The rights of the parties hereunder are cumulative, not exclusive, may be exercised as often as each party considers appropriate and are in addition to its rights under general Law. The rights of one party against the other party are not capable of being waived or amended except by an express waiver or amendment in writing. Any failure to exercise or any delay in exercising any of such rights will not operate as a waiver or amendment of that or any other such right any defective or partial exercise of any such rights will not preclude any other or further exercise of that or any other such right and no act or course of conduct or negotiation on a party's part or on its behalf will in any way preclude such party from exercising any such right or constitute a suspension or any amendment of any such right. 28.9 FURTHER ASSURANCES. Each party agrees from time to time to do and perform such other and further acts and execute and deliver any and all such other instruments as may be required by Law, reasonably requested by the auditors of the other party or requested by the other party to establish, maintain or protect the rights and remedies of the requesting party or to carry out and effect the intent and purpose of this Lease. 28.10 USE OF WORD "INCLUDING". The term "INCLUDING" is used herein without limitation. 28.11 HEADINGS. All article and paragraph headings and captions are purely for convenience and will not affect the interpretation of this Lease. Any reference to a specific article, paragraph or section will be interpreted as a reference to such article, paragraph or section of this Lease. 28.12 INVALIDITY OF ANY PROVISION. If any of the provisions of this Lease become invalid, illegal or unenforceable in any respect under any Law, the validity, legality and enforceability of the remaining provisions will not in any way be affected or impaired. 28.13 NEGOTIATION. The terms of this Lease are agreed by LESSOR from its principal place of business in Los Angeles, California. 28.14 TIME IS OF THE ESSENCE. Time is of the essence in the performance of all obligations of the parties under this Lease and, consequently, all time limitations set forth in the provisions of this Lease will be strictly observed. 28.15 AMENDMENTS IN WRITING. The provisions of this Lease may only be amended or modified by a writing executed by LESSOR and LESSEE. 28.16 COUNTERPARTS. This Lease may be executed in any number of identical counterparts, each of which will be deemed to be an original, and all of which together will be deemed to be one and the same instrument when each party has signed and delivered one such counterpart to the other party. 28.17 DELIVERY OF DOCUMENTS BY FAX. Delivery of an executed counterpart of this Lease or of any other documents in connection with this Lease by fax will be deemed as effective as delivery of an originally executed counterpart. Any party delivering an executed counterpart of this Lease or other document by fax will also deliver an originally executed counterpart, but the failure of any party to deliver an originally executed counterpart of this Lease or such other document will not affect the validity or effectiveness of this Lease or such other document. 28.18 ENTIRE AGREEMENT. The Operative Documents constitute the entire agreement between the parties in relation to the leasing of the Aircraft by LESSOR to LESSEE and supersede all previous proposals, agreements and other written and oral communications in relation hereto. The parties acknowledge that there have been no representations, warranties, promises, guarantees or agreements, express or implied, except as set forth herein and in the other Operative Documents. IN WITNESS WHEREOF, LESSEE and LESSOR have caused this Lease to be executed by their respective officers as of September 5, 2000. INTERNATIONAL LEASE FINANCE AMERICAN TRANS AIR, INC. CORPORATION By: /s/ Grant Levy By: /s/ Kenneth K. Wolff Its: Vice President Its: Executive Vice President & CFO EXHIBIT A AIRCRAFT DESCRIPTION Aircraft Manufacturer and Model: Boeing 737-800 Specification: Seating Configuration: Manufacturer's Serial Number: 28245 Registration Mark: ____ Engine Manufacturer and Model: CFM56-7B-27 Engine Serial Numbers: _______ and ________ Engine Thrust Rating: 27,300 pounds Maximum Gross Takeoff Weight: 160,000 pounds EXHIBIT B AGENCY AGREEMENT (Limited Authority) Relating to Boeing 737-800 Aircraft THIS AGENCY AGREEMENT ("AGREEMENT") is made and entered into as of ____________________. BETWEEN: AMERICAN TRANS AIR, INC., a Indiana corporation whose address and principal place of business is at 7337 West Washington Street, Indianapolis International Airport, Indianapolis, Indiana 46231, United States of America ("AGENT") and INTERNATIONAL LEASE FINANCE CORPORATION, a California corporation, whose address and principal place of business is at 1999 Avenue of the Stars, 39th Floor, Los Angeles, California 90067, U.S.A. ("BUYER"). RECITAL The Boeing Company ("MANUFACTURER") and Buyer have entered into Purchase Agreement 1830, dated as of June 27, 1995 (such purchase agreement as may be amended in accordance with the provisions thereof is hereinafter referred to as the "PURCHASE AGREEMENT") under which Manufacturer has agreed to manufacture and sell and Buyer has agreed to purchase certain Boeing 737-800 aircraft. Buyer has agreed to lease one (1) of such aircraft bearing manufacturer's serial number 28245 (the "AIRCRAFT") to the Agent pursuant to an Aircraft Lease Agreement between Buyer and Agent dated as of September 5, 2000 (the "LEASE"). The Agent is engaged in business as a commercial air carrier and intends to lease the Aircraft from Buyer, and Buyer is desirous of utilizing the expertise of the Agent as Buyer's agent in all matters to which the Purchase Agreement relates with respect to the Aircraft except certain items as indicated below, and the Agent, as Buyer's agent, is willing to make such expertise available to Buyer. Accordingly, the parties agree as follows: 1. Buyer hereby appoints the Agent as Buyer's sole and exclusive agent with authority to perform the following, on behalf of Buyer, as the Agent may in its discretion determine to be necessary or desirable: (a) monitor Manufacturer's production, testing and delivery of the Aircraft in accordance with the Purchase Agreement and (b) do all such other things permitted by the Purchase Agreement related to the technical and engineering aspects of Manufacturer's production of the Aircraft, except Buyer limits Agent's authority to perform on behalf of Buyer on any defect that occurs during manufacture that is considered significant in nature by Buyer as measured by the criteria set forth below. Buyer retains the sole authority to perform on any defect meeting such criteria. (i) Deviations from the drawing configuration that could affect future modifications, maintenance, repair or overhaul of the Aircraft; (ii) Defects that are obvious appearance items; (iii) Rework that requires stress concurrence to satisfy Manufacturer's Material Review Board (MRB) requirements; (iv) A high quantity of defects normally considered minor on a singular basis; (v) Major rework requiring extensive repair or modification, E.G. replacement of ---- skin panels, extensive use of oversize fasteners, repair of damaged areas and significant structural modifications; (vi) Rework that affects the aerodynamic drag coefficient of the Aircraft; or (vii) Rework that involves areas known to be sensitive to Buyer. 2. Notwithstanding anything in the provisions of paragraph 1, nothing in this Agreement will confer authority upon or otherwise permit the Agent: (a) to exercise any power of termination under the Purchase Agreement or (b) to make any payments due from Buyer to Manufacturer or to receive on behalf of Buyer any payments due from Manufacturer under the Purchase Agreement, or to alter any of the terms and conditions of the Purchase Agreement or the Detail Specifications of the Aircraft. 3. Buyer will not revoke the appointment of and authority granted under this Agreement to the Agent unless a termination of the Purchase Agreement or Lease has occurred with respect to the Aircraft or the Agent has failed to perform a material obligation under this Agreement. Notice of any such revocation will be provided in accordance with the provisions of Article 14 of the Purchase Agreement and given to both Manufacturer and the Agent. 4. Manufacturer acknowledges the appointment of the Agent for the purpose set forth hereunder and Manufacturer and Buyer agree that due performance by Manufacturer or Agent of an obligation under the Purchase Agreement will constitute due satisfaction of such obligation by such party and Buyer agrees to be bound by the acts of the Agent. 5. Buyer and Agent agree to identify the technical organization and/or person(s) with the limited authority to act for Agent during production of the Aircraft. Buyer will, if possible, provide such identification to Manufacturer in writing, along with office space requirements for Agent, if required, prior to or at the time of Manufacturer's acknowledgment of this Agreement. 6. Nothing in this Agreement will subject Manufacturer to any liability under the Purchase Agreement which it would not otherwise be subject to, or modify Manufacturer's rights thereunder, or require Manufacturer to divest itself of title to or possession of Aircraft or any other property which is subject to the Purchase Agreement until payment therefor and delivery thereof in accordance with the Purchase Agreement. 7. None of the parties hereto will be entitled to assign to any third party any of their rights under this Agreement. 8. The Agent will not delegate to any third party the performance of the obligations imposed on it by this Agreement or appoint a sub-agent. 9. References to Manufacturer in this Agreement will include any wholly-owned subsidiary of Manufacturer to which Manufacturer assigns any of its rights and obligations under the Purchase Agreement pursuant to the terms and conditions thereof. 10. This Agreement will be governed by the laws of the State of California; however, the Purchase Agreement shall remain governed by the laws of the State of Washington. This Agreement has been executed by the parties hereto as of the day and year first above written. INTERNATIONAL LEASE FINANCE CORPORATION AMERICAN TRANS AIR, INC. By: By: Its: Its: The Boeing Company acknowledges the appointment of AMERICAN TRANS AIR, INC. as agent of International Lease Finance Corporation in connection with the above referenced Aircraft as set forth in this Agreement. THE BOEING COMPANY By: Its: EXHIBIT C CERTIFICATE OF INSURANCE [Refer to Aircraft Lease Agreement dated as of September 5, 2000 between LESSEE and LESSOR (the "Lease"). If applicable, insurance certificates from both the insurers and reinsurers will be provided. If there is a LESSOR's Lender, include references to it where appropriate after references to LESSOR.] To: INTERNATIONAL LEASE FINANCE CORPORATION ("LESSOR") ------ 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States Re: AMERICAN TRANS AIR, INC. ("LESSEE") Boeing 737-800 Manufacturer's Serial No.: 28245 Registration Mark: ____ (the "AIRCRAFT") The following security has subscribed to the insurance and/or reinsurance policies: [LIST COMPANIES & PERCENTAGES] THIS IS TO CERTIFY THAT, as Insurance Brokers, we have effected Fleet Insurance in respect of aircraft owned or operated by LESSEE (including the Aircraft), and that insurance in respect of the Aircraft is as specified below. AIRCRAFT HULL ALL RISKS COVERING: All risks of physical loss or damage to the Aircraft from any cause (subject only to the exclusions as specified below), for an Agreed Value of Aircraft in the amount of [list amount calculated in accordance with Article 18.1] DEDUCTIBLES: (CONFIDENTIAL MATERIAL OMITTED) each and every loss (or such lesser amount as generally applicable to the rest of LESSEE's 737-800 fleet). Not applicable to Total Loss/Constructive Total Loss or Arranged Total Loss GEOGRAPHICAL COVERAGE: Worldwide [subject to customary exclusions] AVIATION AND AIRLINE GENERAL THIRD PARTY LIABILITY COVERING: Aircraft Third Party, Passenger, Baggage, Cargo and Mail Liability and Airline General Third Party Liability (including Premises, Hangarkeepers and Products Liability) for combined single limit of not less than (CONFIDENTIAL MATERIAL OMITTED) (or such higher amount as LESSEE may carry generally on other 737-800 aircraft in its fleet) any one accident/occurrence (but in the aggregate in relation to Products Liability), extended to cover LESSEE's liability under the Lease to the extent of the risks covered by the policy including war and allied perils under Extended Coverage Endorsement as per AVN 52 subject only to exclusions as specified below GEOGRAPHICAL LIMITS: Worldwide [subject to customary exclusions] HULL WAR AND ALLIED PERILS COVERING: Hull War Risks as per LSW555.B, but including (a) confiscation or requisition (including by State of Registration and state where airline is domiciled), (b) hijacking or other unlawful seizure or wrongful exercise of control of the Aircraft or crew in flight (including any attempt at such seizure or control) and including "All Risks" Continuation Clause and Extortion Risks (including expenses) and covering claims excluded from Hull All Risks Policy while Aircraft outside Assured's control by reason of perils insured under this policy, for an Agreed Value of Aircraft in the amount of [list amount calculated in accordance with Article 18.1] DEDUCTIBLE: No deductible GEOGRAPHICAL LIMITS: Worldwide AIRCRAFT SPARES ALL RISKS INSURANCE COVERING: All risks of physical loss or damage to Aircraft Parts or spares or Engines at all times when removed from the Aircraft from whatever cause, subject only to the exclusions specified below, including the risks set down in AVN 48B other than paragraphs (a) and (b) thereof (but including paragraph (a) in respect of transit risks) for limits of not less than: CONFIDENTIAL MATERIAL OMITTED and covering: With respect to an Engine, an agreed value (CONFIDENTIAL MATERIAL OMITTED) or, with LESSOR's written concurrence, replacement cost With respect to Parts, replacement cost DEDUCTIBLE: (CONFIDENTIAL MATERIAL OMITTED) GEOGRAPHICAL COVERAGE: Worldwide INSURANCE REQUIRED BY MANUFACTURER LESSEE will carry the insurance required by Manufacturer in connection with LESSOR's assignment of Manufacturer's warranties and product support to LESSEE CONTRACTUAL INDEMNITY To the extent of the risks covered by the policies, LESSEE has insurance coverage for the indemnities agreed to by LESSEE pursuant to Article 16 of the Lease, subject to AVN67B or equivalent PERIOD OF COVERAGE (ALL POLICIES) From the Delivery Date of Aircraft to [END OF POLICY PERIOD] It is further certified that LESSOR has an interest in respect of the Aircraft under the Lease. Accordingly, with respect to losses occurring during the period from the Effective Date until the expiry of the Insurance or until the expiry or agreed termination of the Lease or until the obligations under the Lease are terminated by any action of the Insured or LESSOR and in consideration of the Additional Premium it is confirmed that the Insurance afforded by the Policy is in full force and effect and it is further agreed that the following provisions are specifically endorsed to the Policy. 1. UNDER THE HULL (ALL RISKS AND HULL WAR AND ALLIED RISKS) AND AIRCRAFT SPARES INSURANCES (a) In respect of any claim on the Aircraft that becomes payable on the basis of a Total Loss, payment of any settlement will be made to, or to the order of LESSOR as sole loss payee, up to the Agreed Value. With respect to repairable damage to an Aircraft or Engine, LESSOR will receive all insurance proceeds in excess of CONFIDENTIAL MATERIAL OMITTED provided that upon receipt by the insurance broker of written notice of a material default on the part of LESSEE (and until notice that it has been cured), all insurance proceeds which otherwise would be payable to LESSEE will be made directly to LESSOR. In respect of any other claim, payment of any settlement (net of any relevant policy deductible) will be made with such party(ies) as may be necessary to repair the Aircraft unless otherwise agreed after consultation between the Insurers and the Insured and, where necessary under the terms of the Lease, LESSOR. Such payments will only be made provided they are in compliance with all applicable laws and regulations. (b) Insurers agree on a 50/50 settlement in terms of AVS 103. (c) Insurers have no right to replace the Aircraft on a Total Loss (arranged, constructive or otherwise). (d) Insurers confirm that under the insurance policies, if the Insured installs an engine owned by a third party on the Aircraft, either (i) the hull insurance will automatically increase to such higher amount as is necessary in order to satisfy both LESSOR's requirement to receive the Agreed Value in the event of a Total Loss, Constructive Total Loss or Arranged Total Loss and the amount required by the third party engine owner, or (ii) separate additional insurance on such engine will attach in order to satisfy separately the requirements of the Insured to such third party engine owner. 2. UNDER THE LEGAL LIABILITY INSURANCE (a) Subject to the provisions of this Endorsement, the Insurance will operate in all respects as if a separate Policy had been issued covering each party insured hereunder, but this provision will not operate to include any claim arising howsoever in respect of loss or damage to the Aircraft insured under the Hull or Spares Insurance of the Insured. Notwithstanding the foregoing the total liability of Insurers in respect of any and all Insureds will not exceed the limits of liability stated in the Policy. (b) The Insurance provided hereunder will be primary and without right of contribution from any other insurance which may be available to LESSOR. 3. UNDER ALL INSURANCES (a) LESSOR, its successors and assigns, and (with respect to Aviation and Airline General Third Party Liability only) its directors, officers and employees for their respective rights and interests, are included as Additional Insureds. (b) The cover afforded to LESSOR by the Policy in accordance with this Endorsement will 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 Policy. (c) LESSOR will have no responsibility for premium and insurers will waive any right of set-off or counterclaim against LESSOR except in respect of outstanding premium in respect of the Aircraft, provided that Insurer may only set-off for premiums against the proceeds of the hull insurance for outstanding premiums in connection with hull all risks and hull war and allied perils insurance. (d) Upon payment of any loss or claim to or on behalf of LESSOR, Insurers will to the extent and in respect of such payment be thereupon subrogated to all legal and equitable rights of LESSOR indemnified hereby (but not against LESSOR). Insurers will not exercise such rights without the consent of those indemnified, such consent not to be unreasonably withheld. At the expense of Insurers LESSOR will do all things reasonably necessary to assist the Insurers to exercise said rights. (e) Except in respect of any provision for Cancellation or Automatic Termination specified in the Policy or any endorsement thereof, cover provided by this Endorsement may only be cancelled or materially altered in a manner adverse to LESSOR by the giving of not less than thirty (30) days notice in writing to LESSOR. Notice will be deemed to commence from the date such notice is given by the Insurers. Such notice will NOT, however, be given at normal expiry date of the Policy or any endorsement. 4. EXCEPT AS SPECIFICALLY VARIED OR PROVIDED BY THE TERMS OF THIS CERTIFICATE (a) LESSOR IS COVERED BY THE POLICY SUBJECT TO ALL TERMS, CONDITIONS, LIMITATIONS,WARRANTIES, EXCLUSIONS AND CANCELLATION PROVISIONS THEREOF. (b) THE POLICY WILL NOT BE VARIED BY ANY PROVISIONS CONTAINED IN THE LEASE WHICH PURPORT TO SERVE AS AN ENDORSEMENT OR AMENDMENT TO THE POLICY. SUBJECT (save as specifically stated in this Certificate) to policy terms, conditions, limitations and exclusions. Yours faithfully, [BROKERS] EXHIBIT D BROKERS' LETTER OF UNDERTAKING To: INTERNATIONAL LEASE FINANCE CORPORATION 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States Date: Our Ref: Re: AMERICAN TRANS AIR, INC. ("LESSEE") ------ Boeing 737-800 Manufacturer's Serial No.: ____ Registration Mark: ____ (the "AIRCRAFT") Dear Sirs: We confirm that insurance has been effected for the account of [LESSEE] (the "OPERATOR") covering all aircraft owned or operated by them, including the above-referenced aircraft (the "Aircraft"). [Also confirm, if applicable, the amount of any hull all risks or hull war and allied perils on the Aircraft which LESSEE is carrying in excess of the Agreed Value (which excess insurance would be payable to LESSEE). Such excess insurance may not exceed ten percent (10%) of the Agreed Value.] Pursuant to instructions received from the Operator and in consideration of your approving the arrangement of the Operator's "Fleet Policy" (under which the above-referenced Aircraft is insured) through the intermediary of ourselves as Brokers in connection with the insurance (the "INSURANCE") mentioned in our Certificate of Insurance (Reference No. [ ] dated [ ] and attached hereto), we undertake as follows: 1. In relation to the Hull and War Risks Insurance to hold to your order the insurance Slips or Contracts and any Policies which may be issued or any policies substituted (with your consent) therefor (but only insofar as the same relate to the Aircraft only) and the benefit of the Hull and War Risks Insurance thereunder, but subject to our requirements to operate the Fleet Policy insofar as it relates to any other aircraft insured thereunder. 2. To advise you of any of the following: (a) If any insurer cancels or gives notice of cancellation of any of the Insurance at least thirty (30) days (or such lesser period as may be available in the case of War and Allied Perils) before such cancellation is to take effect in respect of the Aircraft. (b) Of any act or omission or of any event (including non-payment of premium) of which we have knowledge or are notified and which might invalidate or render unenforceable in whole or in part any of the Insurance, insofar as the same relate to the Aircraft. (c) If we do not receive instructions to renew all or any of the Insurance at least thirty (30) days prior to their expiration. (d) If any of the Insurance are not renewed on the same terms (save as to premium and period of cover and as you might otherwise have notified us to be acceptable to you) seven (7) days prior to expiry thereof. The above undertakings are given subject to our continuing appointment for the time being as Insurance Brokers to the Operator. We also undertake to advise you if we cease to be Insurance Brokers to the Operator. Yours faithfully, EXHIBIT E ESTOPPEL AND ACCEPTANCE CERTIFICATE AMERICAN TRANS AIR, INC. ("LESSEE"), a corporation organized under the laws of Indiana does hereby represent, acknowledge, warrant and agree as follows: 1. LESSEE and INTERNATIONAL LEASE FINANCE CORPORATION, as LESSOR, have entered into an Aircraft Lease Agreement dated as of September 5, 2000 (hereinafter referred to as the "LEASE"). Words used herein with capital letters and not otherwise defined will have the meanings set forth in the Lease. 2. LESSEE has this ____ day of __________, ____ (Time: __________) at ____________________ received from LESSOR possession of: (a) One (1) Boeing 737-800 aircraft bearing Manufacturer's serial number ____ and U.S. registration mark ____, together with two (2) CFM56-7B-27 engines bearing manufacturer's serial numbers _______ and ________ (each of which has 750 or more rated take-off horsepower), all in airworthy condition. (b) All Aircraft Documentation, including the usual and customary manuals, logbooks, flight records and historical information regarding the Aircraft, Engines and Parts. 3. All of the foregoing has been delivered and accepted on the date set forth above to LESSEE's full satisfaction and pursuant to the terms and provisions of the Lease. 4. The Agreed Value of the Aircraft is US$_______________. 5. The amount of fuel on board at Delivery is __________ (circle one) pounds/kilos (________ gallons). 6. The Aircraft, Engines, Parts and Aircraft Documentation as described in the Lease have been fully examined by LESSEE and have been received in a condition fully satisfactory to LESSEE and in full conformity with the Lease in every respect. 7. The Lease is in full force and effect, LESSEE has no claims, offsets, deductions or set-off of any kind or nature in connection with the Lease, except for any claims against LESSOR set forth on the attached List of Discrepancies. 8. LESSOR's Lender may rely upon all of the foregoing in granting substantial financial accommodations to LESSOR and LESSEE understands and agrees that any funds being advanced by LESSOR's Lender will be made in reliance upon the foregoing. 9. LESSEE has obtained all required permits, authorizations, licenses and fees of the State of Registration or any Government Entity thereof necessary in order for LESSEE to operate the Aircraft as permitted by the terms of the Lease. Dated on the date set forth above AMERICAN TRANS AIR, INC. By: Title: ATTACHMENTS: 1. List of Aircraft Documentation 2. List of Loose Equipment 3. List of Discrepancies ATTACHMENT 1 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE LIST OF AIRCRAFT DOCUMENTATION MANUALS 1. FAA Approved Flight Manual 2. Airplane Flight Operation Manual 3. Aircraft Recover Manual 4. Quick Reference Handbook (QRH) 5. Weight and Balance Manual 6. Aircraft Fueling Manual 7. Aircraft Maintenance Manual (MM) 8. Aircraft Maintenance Manual Supplement 9. Ramp Maintenance Manual (RMM) 10. Cargo Loading Manual 11. Fault Reporting Manual (FRM) 12. Fault Isolation Manual (FIM) 13. Illustrated Parts Catalog (IPC) 14. Life Limited Parts Manual 15. Structural Repair Manual (SRM) 16. Master Minimum Equipment List 17. Wiring Diagram Manual (WD) 18. Wiring Practices Manual 19. System Schematics Manual 20. B.I.T.E. Manual 21. Non-Destructive Test Manual 22. Corrosion Prevention Manual 23. Component Maintenance Manual 24. APU Log Book 25. Engine Maintenance Manual 26. Engine Log Book 27. Engine Illustrated Parts Catalog 28. Engine Data Submittal Book 29. Engine Overhaul Manual 30. Power Plant Build-up Manual AIRCRAFT RECORDS AND HISTORICAL DOCUMENTS 1. Copies of original Certificates delivered by Boeing: a. Airworthiness Certificate for Export b. Radio installation conformity certificate c. Noise limitation certificate 2. Copies of original Documents delivered by Boeing: a. Airworthiness Directive Compliance list b. Aircraft inspection report c. Aircraft Readiness Log d. Weighing report 3. Copies of current Certificates: a. Airworthiness Certificate b. Noise limitation c. Radio license d. Interior material burn certificates e. Certificate of Export f. Aircraft deregistration confirmation e. Aircraft Registration 4. Letters signed and stamped by Quality Assurance: a. Current aircraft hours and cycles b. Current engines hours and cycles c. Accident and Incident report d. Summary of Maintenance Program e. AD compliance during the lease term 5. Aircraft log books and Aircraft readiness log. 6. Aircraft Hard Time (HT) inspection status. 7. One year forecast for HT inspection. 8. Aircraft Modification status, including service bulletins. 9. Last weighing report prior to redelivery. 10. AD compliance report with original signoffs. 11. Routine and non-routine job cards of the last "C" and "D" checks. 12. Past year pilots and maintenance discrepancies. 13. Major and Minor structural repairs with applicable approvals. 14. Compass Swing report of the last three years. 15. Cabin Configuration drawing (LOPA). 16. Emergency equipment location drawing. 17. Last X-RAYs ENGINES RECORDS 1. Last test cell run reports. 2. Life Limited Parts status and traceability. 3. AD compliance report with original signoffs. 4. Engine Modification/service bulletin/inspection report and applicableforms. 5. Last heavy maintenance records for each module. 6. Engine log books. 7. Engine removal history. 8. Past year trend monitoring reports. 9. Historical borescope reports. 10. Engine component report. APU RECORDS 1. APU status (FH, FC, limits). 2. Life limited Part status and traceability. 3. AD compliance with original signoffs. 4. Modification status. 5. Last heavy maintenance documents. 6. APU log books. 7. Last test cell report. COMPONENT RECORDS 1. Aircraft component inventory. 2. Hard time component inventory. 3. All serviceable tags. 4. Landing Gear status with last overhaul and life limited Part status. 5. AD compliance with original signoffs. 6. Modification status. ATTACHMENT 2 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE LIST OF LOOSE EQUIPMENT ATTACHMENT 3 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE LIST OF DISCREPANCIES EXHIBIT F OPINION OF COUNSEL TO BE GIVEN BY INDEPENDENT OUTSIDE COUNSEL OF LESSEE OR OTHER LAWYERS ACCEPTABLE TO LESSOR To: International Lease Finance Corporation 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States Gentlemen: This opinion is furnished to you pursuant to Article 7 of the Aircraft Lease Agreement dated as of September 5, 2000 (the "LEASE") between AMERICAN TRANS AIR, INC. ("LESSEE") and INTERNATIONAL LEASE FINANCE CORPORATION ("LESSOR"). Defined terms in this opinion are used herein as defined in the Lease. I have acted as counsel for LESSEE in connection with the preparation, execution and delivery of the Lease. In that connection I have examined: (a) The Lease and Estoppel and Acceptance Certificate; (b) The charter of LESSEE and all amendments thereto (the "CHARTER"); and (c) Such other documents, agreements and instruments, and such treaties, laws, rules, regulations, decrees and the like, as I have deemed necessary as a basis for the opinions hereinafter expressed. [ (d) All of the agreements and any amendments thereto between LESSEE and all other lessors and lenders of LESSEE covering other aircraft operated by LESSEE on which the Engines can be installed.] Based upon the foregoing and having regard for legal considerations which I deem relevant, I am of the opinion that: 1. LESSEE is a corporation duly incorporated, validly existing and in good standing under the Laws of Indiana. It has the corporate power and authority to carry on its business as presently conducted and to perform its obligations under the Lease. 2. No authorization, approval, consent, license or order of, or registration with, or the giving of notice to the Aviation Authority or any other regulatory body or authority is required for the valid authorization, execution, delivery and performance by LESSEE of the Lease. 3. The Lease and the Estoppel and Acceptance Certificate have each been duly authorized, executed and delivered by LESSEE. Each such instrument is a valid, enforceable and binding obligation of LESSEE except as enforceability may be limited by bankruptcy, insolvency, reorganization or other Laws of general application affecting the enforcement of creditors' rights. 4. The execution and delivery of the Lease and the Estoppel and Acceptance Certificate, the consummation by LESSEE of the transactions contemplated therein and compliance by LESSEE with the terms and provisions thereof do not contravene any Law applicable to LESSEE, or result in any breach of or constitute any default under or result in the creation of any lien, charge or encumbrance upon any property of LESSEE, under any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which LESSEE is a party or by which LESSEE or its properties or assets is bound. 5. Except for any filing or recording that may be required with the [NAME OF AIRCRAFT REGISTER] and except for [DESCRIBE SUCH OTHER FILINGS OR RECORDINGS], no filing or recording of any instrument or document (including the filing of any financial statement) is necessary under the laws of the U.S. in order for the Lease to constitute a valid and perfected lease of record relating to the Aircraft, it being understood that such counsel expresses no opinion as to the nature of LESSOR's title to the Aircraft on the Delivery Date. 6. LESSEE holds all licenses, certificates and permits from applicable governmental authorities in the U.S. necessary for the conduct of its business as a certificated air carrier and performance of its obligations under the Lease. 7. To my knowledge, there are no suits or proceedings pending or threatened against LESSEE before any Government Entity against or affecting LESSEE which are reasonably likely to be adversely determined and, if adversely determined, would have a material adverse effect on the financial condition or business of LESSEE or its ability to perform under the Lease, except as described in the filings provided to LESSOR pursuant to Article 22. 8. The obligations of LESSEE under the Lease are direct, general and unconditional obligations of LESSEE and rank or will rank at least PARI PASSU with all other present and future unsecured and unsubordinated obligations (including contingent obligations) of LESSEE, with the exception of such obligations as are mandatorily preferred by law. 9. LESSEE, under the laws of the U.S. or of any other jurisdiction affecting LESSEE, is subject to private commercial law and suit. Neither LESSEE nor its properties or assets have the right of immunity from suit or execution on the grounds of sovereignty in such jurisdictions and the performance by LESSEE of its obligations under the Lease constitute commercial acts done for commercial purposes. 10. There is no applicable usury or interest limitation Law in Indiana which may restrict the recovery of payments in accordance with the Lease. 11. LESSOR will not violate any Law or become liable to any tax in Indiana or the U.S. by reason of entering into or performing its obligations under the Lease and it is not necessary to establish a place of business in Indiana in order to enforce any provisions of the Lease. Very truly yours, EXHIBIT G ASSIGNMENT OF RIGHTS (AIRFRAME) [DATE] Boeing Commercial Airplane Group P.O. Box 3707 Seattle, Washington 98124-2207 Attention: Vice President-Contracts Mail Code 21-34 Subject: Full Assignment of Rights and Obligations - International Lease Finance Corporation as Lessor and AMERICAN TRANS AIR, INC. as Lessee of Model Boeing 737-800 aircraft bearing manufacturer's serial number 28245 Ladies and Gentlemen: In connection with International Lease Finance Corporation's lease to AMERICAN TRANS AIR, INC. ("Lessee") of a Boeing aircraft (more fully described below), reference is made to the following documents: A. Purchase Agreement 1830, dated as of June 27, 1995, between The Boeing Company ("Boeing") and International Lease Finance Corporation ("ILFC") (the "Boeing Agreement") under which ILFC purchased a certain Boeing Model 737-800 aircraft bearing manufacturer's serial number 28245 (the "Aircraft"). B. Aircraft Lease Agreement (the "Lease") for the Aircraft dated as of September 5, 2000 between ILFC and Lessee. Capitalized terms used herein without definition will have the same meaning as in the Boeing Agreement. In connection with ILFC's lease of the Aircraft under the Lease, ILFC is transferring to Lessee certain rights of ILFC related to the Aircraft under the Boeing Agreement. To accomplish this transfer of rights, as authorized by the provisions of the Boeing Agreement: 1. Lessee acknowledges that it has received copies of the following specific provisions of the Boeing Agreement applicable to the Aircraft and agrees to be bound by and comply with all the terms, conditions, and limitations contained in such provisions, including without limitation the disclaimer and release, exclusion of liabilities, indemnity and insurance provisions thereof: Boeing Agreement Article 6 - Excusable Delay 6.1 General Article 10 - Assignment, Resale or Lease 10.1 Assignment 10.3 Sale by Buyer after Delivery 10.4 Lease by Buyer after Delivery 10.5 No Increase in Boeing Liability 10.6 Exculpatory or Indemnity Clause in Post-delivery Sale or Lease Article 12 - Product Assurance; Disclaimer and Release; Exclusion of Liabilities; Customer Support; Indemnification and Insurance (in its entirety) Article 14 - Contractual Notices and Requests Article 15 - Miscellaneous 15.4 Governing Law Exhibit B - Product Assurance Document Part A Boeing Warrant Part B Warranty Repairs and Modifications by Buyer Part C Boeing Service Life Policy Part D Boeing Indemnity Against Patent Infringement Part D-1 Boeing Indemnity Against Copyright Infringement Part E Supplier Warranties and Patent Indemnities Part G Boeing Interface Commitment Part H General Exhibit C-1 - Customer Support Document Part B Boeing Customer Support Services Part D Technical Data and Documents Part E Buyer's Indemnification of Boeing and Insurance Part F Alleviation or Cessation of Performance Exhibit E - Buyer Furnished Equipment Provisions Document Paragraph 8 Indemnification of Boeing Paragraph 9 Patent Indemnity Paragraph 10 Definitions Letter Agreement No. 1830-3 - Seller Purchased Equipment Paragraph 6 Buyer's Indemnification of Boeing 2. Lessee recognizes that Boeing's obligation to provide training, support and services to Lessee pursuant to Exhibit C of the Boeing Agreement is conditioned on the receipt by Boeing of evidence of compliance by Lessee with the insurance requirements set forth in paragraph 2 of Part E of Exhibit C or in such other form as may be satisfactory to Boeing, prior to the commencement of such training, support and services. 3. ILFC reserves to itself all rights, claims and interests it may have under the Boeing Agreement not expressly assigned to Lessee hereunder. ILFC will remain responsible to Boeing for any amounts with respect to the Aircraft owed to Boeing under the Boeing Agreement prior to the effective date of this letter, including any amounts owed by ILFC to Boeing under the specific articles and paragraphs of the Boeing Agreement referenced in paragraph 1 above based upon events or incidents relating to the Aircraft occurring prior to the effective date of this letter. 4. ILFC hereby assigns to Lessee the sole authority to exercise in Lessee's name all rights and powers of ILFC with respect to the Aircraft under the specific portions of the Boeing Agreement referenced in paragraph 1 above. Such authorization will continue until Boeing receives from ILFC written notice that the Lease has been cancelled or terminated, addressed to Boeing's Vice President, Contracts, P.O. Box 3707, MC 21-34, Seattle, Washington 98124-2207, U.S.A. Until Boeing receives such notice, Boeing will be entitled to deal exclusively with Lessee with respect to the Aircraft under the specific portions of the Boeing Agreement referenced in paragraph 1 above and, with respect to the rights, powers, duties or obligations under such portions of the Boeing Agreement, any and all actions taken by Lessee or agreements entered into by Lessee during the period prior to Boeing's receipt of such notice will be final and binding on ILFC. 5. Lessee hereby accepts the authorization set forth in paragraph 4 above and agrees to be bound by and to comply with all the terms, conditions and limitations of the portion of the Boeing Agreement referenced in paragraph 1 above. 6. This Assignment may be signed by the parties hereto in separate counterparts, each of which when executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. 7. This Assignment shall be governed by, and construed in accordance with,the laws of the State of Washington, including all matters of construction, validity and performance. We request that Boeing, upon receipt of this letter, acknowledge receipt thereof and the transfer of rights set forth above by signing the acknowledgment and forwarding one copy of this letter to each of the undersigned. IN WITNESS WHEREOF, the parties hereto have caused this Assignment Agreement to be duly executed as of the dates written below. INTERNATIONAL LEASE FINANCE AMERICAN TRANS AIR, INC., as Lessee CORPORATION, as Lessor and Buyer By: By: Its: Its: BOEING ACKNOWLEDGMENT AND CONSENT TO ASSIGNMENT Receipt of the above letter is acknowledged and transfer of certain rights as described above under the Boeing Agreement is confirmed, effective as of this date. THE BOEING COMPANY By: Its: Date: EXHIBIT H ASSIGNMENT OF RIGHTS (ENGINES) [DATE] CFM INTERNATIONAL, INC. 1 Neumann Way, F-17 Cincinnati, Ohio 45215 Attention: Commercial Contracts - Warranty Assignment Administrator Dear Warranty Assignment Administrator: Reference is hereby made to that Consent to Assignment made as of April 29, 1988 (the "CONSENT TO ASSIGNMENT"), by and between CFM INTERNATIONAL, INC. ("CFMI") and INTERNATIONAL LEASE FINANCE CORPORATION ("ILFC"). Terms defined in the Consent to Assignment are used herein with the same meaning as in the Consent to Assignment. As of ________________ ___, ______, ILFC has assigned all of its rights and interest in, to and under the Engine Warranties to AMERICAN TRANS AIR, INC. ("ASSIGNEE") in connection with its lease to Assignee of a Boeing 737-800 aircraft (the "AIRCRAFT") together with two (2) CFMI Model CFM56-7B-27 engines bearing Manufacturer's Serial Numbers _______ and ________ (the "ENGINES") as of the date each such Engine was delivered to Assignee. Such assignment shall be effective from such date until ILFC notifies CFMI that the Lease has been cancelled or terminated. The Assignee has accepted such assignment and all the limitations and liabilities pertaining to the Engine Warranties as stated in the provisions of the GTA listed in Schedule 2 to the Consent to Assignment. A copy of the aforesaid assignment is attached hereto. Very truly yours, INTERNATIONAL LEASE FINANCE CORPORATION By: Title: cc: Ruben M. Cabrera Director, Commercial Contracts ASSIGNMENT OF WARRANTIES [DATE] In consideration of AMERICAN TRANS AIR, INC. ("LESSEE") leasing from International Lease Finance Corporation ("ILFC") one (1) Boeing 737-800 aircraft together with two (2) CFMI Model CFM56-7B-27 engines bearing manufacturer's serial numbers _______ and ________, it is hereby agreed as follows: 1. ILFC hereby assigns and transfers to Lessee all of ILFC's respective rights and interest in and to and in and under the Engine Warranties set forth in and subject to the limitations and liabilities set forth in Exhibit B Warranty, Section X (the "ENGINE WARRANTIES") of CFM International, Inc. - ILFC General Terms Agreement No. 6-3987 dated 22 June 1984 (the "GTA") during the term of such leases so long as Lessee is not in default thereunder. 2. Lessee hereby accepts such assignment including all the limitations and liabilities pertaining to said Engine Warranties as stated in the provisions of Exhibit B Warranty, Section X of the GTA. 3. This Agreement shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors and assigns to the extent permitted by the GTA and hereunder. 4. This Agreement shall be governed by and construed in accordance with the laws of the State of California. 5. This Agreement may be executed in any number of counterparts, each of which when executed and delivered is an original but all of which taken together constitute one and the same instrument and any party may execute this Agreement by signing any counterpart. IN WITNESS WHEREOF, the authorized representative of the parties hereto have executed this Agreement as of the day and year first above written. For and on behalf of For and on behalf of INTERNATIONAL LEASE FINANCE AMERICAN TRANS AIR, INC. CORPORATION By: By: Its: Its: EXHIBIT I RETURN ACCEPTANCE RECEIPT Date: _________________ ___, ____ 1. AMERICAN TRANS AIR, INC., as LESSEE, and INTERNATIONAL LEASE FINANCE CORPORATION, as LESSOR, have entered into an Aircraft Lease Agreement dated as of September 5, 2000 (the "LEASE"). Words used herein with capital letters and not otherwise defined will have the meanings set forth in the Lease. 2. LESSOR has this ____ day of __________, ____ (Time: __________) at ____________________ received from LESSEE possession of: (a) One (1) Boeing 737-800 Aircraft bearing Manufacturer's serial number ____, together with two (2) CFM56-7B-27 engines bearing manufacturer's serial numbers _______ and ________, and all Parts attached thereto and thereon in an airworthy condition and (b) All Aircraft Documentation, including the usual and customary manuals, logbooks, flight records and historical information regarding the Aircraft, Engines and Parts, as listed in the Document Receipt attached hereto. 3. The Airframe, Engines and Parts had the following hours/cycles at return: (a) AIRFRAME: Total hours: _______________ Total Landings: _______________ (b) ENGINES: POSITION SERIAL NO. TOTAL HOURS TOTAL CYCLES HRS/CYCLES SINCE LAST SHOP VISIT Time Remaining to Next LIFE LIMITED PART REMOVAL PART NAME HOURS CYCLES MSN MSN (c) APU: MSN __________ Total hours: __________ ______ hours/ ______ cycles since last Overhaul ______ hours/ ______ cycles remaining on APU life-limited Parts (d) LANDING GEARS: POSITION SERIAL NO. Total Hrs/Cycles since Date of last HRS/CYCLES LAST OVERHAUL OVERHAUL Nose Right Main Left Main (e) FUEL ON BOARD AT RETURN: ______ (circle one) pounds/kilos (______ gallons) 4. Other technical information regarding the Aircraft and its components are correctly set forth on the Technical Evaluation Report (in the form of Exhibit L) attached hereto. 5. The above specified aircraft, engines and documentation are hereby accepted by LESSOR subject to correction by LESSEE (or procurement by LESSEE at LESSEE's cost) as soon as reasonably possible of the discrepancies specified in Attachment 2 hereto. 6. Subject to the following paragraph, the leasing of the Aircraft by LESSOR to LESSEE pursuant to the Lease is hereby terminated without prejudice to LESSEE's continuing obligations under the Lease including, without limitation, paragraph 6 above and Articles 10.5, 15 and 16. 7. LESSEE represents and warrants that during the term of the Lease all maintenance and repairs to the Airframe and Engines were performed in accordance with the requirements contained in the Lease. LESSEE further confirms that all of its obligations under the Lease whether accruing prior to the date hereof or which survive the termination of the Lease by their terms and accrue after the date hereof, will remain in full force and effect until all such obligations have been satisfactorily completed. 8. This Return Acceptance Supplement is executed and delivered by the parties in [place]. IN WITNESS WHEREOF, the parties hereto have caused this Return Acceptance Receipt to be executed in their respective corporate names by their duly authorized representatives as of the day and year first above written. INTERNATIONAL LEASE FINANCE CORPORATION AMERICAN TRANS AIR, INC. By: By: Its: Its: ATTACHMENTS: 1. List of Aircraft Documentation 2. List of Loose Equipment 3. List of Discrepancies 4. Engine Maximum Power Assurance Test Conditions and Results 5. Dent and Damage Chart 6. Form of No Accident/Incident Letter 7. Technical Evaluation Report (in the form of Exhibit L) ATTACHMENT 1 TO RETURN ACCEPTANCE RECEIPT LIST OF AIRCRAFT DOCUMENTATION [The (a) manuals and (b) Aircraft records and historical documents set forth below are to be returned with the Aircraft in a current, up-to-date and correct status] MANUALS 1. FAA Approved Flight Manual 2. Airplane Flight Operation Manual 3. Aircraft Recover Manual 4. Quick Reference Handbook (QRH) 5. Weight and Balance Manual 6. Aircraft Fueling Manual 7. Aircraft Maintenance Manual (MM) 8. Aircraft Maintenance Manual Supplement 9. Ramp Maintenance Manual (RMM) 10. Cargo Loading Manual 11. Fault Reporting Manual (FRM) 12. Fault Isolation Manual (FIM) 13. Illustrated Parts Catalog (IPC) 14. Life Limited Parts Manual 15. Structural Repair Manual (SRM) 16. Master Minimum Equipment List 17. Wiring Diagram Manual (WD) 18. Wiring Practices Manual 19. System Schematics Manual 20. B.I.T.E. Manual 21. Non-Destructive Test Manual 22. Corrosion Prevention Manual 23. Component Maintenance Manual 24. APU Log Book 25. Engine Maintenance Manual 26. Engine Log Book 27. Engine Illustrated Parts Catalog 28. Engine Data Submittal Book 29. Engine Overhaul Manual 30. Power Plant Build-up Manual AIRCRAFT RECORDS AND HISTORICAL DOCUMENTS 1. Copies of original Certificates delivered by Boeing: a. Airworthiness Certificate for Export b. Radio installation conformity certificate c. Noise limitation certificate 2. Copies of original Documents delivered by Boeing: a. Airworthiness Directive Compliance list b. Aircraft inspection report c. Aircraft Readiness Log d. Weighing report 3. Copies of current Certificates: a. Airworthiness Certificate b. Noise limitation c. Radio license d. Interior material burn certificates e. Certificate of Export f. Aircraft deregistration confirmation e. Aircraft Registration 4. Letters signed and stamped by Quality Assurance: a. Current aircraft hours and cycles b. Current engines hours and cycles c. Accident and Incident report d. Summary of Maintenance Program e. AD compliance during the lease term 5. Aircraft log books and Aircraft readiness log. 6. Aircraft Hard Time (HT) inspection status. 7. One year forecast for HT inspection. 8. Aircraft Modification status, including service bulletins. 9. Last weighing report prior to redelivery. 10. AD compliance report with original signoffs. 11. Routine and non-routine job cards of the last "C" and "D" checks. 12. Past year pilots and maintenance discrepancies. 13. Major and Minor structural repairs with applicable approvals. 14. Compass Swing report of the last three years. 15. Cabin Configuration drawing (LOPA). 16. Emergency equipment location drawing. 17. Last X-RAYs ENGINES RECORDS 1. Last test cell run reports. 2. Life Limited Parts status and traceability. 3. AD compliance report with original signoffs. 4. Engine Modification/service bulletin/inspection report and applicable forms. 5. Last heavy maintenance records for each module. 6. Engine log books. 7. Engine removal history. 8. Past year trend monitoring reports. 9. Historical borescope reports. 10. Engine component report. APU RECORDS 1. APU status (FH, FC, limits). 2. Life limited Part status and traceability. 3. AD compliance with original signoffs. 4. Modification status. 5. Last heavy maintenance documents. 6. APU log books. 7. Last test cell report. COMPONENT RECORDS 1. Aircraft component inventory. 2. Hard time component inventory. 3. All serviceable tags. 4. Landing Gear status with last overhaul and life limited Part status. 5. AD compliance with original signoffs. 6. Modification status. ATTACHMENT 2 TO RETURN ACCEPTANCE RECEIPT LIST OF LOOSE EQUIPMENT ATTACHMENT 3 TO RETURN ACCEPTANCE RECEIPT LIST OF DISCREPANCIES ATTACHMENT 4 TO RETURN ACCEPTANCE RECEIPT ENGINE MAXIMUM POWER ASSURANCE TEST CONDITIONS AND RESULTS ATTACHMENT 5 TO RETURN ACCEPTANCE RECEIPT DENT AND DAMAGE CHART ATTACHMENT 6 TO RETURN ACCEPTANCE RECEIPT FORM OF NO ACCIDENT/INCIDENT LETTER EXHIBIT J MONTHLY REPORT (SEE FOLLOWING SHEET) MONTHLY AIRCRAFT UTILIZATION AND STATUS REPORT Page 1 of 2 Report Due Date: To: INTERNATIONAL LEASE FINANCE CORPORATION Fax: (310) 788-1990 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067, United States Attn: Finance Department From: AMERICAN TRANS AIR, INC. Contact: Fax: AIRCRAFT TYPE: BOEING 737-800 ENGINE TYPE: CFM56-7B-27 REGISTRATION: ____ SERIAL NUMBER: ____ MONTH OF: NOTE: PLEASE RECORD TIME IN HOURS AND MINUTES NOT DECIMALS. Aircraft Total Time Since New As Of Last Month: Hours: Min: Aircraft Total Time Since New: Hours: Min: Aircraft Total Cycles Since New: Cycles: Airframe Hours Flown During Month: Hours: Min: Airframe Cycles/Landings During Month: Cycles: Time Remaining to "D" or Heavy Maintenance Check: HOURS OR US$ PER CYCLES FLOWN HOUR OR DURING MONTH (AS CYCLE (AS APPLICABLE) X APPLICABLE) = RESERVES TOTAL AIRFRAME: HRS: X = TOTAL LANDING GEAR: HRS: X = TOTAL APU: HRS: X = ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles(for Engine LLP Reserves): x = ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles (for Engine LLP Reserves): x = ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles (for LLP x = Reserves): ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles (for Engine LLP Reserves): x = TOTAL AMOUNT OF RESERVES (US$) PAID THIS MONTH: US$ Monthly Aircraft Utilization and Status Report From: AMERICAN TRANS AIR, INC. PAGE 2 OF 2 ENGINE SERIAL NUMBER: ENGINE SERIAL NUMBER: ORIGINAL POSITION: ORIGINAL POSITION: ACTUAL LOCATION: ACTUAL LOCATION: CURRENT THRUST RATING: CURRENT THRUST RATING: HOURS:/MIN: HOURS:/MIN: Total Time Since New As Of Total Time Since New As Of Last Month: Last Month: Total Time Since New: Total Time Since New: Total Cycles Since New: Total Cycles Since New: Hours Flown During Month: Hours Flown During Month: Cycles During Month: Cycles During Month: IMPORTANT: IF ILFC-OWNED ENGINE IS REMOVED OR INSTALLED ON ANOTHER AIRCRAFT, IT MUST BE REPORTED MONTHLY ON THIS FORM. EXHIBIT K AIRCRAFT DOCUMENTATION AIRCRAFT RECORDS 1. Copies of original Certificates delivered by Boeing: a. Airworthiness Certificate for Export b. Radio installation conformity certificate c. Noise limitation certificate 2. Copies of original Documents delivered by Boeing: a. Airworthiness Directive Compliance list b. Aircraft inspection report c. Aircraft Readiness Log d. Weighing report 3. Copies of current Certificates: a. Airworthiness Certificate b. Noise limitation c. Radio license d. Interior material burn certificates e. Certificate of Export f. Aircraft deregistration confirmation e. Aircraft Registration 4. Letters signed and stamped by Quality Assurance: a. Current aircraft hours and cycles b. Current engines hours and cycles c. Accident and Incident report d. Summary of Maintenance Program e. AD compliance during the lease term 5. Aircraft log books and Aircraft readiness log. 6. Aircraft Hard Time (HT) inspection status. 7. One year forecast for HT inspection. 8. Aircraft Modification status, including service bulletins. 9. Last weighing report prior to redelivery. 10. AD compliance report with original signoffs. 11. Routine and non-routine job cards of the last "C" and "D" checks. 12. Past year pilots and maintenance discrepancies. 13. Major and Minor structural repairs with applicable approvals. 14. Compass Swing report of the last three years. 15. Cabin Configuration drawing (LOPA). 16. Emergency equipment location drawing. 17. Last X-RAYs ENGINES RECORDS 1. Last test cell run reports. 2. Life Limited Parts status and traceability. 3. AD compliance report with original signoffs. 4. Engine Modification/service bulletin/inspection report and applicable forms. 5. Last heavy maintenance records for each module. 6. Engine log books. 7. Engine removal history. 8. Past year trend monitoring reports. 9. Historical borescope reports. 10. Engine component report. APU RECORDS 1. APU status (FH, FC, limits). 2. Life limited Part status and traceability. 3. AD compliance with original signoffs. 4. Modification status. 5. Last heavy maintenance documents. 6. APU log books. 7. Last test cell report. COMPONENT RECORDS 1. Aircraft component inventory. 2. Hard time component inventory. 3. All serviceable tags. 4. Landing Gear status with last overhaul and life limited Part status. 5. AD compliance with original signoffs. 6. Modification status. EXHIBIT L TECHNICAL EVALUATION REPORT (SEE FOLLOWING SHEETS) EX-10.6(G) 22 file068.txt AMTRAN, INC., 2000 10-K, EXHIBIT 10.6(G) AIRCRAFT LEASE AGREEMENT Dated as of September 5, 2000 BETWEEN AMERICAN TRANS AIR, INC. as LESSEE and INTERNATIONAL LEASE FINANCE CORPORATION as LESSOR ------------------------------------------------------------------------------- Aircraft Make and Model: New Boeing 737-800 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Aircraft Manufacturer's Serial Number: 28246 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Aircraft Registration Mark: Per Estoppel and Acceptance Certificate ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Make and Model of Engines: CFM56-7B-27 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Serial Numbers of Engines: Per Estoppel and Acceptance Certificate ------------------------------------------------------------------------------- NEW BOEING 737-800 AIRCRAFT NO. 8 TABLE OF CONTENTS ARTICLE 1 SUMMARY OF TRANSACTION.........................................2 1.1 Description of Aircraft........................................2 1.2 Scheduled Delivery Date and Location...........................2 1.3 Lease Term.....................................................2 1.4 Security Deposit...............................................2 1.5 Transaction Fee................................................2 1.6 Rent During Lease Term.........................................2 1.7 Country of Aircraft Registration...............................4 1.8 Maintenance Program............................................4 1.9 Agreed Value of Aircraft.......................................4 1.10 LESSOR's Bank Account..........................................4 ARTICLE 2 DEFINITIONS....................................................5 2.1 General Definitions............................................5 2.2 Specific Definitions...........................................9 ARTICLE 3 PLACE AND DATE OF DELIVERY....................................11 3.1 Place of Delivery.............................................11 3.2 Scheduled Delivery Date.......................................11 3.3 Delivery subject to Manufacturer Delivery.....................11 3.4 No LESSOR Liability...........................................11 3.5 Total Loss of Aircraft prior to Delivery......................11 3.6 Cancellation for Delay........................................11 ARTICLE 4 LEASE TERM....................................................12 4.1 Lease Term....................................................12 4.2 "Expiration Date".............................................12 4.3 "Termination Date"............................................12 ARTICLE 5 SECURITY DEPOSIT, TRANSACTION FEE, RENT AND OTHER PAYMENTS......................................................13 5.1 Security Deposit..............................................13 5.2 Transaction Fee...............................................14 5.3 Rent..........................................................14 5.4 LESSOR's Bank Account.........................................15 5.5 Default Interest..............................................16 5.6 No Deductions or Withholdings.................................16 5.7 Value Added Taxes.............................................16 5.8 Net Lease.....................................................17 5.9 LESSOR Performance of LESSEE Obligation.......................18 5.10 Consideration for Rent and other Amounts......................18 ARTICLE 6 INVOLVEMENT WITH AIRCRAFT MANUFACTURER........................19 6.1 LESSEE Selection of Aircraft..................................19 6.2 Agency Agreement..............................................19 6.3 Procurement of BFE............................................19 6.4 Assignment of Training........................................19 6.5 LESSEE Inspection of Aircraft.................................19 6.6 Aircraft at Delivery..........................................19 6.7 Delivery of the Aircraft to LESSEE............................20 6.8 LESSEE Acceptance of Aircraft.................................20 ARTICLE 7 PRE-DELIVERY, DELIVERY AND POST-DELIVERY DOCUMENTARY AND OTHER REQUIREMENTS............................21 7.1 Pre-Delivery Requirements.....................................21 7.2 Delivery Requirements.........................................22 7.3 Post-Delivery Requirements....................................23 ARTICLE 8 DISCLAIMERS...................................................24 8.1 "As Is, Where Is".............................................24 8.2 Waiver of Warranty of Description.............................24 8.3 LESSEE Waiver.................................................25 8.4 Conclusive Proof..............................................25 8.5 No LESSOR Liability for Losses................................25 8.6 No Liability to Repair or Replace.............................25 8.7 No Waiver.....................................................26 ARTICLE 9 MANUFACTURERS' AND VENDORS' WARRANTIES........................27 9.1 Warranties....................................................27 9.2 Reassignment..................................................27 ARTICLE 10 OPERATION OF AIRCRAFT.........................................28 10.1 Costs of Operation............................................28 10.2 Compliance with Laws..........................................28 10.3 Training......................................................28 10.4 No Violation of Insurance Policies............................28 10.5 Flight Charges................................................29 ARTICLE 11 SUBLEASES.....................................................30 11.1 No Sublease without LESSOR Consent............................30 11.2 LESSOR Costs..................................................30 11.3 Any Approved Sublease.........................................30 11.4 Assignment of Sublease........................................30 11.5 Continued Responsibility of LESSEE............................30 ARTICLE 12 MAINTENANCE AND USE OF AIRCRAFT...............................31 12.1 General Obligation............................................31 12.2 Specific Obligations..........................................31 12.3 Replacement of Parts..........................................32 12.4 Removal of Engines............................................33 12.5 Pooling of Engines and Parts..................................34 12.6 Installation of Engines on other aircraft.....................34 12.7 Modifications.................................................35 12.8 Performance of Work by Third Parties..........................36 12.9 Reporting Requirements........................................36 12.10 Information Regarding Maintenance Program.....................36 12.11 LESSOR Rights to Inspect Aircraft.............................36 ARTICLE 13 TITLE AND REGISTRATION........................................37 13.1 Title to the Aircraft During Lease Term.......................37 13.2 Registration of Aircraft......................................37 13.3 Filing of this Lease..........................................37 13.4 Evidence of Registration and Filings..........................37 ARTICLE 14 IDENTIFICATION PLATES.........................................38 14.1 Airframe Identification Plates................................38 14.2 Engine Identification Plates..................................38 ARTICLE 15 TAXES.........................................................39 15.1 General Obligation of LESSEE..................................39 15.2 Exceptions to Indemnity.......................................39 15.3 After-Tax Basis...............................................40 15.4 Claims and Contests...........................................40 15.5 Refunds.......................................................41 15.6 Cooperation in Filing Tax Returns.............................41 ARTICLE 16 INDEMNITIES...................................................42 16.1 General Indemnity.............................................42 16.2 Exceptions to General Indemnities.............................43 16.3 After-Tax Basis...............................................44 16.4 Timing of Payment.............................................44 16.5 Subrogation...................................................44 16.6 Notice........................................................44 16.7 Refunds.......................................................44 16.8 Defense of Claims.............................................45 16.9 Survival of Obligation........................................45 ARTICLE 17 INSURANCE.....................................................46 17.1 Categories of Insurance.......................................46 17.2 Insurance for Indemnities.....................................46 17.3 Insurance required by Manufacturer............................46 17.4 Renewal.......................................................46 17.5 Assignment of Rights by LESSOR................................46 17.6 Deductibles...................................................46 17.7 Other Insurance...............................................47 17.8 Information...................................................47 17.9 Currency......................................................47 17.10 Grounding of Aircraft.........................................47 17.11 Failure to Insure.............................................47 17.12 Limit on Hull in favor of LESSEE..............................47 17.13 Marketplace Limitations.......................................48 ARTICLE 18 LOSS, DAMAGE AND REQUISITION..................................49 18.1 Definitions...................................................49 18.2 Notice of Total Loss..........................................50 18.3 Total Loss of Aircraft or Airframe............................50 18.4 Surviving Engine(s)...........................................51 18.5 Total Loss of Engine and not Airframe.........................51 18.6 Other Loss or Damage..........................................52 18.7 Copy of Insurance Policy......................................53 18.8 Government Requisition........................................53 18.9 Conveyance to LESSEE..........................................53 ARTICLE 19 CRAF PROGRAM..................................................54 19.1 Dedication to CRAF............................................54 19.2 Notice to LESSOR..............................................54 19.3 Requisition of Engine.........................................54 19.4 Government Indemnification....................................54 19.5 No Geographic Limits..........................................54 19.6 Notice of Default.............................................55 19.7 Receipt of Payments...........................................55 ARTICLE 20 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE...........56 20.1 Representations and Warranties................................56 20.2 Covenants.....................................................58 ARTICLE 21 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSOR...........61 21.1 Representations and Warranties................................61 21.2 Covenant of Quiet Enjoyment...................................62 ARTICLE 22 FINANCIAL AND RELATED INFORMATION.............................63 ARTICLE 23 RETURN OF AIRCRAFT............................................64 23.1 Date of Return................................................64 23.2 Technical Report..............................................64 23.3 Return Location...............................................64 23.4 Full Aircraft Documentation Review............................64 23.5 Aircraft Inspection...........................................64 23.6 Certificate of Airworthiness Matters..........................65 23.7 General Condition of Aircraft at Return.......................66 23.8 Checks Prior to Return........................................69 23.9 Part Lives....................................................72 23.10 Export and Deregistration of Aircraft.........................74 23.11 LESSEE's Continuing Obligations...............................75 23.12 Airport and Navigation Charges................................75 23.13 Return Acceptance Certificate.................................76 23.14 Indemnities and Insurance.....................................76 ARTICLE 24 ASSIGNMENT....................................................77 24.1 No Assignment by LESSEE.......................................77 24.2 Sale or Assignment by LESSOR..................................77 24.3 LESSOR's Lender...............................................79 24.4 LESSEE Cooperation............................................79 24.5 Protections...................................................79 ARTICLE 25 DEFAULT OF LESSEE.............................................80 25.1 LESSEE Notice to LESSOR.......................................80 25.2 Events of Default.............................................80 25.3 LESSOR's General Rights.......................................82 25.4 Deregistration and Export of Aircraft.........................83 25.5 LESSEE Liability for Damages..................................83 25.6 Waiver of Default.............................................84 25.7 Present Value of Payments.....................................84 25.8 Use of "Termination Date".....................................84 ARTICLE 26 NOTICES.......................................................85 26.1 Manner of Sending Notices.....................................85 26.2 Notice Information............................................85 ARTICLE 27 GOVERNING LAW AND JURISDICTION................................86 27.1 California Law................................................86 27.2 Non-Exclusive Jurisdiction in California......................86 27.3 Service of Process............................................86 27.4 Prevailing Party in Dispute...................................86 27.5 Waiver........................................................86 ARTICLE 28 MISCELLANEOUS.................................................87 28.1 Press Releases................................................87 28.2 LESSOR Performance for LESSEE.................................87 28.3 LESSOR's Payment Obligations..................................87 28.4 Application of Payments.......................................87 28.5 Usury Laws....................................................87 28.6 Delegation by LESSOR..........................................87 28.7 Confidentiality...............................................88 28.8 Rights of Parties.............................................88 28.9 Further Assurances............................................88 28.10 Use of Word "including".......................................88 28.11 Headings......................................................88 28.12 Invalidity of any Provision...................................88 28.13 Negotiation...................................................88 28.14 Time is of the Essence........................................89 28.15 Amendments in Writing.........................................89 28.16 Counterparts..................................................89 28.17 Delivery of Documents by Fax..................................89 28.18 Entire Agreement..............................................89 EXHIBIT A AIRCRAFT DESCRIPTION..........................................91 EXHIBIT B AGENCY AGREEMENT..............................................92 EXHIBIT C CERTIFICATE OF INSURANCE......................................96 EXHIBIT D BROKERS' LETTER OF UNDERTAKING...............................102 EXHIBIT E ESTOPPEL AND ACCEPTANCE CERTIFICATE..........................104 EXHIBIT F OPINION OF COUNSEL...........................................111 EXHIBIT G ASSIGNMENT OF RIGHTS (AIRFRAME)..............................114 EXHIBIT H ASSIGNMENT OF RIGHTS (ENGINES)...............................119 EXHIBIT I RETURN ACCEPTANCE RECEIPT....................................123 EXHIBIT J MONTHLY REPORT...............................................134 EXHIBIT K AIRCRAFT DOCUMENTATION.......................................138 EXHIBIT L TECHNICAL EVALUATION REPORT..................................140 AIRCRAFT LEASE AGREEMENT THIS AIRCRAFT LEASE AGREEMENT is made and entered into as of September 5, 2000. BETWEEN: AMERICAN TRANS AIR, INC., a Indiana corporation whose address and principal place of business is at 7337 West Washington Street, Indianapolis International Airport, Indianapolis, Indiana 46231, United States of America ("LESSEE") and INTERNATIONAL LEASE FINANCE CORPORATION, a California corporation whose address and principal place of business is at 1999 Avenue of the Stars, 39th Floor, Los Angeles, California 90067, United States of America ("LESSOR"). The subject matter of this Lease is one (1) new Boeing 737-800 aircraft. In consideration of and subject to the mutual covenants, terms and conditions contained in this Lease, LESSOR hereby agrees to lease to LESSEE and LESSEE hereby agrees to lease from LESSOR the aircraft and the parties further agree as follows: ARTICLE 1 SUMMARY OF TRANSACTION The information in this Article 1 is a summary of the lease transaction between LESSEE and LESSOR. It is set forth for the convenience of the parties only and will not be deemed in any way to amend, detract from or simplify the other provisions of this Lease. 1.1 DESCRIPTION OF AIRCRAFT One new Boeing 737-800 aircraft 1.2 SCHEDULED DELIVERY DATE AND LOCATION In the month of (CONFIDENTIAL MATERIAL OMITTED) at Seattle, Washington 1.3 LEASE TERM 15 years 1.4 SECURITY DEPOSIT (CONFIDENTIAL MATERIAL OMITTED) 1.5 TRANSACTION FEE (CONFIDENTIAL MATERIAL OMITTED) 1.6 RENT DURING LEASE TERM Payable monthly in advance and equal to the sum of: (a The following amounts for the following years of the Lease Term: LEASE PERIOD MONTHLY RENTAL AMOUNT* (CONFIDENTIAL MATERIAL OMITTED) *The above base rent is expressed in January 1999 U.S.Dollars and will increase in the following amounts for the following periods: PERIOD ESCALATION FACTOR (CONFIDENTIAL MATERIAL OMITTED) 1.7 COUNTRY OF AIRCRAFT REGISTRATION U.S. 1.8 MAINTENANCE PROGRAM LESSEE's Maintenance Program 1.9 AGREED VALUE OF AIRCRAFT (CONFIDENTIAL MATERIAL OMITTED) The Agreed Value is expressed in March 2001 U.S. Dollars and will increase in accordance with Manufacturer's announced escalation rate from March 1, 2001 to the Delivery Date. On each annual renewal date of LESSEE's insurance policy commencing on the renewal date following the first anniversary of the Lease Term, the Agreed Value will decrease by two percent (2.0%) of the then existing Agreed Value. 1.10 LESSOR'S BANK ACCOUNT (Confidential Material Omitted) ARTICLE 2 DEFINITIONS Except where the context otherwise requires, the following words have the following meanings for all purposes of this Lease. The definitions are equally applicable to the singular and plural forms of the words. Any agreement defined below includes each amendment, modification, supplement and waiver thereto in effect from time to time. 2.1 GENERAL DEFINITIONS. "ACT" means the Federal Aviation Act of 1958, as amended from time to time, or any successor act thereto. "AIRCRAFT" means the Airframe, two (2) Engines, Parts and Aircraft Documentation, collectively. As the context requires, "Aircraft" may also mean the Airframe, any Engine, any Part, the Aircraft Documentation or any part thereof individually. For example, in the context of return to LESSOR the term "Aircraft" means the Airframe, Engines, Parts and Aircraft Documentation collectively, yet in the context of LESSEE not creating any Security Interests other than Permitted Liens on the Aircraft, the term "Aircraft" means any of the Airframe, any Engine, any Part or the Aircraft Documentation individually. "AIRCRAFT DOCUMENTATION" means all (a) log books, Aircraft records, manuals and other documents provided to LESSEE in connection with the Aircraft, (b) documents listed in Exhibits E and K and (c) any other documents required to be maintained during the Lease Term by the Aviation Authority, LESSEE's Maintenance Program and this Lease. "AIRFRAME" means the airframe listed in the Estoppel and Acceptance Certificate executed at Delivery together with all Parts relating thereto (except Engines or engines). "AIRWORTHINESS DIRECTIVES" or "ADS" means all airworthiness directives (or equivalent) of the FAA and the Aviation Authority applicable to the Aircraft. "APU" means the auxiliary power unit of the Aircraft. "AVIATION AUTHORITY" means the FAA or any Government Entity which under the Laws of the U.S. from time to time has control over civil aviation or the registration, airworthiness or operation of aircraft in the U.S. If the Aircraft is registered in a country other than the U.S., "Aviation Authority" means the agency which regulates civil aviation in such other country. "AVIATION DOCUMENTS" means any or all of the following which at any time may be obtainable from the Aviation Authority: (a) if required, a temporary certificate of airworthiness from the Aviation Authority allowing the Aircraft to be flown after Delivery to the State of Registration, (b) an application for registration of the Aircraft with the appropriate authority in the State of Registration, (c) the certificate of registration for the Aircraft issued by the State of Registration, (d) a full certificate of airworthiness for the Aircraft specifying transport category (passenger), (e) an air transport license, (f) an air operator's certificate, (g) such recordation of LESSOR's title to the Aircraft and interest in this Lease as may be available in the State of Registration and (h) all such other authorizations, approvals, consents and certificates in the State of Registration as may be required to enable LESSEE lawfully to operate the Aircraft. "BANKRUPTCY CODE" means The Bankruptcy Reform Act of 1978 (11 U.S.C. ss.ss. 101-1330), as amended or supplemented from time to time, and any successor statute, and all of the rules and regulations issued or promulgated in connection therewith. "BASIC ENGINE" means those units and components of the Engine which are used to induce and convert fuel/air mixture into thrust/power; to transmit power to the fan and accessory drives; to supplement the function of other defined systems external to the Engine; and to control and direct the flow of internal lubrication, plus all essential accessories as supplied by the Engine manufacturer. The nacelle, installed components related to the Aircraft systems, thrust reversers, QEC and the primary flight nozzle are excluded. "BFE" means any equipment which is to be provided by the purchaser of the Aircraft (whether actually provided by LESSOR as buyer-furnished equipment or Manufacturer as seller-purchased equipment). "BUSINESS DAY" means a day other than a Saturday or Sunday on which the banks in Indianapolis, Indiana and in the city where LESSOR's Bank is located are open for the transaction of business of the type required by this Lease. "CREDITOR" means any lessor, owner, bank, lender, mortgagee or other Person which is the owner of or has any interest in an aircraft engine or aircraft operated by LESSEE. "CREDITOR AGREEMENT" means the applicable agreement between a Creditor and LESSEE or between Creditors pursuant to which such Creditor owns, leases or has an interest in either an aircraft operated by LESSEE on which an Engine may be installed or in an aircraft engine which may be installed on the Airframe. "DEFAULT" means any event which, upon the giving of notice, the lapse of time and/or a relevant determination, would constitute an Event of Default. "DELIVERY" means the delivery of the Aircraft from LESSOR to LESSEE pursuant to Articles 3 and 6. "DELIVERY DATE" means the date on which Delivery takes place. "DOLLARS" and "$" means the lawful currency of the U.S. "ENGINE" means (a) each of the engines listed on the Estoppel and Acceptance Certificate; or (b) any replacement engine acquired by LESSOR and leased to LESSEE pursuant to Article 18.5 following a Total Loss of an Engine; including in each case all Parts installed in or on any of such engines at Delivery (or substituted, renewed or replacement Parts in accordance with this Lease) so long as title thereto is or remains vested in LESSOR in accordance with the terms of Article 12.3. "EVENT OF DEFAULT" means any of the events referred to in Article 25.2. "FAA" means the Federal Aviation Administration of the Department of Transportation or any successor thereto under the Laws of the U.S. "FARS" means the U.S. Federal Aviation Regulations embodied in Title 14 of the U.S. Code of Federal Regulations, as amended from time to time, or any successor regulations thereto. "GENEVA CONVENTION" means the Convention on the International Recognition of Rights in Aircraft signed in Geneva, Switzerland on June 19, 1948. "GOVERNMENT ENTITY" means any (a) national, state or local government, (b) board, commission, department, division, instrumentality, court, agency or political subdivision thereof and (c) association, organization or institution of which any of the entities listed in (a) or (b) is a member or to whose jurisdiction any such entity is subject. "LANDING GEAR" means the installed main and nose landing gear, components and their associated actuators, side braces and parts. "LAW" means any (a) statute, decree, constitution, regulation, order or any directive of any Government Entity, (b) treaty, pact, compact or other agreement to which any Government Entity is a signatory or party and (c) judicial or administrative interpretation or application of any of the foregoing. "LEASE" means this Aircraft Lease Agreement, together with all Exhibits hereto. "LESSOR'S LIEN" means any Security Interest created by LESSOR, or arising from a claim against LESSOR completely unrelated to this Lease or the other Operative Documents. "MAINTENANCE PROGRAM" means LESSEE's maintenance program as approved by the Aviation Authority or such other maintenance program as LESSOR may, in its discretion, accept in writing. "MANUFACTURER" means The Boeing Company, a Delaware corporation. "MPD" means the Maintenance Planning Document published by Manufacturer and applicable to the Aircraft. "OVERHAUL" means the full reconditioning of the Aircraft, an Engine, APU, Landing Gear, module or Part, as the case may be, in which such equipment has been fully disassembled; cleaned; thoroughly inspected; and returned to the highest standard specified by the applicable manufacturer's manual. "PART" means the APU, any part, component, appliance, system module, engine module, accessory, material, instrument, communications equipment, furnishing, LESSEE-furnished or LESSOR-purchased equipment or other item of equipment (other than complete Engines or engines) for the time being installed in or attached to the Airframe or any Engine or which, having been removed from the Airframe or any Engine, remains the property of LESSOR. "PERMITTED INSTITUTION" means any Person (other than a commercial air carrier, a commercial aircraft operator, a freight forwarder, or an affiliate of any of the foregoing), with either: (a) a combined capital and surplus or net worth of at least; or (b) have a credit rating on the majority of its unsecured debt which is at least equal to BBB or its equivalent from Standard and Poor's Rating Group, a division of The McGraw-Hill Companies, Inc. or Moody's Investors Service, Inc. "PERMITTED LIEN" means (a) LESSOR's Liens; (b) Security Interests arising in the ordinary course of LESSEE's business for Taxes either not yet due and payable or, if due and payable, being contested in good faith in accordance with Article 15.4; (c) materialmen's, mechanics', workmen's, repairmen's, employees' liens or similar Security Interests arising by operation of Law after the Delivery Date in the ordinary course of LESSEE's business for amounts which are either not yet due or are being contested in good faith by appropriate proceedings (and for which adequate reserves have been made or, when required in order to pursue such proceedings, an adequate bond has been provided) so long as such proceedings do not involve any material danger of sale, forfeiture or loss of the Aircraft; (d) the rights of LESSOR and any LESSOR's Lender and the rights of LESSEE under this Lease and the other Operative Documents; (e) the rights of others under agreements or arrangements to the extent permitted by Articles 10 and 11.5; and (f) any Security Interest against which LESSEE causes to be provided a bond in such amount and under such terms and conditions as are reasonably satisfactory to LESSOR. "PERSON" means any individual, firm, partnership, joint venture, trust, corporation, limited liability company, Government Entity, committee, department, authority or any body, incorporated or unincorporated, whether having distinct legal personality or not. "PRIME RATE" means the rate of interest from time to time announced by Bank of America Illinois in Chicago, Illinois as its prime commercial lending rate. "SECURITY INTEREST" means any encumbrance or security interest, however and wherever created or arising including (without prejudice to the generality of the foregoing) any right of ownership, security, mortgage, pledge, charge, encumbrance, lease, lien, statutory or other right in rem, hypothecation, title retention, attachment, levy, claim or right of possession or detention. "STATE OF REGISTRATION" means the U.S. or such other country or state of registration of the Aircraft as LESSOR may, in its absolute discretion, approve in writing. "U.S." means the United States of America. "U.S. AIR CARRIER" means any U.S. air carrier who is a Citizen of the U.S. holding an air carrier operating certificate issued by the Secretary of Transportation pursuant to chapter 447 of the Act for aircraft capable of carrying 10 or more individuals or 6000 pounds or more of cargo, and as to whom there is in force an air carrier operating certificate issued pursuant to FAR Part 121, or who may operate as an air carrier by certification or otherwise under any successor or substitute provisions therefor or in the absence thereof. 2.2 SPECIFIC DEFINITIONS. The following terms are defined in the Articles referenced below: TERMS ARTICLE Agreed Value 18.1 CRAF Program 19.1 CRAF Program Requisition 19.1 Period Default Interest 5.5 Delivery Location 3.1 Expenses 16.1 Expiration Date 4.3 Indemnities 16.1 Lease Term 4.1 LESSEE Customization 5.3.1 Costs LESSOR's Assignee 24.2.1 LESSOR's Bank 5.4 LESSOR's Lender 24.3 Manufacturer's Escalation 5.3.1 Rate Modifications 12.7.2 Net Total Loss Proceeds 18.1 Operative Documents 20.1.3 Rent 5.3.1 Return Check 23.8.1 Scheduled Delivery Date 3.2 Security Deposit 5.1.1 Taxes 15.1 Termination Date 4.3 Total Loss 18.1 Total Loss Date 18.1 Total Loss Proceeds 18.1 Transaction Fee 5.2 ARTICLE 3 PLACE AND DATE OF DELIVERY 3.1 PLACE OF DELIVERY. LESSOR will deliver the Aircraft to LESSEE at Manufacturer's facility at Seattle, Washington or such other place as may be agreed in writing between the parties (the "DELIVERY LOCATION"). 3.2 SCHEDULED DELIVERY DATE. As of the date of this Lease, delivery of the Aircraft from Manufacturer to LESSOR is scheduled to occur in the month of (CONFIDENTIAL MATERIAL OMITTED). LESSOR will not agree to reschedule such delivery without LESSEE's prior written consent. LESSOR will notify LESSEE from time to time and in a timely manner of the exact date on which LESSOR expects such delivery to take place (the "SCHEDULED DELIVERY DATE"). 3.3 DELIVERY SUBJECT TO MANUFACTURER DELIVERY. LESSOR and LESSEE expressly acknowledge that Delivery of the Aircraft to LESSEE is subject to and conditioned upon, and is to occur simultaneously with, delivery of the Aircraft by Manufacturer to LESSOR. 3.4 NO LESSOR LIABILITY. LESSOR will not be liable for any loss or expense, or any loss of profit, arising from any delay or failure in Delivery to LESSEE unless such delay or failure arises as a consequence of the willful misconduct of LESSOR, and in no event will LESSOR be liable for any delay or failure which is caused by any breach or delay on the part of Manufacturer or any BFE supplier. 3.5 TOTAL LOSS OF AIRCRAFT PRIOR TO DELIVERY. If a Total Loss of the Aircraft occurs prior to Delivery, neither party will have any further liability to the other except that LESSOR will return to LESSEE the Security Deposit in accordance with Article 5.1.3 and any prepaid Rent. 3.6 CANCELLATION FOR DELAY. Promptly after LESSOR becomes aware that in Manufacturer's opinion a delay will cause Delivery to be delayed beyond (CONFIDENTIAL MATERIAL OMITTED) LESSOR will notify LESSEE. By written notice given within ten (10) Business Days after LESSEE's receipt of such LESSOR notice, either party may by written notice to the other party terminate this Lease and this Lease will terminate on the date of receipt of such notice. In the event of such termination, neither party will have any further liability to the other party except that LESSOR will return to LESSEE the Security Deposit in accordance with Article 5.1.3 and any prepaid Rent. If neither party gives notice of termination within such ten (10) Business Days, both parties lose all right to terminate under this Article 3.6 unless otherwise agreed in writing by the parties. ARTICLE 4 LEASE TERM 4.1 LEASE TERM. The term of leasing of the Aircraft will commence on the Delivery Date and continue for a term of fifteen (15) years ("LEASE TERM"). 4.2 "EXPIRATION DATE". "EXPIRATION DATE" means the date on which LESSEE is required to redeliver the Aircraft to LESSOR in the condition required by this Lease on the last day of the Lease Term. 4.3 "TERMINATION DATE". This Lease may in fact terminate on any of the dates set forth below: (a the Expiration Date, provided LESSEE returns the Aircraft to LESSOR on the Expiration Date in the condition required by Article 23; or (b a date earlier than the Expiration Date, if: (i there is a Total Loss of the Aircraft prior to Delivery pursuant to Article 3.5; (ii cancellation of this Lease occurs pursuant to Article 3.6; (iii there is a Total Loss of the Aircraft and payment is made to LESSOR in accordance with Article 18.3; or (iv an Event of Default occurs and LESSOR repossesses the Aircraft or otherwise terminates this Lease pursuant to Article 25.3. (c a date later than the Expiration Date, if: (i an Event of Default occurs hereunder by LESSEE returning the Aircraft in the condition required by this Lease after the Expiration Date; or (ii an Event of Default occurs and LESSOR repossesses the Aircraft or otherwise terminates this Lease pursuant to Article 25.3. The "TERMINATION DATE" is the date on which this Lease terminates because one of the above has occurred. ARTICLE 5 SECURITY DEPOSIT, TRANSACTION FEE, RENT AND OTHER PAYMENTS 5.1 SECURITY DEPOSIT. 5.1.1 (CONFIDENTIAL MATERIAL OMITTED) 5.1.2 The Security Deposit may be commingled with LESSOR's general funds and any interest earned on such Security Deposit will be for LESSOR's account. If the Security Deposit is reduced below the required amount by application to meet LESSEE's unperformed obligations under this Lease, LESSEE will replenish the Security Deposit within ten (10) days after LESSOR's demand therefor. The Security Deposit will serve as security for the performance by LESSEE of its obligations under this Lease and any other agreements between LESSEE and LESSOR relating to aircraft, engines, aircraft equipment or the extension of credit and may be applied by LESSOR upon the occurrence of a Default or Event of Default hereunder or of a default by LESSEE under any such other agreements. 5.1.3 Upon termination of this Lease in accordance with Article 4.3 other than if an Event of Default has occurred and is continuing, LESSOR will return to LESSEE the amount of the Security Deposit then held by LESSOR (so long as no default by LESSEE exists under any other agreement between LESSEE and LESSOR relating to aircraft, engines or aircraft equipment or the extension of credit by LESSOR to LESSEE), without interest, less an amount determined by LESSOR to be a reasonable estimate of the costs, if any, which LESSOR will incur to remedy any unperformed obligations of LESSEE under this Lease, including the correction of any discrepancies from the required condition of the Aircraft on return of the Aircraft. 5.2 TRANSACTION FEE. Within two (2) Business Days after execution of this Lease, LESSEE will pay LESSOR a nonrefundable transaction fee (CONFIDENTIAL MATERIAL OMITTED) 5.3 RENT. 5.3.1 LESSEE will pay LESSOR the following amounts monthly in advance as rent for the Aircraft (the "RENT"): (a The following amounts for the following years of the Lease Term: LEASE PERIOD MONTHLY RENTAL AMOUNT* ------------ --------------------- (CONFIDENTIAL MATERIAL OMITTED) *The above base rent is expressed in January 1999 U.S. dollars and will increase in the following amounts for the following periods (the "MANUFACTURER'S ESCALATION RATE"): PERIOD ESCALATION FACTOR ------------ --------------------- (CONFIDENTIAL MATERIAL OMITTED) Any increases to the above base Rent during the Lease Term will be calculated immediately prior to Delivery. 5.3.2 The first payment of Rent during the Lease Term will be paid prior to the Scheduled Delivery Date. Each subsequent payment of Rent will be due monthly thereafter no later than the same day of the month as the Delivery Date of the Aircraft except that, if such day is not a Business Day, the Rent will be due on the immediately preceding Business Day. If Delivery occurred on the 29th, 30th or 31st of the month and in any given month during the Lease Term there is no such corresponding date, Rent will be payable on the last Business Day of such month. 5.4 LESSOR'S BANK ACCOUNT. The Security Deposit, Transaction Fee, Rent and any other payment due under this Lease will be paid by wire transfer of immediately available U.S. Dollar funds to LESSOR's bank account at: (CONFIDENTIAL MATERIAL OMITTED) or to such other bank account in the U.S. as LESSOR may from time to time designate by written notice ("LESSOR'S BANK"). When it is stated in this Lease that an installment of the Security Deposit, the monthly Rent or any other payment is due or must be paid or made by LESSEE by a specific date, then such payment actually must be received by LESSOR's Bank on or before such specific date, even if, in order for such payment to be received by LESSOR's Bank by such specific date, LESSEE must initiate the wire transfer prior to such specific date. 5.5 DEFAULT INTEREST. If LESSOR's Bank does not receive the Rent or any other amount on or before the specific date when due, LESSOR will suffer loss and damage the exact nature and amount of which are difficult or impossible to ascertain. LESSEE will pay LESSOR as supplemental Rent (by way of agreed compensation and not as a penalty) interest on any due and unpaid amounts payable by LESSEE under this Lease. Interest will be calculated at a per annum rate (based on a 360 day year) which is equal to three percent (3%) plus the Prime Rate in effect on the date on which the amount was originally due for the period from the date the amount originally was due through the date the amount actually is received at LESSOR's Bank or, in the case of LESSOR's performance of LESSEE's obligations hereunder, from the date of payment by LESSOR through the date of LESSEE's repayment to LESSOR ("DEFAULT INTEREST"). Default Interest will accrue on a day-to-day basis and be compounded monthly. 5.6 NO DEDUCTIONS OR WITHHOLDINGS. All payments by LESSEE under this Lease, including the Security Deposit, Transaction Fee, Rent, Default Interest, fees, indemnities or any other item, will be made in full without any deduction or withholding whether in respect of set-off, counterclaim, duties, or Taxes (as defined in Article 15) imposed in the State of Registration or any jurisdiction from which such payments are made unless LESSEE is prohibited by Law from doing so, in which event LESSEE will gross up the payment amount such that the net payment received by LESSOR after any deduction or withholding equals the amounts called for under this Lease. LESSEE's requirement to pay the amounts required by this Article 5.6 is subject to the exceptions provided in Article 15.2. 5.7 VALUE ADDED TAXES. The Rent and other amounts payable by LESSEE under this Lease are exclusive of any value added tax, turnover tax or similar tax or duty. 5.8 NET LEASE. 5.8.1 This Lease is a net lease and LESSEE's obligation to pay Rent and make other payments in accordance with this Lease will be absolute and unconditional under any and all circumstances and regardless of other events, including the following: (a) any right of set-off, counterclaim, recoupment, defense or other right (including any right of reimbursement) which LESSEE may have against LESSOR, Manufacturer, the Engine manufacturer or any other person for any reason, including any claim LESSEE may have for the foregoing; (b) unavailability or interruption in use of the Aircraft for any reason, including a requisition thereof or any prohibition or interference with or other restriction against LESSEE's use, operation or possession of the Aircraft (whether by Law or otherwise), any defect in title, airworthiness, merchantability, fitness for any purpose, condition, design, specification or operation of any kind or nature of the Aircraft, the ineligibility of the Aircraft for any particular use or trade or for registration under the Laws of any jurisdiction or Total Loss of the Aircraft; (c) insolvency, bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, liquidation, receivership, administration or similar proceedings by or against LESSOR, LESSEE, Manufacturer, the Engine manufacturer or any other Person; (d) invalidity or unenforceability or lack of due authorization of or other defect in this Lease; (e) failure or delay on the part of any party to perform its obligations under this Lease; or (f) any other circumstance which but for this provision would or might have the effect of terminating or in any other way affecting any obligation of LESSEE hereunder. 5.8.2 Nothing in Article 5.8 will be construed to limit LESSEE's rights and remedies in the event of LESSOR's breach of its warranty of quiet enjoyment set forth in Article 21.2 or to limit LESSEE's rights and remedies to pursue in a court of law any claim it may have against LESSOR or any other Person. 5.9 LESSOR PERFORMANCE OF LESSEE OBLIGATION. If LESSEE fails to make any payment under this Lease to a third party in connection with the Aircraft or fails to perform any other obligation required under this Lease, LESSOR may (but is not required to) at its election and without waiver of its rights perform such obligation and/or pay such amount. Within five (5) Business Days after written notice to LESSEE of the amount paid by LESSOR on behalf of LESSEE, LESSEE will repay such amount to LESSOR together with Default Interest. Such payment to LESSOR will constitute additional Rent payable by LESSEE to LESSOR hereunder. Any payment, performance or compliance by LESSOR of a LESSEE obligation hereunder will not affect the occurrence or continuance of a Default or Event of Default, as the case may be. 5.10 CONSIDERATION FOR RENT AND OTHER AMOUNTS. The amount of the Rent and other payments contained herein are in consideration of LESSEE's waiver of warranties and indemnities set forth in Articles 8 and 16, respectively, and the other provisions of this Lease. ARTICLE 6 INVOLVEMENT WITH AIRCRAFT MANUFACTURER 6.1 LESSEE SELECTION OF AIRCRAFT. LESSEE ACKNOWLEDGES THAT THE DESCRIPTION OF THE AIRCRAFT SET FORTH IN THIS LEASE IS BASED UPON INFORMATION SUPPLIED BY MANUFACTURER. LESSEE COVENANTS TO LESSOR THAT LESSEE HAS USED ITS OWN JUDGMENT IN SELECTING THE AIRCRAFT AND HAS DONE SO BASED ON ITS SIZE, DESIGN AND TYPE. LESSEE ACKNOWLEDGES THAT LESSOR IS NOT A MANUFACTURER, REPAIRER OR SERVICING AGENT OF THE AIRCRAFT. 6.2 AGENCY AGREEMENT. Certain obligations remain to be performed by LESSOR in connection with the manufacture, fabrication and completion of the Aircraft by Manufacturer which will be performed by LESSEE (as provided in the Agency Agreement). LESSEE will act as LESSOR's agent with respect to some of these matters pursuant to the terms of an Agency Agreement to be entered into between LESSEE and LESSOR in the form set forth in Exhibit B. 6.3 PROCUREMENT OF BFE. LESSEE's and LESSOR's technical representatives will meet and determine which of LESSEE or LESSOR will provide specific items of BFE. Such BFE will then be provided to Manufacturer by LESSEE or LESSOR, as applicable, within the time frames required by Manufacturer. 6.4 ASSIGNMENT OF TRAINING. LESSOR hereby assigns to LESSEE all rights to training to which LESSOR is entitled as a result of LESSOR's purchase of the Aircraft and lease of the Aircraft to LESSEE. If LESSEE fails to take Delivery of the Aircraft when tendered in accordance with Article 6.7, LESSEE will immediately pay to LESSOR an amount equal to the Dollar value of such training based on what the training would have cost LESSEE had LESSEE purchased such training directly from Manufacturer. 6.5 LESSEE INSPECTION OF AIRCRAFT. During the course of final assembly of the Aircraft, and at Delivery, LESSEE will have its own representative present to inspect the Aircraft and to ensure its conformity with LESSEE's needs and the terms of this Lease. LESSEE will have ground inspection and acceptance flight rights with respect to the Aircraft. LESSEE acknowledges that, as between LESSEE and LESSOR, in accepting the Aircraft LESSEE is relying on its own inspection and knowledge of the Aircraft in determining whether the Aircraft meets the requirements of this Lease. 6.6 AIRCRAFT AT DELIVERY. At Delivery, the Aircraft will be as set forth in Exhibit A, as such description may be modified by any change requests agreed to among LESSEE, LESSOR and Manufacturer (which will be reflected in amendment(s) to this Lease). In the event of any discrepancies, LESSEE and LESSOR will cooperate in good faith with one another and with Manufacturer and Engine manufacturer, as applicable, in order to arrive at a mutually acceptable resolution of any such discrepancies. 6.7 DELIVERY OF THE AIRCRAFT TO LESSEE. Subject to LESSEE having performed all of the conditions precedent to Delivery set forth herein, immediately following delivery of the Aircraft from Manufacturer to LESSOR, LESSOR will deliver the Aircraft to LESSEE at the Delivery Location. Provided that the Aircraft is in the condition required by Article 6.6, upon the tender of the Aircraft by LESSOR to LESSEE, LESSEE will accept the Aircraft and the date of tender by LESSOR to LESSEE will be deemed to be the Delivery Date for all purposes under this Lease, including, but not limited to, the commencement of LESSEE's obligation to pay Rent hereunder. 6.8 LESSEE ACCEPTANCE OF AIRCRAFT. If LESSEE fails to (a) comply with its obligations set forth in Article 6.2, (b) comply with the conditions contained in Articles 7.1 and 7.2 so as to allow Delivery to take place immediately following delivery of the Aircraft by Manufacturer to LESSOR or (c) take delivery of the Aircraft when properly tendered for delivery by LESSOR in the condition required hereunder, LESSEE will indemnify LESSOR for all costs and expenses incurred by LESSOR as a result thereof including (but without limitation) any payments other than the purchase price which LESSOR becomes obliged to make to Manufacturer. ARTICLE 7 PRE-DELIVERY, DELIVERY AND POST-DELIVERY DOCUMENTARY AND OTHER REQUIREMENTS 7.1 PRE-DELIVERY REQUIREMENTS. LESSEE will do each of the following prior to the Scheduled Delivery Date of the Aircraft within the time frames set forth below: 7.1.1 Within one (1) month after execution of this Lease, LESSEE will deliver to LESSOR each of the following: (a) copies of resolutions of the Board of Directors of LESSEE or other written evidence of appropriate corporate action, duly certifying and authorizing the lease of the Aircraft hereunder and the execution, delivery and performance of this Lease, together with an incumbency certificate as to the person or persons authorized to execute and deliver documents on behalf of LESSEE hereunder; and (b) an opinion of counsel in the form and substance of Exhibit F. 7.1.2 At least three (3) days prior to the Scheduled Delivery Date, LESSEE will have delivered to LESSOR a Certificate of Insurance and Brokers' Letter of Undertaking in the form and substance of Exhibits C and D, respectively, from LESSEE's insurance brokers evidencing insurance of the Aircraft in accordance with this Lease from the Delivery Date. 7.1.3 At least three (3) Business Days prior to the Scheduled Delivery Date, LESSEE will do each of the following: (a) provide LESSOR with a copy of such Aviation Documents as may be available prior to the Scheduled Delivery Date; (b) provide LESSOR with a power of attorney empowering LESSEE's representative, who may be an officer or employee of LESSEE, to accept the Aircraft on behalf of LESSEE; and (c) provide LESSOR with such other documents as LESSOR may reasonably request. 7.1.4 Prior to the Scheduled Delivery Date, LESSEE will pay LESSOR the first monthly installment of Rent in accordance with Article 5.3.2. 7.2 DELIVERY REQUIREMENTS. On the Delivery Date of the Aircraft, each of the following will occur: 7.2.1 LESSEE will execute and deliver to LESSOR an Estoppel and Acceptance Certificate in the form of Exhibit E covering the Aircraft and effective as of the Delivery Date. 7.2.2 If not previously done, LESSEE and LESSOR will sign an amendment or supplement to Exhibit A evidencing all agreed-to changes to the specification of the Aircraft. 7.2.3 LESSEE will deliver a certificate signed on behalf of LESSEE by an officer of LESSEE stating all of the following: (a) the representations and warranties contained in Article 20 are true and accurate on and as of the Delivery Date as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date); (b) no Default has occurred and is continuing or will result from LESSEE's lease of the Aircraft hereunder; and (c) none of the Creditor Agreements contains terms which provide or contemplate that any Creditor will obtain any right, title or interest in an Engine which is installed on another aircraft (or, if this is not the case, such certificate will identify the parties, the aircraft and the Creditor Agreements for which this statement is untrue). 7.2.4 LESSEE's counsel will deliver opinions confirming the matters set forth in the opinion of counsel described in Article 7.1 and advising that all filing and other requirements have been met or concurrently are being met. 7.2.5 If any Creditor Agreement provides or contemplates that such Creditor will obtain any right, title or interest in an Engine which is installed on such Creditor's aircraft, LESSEE will deliver to LESSOR an engines cooperation agreement in form and substance acceptable to LESSOR which is executed by LESSEE and LESSEE's Creditors (as defined therein). 7.2.6 LESSOR will deliver to LESSEE an assignment of Manufacturer and Engine manufacturer rights in the form and substance of Exhibits G and H, respectively, and concurrently therewith LESSOR, to the extent it has not previously done so, will be deemed to have assigned all training, product assurance and product support applicable to the owner or operator of the Aircraft to LESSEE during the Lease Term. 7.3 POST-DELIVERY REQUIREMENTS. 7.3.1 Promptly after Delivery, LESSEE will do each of the following: (a) provide LESSOR with copies of all Aviation Documents not previously delivered; and (b) provide LESSOR with a follow-up opinion of counsel advising that the Aircraft has been registered in the State of Registration and that all necessary filings have been made. ARTICLE 8 DISCLAIMERS LESSOR HAS COMMITTED TO LESSEE THAT ON THE DELIVERY DATE THE AIRCRAFT WILL BE IN THE CONDITION REQUIRED BY ARTICLE 6. SUCH COMMITMENT OR COVENANT ON THE PART OF LESSOR EXPIRES AND THE DISCLAIMERS SET FORTH IN THIS ARTICLE 8 APPLY UPON LESSEE'S ACCEPTANCE OF THE AIRCRAFT AND EXECUTION OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATE. AFTER SUCH TIME, THEN AS BETWEEN LESSOR AND LESSEE: 8.1 "AS IS, WHERE IS". LESSEE AGREES THAT IT IS LEASING THE AIRCRAFT "AS IS, WHERE IS". LESSEE UNCONDITIONALLY ACKNOWLEDGES AND AGREES THAT NEITHER LESSOR NOR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES OR REPRESENTATIVES HAVE MADE OR WILL BE DEEMED TO HAVE MADE ANY TERM, CONDITION, REPRESENTATION, WARRANTY OR COVENANT EXPRESS OR IMPLIED (WHETHER STATUTORY OR OTHERWISE) AS TO (a) THE CAPACITY, AGE, AIRWORTHINESS, VALUE, QUALITY, DURABILITY, CONFORMITY TO THE PROVISIONS OF THIS LEASE, DESCRIPTION, CONDITION (WHETHER OF THE AIRCRAFT, ANY ENGINE, ANY PART THEREOF OR THE AIRCRAFT DOCUMENTATION), DESIGN, WORKMANSHIP, MATERIALS, MANUFACTURE, CONSTRUCTION, OPERATION, DESCRIPTION, STATE, MERCHANTABILITY, PERFORMANCE, FITNESS FOR ANY PARTICULAR USE OR PURPOSE (INCLUDING THE ABILITY TO OPERATE OR REGISTER THE AIRCRAFT OR USE THE AIRCRAFT DOCUMENTATION IN ANY OR ALL JURISDICTIONS) OR SUITABILITY OF THE AIRCRAFT OR ANY PART THEREOF, OR THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, KNOWN OR UNKNOWN, APPARENT OR CONCEALED, EXTERIOR OR INTERIOR, (b) THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK, COPYRIGHT OR OTHER INTELLECTUAL PROPERTY RIGHTS, (c) ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE OR (d) EXCEPT AS SET FORTH IN ARTICLE 21.1, ANY OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY PART THEREOF, ALL OF WHICH ARE HEREBY EXPRESSLY EXCLUDED AND EXTINGUISHED. 8.2 WAIVER OF WARRANTY OF DESCRIPTION. IN CONSIDERATION OF (a) LESSEE'S RIGHTS HEREUNDER TO INSPECT THE AIRCRAFT AND (b) LESSOR'S ASSIGNMENT TO LESSEE OF ANY EXISTING AND ASSIGNABLE WARRANTIES OF MANUFACTURER AND THE ENGINE MANUFACTURER, LESSEE HEREBY AGREES THAT ITS ACCEPTANCE OF THE AIRCRAFT AT DELIVERY AND ITS EXECUTION AND DELIVERY OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATE CONSTITUTE LESSEE'S WAIVER OF THE WARRANTY OF DESCRIPTION, ANY CLAIMS LESSEE MAY HAVE AGAINST LESSOR BASED UPON THE FAILURE OF THE AIRCRAFT TO CONFORM WITH SUCH DESCRIPTION AND ANY AND ALL RIGHTS IT MAY HAVE TO THE REMEDIES SET FORTH IN SECTIONS 10508 THROUGH 10522 OF THE CALIFORNIA COMMERCIAL CODE. EVEN IF AT ANY TIME THE FAILURE OF THE AIRCRAFT TO CONFORM TO SUCH DESCRIPTION SUBSTANTIALLY IMPAIRS THE VALUE AND UTILITY OF THE AIRCRAFT AND EITHER (i) LESSEE ACCEPTED THE AIRCRAFT BASED ON A REASONABLE ASSUMPTION THAT THE NONCONFORMITY WOULD BE CURED AND IT WAS NOT SEASONABLY CURED OR (ii) LESSEE ACCEPTED THE AIRCRAFT WITHOUT DISCOVERING THE NONCONFORMITY BUT LESSEE'S ACCEPTANCE OF THE AIRCRAFT WAS REASONABLY INDUCED EITHER BY LESSOR'S ASSURANCES OR BY THE DIFFICULTY OF DISCOVERING ANY DEFECT PRIOR TO ACCEPTANCE, LESSEE AGREES NOT TO LOOK TO LESSOR FOR DAMAGES OR RELIEF ARISING OUT OF THE FAILURE OF THE AIRCRAFT TO CONFORM TO SUCH DESCRIPTION. 8.3 LESSEE WAIVER. LESSEE hereby waives as between itself and LESSOR and agrees not to seek to establish or enforce any rights and remedies, express or implied (whether statutory or otherwise) against LESSOR or the Aircraft relating to any of the matters mentioned in Articles 8.1 or 8.2. 8.4 CONCLUSIVE PROOF. DELIVERY BY LESSEE TO LESSOR OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATE WILL BE CONCLUSIVE PROOF AS BETWEEN LESSOR AND LESSEE THAT LESSEE'S TECHNICAL EXPERTS HAVE EXAMINED AND INVESTIGATED THE AIRCRAFT AND ENGINES AND (a) EACH IS AIRWORTHY AND IN GOOD WORKING ORDER AND REPAIR AND (b) THE AIRCRAFT AND ENGINES AND THE AIRCRAFT DOCUMENTATION ARE WITHOUT DEFECT (WHETHER OR NOT DISCOVERABLE AT DELIVERY) AND IN EVERY WAY SATISFACTORY TO LESSEE. 8.5 NO LESSOR LIABILITY FOR LOSSES. LESSEE agrees that LESSOR will not be liable to LESSEE, any sublessee or any Person, whether in contract or tort and however arising, for any cost, loss or damage (consequential or otherwise) arising out of the condition of the Aircraft, whether or not due in whole or in part to an act or omission or the active or passive negligence of LESSOR. 8.6 NO LIABILITY TO REPAIR OR REPLACE. LESSOR will not be liable for any expense in repairing or replacing any item of the Aircraft or be liable to supply another aircraft or any item in lieu of the Aircraft or any Part thereof if the same is lost, confiscated, damaged, destroyed or otherwise rendered unfit for use. 8.7 NO WAIVER. Nothing in this Article 8 or elsewhere in this Lease will be deemed to be a waiver by LESSEE of any rights it may have against Manufacturer, the Engine manufacturer or any other Person. ARTICLE 9 MANUFACTURERS' AND VENDORS' WARRANTIES 9.1 WARRANTIES. As set forth in Article 7.2.6, at Delivery LESSOR will assign to LESSEE for the duration of the Lease Term the benefit of all warranties and indemnities given to LESSOR by Manufacturer and the Engine manufacturer. Effective on the Delivery Date, all other vendor warranties with respect to the Aircraft are hereby assigned by LESSOR to LESSEE. 9.2 REASSIGNMENT. On the Termination Date, the benefit of any warranty assigned by LESSOR to LESSEE pursuant to Article 7.2.6 will be reassigned automatically to LESSOR or its designee. ARTICLE 10 OPERATION OF AIRCRAFT 10.1 COSTS OF OPERATION. As between LESSEE and LESSOR, LESSEE will pay all costs incurred in the operation of the Aircraft during the Lease Term, for profit or otherwise, including the costs of flight crews, cabin personnel, fuel, oil, lubricants, maintenance, insurance, storage, landing and navigation fees, airport charges, passenger service and any and all other expenses of any kind or nature, directly or indirectly, in connection with or related to the use, movement and operation of the Aircraft. The obligations, covenants and liabilities of LESSEE under this paragraph arising prior to return of the Aircraft to LESSOR will continue in full force and effect, notwithstanding the termination of this Lease or expiration of the Lease Term. 10.2 COMPLIANCE WITH LAWS. LESSEE agrees throughout the Lease Term that all use of the Aircraft will be in accordance with applicable Laws of the State of Registration and of any country, state, territory or municipality into or over which LESSEE may operate. LESSEE will not employ, suffer or cause the Aircraft to be used in any business which is forbidden by Law or in any manner which may render it liable to condemnation, destruction, seizure, or confiscation by any authority. LESSEE will not permit the Aircraft to fly to any airport or country if so doing would cause LESSEE to be in violation of any Law applicable to LESSEE or the Aircraft. The foregoing provisions in this Article 10.2 shall not prohibit any violation of Law (a) during a good-faith contest of the validity, application, or alleged violation thereof in any reasonable manner so long as there is no material danger of sale, forfeiture, or loss of the Aircraft (however, this good faith exception shall not apply in the case of a mandatory grounding order, the good faith contest of which does not permit LESSEE to operate the Aircraft during such contest), and which does not extend beyond the end of the Lease Term if the pendency of such contest would adversely affect the Aircraft or the remarketing thereof in any material respect; and (b) for minor or non-recurring violations (with the understanding that minor violations may cease to be minor if recurring) that LESSEE is diligently trying to rectify which do not render the Aircraft liable to any risk of condemnation, destruction, seizure, or confiscation by any Government Entity. 10.3 TRAINING. LESSEE will not use the Aircraft for testing or for training of flight crew members other than LESSEE crew members and will not use the Aircraft for training any more than it utilizes for training the other aircraft in its fleet. 10.4 NO VIOLATION OF INSURANCE POLICIES. LESSEE will not use or permit the Aircraft to be used in any manner or for any purpose which is not covered by the insurance policies LESSEE is required to carry and maintain as set forth in this Lease. LESSEE will not carry any goods of any description that would invalidate or limit such policies or do any other act or permit to be done anything which could reasonably be expected to invalidate or limit any such insurance policy. 10.5 FLIGHT CHARGES. 10.5.1 LESSEE will pay promptly when due all enroute navigation charges, navigation service charges and all other charges payable by LESSEE for the use of or for services provided at any airport, whether in respect of the Aircraft or any other aircraft of LESSEE, and will indemnify and hold LESSOR harmless in respect of the same. This indemnity will continue in full force and effect notwithstanding the termination or expiration of the Lease Term for any reason or the return of the Aircraft. 10.5.2 If requested by LESSOR, LESSEE will provide LESSOR with a list of the airports to which LESSEE regularly operates the Aircraft or its other aircraft. LESSEE hereby authorizes Eurocontrol or another aviation authority or airport or creditor claiming rights on the Aircraft to confirm the status of LESSEE's payments to such creditor for the Aircraft and its other aircraft, as and when requested by LESSOR. ARTICLE 11 SUBLEASES 11.1 NO SUBLEASE WITHOUT LESSOR CONSENT. LESSEE WILL NOT SUBLEASE OR PART WITH POSSESSION OF THE AIRCRAFT (EXCEPT FOR MAINTENANCE AND REPAIR) AT ANY TIME WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR (NOT TO BE UNREASONABLY WITHHELD) AND IN ACCORDANCE WITH SUCH REQUIREMENTS AS MAY FROM TIME TO TIME BE AGREED IN WRITING BETWEEN LESSOR AND LESSEE. The wet leasing of the Aircraft during the Lease Term (in which LESSEE and its crews retain operational control of the Aircraft) will not be considered a sublease of the Aircraft. 11.2 LESSOR COSTS. LESSEE will indemnify LESSOR on demand for all out-of-pocket expenses (including legal fees) incurred in connection with LESSOR's assessment of the subleasing proposal (whether or not LESSOR's consent to such sublease is ultimately given) and implementation of the sublease. 11.3 ANY APPROVED SUBLEASE. Any sublease approved by LESSOR will be for a term no greater than the remaining Lease Term and contain provisions consistent with this Lease protecting LESSOR's title to the Aircraft, providing appropriate LESSOR indemnities, regarding the maintenance and repair standards for the Aircraft, concerning the insurances which will be carried by the sublessee and the circumstances which constitute a Total Loss of the Aircraft. Any such sublease will be subject and subordinate to this Lease. In its sole discretion, LESSOR may require an opinion of counsel in connection with such sublease, including LESSOR's right to repossess the Aircraft in the event of an Event of Default hereunder or under the sublease. LESSEE will not amend the terms of any approved sublease without the prior written consent of LESSOR, which will not be unreasonably withheld. 11.4 ASSIGNMENT OF SUBLEASE. Any approved sublease will be assigned to LESSOR as security. LESSEE will deliver the original counterpart of the sublease to LESSOR and make any filings necessary to protect LESSOR's security interest. 11.5 CONTINUED RESPONSIBILITY OF LESSEE. LESSEE will continue to be responsible for performance of its obligations under this Lease during any period of sublease. ARTICLE 12 MAINTENANCE AND USE OF AIRCRAFT 12.1 GENERAL OBLIGATION. 12.1.1 During the Lease Term and until the Aircraft is returned to LESSOR, LESSEE alone has the obligation, at its expense, to maintain and repair the Aircraft, Engines and all of the Parts (a) in accordance with the Maintenance Program, (b) in accordance with the rules and regulations of the Aviation Authority, (c) in accordance with Manufacturer's type design, (d) in accordance with any other regulations or requirements necessary in order to maintain a valid Certificate of Airworthiness for the Aircraft and meet the requirements at all times during the Lease Term and upon return of the Aircraft to LESSOR for issuance of a Standard Certificate of Airworthiness for transport category aircraft issued by the Aviation Authority (except during those periods when the Aircraft is undergoing maintenance or repairs as required or permitted by this Lease) and (e) in the same manner and with the same care as used by LESSEE or its sublessee with respect to similar aircraft and engines operated by LESSEE or its sublessee and without in any way discriminating against the Aircraft. 12.1.2 LESSEE will maintain and repair the Engines in the same manner and in the equivalent time frame to its other engines and LESSEE will not discriminate against any of the Engines in respect of the repair and maintenance. 12.1.3 LESSEE will not enter into any Engine maintenance cost per flight hour, power-by-the-hour or similar agreement with Engine manufacturer or any other Engine maintenance facility or organization without LESSOR's prior written consent. 12.2 SPECIFIC OBLIGATIONS. Without limiting Article 12.1, LESSEE agrees that such maintenance and repairs will include but will not be limited to each of the following specific items: (a) performance in accordance with the Maintenance Program of all routine and non-routine maintenance work; (b) incorporation in the Aircraft of all Airworthiness Directives; (c) incorporation in the Aircraft of all service bulletins of Manufacturer, the Engine manufacturer and other vendors which LESSEE schedules to adopt within the Lease Term for the rest of its Boeing 737-800 aircraft fleet. It is the intent of the parties that the Aircraft will not be discriminated from the rest of LESSEE's fleet in service bulletin compliance (including method of compliance) or other maintenance matters. LESSEE will not discriminate against the Engines with respect to Overhaul build standards and life-limited part replacements; (d) incorporation in the Maintenance Program for the Aircraft of a corrosion prevention and control program; (e) maintaining in English and keeping in an up-to-date status the records and historical documents set forth in Attachment 1 of Exhibit I; (f) maintaining historical records, in English, for on condition, condition-monitored, hard time and life-limited Parts (including tags from the manufacturer of such Part or a repair facility which evidence that such Part is new or overhauled and establish authenticity, total time in service and time since overhaul for such Part), the hours and cycles the Aircraft and Engines operate and all maintenance and repairs performed on the Aircraft; and (g) properly documenting all repairs, Modifications and alterations and the addition, removal or replacement of equipment, systems or components in accordance with the rules and regulations of the Aviation Authority and reflecting such items in the Aircraft Documentation. In addition, all repairs to the Aircraft will be accomplished in accordance with Manufacturer's Structural Repair Manual (or FAA-approved data supported by FAA Form 8110-3 or equivalent). All Modifications and alterations will also be accomplished in accordance with FAA-approved data supported by FAA Form 8110-3 or equivalent. 12.3 REPLACEMENT OF PARTS. 12.3.1 LESSEE, at its own cost and expense, will promptly replace all Parts which may from time to time become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or rendered unfit or beyond economical repair (BER) for any reason. In the ordinary course of maintenance, service, repair, overhaul or testing, LESSEE may remove any Part provided that LESSEE replaces such Part as promptly as practicable. All replacement Parts will (a) be free and clear of all Security Interests (except Permitted Liens) of any kind or description, (b) be in airworthy condition and of at least equivalent model, service bulletin and modification status and have a value and utility at least equal to the Parts replaced, assuming such replaced Parts were in the condition and repair required to be maintained by the terms hereof and (c) have a current "serviceable tag" of the manufacturer or maintenance facility providing such items to LESSEE, indicating that such Parts are new, serviceable or Overhauled. So long as a substitution meets the requirements of the Maintenance Program and Aviation Authority, LESSEE may substitute for any Part a part that does not meet the requirements of the foregoing sentence if a complying Part cannot be procured or installed within the available groundtime of the Aircraft and as soon as practicable the noncomplying part is removed and replaced by a complying Part. 12.3.2 All Parts removed from the Airframe or any Engine will remain the property of LESSOR and subject to this Lease no matter where located, until such time as such Parts have been replaced by Parts (which have been incorporated or installed in or attached to the Airframe or such Engine) which meet the requirements for replacement Parts specified above and title to such replacement Parts has passed to LESSOR under the Laws of the State of Registration and LEX SITUS. To the extent permitted by the Laws of the State of --- ----- Registration and the LEX SITUS it is the intent of LESSOR and LESSEE that without further --- ----- act and immediately upon any replacement Part becoming incorporated, installed or attached to the Airframe or an Engine as above provided, (a) title to the removed Part will thereupon vest in LESSEE, free and clear of all rights of LESSOR, (b) title to the replacement Part will thereupon vest in LESSOR free and clear of all rights of LESSEE and (c) such replacement Part will become subject to this Lease and be deemed to be a Part hereunder to the same extent as the Parts originally incorporated or installed in or attached to the Airframe or such Engine. 12.4 REMOVAL OF ENGINES. 12.4.1 If an Engine is removed for testing, service, repair, maintenance, Overhaul work, alterations or modifications, title to such Engine will remain vested in LESSOR. 12.4.2 LESSEE will be entitled to remove any of the Engines from the Aircraft and install another engine or engines on the Aircraft, provided that LESSEE complies with each of the following obligations: (a) the insurance requirements set forth in Article 17 and Exhibit C are in place; (b) LESSEE ensures that the identification plates referred to in Article 14 are not removed from any Engine upon such Engine being detached from the Aircraft; and (c) title to the Engine remains with LESSOR free from all Security Interests (except Permitted Liens) regardless of the location of the Engine or its attachment to or detachment from the Aircraft. 12.5 POOLING OF ENGINES AND PARTS. With LESSOR's prior written consent, not to be unreasonably withheld, LESSEE may subject the Engines and Parts to normal interchange or pooling agreements with responsible commercial air carriers customary in the airline industry and entered into by LESSEE in the ordinary course of its business with respect to its Boeing 737-800 fleet generally, so long as (a) in the case of pooling of an Engine, such Engine is returned to LESSEE within two (2) months, (b) no transfer of title to the Engine occurs, (c) all other terms of this Lease continue to be observed with respect to the Engines or Parts, including but not limited to Articles 8, 10, 12, 13, 14, 15, 16, 17 and 18 and (d) LESSEE continues to be fully responsible to LESSOR for the performance of all of its obligations hereunder. 12.6 INSTALLATION OF ENGINES ON OTHER AIRCRAFT. Any Engine removed from the Aircraft may be installed on another airframe in LESSEE's fleet which utilizes engines of the same type as the Engine only if one of the situations described in this Article 12.6 exists: 12.6.1 LESSEE or LESSOR has title to such other aircraft free and clear of all Security Interests (except Permitted Liens). 12.6.2 LESSEE, LESSOR and all of the Creditors of LESSEE of such aircraft enter into an engines cooperation agreement in form and substance acceptable to LESSOR in which each party agrees to recognize one another's rights in the engines. LESSEE will reimburse LESSOR and LESSOR's Lender for their reasonable attorneys' fees and costs in negotiating and finalizing engine cooperation agreement arrangements with LESSEE and its Creditors. 12.6.3 Such other aircraft is subject to a Creditor Agreement (but no other Security Interests except Permitted Liens) which by its terms expressly or effectively states that such Creditor and its successors and assigns will not acquire any right, title or interest in any Engine by reason of such Engine being installed on such aircraft. LESSEE hereby agrees that if LESSOR's title to an Engine is in fact impaired under any such Creditor Agreement, such impairment will be a Total Loss of such Engine and the provisions of Article 18.5 will apply. To the extent another Creditor Agreement contains such provisions, then LESSOR hereby agrees for the benefit of the Creditor of such Creditor Agreement that neither LESSOR nor its successors or assigns will acquire or claim any right, title or interest in any engine in which LESSEE or another Creditor has an interest as a result of such engine being installed on the Airframe. 12.7 MODIFICATIONS. 12.7.1 No modification, alteration, addition or removal to the Aircraft ("MODIFICATION") expected to cost over Five Hundred Thousand U.S. Dollars (US$500,000) or deviation from the Aircraft's original type design or configuration will be made without the prior written consent of LESSOR, which consent will not be unreasonably withheld. "Modifications" do not include Airworthiness Directives or Manufacturer's recommended service bulletins, for which LESSOR's consent is not required. 12.7.2 LESSOR may review LESSEE's proposed designs, plans, engineering drawings and diagrams, and flight and maintenance manual revisions for any proposed Modification. If requested by LESSOR, LESSEE will furnish LESSOR (at LESSEE's expense) with such documents in final form and any other documents required by Law, as a result of such Modification. All Modifications incorporated on the Aircraft will be properly documented in the Aircraft Documentation and be fully approved by the Aviation Authority. 12.7.3 Notwithstanding any other provision of this Lease, no Modification will be made which has the effect of decreasing the utility or value of the Aircraft. 12.7.4 No Modification will be made by LESSEE if an Event of Default exists and is continuing hereunder. 12.7.5 Unless otherwise agreed by LESSOR in writing, all non-severable or structural Modifications will forthwith become a part of the Aircraft and LESSEE relinquishes to LESSOR all rights and title thereto. However, all severable Modifications will remain the property of LESSEE or the third-party owner and, at LESSOR's request and LESSEE's cost, will be removed from the Aircraft prior to return of the Aircraft, with LESSEE restoring the Aircraft to the condition it was in prior to the Modification. Notwithstanding the foregoing, no such removal will be permitted without LESSOR's permission after the occurrence of an Event of Default hereunder and immediately upon the occurrence of an Event of Default hereunder, without the requirement of any further act or notice, all right, title and interest in such Modifications will immediately vest in LESSOR. 12.7.6 LESSOR will bear no liability for the cost of Modifications of the Aircraft whether in the event of grounding or suspensions of certification, or for any other cause. 12.8 PERFORMANCE OF WORK BY THIRD PARTIES. Whenever maintenance and repair work on the Aircraft or Engines will be regularly performed by a Person other than LESSEE, such Person will be an FAA-authorized repair station. 12.9 REPORTING REQUIREMENTS. 12.9.1 Commencing with a report furnished ten (10) days after the end of the calendar month in which Delivery occurs, LESSEE will furnish to LESSOR a Monthly Report in English in the form attached hereto as Exhibit J. Each Monthly Report will be furnished within ten (10) days after the end of each calendar month, except that the Monthly Report pertaining to the last month (or any portion thereof) of the Lease Term will be furnished to LESSOR on the Termination Date. 12.9.2 On each anniversary of the Delivery Date, LESSEE will provide LESSOR with a Technical Evaluation Report for the Aircraft in the form and substance of Exhibit L, as revised. 12.10 INFORMATION REGARDING MAINTENANCE PROGRAM. LESSEE will provide LESSOR with a copy of or information regarding the Maintenance Program for the Aircraft, as requested by LESSOR. 12.11 LESSOR RIGHTS TO INSPECT AIRCRAFT. On reasonable notice, LESSOR and/or its authorized agents or representatives will have the right to inspect the Aircraft and Aircraft Documentation. LESSOR agrees that such requests will be coordinated with LESSEE so as to cause the minimum practical disturbance to LESSEE's operation or its personnel. LESSEE agrees to cooperate with LESSOR in making the Aircraft and Aircraft Documentation available to such authorized technical teams. No such inspection shall include opening panels, bays, or the like (although LESSOR may observe those that are then open), or disassembling any item. LESSOR will have no duty to make any such inspection and will not incur any liability or obligation by reason of (and LESSEE's indemnity obligations pursuant to Article 16 will apply notwithstanding) not making any such inspection or by reason of any reports it receives or any reviews it may make of the Aircraft records. ARTICLE 13 TITLE AND REGISTRATION 13.1 TITLE TO THE AIRCRAFT DURING LEASE TERM. Title to the Aircraft will be and remain vested in LESSOR. LESSOR and LESSEE intend this Lease to be a "true lease". LESSEE will have no right, title or interest in the Aircraft except as provided in this Lease. 13.2 REGISTRATION OF AIRCRAFT. LESSEE at its sole cost and expense will (a) register and maintain registration of the Aircraft in the name of LESSOR at the register of aircraft in the State of Registration and (b) from time to time take all other steps then required by Law (including the Geneva Convention if applicable) or by practice, custom or understanding or as LESSOR may reasonably request to protect and perfect LESSOR's interest in the Aircraft and this Lease in the State of Registration or in any other jurisdictions in or over which LESSEE may operate the Aircraft. 13.3 FILING OF THIS LEASE. To the extent permitted by Law and in accordance with the requirements of the Law from time to time, LESSEE at its sole cost and expense will cause this Lease to be kept, filed, recorded and refiled or rerecorded in the State of Registration and in any other offices necessary to protect LESSOR's rights hereunder. 13.4 EVIDENCE OF REGISTRATION AND FILINGS. As LESSOR may reasonably request from time to time, LESSEE will furnish to LESSOR an opinion of counsel or other evidence reasonably satisfactory to LESSOR of the registrations and filings required hereunder. ARTICLE 14 IDENTIFICATION PLATES LESSOR will affix and LESSEE will at all times maintain on the Airframe and each Engine the identification plates containing the following legends or any other legend reasonably requested by LESSOR in writing: 14.1 AIRFRAME IDENTIFICATION PLATES. Location: One to be affixed to the Aircraft structure above the forward entry door adjacent to and not less prominent than that of Manufacturer's data plate and another in a prominent place on the flight deck. Size: No smaller than 4" x 6". Legend: "THIS AIRCRAFT IS OWNED BY INTERNATIONAL LEASE FINANCE CORPORATION. MANUFACTURER'S SERIAL NO: 28246 OWNER'S ADDRESS: INTERNATIONAL LEASE FINANCE CORPORATION 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States of America Fax: (310) 788-1990" 14.2 ENGINE IDENTIFICATION PLATES. Location: The legend on the plate must be visible. Size: No smaller than 2" x 6". "THIS ENGINE IS OWNED BY INTERNATIONAL LEASE FINANCE CORPORATION, LOS ANGELES, CALIFORNIA, USA." ARTICLE 15 TAXES 15.1 GENERAL OBLIGATION OF LESSEE. Except as set forth in Article 15.2, LESSEE agrees to pay promptly when due, and to indemnify and hold harmless LESSOR on a full indemnity basis from, all license and registration fees and all taxes, fees, levies, imposts, duties, charges or withholdings of any nature whatsoever (including without limitation any value added, franchise, transfer, sales, gross receipts, use, business, occupation, excise, personal property, real property, stamp or other tax) together with any assessments, penalties, fines, additions to tax or interest thereon, however or wherever imposed (whether imposed upon LESSEE, LESSOR, on all or part of the Aircraft, the Engines or otherwise), by any Government Entity or taxing authority in the U.S., any State thereof, or any foreign country or by any international taxing authority, upon or with respect to, based upon or measured by any of the following (collectively, "TAXES"): (a) the Aircraft, the Engines or any Parts. (b) the use, operation or maintenance of the Aircraft or carriage of passengers or freight during the Lease Term. (c) this Lease, the payments due hereunder and the terms and conditions hereof. (d) the return of the Aircraft to LESSOR or other use or disposition of the Aircraft by LESSEE. 15.2 EXCEPTIONS TO INDEMNITY. The indemnity provided in Article 15.1 does not extend to any of the following Taxes: (a) Imposed by the U.S. (including without limitation any taxes collected by withholding) or any state or local government or governmental subdivision or state or local taxing authority in the U.S. (including any possession or territory of the U.S.) or by any foreign government, taxing authority or governmental subdivision of a foreign country which are based on, or measured by, the receipts, gross or net income, capital, net worth, franchises, excess profits, or conduct of business (including minimum taxes, withholding taxes and taxes on or measured by any items of tax preference) of LESSOR, except to the extent that such Tax would not have been imposed on or payable by LESSOR but for the location, use, registration or operation of the Aircraft or any part thereof, or any place of business or any activity of LESSEE in the jurisdiction imposing such Tax. (b) Imposed as a result of LESSOR's transfer, mortgage, pledge, financing or other disposition by LESSOR of all or a portion of its interest in the Aircraft or this Lease except a transfer or sale resulting from an exercise of remedies pursuant to Article 25.3 hereunder or in connection with a termination of the Lease pursuant to Article 18 hereof. (c) Attributable to the period prior to the Delivery Date or after return of the Aircraft to LESSOR in accordance with this Lease. (d) Attributable to LESSOR's gross negligence, willful misconduct or breach of this Lease. 15.3 AFTER-TAX BASIS. The amount which LESSEE is required to pay with respect to any Taxes indemnified against under Article 15.1 is an amount sufficient to restore LESSOR on an after-tax basis to the same position LESSOR would have been in had such Taxes not been incurred. 15.4 CLAIMS AND CONTESTS. If a written claim is received by LESSOR for Taxes, which claim, if sustained, would require the payment of an indemnity by LESSEE pursuant to this Article 15, LESSOR shall notify LESSEE of such claim within thirty (30) days after its receipt, provided that failure to provide such notice within thirty (30) days will not relieve LESSEE of any indemnification obligation pursuant to this Article 15 if such failure does not preclude LESSEE from exercising its contest rights hereunder. Payments due from LESSEE to LESSOR pursuant to this Article 15 shall be made directly to LESSOR within thirty (30) days of written demand by LESSOR to LESSEE. If requested by LESSEE in writing, LESSOR shall upon receipt of indemnity reasonably satisfactory to it and at the expense of LESSEE (including, without limitation, all reasonable costs, expenses, legal and accountants' fees, and disbursements, penalties, interest incurred in contesting such claim, and additions to tax) in good faith, in the name of LESSOR or, if requested by LESSEE, in the name of LESSEE (or permit LESSEE, if desired by LESSEE, to contest in the name of LESSEE) if permissible under applicable laws, the validity, applicability or amount of such Taxes by (i) resisting payment thereof if practicable only if adequate reserves have been made for such Taxes or, if required, an adequate bond has been posted, (ii) paying the same under protest, if protest shall be necessary and proper, (iii) if payment shall be made, using reasonable efforts to obtain a refund thereof in appropriate administrative and judicial proceedings, and (iv) taking such other action as is reasonably requested by LESSEE from time to time including not paying such Taxes only if adequate reserves have been made for such Taxes or, if required, an adequate bond has been posted. LESSOR shall determine the method of any contest and (in good faith consultation with LESSEE) control the conduct thereof. Notwithstanding anything contained in this Article 15.4, LESSOR will not be required to contest, or to continue to contest, the validity, applicability or amount of any Tax (or portion thereof) (x) if such contest would result in any material risk of criminal penalties or any material risk of sale, forfeiture or loss of the Aircraft, (y) if an Event of Default has occurred and is continuing, or (z) in the case of a contest of a Tax reflected on a return of LESSOR with other taxes of LESSOR that are not indemnified by the LESSEE hereunder, if LESSEE shall not have furnished an opinion of independent tax counsel selected by the LESSEE, and reasonably satisfactory to LESSOR, that a reasonable basis exists for such contest. If LESSOR shall obtain a refund of all or any part of such Taxes for which an indemnity was paid by LESSEE, LESSOR shall pay LESSEE the amount of such refund; PROVIDED, HOWEVER, that such amount shall not be payable before such time as LESSEE shall have made all payments or indemnities to LESSOR then due under this Article 15 and under the Lease or while an Event of Default shall have occurred and be continuing. If in addition to such refund LESSOR shall receive an amount representing interest on the amount of such refund, LESSEE shall be paid that proportion of such interest which is fairly attributable to Taxes paid with an indemnity payment by LESSEE prior to the receipt of such refund or interest and increased by any taxes saved by reason of the deductibility of such payment by LESSOR. LESSEE shall not be deemed to be in default under any of the indemnification provisions under this Article 15 so long as it or LESSOR shall diligently prosecute such contest and LESSEE has indemnified LESSOR to LESSOR's reasonable satisfaction. In case any report or return is required to be made with respect to any obligation of LESSEE under this Article 15.4 or arising out of this Article 15.4, LESSEE will either timely make such report or return in such manner as will show the ownership of the Aircraft in LESSOR, and will as soon as possible send a copy of such report or return to LESSOR, or will notify LESSOR of such requirement and prepare and deliver such report or return to LESSOR in such manner as shall be satisfactory to LESSOR. 15.5 REFUNDS. Upon receipt by LESSOR of a refund of all or any part of any Taxes (including any deductions or withholdings referred to in Article 15.1) which LESSEE has paid, LESSOR will pay to LESSEE the net amount of such Taxes refunded. 15.6 COOPERATION IN FILING TAX RETURNS. LESSEE and LESSOR will cooperate with one another in providing information which may be reasonably required to fulfill each party's tax filing requirements and any audit information request arising from such filing. ARTICLE 16 INDEMNITIES 16.1 GENERAL INDEMNITY. Except as set forth in Article 16.2, LESSEE agrees to indemnify and hold harmless LESSOR and its officers, directors, employees, agents and shareholders (individually an "INDEMNITEE" and collectively "INDEMNITEES") from any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs, disbursements and expenses (including legal fees, costs and related expenses) of every kind and nature, whether or not any of the transactions contemplated by this Lease are consummated (collectively "EXPENSES"), which are imposed on, incurred by or asserted against any Indemnitee and which are in any way relating to, based on or arising out of any of the following: (a) this Lease or any transactions contemplated hereby; (b) the operation, possession, use, non-use, control, leasing, subleasing, maintenance, storage, overhaul, testing, inspections or acceptance flights at return of the Aircraft, any Engine or any Part during the Lease Term by LESSEE, any sublessee or any other Person, whether or not the same is in compliance with the terms of this Lease, including without limitation claims for death, personal injury, property damage, other loss or harm to any Person and claims relating to any Laws, including without limitation environmental control, noise and pollution laws, rules or regulations; (c) the manufacture, design, acceptance, rejection, delivery, return, sale in connection with an Event of Default, import, export, condition, repair, modification, servicing, rebuilding, enforcement of warranties whether in LESSOR's or LESSEE's name, customer and product support provided by Manufacturer and other vendors, airworthiness, registration, reregistration, performance, sublease, merchantability, fitness for use, substitution or replacement of the Aircraft, Engine or any Part under this Lease or other transfer of use or possession of the Aircraft, Engine or any Part, including under a pooling or interchange arrangement, including without limitation latent and other defects, whether or not discoverable and patent, trademark or copyright infringement; (d) any non-compliance by LESSEE with any term of this Lease or the falsity or inaccuracy of any representation or warranty of LESSEE set forth herein; (e) the prevention or attempt to prevent the arrest, confiscation, seizure, taking in execution, impounding, forfeiture or detention of the Aircraft, or in securing the release of the Aircraft; or (f) as a consequence of any Default in payment by LESSEE of any sum to be paid by LESSEE when due under this Lease or any other Default by LESSEE in the due and punctual performance of its obligations under this Lease. The foregoing indemnity by LESSEE is intended to include and cover any Expense to which an Indemnitee may be subject (in contract, tort, strict liability or under any other theory) regardless of the negligence, active or passive or any other type, of such Indemnitee, so long as such Expense does not fall within any of the exceptions listed in Article 16.2. 16.2 EXCEPTIONS TO GENERAL INDEMNITIES. The indemnity provided for in Article 16.1 will not extend to Expenses of any Indemnitee to the extent resulting from or arising out of any of the following: (a) Expenses which have resulted from the willful misconduct of such Indemnitee; (b) Expenses which LESSEE and LESSOR mutually agree or, absent mutual agreement, are judicially determined to be attributable to acts or events which occur after the Termination Date and return of the Aircraft to LESSOR in the condition required hereunder, but in any such case only to the extent not attributable to acts or omissions of LESSEE; (c) Expenses representing Taxes, it being acknowledged that the terms of Article 15 apply exclusively to LESSEE's indemnity obligations with respect to Taxes; (d) Expenses due to the breach by LESSOR of its covenant of quiet enjoyment pursuant to Article 21.2 (except to the extent covered by LESSEE's insurances); (e) Expenses which arise in connection with the transfer by LESSOR of any interest in the Aircraft or this Lease, except for any transfer in connection with any Event of Default or a Total Loss of the Aircraft or an Engine. (f) Expenses which are solely attributable to the representation or warranty of LESSOR contained in or made pursuant to any Operative Document being untrue; (g) Expenses which are solely related to the failure of such Indemnitees to perform or observe any agreement, covenant, or condition on its part to be performed or observed in any Operative Document; (h) Expenses which are solely an ordinary and usual internal customary operating expense; or (i) Expenses which are solely related to a breach of Article 21.1.6, or (j) Expenses which are solely related to a LESSOR's Lien. 16.3 AFTER-TAX BASIS. The amount which LESSEE will be required to pay with respect to any Expense indemnified against under Article 16.1 will be an amount sufficient to restore the Indemnitee, on an after-tax basis, to the same position such Indemnitee would have been in had such Expense not been incurred. 16.4 TIMING OF PAYMENT. It is the intent of the parties that each Indemnitee will have the right to indemnification for Expenses hereunder as soon as a claim is made and as soon as an Expense is incurred, whether or not such claim is meritorious and whether or not liability is established (but subject to Articles 16.2 and 16.8). LESSEE will pay an Indemnitee for Expenses pursuant to this Article 16 within ten (10) days after receipt of a written demand therefor from such Indemnitee accompanied by a written statement describing in reasonable detail the basis for such indemnity (but not before payment is due from such Indemnitee). 16.5 SUBROGATION. Upon the payment in full of any indemnity pursuant to this Article 16 by LESSEE, LESSEE will be subrogated to any right of the Indemnitee in respect of the matter against which such indemnity has been made. 16.6 NOTICE. Each Indemnitee and LESSEE will give prompt written notice one to the other of any liability of which such party has knowledge for which LESSEE is, or may be, liable under Article 16.1; provided, however, that failure to give such notice will not terminate any of the rights of Indemnitees under this Article 16 except to the extent that LESSEE has been materially prejudiced by the failure to provide such notice. 16.7 REFUNDS. If any Indemnitee obtains a recovery of all or any part of any amount which LESSEE has paid to such Indemnitee, such Indemnitee will pay to LESSEE the net amount recovered by such Indemnitee. 16.8 DEFENSE OF CLAIMS. (a) LESSEE and its insurers will have the right (in each such case at LESSEE's sole expense) to investigate or, provided that LESSEE or its insurers have not reserved the right to dispute liability with respect to any insurance policies pursuant to which coverage is sought, defend or compromise any claim covered by insurance for which indemnification is sought pursuant to Article 16.1 and each Indemnitee will cooperate with LESSEE or its insurers with respect thereto. If LESSEE or its insurers are retaining attorneys to handle such claim, such counsel must be reasonably satisfactory to the Indemnitees. If not, the Indemnitees will have the right to retain counsel of their choice at LESSEE's expense. (b) Unless LESSOR agrees in writing otherwise, no settlement of any claim hereunder may require LESSOR to agree to any remedy apart from the payment of money damages (for which such payment of money damages LESSEE will in any event indemnify the Indemnitees). (c) In no event shall any Indemnitee enter into a settlement or other compromise with respect to any Expense without LESSEE's prior written consent (which shall not be unreasonably withheld or delayed), unless such Indemnitee waives its right to be indemnified with respect to such Expense under this Article 16. (d) To the extent that any Expense indemnified by LESSEE hereunder may be covered by insurance maintained by LESSEE, at LESSEE's expense, each Indemnitee agrees to cooperate with the insurers in the exercise of their rights to investigate, defend, or compromise that Expense as may be required to retain the benefits of the insurance for that Expense. (e) If an Indemnitee is not a party to this Lease, LESSEE may require that Indemnitee to agree in writing to the terms of this Article 16 before making any payment to such Indemnitee under this Article 16. 16.9 SURVIVAL OF OBLIGATION. Notwithstanding anything in this Lease to the contrary, the provisions of this Article 16 will survive the Termination Date and continue in full force and effect notwithstanding any breach by LESSOR or LESSEE of the terms of this Lease, the termination of the lease of the Aircraft to LESSEE under this Lease or the repudiation by LESSOR or LESSEE of this Lease. ARTICLE 17 INSURANCE 17.1 CATEGORIES OF INSURANCE. Throughout the Lease Term and until the Termination Date LESSEE will, at its own expense, effect and maintain in full force and effect the types of insurance and amounts of insurance (including deductibles) described in Exhibit C through such brokers and with such insurers favorably regarded in the airline industry. 17.2 INSURANCE FOR INDEMNITIES. The insurance referred to in Article 17.1 will in each case include and insure (to the extent of the risks covered by the policies) the indemnity provisions of Article 16 and LESSEE will maintain such insurance of the indemnities for a minimum of two (2) years following the Termination Date. 17.3 INSURANCE REQUIRED BY MANUFACTURER. During the Lease Term, LESSEE will carry the insurance required by Manufacturer in connection with LESSOR's assignment of Manufacturer's warranties and product support to LESSEE. 17.4 RENEWAL. Not less than two (2) Business Days before the expiration or termination date of any insurance required hereunder, LESSEE will provide LESSOR with fax confirmation from LESSEE's insurance brokers that renewed certificates of insurance evidencing the renewal or replacement of such insurance and complying with Exhibit C will be issued on the termination date of the prior certificate. Within seven (7) days after such renewal, LESSEE will furnish its brokers' certificates of insurance to LESSOR. 17.5 ASSIGNMENT OF RIGHTS BY LESSOR. If LESSOR assigns all or any of its rights under this Lease as permitted by this Lease or otherwise disposes of any interest in the Aircraft to any other Person, LESSEE will, upon request, procure that (to the extent of the assignment or disposition) such Person hereunder be added as loss payee and/or additional assured in the policies effected hereunder and enjoy the same rights and insurance enjoyed by LESSOR under such policies. To the extent of its retained interest or as provided in Article 24.2.1, LESSOR will nevertheless continue to be covered by such policies. 17.6 DEDUCTIBLES. If there is a material adverse change in the financial condition of LESSEE which LESSOR reasonably believes will not enable LESSEE to pay the deductible upon the occurrence of a partial loss of the Aircraft or an Engine, then LESSOR may require LESSEE at LESSEE's expense to lower its deductibles on the insurance maintained hereunder to a level which is available on commercially reasonable terms in the insurance market. 17.7 OTHER INSURANCE. LESSOR may from time to time by notice to LESSEE require LESSEE at LESSEE's expense to effect such other insurance or such variations to the terms of the existing insurance as may then be customary in the airline industry for aircraft of the same type as the Aircraft and at the time commonly available in the insurance market. 17.8 INFORMATION. LESSEE will provide LESSOR with any information reasonably requested by LESSOR from time to time concerning the insurance maintained with respect to the Aircraft or in connection with any claim being made or proposed to be made thereunder. 17.9 CURRENCY. All proceeds of insurance pursuant to this Lease will be payable in Dollars except as may be otherwise agreed by LESSOR. 17.10 GROUNDING OF AIRCRAFT. If at any time any of the insurance required pursuant to this Lease will cease to be in full force and effect, LESSEE will forthwith ground the Aircraft and keep the Aircraft grounded until such time as such insurance is in full force and effect again. 17.11 FAILURE TO INSURE. If at any time LESSEE fails to maintain insurance in compliance with this Article 17, LESSOR will be entitled but not bound to do any of the following (without prejudice to any other rights which it may have under this Lease by reason of such failure): (a) to pay any premiums due or to effect or maintain substitute insurance or otherwise remedy such failure in any reasonable manner (and LESSEE will upon demand reimburse LESSOR in full for any amount so expended in that connection); or (b) at any time while such failure is continuing, to require the Aircraft to remain at any airport or (as the case may be), proceed to and remain at any airport designated by LESSOR. 17.12 LIMIT ON HULL IN FAVOR OF LESSEE. LESSEE may carry hull all risks or hull war and allied perils on the Aircraft in excess of the Agreed Value (which Agreed Value is payable to LESSOR) only to the extent such excess insurance which would be payable to LESSEE in the event of a Total Loss does not exceed fifteen percent (15%) of the Agreed Value and only to the extent that such additional insurance will not prejudice the insurances required herein or the recovery by LESSOR thereunder. LESSEE agrees that it will not create or permit to exist any liens or encumbrances over the insurances, or its interest therein, except as constituted by this Lease. 17.13 MARKETPLACE LIMITATIONS. The insurance required by this Lease may be subject to any limitations generally prevailing in the airline insurance marketplace at the time (e.g., AVN67B). ARTICLE 18 LOSS, DAMAGE AND REQUISITION Throughout the Lease Term and until the Termination Date, LESSEE will bear all risk of loss, theft, damage and destruction to the Aircraft. 18.1 DEFINITIONS. In this Article 18: "AGREED VALUE" (CONFIDENTIAL MATERIAL OMITTED) The Agreed Value is set forth in March 2001 U.S. Dollars and will be increased in accordance with Manufacturer's announced escalation rate from March 1, 2001 to the Delivery Date. On each annual renewal date of LESSEE's insurance policy commencing on the renewal date following the first anniversary of the Lease Term, the Agreed Value will decrease by two percent (2.0%) of the then-existing Agreed Value. "NET TOTAL LOSS PROCEEDS" means the Total Loss Proceeds actually received by LESSOR following a Total Loss, less any legal and other out-of-pocket expenses or duties incurred by LESSOR in connection with the collection of such proceeds. "TOTAL LOSS" means any of the following in relation to the Aircraft, Airframe or any Engine and "TOTAL LOSS DATE" means the date set forth in parenthesis after each Total Loss: (a) destruction, damage beyond repair or being rendered permanently unfit for normal use for any reason (the date such event occurs or, if not known, the date on which the Aircraft, Airframe or Engine was last heard of); (b) actual, constructive, compromised, arranged or agreed total loss (the earlier of the date on which the loss is agreed or compromised by the insurers or thirty (30) days after the date of notice to LESSEE's brokers or insurers claiming such total loss); (c) requisition of title, confiscation, forfeiture or any compulsory acquisition of title or other similar event (the date on which the same takes effect); (d) sequestration, detention, seizure or any similar event for more than one hundred eighty (180) consecutive days (the earlier of the date on which insurers make payment on the basis of a total loss or the date of expiration of such period); (e) requisition for use for more than one hundred eighty (180) consecutive days, except as set forth in Article 18.8 (the earlier of the date on which the insurers make payment on the basis of a total loss or the date of expiration of such period); (f) in the case of an Engine, the event described in Article 12.6.3 (the date on which the same takes effect); "TOTAL LOSS PROCEEDS" means the proceeds of any insurance or any compensation or similar payment arising in respect of a Total Loss. 18.2 NOTICE OF TOTAL LOSS. LESSEE will notify LESSOR in writing within two (2) Business Days after a Total Loss Date of the Aircraft, Airframe or any Engine. 18.3 TOTAL LOSS OF AIRCRAFT OR AIRFRAME. If the Total Loss of the Aircraft or Airframe occurs during the Lease Term, the following will occur: 18.3.1 After the Total Loss Date and until receipt by LESSOR of the Agreed Value and all other amounts then due under this Lease, LESSEE will continue to pay Rent and the parties will perform all of their other obligations under this Lease. 18.3.2 On the date which is the earlier of the following dates: (a) the date on which the Total Loss Proceeds of the Aircraft or the Airframe are paid by LESSEE's insurance underwriters or brokers and (b) the date which falls sixty (60) days after the Total Loss Date, LESSEE will pay to LESSOR an amount equal to the sum of: (a) the Agreed Value and (b) all other amounts then due and payable under this Lease, less an amount equal to the Net Total Loss Proceeds received by LESSOR by such date. 18.3.3 LESSOR will apply the Net Total Loss Proceeds and any amounts received from LESSEE pursuant to Article 18.3.2 as follows: (a) first, in discharge of any unpaid Rent and any other amounts accrued and unpaid up to the date of LESSOR's receipt of the Agreed Value; (b) second, in discharge of the Agreed Value; and (c) third, payment of the balance, if any, to LESSEE. 18.3.4 Upon receipt by LESSOR of all monies payable by LESSEE in Article 18.3, provided no Default has occurred and is continuing, this Lease will terminate except for LESSEE's obligations under Articles 10.5, 15 and 16 which survive the Termination Date and the Security Deposit will be returned to LESSEE in accordance with Article 5.3.1. FOR AVOIDANCE OF DOUBT, THE AGREED VALUE OF THE AIRCRAFT WILL BE PAYABLE TO LESSOR PURSUANT TO THIS ARTICLE 18.3 IF A TOTAL LOSS OF THE AIRFRAME OCCURS EVEN IF THERE HAS NOT BEEN A TOTAL LOSS OF AN ENGINE OR ENGINES. 18.4 SURVIVING ENGINE(S). If a Total Loss of the Airframe occurs and there has not been a Total Loss of an Engine or Engines, then provided no Default has occurred and is continuing, at the request of LESSEE (subject to agreement of relevant insurers) and on receipt of all monies due under Article 18.3 and payment by LESSEE of all airport, navigation and other charges on the Aircraft, LESSOR will transfer all of its right, title and interest in the surviving Engine(s) to LESSEE, but without any responsibility, condition or warranty on the part of LESSOR other than as to freedom from any LESSOR's Lien. 18.5 TOTAL LOSS OF ENGINE AND NOT AIRFRAME. 18.5.1 Upon a Total Loss of any Engine not installed on the Airframe or a Total Loss of an Engine installed on the Airframe not involving a Total Loss of the Airframe, LESSEE will replace such Engine as soon as reasonably possible by duly conveying to LESSOR title to another engine (a) free and clear of all Security Interests (except Permitted Liens) of any kind or description, (b) in airworthy condition and of the same or improved model, service bulletin and modification status and having a value and utility at least equal to the Engine which sustained the Total Loss, and (c) not older (by reference to serial number or manufacture date) than three (3) years older than the oldest of the two Engines delivered by LESSOR to LESSEE with the Aircraft on the Delivery Date. Such replacement engine will be an Engine as defined herein and the Engine which sustained such Total Loss will cease to be an Engine. 18.5.2 LESSEE agrees at its own expense to take such action as LESSOR may reasonably request in order that any such replacement Engine becomes the property of LESSOR and is leased hereunder on the same terms as the destroyed Engine. LESSEE's obligation to pay Rent will continue in full force and effect, but an amount equal to the Net Total Loss Proceeds received by LESSOR with respect to such destroyed Engine will, subject to LESSOR's right to deduct therefrom any amounts then due and payable by LESSEE under this Lease, be paid to LESSEE. 18.6 OTHER LOSS OR DAMAGE. 18.6.1 If the Aircraft or any Part thereof suffers loss or damage not constituting a Total Loss of the Aircraft or the Airframe or any Engine, all the obligations of LESSEE under this Lease (including payment of Rent) will continue in full force. 18.6.2 In the event of any loss or damage to the Aircraft or Airframe which does not constitute a Total Loss of the Aircraft or the Airframe, or any loss or damage to an Engine which does not constitute a Total Loss of such Engine, LESSEE will at its sole cost and expense fully repair the Aircraft or Engine in order that the Aircraft or Engine is placed in an airworthy condition and substantially the same condition as it was prior to such loss or damage. All repairs will be performed in accordance with sound airline procedures. LESSEE will notify LESSOR forthwith of any loss, theft or damage to the Aircraft for which the cost of repairs is estimated to exceed Seven Hundred Fifty Thousand U.S. Dollars (US$750,000), together with LESSEE's proposal for carrying out the repair. In the event that LESSOR does not agree with LESSEE's proposals for repair, LESSOR will so notify LESSEE within two (2) Business Days after its receipt of such proposal. LESSEE and LESSOR will then consult with Manufacturer and LESSEE and LESSOR agree to accept as conclusive, and be bound by, Manufacturer's directions or recommendations as to the manner in which to carry out such repairs. If Manufacturer declines to give directions or recommendations, LESSEE will carry out the repairs in accordance with the directions of LESSOR. 18.6.3 To the extent that LESSOR has received insurance proceeds from LESSEE's insurers with respect to any loss or damage, LESSOR will (subject to LESSOR's right to deduct therefrom any amounts then due and payable by LESSEE under this Lease and submission by LESSEE of reasonable documentation confirming the completion of the repairs in accordance with the requirements of this Lease) pay to LESSEE insurance proceeds received by LESSOR as and when such repair work is performed on the Aircraft. 18.7 COPY OF INSURANCE POLICY. Promptly after LESSOR's request following the occurrence of a partial loss or Total Loss of the Aircraft or an Engine, LESSEE will provide LESSOR with a copy of LESSEE's insurance policy. 18.8 GOVERNMENT REQUISITION. If the Aircraft, Airframe or any Engine is requisitioned for use by any Government Entity, LESSEE will promptly notify LESSOR of such requisition. All of LESSEE's obligations hereunder will continue as if such requisition had not occurred. Except if a Default or an Event of Default has occurred and is continuing, all payments received by LESSOR or LESSEE from such Government Entity will be paid over to or retained by LESSEE. 18.9 CONVEYANCE TO LESSEE. Upon compliance by LESSEE with the applicable terms of Article 18.3 or 18.5, LESSOR will transfer to LESSEE the Airframe or Engine(s), as applicable, with respect to which such Total Loss. ARTICLE 19 CRAF PROGRAM 19.1 DEDICATION TO CRAF. LESSEE may transfer possession of the Airframe or any Engine to the United States of America or any instrumentality or agency thereof as part of the Civil Reserve Air Fleet Program authorized under 10 U.S.C. ss. 9511 ET SEQ. (or any substantially similar program) ("CRAF PROGRAM") for a period which includes (collectively, the "CRAF PROGRAM REQUISITION PERIOD") the entire period of requisition under the CRAF Program. If the CRAF Program Requisition Period extends beyond the Expiration Date provided by this Lease, then the Lease will be deemed to continue for six (6) months after the end of the CRAF Program Requisition Period at a monthly rental rate equal to the monthly rental rate during the Lease Term. If such extension extends beyond the Lease Term, then LESSEE will provide LESSOR with written notice of the proposed redelivery by the earlier of six (6) months prior to the proposed redelivery date or five (5) Business Days after the date of receipt of the actual notice given to LESSEE by the government prior to the government's redelivery date and LESSEE will return the Aircraft to LESSOR in the condition required by Article 23 on LESSEE's proposed redelivery date set forth in such notice. 19.2 NOTICE TO LESSOR. LESSEE will promptly notify LESSOR in writing in the event of the requisition for use of the Aircraft under CRAF activation by the U.S. Government. All of LESSEE's obligations under this Lease will continue to the same extent as if such requisition had not occurred. 19.3 REQUISITION OF ENGINE. If there is a requisition for use of any Engine (but not the Airframe) by the U.S. Government in connection with the CRAF Program, LESSEE will replace such Engine by complying with the terms of Article 18.5 hereof. 19.4 GOVERNMENT INDEMNIFICATION. Any provisions of this Lease to the contrary notwithstanding, if there is a requisition for use of the Aircraft pursuant to the CRAF Program and/or CRAF activation, LESSOR agrees that LESSEE's insurances described in Exhibit C may be supplemented by insurances provided under Title XIII of the Act, and/or U.S. Government indemnification (which Title XIII insurances and indemnification will be in amounts not less than those established in Exhibit C); provided, however, that LESSEE will remain responsible for full compliance with all the provisions of this Lease, including Articles 14 and 16, to the extent Title XIII and/or the U.S. Government indemnification do not satisfy LESSEE's obligations under this Lease. 19.5 NO GEOGRAPHIC LIMITS. If there is a requisition for use of the Aircraft pursuant to the CRAF Program and/or CRAF activation, there will be no limitation on the geographic area in which the Aircraft may be operated so long as, taken as a whole, LESSEE's insurance, the Title XIII insurance and/or the indemnification provided by the U.S. Government fully cover (without any geographic exclusions) LESSEE's Exhibit C insurance requirements. 19.6 NOTICE OF DEFAULT. If an Event of Default occurs under this Lease and LESSOR elects to pursue its remedies under Article 25.3(e) to terminate this Lease and repossess the Aircraft, LESSOR will so notify the U.S. Government by sending a written communication as follows: Headquarters Air Mobility Command AMC Contracting Office -- XOKA Scott Air Force Base, Illinois 62225-5007 19.7 RECEIPT OF PAYMENTS. Subject to the following sentence, all payments received by LESSOR or LESSEE from such Government Entity in connection with the requisition of the Aircraft under the CRAF Program will be paid over to or retained by LESSEE. If a Default has occurred and is continuing, all payments received by LESSEE or LESSOR from such Government Entity in connection with the requisition of the Aircraft under the CRAF Program may be used by LESSOR to satisfy any obligations owing by LESSEE. ARTICLE 20 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE 20.1 REPRESENTATIONS AND WARRANTIES. LESSEE represents and warrants the following to LESSOR as of the date of execution of this Lease and as of the Delivery Date: 20.1.1 CORPORATE STATUS. LESSEE is a corporation duly incorporated, validly existing and in good standing under the Laws of Indiana (or, on the Delivery Date, the state of its incorporation). It has the corporate power and authority to carry on its business as presently conducted and to perform its obligations hereunder. 20.1.2 GOVERNMENTAL APPROVALS. No authorization, approval, consent, license or order of, or registration with, or the giving of notice to the Aviation Authority or any other Government Entity is required for the valid authorization, execution, delivery and performance by LESSEE of this Lease, except as will have been duly effected as of the Delivery Date. 20.1.3 BINDING. LESSEE's Board of Directors has authorized LESSEE to enter into this Lease, any Side Letters hereto and any other documentation in connection with the leasing of the Aircraft from LESSOR (collectively, the "OPERATIVE DOCUMENTS") and perform its obligations under the Operative Documents. This Lease and the other Operative Documents have been duly executed and delivered by LESSEE and represent the valid, binding and enforceable obligations of LESSEE except as enforceability may be limited by bankruptcy, insolvency, reorganization or other Laws of general application affecting the enforcement of creditors' rights. When executed by LESSEE at Delivery, the same will apply to the Estoppel and Acceptance Certificate. 20.1.4 NO BREACH. The execution and delivery of the Operative Documents, the consummation by LESSEE of the transactions contemplated herein and compliance by LESSEE with the terms and provisions hereof do not and will not contravene any Law applicable to LESSEE, or result in any breach of or constitute any default under or result in the creation of any Security Interest upon any property of LESSEE, pursuant to any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which LESSEE is a party or by which LESSEE or its properties or assets may be bound or affected. When executed by LESSEE at Delivery, the same will apply to the Estoppel and Acceptance Certificate. 20.1.5 FILINGS. Except for any filing or recording that may be required by the FARs, no filing or recording of any instrument or document (including the filing of any financial statement) is necessary under the Laws of the State of Registration in order for this Lease to constitute a valid and perfected lease of record relating to the Aircraft. 20.1.6 LICENSES. LESSEE holds all licenses, certificates and permits from applicable Government Entities in the U.S. for the conduct of its business as a certificated air carrier and performance of its obligations under this Lease. 20.1.7 NO SUITS. There are no suits, arbitrations or other proceedings pending or threatened before any court or administrative agency against LESSEE which are reasonably likely to be determined adversely and, if adversely determined, would have a material adverse effect on the business, assets or condition (financial or otherwise) of LESSEE or its ability to perform under this Lease, except as described in the filings provided to LESSOR pursuant to Article 22. 20.1.8 GENERAL OBLIGATIONS. The obligations of LESSEE under this Lease are direct, general and unconditional obligations of LESSEE and rank or will rank at least PARI PASSU with all other present and future unsecured and unsubordinated obligations (including contingent obligations) of LESSEE, with the exception of such obligations as are mandatorily preferred by law and not by reason of any encumbrance. 20.1.9 NO SOVEREIGN IMMUNITY. LESSEE, under the Laws of the U.S. or of any other jurisdiction affecting LESSEE, is subject to private commercial law and suit. Neither LESSEE nor its properties or assets is entitled to sovereign immunity under any such Laws. LESSEE's performance of its obligations hereunder constitute commercial acts done for commercial purposes. 20.1.10 TAX RETURNS. All necessary federal and state income tax returns have been delivered by LESSEE to all relevant taxation authorities in the U.S. or any state thereof and LESSEE is not in default in the payment of any taxes due and payable as shown on any such returns or on any assessment received by LESSEE. 20.1.11 NO MATERIAL ADVERSE EFFECT. LESSEE is not in default under any agreement to which it is a party or by which it may be bound which would have a material adverse effect on its business, assets or condition. 20.1.12 NO DEFAULT UNDER THIS LEASE. At the time of execution of this Lease, no Default has occurred and is continuing and the financial statements provided to LESSOR pursuant to Article 22 fairly present the financial condition of LESSEE. 20.2 COVENANTS. LESSEE covenants to LESSOR that it will comply with the following throughout the entire Lease Term: 20.2.1 LICENSING. LESSEE will hold all licenses, certificates and permits from applicable Government Entities in the U.S. for the conduct of its business as a certificated air carrier and performance of its obligations under this Lease. LESSEE will advise LESSOR promptly in the event any such licenses, certificates or permits are cancelled, terminated, revoked or not renewed. 20.2.2 SOVEREIGN IMMUNITY. LESSEE, under the Laws of the U.S. or of any other jurisdiction affecting LESSEE, will continue to be subject to private commercial law and suit. Neither LESSEE nor its properties or assets will be entitled to sovereign immunity under any such Laws. LESSEE's performance of its obligations hereunder will constitute commercial acts done for commercial purposes. LESSEE will advise LESSOR promptly of any change in the foregoing. 20.2.3 INFORMATION ABOUT SUITS. LESSEE will promptly give to LESSOR a notice in writing of any suit, arbitration or proceeding against LESSEE before any court, administrative agency or Government Entity which is reasonably likely to be determined adversely and, if adversely determined, would materially adversely affect LESSEE's financial condition, affairs, operations or its ability to perform under this Lease. 20.2.4 MERGER OF LESSEE. (a) LESSEE shall not consolidate with or merge into any other Person under circumstances in which LESSEE is not the surviving corporation, or convey, transfer, or lease in one or more transactions all or substantially all of its assets to any other Person, unless: (i) such Person is organized, existing, and in good standing under the Laws of the U.S., any state of the U.S., or the District of Columbia, and, upon consummation of such transaction, such Person will be a U.S. Air Carrier; (ii) such Person executes and delivers to LESSOR a duly authorized, legal, valid, binding and enforceable agreement, reasonably satisfactory in form and substance to LESSOR, containing an effective assumption by such Person of the due and punctual performance and observance of each covenant, agreement and condition in the Operative Documents to be performed or observed by LESSEE; (iii) such Person makes such filings and recordings with the FAA pursuant to the Act as shall be necessary to evidence such consolidation or merger; (iv) LESSEE furnishes LESSOR an opinion of counsel reasonably satisfactory to LESSOR to the effect that such consolidation or merger has satisfied at the closing of such consolidation or merger items (i), (ii) and (iii) above; (v) immediately after giving effect to such consolidation or merger, no Default or Event of Default exists; (vi) unless LESSOR otherwise consents, immediately after giving effect to such consolidation or merger, such Person will have a tangible net worth of not less than sixty-five percent (65%) of the LESSEE's tangible net worth immediately prior to such merger; and (vii) upon such merger becoming effective, LESSOR will enjoy the same degree of protection under ss. 1110 of the Bankruptcy Code with respect to the Aircraft as LESSOR enjoyed prior to such merger. (b) Upon any such consolidation or merger of LESSEE with or into, or the conveyance, transfer, or lease by LESSEE of all or substantially all of its assets to, any Person in accordance with this Article 20.2.4, such Person will succeed to, and be substituted for, and may exercise every right and power of, LESSEE under the Operative Documents with the same effect as if such Person had been named as "LESSEE" therein. No such consolidation, merger, conveyance, transfer, or lease shall have the effect of releasing LESSEE or such Person from any of LESSEE's obligations, liabilities, covenants, or undertakings under this Lease. 20.2.5 RESTRICTION ON RELINQUISHMENT OF POSSESSION. LESSEE will not, without the prior consent of LESSOR, deliver, transfer or relinquish possession of the Aircraft except in accordance with Articles 11 and 12. 20.2.6 NO SECURITY INTERESTS. LESSEE will not create or agree to or permit to arise any Security Interest (other than Permitted Liens) on or with respect to the Aircraft, title thereto or any interest therein. LESSEE will forthwith, at its own expense, take all action as may be necessary to discharge or remove any such Security Interest if it exists at any time. LESSEE will within five (5) Business Days after becoming aware of the existence of any such Security Interest give written notice thereof to LESSOR. 20.2.7 REPRESENTATIONS TO OTHER PARTIES. LESSEE will not represent or hold out LESSOR as carrying goods or passengers on the Aircraft or as being in any way connected or associated with any operation of the Aircraft. ARTICLE 21 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSOR 21.1 REPRESENTATIONS AND WARRANTIES. LESSOR represents and warrants the following to LESSEE as of the date of execution of the Lease and as of the Delivery Date and ALL OTHER WARRANTIES, EXPRESS OR IMPLIED HAVE BEEN WAIVED IN ACCORDANCE WITH ARTICLE 8: 21.1.1 CORPORATE STATUS. LESSOR is a corporation duly incorporated, validly existing and in good standing under the Laws of the State of California. It has the corporate power and authority to carry on its business as presently conducted and to perform its obligations hereunder. 21.1.2 GOVERNMENTAL APPROVALS. No authorization, approval, consent, license or order of, or registration with, or the giving of notice to any U.S. Government Entity is required for the valid authorization, execution, delivery and performance by LESSOR of this Lease. 21.1.3 BINDING. This Lease and the other Operative Documents have been duly authorized, executed and delivered by LESSOR and represent the valid, enforceable and binding obligations of LESSOR except as enforceability may be limited by bankruptcy, insolvency, reorganization or other Laws of general application affecting the enforcement of creditors' rights. 21.1.4 NO BREACH. The execution and delivery of the Operative Documents, the consummation by LESSOR of the transactions contemplated herein and compliance by LESSOR with the terms and provisions hereof do not and will not contravene any Law applicable to LESSOR, or result in any breach of or constitute any default under any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which LESSOR is a party or by which LESSOR or its properties or assets may be bound or affected. 21.1.5 TITLE TO AIRCRAFT. On the Delivery Date LESSOR will have good and valid title to the Aircraft. 21.1.6 CITIZENSHIP. LESSOR is a "citizen of the United States" within the meaning of 49 U.S. Code 40102(a)(15). 21.1.7 INVESTMENT BY LESSOR. LESSOR is acquiring its interest in the Aircraft for its own account from its corporate funds, for investment and not with a view to any resale or distribution thereof that would require registration under the Securities Act of 1933; PROVIDED, HOWEVER, that subject to the transfer restrictions in Article 24.2, its disposition of its interest in the Aircraft shall at all times be within its control. 21.2 COVENANT OF QUIET ENJOYMENT. So long as no Event of Default has occurred and is continuing hereunder, LESSOR covenants that neither LESSOR nor any person lawfully claiming through LESSOR will interfere with LESSEE's quiet, peaceful use and enjoyment of the Aircraft. ARTICLE 22 FINANCIAL AND RELATED INFORMATION LESSEE agrees to furnish each of the following to LESSOR: (a) within sixty (60) days after the end of each fiscal quarter of LESSEE, the unaudited consolidated financial statements (including a balance sheet and profit and loss statement) prepared for such quarter in accordance with generally accepted accounting principles in the U.S.; (b) within one hundred twenty (120) days after the end of each fiscal year of LESSEE, the audited consolidated financial statements (including a balance sheet and profit and loss statement) prepared as of the close of such fiscal year in accordance with generally accepted accounting principles in the U.S. LESSEE's chief financial officer will also provide a certificate of LESSEE stating that, to such officer's knowledge, no Default exists under this Lease (or if, to such officer's knowledge, a Default does exist, identifying it); (c) promptly after distribution, all reports and financial statements which Amtran, Inc. sends or makes generally available to its stockholders or creditors; and (d) from time to time, such other reasonable information as LESSOR or LESSOR's Lender may reasonably request concerning the location, condition, use and operation of the Aircraft or the financial condition of LESSEE. ARTICLE 23 RETURN OF AIRCRAFT 23.1 DATE OF RETURN. LESSEE is obligated to return the Aircraft, Engines Parts and Aircraft Documentation to LESSOR on the Expiration Date, unless a Total Loss of the Aircraft occurred prior to the Expiration Date and this Lease was terminated early in accordance with Article 18.3. If LESSEE is in Default hereunder by failing to return the Aircraft on the Expiration Date or if an Event of Default occurs prior to the Expiration Date and LESSOR repossesses the Aircraft, the return requirements set forth in this Article 23 nonetheless must be met on the date the Aircraft is actually returned to LESSOR or repossessed by LESSOR. 23.2 TECHNICAL REPORT. Six (6) months prior to the Expiration Date (and in an updated form at return of the Aircraft), LESSEE will provide LESSOR with a Technical Evaluation Report in the form and substance of Exhibit L, as revised, and, in addition upon LESSOR's request, will make copies available of (a) drawings of the interior configuration of the Aircraft both as it presently exists and as it will exist at return, (b) an Airworthiness Directive status list, (c) a service bulletin incorporation list, (d) rotable tracked, hard-time and life-limited component listings, (e) a list of LESSEE-initiated modifications and alterations, (f) interior material burn certificates, (g) the Aircraft Maintenance Program, (h) the complete workscope for the checks, inspections and other work to be performed prior to return, (i) a list of all no-charge service bulletin kits with respect to the Aircraft which were ordered by LESSEE from Manufacturer or Engine manufacturer, (j) current Engine disk sheets and a description of the last shop visit for each Engine and (k) any other data which is reasonably requested by LESSOR. 23.3 RETURN LOCATION. LESSEE at its expense will return the Aircraft, Engines, Parts and Aircraft Documentation to LESSOR at Indianapolis International Airport, Indianapolis, Indiana or to such other airport as may be mutually agreed to by LESSEE and LESSOR. 23.4 FULL AIRCRAFT DOCUMENTATION REVIEW. For the period commencing at least ten (10) Business Days prior to the proposed redelivery date and continuing until the date on which the Aircraft is returned to LESSOR in the condition required by this Lease, LESSEE will provide for the review of LESSOR and/or its representative all of the Aircraft records and historical documents described in Exhibit K in one central room at the Aircraft return location. 23.5 AIRCRAFT INSPECTION. 23.5.1 During the maintenance checks performed immediately prior to the proposed redelivery and at the actual return of the Aircraft, LESSOR and/or its representatives will have an opportunity to conduct a full systems functional and operational inspection of the Aircraft (and other types of reasonable inspections based upon the Aircraft type, age, use and other known factors with respect to the Aircraft) and a full inspection of the Aircraft Documentation (including records and manuals), all to LESSOR's satisfaction. The inspection will occur during the Return Check when the panels, bays or the like are open and certain Parts are disassembled. LESSOR may inspect such opened panels, bays or the like and the disassembled Parts so long as LESSOR does not disrupt the Return Check or cause such Return Check to be extended beyond the anticipated completion date of such Return Check. Any deficiencies from the Aircraft return condition requirements set forth in this Article 23 will be corrected by LESSEE at its cost prior to the acceptance flight described in Article 23.5.2. 23.5.2 Immediately prior to the proposed redelivery of the Aircraft, LESSEE will carry out for LESSOR and/or LESSOR's representatives an Aircraft acceptance flight in accordance with Manufacturer's standard flight operation check flight procedures or, if agreed to in writing by LESSOR, in accordance with an airline acceptance flight procedure, either of which will be for the duration necessary to perform such check flight procedures but in any event not less than two (2) hours. Flight costs and fuel will be furnished by and at the expense of LESSEE. Any deficiencies from the Aircraft return condition requirements set forth in this Article 23 will be corrected by LESSEE at its cost prior to return of the Aircraft. 23.5.3 To the extent that the ground inspection and acceptance flight extend beyond the Expiration Date, the Lease Term will be deemed to have been automatically extended and the obligations of LESSEE hereunder (including Article 23.11.3) will continue on a day-to-day basis until the Aircraft is accepted by LESSOR executing the Return Acceptance Receipt in the form of Exhibit I. 23.6 CERTIFICATE OF AIRWORTHINESS MATTERS. 23.6.1 The Aircraft will possess a current Certificate of Airworthiness issued by the Aviation Authority (although this Certificate of Airworthiness may later be substituted by the Export Certificate of Airworthiness or equivalent if requested by LESSOR pursuant to Article 23.10). The Aircraft at return must be in the condition required in order to meet the requirements of a U.S. Standard Certificate of Airworthiness for transport category aircraft issued by the FAA in accordance with FAR Part 21 and, in addition, to meet the operating requirements of FAR Part 121. 23.6.2 LESSEE at its cost will demonstrate that the Aircraft meets the requirements for issuance of the U.S. Standard Certificate of Airworthiness for transport category aircraft specified in Article 23.6.1 by delivering to LESSOR an actual U.S. Standard Certificate of Airworthiness. If there is a dispute in regards to the condition of the Aircraft or the Aircraft Documentation, then LESSEE will provide LESSOR with a letter acceptable to LESSOR signed by an FAA Designated Airworthiness Representative (DAR) or another Person acceptable to LESSOR stating that the DAR or such Person has inspected the Aircraft and Aircraft Documentation (including records and manuals) and has found that the Aircraft meets the requirements for issuance of a U.S. Standard Certificate of Airworthiness for transport category aircraft in accordance with FAR Part 21 and, in addition, meets the operating requirements of FAR Part 121. 23.6.3 If the Aircraft is to be registered in a country other than in the U.S. after return from LESSEE, LESSOR may in its sole discretion waive the requirements of Article 23.6.2 and instead require that LESSEE at its expense (to the extent such expense is no greater than that which LESSEE would have incurred pursuant to Articles 23.6.1 and 23.6.2, with any additional expenses being for LESSOR's account) put the Aircraft in a condition to meet the requirements for issuance of a Certificate of Airworthiness of the Aviation Authority of the next country of register. 23.7 GENERAL CONDITION OF AIRCRAFT AT RETURN. 23.7.1 The Aircraft, Engines and Parts will have been maintained and repaired in accordance with the Maintenance Program, the rules and regulations of the Aviation Authority and this Lease. 23.7.2 Aircraft Documentation (including records and manuals) will have been maintained in an up-to-date status, in accordance with the rules and regulations of the Aviation Authority and the FAA and this Lease and in a form necessary in order to meet the requirements of Article 23.6.2. The records and historical documents set forth in Attachment 1 of Exhibit I will be in English. 23.7.3 The Aircraft will be in the same working order and condition as at Delivery (subject to the other provisions of this Article 23, reasonable wear and tear from normal flight operations excepted), with all pilot discrepancies and deferred maintenance items cleared on a terminating action basis. 23.7.4 The Aircraft will be airworthy (conform to type design and be in a condition for safe operation), with all Aircraft equipment, components and systems operating in accordance with their intended use and within limits approved by the Manufacturer, Aviation Authority and FAA. 23.7.5 The Aircraft interior (including cabin and windows) and exterior will be clean and all compartments will be reasonably free of foreign objects, dirt, grease, fluids, stains, grime, cracks, tears and rips (with the exception of normal wear and tear) and ready to be placed into immediate commercial airline operations. 23.7.6 No special or unique Manufacturer, Engine manufacturer or Aviation Authority inspection or check requirements which are specific to the Aircraft or Engines (as opposed to all aircraft or engines of their types) will exist with respect to the Airframe, Engines and Aircraft equipment, components and systems. 23.7.7 All repairs, modifications and alterations to the Aircraft will have been accomplished in accordance with Manufacturer's Structural Repair Manual (or FAA-approved data supported by FAA Form 8110-3) for the Aircraft. 23.7.8 The Aircraft will be returned with LESSOR's Engines installed and with the same equipment as at Delivery, subject only to those replacements, additions and Modifications permitted under this Lease. LESSEE will inform LESSOR of whether LESSEE will be able to redeliver the Engines with the Aircraft and the proposed replacement engines that LESSEE wants to provide LESSOR in place of the Engines. LESSEE will provide LESSOR with whatever data, records and information that LESSOR reasonably requests in order to evaluate the proposed replacement engines. In the event that LESSEE is unable to return either of the Engines in the conditions required by this Article 23, then LESSEE may provide a replacement engine (a "REPLACEMENT ENGINE") for such Engine to LESSOR by duly conveying to LESSOR as owner hereunder title to another engine of the same manufacturer and of the same or an improved model as the Engine being replaced and suitable for installation and use on the Aircraft, which engine shall be free and clear of all Security Interests, and shall be no more than three (3) years older by reference to serial number than the replaced Engine and have a modification status, value and utility at least equal to the Engine which such Replacement Engine is replacing on the Aircraft assuming that such Engine which such Replacement Engine is replacing was then of the value, utility, condition, and airworthiness required to be maintained by the terms of this Lease. Such Replacement Engine, after approval and acceptance by LESSOR, shall be deemed an "Engine" as defined herein for all purposes hereunder. LESSEE agrees to take such action as LESSOR may reasonably request in order that such Replacement Engine shall be duly and properly titled in the name of LESSOR. Prior to or at the time of any such conveyance, LESSEE, at its own expense, will promptly: (a) furnish LESSOR with a warranty bill of sale, in form and substance satisfactory to LESSOR, with respect to such Replacement Engine, (b) furnish LESSOR with such evidence of title to such Replacement Engine as reasonably requested by LESSOR, and (c) furnish LESSOR with an opinion of LESSEE's counsel to the effect that title to such Replacement Engine has been duly conveyed to LESSOR free and clear of all Security Interests of any kind or nature and that such exchange qualifies for tax free treatment under the Internal Revenue Code of 1986, as amended. Upon full compliance with this Article, LESSOR shall transfer to LESSEE all of LESSOR's right, title and interest, on an "AS-IS", "WHERE-IS" basis in and to the Engine being replaced by such Replacement Engine, without recourse or warranty, express or implied, except that LESSOR has good and marketable title to such Engine and such Engine shall be free and clear of LESSOR's Liens. 23.7.9 All Airworthiness Directives which are issued prior to the date of return of the Aircraft and require compliance (either by means of repetitive inspections, modifications or terminating action) prior to return of the Aircraft to LESSOR or within one (1) year after the Termination Date will have been complied with on the Aircraft on a terminating action basis at LESSEE's cost. Airworthiness Directives which do not have a terminating action will be accomplished at the highest level of inspection or modification possible. If, after using best efforts, LESSEE is unable to acquire the material, parts or components necessary to accomplish such Airworthiness Directive, LESSEE will pay to LESSOR upon return of the Aircraft the estimated cost of terminating such Airworthiness Directive. If the estimated cost cannot be mutually agreed upon by LESSEE and LESSOR, LESSEE and LESSOR will each obtain an estimate from a reputable FAA-approved maintenance facility (unaffiliated with LESSEE or LESSOR) and the estimated cost will be the average of the two estimates. 23.7.10 The Aircraft will be in compliance with the Corrosion Prevention and Control Program (CPCP) specified in LESSEE's Maintenance Program. 23.7.11 If any waivers, deviations, dispensations, alternate means of compliance, extensions or carry-overs with respect to maintenance or operating requirements, repairs or Airworthiness Directives are granted by the Aviation Authority or permitted by the Maintenance Program, LESSEE at its sole cost and expense will nonetheless perform such maintenance or operating requirements, repairs or Airworthiness Directives as if such waivers, deviations, dispensations, alternate means of compliance, or extensions or carry-overs did not exist. 23.7.12 The Aircraft will be free from any Security Interest except LESSOR's Liens and no circumstance will have so arisen whereby the Aircraft is or could become subject to any Security Interest or right of detention or sale in favor of the Aviation Authority, any airport authority, or any other authority. 23.7.13 All no-charge vendor and Manufacturer's service bulletin kits received by LESSEE for the Aircraft but not installed thereon will be on board the Aircraft as cargo. At LESSOR's request, any other service bulletin kit which LESSEE paid for will also be delivered to LESSOR on board the Aircraft, but LESSOR will reimburse LESSEE for its actual out-of-pocket costs for such kit, unless LESSEE purchased such kit as part of its implementation of a service bulletin on its fleet of aircraft of the same type as the Aircraft but had not yet installed such kit on the Aircraft, in which case such kit will be furnished free of charge to LESSOR. 23.7.14 The Aircraft will be free of any leaks and any damage resulting therefrom. All repairs will have been performed on a permanent basis in accordance with the applicable manufacturer's instructions. 23.7.15 The Aircraft fluid reservoirs (including oil, oxygen, hydraulic and water) will be serviced to full and the waste tank serviced in accordance with Manufacturer's instructions. (Fuel tanks will be at least as full as at Delivery.) 23.8 CHECKS PRIOR TO RETURN. Immediately prior to return of the Aircraft to LESSOR, LESSEE at its expense will do each of the following: 23.8.1 Have performed, and completed, by an FAA-approved repair station, all maintenance tasks specified in LESSEE's Maintenance Program and the MPD which (a) are necessary to clear the Aircraft of all such tasks for eighteen (18) months, five thousand (5,000) hours, and three thousand (3,000) cycles from the date of return of the Aircraft, and (b) are required to be performed at lesser intervals than eighteen (18) months, five thousand (5,000) hours or three thousand (3,000) cycles (all such work collectively referred to as the "RETURN CHECK"). If a maintenance task is specific to LESSEE's Maintenance Program and not required or recommended to be performed by the MPD, then LESSEE will not be required to perform such maintenance task so long as the Return Check is performed in such a manner that clears the Aircraft of all maintenance tasks in accordance with the requirements of the preceding sentence. As part of the Return Check, all non-routine tasks generated as a result of the performance of the work included in the Return Check and any other discrepancies revealed during the Return Check must also be performed in accordance with the FAA approved procedures. LESSEE will also weigh the Aircraft. LESSEE agrees to perform during the Return Check any other work reasonably required by LESSOR (and not otherwise required under this Lease) and LESSOR will, promptly upon receipt of an invoice from LESSEE, reimburse LESSEE for such work at LESSEE's preferred customer rates. 23.8.2 Have the Aircraft in compliance with Corrosion Prevention and Control Program (CPCP) as specified in the MPD and LESSEE's Maintenance Program. 23.8.3 Remove LESSEE's exterior markings, including all exterior paint, by stripping (or, at LESSOR's option, pneumatically scuff/sanding) the paint from the fuselage, empennage, wings and Engine cowlings, and clean, reseal, refinish, prepare (including application of alodine or another corrosion inhibitor) and prime the surfaces to be painted, all in accordance with Manufacturer's and paint manufacturer's recommendations. LESSEE will then repaint the fuselage, empennage, wings and Engine cowlings in the colors and logo specified by LESSOR ; PROVIDED, HOWEVER, that LESSEE will be responsible for only paying the amount that it would cost to strip or scuff/sand (whichever is performed on the Aircraft at return) and properly paint the Aircraft in LESSEE's colors and logo and LESSOR will be responsible for the excess cost to paint the Aircraft in the next lessee's colors and logo. Such painting will be accomplished in such a manner as to result in a uniformly smooth and cosmetically acceptable aerodynamic surface. All external placards, signs and markings will be properly attached, free from damage, clean and legible. 23.8.4 Clean the exterior and interior of the Aircraft. 23.8.5 If reasonably required by LESSOR, apply touch up to paint to the interior of the Aircraft, including flight deck, and replace any missing or broken placards. 23.8.6 In accordance with Article 23.7.7, permanently repair damage to the Aircraft that exceeds Manufacturer's limits and replace any non-flush structural patch repairs installed on the Aircraft with flush-type repairs, so long as the Manufacturer or the Manufacturer's Structural Repair Manual permits flush-type repairs on the portion of the Aircraft where the non-flush structural repairs were made. 23.8.7 With LESSOR or its representatives present, perform a full and complete hot and cold section videotape borescope on each Engine and its modules in accordance with the Engine manufacturer's maintenance manual. 23.8.8 If the Engine historical and technical records and/or condition trend monitoring data of any Engine (including the APU) indicate an acceleration in the rate of deterioration in the performance of an Engine, LESSEE will correct, to LESSOR's satisfaction, such conditions which are determined to be causing such accelerated rate of deterioration. 23.8.9 With LESSOR or its representatives present, accomplish a maximum power assurance run on the Engines. LESSEE will evaluate the Engine performance and record the Engine maximum power assurance test conditions and results on the Return Acceptance Receipt. 23.8.10 LESSEE will provide evidence to LESSOR's satisfaction that the Engine historical and technical records, borescope inspection, trend monitoring and other checks specified in Article 23.8.9 do not reveal any condition which would cause the Engines or any module to be unserviceable, beyond serviceable limits or serviceable with an increased frequency of inspection or with calendar time, flight hour or flight cycle restrictions under the Engine manufacturer's maintenance manual. LESSEE will correct any discrepancies in accordance with the guidelines set out by the Engine manufacturer which may be discovered during such inspection. 23.8.11 In the event the Engine historical and technical records, borescope inspection, trend monitoring and other checks specified in Article 23.8.9 result in a dispute regarding the conformity of an Engine with the requirements of this Article 23, LESSEE and LESSOR will consult with Engine manufacturer and follow Engine manufacturer's recommendations (including the accomplishment of an Engine test cell operational check) with regard to determining if such Engine complies with the requirements of this Article 23 and the manner in which any discrepancies from the requirements of this Article 23 will be rectified. 23.9 PART LIVES. At return, the condition of the Aircraft will be as follows: (CONFIDENTIAL MATERIAL OMITTED) 23.10 EXPORT AND DEREGISTRATION OF AIRCRAFT. At LESSOR's request, LESSEE at its cost will (a) provide an Export Certificate of Airworthiness or its equivalent from the State of Registration so that the Aircraft can be exported to the country designated by LESSOR, (b) assist with deregistration of the Aircraft from the register of aircraft in the State of Registration, (c) assist with arranging for prompt confirmation of such deregistration to be sent by the registry in the State of Registration to the next country of registration and (d) perform any other acts reasonably required by LESSOR in connection with the foregoing. If any Aircraft work which LESSEE is not otherwise required to perform hereunder, including engineering, is required in order to obtain such Export Certificate of Airworthiness, LESSEE will perform such work and LESSOR will reimburse LESSEE for such work at LESSEE's preferred customer rates. 23.11 LESSEE'S CONTINUING OBLIGATIONS. In the event that LESSEE does not return the Aircraft to LESSOR on the Expiration Date and in the condition required by this Article 23 for any reason (whether or not the reason is within LESSEE's control): 23.11.1 the obligations of LESSEE under this Lease will continue in full force and effect on a day-to-day basis until such return. This will not be considered a waiver of LESSEE's Event of Default or any right of LESSOR hereunder. 23.11.2 Until such return, the Agreed Value will be an amount equal to the Agreed Value on the day the Aircraft should have been returned to LESSOR pursuant to this Lease. 23.11.3 LESSEE will fully indemnify LESSOR on demand for all losses (including consequential damages), liabilities, actions, proceedings, costs and expenses thereby suffered or incurred by LESSOR and, in addition, if a delay in return of the Aircraft was due to reasons within LESSEE's reasonable control, then until such time as the Aircraft is redelivered to LESSOR and put into the condition required by this Article 23, instead of paying the Rent specified in Article 5.3, LESSEE will pay twice the amount of Rent for each day from the scheduled Expiration Date until the Termination Date (the monthly Rent payable under Article 5.3.1 will be prorated based on the actual number of days in the applicable month). Payment will be made upon presentation of LESSOR's invoice. 23.11.4 LESSOR may elect, in its sole and absolute discretion, to accept the return of the Aircraft prior to the Aircraft being put in the condition required by this Article 23 and thereafter have any such non-conformance corrected at such time as LESSOR may deem appropriate (but within ninety (90) days following the return of the Aircraft) and at commercial rates then-charged by the Person selected by LESSOR to perform such correction. Any direct expenses incurred by LESSOR for such correction will become additional Rent payable by LESSEE within fifteen (15) days following the submission of a written statement by LESSOR to LESSEE, identifying the items corrected and setting forth the expense of such corrections. LESSEE's obligation to pay such supplemental Rent will survive the Termination Date. 23.12 AIRPORT AND NAVIGATION CHARGES. LESSEE will ensure that at return of the Aircraft any and all airport, navigation and other charges which give rise or may if unpaid give rise to any lien, right of detention, right of sale or other Security Interest in relation to the Aircraft, Engine or any Part have been paid and discharged in full and will at LESSOR's request produce evidence thereof satisfactory to LESSOR. 23.13 RETURN ACCEPTANCE CERTIFICATE. Upon return of the Aircraft in accordance with the terms of this Lease, LESSEE will prepare and execute two (2) Return Acceptance Certificates in the form and substance of Exhibit I and LESSOR will countersign and return one such Return Acceptance Certificate to LESSEE. In addition, LESSEE and LESSOR will execute a Lease Termination for filing with the FAA evidencing termination of this Lease. 23.14 INDEMNITIES AND INSURANCE. The indemnities and insurance requirements set forth in Articles 16 and 17, respectively, will apply to Indemnitees and LESSOR's representatives during return of the Aircraft, including the ground inspection and acceptance flight. With respect to the acceptance flight, LESSOR's representatives will receive the same protections as LESSOR on LESSEE's Aviation and Airline General Third Party Liability Insurance. ARTICLE 24 ASSIGNMENT 24.1 NO ASSIGNMENT BY LESSEE. EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED BY THE TERMS OF THIS LEASE, NO ASSIGNMENT, NOVATION, TRANSFER, MORTGAGE OR OTHER CHARGE MAY BE MADE BY LESSEE OF ANY OF ITS RIGHTS WITH RESPECT TO THE AIRCRAFT, ENGINE OR PART OF THIS LEASE. 24.2 SALE OR ASSIGNMENT BY LESSOR. 24.2.1 Subject to LESSEE's rights pursuant to this Lease, LESSOR may at any time and without LESSEE's consent sell, assign or transfer its rights, interest and obligations hereunder or with respect to the Aircraft to a third party ("LESSOR'S ASSIGNEE"), but only if: (a) LESSOR's Assignee has full power, authority, and legal right to execute, deliver, and perform the obligations of LESSOR under the Operative Documents and provides reasonably satisfactory evidence of such power and authority to LESSEE; (b) LESSOR's Assignee enters into one or more legal, valid, binding and enforceable agreements effective to confirm that LESSOR's Assignee agrees to be bound by all the terms of, and to undertake all of the obligations arising after such transfer of LESSOR in, the Operative Documents, and in which it makes representations and warranties substantially the same as those in Article 21.1 of this Lease; (c) upon such transfer LESSEE shall not be obligated to pay any greater amount or incur any greater obligation (other than indemnifying additional indemnitees, insuring additional insureds and other minor ministerial matters) than that which it would have been obliged to pay or incur under the Operative Documents if no transfer or assignment had taken place, and upon such transfer the terms and conditions of the Operative Documents insofar as they relate to the rights and obligations of LESSEE are not altered; (d) LESSOR shall cause LESSOR's Assignee to deliver to LESSEE an opinion of counsel reasonably satisfactory to LESSEE to the effect that such agreement or agreements referred to in clause (2) and, if applicable, clause (6) are legal, binding, and enforceable in accordance with its or their terms, subject to the typical exceptions. (e) the transfer shall relate to LESSOR's entire interest as owner or lessor; (f) LESSOR's Assignee is a citizen of the United States under 49 U.S. Code ss.40102(a)(15) (such status to be determined without considering FAR ss.47.9 or any other provision that may restrict LESSEE's use or operation of the Aircraft), or shall use a voting powers trust or similar arrangement in order to hold an interest in the Aircraft such that the Aircraft can be registered in the U.S. (without considering FAR ss.47.9 or any other provision that may restrict LESSEE's use or operation of the Aircraft); (g) LESSOR's Assignee is a single Person and is either (i) a Permitted Institution, or (ii) or an affiliate of a Permitted Institution, if such affiliate's obligations under the Operative Documents are guaranteed by such Permitted Institution pursuant to a written guaranty, in form and substance reasonably satisfactory to LESSEE; and (h) LESSOR shall give written notice to LESSEE at least five (5) days before any such transfer, specifying the name and address of the proposed LESSOR's Assignee, and providing reasonably satisfactory evidence that the proposed LESSOR's Assignee meets the requirements described in Article 24.2.1(g)(i) or (ii). For a period of two (2) years after such sale or assignment and at LESSEE's cost, LESSEE will continue to name LESSOR as an additional insured under the Aviation and Airline General Third Party Liability Insurance required pursuant to Article 17 and Exhibit C. 24.2.2 The term "LESSOR" as used in this Lease means the lessor of the Aircraft at the time in question. In the event of the sale of the Aircraft and transfer of LESSOR's rights and obligations under this Lease, LESSOR's Assignee will become "LESSOR" of the Aircraft under this Lease and the transferring party (the prior "LESSOR") will be relieved of all liability to LESSEE under this Lease for obligations arising on and after the date the Aircraft is sold. LESSEE will acknowledge and accept LESSOR's Assignee as the new "LESSOR" under this Lease and will look solely to LESSOR's Assignee for the performance of all LESSOR obligations and covenants under this Lease arising on and after the Aircraft sale date. 24.3 LESSOR'S LENDER. Subject to LESSEE's rights pursuant to this Lease, LESSOR may at any time and without LESSEE's consent grant security interests over the Aircraft and assign the benefit of this Lease to a lender ("LESSOR'S LENDER") as security for LESSOR's obligations to LESSOR's Lender. Accordingly, if LESSOR's Lender requires, as a condition to providing financing, any nonsubstantive modification of this Lease, LESSEE agrees to enter into an agreement so modifying this Lease. 24.4 LESSEE COOPERATION. On request by LESSOR, LESSOR's Assignee or LESSOR's Lender, LESSEE will execute all such documents (such as a lease assignment agreement) as LESSOR, LESSOR's Assignee or LESSOR's Lender may reasonably require to confirm LESSEE's obligations under this Lease and obtain LESSEE's acknowledgment that to the best of LESSEE's knowledge, LESSOR is not in breach of this Lease. LESSEE will provide all other reasonable assistance and cooperation to LESSOR, LESSOR's Assignee and LESSOR's Lender in connection with any such sale or assignment or the perfection and maintenance of any such security interest, at LESSOR's cost, including making all necessary filings and registrations in the State of Registration and providing all opinions of counsel with respect to matters reasonably requested by LESSOR, LESSOR's Lender or LESSOR's Assignee. LESSOR will reimburse LESSEE for its reasonable out-of-pocket costs in reviewing documents required by LESSOR or LESSOR's Lender. 24.5 PROTECTIONS. 24.5.1 LESSOR will obtain for the benefit of LESSEE an acknowledgment from any LESSOR's Assignee or LESSOR's Lender that, so long as no Event of Default has occurred and is continuing hereunder, such Person will not interfere with LESSEE's quiet, peaceful use and enjoyment of the Aircraft. 24.5.2 Wherever the term "LESSOR" is used in this Lease in relation to any of the provisions relating to disclaimer, title and registration, indemnity and insurance contained in Articles 8, 13, 16 and 17, respectively, or with respect to Article 20.2.7, the term "LESSOR" will be deemed to include LESSOR's Assignee and LESSOR's Lender, if applicable. For avoidance of doubt, in the event of LESSOR's sale or financing of the Aircraft, the disclaimer and indemnity provisions contained in Articles 8 and 16 will continue to be applicable after the sale or assignment to International Lease Finance Corporation, as well as being applicable to LESSOR's Assignee and LESSOR's Lender. ARTICLE 25 DEFAULT OF LESSEE 25.1 LESSEE NOTICE TO LESSOR. LESSEE will promptly notify LESSOR if LESSEE becomes aware of the occurrence of any Default. 25.2 EVENTS OF DEFAULT. The occurrence of any of the following will constitute an Event of Default and material breach of this Lease by LESSEE: (a) LESSEE fails to take delivery of the Aircraft when obligated to do so under the terms of this Lease; (b) LESSEE fails to make a Rent or other payment due hereunder in the manner and by the date provided herein and fails to make such payment within five (5) Business Days after its receipt of notice that such payment is due; (c) LESSEE fails to obtain or maintain the insurance required by Article 17; (d) LESSEE fails to return the Aircraft to LESSOR on the Expiration Date in accordance with Article 23; (e) LESSEE fails to observe or perform any of its other obligations hereunder and fails to cure the same within thirty (30) days after written notice thereof to LESSEE; provided, that LESSEE will have up to a total of sixty (60) days to cure such failure so long as it uses diligent efforts to do so; (f) any representation or warranty of LESSEE herein proves to have been untrue in any material respect when made; provided, that, if the effect of such falsity is curable, LESSEE shall have thirty (30) days after LESSEE has knowledge that the representation or warranty is untrue; (g) the registration of the Aircraft is cancelled other than as a result of an act or omission of LESSOR; (h) LESSEE abandons the Aircraft or Engines; (i) LESSEE or an approved sublessee no longer has unencumbered control (other than Permitted Liens) or possession of the Aircraft or Engines, except as otherwise permitted by this Lease; (j) LESSEE temporarily or permanently discontinues business or (except as permitted by Article 20.2.4) sells or otherwise disposes of all or substantially all of its assets; (k) a material adverse change occurs in the financial condition of LESSEE; (l) LESSEE no longer possesses the licenses, certificates and permits required for the conduct of its business as a certificated air carrier in the U.S.; (m) LESSEE (i) suspends payment on its debts or other obligations generally, (ii) is unable to or admits its inability to pay its debts or other obligations generally as they fall due, (iii) is adjudicated or becomes bankrupt or insolvent or (iv) enters into any composition or other arrangement for the benefit of its creditors generally; (n) any proceedings, resolutions, filings or other steps are instituted with respect to LESSEE relating to the bankruptcy, liquidation, reorganization or protection from creditors of LESSEE or at least half of LESSEE's property. If instituted by LESSEE, the same will be an immediate Event of Default. If instituted by another Person, the same will be an Event of Default if not dismissed, remedied or relinquished within sixty (60) days; (o) any order, judgment or decree is entered by any court of competent jurisdiction appointing a receiver, trustee or liquidator of LESSEE or at least half of its property, or if at least half of LESSEE's property is to be sequestered. If instituted by or done with the consent of LESSEE, the same will be an immediate Event of Default. If instituted by another Person, the same will be an Event of Default if not dismissed, stayed, remedied or relinquished within sixty (60) days; PROVIDED, HOWEVER, that if such proceeding is stayed, then such proceeding will become an immediate Event of Default if such stay is removed or terminates and the proceeding is not dismissed, remedied or relinquished when such stay is removed or terminates. (p) any indebtedness for borrowed moneys or a guarantee or similar obligation owed by LESSEE with an unpaid balance of CONFIDENTIAL MATERIAL OMITTED is declared due before its stated maturity or LESSEE is in default of payment obligations CONFIDENTIAL MATERIAL OMITTED under any other purchase agreement, lease, conditional sale agreement or other agreement pursuant to which LESSEE has possession of any aircraft; (q) Eurocontrol has notified LESSOR that there are unpaid Eurocontrol charges due from LESSEE (unless such charges are being contested in good faith and by appropriate proceedings, an adequate bond has been provided and such proceedings do not involve any danger of the detention, interference with the use or operation, sale, forfeiture or loss of the Aircraft) and such charges remain outstanding for a period of thirty (30) days from the date of Eurocontrol's notice to LESSOR provided that such thirty (30) day grace period will not apply if there is a danger of detention, interference with the use or operation, sale, forfeiture or loss of the Aircraft; or (r) LESSEE is in default under any other lease or agreement between LESSEE and LESSOR and the same is not cured within its specified cure period. 25.3 LESSOR'S GENERAL RIGHTS. Upon the occurrence of any Event of Default, LESSOR may do all or any of the following at its option (in addition to such other rights and remedies which LESSOR may have by statute or otherwise but subject to any requirements of applicable Law): (a) terminate this Lease by giving written notice to LESSEE; (b) require that LESSEE immediately move the Aircraft to an airport or other location designated by LESSOR; (c) for LESSEE's account, do anything that may reasonably be required to cure any default and recover from LESSEE all reasonable costs, including legal fees and expenses incurred in doing so and Default Interest; (d) proceed as appropriate to enforce performance of this Lease and to recover any damages for the breach hereof, including the amounts specified in Article 25.5; (e) terminate this Lease by taking possession of the Aircraft or by serving notice requiring LESSEE to return the Aircraft to LESSOR at the location specified by LESSOR. If LESSOR takes possession of the Aircraft, it may enter upon LESSEE's premises where the Aircraft is located without liability. Upon repossession of the Aircraft, LESSOR will then be entitled to sell, lease or otherwise deal with the Aircraft as if this Lease had never been made. LESSOR will be entitled to the full benefit of its bargain with LESSEE; or (f) apply all or any portion of the Security Deposit and any other security deposits held by LESSOR pursuant to any other agreements between LESSOR and LESSEE to any amounts due. 25.4 DEREGISTRATION AND EXPORT OF AIRCRAFT. If an Event of Default has occurred and is continuing, LESSOR may take all steps necessary to deregister the Aircraft in and export the Aircraft from the State of Registration. 25.5 LESSEE LIABILITY FOR DAMAGES. If an Event of Default occurs, in addition to all other remedies available at law or in equity, LESSOR has the right to recover from LESSEE and LESSEE will pay LESSOR within two (2) Business Days after LESSOR's written demand, all of the following: (a) all amounts which are then due and unpaid hereunder and which become due prior to the earlier of LESSOR's recovery of possession of the Aircraft or LESSEE making an effective tender thereof; (b) any losses suffered by LESSOR because of LESSOR's inability to place the Aircraft on lease with another lessee or to otherwise utilize the Aircraft on financial terms as favorable to LESSOR as the terms hereof or, if LESSOR elects to dispose of the Aircraft, the funds arising from a sale or other disposition of the Aircraft are not as profitable to LESSOR as leasing the Aircraft in accordance with the terms hereof would have been (and LESSOR will be entitled to accelerate any and all Rent which would have been due from the date of LESSOR's recovery or repossession of the Aircraft through the Expiration Date); (c) all costs associated with LESSOR's exercise of its remedies hereunder, including but not limited to repossession costs, legal fees, Aircraft storage costs, Aircraft re-lease or sale costs and LESSOR's internal costs and expenses (including the cost of personnel time calculated based upon the compensation paid to the individuals involved on an annual basis and a general LESSOR overhead allocation); (d) any amount of principal, interest, fees or other sums paid or payable on account of funds borrowed in order to carry any unpaid amount; (e) any loss, premium, penalty or expense which may be incurred in repaying funds raised to finance the Aircraft or in unwinding any financial instrument relating in whole or in part to LESSOR's financing of the Aircraft; (f) any loss, cost, expense or liability sustained by LESSOR due to LESSEE's failure to redeliver the Aircraft in the condition required by this Lease; and (g) any other loss, damage, expense, cost or liability which LESSOR suffers or incurs as a result of the Event of Default and/or termination of this Lease, including an amount sufficient to fully compensate LESSOR for any loss of or damage to LESSOR's residual interest in the Aircraft caused by LESSEE's default. 25.6 WAIVER OF DEFAULT. By written notice to LESSEE, LESSOR may at its election waive any Default or Event of Default and its consequences and rescind and annul any prior notice of termination of this Lease. The respective rights of the parties will then be as they would have been had no Default or Event of Default occurred and no such notice been given. 25.7 PRESENT VALUE OF PAYMENTS. In calculating LESSOR's damages hereunder, upon an Event of Default all Rent and other amounts which would have been due hereunder during the Lease Term if an Event of Default had not occurred will be calculated on a present value basis using a discounting rate of six percent (6%) per annum discounted to the earlier of the date on which LESSOR obtains possession of the Aircraft or LESSEE makes an effective tender thereof. 25.8 USE OF "TERMINATION DATE". For avoidance of doubt, it is agreed that if this Lease terminates and the Aircraft is repossessed by LESSOR due to an Event of Default, then, notwithstanding the use of the term "Termination Date" in this Lease, the period of the Lease Term and the "Expiration Date" will be utilized in calculating the damages to which LESSOR is entitled pursuant to Article 25.5. For example, it is agreed and understood that LESSOR is entitled to receive from LESSEE the Rent and the benefit of LESSEE's insurance and maintenance of the Aircraft until expiration of the Lease Term. ARTICLE 26 NOTICES 26.1 MANNER OF SENDING NOTICES. Any notice, request or information required or permissible under this Lease will be in writing and in English. Notices will be delivered in person or sent by fax, letter (mailed airmail, certified and return receipt requested), or by expedited delivery addressed to the parties as set forth in Article 26.2. In the case of a fax, notice will be deemed received upon actual receipt (and the date of actual receipt will be deemed to be the date set forth on the confirmation of receipt produced by the sender's fax machine immediately after the fax is sent). In the case of a notice sent by expedited delivery, notice will be deemed received on the date of delivery set forth in the records of the Person which accomplished the delivery. If any notice is sent by more than one of the above listed methods, notice will be deemed received on the earliest possible date in accordance with the above provisions. 26.2 NOTICE INFORMATION. Notices will be sent: If to LESSOR: INTERNATIONAL LEASE FINANCE CORPORATION 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067, U.S.A. Attention: Legal Department Fax: 310-788-1990 Telephone: 310-788-1999 If to LESSEE: AMERICAN TRANS AIR, INC. 7337 West Washington Street Indianapolis International Airport Indianapolis, Indiana 46231 United States of America Attention: Ken Wolff Executive Vice President and Chief Financial Officer Fax: 317-240-7091 Telephone: 317-247-4000 or to such other places and numbers as either party directs in writing to the other party. ARTICLE 27 GOVERNING LAW AND JURISDICTION 27.1 CALIFORNIA LAW. This Lease is being delivered in the State of California and will in all respects be governed by and construed in accordance with the Laws of the State of California (notwithstanding the conflict Laws of the State of California). 27.2 NON-EXCLUSIVE JURISDICTION IN CALIFORNIA. As permitted by Section 410.40 of the California Code of Civil Procedure, the parties hereby irrevocably submit to the non-exclusive jurisdiction of the Federal District Court for the Central District of California and the State of California Superior or Municipal Court in Los Angeles, California. Nothing herein will prevent either party from bringing suit in any other appropriate jurisdiction. 27.3 SERVICE OF PROCESS. The parties hereby consent to the service of process (a) out of any of the courts referred to above, (b) in accordance with Section 415.40 of the California Code of Civil Procedure by mailing copies of the summons and complaint to the person to be served by certified or registered mail to the address set forth in Article 26.2, postage prepaid, return receipt requested or (c) in accordance with the Hague Convention, if applicable. 27.4 PREVAILING PARTY IN DISPUTE. If any legal action or other proceeding is brought in connection with or arises out of any provisions in this Lease, the prevailing party will be entitled to recover reasonable attorneys' fees and other costs incurred in such action or proceedings. The prevailing party will also, to the extent permissible by Law, be entitled to receive pre- and post-judgment Default Interest. 27.5 WAIVER. LESSEE AND LESSOR HEREBY WAIVE THE RIGHT TO A TRIAL BY JURY. LESSEE AND LESSOR HEREBY IRREVOCABLY WAIVE ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATED TO THIS LEASE BROUGHT IN ANY OF THE COURTS REFERRED TO IN ARTICLE 27.2, AND HEREBY FURTHER IRREVOCABLY WAIVE ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. ARTICLE 28 MISCELLANEOUS 28.1 PRESS RELEASES. The parties will give copies to one another, in advance if possible, of all news, articles and other releases provided to the public media regarding this Lease. 28.2 LESSOR PERFORMANCE FOR LESSEE. The exercise by LESSOR of its remedy of performing a LESSEE obligation hereunder is not a waiver of and will not relieve LESSEE from the performance of such obligation at any subsequent time or from the performance of any of its other obligations hereunder. 28.3 LESSOR'S PAYMENT OBLIGATIONS. Any obligation of LESSOR under this Lease to pay or release any amount to LESSEE is conditioned upon (a) all amounts then due and payable by LESSEE to LESSOR under this Lease or under any other agreement between LESSOR and LESSEE having been paid in full and (b) no Default or Event of Default having occurred and continuing hereunder at the time such payment or release of payment is payable to LESSEE. 28.4 APPLICATION OF PAYMENTS. Any amounts paid or recovered in respect of LESSEE liabilities hereunder may be applied to Rent, Default Interest, fees or any other amount due hereunder in such proportions, order and manner as LESSOR determines. 28.5 USURY LAWS. The parties intend to contract in strict compliance with the usury Laws of the State of California and, to the extent applicable, the U.S. Notwithstanding anything to the contrary in the Operative Documents, LESSEE will not be obligated to pay Default Interest or other interest in excess of the maximum non-usurious interest rate, as in effect from time to time, which may by applicable Law be charged, contracted for, reserved, received or collected by LESSOR in connection with the Operative Documents. During any period of time in which the then-applicable highest lawful rate is lower than the Default Interest rate, Default Interest will accrue and be payable at such highest lawful rate; however, if at later times such highest lawful rate is greater than the Default Interest rate, then LESSEE will pay Default Interest at the highest lawful rate until the Default Interest which is paid by LESSEE equals the amount of interest that would have been payable in accordance with the interest rate set forth in Article 5.5. 28.6 DELEGATION BY LESSOR. LESSOR may delegate to any Person(s) all or any of the rights, powers or discretion vested in it by this Lease and any such delegation may be made upon such terms and conditions as LESSOR in its absolute discretion thinks fit. 28.7 CONFIDENTIALITY. The Operative Documents and all non-public information obtained by either party about the other are confidential and are between LESSOR and LESSEE only and will not be disclosed by a party to third parties (other than to such party's auditors or legal advisors or as required in connection with any filings of this Lease in accordance with Article 13) without the prior written consent of the other party. If disclosure is required as a result of applicable Law, LESSEE and LESSOR will cooperate with one another to obtain confidential treatment as to the commercial terms and other material provisions of this Lease. 28.8 RIGHTS OF PARTIES. The rights of the parties hereunder are cumulative, not exclusive, may be exercised as often as each party considers appropriate and are in addition to its rights under general Law. The rights of one party against the other party are not capable of being waived or amended except by an express waiver or amendment in writing. Any failure to exercise or any delay in exercising any of such rights will not operate as a waiver or amendment of that or any other such right any defective or partial exercise of any such rights will not preclude any other or further exercise of that or any other such right and no act or course of conduct or negotiation on a party's part or on its behalf will in any way preclude such party from exercising any such right or constitute a suspension or any amendment of any such right. 28.9 FURTHER ASSURANCES. Each party agrees from time to time to do and perform such other and further acts and execute and deliver any and all such other instruments as may be required by Law, reasonably requested by the auditors of the other party or requested by the other party to establish, maintain or protect the rights and remedies of the requesting party or to carry out and effect the intent and purpose of this Lease. 28.10 USE OF WORD "INCLUDING". The term "INCLUDING" is used herein without limitation. 28.11 HEADINGS. All article and paragraph headings and captions are purely for convenience and will not affect the interpretation of this Lease. Any reference to a specific article, paragraph or section will be interpreted as a reference to such article, paragraph or section of this Lease. 28.12 INVALIDITY OF ANY PROVISION. If any of the provisions of this Lease become invalid, illegal or unenforceable in any respect under any Law, the validity, legality and enforceability of the remaining provisions will not in any way be affected or impaired. 28.13 NEGOTIATION. The terms of this Lease are agreed by LESSOR from its principal place of business in Los Angeles, California. 28.14 TIME IS OF THE ESSENCE. Time is of the essence in the performance of all obligations of the parties under this Lease and, consequently, all time limitations set forth in the provisions of this Lease will be strictly observed. 28.15 AMENDMENTS IN WRITING. The provisions of this Lease may only be amended or modified by a writing executed by LESSOR and LESSEE. 28.16 COUNTERPARTS. This Lease may be executed in any number of identical counterparts, each of which will be deemed to be an original, and all of which together will be deemed to be one and the same instrument when each party has signed and delivered one such counterpart to the other party. 28.17 DELIVERY OF DOCUMENTS BY FAX. Delivery of an executed counterpart of this Lease or of any other documents in connection with this Lease by fax will be deemed as effective as delivery of an originally executed counterpart. Any party delivering an executed counterpart of this Lease or other document by fax will also deliver an originally executed counterpart, but the failure of any party to deliver an originally executed counterpart of this Lease or such other document will not affect the validity or effectiveness of this Lease or such other document. 28.18 ENTIRE AGREEMENT. The Operative Documents constitute the entire agreement between the parties in relation to the leasing of the Aircraft by LESSOR to LESSEE and supersede all previous proposals, agreements and other written and oral communications in relation hereto. The parties acknowledge that there have been no representations, warranties, promises, guarantees or agreements, express or implied, except as set forth herein and in the other Operative Documents. IN WITNESS WHEREOF, LESSEE and LESSOR have caused this Lease to be executed by their respective officers as of September 5, 2000. INTERNATIONAL LEASE FINANCE AMERICAN TRANS AIR, INC. CORPORATION By: /s/ Grant Levy By: /s/ Kenneth K. Wolff Its: Vice President Its: Executive Vice President & CFO EXHIBIT A AIRCRAFT DESCRIPTION Aircraft Manufacturer and Model: Boeing 737-800 Specification: Seating Configuration: Manufacturer's Serial Number: 28246 Registration Mark: ____ Engine Manufacturer and Model: CFM56-7B-27 Engine Serial Numbers: _______ and ________ Engine Thrust Rating: 27,300 pounds Maximum Gross Takeoff Weight: 160,000 pounds EXHIBIT B AGENCY AGREEMENT (Limited Authority) Relating to Boeing 737-800 Aircraft THIS AGENCY AGREEMENT ("AGREEMENT") is made and entered into as of ____________________. BETWEEN: AMERICAN TRANS AIR, INC., a Indiana corporation whose address and principal place of business is at 7337 West Washington Street, Indianapolis International Airport, Indianapolis, Indiana 46231, United States of America ("AGENT") and INTERNATIONAL LEASE FINANCE CORPORATION, a California corporation, whose address and principal place of business is at 1999 Avenue of the Stars, 39th Floor, Los Angeles, California 90067, U.S.A. ("BUYER"). RECITAL The Boeing Company ("MANUFACTURER") and Buyer have entered into Purchase Agreement 1830, dated as of June 27, 1995 (such purchase agreement as may be amended in accordance with the provisions thereof is hereinafter referred to as the "PURCHASE AGREEMENT") under which Manufacturer has agreed to manufacture and sell and Buyer has agreed to purchase certain Boeing 737-800 aircraft. Buyer has agreed to lease one (1) of such aircraft bearing manufacturer's serial number 28246 (the "AIRCRAFT") to the Agent pursuant to an Aircraft Lease Agreement between Buyer and Agent dated as of September 5, 2000 (the "LEASE"). The Agent is engaged in business as a commercial air carrier and intends to lease the Aircraft from Buyer, and Buyer is desirous of utilizing the expertise of the Agent as Buyer's agent in all matters to which the Purchase Agreement relates with respect to the Aircraft except certain items as indicated below, and the Agent, as Buyer's agent, is willing to make such expertise available to Buyer. Accordingly, the parties agree as follows: 1. Buyer hereby appoints the Agent as Buyer's sole and exclusive agent with authority to perform the following, on behalf of Buyer, as the Agent may in its discretion determine to be necessary or desirable: (a) monitor Manufacturer's production, testing and delivery of the Aircraft in accordance with the Purchase Agreement and (b) do all such other things permitted by the Purchase Agreement related to the technical and engineering aspects of Manufacturer's production of the Aircraft, except Buyer limits Agent's authority to perform on behalf of Buyer on any defect that occurs during manufacture that is considered significant in nature by Buyer as measured by the criteria set forth below. Buyer retains the sole authority to perform on any defect meeting such criteria. (i) Deviations from the drawing configuration that could affect future modifications, maintenance, repair or overhaul of the Aircraft; (ii) Defects that are obvious appearance items; (iii) Rework that requires stress concurrence to satisfy Manufacturer's Material Review Board (MRB) requirements; (iv) A high quantity of defects normally considered minor on a singular basis; (v) Major rework requiring extensive repair or modification, E.G. replacement of ---- skin panels, extensive use of oversize fasteners, repair of damaged areas and significant structural modifications; (vi) Rework that affects the aerodynamic drag coefficient of the Aircraft; or (vii) Rework that involves areas known to be sensitive to Buyer. 2. Notwithstanding anything in the provisions of paragraph 1, nothing in this Agreement will confer authority upon or otherwise permit the Agent: (a) to exercise any power of termination under the Purchase Agreement or (b) to make any payments due from Buyer to Manufacturer or to receive on behalf of Buyer any payments due from Manufacturer under the Purchase Agreement, or to alter any of the terms and conditions of the Purchase Agreement or the Detail Specifications of the Aircraft. 3. Buyer will not revoke the appointment of and authority granted under this Agreement to the Agent unless a termination of the Purchase Agreement or Lease has occurred with respect to the Aircraft or the Agent has failed to perform a material obligation under this Agreement. Notice of any such revocation will be provided in accordance with the provisions of Article 14 of the Purchase Agreement and given to both Manufacturer and the Agent. 4. Manufacturer acknowledges the appointment of the Agent for the purpose set forth hereunder and Manufacturer and Buyer agree that due performance by Manufacturer or Agent of an obligation under the Purchase Agreement will constitute due satisfaction of such obligation by such party and Buyer agrees to be bound by the acts of the Agent. 5. Buyer and Agent agree to identify the technical organization and/or person(s) with the limited authority to act for Agent during production of the Aircraft. Buyer will, if possible, provide such identification to Manufacturer in writing, along with office space requirements for Agent, if required, prior to or at the time of Manufacturer's acknowledgment of this Agreement. 6. Nothing in this Agreement will subject Manufacturer to any liability under the Purchase Agreement which it would not otherwise be subject to, or modify Manufacturer's rights thereunder, or require Manufacturer to divest itself of title to or possession of Aircraft or any other property which is subject to the Purchase Agreement until payment therefor and delivery thereof in accordance with the Purchase Agreement. 7. None of the parties hereto will be entitled to assign to any third party any of their rights under this Agreement. 8. The Agent will not delegate to any third party the performance of the obligations imposed on it by this Agreement or appoint a sub-agent. 9. References to Manufacturer in this Agreement will include any wholly-owned subsidiary of Manufacturer to which Manufacturer assigns any of its rights and obligations under the Purchase Agreement pursuant to the terms and conditions thereof. 10. This Agreement will be governed by the laws of the State of California; however, the Purchase Agreement shall remain governed by the laws of the State of Washington. This Agreement has been executed by the parties hereto as of the day and year first above written. INTERNATIONAL LEASE FINANCE CORPORATION AMERICAN TRANS AIR, INC. By: By: Its: Its: The Boeing Company acknowledges the appointment of AMERICAN TRANS AIR, INC. as agent of International Lease Finance Corporation in connection with the above referenced Aircraft as set forth in this Agreement. THE BOEING COMPANY By: Its: EXHIBIT C CERTIFICATE OF INSURANCE [Refer to Aircraft Lease Agreement dated as of September 5, 2000 between LESSEE and LESSOR (the "Lease"). If applicable, insurance certificates from both the insurers and reinsurers will be provided. If there is a LESSOR's Lender, include references to it where appropriate after references to LESSOR.] To: INTERNATIONAL LEASE FINANCE CORPORATION ("LESSOR") ------ 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States Re: AMERICAN TRANS AIR, INC. ("LESSEE") Boeing 737-800 Manufacturer's Serial No.: 28246 Registration Mark: ____ (the "AIRCRAFT") The following security has subscribed to the insurance and/or reinsurance policies: [LIST COMPANIES & PERCENTAGES] THIS IS TO CERTIFY THAT, as Insurance Brokers, we have effected Fleet Insurance in respect of aircraft owned or operated by LESSEE (including the Aircraft), and that insurance in respect of the Aircraft is as specified below. AIRCRAFT HULL ALL RISKS COVERING: All risks of physical loss or damage to the Aircraft from any cause (subject only to the exclusions as specified below), for an Agreed Value of Aircraft in the amount of [list amount calculated in accordance with Article 18.1] DEDUCTIBLES: (CONFIDENTIAL MATERIAL OMITTED) each and every loss (or such lesser amount as generally applicable to the rest of LESSEE's 737-800 fleet). Not applicable to Total Loss/Constructive Total Loss or Arranged Total Loss GEOGRAPHICAL COVERAGE: Worldwide [subject to customary exclusions] AVIATION AND AIRLINE GENERAL THIRD PARTY LIABILITY COVERING: Aircraft Third Party, Passenger, Baggage, Cargo and Mail Liability and Airline General Third Party Liability (including Premises, Hangarkeepers and Products Liability) for combined single limit of not less than (CONFIDENTIAL MATERIAL OMITTED) (or such higher amount as LESSEE may carry generally on other 737-800 aircraft in its fleet) any one accident/occurrence (but in the aggregate in relation to Products Liability), extended to cover LESSEE's liability under the Lease to the extent of the risks covered by the policy including war and allied perils under Extended Coverage Endorsement as per AVN 52 subject only to exclusions as specified below GEOGRAPHICAL LIMITS: Worldwide [subject to customary exclusions] HULL WAR AND ALLIED PERILS COVERING: Hull War Risks as per LSW555.B, but including (a) confiscation or requisition (including by State of Registration and state where airline is domiciled), (b) hijacking or other unlawful seizure or wrongful exercise of control of the Aircraft or crew in flight (including any attempt at such seizure or control) and including "All Risks" Continuation Clause and Extortion Risks (including expenses) and covering claims excluded from Hull All Risks Policy while Aircraft outside Assured's control by reason of perils insured under this policy, for an Agreed Value of Aircraft in the amount of [list amount calculated in accordance with Article 18.1] DEDUCTIBLE: No deductible GEOGRAPHICAL LIMITS: Worldwide AIRCRAFT SPARES ALL RISKS INSURANCE COVERING: All risks of physical loss or damage to Aircraft Parts or spares or Engines at all times when removed from the Aircraft from whatever cause, subject only to the exclusions specified below, including the risks set down in AVN 48B other than paragraphs (a) and (b) thereof (but including paragraph (a) in respect of transit risks) for limits of not less than: CONFIDENTIAL MATERIAL OMITTED and covering: With respect to an Engine, an agreed value (CONFIDENTIAL MATERIAL OMITTED) or, with LESSOR's written concurrence, replacement cost With respect to Parts, replacement cost DEDUCTIBLE: (CONFIDENTIAL MATERIAL OMITTED) GEOGRAPHICAL COVERAGE: Worldwide INSURANCE REQUIRED BY MANUFACTURER LESSEE will carry the insurance required by Manufacturer in connection with LESSOR's assignment of Manufacturer's warranties and product support to LESSEE CONTRACTUAL INDEMNITY To the extent of the risks covered by the policies, LESSEE has insurance coverage for the indemnities agreed to by LESSEE pursuant to Article 16 of the Lease, subject to AVN67B or equivalent PERIOD OF COVERAGE (ALL POLICIES) From the Delivery Date of Aircraft to [END OF POLICY PERIOD] It is further certified that LESSOR has an interest in respect of the Aircraft under the Lease. Accordingly, with respect to losses occurring during the period from the Effective Date until the expiry of the Insurance or until the expiry or agreed termination of the Lease or until the obligations under the Lease are terminated by any action of the Insured or LESSOR and in consideration of the Additional Premium it is confirmed that the Insurance afforded by the Policy is in full force and effect and it is further agreed that the following provisions are specifically endorsed to the Policy. 1. UNDER THE HULL (ALL RISKS AND HULL WAR AND ALLIED RISKS) AND AIRCRAFT SPARES INSURANCES (a) In respect of any claim on the Aircraft that becomes payable on the basis of a Total Loss, payment of any settlement will be made to, or to the order of LESSOR as sole loss payee, up to the Agreed Value. With respect to repairable damage to an Aircraft or Engine, LESSOR will receive all insurance proceeds in excess of CONFIDENTIAL MATERIAL OMITTED provided that upon receipt by the insurance broker of written notice of a material default on the part of LESSEE (and until notice that it has been cured), all insurance proceeds which otherwise would be payable to LESSEE will be made directly to LESSOR. In respect of any other claim, payment of any settlement (net of any relevant policy deductible) will be made with such party(ies) as may be necessary to repair the Aircraft unless otherwise agreed after consultation between the Insurers and the Insured and, where necessary under the terms of the Lease, LESSOR. Such payments will only be made provided they are in compliance with all applicable laws and regulations. (b) Insurers agree on a 50/50 settlement in terms of AVS 103. (c) Insurers have no right to replace the Aircraft on a Total Loss (arranged, constructive or otherwise). (d) Insurers confirm that under the insurance policies, if the Insured installs an engine owned by a third party on the Aircraft, either (i) the hull insurance will automatically increase to such higher amount as is necessary in order to satisfy both LESSOR's requirement to receive the Agreed Value in the event of a Total Loss, Constructive Total Loss or Arranged Total Loss and the amount required by the third party engine owner, or (ii) separate additional insurance on such engine will attach in order to satisfy separately the requirements of the Insured to such third party engine owner. 2. UNDER THE LEGAL LIABILITY INSURANCE (a) Subject to the provisions of this Endorsement, the Insurance will operate in all respects as if a separate Policy had been issued covering each party insured hereunder, but this provision will not operate to include any claim arising howsoever in respect of loss or damage to the Aircraft insured under the Hull or Spares Insurance of the Insured. Notwithstanding the foregoing the total liability of Insurers in respect of any and all Insureds will not exceed the limits of liability stated in the Policy. (b) The Insurance provided hereunder will be primary and without right of contribution from any other insurance which may be available to LESSOR. 3. UNDER ALL INSURANCES (a) LESSOR, its successors and assigns, and (with respect to Aviation and Airline General Third Party Liability only) its directors, officers and employees for their respective rights and interests, are included as Additional Insureds. (b) The cover afforded to LESSOR by the Policy in accordance with this Endorsement will 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 Policy. (c) LESSOR will have no responsibility for premium and insurers will waive any right of set-off or counterclaim against LESSOR except in respect of outstanding premium in respect of the Aircraft, provided that Insurer may only set-off for premiums against the proceeds of the hull insurance for outstanding premiums in connection with hull all risks and hull war and allied perils insurance. (d) Upon payment of any loss or claim to or on behalf of LESSOR, Insurers will to the extent and in respect of such payment be thereupon subrogated to all legal and equitable rights of LESSOR indemnified hereby (but not against LESSOR). Insurers will not exercise such rights without the consent of those indemnified, such consent not to be unreasonably withheld. At the expense of Insurers LESSOR will do all things reasonably necessary to assist the Insurers to exercise said rights. (e) Except in respect of any provision for Cancellation or Automatic Termination specified in the Policy or any endorsement thereof, cover provided by this Endorsement may only be cancelled or materially altered in a manner adverse to LESSOR by the giving of not less than thirty (30) days notice in writing to LESSOR. Notice will be deemed to commence from the date such notice is given by the Insurers. Such notice will NOT, however, be given at normal expiry date of the Policy or any endorsement. 4. EXCEPT AS SPECIFICALLY VARIED OR PROVIDED BY THE TERMS OF THIS CERTIFICATE (a) LESSOR IS COVERED BY THE POLICY SUBJECT TO ALL TERMS, CONDITIONS, LIMITATIONS,WARRANTIES, EXCLUSIONS AND CANCELLATION PROVISIONS THEREOF. (b) THE POLICY WILL NOT BE VARIED BY ANY PROVISIONS CONTAINED IN THE LEASE WHICH PURPORT TO SERVE AS AN ENDORSEMENT OR AMENDMENT TO THE POLICY. SUBJECT (save as specifically stated in this Certificate) to policy terms, conditions, limitations and exclusions. Yours faithfully, [BROKERS] EXHIBIT D BROKERS' LETTER OF UNDERTAKING To: INTERNATIONAL LEASE FINANCE CORPORATION 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States Date: Our Ref: Re: AMERICAN TRANS AIR, INC. ("LESSEE") ------ Boeing 737-800 Manufacturer's Serial No.: ____ Registration Mark: ____ (the "AIRCRAFT") Dear Sirs: We confirm that insurance has been effected for the account of [LESSEE] (the "OPERATOR") covering all aircraft owned or operated by them, including the above-referenced aircraft (the "Aircraft"). [Also confirm, if applicable, the amount of any hull all risks or hull war and allied perils on the Aircraft which LESSEE is carrying in excess of the Agreed Value (which excess insurance would be payable to LESSEE). Such excess insurance may not exceed ten percent (10%) of the Agreed Value.] Pursuant to instructions received from the Operator and in consideration of your approving the arrangement of the Operator's "Fleet Policy" (under which the above-referenced Aircraft is insured) through the intermediary of ourselves as Brokers in connection with the insurance (the "INSURANCE") mentioned in our Certificate of Insurance (Reference No. [ ] dated [ ] and attached hereto), we undertake as follows: 1. In relation to the Hull and War Risks Insurance to hold to your order the insurance Slips or Contracts and any Policies which may be issued or any policies substituted (with your consent) therefor (but only insofar as the same relate to the Aircraft only) and the benefit of the Hull and War Risks Insurance thereunder, but subject to our requirements to operate the Fleet Policy insofar as it relates to any other aircraft insured thereunder. 2. To advise you of any of the following: (a) If any insurer cancels or gives notice of cancellation of any of the Insurance at least thirty (30) days (or such lesser period as may be available in the case of War and Allied Perils) before such cancellation is to take effect in respect of the Aircraft. (b) Of any act or omission or of any event (including non-payment of premium) of which we have knowledge or are notified and which might invalidate or render unenforceable in whole or in part any of the Insurance, insofar as the same relate to the Aircraft. (c) If we do not receive instructions to renew all or any of the Insurance at least thirty (30) days prior to their expiration. (d) If any of the Insurance are not renewed on the same terms (save as to premium and period of cover and as you might otherwise have notified us to be acceptable to you) seven (7) days prior to expiry thereof. The above undertakings are given subject to our continuing appointment for the time being as Insurance Brokers to the Operator. We also undertake to advise you if we cease to be Insurance Brokers to the Operator. Yours faithfully, EXHIBIT E ESTOPPEL AND ACCEPTANCE CERTIFICATE AMERICAN TRANS AIR, INC. ("LESSEE"), a corporation organized under the laws of Indiana does hereby represent, acknowledge, warrant and agree as follows: 1. LESSEE and INTERNATIONAL LEASE FINANCE CORPORATION, as LESSOR, have entered into an Aircraft Lease Agreement dated as of September 5, 2000 (hereinafter referred to as the "LEASE"). Words used herein with capital letters and not otherwise defined will have the meanings set forth in the Lease. 2. LESSEE has this ____ day of __________, ____ (Time: __________) at ____________________ received from LESSOR possession of: (a) One (1) Boeing 737-800 aircraft bearing Manufacturer's serial number ____ and U.S. registration mark ____, together with two (2) CFM56-7B-27 engines bearing manufacturer's serial numbers _______ and ________ (each of which has 750 or more rated take-off horsepower), all in airworthy condition. (b) All Aircraft Documentation, including the usual and customary manuals, logbooks, flight records and historical information regarding the Aircraft, Engines and Parts. 3. All of the foregoing has been delivered and accepted on the date set forth above to LESSEE's full satisfaction and pursuant to the terms and provisions of the Lease. 4. The Agreed Value of the Aircraft is US$_______________. 5. The amount of fuel on board at Delivery is __________ (circle one) pounds/kilos (________ gallons). 6. The Aircraft, Engines, Parts and Aircraft Documentation as described in the Lease have been fully examined by LESSEE and have been received in a condition fully satisfactory to LESSEE and in full conformity with the Lease in every respect. 7. The Lease is in full force and effect, LESSEE has no claims, offsets, deductions or set-off of any kind or nature in connection with the Lease, except for any claims against LESSOR set forth on the attached List of Discrepancies. 8. LESSOR's Lender may rely upon all of the foregoing in granting substantial financial accommodations to LESSOR and LESSEE understands and agrees that any funds being advanced by LESSOR's Lender will be made in reliance upon the foregoing. 9. LESSEE has obtained all required permits, authorizations, licenses and fees of the State of Registration or any Government Entity thereof necessary in order for LESSEE to operate the Aircraft as permitted by the terms of the Lease. Dated on the date set forth above AMERICAN TRANS AIR, INC. By: Title: ATTACHMENTS: 1. List of Aircraft Documentation 2. List of Loose Equipment 3. List of Discrepancies ATTACHMENT 1 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE LIST OF AIRCRAFT DOCUMENTATION MANUALS 1. FAA Approved Flight Manual 2. Airplane Flight Operation Manual 3. Aircraft Recover Manual 4. Quick Reference Handbook (QRH) 5. Weight and Balance Manual 6. Aircraft Fueling Manual 7. Aircraft Maintenance Manual (MM) 8. Aircraft Maintenance Manual Supplement 9. Ramp Maintenance Manual (RMM) 10. Cargo Loading Manual 11. Fault Reporting Manual (FRM) 12. Fault Isolation Manual (FIM) 13. Illustrated Parts Catalog (IPC) 14. Life Limited Parts Manual 15. Structural Repair Manual (SRM) 16. Master Minimum Equipment List 17. Wiring Diagram Manual (WD) 18. Wiring Practices Manual 19. System Schematics Manual 20. B.I.T.E. Manual 21. Non-Destructive Test Manual 22. Corrosion Prevention Manual 23. Component Maintenance Manual 24. APU Log Book 25. Engine Maintenance Manual 26. Engine Log Book 27. Engine Illustrated Parts Catalog 28. Engine Data Submittal Book 29. Engine Overhaul Manual 30. Power Plant Build-up Manual AIRCRAFT RECORDS AND HISTORICAL DOCUMENTS 1. Copies of original Certificates delivered by Boeing: a. Airworthiness Certificate for Export b. Radio installation conformity certificate c. Noise limitation certificate 2. Copies of original Documents delivered by Boeing: a. Airworthiness Directive Compliance list b. Aircraft inspection report c. Aircraft Readiness Log d. Weighing report 3. Copies of current Certificates: a. Airworthiness Certificate b. Noise limitation c. Radio license d. Interior material burn certificates e. Certificate of Export f. Aircraft deregistration confirmation e. Aircraft Registration 4. Letters signed and stamped by Quality Assurance: a. Current aircraft hours and cycles b. Current engines hours and cycles c. Accident and Incident report d. Summary of Maintenance Program e. AD compliance during the lease term 5. Aircraft log books and Aircraft readiness log. 6. Aircraft Hard Time (HT) inspection status. 7. One year forecast for HT inspection. 8. Aircraft Modification status, including service bulletins. 9. Last weighing report prior to redelivery. 10. AD compliance report with original signoffs. 11. Routine and non-routine job cards of the last "C" and "D" checks. 12. Past year pilots and maintenance discrepancies. 13. Major and Minor structural repairs with applicable approvals. 14. Compass Swing report of the last three years. 15. Cabin Configuration drawing (LOPA). 16. Emergency equipment location drawing. 17. Last X-RAYs ENGINES RECORDS 1. Last test cell run reports. 2. Life Limited Parts status and traceability. 3. AD compliance report with original signoffs. 4. Engine Modification/service bulletin/inspection report and applicableforms. 5. Last heavy maintenance records for each module. 6. Engine log books. 7. Engine removal history. 8. Past year trend monitoring reports. 9. Historical borescope reports. 10. Engine component report. APU RECORDS 1. APU status (FH, FC, limits). 2. Life limited Part status and traceability. 3. AD compliance with original signoffs. 4. Modification status. 5. Last heavy maintenance documents. 6. APU log books. 7. Last test cell report. COMPONENT RECORDS 1. Aircraft component inventory. 2. Hard time component inventory. 3. All serviceable tags. 4. Landing Gear status with last overhaul and life limited Part status. 5. AD compliance with original signoffs. 6. Modification status. ATTACHMENT 2 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE LIST OF LOOSE EQUIPMENT ATTACHMENT 3 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE LIST OF DISCREPANCIES EXHIBIT F OPINION OF COUNSEL TO BE GIVEN BY INDEPENDENT OUTSIDE COUNSEL OF LESSEE OR OTHER LAWYERS ACCEPTABLE TO LESSOR To: International Lease Finance Corporation 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States Gentlemen: This opinion is furnished to you pursuant to Article 7 of the Aircraft Lease Agreement dated as of September 5, 2000 (the "LEASE") between AMERICAN TRANS AIR, INC. ("LESSEE") and INTERNATIONAL LEASE FINANCE CORPORATION ("LESSOR"). Defined terms in this opinion are used herein as defined in the Lease. I have acted as counsel for LESSEE in connection with the preparation, execution and delivery of the Lease. In that connection I have examined: (a) The Lease and Estoppel and Acceptance Certificate; (b) The charter of LESSEE and all amendments thereto (the "CHARTER"); and (c) Such other documents, agreements and instruments, and such treaties, laws, rules, regulations, decrees and the like, as I have deemed necessary as a basis for the opinions hereinafter expressed. [ (d) All of the agreements and any amendments thereto between LESSEE and all other lessors and lenders of LESSEE covering other aircraft operated by LESSEE on which the Engines can be installed.] Based upon the foregoing and having regard for legal considerations which I deem relevant, I am of the opinion that: 1. LESSEE is a corporation duly incorporated, validly existing and in good standing under the Laws of Indiana. It has the corporate power and authority to carry on its business as presently conducted and to perform its obligations under the Lease. 2. No authorization, approval, consent, license or order of, or registration with, or the giving of notice to the Aviation Authority or any other regulatory body or authority is required for the valid authorization, execution, delivery and performance by LESSEE of the Lease. 3. The Lease and the Estoppel and Acceptance Certificate have each been duly authorized, executed and delivered by LESSEE. Each such instrument is a valid, enforceable and binding obligation of LESSEE except as enforceability may be limited by bankruptcy, insolvency, reorganization or other Laws of general application affecting the enforcement of creditors' rights. 4. The execution and delivery of the Lease and the Estoppel and Acceptance Certificate, the consummation by LESSEE of the transactions contemplated therein and compliance by LESSEE with the terms and provisions thereof do not contravene any Law applicable to LESSEE, or result in any breach of or constitute any default under or result in the creation of any lien, charge or encumbrance upon any property of LESSEE, under any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which LESSEE is a party or by which LESSEE or its properties or assets is bound. 5. Except for any filing or recording that may be required with the [NAME OF AIRCRAFT REGISTER] and except for [DESCRIBE SUCH OTHER FILINGS OR RECORDINGS], no filing or recording of any instrument or document (including the filing of any financial statement) is necessary under the laws of the U.S. in order for the Lease to constitute a valid and perfected lease of record relating to the Aircraft, it being understood that such counsel expresses no opinion as to the nature of LESSOR's title to the Aircraft on the Delivery Date. 6. LESSEE holds all licenses, certificates and permits from applicable governmental authorities in the U.S. necessary for the conduct of its business as a certificated air carrier and performance of its obligations under the Lease. 7. To my knowledge, there are no suits or proceedings pending or threatened against LESSEE before any Government Entity against or affecting LESSEE which are reasonably likely to be adversely determined and, if adversely determined, would have a material adverse effect on the financial condition or business of LESSEE or its ability to perform under the Lease, except as described in the filings provided to LESSOR pursuant to Article 22. 8. The obligations of LESSEE under the Lease are direct, general and unconditional obligations of LESSEE and rank or will rank at least PARI PASSU with all other present and future unsecured and unsubordinated obligations (including contingent obligations) of LESSEE, with the exception of such obligations as are mandatorily preferred by law. 9. LESSEE, under the laws of the U.S. or of any other jurisdiction affecting LESSEE, is subject to private commercial law and suit. Neither LESSEE nor its properties or assets have the right of immunity from suit or execution on the grounds of sovereignty in such jurisdictions and the performance by LESSEE of its obligations under the Lease constitute commercial acts done for commercial purposes. 10. There is no applicable usury or interest limitation Law in Indiana which may restrict the recovery of payments in accordance with the Lease. 11. LESSOR will not violate any Law or become liable to any tax in Indiana or the U.S. by reason of entering into or performing its obligations under the Lease and it is not necessary to establish a place of business in Indiana in order to enforce any provisions of the Lease. Very truly yours, EXHIBIT G ASSIGNMENT OF RIGHTS (AIRFRAME) [DATE] Boeing Commercial Airplane Group P.O. Box 3707 Seattle, Washington 98124-2207 Attention: Vice President-Contracts Mail Code 21-34 Subject: Full Assignment of Rights and Obligations - International Lease Finance Corporation as Lessor and AMERICAN TRANS AIR, INC. as Lessee of Model Boeing 737-800 aircraft bearing manufacturer's serial number 28246 Ladies and Gentlemen: In connection with International Lease Finance Corporation's lease to AMERICAN TRANS AIR, INC. ("Lessee") of a Boeing aircraft (more fully described below), reference is made to the following documents: A. Purchase Agreement 1830, dated as of June 27, 1995, between The Boeing Company ("Boeing") and International Lease Finance Corporation ("ILFC") (the "Boeing Agreement") under which ILFC purchased a certain Boeing Model 737-800 aircraft bearing manufacturer's serial number 28246 (the "Aircraft"). B. Aircraft Lease Agreement (the "Lease") for the Aircraft dated as of September 5, 2000 between ILFC and Lessee. Capitalized terms used herein without definition will have the same meaning as in the Boeing Agreement. In connection with ILFC's lease of the Aircraft under the Lease, ILFC is transferring to Lessee certain rights of ILFC related to the Aircraft under the Boeing Agreement. To accomplish this transfer of rights, as authorized by the provisions of the Boeing Agreement: 1. Lessee acknowledges that it has received copies of the following specific provisions of the Boeing Agreement applicable to the Aircraft and agrees to be bound by and comply with all the terms, conditions, and limitations contained in such provisions, including without limitation the disclaimer and release, exclusion of liabilities, indemnity and insurance provisions thereof: Boeing Agreement Article 6 - Excusable Delay 6.1 General Article 10 - Assignment, Resale or Lease 10.1 Assignment 10.3 Sale by Buyer after Delivery 10.4 Lease by Buyer after Delivery 10.5 No Increase in Boeing Liability 10.6 Exculpatory or Indemnity Clause in Post-delivery Sale or Lease Article 12 - Product Assurance; Disclaimer and Release; Exclusion of Liabilities; Customer Support; Indemnification and Insurance (in its entirety) Article 14 - Contractual Notices and Requests Article 15 - Miscellaneous 15.4 Governing Law Exhibit B - Product Assurance Document Part A Boeing Warrant Part B Warranty Repairs and Modifications by Buyer Part C Boeing Service Life Policy Part D Boeing Indemnity Against Patent Infringement Part D-1 Boeing Indemnity Against Copyright Infringement Part E Supplier Warranties and Patent Indemnities Part G Boeing Interface Commitment Part H General Exhibit C-1 - Customer Support Document Part B Boeing Customer Support Services Part D Technical Data and Documents Part E Buyer's Indemnification of Boeing and Insurance Part F Alleviation or Cessation of Performance Exhibit E - Buyer Furnished Equipment Provisions Document Paragraph 8 Indemnification of Boeing Paragraph 9 Patent Indemnity Paragraph 10 Definitions Letter Agreement No. 1830-3 - Seller Purchased Equipment Paragraph 6 Buyer's Indemnification of Boeing 2. Lessee recognizes that Boeing's obligation to provide training, support and services to Lessee pursuant to Exhibit C of the Boeing Agreement is conditioned on the receipt by Boeing of evidence of compliance by Lessee with the insurance requirements set forth in paragraph 2 of Part E of Exhibit C or in such other form as may be satisfactory to Boeing, prior to the commencement of such training, support and services. 3. ILFC reserves to itself all rights, claims and interests it may have under the Boeing Agreement not expressly assigned to Lessee hereunder. ILFC will remain responsible to Boeing for any amounts with respect to the Aircraft owed to Boeing under the Boeing Agreement prior to the effective date of this letter, including any amounts owed by ILFC to Boeing under the specific articles and paragraphs of the Boeing Agreement referenced in paragraph 1 above based upon events or incidents relating to the Aircraft occurring prior to the effective date of this letter. 4. ILFC hereby assigns to Lessee the sole authority to exercise in Lessee's name all rights and powers of ILFC with respect to the Aircraft under the specific portions of the Boeing Agreement referenced in paragraph 1 above. Such authorization will continue until Boeing receives from ILFC written notice that the Lease has been cancelled or terminated, addressed to Boeing's Vice President, Contracts, P.O. Box 3707, MC 21-34, Seattle, Washington 98124-2207, U.S.A. Until Boeing receives such notice, Boeing will be entitled to deal exclusively with Lessee with respect to the Aircraft under the specific portions of the Boeing Agreement referenced in paragraph 1 above and, with respect to the rights, powers, duties or obligations under such portions of the Boeing Agreement, any and all actions taken by Lessee or agreements entered into by Lessee during the period prior to Boeing's receipt of such notice will be final and binding on ILFC. 5. Lessee hereby accepts the authorization set forth in paragraph 4 above and agrees to be bound by and to comply with all the terms, conditions and limitations of the portion of the Boeing Agreement referenced in paragraph 1 above. 6. This Assignment may be signed by the parties hereto in separate counterparts, each of which when executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. 7. This Assignment shall be governed by, and construed in accordance with,the laws of the State of Washington, including all matters of construction, validity and performance. We request that Boeing, upon receipt of this letter, acknowledge receipt thereof and the transfer of rights set forth above by signing the acknowledgment and forwarding one copy of this letter to each of the undersigned. IN WITNESS WHEREOF, the parties hereto have caused this Assignment Agreement to be duly executed as of the dates written below. INTERNATIONAL LEASE FINANCE AMERICAN TRANS AIR, INC. CORPORATION By: /s/ Grant Levy By: /s/ Kenneth K. Wolff Its: Vice President Its: Executive Vice President & CSO BOEING ACKNOWLEDGMENT AND CONSENT TO ASSIGNMENT Receipt of the above letter is acknowledged and transfer of certain rights as described above under the Boeing Agreement is confirmed, effective as of this date. THE BOEING COMPANY By: Its: Date: EXHIBIT H ASSIGNMENT OF RIGHTS (ENGINES) [DATE] CFM INTERNATIONAL, INC. 1 Neumann Way, F-17 Cincinnati, Ohio 45215 Attention: Commercial Contracts - Warranty Assignment Administrator Dear Warranty Assignment Administrator: Reference is hereby made to that Consent to Assignment made as of April 29, 1988 (the "CONSENT TO ASSIGNMENT"), by and between CFM INTERNATIONAL, INC. ("CFMI") and INTERNATIONAL LEASE FINANCE CORPORATION ("ILFC"). Terms defined in the Consent to Assignment are used herein with the same meaning as in the Consent to Assignment. As of ________________ ___, ______, ILFC has assigned all of its rights and interest in, to and under the Engine Warranties to AMERICAN TRANS AIR, INC. ("ASSIGNEE") in connection with its lease to Assignee of a Boeing 737-800 aircraft (the "AIRCRAFT") together with two (2) CFMI Model CFM56-7B-27 engines bearing Manufacturer's Serial Numbers _______ and ________ (the "ENGINES") as of the date each such Engine was delivered to Assignee. Such assignment shall be effective from such date until ILFC notifies CFMI that the Lease has been cancelled or terminated. The Assignee has accepted such assignment and all the limitations and liabilities pertaining to the Engine Warranties as stated in the provisions of the GTA listed in Schedule 2 to the Consent to Assignment. A copy of the aforesaid assignment is attached hereto. Very truly yours, INTERNATIONAL LEASE FINANCE CORPORATION By: Title: cc: Ruben M. Cabrera Director, Commercial Contracts ASSIGNMENT OF WARRANTIES [DATE] In consideration of AMERICAN TRANS AIR, INC. ("LESSEE") leasing from International Lease Finance Corporation ("ILFC") one (1) Boeing 737-800 aircraft together with two (2) CFMI Model CFM56-7B-27 engines bearing manufacturer's serial numbers _______ and ________, it is hereby agreed as follows: 1. ILFC hereby assigns and transfers to Lessee all of ILFC's respective rights and interest in and to and in and under the Engine Warranties set forth in and subject to the limitations and liabilities set forth in Exhibit B Warranty, Section X (the "ENGINE WARRANTIES") of CFM International, Inc. - ILFC General Terms Agreement No. 6-3987 dated 22 June 1984 (the "GTA") during the term of such leases so long as Lessee is not in default thereunder. 2. Lessee hereby accepts such assignment including all the limitations and liabilities pertaining to said Engine Warranties as stated in the provisions of Exhibit B Warranty, Section X of the GTA. 3. This Agreement shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors and assigns to the extent permitted by the GTA and hereunder. 4. This Agreement shall be governed by and construed in accordance with the laws of the State of California. 5. This Agreement may be executed in any number of counterparts, each of which when executed and delivered is an original but all of which taken together constitute one and the same instrument and any party may execute this Agreement by signing any counterpart. IN WITNESS WHEREOF, the authorized representative of the parties hereto have executed this Agreement as of the day and year first above written. For and on behalf of For and on behalf of INTERNATIONAL LEASE FINANCE AMERICAN TRANS AIR, INC. CORPORATION By: By: Its: Its: EXHIBIT I RETURN ACCEPTANCE RECEIPT Date: _________________ ___, ____ 1. AMERICAN TRANS AIR, INC., as LESSEE, and INTERNATIONAL LEASE FINANCE CORPORATION, as LESSOR, have entered into an Aircraft Lease Agreement dated as of September 5, 2000 (the "LEASE"). Words used herein with capital letters and not otherwise defined will have the meanings set forth in the Lease. 2. LESSOR has this ____ day of __________, ____ (Time: __________) at ____________________ received from LESSEE possession of: (a) One (1) Boeing 737-800 Aircraft bearing Manufacturer's serial number ____, together with two (2) CFM56-7B-27 engines bearing manufacturer's serial numbers _______ and ________, and all Parts attached thereto and thereon in an airworthy condition and (b) All Aircraft Documentation, including the usual and customary manuals, logbooks, flight records and historical information regarding the Aircraft, Engines and Parts, as listed in the Document Receipt attached hereto. 3. The Airframe, Engines and Parts had the following hours/cycles at return: (a) AIRFRAME: Total hours: _______________ Total Landings: _______________ (b) ENGINES: POSITION SERIAL NO. TOTAL HOURS TOTAL CYCLES HRS/CYCLES SINCE LAST SHOP VISIT Time Remaining to Next LIFE LIMITED PART REMOVAL PART NAME HOURS CYCLES MSN MSN (c) APU: MSN __________ Total hours: __________ ______ hours/ ______ cycles since last Overhaul ______ hours/ ______ cycles remaining on APU life-limited Parts (d) LANDING GEARS: POSITION SERIAL NO. Total Hrs/Cycles since Date of last HRS/CYCLES LAST OVERHAUL OVERHAUL Nose Right Main Left Main (e) FUEL ON BOARD AT RETURN: ______ (circle one) pounds/kilos (______ gallons) 4. Other technical information regarding the Aircraft and its components are correctly set forth on the Technical Evaluation Report (in the form of Exhibit L) attached hereto. 5. The above specified aircraft, engines and documentation are hereby accepted by LESSOR subject to correction by LESSEE (or procurement by LESSEE at LESSEE's cost) as soon as reasonably possible of the discrepancies specified in Attachment 2 hereto. 6. Subject to the following paragraph, the leasing of the Aircraft by LESSOR to LESSEE pursuant to the Lease is hereby terminated without prejudice to LESSEE's continuing obligations under the Lease including, without limitation, paragraph 6 above and Articles 10.5, 15 and 16. 7. LESSEE represents and warrants that during the term of the Lease all maintenance and repairs to the Airframe and Engines were performed in accordance with the requirements contained in the Lease. LESSEE further confirms that all of its obligations under the Lease whether accruing prior to the date hereof or which survive the termination of the Lease by their terms and accrue after the date hereof, will remain in full force and effect until all such obligations have been satisfactorily completed. 8. This Return Acceptance Supplement is executed and delivered by the parties in [place]. IN WITNESS WHEREOF, the parties hereto have caused this Return Acceptance Receipt to be executed in their respective corporate names by their duly authorized representatives as of the day and year first above written. INTERNATIONAL LEASE FINANCE CORPORATION AMERICAN TRANS AIR, INC. By: By: Its: Its: ATTACHMENTS: 1. List of Aircraft Documentation 2. List of Loose Equipment 3. List of Discrepancies 4. Engine Maximum Power Assurance Test Conditions and Results 5. Dent and Damage Chart 6. Form of No Accident/Incident Letter 7. Technical Evaluation Report (in the form of Exhibit L) ATTACHMENT 1 TO RETURN ACCEPTANCE RECEIPT LIST OF AIRCRAFT DOCUMENTATION [The (a) manuals and (b) Aircraft records and historical documents set forth below are to be returned with the Aircraft in a current, up-to-date and correct status] MANUALS 1. FAA Approved Flight Manual 2. Airplane Flight Operation Manual 3. Aircraft Recover Manual 4. Quick Reference Handbook (QRH) 5. Weight and Balance Manual 6. Aircraft Fueling Manual 7. Aircraft Maintenance Manual (MM) 8. Aircraft Maintenance Manual Supplement 9. Ramp Maintenance Manual (RMM) 10. Cargo Loading Manual 11. Fault Reporting Manual (FRM) 12. Fault Isolation Manual (FIM) 13. Illustrated Parts Catalog (IPC) 14. Life Limited Parts Manual 15. Structural Repair Manual (SRM) 16. Master Minimum Equipment List 17. Wiring Diagram Manual (WD) 18. Wiring Practices Manual 19. System Schematics Manual 20. B.I.T.E. Manual 21. Non-Destructive Test Manual 22. Corrosion Prevention Manual 23. Component Maintenance Manual 24. APU Log Book 25. Engine Maintenance Manual 26. Engine Log Book 27. Engine Illustrated Parts Catalog 28. Engine Data Submittal Book 29. Engine Overhaul Manual 30. Power Plant Build-up Manual AIRCRAFT RECORDS AND HISTORICAL DOCUMENTS 1. Copies of original Certificates delivered by Boeing: a. Airworthiness Certificate for Export b. Radio installation conformity certificate c. Noise limitation certificate 2. Copies of original Documents delivered by Boeing: a. Airworthiness Directive Compliance list b. Aircraft inspection report c. Aircraft Readiness Log d. Weighing report 3. Copies of current Certificates: a. Airworthiness Certificate b. Noise limitation c. Radio license d. Interior material burn certificates e. Certificate of Export f. Aircraft deregistration confirmation e. Aircraft Registration 4. Letters signed and stamped by Quality Assurance: a. Current aircraft hours and cycles b. Current engines hours and cycles c. Accident and Incident report d. Summary of Maintenance Program e. AD compliance during the lease term 5. Aircraft log books and Aircraft readiness log. 6. Aircraft Hard Time (HT) inspection status. 7. One year forecast for HT inspection. 8. Aircraft Modification status, including service bulletins. 9. Last weighing report prior to redelivery. 10. AD compliance report with original signoffs. 11. Routine and non-routine job cards of the last "C" and "D" checks. 12. Past year pilots and maintenance discrepancies. 13. Major and Minor structural repairs with applicable approvals. 14. Compass Swing report of the last three years. 15. Cabin Configuration drawing (LOPA). 16. Emergency equipment location drawing. 17. Last X-RAYs ENGINES RECORDS 1. Last test cell run reports. 2. Life Limited Parts status and traceability. 3. AD compliance report with original signoffs. 4. Engine Modification/service bulletin/inspection report and applicable forms. 5. Last heavy maintenance records for each module. 6. Engine log books. 7. Engine removal history. 8. Past year trend monitoring reports. 9. Historical borescope reports. 10. Engine component report. APU RECORDS 1. APU status (FH, FC, limits). 2. Life limited Part status and traceability. 3. AD compliance with original signoffs. 4. Modification status. 5. Last heavy maintenance documents. 6. APU log books. 7. Last test cell report. COMPONENT RECORDS 1. Aircraft component inventory. 2. Hard time component inventory. 3. All serviceable tags. 4. Landing Gear status with last overhaul and life limited Part status. 5. AD compliance with original signoffs. 6. Modification status. ATTACHMENT 2 TO RETURN ACCEPTANCE RECEIPT LIST OF LOOSE EQUIPMENT ATTACHMENT 3 TO RETURN ACCEPTANCE RECEIPT LIST OF DISCREPANCIES ATTACHMENT 4 TO RETURN ACCEPTANCE RECEIPT ENGINE MAXIMUM POWER ASSURANCE TEST CONDITIONS AND RESULTS ATTACHMENT 5 TO RETURN ACCEPTANCE RECEIPT DENT AND DAMAGE CHART ATTACHMENT 6 TO RETURN ACCEPTANCE RECEIPT FORM OF NO ACCIDENT/INCIDENT LETTER EXHIBIT J MONTHLY REPORT (SEE FOLLOWING SHEET) MONTHLY AIRCRAFT UTILIZATION AND STATUS REPORT Page 1 of 2 Report Due Date: To: INTERNATIONAL LEASE FINANCE CORPORATION Fax: (310) 788-1990 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067, United States Attn: Finance Department From: AMERICAN TRANS AIR, INC. Contact: Fax: AIRCRAFT TYPE: BOEING 737-800 ENGINE TYPE: CFM56-7B-27 REGISTRATION: ____ SERIAL NUMBER: ____ MONTH OF: NOTE: PLEASE RECORD TIME IN HOURS AND MINUTES NOT DECIMALS. Aircraft Total Time Since New As Of Last Month: Hours: Min: Aircraft Total Time Since New: Hours: Min: Aircraft Total Cycles Since New: Cycles: Airframe Hours Flown During Month: Hours: Min: Airframe Cycles/Landings During Month: Cycles: Time Remaining to "D" or Heavy Maintenance Check: HOURS OR US$ PER CYCLES FLOWN HOUR OR DURING MONTH (AS CYCLE (AS APPLICABLE) X APPLICABLE) = RESERVES TOTAL AIRFRAME: HRS: X = TOTAL LANDING GEAR: HRS: X = TOTAL APU: HRS: X = ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles(for Engine LLP Reserves): x = ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles (for Engine LLP Reserves): x = ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles (for LLP x = Reserves): ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles (for Engine LLP Reserves): x = TOTAL AMOUNT OF RESERVES (US$) PAID THIS MONTH: US$ Monthly Aircraft Utilization and Status Report From: AMERICAN TRANS AIR, INC. PAGE 2 OF 2 ENGINE SERIAL NUMBER: ENGINE SERIAL NUMBER: ORIGINAL POSITION: ORIGINAL POSITION: ACTUAL LOCATION: ACTUAL LOCATION: CURRENT THRUST RATING: CURRENT THRUST RATING: HOURS:/MIN: HOURS:/MIN: Total Time Since New As Of Total Time Since New As Of Last Month: Last Month: Total Time Since New: Total Time Since New: Total Cycles Since New: Total Cycles Since New: Hours Flown During Month: Hours Flown During Month: Cycles During Month: Cycles During Month: IMPORTANT: IF ILFC-OWNED ENGINE IS REMOVED OR INSTALLED ON ANOTHER AIRCRAFT, IT MUST BE REPORTED MONTHLY ON THIS FORM. EXHIBIT K AIRCRAFT DOCUMENTATION AIRCRAFT RECORDS 1. Copies of original Certificates delivered by Boeing: a. Airworthiness Certificate for Export b. Radio installation conformity certificate c. Noise limitation certificate 2. Copies of original Documents delivered by Boeing: a. Airworthiness Directive Compliance list b. Aircraft inspection report c. Aircraft Readiness Log d. Weighing report 3. Copies of current Certificates: a. Airworthiness Certificate b. Noise limitation c. Radio license d. Interior material burn certificates e. Certificate of Export f. Aircraft deregistration confirmation e. Aircraft Registration 4. Letters signed and stamped by Quality Assurance: a. Current aircraft hours and cycles b. Current engines hours and cycles c. Accident and Incident report d. Summary of Maintenance Program e. AD compliance during the lease term 5. Aircraft log books and Aircraft readiness log. 6. Aircraft Hard Time (HT) inspection status. 7. One year forecast for HT inspection. 8. Aircraft Modification status, including service bulletins. 9. Last weighing report prior to redelivery. 10. AD compliance report with original signoffs. 11. Routine and non-routine job cards of the last "C" and "D" checks. 12. Past year pilots and maintenance discrepancies. 13. Major and Minor structural repairs with applicable approvals. 14. Compass Swing report of the last three years. 15. Cabin Configuration drawing (LOPA). 16. Emergency equipment location drawing. 17. Last X-RAYs ENGINES RECORDS 1. Last test cell run reports. 2. Life Limited Parts status and traceability. 3. AD compliance report with original signoffs. 4. Engine Modification/service bulletin/inspection report and applicable forms. 5. Last heavy maintenance records for each module. 6. Engine log books. 7. Engine removal history. 8. Past year trend monitoring reports. 9. Historical borescope reports. 10. Engine component report. APU RECORDS 1. APU status (FH, FC, limits). 2. Life limited Part status and traceability. 3. AD compliance with original signoffs. 4. Modification status. 5. Last heavy maintenance documents. 6. APU log books. 7. Last test cell report. COMPONENT RECORDS 1. Aircraft component inventory. 2. Hard time component inventory. 3. All serviceable tags. 4. Landing Gear status with last overhaul and life limited Part status. 5. AD compliance with original signoffs. 6. Modification status. EXHIBIT L TECHNICAL EVALUATION REPORT (SEE FOLLOWING SHEETS) EX-10.6(H) 23 file069.txt AMTRAN, INC., 2000 10-K, EXHIBIT 10.6(H) AIRCRAFT LEASE AGREEMENT Dated as of September 5, 2000 BETWEEN AMERICAN TRANS AIR, INC. as LESSEE and INTERNATIONAL LEASE FINANCE CORPORATION as LESSOR ------------------------------------------------------------------------------- Aircraft Make and Model: New Boeing 737-800 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Aircraft Manufacturer's Serial Number: 28247 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Aircraft Registration Mark: Per Estoppel and Acceptance Certificate ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Make and Model of Engines: CFM56-7B-27 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Serial Numbers of Engines: Per Estoppel and Acceptance Certificate ------------------------------------------------------------------------------- NEW BOEING 737-800 AIRCRAFT NO. 9 TABLE OF CONTENTS ARTICLE 1 SUMMARY OF TRANSACTION.........................................2 1.1 Description of Aircraft........................................2 1.2 Scheduled Delivery Date and Location...........................2 1.3 Lease Term.....................................................2 1.4 Security Deposit...............................................2 1.5 Transaction Fee................................................2 1.6 Rent During Lease Term.........................................2 1.7 Country of Aircraft Registration...............................4 1.8 Maintenance Program............................................4 1.9 Agreed Value of Aircraft.......................................4 1.10 LESSOR's Bank Account..........................................4 ARTICLE 2 DEFINITIONS....................................................5 2.1 General Definitions............................................5 2.2 Specific Definitions...........................................9 ARTICLE 3 PLACE AND DATE OF DELIVERY....................................11 3.1 Place of Delivery.............................................11 3.2 Scheduled Delivery Date.......................................11 3.3 Delivery subject to Manufacturer Delivery.....................11 3.4 No LESSOR Liability...........................................11 3.5 Total Loss of Aircraft prior to Delivery......................11 3.6 Cancellation for Delay........................................11 ARTICLE 4 LEASE TERM....................................................12 4.1 Lease Term....................................................12 4.2 "Expiration Date".............................................12 4.3 "Termination Date"............................................12 ARTICLE 5 SECURITY DEPOSIT, TRANSACTION FEE, RENT AND OTHER PAYMENTS......................................................13 5.1 Security Deposit..............................................13 5.2 Transaction Fee...............................................14 5.3 Rent..........................................................14 5.4 LESSOR's Bank Account.........................................15 5.5 Default Interest..............................................16 5.6 No Deductions or Withholdings.................................16 5.7 Value Added Taxes.............................................16 5.8 Net Lease.....................................................17 5.9 LESSOR Performance of LESSEE Obligation.......................18 5.10 Consideration for Rent and other Amounts......................18 ARTICLE 6 INVOLVEMENT WITH AIRCRAFT MANUFACTURER........................19 6.1 LESSEE Selection of Aircraft..................................19 6.2 Agency Agreement..............................................19 6.3 Procurement of BFE............................................19 6.4 Assignment of Training........................................19 6.5 LESSEE Inspection of Aircraft.................................19 6.6 Aircraft at Delivery..........................................19 6.7 Delivery of the Aircraft to LESSEE............................20 6.8 LESSEE Acceptance of Aircraft.................................20 ARTICLE 7 PRE-DELIVERY, DELIVERY AND POST-DELIVERY DOCUMENTARY AND OTHER REQUIREMENTS............................21 7.1 Pre-Delivery Requirements.....................................21 7.2 Delivery Requirements.........................................22 7.3 Post-Delivery Requirements....................................23 ARTICLE 8 DISCLAIMERS...................................................24 8.1 "As Is, Where Is".............................................24 8.2 Waiver of Warranty of Description.............................24 8.3 LESSEE Waiver.................................................25 8.4 Conclusive Proof..............................................25 8.5 No LESSOR Liability for Losses................................25 8.6 No Liability to Repair or Replace.............................25 8.7 No Waiver.....................................................26 ARTICLE 9 MANUFACTURERS' AND VENDORS' WARRANTIES........................27 9.1 Warranties....................................................27 9.2 Reassignment..................................................27 ARTICLE 10 OPERATION OF AIRCRAFT.........................................28 10.1 Costs of Operation............................................28 10.2 Compliance with Laws..........................................28 10.3 Training......................................................28 10.4 No Violation of Insurance Policies............................28 10.5 Flight Charges................................................29 ARTICLE 11 SUBLEASES.....................................................30 11.1 No Sublease without LESSOR Consent............................30 11.2 LESSOR Costs..................................................30 11.3 Any Approved Sublease.........................................30 11.4 Assignment of Sublease........................................30 11.5 Continued Responsibility of LESSEE............................30 ARTICLE 12 MAINTENANCE AND USE OF AIRCRAFT...............................31 12.1 General Obligation............................................31 12.2 Specific Obligations..........................................31 12.3 Replacement of Parts..........................................32 12.4 Removal of Engines............................................33 12.5 Pooling of Engines and Parts..................................34 12.6 Installation of Engines on other aircraft.....................34 12.7 Modifications.................................................35 12.8 Performance of Work by Third Parties..........................36 12.9 Reporting Requirements........................................36 12.10 Information Regarding Maintenance Program.....................36 12.11 LESSOR Rights to Inspect Aircraft.............................36 ARTICLE 13 TITLE AND REGISTRATION........................................37 13.1 Title to the Aircraft During Lease Term.......................37 13.2 Registration of Aircraft......................................37 13.3 Filing of this Lease..........................................37 13.4 Evidence of Registration and Filings..........................37 ARTICLE 14 IDENTIFICATION PLATES.........................................38 14.1 Airframe Identification Plates................................38 14.2 Engine Identification Plates..................................38 ARTICLE 15 TAXES.........................................................39 15.1 General Obligation of LESSEE..................................39 15.2 Exceptions to Indemnity.......................................39 15.3 After-Tax Basis...............................................40 15.4 Claims and Contests...........................................40 15.5 Refunds.......................................................41 15.6 Cooperation in Filing Tax Returns.............................41 ARTICLE 16 INDEMNITIES...................................................42 16.1 General Indemnity.............................................42 16.2 Exceptions to General Indemnities.............................43 16.3 After-Tax Basis...............................................44 16.4 Timing of Payment.............................................44 16.5 Subrogation...................................................44 16.6 Notice........................................................44 16.7 Refunds.......................................................44 16.8 Defense of Claims.............................................45 16.9 Survival of Obligation........................................45 ARTICLE 17 INSURANCE.....................................................46 17.1 Categories of Insurance.......................................46 17.2 Insurance for Indemnities.....................................46 17.3 Insurance required by Manufacturer............................46 17.4 Renewal.......................................................46 17.5 Assignment of Rights by LESSOR................................46 17.6 Deductibles...................................................46 17.7 Other Insurance...............................................47 17.8 Information...................................................47 17.9 Currency......................................................47 17.10 Grounding of Aircraft.........................................47 17.11 Failure to Insure.............................................47 17.12 Limit on Hull in favor of LESSEE..............................47 17.13 Marketplace Limitations.......................................48 ARTICLE 18 LOSS, DAMAGE AND REQUISITION..................................49 18.1 Definitions...................................................49 18.2 Notice of Total Loss..........................................50 18.3 Total Loss of Aircraft or Airframe............................50 18.4 Surviving Engine(s)...........................................51 18.5 Total Loss of Engine and not Airframe.........................51 18.6 Other Loss or Damage..........................................52 18.7 Copy of Insurance Policy......................................53 18.8 Government Requisition........................................53 18.9 Conveyance to LESSEE..........................................53 ARTICLE 19 CRAF PROGRAM..................................................54 19.1 Dedication to CRAF............................................54 19.2 Notice to LESSOR..............................................54 19.3 Requisition of Engine.........................................54 19.4 Government Indemnification....................................54 19.5 No Geographic Limits..........................................54 19.6 Notice of Default.............................................55 19.7 Receipt of Payments...........................................55 ARTICLE 20 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE...........56 20.1 Representations and Warranties................................56 20.2 Covenants.....................................................58 ARTICLE 21 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSOR...........61 21.1 Representations and Warranties................................61 21.2 Covenant of Quiet Enjoyment...................................62 ARTICLE 22 FINANCIAL AND RELATED INFORMATION.............................63 ARTICLE 23 RETURN OF AIRCRAFT............................................64 23.1 Date of Return................................................64 23.2 Technical Report..............................................64 23.3 Return Location...............................................64 23.4 Full Aircraft Documentation Review............................64 23.5 Aircraft Inspection...........................................64 23.6 Certificate of Airworthiness Matters..........................65 23.7 General Condition of Aircraft at Return.......................66 23.8 Checks Prior to Return........................................69 23.9 Part Lives....................................................72 23.10 Export and Deregistration of Aircraft.........................74 23.11 LESSEE's Continuing Obligations...............................75 23.12 Airport and Navigation Charges................................75 23.13 Return Acceptance Certificate.................................76 23.14 Indemnities and Insurance.....................................76 ARTICLE 24 ASSIGNMENT....................................................77 24.1 No Assignment by LESSEE.......................................77 24.2 Sale or Assignment by LESSOR..................................77 24.3 LESSOR's Lender...............................................79 24.4 LESSEE Cooperation............................................79 24.5 Protections...................................................79 ARTICLE 25 DEFAULT OF LESSEE.............................................80 25.1 LESSEE Notice to LESSOR.......................................80 25.2 Events of Default.............................................80 25.3 LESSOR's General Rights.......................................82 25.4 Deregistration and Export of Aircraft.........................83 25.5 LESSEE Liability for Damages..................................83 25.6 Waiver of Default.............................................84 25.7 Present Value of Payments.....................................84 25.8 Use of "Termination Date".....................................84 ARTICLE 26 NOTICES.......................................................85 26.1 Manner of Sending Notices.....................................85 26.2 Notice Information............................................85 ARTICLE 27 GOVERNING LAW AND JURISDICTION................................86 27.1 California Law................................................86 27.2 Non-Exclusive Jurisdiction in California......................86 27.3 Service of Process............................................86 27.4 Prevailing Party in Dispute...................................86 27.5 Waiver........................................................86 ARTICLE 28 MISCELLANEOUS.................................................87 28.1 Press Releases................................................87 28.2 LESSOR Performance for LESSEE.................................87 28.3 LESSOR's Payment Obligations..................................87 28.4 Application of Payments.......................................87 28.5 Usury Laws....................................................87 28.6 Delegation by LESSOR..........................................87 28.7 Confidentiality...............................................88 28.8 Rights of Parties.............................................88 28.9 Further Assurances............................................88 28.10 Use of Word "including".......................................88 28.11 Headings......................................................88 28.12 Invalidity of any Provision...................................88 28.13 Negotiation...................................................88 28.14 Time is of the Essence........................................89 28.15 Amendments in Writing.........................................89 28.16 Counterparts..................................................89 28.17 Delivery of Documents by Fax..................................89 28.18 Entire Agreement..............................................89 EXHIBIT A AIRCRAFT DESCRIPTION..........................................91 EXHIBIT B AGENCY AGREEMENT..............................................92 EXHIBIT C CERTIFICATE OF INSURANCE......................................96 EXHIBIT D BROKERS' LETTER OF UNDERTAKING...............................102 EXHIBIT E ESTOPPEL AND ACCEPTANCE CERTIFICATE..........................104 EXHIBIT F OPINION OF COUNSEL...........................................111 EXHIBIT G ASSIGNMENT OF RIGHTS (AIRFRAME)..............................114 EXHIBIT H ASSIGNMENT OF RIGHTS (ENGINES)...............................119 EXHIBIT I RETURN ACCEPTANCE RECEIPT....................................123 EXHIBIT J MONTHLY REPORT...............................................134 EXHIBIT K AIRCRAFT DOCUMENTATION.......................................138 EXHIBIT L TECHNICAL EVALUATION REPORT..................................140 AIRCRAFT LEASE AGREEMENT THIS AIRCRAFT LEASE AGREEMENT is made and entered into as of September 5, 2000. BETWEEN: AMERICAN TRANS AIR, INC., a Indiana corporation whose address and principal place of business is at 7337 West Washington Street, Indianapolis International Airport, Indianapolis, Indiana 46231, United States of America ("LESSEE") and INTERNATIONAL LEASE FINANCE CORPORATION, a California corporation whose address and principal place of business is at 1999 Avenue of the Stars, 39th Floor, Los Angeles, California 90067, United States of America ("LESSOR"). The subject matter of this Lease is one (1) new Boeing 737-800 aircraft. In consideration of and subject to the mutual covenants, terms and conditions contained in this Lease, LESSOR hereby agrees to lease to LESSEE and LESSEE hereby agrees to lease from LESSOR the aircraft and the parties further agree as follows: ARTICLE 1 SUMMARY OF TRANSACTION The information in this Article 1 is a summary of the lease transaction between LESSEE and LESSOR. It is set forth for the convenience of the parties only and will not be deemed in any way to amend, detract from or simplify the other provisions of this Lease. 1.1 DESCRIPTION OF AIRCRAFT One new Boeing 737-800 aircraft 1.2 SCHEDULED DELIVERY DATE AND LOCATION In the month of (CONFIDENTIAL MATERIAL OMITTED) at Seattle, Washington 1.3 LEASE TERM 15 years 1.4 SECURITY DEPOSIT (CONFIDENTIAL MATERIAL OMITTED) 1.5 TRANSACTION FEE (CONFIDENTIAL MATERIAL OMITTED) 1.6 RENT DURING LEASE TERM Payable monthly in advance and equal to the sum of: (a The following amounts for the following years of the Lease Term: LEASE PERIOD MONTHLY RENTAL AMOUNT* (CONFIDENTIAL MATERIAL OMITTED) *The above base rent is expressed in January 1999 U.S.Dollars and will increase in the following amounts for the following periods: PERIOD ESCALATION FACTOR (CONFIDENTIAL MATERIAL OMITTED) 1.7 COUNTRY OF AIRCRAFT REGISTRATION U.S. 1.8 MAINTENANCE PROGRAM LESSEE's Maintenance Program 1.9 AGREED VALUE OF AIRCRAFT (CONFIDENTIAL MATERIAL OMITTED) The Agreed Value is expressed in March 2001 U.S. Dollars and will increase in accordance with Manufacturer's announced escalation rate from March 1, 2001 to the Delivery Date. On each annual renewal date of LESSEE's insurance policy commencing on the renewal date following the first anniversary of the Lease Term, the Agreed Value will decrease by two percent (2.0%) of the then existing Agreed Value. 1.10 LESSOR'S BANK ACCOUNT (Confidential Material Omitted) ARTICLE 2 DEFINITIONS Except where the context otherwise requires, the following words have the following meanings for all purposes of this Lease. The definitions are equally applicable to the singular and plural forms of the words. Any agreement defined below includes each amendment, modification, supplement and waiver thereto in effect from time to time. 2.1 GENERAL DEFINITIONS. "ACT" means the Federal Aviation Act of 1958, as amended from time to time, or any successor act thereto. "AIRCRAFT" means the Airframe, two (2) Engines, Parts and Aircraft Documentation, collectively. As the context requires, "Aircraft" may also mean the Airframe, any Engine, any Part, the Aircraft Documentation or any part thereof individually. For example, in the context of return to LESSOR the term "Aircraft" means the Airframe, Engines, Parts and Aircraft Documentation collectively, yet in the context of LESSEE not creating any Security Interests other than Permitted Liens on the Aircraft, the term "Aircraft" means any of the Airframe, any Engine, any Part or the Aircraft Documentation individually. "AIRCRAFT DOCUMENTATION" means all (a) log books, Aircraft records, manuals and other documents provided to LESSEE in connection with the Aircraft, (b) documents listed in Exhibits E and K and (c) any other documents required to be maintained during the Lease Term by the Aviation Authority, LESSEE's Maintenance Program and this Lease. "AIRFRAME" means the airframe listed in the Estoppel and Acceptance Certificate executed at Delivery together with all Parts relating thereto (except Engines or engines). "AIRWORTHINESS DIRECTIVES" or "ADS" means all airworthiness directives (or equivalent) of the FAA and the Aviation Authority applicable to the Aircraft. "APU" means the auxiliary power unit of the Aircraft. "AVIATION AUTHORITY" means the FAA or any Government Entity which under the Laws of the U.S. from time to time has control over civil aviation or the registration, airworthiness or operation of aircraft in the U.S. If the Aircraft is registered in a country other than the U.S., "Aviation Authority" means the agency which regulates civil aviation in such other country. "AVIATION DOCUMENTS" means any or all of the following which at any time may be obtainable from the Aviation Authority: (a) if required, a temporary certificate of airworthiness from the Aviation Authority allowing the Aircraft to be flown after Delivery to the State of Registration, (b) an application for registration of the Aircraft with the appropriate authority in the State of Registration, (c) the certificate of registration for the Aircraft issued by the State of Registration, (d) a full certificate of airworthiness for the Aircraft specifying transport category (passenger), (e) an air transport license, (f) an air operator's certificate, (g) such recordation of LESSOR's title to the Aircraft and interest in this Lease as may be available in the State of Registration and (h) all such other authorizations, approvals, consents and certificates in the State of Registration as may be required to enable LESSEE lawfully to operate the Aircraft. "BANKRUPTCY CODE" means The Bankruptcy Reform Act of 1978 (11 U.S.C. ss.ss. 101-1330), as amended or supplemented from time to time, and any successor statute, and all of the rules and regulations issued or promulgated in connection therewith. "BASIC ENGINE" means those units and components of the Engine which are used to induce and convert fuel/air mixture into thrust/power; to transmit power to the fan and accessory drives; to supplement the function of other defined systems external to the Engine; and to control and direct the flow of internal lubrication, plus all essential accessories as supplied by the Engine manufacturer. The nacelle, installed components related to the Aircraft systems, thrust reversers, QEC and the primary flight nozzle are excluded. "BFE" means any equipment which is to be provided by the purchaser of the Aircraft (whether actually provided by LESSOR as buyer-furnished equipment or Manufacturer as seller-purchased equipment). "BUSINESS DAY" means a day other than a Saturday or Sunday on which the banks in Indianapolis, Indiana and in the city where LESSOR's Bank is located are open for the transaction of business of the type required by this Lease. "CREDITOR" means any lessor, owner, bank, lender, mortgagee or other Person which is the owner of or has any interest in an aircraft engine or aircraft operated by LESSEE. "CREDITOR AGREEMENT" means the applicable agreement between a Creditor and LESSEE or between Creditors pursuant to which such Creditor owns, leases or has an interest in either an aircraft operated by LESSEE on which an Engine may be installed or in an aircraft engine which may be installed on the Airframe. "DEFAULT" means any event which, upon the giving of notice, the lapse of time and/or a relevant determination, would constitute an Event of Default. "DELIVERY" means the delivery of the Aircraft from LESSOR to LESSEE pursuant to Articles 3 and 6. "DELIVERY DATE" means the date on which Delivery takes place. "DOLLARS" and "$" means the lawful currency of the U.S. "ENGINE" means (a) each of the engines listed on the Estoppel and Acceptance Certificate; or (b) any replacement engine acquired by LESSOR and leased to LESSEE pursuant to Article 18.5 following a Total Loss of an Engine; including in each case all Parts installed in or on any of such engines at Delivery (or substituted, renewed or replacement Parts in accordance with this Lease) so long as title thereto is or remains vested in LESSOR in accordance with the terms of Article 12.3. "EVENT OF DEFAULT" means any of the events referred to in Article 25.2. "FAA" means the Federal Aviation Administration of the Department of Transportation or any successor thereto under the Laws of the U.S. "FARS" means the U.S. Federal Aviation Regulations embodied in Title 14 of the U.S. Code of Federal Regulations, as amended from time to time, or any successor regulations thereto. "GENEVA CONVENTION" means the Convention on the International Recognition of Rights in Aircraft signed in Geneva, Switzerland on June 19, 1948. "GOVERNMENT ENTITY" means any (a) national, state or local government, (b) board, commission, department, division, instrumentality, court, agency or political subdivision thereof and (c) association, organization or institution of which any of the entities listed in (a) or (b) is a member or to whose jurisdiction any such entity is subject. "LANDING GEAR" means the installed main and nose landing gear, components and their associated actuators, side braces and parts. "LAW" means any (a) statute, decree, constitution, regulation, order or any directive of any Government Entity, (b) treaty, pact, compact or other agreement to which any Government Entity is a signatory or party and (c) judicial or administrative interpretation or application of any of the foregoing. "LEASE" means this Aircraft Lease Agreement, together with all Exhibits hereto. "LESSOR'S LIEN" means any Security Interest created by LESSOR, or arising from a claim against LESSOR completely unrelated to this Lease or the other Operative Documents. "MAINTENANCE PROGRAM" means LESSEE's maintenance program as approved by the Aviation Authority or such other maintenance program as LESSOR may, in its discretion, accept in writing. "MANUFACTURER" means The Boeing Company, a Delaware corporation. "MPD" means the Maintenance Planning Document published by Manufacturer and applicable to the Aircraft. "OVERHAUL" means the full reconditioning of the Aircraft, an Engine, APU, Landing Gear, module or Part, as the case may be, in which such equipment has been fully disassembled; cleaned; thoroughly inspected; and returned to the highest standard specified by the applicable manufacturer's manual. "PART" means the APU, any part, component, appliance, system module, engine module, accessory, material, instrument, communications equipment, furnishing, LESSEE-furnished or LESSOR-purchased equipment or other item of equipment (other than complete Engines or engines) for the time being installed in or attached to the Airframe or any Engine or which, having been removed from the Airframe or any Engine, remains the property of LESSOR. "PERMITTED INSTITUTION" means any Person (other than a commercial air carrier, a commercial aircraft operator, a freight forwarder, or an affiliate of any of the foregoing), with either: (a) a combined capital and surplus or net worth of at least; or (b) have a credit rating on the majority of its unsecured debt which is at least equal to BBB or its equivalent from Standard and Poor's Rating Group, a division of The McGraw-Hill Companies, Inc. or Moody's Investors Service, Inc. "PERMITTED LIEN" means (a) LESSOR's Liens; (b) Security Interests arising in the ordinary course of LESSEE's business for Taxes either not yet due and payable or, if due and payable, being contested in good faith in accordance with Article 15.4; (c) materialmen's, mechanics', workmen's, repairmen's, employees' liens or similar Security Interests arising by operation of Law after the Delivery Date in the ordinary course of LESSEE's business for amounts which are either not yet due or are being contested in good faith by appropriate proceedings (and for which adequate reserves have been made or, when required in order to pursue such proceedings, an adequate bond has been provided) so long as such proceedings do not involve any material danger of sale, forfeiture or loss of the Aircraft; (d) the rights of LESSOR and any LESSOR's Lender and the rights of LESSEE under this Lease and the other Operative Documents; (e) the rights of others under agreements or arrangements to the extent permitted by Articles 10 and 11.5; and (f) any Security Interest against which LESSEE causes to be provided a bond in such amount and under such terms and conditions as are reasonably satisfactory to LESSOR. "PERSON" means any individual, firm, partnership, joint venture, trust, corporation, limited liability company, Government Entity, committee, department, authority or any body, incorporated or unincorporated, whether having distinct legal personality or not. "PRIME RATE" means the rate of interest from time to time announced by Bank of America Illinois in Chicago, Illinois as its prime commercial lending rate. "SECURITY INTEREST" means any encumbrance or security interest, however and wherever created or arising including (without prejudice to the generality of the foregoing) any right of ownership, security, mortgage, pledge, charge, encumbrance, lease, lien, statutory or other right in rem, hypothecation, title retention, attachment, levy, claim or right of possession or detention. "STATE OF REGISTRATION" means the U.S. or such other country or state of registration of the Aircraft as LESSOR may, in its absolute discretion, approve in writing. "U.S." means the United States of America. "U.S. AIR CARRIER" means any U.S. air carrier who is a Citizen of the U.S. holding an air carrier operating certificate issued by the Secretary of Transportation pursuant to chapter 447 of the Act for aircraft capable of carrying 10 or more individuals or 6000 pounds or more of cargo, and as to whom there is in force an air carrier operating certificate issued pursuant to FAR Part 121, or who may operate as an air carrier by certification or otherwise under any successor or substitute provisions therefor or in the absence thereof. 2.2 SPECIFIC DEFINITIONS. The following terms are defined in the Articles referenced below: TERMS ARTICLE Agreed Value 18.1 CRAF Program 19.1 CRAF Program Requisition 19.1 Period Default Interest 5.5 Delivery Location 3.1 Expenses 16.1 Expiration Date 4.3 Indemnities 16.1 Lease Term 4.1 LESSEE Customization 5.3.1 Costs LESSOR's Assignee 24.2.1 LESSOR's Bank 5.4 LESSOR's Lender 24.3 Manufacturer's Escalation 5.3.1 Rate Modifications 12.7.2 Net Total Loss Proceeds 18.1 Operative Documents 20.1.3 Rent 5.3.1 Return Check 23.8.1 Scheduled Delivery Date 3.2 Security Deposit 5.1.1 Taxes 15.1 Termination Date 4.3 Total Loss 18.1 Total Loss Date 18.1 Total Loss Proceeds 18.1 Transaction Fee 5.2 ARTICLE 3 PLACE AND DATE OF DELIVERY 3.1 PLACE OF DELIVERY. LESSOR will deliver the Aircraft to LESSEE at Manufacturer's facility at Seattle, Washington or such other place as may be agreed in writing between the parties (the "DELIVERY LOCATION"). 3.2 SCHEDULED DELIVERY DATE. As of the date of this Lease, delivery of the Aircraft from Manufacturer to LESSOR is scheduled to occur in the month of (CONFIDENTIAL MATERIAL OMITTED). LESSOR will not agree to reschedule such delivery without LESSEE's prior written consent. LESSOR will notify LESSEE from time to time and in a timely manner of the exact date on which LESSOR expects such delivery to take place (the "SCHEDULED DELIVERY DATE"). 3.3 DELIVERY SUBJECT TO MANUFACTURER DELIVERY. LESSOR and LESSEE expressly acknowledge that Delivery of the Aircraft to LESSEE is subject to and conditioned upon, and is to occur simultaneously with, delivery of the Aircraft by Manufacturer to LESSOR. 3.4 NO LESSOR LIABILITY. LESSOR will not be liable for any loss or expense, or any loss of profit, arising from any delay or failure in Delivery to LESSEE unless such delay or failure arises as a consequence of the willful misconduct of LESSOR, and in no event will LESSOR be liable for any delay or failure which is caused by any breach or delay on the part of Manufacturer or any BFE supplier. 3.5 TOTAL LOSS OF AIRCRAFT PRIOR TO DELIVERY. If a Total Loss of the Aircraft occurs prior to Delivery, neither party will have any further liability to the other except that LESSOR will return to LESSEE the Security Deposit in accordance with Article 5.1.3 and any prepaid Rent. 3.6 CANCELLATION FOR DELAY. Promptly after LESSOR becomes aware that in Manufacturer's opinion a delay will cause Delivery to be delayed beyond (CONFIDENTIAL MATERIAL OMITTED) LESSOR will notify LESSEE. By written notice given within ten (10) Business Days after LESSEE's receipt of such LESSOR notice, either party may by written notice to the other party terminate this Lease and this Lease will terminate on the date of receipt of such notice. In the event of such termination, neither party will have any further liability to the other party except that LESSOR will return to LESSEE the Security Deposit in accordance with Article 5.1.3 and any prepaid Rent. If neither party gives notice of termination within such ten (10) Business Days, both parties lose all right to terminate under this Article 3.6 unless otherwise agreed in writing by the parties. ARTICLE 4 LEASE TERM 4.1 LEASE TERM. The term of leasing of the Aircraft will commence on the Delivery Date and continue for a term of fifteen (15) years ("LEASE TERM"). 4.2 "EXPIRATION DATE". "EXPIRATION DATE" means the date on which LESSEE is required to redeliver the Aircraft to LESSOR in the condition required by this Lease on the last day of the Lease Term. 4.3 "TERMINATION DATE". This Lease may in fact terminate on any of the dates set forth below: (a the Expiration Date, provided LESSEE returns the Aircraft to LESSOR on the Expiration Date in the condition required by Article 23; or (b a date earlier than the Expiration Date, if: (i there is a Total Loss of the Aircraft prior to Delivery pursuant to Article 3.5; (ii cancellation of this Lease occurs pursuant to Article 3.6; (iii there is a Total Loss of the Aircraft and payment is made to LESSOR in accordance with Article 18.3; or (iv an Event of Default occurs and LESSOR repossesses the Aircraft or otherwise terminates this Lease pursuant to Article 25.3. (c a date later than the Expiration Date, if: (i an Event of Default occurs hereunder by LESSEE returning the Aircraft in the condition required by this Lease after the Expiration Date; or (ii an Event of Default occurs and LESSOR repossesses the Aircraft or otherwise terminates this Lease pursuant to Article 25.3. The "TERMINATION DATE" is the date on which this Lease terminates because one of the above has occurred. ARTICLE 5 SECURITY DEPOSIT, TRANSACTION FEE, RENT AND OTHER PAYMENTS 5.1 SECURITY DEPOSIT. 5.1.1 (CONFIDENTIAL MATERIAL OMITTED) 5.1.2 The Security Deposit may be commingled with LESSOR's general funds and any interest earned on such Security Deposit will be for LESSOR's account. If the Security Deposit is reduced below the required amount by application to meet LESSEE's unperformed obligations under this Lease, LESSEE will replenish the Security Deposit within ten (10) days after LESSOR's demand therefor. The Security Deposit will serve as security for the performance by LESSEE of its obligations under this Lease and any other agreements between LESSEE and LESSOR relating to aircraft, engines, aircraft equipment or the extension of credit and may be applied by LESSOR upon the occurrence of a Default or Event of Default hereunder or of a default by LESSEE under any such other agreements. 5.1.3 Upon termination of this Lease in accordance with Article 4.3 other than if an Event of Default has occurred and is continuing, LESSOR will return to LESSEE the amount of the Security Deposit then held by LESSOR (so long as no default by LESSEE exists under any other agreement between LESSEE and LESSOR relating to aircraft, engines or aircraft equipment or the extension of credit by LESSOR to LESSEE), without interest, less an amount determined by LESSOR to be a reasonable estimate of the costs, if any, which LESSOR will incur to remedy any unperformed obligations of LESSEE under this Lease, including the correction of any discrepancies from the required condition of the Aircraft on return of the Aircraft. 5.2 TRANSACTION FEE. Within two (2) Business Days after execution of this Lease, LESSEE will pay LESSOR a nonrefundable transaction fee (CONFIDENTIAL MATERIAL OMITTED) 5.3 RENT. 5.3.1 LESSEE will pay LESSOR the following amounts monthly in advance as rent for the Aircraft (the "RENT"): (a The following amounts for the following years of the Lease Term: LEASE PERIOD MONTHLY RENTAL AMOUNT* ------------ --------------------- (CONFIDENTIAL MATERIAL OMITTED) *The above base rent is expressed in January 1999 U.S. dollars and will increase in the following amounts for the following periods (the "MANUFACTURER'S ESCALATION RATE"): PERIOD ESCALATION FACTOR ------------ --------------------- (CONFIDENTIAL MATERIAL OMITTED) Any increases to the above base Rent during the Lease Term will be calculated immediately prior to Delivery. 5.3.2 The first payment of Rent during the Lease Term will be paid prior to the Scheduled Delivery Date. Each subsequent payment of Rent will be due monthly thereafter no later than the same day of the month as the Delivery Date of the Aircraft except that, if such day is not a Business Day, the Rent will be due on the immediately preceding Business Day. If Delivery occurred on the 29th, 30th or 31st of the month and in any given month during the Lease Term there is no such corresponding date, Rent will be payable on the last Business Day of such month. 5.4 LESSOR'S BANK ACCOUNT. The Security Deposit, Transaction Fee, Rent and any other payment due under this Lease will be paid by wire transfer of immediately available U.S. Dollar funds to LESSOR's bank account at: (CONFIDENTIAL MATERIAL OMITTED) or to such other bank account in the U.S. as LESSOR may from time to time designate by written notice ("LESSOR'S BANK"). When it is stated in this Lease that an installment of the Security Deposit, the monthly Rent or any other payment is due or must be paid or made by LESSEE by a specific date, then such payment actually must be received by LESSOR's Bank on or before such specific date, even if, in order for such payment to be received by LESSOR's Bank by such specific date, LESSEE must initiate the wire transfer prior to such specific date. 5.5 DEFAULT INTEREST. If LESSOR's Bank does not receive the Rent or any other amount on or before the specific date when due, LESSOR will suffer loss and damage the exact nature and amount of which are difficult or impossible to ascertain. LESSEE will pay LESSOR as supplemental Rent (by way of agreed compensation and not as a penalty) interest on any due and unpaid amounts payable by LESSEE under this Lease. Interest will be calculated at a per annum rate (based on a 360 day year) which is equal to three percent (3%) plus the Prime Rate in effect on the date on which the amount was originally due for the period from the date the amount originally was due through the date the amount actually is received at LESSOR's Bank or, in the case of LESSOR's performance of LESSEE's obligations hereunder, from the date of payment by LESSOR through the date of LESSEE's repayment to LESSOR ("DEFAULT INTEREST"). Default Interest will accrue on a day-to-day basis and be compounded monthly. 5.6 NO DEDUCTIONS OR WITHHOLDINGS. All payments by LESSEE under this Lease, including the Security Deposit, Transaction Fee, Rent, Default Interest, fees, indemnities or any other item, will be made in full without any deduction or withholding whether in respect of set-off, counterclaim, duties, or Taxes (as defined in Article 15) imposed in the State of Registration or any jurisdiction from which such payments are made unless LESSEE is prohibited by Law from doing so, in which event LESSEE will gross up the payment amount such that the net payment received by LESSOR after any deduction or withholding equals the amounts called for under this Lease. LESSEE's requirement to pay the amounts required by this Article 5.6 is subject to the exceptions provided in Article 15.2. 5.7 VALUE ADDED TAXES. The Rent and other amounts payable by LESSEE under this Lease are exclusive of any value added tax, turnover tax or similar tax or duty. 5.8 NET LEASE. 5.8.1 This Lease is a net lease and LESSEE's obligation to pay Rent and make other payments in accordance with this Lease will be absolute and unconditional under any and all circumstances and regardless of other events, including the following: (a) any right of set-off, counterclaim, recoupment, defense or other right (including any right of reimbursement) which LESSEE may have against LESSOR, Manufacturer, the Engine manufacturer or any other person for any reason, including any claim LESSEE may have for the foregoing; (b) unavailability or interruption in use of the Aircraft for any reason, including a requisition thereof or any prohibition or interference with or other restriction against LESSEE's use, operation or possession of the Aircraft (whether by Law or otherwise), any defect in title, airworthiness, merchantability, fitness for any purpose, condition, design, specification or operation of any kind or nature of the Aircraft, the ineligibility of the Aircraft for any particular use or trade or for registration under the Laws of any jurisdiction or Total Loss of the Aircraft; (c) insolvency, bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, liquidation, receivership, administration or similar proceedings by or against LESSOR, LESSEE, Manufacturer, the Engine manufacturer or any other Person; (d) invalidity or unenforceability or lack of due authorization of or other defect in this Lease; (e) failure or delay on the part of any party to perform its obligations under this Lease; or (f) any other circumstance which but for this provision would or might have the effect of terminating or in any other way affecting any obligation of LESSEE hereunder. 5.8.2 Nothing in Article 5.8 will be construed to limit LESSEE's rights and remedies in the event of LESSOR's breach of its warranty of quiet enjoyment set forth in Article 21.2 or to limit LESSEE's rights and remedies to pursue in a court of law any claim it may have against LESSOR or any other Person. 5.9 LESSOR PERFORMANCE OF LESSEE OBLIGATION. If LESSEE fails to make any payment under this Lease to a third party in connection with the Aircraft or fails to perform any other obligation required under this Lease, LESSOR may (but is not required to) at its election and without waiver of its rights perform such obligation and/or pay such amount. Within five (5) Business Days after written notice to LESSEE of the amount paid by LESSOR on behalf of LESSEE, LESSEE will repay such amount to LESSOR together with Default Interest. Such payment to LESSOR will constitute additional Rent payable by LESSEE to LESSOR hereunder. Any payment, performance or compliance by LESSOR of a LESSEE obligation hereunder will not affect the occurrence or continuance of a Default or Event of Default, as the case may be. 5.10 CONSIDERATION FOR RENT AND OTHER AMOUNTS. The amount of the Rent and other payments contained herein are in consideration of LESSEE's waiver of warranties and indemnities set forth in Articles 8 and 16, respectively, and the other provisions of this Lease. ARTICLE 6 INVOLVEMENT WITH AIRCRAFT MANUFACTURER 6.1 LESSEE SELECTION OF AIRCRAFT. LESSEE ACKNOWLEDGES THAT THE DESCRIPTION OF THE AIRCRAFT SET FORTH IN THIS LEASE IS BASED UPON INFORMATION SUPPLIED BY MANUFACTURER. LESSEE COVENANTS TO LESSOR THAT LESSEE HAS USED ITS OWN JUDGMENT IN SELECTING THE AIRCRAFT AND HAS DONE SO BASED ON ITS SIZE, DESIGN AND TYPE. LESSEE ACKNOWLEDGES THAT LESSOR IS NOT A MANUFACTURER, REPAIRER OR SERVICING AGENT OF THE AIRCRAFT. 6.2 AGENCY AGREEMENT. Certain obligations remain to be performed by LESSOR in connection with the manufacture, fabrication and completion of the Aircraft by Manufacturer which will be performed by LESSEE (as provided in the Agency Agreement). LESSEE will act as LESSOR's agent with respect to some of these matters pursuant to the terms of an Agency Agreement to be entered into between LESSEE and LESSOR in the form set forth in Exhibit B. 6.3 PROCUREMENT OF BFE. LESSEE's and LESSOR's technical representatives will meet and determine which of LESSEE or LESSOR will provide specific items of BFE. Such BFE will then be provided to Manufacturer by LESSEE or LESSOR, as applicable, within the time frames required by Manufacturer. 6.4 ASSIGNMENT OF TRAINING. LESSOR hereby assigns to LESSEE all rights to training to which LESSOR is entitled as a result of LESSOR's purchase of the Aircraft and lease of the Aircraft to LESSEE. If LESSEE fails to take Delivery of the Aircraft when tendered in accordance with Article 6.7, LESSEE will immediately pay to LESSOR an amount equal to the Dollar value of such training based on what the training would have cost LESSEE had LESSEE purchased such training directly from Manufacturer. 6.5 LESSEE INSPECTION OF AIRCRAFT. During the course of final assembly of the Aircraft, and at Delivery, LESSEE will have its own representative present to inspect the Aircraft and to ensure its conformity with LESSEE's needs and the terms of this Lease. LESSEE will have ground inspection and acceptance flight rights with respect to the Aircraft. LESSEE acknowledges that, as between LESSEE and LESSOR, in accepting the Aircraft LESSEE is relying on its own inspection and knowledge of the Aircraft in determining whether the Aircraft meets the requirements of this Lease. 6.6 AIRCRAFT AT DELIVERY. At Delivery, the Aircraft will be as set forth in Exhibit A, as such description may be modified by any change requests agreed to among LESSEE, LESSOR and Manufacturer (which will be reflected in amendment(s) to this Lease). In the event of any discrepancies, LESSEE and LESSOR will cooperate in good faith with one another and with Manufacturer and Engine manufacturer, as applicable, in order to arrive at a mutually acceptable resolution of any such discrepancies. 6.7 DELIVERY OF THE AIRCRAFT TO LESSEE. Subject to LESSEE having performed all of the conditions precedent to Delivery set forth herein, immediately following delivery of the Aircraft from Manufacturer to LESSOR, LESSOR will deliver the Aircraft to LESSEE at the Delivery Location. Provided that the Aircraft is in the condition required by Article 6.6, upon the tender of the Aircraft by LESSOR to LESSEE, LESSEE will accept the Aircraft and the date of tender by LESSOR to LESSEE will be deemed to be the Delivery Date for all purposes under this Lease, including, but not limited to, the commencement of LESSEE's obligation to pay Rent hereunder. 6.8 LESSEE ACCEPTANCE OF AIRCRAFT. If LESSEE fails to (a) comply with its obligations set forth in Article 6.2, (b) comply with the conditions contained in Articles 7.1 and 7.2 so as to allow Delivery to take place immediately following delivery of the Aircraft by Manufacturer to LESSOR or (c) take delivery of the Aircraft when properly tendered for delivery by LESSOR in the condition required hereunder, LESSEE will indemnify LESSOR for all costs and expenses incurred by LESSOR as a result thereof including (but without limitation) any payments other than the purchase price which LESSOR becomes obliged to make to Manufacturer. ARTICLE 7 PRE-DELIVERY, DELIVERY AND POST-DELIVERY DOCUMENTARY AND OTHER REQUIREMENTS 7.1 PRE-DELIVERY REQUIREMENTS. LESSEE will do each of the following prior to the Scheduled Delivery Date of the Aircraft within the time frames set forth below: 7.1.1 Within one (1) month after execution of this Lease, LESSEE will deliver to LESSOR each of the following: (a) copies of resolutions of the Board of Directors of LESSEE or other written evidence of appropriate corporate action, duly certifying and authorizing the lease of the Aircraft hereunder and the execution, delivery and performance of this Lease, together with an incumbency certificate as to the person or persons authorized to execute and deliver documents on behalf of LESSEE hereunder; and (b) an opinion of counsel in the form and substance of Exhibit F. 7.1.2 At least three (3) days prior to the Scheduled Delivery Date, LESSEE will have delivered to LESSOR a Certificate of Insurance and Brokers' Letter of Undertaking in the form and substance of Exhibits C and D, respectively, from LESSEE's insurance brokers evidencing insurance of the Aircraft in accordance with this Lease from the Delivery Date. 7.1.3 At least three (3) Business Days prior to the Scheduled Delivery Date, LESSEE will do each of the following: (a) provide LESSOR with a copy of such Aviation Documents as may be available prior to the Scheduled Delivery Date; (b) provide LESSOR with a power of attorney empowering LESSEE's representative, who may be an officer or employee of LESSEE, to accept the Aircraft on behalf of LESSEE; and (c) provide LESSOR with such other documents as LESSOR may reasonably request. 7.1.4 Prior to the Scheduled Delivery Date, LESSEE will pay LESSOR the first monthly installment of Rent in accordance with Article 5.3.2. 7.2 DELIVERY REQUIREMENTS. On the Delivery Date of the Aircraft, each of the following will occur: 7.2.1 LESSEE will execute and deliver to LESSOR an Estoppel and Acceptance Certificate in the form of Exhibit E covering the Aircraft and effective as of the Delivery Date. 7.2.2 If not previously done, LESSEE and LESSOR will sign an amendment or supplement to Exhibit A evidencing all agreed-to changes to the specification of the Aircraft. 7.2.3 LESSEE will deliver a certificate signed on behalf of LESSEE by an officer of LESSEE stating all of the following: (a) the representations and warranties contained in Article 20 are true and accurate on and as of the Delivery Date as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date); (b) no Default has occurred and is continuing or will result from LESSEE's lease of the Aircraft hereunder; and (c) none of the Creditor Agreements contains terms which provide or contemplate that any Creditor will obtain any right, title or interest in an Engine which is installed on another aircraft (or, if this is not the case, such certificate will identify the parties, the aircraft and the Creditor Agreements for which this statement is untrue). 7.2.4 LESSEE's counsel will deliver opinions confirming the matters set forth in the opinion of counsel described in Article 7.1 and advising that all filing and other requirements have been met or concurrently are being met. 7.2.5 If any Creditor Agreement provides or contemplates that such Creditor will obtain any right, title or interest in an Engine which is installed on such Creditor's aircraft, LESSEE will deliver to LESSOR an engines cooperation agreement in form and substance acceptable to LESSOR which is executed by LESSEE and LESSEE's Creditors (as defined therein). 7.2.6 LESSOR will deliver to LESSEE an assignment of Manufacturer and Engine manufacturer rights in the form and substance of Exhibits G and H, respectively, and concurrently therewith LESSOR, to the extent it has not previously done so, will be deemed to have assigned all training, product assurance and product support applicable to the owner or operator of the Aircraft to LESSEE during the Lease Term. 7.3 POST-DELIVERY REQUIREMENTS. 7.3.1 Promptly after Delivery, LESSEE will do each of the following: (a) provide LESSOR with copies of all Aviation Documents not previously delivered; and (b) provide LESSOR with a follow-up opinion of counsel advising that the Aircraft has been registered in the State of Registration and that all necessary filings have been made. ARTICLE 8 DISCLAIMERS LESSOR HAS COMMITTED TO LESSEE THAT ON THE DELIVERY DATE THE AIRCRAFT WILL BE IN THE CONDITION REQUIRED BY ARTICLE 6. SUCH COMMITMENT OR COVENANT ON THE PART OF LESSOR EXPIRES AND THE DISCLAIMERS SET FORTH IN THIS ARTICLE 8 APPLY UPON LESSEE'S ACCEPTANCE OF THE AIRCRAFT AND EXECUTION OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATE. AFTER SUCH TIME, THEN AS BETWEEN LESSOR AND LESSEE: 8.1 "AS IS, WHERE IS". LESSEE AGREES THAT IT IS LEASING THE AIRCRAFT "AS IS, WHERE IS". LESSEE UNCONDITIONALLY ACKNOWLEDGES AND AGREES THAT NEITHER LESSOR NOR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES OR REPRESENTATIVES HAVE MADE OR WILL BE DEEMED TO HAVE MADE ANY TERM, CONDITION, REPRESENTATION, WARRANTY OR COVENANT EXPRESS OR IMPLIED (WHETHER STATUTORY OR OTHERWISE) AS TO (a) THE CAPACITY, AGE, AIRWORTHINESS, VALUE, QUALITY, DURABILITY, CONFORMITY TO THE PROVISIONS OF THIS LEASE, DESCRIPTION, CONDITION (WHETHER OF THE AIRCRAFT, ANY ENGINE, ANY PART THEREOF OR THE AIRCRAFT DOCUMENTATION), DESIGN, WORKMANSHIP, MATERIALS, MANUFACTURE, CONSTRUCTION, OPERATION, DESCRIPTION, STATE, MERCHANTABILITY, PERFORMANCE, FITNESS FOR ANY PARTICULAR USE OR PURPOSE (INCLUDING THE ABILITY TO OPERATE OR REGISTER THE AIRCRAFT OR USE THE AIRCRAFT DOCUMENTATION IN ANY OR ALL JURISDICTIONS) OR SUITABILITY OF THE AIRCRAFT OR ANY PART THEREOF, OR THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, KNOWN OR UNKNOWN, APPARENT OR CONCEALED, EXTERIOR OR INTERIOR, (b) THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK, COPYRIGHT OR OTHER INTELLECTUAL PROPERTY RIGHTS, (c) ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE OR (d) EXCEPT AS SET FORTH IN ARTICLE 21.1, ANY OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY PART THEREOF, ALL OF WHICH ARE HEREBY EXPRESSLY EXCLUDED AND EXTINGUISHED. 8.2 WAIVER OF WARRANTY OF DESCRIPTION. IN CONSIDERATION OF (a) LESSEE'S RIGHTS HEREUNDER TO INSPECT THE AIRCRAFT AND (b) LESSOR'S ASSIGNMENT TO LESSEE OF ANY EXISTING AND ASSIGNABLE WARRANTIES OF MANUFACTURER AND THE ENGINE MANUFACTURER, LESSEE HEREBY AGREES THAT ITS ACCEPTANCE OF THE AIRCRAFT AT DELIVERY AND ITS EXECUTION AND DELIVERY OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATE CONSTITUTE LESSEE'S WAIVER OF THE WARRANTY OF DESCRIPTION, ANY CLAIMS LESSEE MAY HAVE AGAINST LESSOR BASED UPON THE FAILURE OF THE AIRCRAFT TO CONFORM WITH SUCH DESCRIPTION AND ANY AND ALL RIGHTS IT MAY HAVE TO THE REMEDIES SET FORTH IN SECTIONS 10508 THROUGH 10522 OF THE CALIFORNIA COMMERCIAL CODE. EVEN IF AT ANY TIME THE FAILURE OF THE AIRCRAFT TO CONFORM TO SUCH DESCRIPTION SUBSTANTIALLY IMPAIRS THE VALUE AND UTILITY OF THE AIRCRAFT AND EITHER (i) LESSEE ACCEPTED THE AIRCRAFT BASED ON A REASONABLE ASSUMPTION THAT THE NONCONFORMITY WOULD BE CURED AND IT WAS NOT SEASONABLY CURED OR (ii) LESSEE ACCEPTED THE AIRCRAFT WITHOUT DISCOVERING THE NONCONFORMITY BUT LESSEE'S ACCEPTANCE OF THE AIRCRAFT WAS REASONABLY INDUCED EITHER BY LESSOR'S ASSURANCES OR BY THE DIFFICULTY OF DISCOVERING ANY DEFECT PRIOR TO ACCEPTANCE, LESSEE AGREES NOT TO LOOK TO LESSOR FOR DAMAGES OR RELIEF ARISING OUT OF THE FAILURE OF THE AIRCRAFT TO CONFORM TO SUCH DESCRIPTION. 8.3 LESSEE WAIVER. LESSEE hereby waives as between itself and LESSOR and agrees not to seek to establish or enforce any rights and remedies, express or implied (whether statutory or otherwise) against LESSOR or the Aircraft relating to any of the matters mentioned in Articles 8.1 or 8.2. 8.4 CONCLUSIVE PROOF. DELIVERY BY LESSEE TO LESSOR OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATE WILL BE CONCLUSIVE PROOF AS BETWEEN LESSOR AND LESSEE THAT LESSEE'S TECHNICAL EXPERTS HAVE EXAMINED AND INVESTIGATED THE AIRCRAFT AND ENGINES AND (a) EACH IS AIRWORTHY AND IN GOOD WORKING ORDER AND REPAIR AND (b) THE AIRCRAFT AND ENGINES AND THE AIRCRAFT DOCUMENTATION ARE WITHOUT DEFECT (WHETHER OR NOT DISCOVERABLE AT DELIVERY) AND IN EVERY WAY SATISFACTORY TO LESSEE. 8.5 NO LESSOR LIABILITY FOR LOSSES. LESSEE agrees that LESSOR will not be liable to LESSEE, any sublessee or any Person, whether in contract or tort and however arising, for any cost, loss or damage (consequential or otherwise) arising out of the condition of the Aircraft, whether or not due in whole or in part to an act or omission or the active or passive negligence of LESSOR. 8.6 NO LIABILITY TO REPAIR OR REPLACE. LESSOR will not be liable for any expense in repairing or replacing any item of the Aircraft or be liable to supply another aircraft or any item in lieu of the Aircraft or any Part thereof if the same is lost, confiscated, damaged, destroyed or otherwise rendered unfit for use. 8.7 NO WAIVER. Nothing in this Article 8 or elsewhere in this Lease will be deemed to be a waiver by LESSEE of any rights it may have against Manufacturer, the Engine manufacturer or any other Person. ARTICLE 9 MANUFACTURERS' AND VENDORS' WARRANTIES 9.1 WARRANTIES. As set forth in Article 7.2.6, at Delivery LESSOR will assign to LESSEE for the duration of the Lease Term the benefit of all warranties and indemnities given to LESSOR by Manufacturer and the Engine manufacturer. Effective on the Delivery Date, all other vendor warranties with respect to the Aircraft are hereby assigned by LESSOR to LESSEE. 9.2 REASSIGNMENT. On the Termination Date, the benefit of any warranty assigned by LESSOR to LESSEE pursuant to Article 7.2.6 will be reassigned automatically to LESSOR or its designee. ARTICLE 10 OPERATION OF AIRCRAFT 10.1 COSTS OF OPERATION. As between LESSEE and LESSOR, LESSEE will pay all costs incurred in the operation of the Aircraft during the Lease Term, for profit or otherwise, including the costs of flight crews, cabin personnel, fuel, oil, lubricants, maintenance, insurance, storage, landing and navigation fees, airport charges, passenger service and any and all other expenses of any kind or nature, directly or indirectly, in connection with or related to the use, movement and operation of the Aircraft. The obligations, covenants and liabilities of LESSEE under this paragraph arising prior to return of the Aircraft to LESSOR will continue in full force and effect, notwithstanding the termination of this Lease or expiration of the Lease Term. 10.2 COMPLIANCE WITH LAWS. LESSEE agrees throughout the Lease Term that all use of the Aircraft will be in accordance with applicable Laws of the State of Registration and of any country, state, territory or municipality into or over which LESSEE may operate. LESSEE will not employ, suffer or cause the Aircraft to be used in any business which is forbidden by Law or in any manner which may render it liable to condemnation, destruction, seizure, or confiscation by any authority. LESSEE will not permit the Aircraft to fly to any airport or country if so doing would cause LESSEE to be in violation of any Law applicable to LESSEE or the Aircraft. The foregoing provisions in this Article 10.2 shall not prohibit any violation of Law (a) during a good-faith contest of the validity, application, or alleged violation thereof in any reasonable manner so long as there is no material danger of sale, forfeiture, or loss of the Aircraft (however, this good faith exception shall not apply in the case of a mandatory grounding order, the good faith contest of which does not permit LESSEE to operate the Aircraft during such contest), and which does not extend beyond the end of the Lease Term if the pendency of such contest would adversely affect the Aircraft or the remarketing thereof in any material respect; and (b) for minor or non-recurring violations (with the understanding that minor violations may cease to be minor if recurring) that LESSEE is diligently trying to rectify which do not render the Aircraft liable to any risk of condemnation, destruction, seizure, or confiscation by any Government Entity. 10.3 TRAINING. LESSEE will not use the Aircraft for testing or for training of flight crew members other than LESSEE crew members and will not use the Aircraft for training any more than it utilizes for training the other aircraft in its fleet. 10.4 NO VIOLATION OF INSURANCE POLICIES. LESSEE will not use or permit the Aircraft to be used in any manner or for any purpose which is not covered by the insurance policies LESSEE is required to carry and maintain as set forth in this Lease. LESSEE will not carry any goods of any description that would invalidate or limit such policies or do any other act or permit to be done anything which could reasonably be expected to invalidate or limit any such insurance policy. 10.5 FLIGHT CHARGES. 10.5.1 LESSEE will pay promptly when due all enroute navigation charges, navigation service charges and all other charges payable by LESSEE for the use of or for services provided at any airport, whether in respect of the Aircraft or any other aircraft of LESSEE, and will indemnify and hold LESSOR harmless in respect of the same. This indemnity will continue in full force and effect notwithstanding the termination or expiration of the Lease Term for any reason or the return of the Aircraft. 10.5.2 If requested by LESSOR, LESSEE will provide LESSOR with a list of the airports to which LESSEE regularly operates the Aircraft or its other aircraft. LESSEE hereby authorizes Eurocontrol or another aviation authority or airport or creditor claiming rights on the Aircraft to confirm the status of LESSEE's payments to such creditor for the Aircraft and its other aircraft, as and when requested by LESSOR. ARTICLE 11 SUBLEASES 11.1 NO SUBLEASE WITHOUT LESSOR CONSENT. LESSEE WILL NOT SUBLEASE OR PART WITH POSSESSION OF THE AIRCRAFT (EXCEPT FOR MAINTENANCE AND REPAIR) AT ANY TIME WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR (NOT TO BE UNREASONABLY WITHHELD) AND IN ACCORDANCE WITH SUCH REQUIREMENTS AS MAY FROM TIME TO TIME BE AGREED IN WRITING BETWEEN LESSOR AND LESSEE. The wet leasing of the Aircraft during the Lease Term (in which LESSEE and its crews retain operational control of the Aircraft) will not be considered a sublease of the Aircraft. 11.2 LESSOR COSTS. LESSEE will indemnify LESSOR on demand for all out-of-pocket expenses (including legal fees) incurred in connection with LESSOR's assessment of the subleasing proposal (whether or not LESSOR's consent to such sublease is ultimately given) and implementation of the sublease. 11.3 ANY APPROVED SUBLEASE. Any sublease approved by LESSOR will be for a term no greater than the remaining Lease Term and contain provisions consistent with this Lease protecting LESSOR's title to the Aircraft, providing appropriate LESSOR indemnities, regarding the maintenance and repair standards for the Aircraft, concerning the insurances which will be carried by the sublessee and the circumstances which constitute a Total Loss of the Aircraft. Any such sublease will be subject and subordinate to this Lease. In its sole discretion, LESSOR may require an opinion of counsel in connection with such sublease, including LESSOR's right to repossess the Aircraft in the event of an Event of Default hereunder or under the sublease. LESSEE will not amend the terms of any approved sublease without the prior written consent of LESSOR, which will not be unreasonably withheld. 11.4 ASSIGNMENT OF SUBLEASE. Any approved sublease will be assigned to LESSOR as security. LESSEE will deliver the original counterpart of the sublease to LESSOR and make any filings necessary to protect LESSOR's security interest. 11.5 CONTINUED RESPONSIBILITY OF LESSEE. LESSEE will continue to be responsible for performance of its obligations under this Lease during any period of sublease. ARTICLE 12 MAINTENANCE AND USE OF AIRCRAFT 12.1 GENERAL OBLIGATION. 12.1.1 During the Lease Term and until the Aircraft is returned to LESSOR, LESSEE alone has the obligation, at its expense, to maintain and repair the Aircraft, Engines and all of the Parts (a) in accordance with the Maintenance Program, (b) in accordance with the rules and regulations of the Aviation Authority, (c) in accordance with Manufacturer's type design, (d) in accordance with any other regulations or requirements necessary in order to maintain a valid Certificate of Airworthiness for the Aircraft and meet the requirements at all times during the Lease Term and upon return of the Aircraft to LESSOR for issuance of a Standard Certificate of Airworthiness for transport category aircraft issued by the Aviation Authority (except during those periods when the Aircraft is undergoing maintenance or repairs as required or permitted by this Lease) and (e) in the same manner and with the same care as used by LESSEE or its sublessee with respect to similar aircraft and engines operated by LESSEE or its sublessee and without in any way discriminating against the Aircraft. 12.1.2 LESSEE will maintain and repair the Engines in the same manner and in the equivalent time frame to its other engines and LESSEE will not discriminate against any of the Engines in respect of the repair and maintenance. 12.1.3 LESSEE will not enter into any Engine maintenance cost per flight hour, power-by-the-hour or similar agreement with Engine manufacturer or any other Engine maintenance facility or organization without LESSOR's prior written consent. 12.2 SPECIFIC OBLIGATIONS. Without limiting Article 12.1, LESSEE agrees that such maintenance and repairs will include but will not be limited to each of the following specific items: (a) performance in accordance with the Maintenance Program of all routine and non-routine maintenance work; (b) incorporation in the Aircraft of all Airworthiness Directives; (c) incorporation in the Aircraft of all service bulletins of Manufacturer, the Engine manufacturer and other vendors which LESSEE schedules to adopt within the Lease Term for the rest of its Boeing 737-800 aircraft fleet. It is the intent of the parties that the Aircraft will not be discriminated from the rest of LESSEE's fleet in service bulletin compliance (including method of compliance) or other maintenance matters. LESSEE will not discriminate against the Engines with respect to Overhaul build standards and life-limited part replacements; (d) incorporation in the Maintenance Program for the Aircraft of a corrosion prevention and control program; (e) maintaining in English and keeping in an up-to-date status the records and historical documents set forth in Attachment 1 of Exhibit I; (f) maintaining historical records, in English, for on condition, condition-monitored, hard time and life-limited Parts (including tags from the manufacturer of such Part or a repair facility which evidence that such Part is new or overhauled and establish authenticity, total time in service and time since overhaul for such Part), the hours and cycles the Aircraft and Engines operate and all maintenance and repairs performed on the Aircraft; and (g) properly documenting all repairs, Modifications and alterations and the addition, removal or replacement of equipment, systems or components in accordance with the rules and regulations of the Aviation Authority and reflecting such items in the Aircraft Documentation. In addition, all repairs to the Aircraft will be accomplished in accordance with Manufacturer's Structural Repair Manual (or FAA-approved data supported by FAA Form 8110-3 or equivalent). All Modifications and alterations will also be accomplished in accordance with FAA-approved data supported by FAA Form 8110-3 or equivalent. 12.3 REPLACEMENT OF PARTS. 12.3.1 LESSEE, at its own cost and expense, will promptly replace all Parts which may from time to time become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or rendered unfit or beyond economical repair (BER) for any reason. In the ordinary course of maintenance, service, repair, overhaul or testing, LESSEE may remove any Part provided that LESSEE replaces such Part as promptly as practicable. All replacement Parts will (a) be free and clear of all Security Interests (except Permitted Liens) of any kind or description, (b) be in airworthy condition and of at least equivalent model, service bulletin and modification status and have a value and utility at least equal to the Parts replaced, assuming such replaced Parts were in the condition and repair required to be maintained by the terms hereof and (c) have a current "serviceable tag" of the manufacturer or maintenance facility providing such items to LESSEE, indicating that such Parts are new, serviceable or Overhauled. So long as a substitution meets the requirements of the Maintenance Program and Aviation Authority, LESSEE may substitute for any Part a part that does not meet the requirements of the foregoing sentence if a complying Part cannot be procured or installed within the available groundtime of the Aircraft and as soon as practicable the noncomplying part is removed and replaced by a complying Part. 12.3.2 All Parts removed from the Airframe or any Engine will remain the property of LESSOR and subject to this Lease no matter where located, until such time as such Parts have been replaced by Parts (which have been incorporated or installed in or attached to the Airframe or such Engine) which meet the requirements for replacement Parts specified above and title to such replacement Parts has passed to LESSOR under the Laws of the State of Registration and LEX SITUS. To the extent permitted by the Laws of the State of --- ----- Registration and the LEX SITUS it is the intent of LESSOR and LESSEE that without further --- ----- act and immediately upon any replacement Part becoming incorporated, installed or attached to the Airframe or an Engine as above provided, (a) title to the removed Part will thereupon vest in LESSEE, free and clear of all rights of LESSOR, (b) title to the replacement Part will thereupon vest in LESSOR free and clear of all rights of LESSEE and (c) such replacement Part will become subject to this Lease and be deemed to be a Part hereunder to the same extent as the Parts originally incorporated or installed in or attached to the Airframe or such Engine. 12.4 REMOVAL OF ENGINES. 12.4.1 If an Engine is removed for testing, service, repair, maintenance, Overhaul work, alterations or modifications, title to such Engine will remain vested in LESSOR. 12.4.2 LESSEE will be entitled to remove any of the Engines from the Aircraft and install another engine or engines on the Aircraft, provided that LESSEE complies with each of the following obligations: (a) the insurance requirements set forth in Article 17 and Exhibit C are in place; (b) LESSEE ensures that the identification plates referred to in Article 14 are not removed from any Engine upon such Engine being detached from the Aircraft; and (c) title to the Engine remains with LESSOR free from all Security Interests (except Permitted Liens) regardless of the location of the Engine or its attachment to or detachment from the Aircraft. 12.5 POOLING OF ENGINES AND PARTS. With LESSOR's prior written consent, not to be unreasonably withheld, LESSEE may subject the Engines and Parts to normal interchange or pooling agreements with responsible commercial air carriers customary in the airline industry and entered into by LESSEE in the ordinary course of its business with respect to its Boeing 737-800 fleet generally, so long as (a) in the case of pooling of an Engine, such Engine is returned to LESSEE within two (2) months, (b) no transfer of title to the Engine occurs, (c) all other terms of this Lease continue to be observed with respect to the Engines or Parts, including but not limited to Articles 8, 10, 12, 13, 14, 15, 16, 17 and 18 and (d) LESSEE continues to be fully responsible to LESSOR for the performance of all of its obligations hereunder. 12.6 INSTALLATION OF ENGINES ON OTHER AIRCRAFT. Any Engine removed from the Aircraft may be installed on another airframe in LESSEE's fleet which utilizes engines of the same type as the Engine only if one of the situations described in this Article 12.6 exists: 12.6.1 LESSEE or LESSOR has title to such other aircraft free and clear of all Security Interests (except Permitted Liens). 12.6.2 LESSEE, LESSOR and all of the Creditors of LESSEE of such aircraft enter into an engines cooperation agreement in form and substance acceptable to LESSOR in which each party agrees to recognize one another's rights in the engines. LESSEE will reimburse LESSOR and LESSOR's Lender for their reasonable attorneys' fees and costs in negotiating and finalizing engine cooperation agreement arrangements with LESSEE and its Creditors. 12.6.3 Such other aircraft is subject to a Creditor Agreement (but no other Security Interests except Permitted Liens) which by its terms expressly or effectively states that such Creditor and its successors and assigns will not acquire any right, title or interest in any Engine by reason of such Engine being installed on such aircraft. LESSEE hereby agrees that if LESSOR's title to an Engine is in fact impaired under any such Creditor Agreement, such impairment will be a Total Loss of such Engine and the provisions of Article 18.5 will apply. To the extent another Creditor Agreement contains such provisions, then LESSOR hereby agrees for the benefit of the Creditor of such Creditor Agreement that neither LESSOR nor its successors or assigns will acquire or claim any right, title or interest in any engine in which LESSEE or another Creditor has an interest as a result of such engine being installed on the Airframe. 12.7 MODIFICATIONS. 12.7.1 No modification, alteration, addition or removal to the Aircraft ("MODIFICATION") expected to cost over Five Hundred Thousand U.S. Dollars (US$500,000) or deviation from the Aircraft's original type design or configuration will be made without the prior written consent of LESSOR, which consent will not be unreasonably withheld. "Modifications" do not include Airworthiness Directives or Manufacturer's recommended service bulletins, for which LESSOR's consent is not required. 12.7.2 LESSOR may review LESSEE's proposed designs, plans, engineering drawings and diagrams, and flight and maintenance manual revisions for any proposed Modification. If requested by LESSOR, LESSEE will furnish LESSOR (at LESSEE's expense) with such documents in final form and any other documents required by Law, as a result of such Modification. All Modifications incorporated on the Aircraft will be properly documented in the Aircraft Documentation and be fully approved by the Aviation Authority. 12.7.3 Notwithstanding any other provision of this Lease, no Modification will be made which has the effect of decreasing the utility or value of the Aircraft. 12.7.4 No Modification will be made by LESSEE if an Event of Default exists and is continuing hereunder. 12.7.5 Unless otherwise agreed by LESSOR in writing, all non-severable or structural Modifications will forthwith become a part of the Aircraft and LESSEE relinquishes to LESSOR all rights and title thereto. However, all severable Modifications will remain the property of LESSEE or the third-party owner and, at LESSOR's request and LESSEE's cost, will be removed from the Aircraft prior to return of the Aircraft, with LESSEE restoring the Aircraft to the condition it was in prior to the Modification. Notwithstanding the foregoing, no such removal will be permitted without LESSOR's permission after the occurrence of an Event of Default hereunder and immediately upon the occurrence of an Event of Default hereunder, without the requirement of any further act or notice, all right, title and interest in such Modifications will immediately vest in LESSOR. 12.7.6 LESSOR will bear no liability for the cost of Modifications of the Aircraft whether in the event of grounding or suspensions of certification, or for any other cause. 12.8 PERFORMANCE OF WORK BY THIRD PARTIES. Whenever maintenance and repair work on the Aircraft or Engines will be regularly performed by a Person other than LESSEE, such Person will be an FAA-authorized repair station. 12.9 REPORTING REQUIREMENTS. 12.9.1 Commencing with a report furnished ten (10) days after the end of the calendar month in which Delivery occurs, LESSEE will furnish to LESSOR a Monthly Report in English in the form attached hereto as Exhibit J. Each Monthly Report will be furnished within ten (10) days after the end of each calendar month, except that the Monthly Report pertaining to the last month (or any portion thereof) of the Lease Term will be furnished to LESSOR on the Termination Date. 12.9.2 On each anniversary of the Delivery Date, LESSEE will provide LESSOR with a Technical Evaluation Report for the Aircraft in the form and substance of Exhibit L, as revised. 12.10 INFORMATION REGARDING MAINTENANCE PROGRAM. LESSEE will provide LESSOR with a copy of or information regarding the Maintenance Program for the Aircraft, as requested by LESSOR. 12.11 LESSOR RIGHTS TO INSPECT AIRCRAFT. On reasonable notice, LESSOR and/or its authorized agents or representatives will have the right to inspect the Aircraft and Aircraft Documentation. LESSOR agrees that such requests will be coordinated with LESSEE so as to cause the minimum practical disturbance to LESSEE's operation or its personnel. LESSEE agrees to cooperate with LESSOR in making the Aircraft and Aircraft Documentation available to such authorized technical teams. No such inspection shall include opening panels, bays, or the like (although LESSOR may observe those that are then open), or disassembling any item. LESSOR will have no duty to make any such inspection and will not incur any liability or obligation by reason of (and LESSEE's indemnity obligations pursuant to Article 16 will apply notwithstanding) not making any such inspection or by reason of any reports it receives or any reviews it may make of the Aircraft records. ARTICLE 13 TITLE AND REGISTRATION 13.1 TITLE TO THE AIRCRAFT DURING LEASE TERM. Title to the Aircraft will be and remain vested in LESSOR. LESSOR and LESSEE intend this Lease to be a "true lease". LESSEE will have no right, title or interest in the Aircraft except as provided in this Lease. 13.2 REGISTRATION OF AIRCRAFT. LESSEE at its sole cost and expense will (a) register and maintain registration of the Aircraft in the name of LESSOR at the register of aircraft in the State of Registration and (b) from time to time take all other steps then required by Law (including the Geneva Convention if applicable) or by practice, custom or understanding or as LESSOR may reasonably request to protect and perfect LESSOR's interest in the Aircraft and this Lease in the State of Registration or in any other jurisdictions in or over which LESSEE may operate the Aircraft. 13.3 FILING OF THIS LEASE. To the extent permitted by Law and in accordance with the requirements of the Law from time to time, LESSEE at its sole cost and expense will cause this Lease to be kept, filed, recorded and refiled or rerecorded in the State of Registration and in any other offices necessary to protect LESSOR's rights hereunder. 13.4 EVIDENCE OF REGISTRATION AND FILINGS. As LESSOR may reasonably request from time to time, LESSEE will furnish to LESSOR an opinion of counsel or other evidence reasonably satisfactory to LESSOR of the registrations and filings required hereunder. ARTICLE 14 IDENTIFICATION PLATES LESSOR will affix and LESSEE will at all times maintain on the Airframe and each Engine the identification plates containing the following legends or any other legend reasonably requested by LESSOR in writing: 14.1 AIRFRAME IDENTIFICATION PLATES. Location: One to be affixed to the Aircraft structure above the forward entry door adjacent to and not less prominent than that of Manufacturer's data plate and another in a prominent place on the flight deck. Size: No smaller than 4" x 6". Legend: "THIS AIRCRAFT IS OWNED BY INTERNATIONAL LEASE FINANCE CORPORATION. MANUFACTURER'S SERIAL NO: 28247 OWNER'S ADDRESS: INTERNATIONAL LEASE FINANCE CORPORATION 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States of America Fax: (310) 788-1990" 14.2 ENGINE IDENTIFICATION PLATES. Location: The legend on the plate must be visible. Size: No smaller than 2" x 6". "THIS ENGINE IS OWNED BY INTERNATIONAL LEASE FINANCE CORPORATION, LOS ANGELES, CALIFORNIA, USA." ARTICLE 15 TAXES 15.1 GENERAL OBLIGATION OF LESSEE. Except as set forth in Article 15.2, LESSEE agrees to pay promptly when due, and to indemnify and hold harmless LESSOR on a full indemnity basis from, all license and registration fees and all taxes, fees, levies, imposts, duties, charges or withholdings of any nature whatsoever (including without limitation any value added, franchise, transfer, sales, gross receipts, use, business, occupation, excise, personal property, real property, stamp or other tax) together with any assessments, penalties, fines, additions to tax or interest thereon, however or wherever imposed (whether imposed upon LESSEE, LESSOR, on all or part of the Aircraft, the Engines or otherwise), by any Government Entity or taxing authority in the U.S., any State thereof, or any foreign country or by any international taxing authority, upon or with respect to, based upon or measured by any of the following (collectively, "TAXES"): (a) the Aircraft, the Engines or any Parts. (b) the use, operation or maintenance of the Aircraft or carriage of passengers or freight during the Lease Term. (c) this Lease, the payments due hereunder and the terms and conditions hereof. (d) the return of the Aircraft to LESSOR or other use or disposition of the Aircraft by LESSEE. 15.2 EXCEPTIONS TO INDEMNITY. The indemnity provided in Article 15.1 does not extend to any of the following Taxes: (a) Imposed by the U.S. (including without limitation any taxes collected by withholding) or any state or local government or governmental subdivision or state or local taxing authority in the U.S. (including any possession or territory of the U.S.) or by any foreign government, taxing authority or governmental subdivision of a foreign country which are based on, or measured by, the receipts, gross or net income, capital, net worth, franchises, excess profits, or conduct of business (including minimum taxes, withholding taxes and taxes on or measured by any items of tax preference) of LESSOR, except to the extent that such Tax would not have been imposed on or payable by LESSOR but for the location, use, registration or operation of the Aircraft or any part thereof, or any place of business or any activity of LESSEE in the jurisdiction imposing such Tax. (b) Imposed as a result of LESSOR's transfer, mortgage, pledge, financing or other disposition by LESSOR of all or a portion of its interest in the Aircraft or this Lease except a transfer or sale resulting from an exercise of remedies pursuant to Article 25.3 hereunder or in connection with a termination of the Lease pursuant to Article 18 hereof. (c) Attributable to the period prior to the Delivery Date or after return of the Aircraft to LESSOR in accordance with this Lease. (d) Attributable to LESSOR's gross negligence, willful misconduct or breach of this Lease. 15.3 AFTER-TAX BASIS. The amount which LESSEE is required to pay with respect to any Taxes indemnified against under Article 15.1 is an amount sufficient to restore LESSOR on an after-tax basis to the same position LESSOR would have been in had such Taxes not been incurred. 15.4 CLAIMS AND CONTESTS. If a written claim is received by LESSOR for Taxes, which claim, if sustained, would require the payment of an indemnity by LESSEE pursuant to this Article 15, LESSOR shall notify LESSEE of such claim within thirty (30) days after its receipt, provided that failure to provide such notice within thirty (30) days will not relieve LESSEE of any indemnification obligation pursuant to this Article 15 if such failure does not preclude LESSEE from exercising its contest rights hereunder. Payments due from LESSEE to LESSOR pursuant to this Article 15 shall be made directly to LESSOR within thirty (30) days of written demand by LESSOR to LESSEE. If requested by LESSEE in writing, LESSOR shall upon receipt of indemnity reasonably satisfactory to it and at the expense of LESSEE (including, without limitation, all reasonable costs, expenses, legal and accountants' fees, and disbursements, penalties, interest incurred in contesting such claim, and additions to tax) in good faith, in the name of LESSOR or, if requested by LESSEE, in the name of LESSEE (or permit LESSEE, if desired by LESSEE, to contest in the name of LESSEE) if permissible under applicable laws, the validity, applicability or amount of such Taxes by (i) resisting payment thereof if practicable only if adequate reserves have been made for such Taxes or, if required, an adequate bond has been posted, (ii) paying the same under protest, if protest shall be necessary and proper, (iii) if payment shall be made, using reasonable efforts to obtain a refund thereof in appropriate administrative and judicial proceedings, and (iv) taking such other action as is reasonably requested by LESSEE from time to time including not paying such Taxes only if adequate reserves have been made for such Taxes or, if required, an adequate bond has been posted. LESSOR shall determine the method of any contest and (in good faith consultation with LESSEE) control the conduct thereof. Notwithstanding anything contained in this Article 15.4, LESSOR will not be required to contest, or to continue to contest, the validity, applicability or amount of any Tax (or portion thereof) (x) if such contest would result in any material risk of criminal penalties or any material risk of sale, forfeiture or loss of the Aircraft, (y) if an Event of Default has occurred and is continuing, or (z) in the case of a contest of a Tax reflected on a return of LESSOR with other taxes of LESSOR that are not indemnified by the LESSEE hereunder, if LESSEE shall not have furnished an opinion of independent tax counsel selected by the LESSEE, and reasonably satisfactory to LESSOR, that a reasonable basis exists for such contest. If LESSOR shall obtain a refund of all or any part of such Taxes for which an indemnity was paid by LESSEE, LESSOR shall pay LESSEE the amount of such refund; PROVIDED, HOWEVER, that such amount shall not be payable before such time as LESSEE shall have made all payments or indemnities to LESSOR then due under this Article 15 and under the Lease or while an Event of Default shall have occurred and be continuing. If in addition to such refund LESSOR shall receive an amount representing interest on the amount of such refund, LESSEE shall be paid that proportion of such interest which is fairly attributable to Taxes paid with an indemnity payment by LESSEE prior to the receipt of such refund or interest and increased by any taxes saved by reason of the deductibility of such payment by LESSOR. LESSEE shall not be deemed to be in default under any of the indemnification provisions under this Article 15 so long as it or LESSOR shall diligently prosecute such contest and LESSEE has indemnified LESSOR to LESSOR's reasonable satisfaction. In case any report or return is required to be made with respect to any obligation of LESSEE under this Article 15.4 or arising out of this Article 15.4, LESSEE will either timely make such report or return in such manner as will show the ownership of the Aircraft in LESSOR, and will as soon as possible send a copy of such report or return to LESSOR, or will notify LESSOR of such requirement and prepare and deliver such report or return to LESSOR in such manner as shall be satisfactory to LESSOR. 15.5 REFUNDS. Upon receipt by LESSOR of a refund of all or any part of any Taxes (including any deductions or withholdings referred to in Article 15.1) which LESSEE has paid, LESSOR will pay to LESSEE the net amount of such Taxes refunded. 15.6 COOPERATION IN FILING TAX RETURNS. LESSEE and LESSOR will cooperate with one another in providing information which may be reasonably required to fulfill each party's tax filing requirements and any audit information request arising from such filing. ARTICLE 16 INDEMNITIES 16.1 GENERAL INDEMNITY. Except as set forth in Article 16.2, LESSEE agrees to indemnify and hold harmless LESSOR and its officers, directors, employees, agents and shareholders (individually an "INDEMNITEE" and collectively "INDEMNITEES") from any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs, disbursements and expenses (including legal fees, costs and related expenses) of every kind and nature, whether or not any of the transactions contemplated by this Lease are consummated (collectively "EXPENSES"), which are imposed on, incurred by or asserted against any Indemnitee and which are in any way relating to, based on or arising out of any of the following: (a) this Lease or any transactions contemplated hereby; (b) the operation, possession, use, non-use, control, leasing, subleasing, maintenance, storage, overhaul, testing, inspections or acceptance flights at return of the Aircraft, any Engine or any Part during the Lease Term by LESSEE, any sublessee or any other Person, whether or not the same is in compliance with the terms of this Lease, including without limitation claims for death, personal injury, property damage, other loss or harm to any Person and claims relating to any Laws, including without limitation environmental control, noise and pollution laws, rules or regulations; (c) the manufacture, design, acceptance, rejection, delivery, return, sale in connection with an Event of Default, import, export, condition, repair, modification, servicing, rebuilding, enforcement of warranties whether in LESSOR's or LESSEE's name, customer and product support provided by Manufacturer and other vendors, airworthiness, registration, reregistration, performance, sublease, merchantability, fitness for use, substitution or replacement of the Aircraft, Engine or any Part under this Lease or other transfer of use or possession of the Aircraft, Engine or any Part, including under a pooling or interchange arrangement, including without limitation latent and other defects, whether or not discoverable and patent, trademark or copyright infringement; (d) any non-compliance by LESSEE with any term of this Lease or the falsity or inaccuracy of any representation or warranty of LESSEE set forth herein; (e) the prevention or attempt to prevent the arrest, confiscation, seizure, taking in execution, impounding, forfeiture or detention of the Aircraft, or in securing the release of the Aircraft; or (f) as a consequence of any Default in payment by LESSEE of any sum to be paid by LESSEE when due under this Lease or any other Default by LESSEE in the due and punctual performance of its obligations under this Lease. The foregoing indemnity by LESSEE is intended to include and cover any Expense to which an Indemnitee may be subject (in contract, tort, strict liability or under any other theory) regardless of the negligence, active or passive or any other type, of such Indemnitee, so long as such Expense does not fall within any of the exceptions listed in Article 16.2. 16.2 EXCEPTIONS TO GENERAL INDEMNITIES. The indemnity provided for in Article 16.1 will not extend to Expenses of any Indemnitee to the extent resulting from or arising out of any of the following: (a) Expenses which have resulted from the willful misconduct of such Indemnitee; (b) Expenses which LESSEE and LESSOR mutually agree or, absent mutual agreement, are judicially determined to be attributable to acts or events which occur after the Termination Date and return of the Aircraft to LESSOR in the condition required hereunder, but in any such case only to the extent not attributable to acts or omissions of LESSEE; (c) Expenses representing Taxes, it being acknowledged that the terms of Article 15 apply exclusively to LESSEE's indemnity obligations with respect to Taxes; (d) Expenses due to the breach by LESSOR of its covenant of quiet enjoyment pursuant to Article 21.2 (except to the extent covered by LESSEE's insurances); (e) Expenses which arise in connection with the transfer by LESSOR of any interest in the Aircraft or this Lease, except for any transfer in connection with any Event of Default or a Total Loss of the Aircraft or an Engine. (f) Expenses which are solely attributable to the representation or warranty of LESSOR contained in or made pursuant to any Operative Document being untrue; (g) Expenses which are solely related to the failure of such Indemnitees to perform or observe any agreement, covenant, or condition on its part to be performed or observed in any Operative Document; (h) Expenses which are solely an ordinary and usual internal customary operating expense; or (i) Expenses which are solely related to a breach of Article 21.1.6, or (j) Expenses which are solely related to a LESSOR's Lien. 16.3 AFTER-TAX BASIS. The amount which LESSEE will be required to pay with respect to any Expense indemnified against under Article 16.1 will be an amount sufficient to restore the Indemnitee, on an after-tax basis, to the same position such Indemnitee would have been in had such Expense not been incurred. 16.4 TIMING OF PAYMENT. It is the intent of the parties that each Indemnitee will have the right to indemnification for Expenses hereunder as soon as a claim is made and as soon as an Expense is incurred, whether or not such claim is meritorious and whether or not liability is established (but subject to Articles 16.2 and 16.8). LESSEE will pay an Indemnitee for Expenses pursuant to this Article 16 within ten (10) days after receipt of a written demand therefor from such Indemnitee accompanied by a written statement describing in reasonable detail the basis for such indemnity (but not before payment is due from such Indemnitee). 16.5 SUBROGATION. Upon the payment in full of any indemnity pursuant to this Article 16 by LESSEE, LESSEE will be subrogated to any right of the Indemnitee in respect of the matter against which such indemnity has been made. 16.6 NOTICE. Each Indemnitee and LESSEE will give prompt written notice one to the other of any liability of which such party has knowledge for which LESSEE is, or may be, liable under Article 16.1; provided, however, that failure to give such notice will not terminate any of the rights of Indemnitees under this Article 16 except to the extent that LESSEE has been materially prejudiced by the failure to provide such notice. 16.7 REFUNDS. If any Indemnitee obtains a recovery of all or any part of any amount which LESSEE has paid to such Indemnitee, such Indemnitee will pay to LESSEE the net amount recovered by such Indemnitee. 16.8 DEFENSE OF CLAIMS. (a) LESSEE and its insurers will have the right (in each such case at LESSEE's sole expense) to investigate or, provided that LESSEE or its insurers have not reserved the right to dispute liability with respect to any insurance policies pursuant to which coverage is sought, defend or compromise any claim covered by insurance for which indemnification is sought pursuant to Article 16.1 and each Indemnitee will cooperate with LESSEE or its insurers with respect thereto. If LESSEE or its insurers are retaining attorneys to handle such claim, such counsel must be reasonably satisfactory to the Indemnitees. If not, the Indemnitees will have the right to retain counsel of their choice at LESSEE's expense. (b) Unless LESSOR agrees in writing otherwise, no settlement of any claim hereunder may require LESSOR to agree to any remedy apart from the payment of money damages (for which such payment of money damages LESSEE will in any event indemnify the Indemnitees). (c) In no event shall any Indemnitee enter into a settlement or other compromise with respect to any Expense without LESSEE's prior written consent (which shall not be unreasonably withheld or delayed), unless such Indemnitee waives its right to be indemnified with respect to such Expense under this Article 16. (d) To the extent that any Expense indemnified by LESSEE hereunder may be covered by insurance maintained by LESSEE, at LESSEE's expense, each Indemnitee agrees to cooperate with the insurers in the exercise of their rights to investigate, defend, or compromise that Expense as may be required to retain the benefits of the insurance for that Expense. (e) If an Indemnitee is not a party to this Lease, LESSEE may require that Indemnitee to agree in writing to the terms of this Article 16 before making any payment to such Indemnitee under this Article 16. 16.9 SURVIVAL OF OBLIGATION. Notwithstanding anything in this Lease to the contrary, the provisions of this Article 16 will survive the Termination Date and continue in full force and effect notwithstanding any breach by LESSOR or LESSEE of the terms of this Lease, the termination of the lease of the Aircraft to LESSEE under this Lease or the repudiation by LESSOR or LESSEE of this Lease. ARTICLE 17 INSURANCE 17.1 CATEGORIES OF INSURANCE. Throughout the Lease Term and until the Termination Date LESSEE will, at its own expense, effect and maintain in full force and effect the types of insurance and amounts of insurance (including deductibles) described in Exhibit C through such brokers and with such insurers favorably regarded in the airline industry. 17.2 INSURANCE FOR INDEMNITIES. The insurance referred to in Article 17.1 will in each case include and insure (to the extent of the risks covered by the policies) the indemnity provisions of Article 16 and LESSEE will maintain such insurance of the indemnities for a minimum of two (2) years following the Termination Date. 17.3 INSURANCE REQUIRED BY MANUFACTURER. During the Lease Term, LESSEE will carry the insurance required by Manufacturer in connection with LESSOR's assignment of Manufacturer's warranties and product support to LESSEE. 17.4 RENEWAL. Not less than two (2) Business Days before the expiration or termination date of any insurance required hereunder, LESSEE will provide LESSOR with fax confirmation from LESSEE's insurance brokers that renewed certificates of insurance evidencing the renewal or replacement of such insurance and complying with Exhibit C will be issued on the termination date of the prior certificate. Within seven (7) days after such renewal, LESSEE will furnish its brokers' certificates of insurance to LESSOR. 17.5 ASSIGNMENT OF RIGHTS BY LESSOR. If LESSOR assigns all or any of its rights under this Lease as permitted by this Lease or otherwise disposes of any interest in the Aircraft to any other Person, LESSEE will, upon request, procure that (to the extent of the assignment or disposition) such Person hereunder be added as loss payee and/or additional assured in the policies effected hereunder and enjoy the same rights and insurance enjoyed by LESSOR under such policies. To the extent of its retained interest or as provided in Article 24.2.1, LESSOR will nevertheless continue to be covered by such policies. 17.6 DEDUCTIBLES. If there is a material adverse change in the financial condition of LESSEE which LESSOR reasonably believes will not enable LESSEE to pay the deductible upon the occurrence of a partial loss of the Aircraft or an Engine, then LESSOR may require LESSEE at LESSEE's expense to lower its deductibles on the insurance maintained hereunder to a level which is available on commercially reasonable terms in the insurance market. 17.7 OTHER INSURANCE. LESSOR may from time to time by notice to LESSEE require LESSEE at LESSEE's expense to effect such other insurance or such variations to the terms of the existing insurance as may then be customary in the airline industry for aircraft of the same type as the Aircraft and at the time commonly available in the insurance market. 17.8 INFORMATION. LESSEE will provide LESSOR with any information reasonably requested by LESSOR from time to time concerning the insurance maintained with respect to the Aircraft or in connection with any claim being made or proposed to be made thereunder. 17.9 CURRENCY. All proceeds of insurance pursuant to this Lease will be payable in Dollars except as may be otherwise agreed by LESSOR. 17.10 GROUNDING OF AIRCRAFT. If at any time any of the insurance required pursuant to this Lease will cease to be in full force and effect, LESSEE will forthwith ground the Aircraft and keep the Aircraft grounded until such time as such insurance is in full force and effect again. 17.11 FAILURE TO INSURE. If at any time LESSEE fails to maintain insurance in compliance with this Article 17, LESSOR will be entitled but not bound to do any of the following (without prejudice to any other rights which it may have under this Lease by reason of such failure): (a) to pay any premiums due or to effect or maintain substitute insurance or otherwise remedy such failure in any reasonable manner (and LESSEE will upon demand reimburse LESSOR in full for any amount so expended in that connection); or (b) at any time while such failure is continuing, to require the Aircraft to remain at any airport or (as the case may be), proceed to and remain at any airport designated by LESSOR. 17.12 LIMIT ON HULL IN FAVOR OF LESSEE. LESSEE may carry hull all risks or hull war and allied perils on the Aircraft in excess of the Agreed Value (which Agreed Value is payable to LESSOR) only to the extent such excess insurance which would be payable to LESSEE in the event of a Total Loss does not exceed fifteen percent (15%) of the Agreed Value and only to the extent that such additional insurance will not prejudice the insurances required herein or the recovery by LESSOR thereunder. LESSEE agrees that it will not create or permit to exist any liens or encumbrances over the insurances, or its interest therein, except as constituted by this Lease. 17.13 MARKETPLACE LIMITATIONS. The insurance required by this Lease may be subject to any limitations generally prevailing in the airline insurance marketplace at the time (e.g., AVN67B). ARTICLE 18 LOSS, DAMAGE AND REQUISITION Throughout the Lease Term and until the Termination Date, LESSEE will bear all risk of loss, theft, damage and destruction to the Aircraft. 18.1 DEFINITIONS. In this Article 18: "AGREED VALUE" (CONFIDENTIAL MATERIAL OMITTED) The Agreed Value is set forth in March 2001 U.S. Dollars and will be increased in accordance with Manufacturer's announced escalation rate from March 1, 2001 to the Delivery Date. On each annual renewal date of LESSEE's insurance policy commencing on the renewal date following the first anniversary of the Lease Term, the Agreed Value will decrease by two percent (2.0%) of the then-existing Agreed Value. "NET TOTAL LOSS PROCEEDS" means the Total Loss Proceeds actually received by LESSOR following a Total Loss, less any legal and other out-of-pocket expenses or duties incurred by LESSOR in connection with the collection of such proceeds. "TOTAL LOSS" means any of the following in relation to the Aircraft, Airframe or any Engine and "TOTAL LOSS DATE" means the date set forth in parenthesis after each Total Loss: (a) destruction, damage beyond repair or being rendered permanently unfit for normal use for any reason (the date such event occurs or, if not known, the date on which the Aircraft, Airframe or Engine was last heard of); (b) actual, constructive, compromised, arranged or agreed total loss (the earlier of the date on which the loss is agreed or compromised by the insurers or thirty (30) days after the date of notice to LESSEE's brokers or insurers claiming such total loss); (c) requisition of title, confiscation, forfeiture or any compulsory acquisition of title or other similar event (the date on which the same takes effect); (d) sequestration, detention, seizure or any similar event for more than one hundred eighty (180) consecutive days (the earlier of the date on which insurers make payment on the basis of a total loss or the date of expiration of such period); (e) requisition for use for more than one hundred eighty (180) consecutive days, except as set forth in Article 18.8 (the earlier of the date on which the insurers make payment on the basis of a total loss or the date of expiration of such period); (f) in the case of an Engine, the event described in Article 12.6.3 (the date on which the same takes effect); "TOTAL LOSS PROCEEDS" means the proceeds of any insurance or any compensation or similar payment arising in respect of a Total Loss. 18.2 NOTICE OF TOTAL LOSS. LESSEE will notify LESSOR in writing within two (2) Business Days after a Total Loss Date of the Aircraft, Airframe or any Engine. 18.3 TOTAL LOSS OF AIRCRAFT OR AIRFRAME. If the Total Loss of the Aircraft or Airframe occurs during the Lease Term, the following will occur: 18.3.1 After the Total Loss Date and until receipt by LESSOR of the Agreed Value and all other amounts then due under this Lease, LESSEE will continue to pay Rent and the parties will perform all of their other obligations under this Lease. 18.3.2 On the date which is the earlier of the following dates: (a) the date on which the Total Loss Proceeds of the Aircraft or the Airframe are paid by LESSEE's insurance underwriters or brokers and (b) the date which falls sixty (60) days after the Total Loss Date, LESSEE will pay to LESSOR an amount equal to the sum of: (a) the Agreed Value and (b) all other amounts then due and payable under this Lease, less an amount equal to the Net Total Loss Proceeds received by LESSOR by such date. 18.3.3 LESSOR will apply the Net Total Loss Proceeds and any amounts received from LESSEE pursuant to Article 18.3.2 as follows: (a) first, in discharge of any unpaid Rent and any other amounts accrued and unpaid up to the date of LESSOR's receipt of the Agreed Value; (b) second, in discharge of the Agreed Value; and (c) third, payment of the balance, if any, to LESSEE. 18.3.4 Upon receipt by LESSOR of all monies payable by LESSEE in Article 18.3, provided no Default has occurred and is continuing, this Lease will terminate except for LESSEE's obligations under Articles 10.5, 15 and 16 which survive the Termination Date and the Security Deposit will be returned to LESSEE in accordance with Article 5.3.1. FOR AVOIDANCE OF DOUBT, THE AGREED VALUE OF THE AIRCRAFT WILL BE PAYABLE TO LESSOR PURSUANT TO THIS ARTICLE 18.3 IF A TOTAL LOSS OF THE AIRFRAME OCCURS EVEN IF THERE HAS NOT BEEN A TOTAL LOSS OF AN ENGINE OR ENGINES. 18.4 SURVIVING ENGINE(S). If a Total Loss of the Airframe occurs and there has not been a Total Loss of an Engine or Engines, then provided no Default has occurred and is continuing, at the request of LESSEE (subject to agreement of relevant insurers) and on receipt of all monies due under Article 18.3 and payment by LESSEE of all airport, navigation and other charges on the Aircraft, LESSOR will transfer all of its right, title and interest in the surviving Engine(s) to LESSEE, but without any responsibility, condition or warranty on the part of LESSOR other than as to freedom from any LESSOR's Lien. 18.5 TOTAL LOSS OF ENGINE AND NOT AIRFRAME. 18.5.1 Upon a Total Loss of any Engine not installed on the Airframe or a Total Loss of an Engine installed on the Airframe not involving a Total Loss of the Airframe, LESSEE will replace such Engine as soon as reasonably possible by duly conveying to LESSOR title to another engine (a) free and clear of all Security Interests (except Permitted Liens) of any kind or description, (b) in airworthy condition and of the same or improved model, service bulletin and modification status and having a value and utility at least equal to the Engine which sustained the Total Loss, and (c) not older (by reference to serial number or manufacture date) than three (3) years older than the oldest of the two Engines delivered by LESSOR to LESSEE with the Aircraft on the Delivery Date. Such replacement engine will be an Engine as defined herein and the Engine which sustained such Total Loss will cease to be an Engine. 18.5.2 LESSEE agrees at its own expense to take such action as LESSOR may reasonably request in order that any such replacement Engine becomes the property of LESSOR and is leased hereunder on the same terms as the destroyed Engine. LESSEE's obligation to pay Rent will continue in full force and effect, but an amount equal to the Net Total Loss Proceeds received by LESSOR with respect to such destroyed Engine will, subject to LESSOR's right to deduct therefrom any amounts then due and payable by LESSEE under this Lease, be paid to LESSEE. 18.6 OTHER LOSS OR DAMAGE. 18.6.1 If the Aircraft or any Part thereof suffers loss or damage not constituting a Total Loss of the Aircraft or the Airframe or any Engine, all the obligations of LESSEE under this Lease (including payment of Rent) will continue in full force. 18.6.2 In the event of any loss or damage to the Aircraft or Airframe which does not constitute a Total Loss of the Aircraft or the Airframe, or any loss or damage to an Engine which does not constitute a Total Loss of such Engine, LESSEE will at its sole cost and expense fully repair the Aircraft or Engine in order that the Aircraft or Engine is placed in an airworthy condition and substantially the same condition as it was prior to such loss or damage. All repairs will be performed in accordance with sound airline procedures. LESSEE will notify LESSOR forthwith of any loss, theft or damage to the Aircraft for which the cost of repairs is estimated to exceed Seven Hundred Fifty Thousand U.S. Dollars (US$750,000), together with LESSEE's proposal for carrying out the repair. In the event that LESSOR does not agree with LESSEE's proposals for repair, LESSOR will so notify LESSEE within two (2) Business Days after its receipt of such proposal. LESSEE and LESSOR will then consult with Manufacturer and LESSEE and LESSOR agree to accept as conclusive, and be bound by, Manufacturer's directions or recommendations as to the manner in which to carry out such repairs. If Manufacturer declines to give directions or recommendations, LESSEE will carry out the repairs in accordance with the directions of LESSOR. 18.6.3 To the extent that LESSOR has received insurance proceeds from LESSEE's insurers with respect to any loss or damage, LESSOR will (subject to LESSOR's right to deduct therefrom any amounts then due and payable by LESSEE under this Lease and submission by LESSEE of reasonable documentation confirming the completion of the repairs in accordance with the requirements of this Lease) pay to LESSEE insurance proceeds received by LESSOR as and when such repair work is performed on the Aircraft. 18.7 COPY OF INSURANCE POLICY. Promptly after LESSOR's request following the occurrence of a partial loss or Total Loss of the Aircraft or an Engine, LESSEE will provide LESSOR with a copy of LESSEE's insurance policy. 18.8 GOVERNMENT REQUISITION. If the Aircraft, Airframe or any Engine is requisitioned for use by any Government Entity, LESSEE will promptly notify LESSOR of such requisition. All of LESSEE's obligations hereunder will continue as if such requisition had not occurred. Except if a Default or an Event of Default has occurred and is continuing, all payments received by LESSOR or LESSEE from such Government Entity will be paid over to or retained by LESSEE. 18.9 CONVEYANCE TO LESSEE. Upon compliance by LESSEE with the applicable terms of Article 18.3 or 18.5, LESSOR will transfer to LESSEE the Airframe or Engine(s), as applicable, with respect to which such Total Loss. ARTICLE 19 CRAF PROGRAM 19.1 DEDICATION TO CRAF. LESSEE may transfer possession of the Airframe or any Engine to the United States of America or any instrumentality or agency thereof as part of the Civil Reserve Air Fleet Program authorized under 10 U.S.C. ss. 9511 ET SEQ. (or any substantially similar program) ("CRAF PROGRAM") for a period which includes (collectively, the "CRAF PROGRAM REQUISITION PERIOD") the entire period of requisition under the CRAF Program. If the CRAF Program Requisition Period extends beyond the Expiration Date provided by this Lease, then the Lease will be deemed to continue for six (6) months after the end of the CRAF Program Requisition Period at a monthly rental rate equal to the monthly rental rate during the Lease Term. If such extension extends beyond the Lease Term, then LESSEE will provide LESSOR with written notice of the proposed redelivery by the earlier of six (6) months prior to the proposed redelivery date or five (5) Business Days after the date of receipt of the actual notice given to LESSEE by the government prior to the government's redelivery date and LESSEE will return the Aircraft to LESSOR in the condition required by Article 23 on LESSEE's proposed redelivery date set forth in such notice. 19.2 NOTICE TO LESSOR. LESSEE will promptly notify LESSOR in writing in the event of the requisition for use of the Aircraft under CRAF activation by the U.S. Government. All of LESSEE's obligations under this Lease will continue to the same extent as if such requisition had not occurred. 19.3 REQUISITION OF ENGINE. If there is a requisition for use of any Engine (but not the Airframe) by the U.S. Government in connection with the CRAF Program, LESSEE will replace such Engine by complying with the terms of Article 18.5 hereof. 19.4 GOVERNMENT INDEMNIFICATION. Any provisions of this Lease to the contrary notwithstanding, if there is a requisition for use of the Aircraft pursuant to the CRAF Program and/or CRAF activation, LESSOR agrees that LESSEE's insurances described in Exhibit C may be supplemented by insurances provided under Title XIII of the Act, and/or U.S. Government indemnification (which Title XIII insurances and indemnification will be in amounts not less than those established in Exhibit C); provided, however, that LESSEE will remain responsible for full compliance with all the provisions of this Lease, including Articles 14 and 16, to the extent Title XIII and/or the U.S. Government indemnification do not satisfy LESSEE's obligations under this Lease. 19.5 NO GEOGRAPHIC LIMITS. If there is a requisition for use of the Aircraft pursuant to the CRAF Program and/or CRAF activation, there will be no limitation on the geographic area in which the Aircraft may be operated so long as, taken as a whole, LESSEE's insurance, the Title XIII insurance and/or the indemnification provided by the U.S. Government fully cover (without any geographic exclusions) LESSEE's Exhibit C insurance requirements. 19.6 NOTICE OF DEFAULT. If an Event of Default occurs under this Lease and LESSOR elects to pursue its remedies under Article 25.3(e) to terminate this Lease and repossess the Aircraft, LESSOR will so notify the U.S. Government by sending a written communication as follows: Headquarters Air Mobility Command AMC Contracting Office -- XOKA Scott Air Force Base, Illinois 62225-5007 19.7 RECEIPT OF PAYMENTS. Subject to the following sentence, all payments received by LESSOR or LESSEE from such Government Entity in connection with the requisition of the Aircraft under the CRAF Program will be paid over to or retained by LESSEE. If a Default has occurred and is continuing, all payments received by LESSEE or LESSOR from such Government Entity in connection with the requisition of the Aircraft under the CRAF Program may be used by LESSOR to satisfy any obligations owing by LESSEE. ARTICLE 20 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE 20.1 REPRESENTATIONS AND WARRANTIES. LESSEE represents and warrants the following to LESSOR as of the date of execution of this Lease and as of the Delivery Date: 20.1.1 CORPORATE STATUS. LESSEE is a corporation duly incorporated, validly existing and in good standing under the Laws of Indiana (or, on the Delivery Date, the state of its incorporation). It has the corporate power and authority to carry on its business as presently conducted and to perform its obligations hereunder. 20.1.2 GOVERNMENTAL APPROVALS. No authorization, approval, consent, license or order of, or registration with, or the giving of notice to the Aviation Authority or any other Government Entity is required for the valid authorization, execution, delivery and performance by LESSEE of this Lease, except as will have been duly effected as of the Delivery Date. 20.1.3 BINDING. LESSEE's Board of Directors has authorized LESSEE to enter into this Lease, any Side Letters hereto and any other documentation in connection with the leasing of the Aircraft from LESSOR (collectively, the "OPERATIVE DOCUMENTS") and perform its obligations under the Operative Documents. This Lease and the other Operative Documents have been duly executed and delivered by LESSEE and represent the valid, binding and enforceable obligations of LESSEE except as enforceability may be limited by bankruptcy, insolvency, reorganization or other Laws of general application affecting the enforcement of creditors' rights. When executed by LESSEE at Delivery, the same will apply to the Estoppel and Acceptance Certificate. 20.1.4 NO BREACH. The execution and delivery of the Operative Documents, the consummation by LESSEE of the transactions contemplated herein and compliance by LESSEE with the terms and provisions hereof do not and will not contravene any Law applicable to LESSEE, or result in any breach of or constitute any default under or result in the creation of any Security Interest upon any property of LESSEE, pursuant to any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which LESSEE is a party or by which LESSEE or its properties or assets may be bound or affected. When executed by LESSEE at Delivery, the same will apply to the Estoppel and Acceptance Certificate. 20.1.5 FILINGS. Except for any filing or recording that may be required by the FARs, no filing or recording of any instrument or document (including the filing of any financial statement) is necessary under the Laws of the State of Registration in order for this Lease to constitute a valid and perfected lease of record relating to the Aircraft. 20.1.6 LICENSES. LESSEE holds all licenses, certificates and permits from applicable Government Entities in the U.S. for the conduct of its business as a certificated air carrier and performance of its obligations under this Lease. 20.1.7 NO SUITS. There are no suits, arbitrations or other proceedings pending or threatened before any court or administrative agency against LESSEE which are reasonably likely to be determined adversely and, if adversely determined, would have a material adverse effect on the business, assets or condition (financial or otherwise) of LESSEE or its ability to perform under this Lease, except as described in the filings provided to LESSOR pursuant to Article 22. 20.1.8 GENERAL OBLIGATIONS. The obligations of LESSEE under this Lease are direct, general and unconditional obligations of LESSEE and rank or will rank at least PARI PASSU with all other present and future unsecured and unsubordinated obligations (including contingent obligations) of LESSEE, with the exception of such obligations as are mandatorily preferred by law and not by reason of any encumbrance. 20.1.9 NO SOVEREIGN IMMUNITY. LESSEE, under the Laws of the U.S. or of any other jurisdiction affecting LESSEE, is subject to private commercial law and suit. Neither LESSEE nor its properties or assets is entitled to sovereign immunity under any such Laws. LESSEE's performance of its obligations hereunder constitute commercial acts done for commercial purposes. 20.1.10 TAX RETURNS. All necessary federal and state income tax returns have been delivered by LESSEE to all relevant taxation authorities in the U.S. or any state thereof and LESSEE is not in default in the payment of any taxes due and payable as shown on any such returns or on any assessment received by LESSEE. 20.1.11 NO MATERIAL ADVERSE EFFECT. LESSEE is not in default under any agreement to which it is a party or by which it may be bound which would have a material adverse effect on its business, assets or condition. 20.1.12 NO DEFAULT UNDER THIS LEASE. At the time of execution of this Lease, no Default has occurred and is continuing and the financial statements provided to LESSOR pursuant to Article 22 fairly present the financial condition of LESSEE. 20.2 COVENANTS. LESSEE covenants to LESSOR that it will comply with the following throughout the entire Lease Term: 20.2.1 LICENSING. LESSEE will hold all licenses, certificates and permits from applicable Government Entities in the U.S. for the conduct of its business as a certificated air carrier and performance of its obligations under this Lease. LESSEE will advise LESSOR promptly in the event any such licenses, certificates or permits are cancelled, terminated, revoked or not renewed. 20.2.2 SOVEREIGN IMMUNITY. LESSEE, under the Laws of the U.S. or of any other jurisdiction affecting LESSEE, will continue to be subject to private commercial law and suit. Neither LESSEE nor its properties or assets will be entitled to sovereign immunity under any such Laws. LESSEE's performance of its obligations hereunder will constitute commercial acts done for commercial purposes. LESSEE will advise LESSOR promptly of any change in the foregoing. 20.2.3 INFORMATION ABOUT SUITS. LESSEE will promptly give to LESSOR a notice in writing of any suit, arbitration or proceeding against LESSEE before any court, administrative agency or Government Entity which is reasonably likely to be determined adversely and, if adversely determined, would materially adversely affect LESSEE's financial condition, affairs, operations or its ability to perform under this Lease. 20.2.4 MERGER OF LESSEE. (a) LESSEE shall not consolidate with or merge into any other Person under circumstances in which LESSEE is not the surviving corporation, or convey, transfer, or lease in one or more transactions all or substantially all of its assets to any other Person, unless: (i) such Person is organized, existing, and in good standing under the Laws of the U.S., any state of the U.S., or the District of Columbia, and, upon consummation of such transaction, such Person will be a U.S. Air Carrier; (ii) such Person executes and delivers to LESSOR a duly authorized, legal, valid, binding and enforceable agreement, reasonably satisfactory in form and substance to LESSOR, containing an effective assumption by such Person of the due and punctual performance and observance of each covenant, agreement and condition in the Operative Documents to be performed or observed by LESSEE; (iii) such Person makes such filings and recordings with the FAA pursuant to the Act as shall be necessary to evidence such consolidation or merger; (iv) LESSEE furnishes LESSOR an opinion of counsel reasonably satisfactory to LESSOR to the effect that such consolidation or merger has satisfied at the closing of such consolidation or merger items (i), (ii) and (iii) above; (v) immediately after giving effect to such consolidation or merger, no Default or Event of Default exists; (vi) unless LESSOR otherwise consents, immediately after giving effect to such consolidation or merger, such Person will have a tangible net worth of not less than sixty-five percent (65%) of the LESSEE's tangible net worth immediately prior to such merger; and (vii) upon such merger becoming effective, LESSOR will enjoy the same degree of protection under ss. 1110 of the Bankruptcy Code with respect to the Aircraft as LESSOR enjoyed prior to such merger. (b) Upon any such consolidation or merger of LESSEE with or into, or the conveyance, transfer, or lease by LESSEE of all or substantially all of its assets to, any Person in accordance with this Article 20.2.4, such Person will succeed to, and be substituted for, and may exercise every right and power of, LESSEE under the Operative Documents with the same effect as if such Person had been named as "LESSEE" therein. No such consolidation, merger, conveyance, transfer, or lease shall have the effect of releasing LESSEE or such Person from any of LESSEE's obligations, liabilities, covenants, or undertakings under this Lease. 20.2.5 RESTRICTION ON RELINQUISHMENT OF POSSESSION. LESSEE will not, without the prior consent of LESSOR, deliver, transfer or relinquish possession of the Aircraft except in accordance with Articles 11 and 12. 20.2.6 NO SECURITY INTERESTS. LESSEE will not create or agree to or permit to arise any Security Interest (other than Permitted Liens) on or with respect to the Aircraft, title thereto or any interest therein. LESSEE will forthwith, at its own expense, take all action as may be necessary to discharge or remove any such Security Interest if it exists at any time. LESSEE will within five (5) Business Days after becoming aware of the existence of any such Security Interest give written notice thereof to LESSOR. 20.2.7 REPRESENTATIONS TO OTHER PARTIES. LESSEE will not represent or hold out LESSOR as carrying goods or passengers on the Aircraft or as being in any way connected or associated with any operation of the Aircraft. ARTICLE 21 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSOR 21.1 REPRESENTATIONS AND WARRANTIES. LESSOR represents and warrants the following to LESSEE as of the date of execution of the Lease and as of the Delivery Date and ALL OTHER WARRANTIES, EXPRESS OR IMPLIED HAVE BEEN WAIVED IN ACCORDANCE WITH ARTICLE 8: 21.1.1 CORPORATE STATUS. LESSOR is a corporation duly incorporated, validly existing and in good standing under the Laws of the State of California. It has the corporate power and authority to carry on its business as presently conducted and to perform its obligations hereunder. 21.1.2 GOVERNMENTAL APPROVALS. No authorization, approval, consent, license or order of, or registration with, or the giving of notice to any U.S. Government Entity is required for the valid authorization, execution, delivery and performance by LESSOR of this Lease. 21.1.3 BINDING. This Lease and the other Operative Documents have been duly authorized, executed and delivered by LESSOR and represent the valid, enforceable and binding obligations of LESSOR except as enforceability may be limited by bankruptcy, insolvency, reorganization or other Laws of general application affecting the enforcement of creditors' rights. 21.1.4 NO BREACH. The execution and delivery of the Operative Documents, the consummation by LESSOR of the transactions contemplated herein and compliance by LESSOR with the terms and provisions hereof do not and will not contravene any Law applicable to LESSOR, or result in any breach of or constitute any default under any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which LESSOR is a party or by which LESSOR or its properties or assets may be bound or affected. 21.1.5 TITLE TO AIRCRAFT. On the Delivery Date LESSOR will have good and valid title to the Aircraft. 21.1.6 CITIZENSHIP. LESSOR is a "citizen of the United States" within the meaning of 49 U.S. Code 40102(a)(15). 21.1.7 INVESTMENT BY LESSOR. LESSOR is acquiring its interest in the Aircraft for its own account from its corporate funds, for investment and not with a view to any resale or distribution thereof that would require registration under the Securities Act of 1933; PROVIDED, HOWEVER, that subject to the transfer restrictions in Article 24.2, its disposition of its interest in the Aircraft shall at all times be within its control. 21.2 COVENANT OF QUIET ENJOYMENT. So long as no Event of Default has occurred and is continuing hereunder, LESSOR covenants that neither LESSOR nor any person lawfully claiming through LESSOR will interfere with LESSEE's quiet, peaceful use and enjoyment of the Aircraft. ARTICLE 22 FINANCIAL AND RELATED INFORMATION LESSEE agrees to furnish each of the following to LESSOR: (a) within sixty (60) days after the end of each fiscal quarter of LESSEE, the unaudited consolidated financial statements (including a balance sheet and profit and loss statement) prepared for such quarter in accordance with generally accepted accounting principles in the U.S.; (b) within one hundred twenty (120) days after the end of each fiscal year of LESSEE, the audited consolidated financial statements (including a balance sheet and profit and loss statement) prepared as of the close of such fiscal year in accordance with generally accepted accounting principles in the U.S. LESSEE's chief financial officer will also provide a certificate of LESSEE stating that, to such officer's knowledge, no Default exists under this Lease (or if, to such officer's knowledge, a Default does exist, identifying it); (c) promptly after distribution, all reports and financial statements which Amtran, Inc. sends or makes generally available to its stockholders or creditors; and (d) from time to time, such other reasonable information as LESSOR or LESSOR's Lender may reasonably request concerning the location, condition, use and operation of the Aircraft or the financial condition of LESSEE. ARTICLE 23 RETURN OF AIRCRAFT 23.1 DATE OF RETURN. LESSEE is obligated to return the Aircraft, Engines Parts and Aircraft Documentation to LESSOR on the Expiration Date, unless a Total Loss of the Aircraft occurred prior to the Expiration Date and this Lease was terminated early in accordance with Article 18.3. If LESSEE is in Default hereunder by failing to return the Aircraft on the Expiration Date or if an Event of Default occurs prior to the Expiration Date and LESSOR repossesses the Aircraft, the return requirements set forth in this Article 23 nonetheless must be met on the date the Aircraft is actually returned to LESSOR or repossessed by LESSOR. 23.2 TECHNICAL REPORT. Six (6) months prior to the Expiration Date (and in an updated form at return of the Aircraft), LESSEE will provide LESSOR with a Technical Evaluation Report in the form and substance of Exhibit L, as revised, and, in addition upon LESSOR's request, will make copies available of (a) drawings of the interior configuration of the Aircraft both as it presently exists and as it will exist at return, (b) an Airworthiness Directive status list, (c) a service bulletin incorporation list, (d) rotable tracked, hard-time and life-limited component listings, (e) a list of LESSEE-initiated modifications and alterations, (f) interior material burn certificates, (g) the Aircraft Maintenance Program, (h) the complete workscope for the checks, inspections and other work to be performed prior to return, (i) a list of all no-charge service bulletin kits with respect to the Aircraft which were ordered by LESSEE from Manufacturer or Engine manufacturer, (j) current Engine disk sheets and a description of the last shop visit for each Engine and (k) any other data which is reasonably requested by LESSOR. 23.3 RETURN LOCATION. LESSEE at its expense will return the Aircraft, Engines, Parts and Aircraft Documentation to LESSOR at Indianapolis International Airport, Indianapolis, Indiana or to such other airport as may be mutually agreed to by LESSEE and LESSOR. 23.4 FULL AIRCRAFT DOCUMENTATION REVIEW. For the period commencing at least ten (10) Business Days prior to the proposed redelivery date and continuing until the date on which the Aircraft is returned to LESSOR in the condition required by this Lease, LESSEE will provide for the review of LESSOR and/or its representative all of the Aircraft records and historical documents described in Exhibit K in one central room at the Aircraft return location. 23.5 AIRCRAFT INSPECTION. 23.5.1 During the maintenance checks performed immediately prior to the proposed redelivery and at the actual return of the Aircraft, LESSOR and/or its representatives will have an opportunity to conduct a full systems functional and operational inspection of the Aircraft (and other types of reasonable inspections based upon the Aircraft type, age, use and other known factors with respect to the Aircraft) and a full inspection of the Aircraft Documentation (including records and manuals), all to LESSOR's satisfaction. The inspection will occur during the Return Check when the panels, bays or the like are open and certain Parts are disassembled. LESSOR may inspect such opened panels, bays or the like and the disassembled Parts so long as LESSOR does not disrupt the Return Check or cause such Return Check to be extended beyond the anticipated completion date of such Return Check. Any deficiencies from the Aircraft return condition requirements set forth in this Article 23 will be corrected by LESSEE at its cost prior to the acceptance flight described in Article 23.5.2. 23.5.2 Immediately prior to the proposed redelivery of the Aircraft, LESSEE will carry out for LESSOR and/or LESSOR's representatives an Aircraft acceptance flight in accordance with Manufacturer's standard flight operation check flight procedures or, if agreed to in writing by LESSOR, in accordance with an airline acceptance flight procedure, either of which will be for the duration necessary to perform such check flight procedures but in any event not less than two (2) hours. Flight costs and fuel will be furnished by and at the expense of LESSEE. Any deficiencies from the Aircraft return condition requirements set forth in this Article 23 will be corrected by LESSEE at its cost prior to return of the Aircraft. 23.5.3 To the extent that the ground inspection and acceptance flight extend beyond the Expiration Date, the Lease Term will be deemed to have been automatically extended and the obligations of LESSEE hereunder (including Article 23.11.3) will continue on a day-to-day basis until the Aircraft is accepted by LESSOR executing the Return Acceptance Receipt in the form of Exhibit I. 23.6 CERTIFICATE OF AIRWORTHINESS MATTERS. 23.6.1 The Aircraft will possess a current Certificate of Airworthiness issued by the Aviation Authority (although this Certificate of Airworthiness may later be substituted by the Export Certificate of Airworthiness or equivalent if requested by LESSOR pursuant to Article 23.10). The Aircraft at return must be in the condition required in order to meet the requirements of a U.S. Standard Certificate of Airworthiness for transport category aircraft issued by the FAA in accordance with FAR Part 21 and, in addition, to meet the operating requirements of FAR Part 121. 23.6.2 LESSEE at its cost will demonstrate that the Aircraft meets the requirements for issuance of the U.S. Standard Certificate of Airworthiness for transport category aircraft specified in Article 23.6.1 by delivering to LESSOR an actual U.S. Standard Certificate of Airworthiness. If there is a dispute in regards to the condition of the Aircraft or the Aircraft Documentation, then LESSEE will provide LESSOR with a letter acceptable to LESSOR signed by an FAA Designated Airworthiness Representative (DAR) or another Person acceptable to LESSOR stating that the DAR or such Person has inspected the Aircraft and Aircraft Documentation (including records and manuals) and has found that the Aircraft meets the requirements for issuance of a U.S. Standard Certificate of Airworthiness for transport category aircraft in accordance with FAR Part 21 and, in addition, meets the operating requirements of FAR Part 121. 23.6.3 If the Aircraft is to be registered in a country other than in the U.S. after return from LESSEE, LESSOR may in its sole discretion waive the requirements of Article 23.6.2 and instead require that LESSEE at its expense (to the extent such expense is no greater than that which LESSEE would have incurred pursuant to Articles 23.6.1 and 23.6.2, with any additional expenses being for LESSOR's account) put the Aircraft in a condition to meet the requirements for issuance of a Certificate of Airworthiness of the Aviation Authority of the next country of register. 23.7 GENERAL CONDITION OF AIRCRAFT AT RETURN. 23.7.1 The Aircraft, Engines and Parts will have been maintained and repaired in accordance with the Maintenance Program, the rules and regulations of the Aviation Authority and this Lease. 23.7.2 Aircraft Documentation (including records and manuals) will have been maintained in an up-to-date status, in accordance with the rules and regulations of the Aviation Authority and the FAA and this Lease and in a form necessary in order to meet the requirements of Article 23.6.2. The records and historical documents set forth in Attachment 1 of Exhibit I will be in English. 23.7.3 The Aircraft will be in the same working order and condition as at Delivery (subject to the other provisions of this Article 23, reasonable wear and tear from normal flight operations excepted), with all pilot discrepancies and deferred maintenance items cleared on a terminating action basis. 23.7.4 The Aircraft will be airworthy (conform to type design and be in a condition for safe operation), with all Aircraft equipment, components and systems operating in accordance with their intended use and within limits approved by the Manufacturer, Aviation Authority and FAA. 23.7.5 The Aircraft interior (including cabin and windows) and exterior will be clean and all compartments will be reasonably free of foreign objects, dirt, grease, fluids, stains, grime, cracks, tears and rips (with the exception of normal wear and tear) and ready to be placed into immediate commercial airline operations. 23.7.6 No special or unique Manufacturer, Engine manufacturer or Aviation Authority inspection or check requirements which are specific to the Aircraft or Engines (as opposed to all aircraft or engines of their types) will exist with respect to the Airframe, Engines and Aircraft equipment, components and systems. 23.7.7 All repairs, modifications and alterations to the Aircraft will have been accomplished in accordance with Manufacturer's Structural Repair Manual (or FAA-approved data supported by FAA Form 8110-3) for the Aircraft. 23.7.8 The Aircraft will be returned with LESSOR's Engines installed and with the same equipment as at Delivery, subject only to those replacements, additions and Modifications permitted under this Lease. LESSEE will inform LESSOR of whether LESSEE will be able to redeliver the Engines with the Aircraft and the proposed replacement engines that LESSEE wants to provide LESSOR in place of the Engines. LESSEE will provide LESSOR with whatever data, records and information that LESSOR reasonably requests in order to evaluate the proposed replacement engines. In the event that LESSEE is unable to return either of the Engines in the conditions required by this Article 23, then LESSEE may provide a replacement engine (a "REPLACEMENT ENGINE") for such Engine to LESSOR by duly conveying to LESSOR as owner hereunder title to another engine of the same manufacturer and of the same or an improved model as the Engine being replaced and suitable for installation and use on the Aircraft, which engine shall be free and clear of all Security Interests, and shall be no more than three (3) years older by reference to serial number than the replaced Engine and have a modification status, value and utility at least equal to the Engine which such Replacement Engine is replacing on the Aircraft assuming that such Engine which such Replacement Engine is replacing was then of the value, utility, condition, and airworthiness required to be maintained by the terms of this Lease. Such Replacement Engine, after approval and acceptance by LESSOR, shall be deemed an "Engine" as defined herein for all purposes hereunder. LESSEE agrees to take such action as LESSOR may reasonably request in order that such Replacement Engine shall be duly and properly titled in the name of LESSOR. Prior to or at the time of any such conveyance, LESSEE, at its own expense, will promptly: (a) furnish LESSOR with a warranty bill of sale, in form and substance satisfactory to LESSOR, with respect to such Replacement Engine, (b) furnish LESSOR with such evidence of title to such Replacement Engine as reasonably requested by LESSOR, and (c) furnish LESSOR with an opinion of LESSEE's counsel to the effect that title to such Replacement Engine has been duly conveyed to LESSOR free and clear of all Security Interests of any kind or nature and that such exchange qualifies for tax free treatment under the Internal Revenue Code of 1986, as amended. Upon full compliance with this Article, LESSOR shall transfer to LESSEE all of LESSOR's right, title and interest, on an "AS-IS", "WHERE-IS" basis in and to the Engine being replaced by such Replacement Engine, without recourse or warranty, express or implied, except that LESSOR has good and marketable title to such Engine and such Engine shall be free and clear of LESSOR's Liens. 23.7.9 All Airworthiness Directives which are issued prior to the date of return of the Aircraft and require compliance (either by means of repetitive inspections, modifications or terminating action) prior to return of the Aircraft to LESSOR or within one (1) year after the Termination Date will have been complied with on the Aircraft on a terminating action basis at LESSEE's cost. Airworthiness Directives which do not have a terminating action will be accomplished at the highest level of inspection or modification possible. If, after using best efforts, LESSEE is unable to acquire the material, parts or components necessary to accomplish such Airworthiness Directive, LESSEE will pay to LESSOR upon return of the Aircraft the estimated cost of terminating such Airworthiness Directive. If the estimated cost cannot be mutually agreed upon by LESSEE and LESSOR, LESSEE and LESSOR will each obtain an estimate from a reputable FAA-approved maintenance facility (unaffiliated with LESSEE or LESSOR) and the estimated cost will be the average of the two estimates. 23.7.10 The Aircraft will be in compliance with the Corrosion Prevention and Control Program (CPCP) specified in LESSEE's Maintenance Program. 23.7.11 If any waivers, deviations, dispensations, alternate means of compliance, extensions or carry-overs with respect to maintenance or operating requirements, repairs or Airworthiness Directives are granted by the Aviation Authority or permitted by the Maintenance Program, LESSEE at its sole cost and expense will nonetheless perform such maintenance or operating requirements, repairs or Airworthiness Directives as if such waivers, deviations, dispensations, alternate means of compliance, or extensions or carry-overs did not exist. 23.7.12 The Aircraft will be free from any Security Interest except LESSOR's Liens and no circumstance will have so arisen whereby the Aircraft is or could become subject to any Security Interest or right of detention or sale in favor of the Aviation Authority, any airport authority, or any other authority. 23.7.13 All no-charge vendor and Manufacturer's service bulletin kits received by LESSEE for the Aircraft but not installed thereon will be on board the Aircraft as cargo. At LESSOR's request, any other service bulletin kit which LESSEE paid for will also be delivered to LESSOR on board the Aircraft, but LESSOR will reimburse LESSEE for its actual out-of-pocket costs for such kit, unless LESSEE purchased such kit as part of its implementation of a service bulletin on its fleet of aircraft of the same type as the Aircraft but had not yet installed such kit on the Aircraft, in which case such kit will be furnished free of charge to LESSOR. 23.7.14 The Aircraft will be free of any leaks and any damage resulting therefrom. All repairs will have been performed on a permanent basis in accordance with the applicable manufacturer's instructions. 23.7.15 The Aircraft fluid reservoirs (including oil, oxygen, hydraulic and water) will be serviced to full and the waste tank serviced in accordance with Manufacturer's instructions. (Fuel tanks will be at least as full as at Delivery.) 23.8 CHECKS PRIOR TO RETURN. Immediately prior to return of the Aircraft to LESSOR, LESSEE at its expense will do each of the following: 23.8.1 Have performed, and completed, by an FAA-approved repair station, all maintenance tasks specified in LESSEE's Maintenance Program and the MPD which (a) are necessary to clear the Aircraft of all such tasks for eighteen (18) months, five thousand (5,000) hours, and three thousand (3,000) cycles from the date of return of the Aircraft, and (b) are required to be performed at lesser intervals than eighteen (18) months, five thousand (5,000) hours or three thousand (3,000) cycles (all such work collectively referred to as the "RETURN CHECK"). If a maintenance task is specific to LESSEE's Maintenance Program and not required or recommended to be performed by the MPD, then LESSEE will not be required to perform such maintenance task so long as the Return Check is performed in such a manner that clears the Aircraft of all maintenance tasks in accordance with the requirements of the preceding sentence. As part of the Return Check, all non-routine tasks generated as a result of the performance of the work included in the Return Check and any other discrepancies revealed during the Return Check must also be performed in accordance with the FAA approved procedures. LESSEE will also weigh the Aircraft. LESSEE agrees to perform during the Return Check any other work reasonably required by LESSOR (and not otherwise required under this Lease) and LESSOR will, promptly upon receipt of an invoice from LESSEE, reimburse LESSEE for such work at LESSEE's preferred customer rates. 23.8.2 Have the Aircraft in compliance with Corrosion Prevention and Control Program (CPCP) as specified in the MPD and LESSEE's Maintenance Program. 23.8.3 Remove LESSEE's exterior markings, including all exterior paint, by stripping (or, at LESSOR's option, pneumatically scuff/sanding) the paint from the fuselage, empennage, wings and Engine cowlings, and clean, reseal, refinish, prepare (including application of alodine or another corrosion inhibitor) and prime the surfaces to be painted, all in accordance with Manufacturer's and paint manufacturer's recommendations. LESSEE will then repaint the fuselage, empennage, wings and Engine cowlings in the colors and logo specified by LESSOR ; PROVIDED, HOWEVER, that LESSEE will be responsible for only paying the amount that it would cost to strip or scuff/sand (whichever is performed on the Aircraft at return) and properly paint the Aircraft in LESSEE's colors and logo and LESSOR will be responsible for the excess cost to paint the Aircraft in the next lessee's colors and logo. Such painting will be accomplished in such a manner as to result in a uniformly smooth and cosmetically acceptable aerodynamic surface. All external placards, signs and markings will be properly attached, free from damage, clean and legible. 23.8.4 Clean the exterior and interior of the Aircraft. 23.8.5 If reasonably required by LESSOR, apply touch up to paint to the interior of the Aircraft, including flight deck, and replace any missing or broken placards. 23.8.6 In accordance with Article 23.7.7, permanently repair damage to the Aircraft that exceeds Manufacturer's limits and replace any non-flush structural patch repairs installed on the Aircraft with flush-type repairs, so long as the Manufacturer or the Manufacturer's Structural Repair Manual permits flush-type repairs on the portion of the Aircraft where the non-flush structural repairs were made. 23.8.7 With LESSOR or its representatives present, perform a full and complete hot and cold section videotape borescope on each Engine and its modules in accordance with the Engine manufacturer's maintenance manual. 23.8.8 If the Engine historical and technical records and/or condition trend monitoring data of any Engine (including the APU) indicate an acceleration in the rate of deterioration in the performance of an Engine, LESSEE will correct, to LESSOR's satisfaction, such conditions which are determined to be causing such accelerated rate of deterioration. 23.8.9 With LESSOR or its representatives present, accomplish a maximum power assurance run on the Engines. LESSEE will evaluate the Engine performance and record the Engine maximum power assurance test conditions and results on the Return Acceptance Receipt. 23.8.10 LESSEE will provide evidence to LESSOR's satisfaction that the Engine historical and technical records, borescope inspection, trend monitoring and other checks specified in Article 23.8.9 do not reveal any condition which would cause the Engines or any module to be unserviceable, beyond serviceable limits or serviceable with an increased frequency of inspection or with calendar time, flight hour or flight cycle restrictions under the Engine manufacturer's maintenance manual. LESSEE will correct any discrepancies in accordance with the guidelines set out by the Engine manufacturer which may be discovered during such inspection. 23.8.11 In the event the Engine historical and technical records, borescope inspection, trend monitoring and other checks specified in Article 23.8.9 result in a dispute regarding the conformity of an Engine with the requirements of this Article 23, LESSEE and LESSOR will consult with Engine manufacturer and follow Engine manufacturer's recommendations (including the accomplishment of an Engine test cell operational check) with regard to determining if such Engine complies with the requirements of this Article 23 and the manner in which any discrepancies from the requirements of this Article 23 will be rectified. 23.9 PART LIVES. At return, the condition of the Aircraft will be as follows: (CONFIDENTIAL MATERIAL OMITTED) 23.10 EXPORT AND DEREGISTRATION OF AIRCRAFT. At LESSOR's request, LESSEE at its cost will (a) provide an Export Certificate of Airworthiness or its equivalent from the State of Registration so that the Aircraft can be exported to the country designated by LESSOR, (b) assist with deregistration of the Aircraft from the register of aircraft in the State of Registration, (c) assist with arranging for prompt confirmation of such deregistration to be sent by the registry in the State of Registration to the next country of registration and (d) perform any other acts reasonably required by LESSOR in connection with the foregoing. If any Aircraft work which LESSEE is not otherwise required to perform hereunder, including engineering, is required in order to obtain such Export Certificate of Airworthiness, LESSEE will perform such work and LESSOR will reimburse LESSEE for such work at LESSEE's preferred customer rates. 23.11 LESSEE'S CONTINUING OBLIGATIONS. In the event that LESSEE does not return the Aircraft to LESSOR on the Expiration Date and in the condition required by this Article 23 for any reason (whether or not the reason is within LESSEE's control): 23.11.1 the obligations of LESSEE under this Lease will continue in full force and effect on a day-to-day basis until such return. This will not be considered a waiver of LESSEE's Event of Default or any right of LESSOR hereunder. 23.11.2 Until such return, the Agreed Value will be an amount equal to the Agreed Value on the day the Aircraft should have been returned to LESSOR pursuant to this Lease. 23.11.3 LESSEE will fully indemnify LESSOR on demand for all losses (including consequential damages), liabilities, actions, proceedings, costs and expenses thereby suffered or incurred by LESSOR and, in addition, if a delay in return of the Aircraft was due to reasons within LESSEE's reasonable control, then until such time as the Aircraft is redelivered to LESSOR and put into the condition required by this Article 23, instead of paying the Rent specified in Article 5.3, LESSEE will pay twice the amount of Rent for each day from the scheduled Expiration Date until the Termination Date (the monthly Rent payable under Article 5.3.1 will be prorated based on the actual number of days in the applicable month). Payment will be made upon presentation of LESSOR's invoice. 23.11.4 LESSOR may elect, in its sole and absolute discretion, to accept the return of the Aircraft prior to the Aircraft being put in the condition required by this Article 23 and thereafter have any such non-conformance corrected at such time as LESSOR may deem appropriate (but within ninety (90) days following the return of the Aircraft) and at commercial rates then-charged by the Person selected by LESSOR to perform such correction. Any direct expenses incurred by LESSOR for such correction will become additional Rent payable by LESSEE within fifteen (15) days following the submission of a written statement by LESSOR to LESSEE, identifying the items corrected and setting forth the expense of such corrections. LESSEE's obligation to pay such supplemental Rent will survive the Termination Date. 23.12 AIRPORT AND NAVIGATION CHARGES. LESSEE will ensure that at return of the Aircraft any and all airport, navigation and other charges which give rise or may if unpaid give rise to any lien, right of detention, right of sale or other Security Interest in relation to the Aircraft, Engine or any Part have been paid and discharged in full and will at LESSOR's request produce evidence thereof satisfactory to LESSOR. 23.13 RETURN ACCEPTANCE CERTIFICATE. Upon return of the Aircraft in accordance with the terms of this Lease, LESSEE will prepare and execute two (2) Return Acceptance Certificates in the form and substance of Exhibit I and LESSOR will countersign and return one such Return Acceptance Certificate to LESSEE. In addition, LESSEE and LESSOR will execute a Lease Termination for filing with the FAA evidencing termination of this Lease. 23.14 INDEMNITIES AND INSURANCE. The indemnities and insurance requirements set forth in Articles 16 and 17, respectively, will apply to Indemnitees and LESSOR's representatives during return of the Aircraft, including the ground inspection and acceptance flight. With respect to the acceptance flight, LESSOR's representatives will receive the same protections as LESSOR on LESSEE's Aviation and Airline General Third Party Liability Insurance. ARTICLE 24 ASSIGNMENT 24.1 NO ASSIGNMENT BY LESSEE. EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED BY THE TERMS OF THIS LEASE, NO ASSIGNMENT, NOVATION, TRANSFER, MORTGAGE OR OTHER CHARGE MAY BE MADE BY LESSEE OF ANY OF ITS RIGHTS WITH RESPECT TO THE AIRCRAFT, ENGINE OR PART OF THIS LEASE. 24.2 SALE OR ASSIGNMENT BY LESSOR. 24.2.1 Subject to LESSEE's rights pursuant to this Lease, LESSOR may at any time and without LESSEE's consent sell, assign or transfer its rights, interest and obligations hereunder or with respect to the Aircraft to a third party ("LESSOR'S ASSIGNEE"), but only if: (a) LESSOR's Assignee has full power, authority, and legal right to execute, deliver, and perform the obligations of LESSOR under the Operative Documents and provides reasonably satisfactory evidence of such power and authority to LESSEE; (b) LESSOR's Assignee enters into one or more legal, valid, binding and enforceable agreements effective to confirm that LESSOR's Assignee agrees to be bound by all the terms of, and to undertake all of the obligations arising after such transfer of LESSOR in, the Operative Documents, and in which it makes representations and warranties substantially the same as those in Article 21.1 of this Lease; (c) upon such transfer LESSEE shall not be obligated to pay any greater amount or incur any greater obligation (other than indemnifying additional indemnitees, insuring additional insureds and other minor ministerial matters) than that which it would have been obliged to pay or incur under the Operative Documents if no transfer or assignment had taken place, and upon such transfer the terms and conditions of the Operative Documents insofar as they relate to the rights and obligations of LESSEE are not altered; (d) LESSOR shall cause LESSOR's Assignee to deliver to LESSEE an opinion of counsel reasonably satisfactory to LESSEE to the effect that such agreement or agreements referred to in clause (2) and, if applicable, clause (6) are legal, binding, and enforceable in accordance with its or their terms, subject to the typical exceptions. (e) the transfer shall relate to LESSOR's entire interest as owner or lessor; (f) LESSOR's Assignee is a citizen of the United States under 49 U.S. Code ss.40102(a)(15) (such status to be determined without considering FAR ss.47.9 or any other provision that may restrict LESSEE's use or operation of the Aircraft), or shall use a voting powers trust or similar arrangement in order to hold an interest in the Aircraft such that the Aircraft can be registered in the U.S. (without considering FAR ss.47.9 or any other provision that may restrict LESSEE's use or operation of the Aircraft); (g) LESSOR's Assignee is a single Person and is either (i) a Permitted Institution, or (ii) or an affiliate of a Permitted Institution, if such affiliate's obligations under the Operative Documents are guaranteed by such Permitted Institution pursuant to a written guaranty, in form and substance reasonably satisfactory to LESSEE; and (h) LESSOR shall give written notice to LESSEE at least five (5) days before any such transfer, specifying the name and address of the proposed LESSOR's Assignee, and providing reasonably satisfactory evidence that the proposed LESSOR's Assignee meets the requirements described in Article 24.2.1(g)(i) or (ii). For a period of two (2) years after such sale or assignment and at LESSEE's cost, LESSEE will continue to name LESSOR as an additional insured under the Aviation and Airline General Third Party Liability Insurance required pursuant to Article 17 and Exhibit C. 24.2.2 The term "LESSOR" as used in this Lease means the lessor of the Aircraft at the time in question. In the event of the sale of the Aircraft and transfer of LESSOR's rights and obligations under this Lease, LESSOR's Assignee will become "LESSOR" of the Aircraft under this Lease and the transferring party (the prior "LESSOR") will be relieved of all liability to LESSEE under this Lease for obligations arising on and after the date the Aircraft is sold. LESSEE will acknowledge and accept LESSOR's Assignee as the new "LESSOR" under this Lease and will look solely to LESSOR's Assignee for the performance of all LESSOR obligations and covenants under this Lease arising on and after the Aircraft sale date. 24.3 LESSOR'S LENDER. Subject to LESSEE's rights pursuant to this Lease, LESSOR may at any time and without LESSEE's consent grant security interests over the Aircraft and assign the benefit of this Lease to a lender ("LESSOR'S LENDER") as security for LESSOR's obligations to LESSOR's Lender. Accordingly, if LESSOR's Lender requires, as a condition to providing financing, any nonsubstantive modification of this Lease, LESSEE agrees to enter into an agreement so modifying this Lease. 24.4 LESSEE COOPERATION. On request by LESSOR, LESSOR's Assignee or LESSOR's Lender, LESSEE will execute all such documents (such as a lease assignment agreement) as LESSOR, LESSOR's Assignee or LESSOR's Lender may reasonably require to confirm LESSEE's obligations under this Lease and obtain LESSEE's acknowledgment that to the best of LESSEE's knowledge, LESSOR is not in breach of this Lease. LESSEE will provide all other reasonable assistance and cooperation to LESSOR, LESSOR's Assignee and LESSOR's Lender in connection with any such sale or assignment or the perfection and maintenance of any such security interest, at LESSOR's cost, including making all necessary filings and registrations in the State of Registration and providing all opinions of counsel with respect to matters reasonably requested by LESSOR, LESSOR's Lender or LESSOR's Assignee. LESSOR will reimburse LESSEE for its reasonable out-of-pocket costs in reviewing documents required by LESSOR or LESSOR's Lender. 24.5 PROTECTIONS. 24.5.1 LESSOR will obtain for the benefit of LESSEE an acknowledgment from any LESSOR's Assignee or LESSOR's Lender that, so long as no Event of Default has occurred and is continuing hereunder, such Person will not interfere with LESSEE's quiet, peaceful use and enjoyment of the Aircraft. 24.5.2 Wherever the term "LESSOR" is used in this Lease in relation to any of the provisions relating to disclaimer, title and registration, indemnity and insurance contained in Articles 8, 13, 16 and 17, respectively, or with respect to Article 20.2.7, the term "LESSOR" will be deemed to include LESSOR's Assignee and LESSOR's Lender, if applicable. For avoidance of doubt, in the event of LESSOR's sale or financing of the Aircraft, the disclaimer and indemnity provisions contained in Articles 8 and 16 will continue to be applicable after the sale or assignment to International Lease Finance Corporation, as well as being applicable to LESSOR's Assignee and LESSOR's Lender. ARTICLE 25 DEFAULT OF LESSEE 25.1 LESSEE NOTICE TO LESSOR. LESSEE will promptly notify LESSOR if LESSEE becomes aware of the occurrence of any Default. 25.2 EVENTS OF DEFAULT. The occurrence of any of the following will constitute an Event of Default and material breach of this Lease by LESSEE: (a) LESSEE fails to take delivery of the Aircraft when obligated to do so under the terms of this Lease; (b) LESSEE fails to make a Rent or other payment due hereunder in the manner and by the date provided herein and fails to make such payment within five (5) Business Days after its receipt of notice that such payment is due; (c) LESSEE fails to obtain or maintain the insurance required by Article 17; (d) LESSEE fails to return the Aircraft to LESSOR on the Expiration Date in accordance with Article 23; (e) LESSEE fails to observe or perform any of its other obligations hereunder and fails to cure the same within thirty (30) days after written notice thereof to LESSEE; provided, that LESSEE will have up to a total of sixty (60) days to cure such failure so long as it uses diligent efforts to do so; (f) any representation or warranty of LESSEE herein proves to have been untrue in any material respect when made; provided, that, if the effect of such falsity is curable, LESSEE shall have thirty (30) days after LESSEE has knowledge that the representation or warranty is untrue; (g) the registration of the Aircraft is cancelled other than as a result of an act or omission of LESSOR; (h) LESSEE abandons the Aircraft or Engines; (i) LESSEE or an approved sublessee no longer has unencumbered control (other than Permitted Liens) or possession of the Aircraft or Engines, except as otherwise permitted by this Lease; (j) LESSEE temporarily or permanently discontinues business or (except as permitted by Article 20.2.4) sells or otherwise disposes of all or substantially all of its assets; (k) a material adverse change occurs in the financial condition of LESSEE; (l) LESSEE no longer possesses the licenses, certificates and permits required for the conduct of its business as a certificated air carrier in the U.S.; (m) LESSEE (i) suspends payment on its debts or other obligations generally, (ii) is unable to or admits its inability to pay its debts or other obligations generally as they fall due, (iii) is adjudicated or becomes bankrupt or insolvent or (iv) enters into any composition or other arrangement for the benefit of its creditors generally; (n) any proceedings, resolutions, filings or other steps are instituted with respect to LESSEE relating to the bankruptcy, liquidation, reorganization or protection from creditors of LESSEE or at least half of LESSEE's property. If instituted by LESSEE, the same will be an immediate Event of Default. If instituted by another Person, the same will be an Event of Default if not dismissed, remedied or relinquished within sixty (60) days; (o) any order, judgment or decree is entered by any court of competent jurisdiction appointing a receiver, trustee or liquidator of LESSEE or at least half of its property, or if at least half of LESSEE's property is to be sequestered. If instituted by or done with the consent of LESSEE, the same will be an immediate Event of Default. If instituted by another Person, the same will be an Event of Default if not dismissed, stayed, remedied or relinquished within sixty (60) days; PROVIDED, HOWEVER, that if such proceeding is stayed, then such proceeding will become an immediate Event of Default if such stay is removed or terminates and the proceeding is not dismissed, remedied or relinquished when such stay is removed or terminates. (p) any indebtedness for borrowed moneys or a guarantee or similar obligation owed by LESSEE with an unpaid balance of CONFIDENTIAL MATERIAL OMITTED is declared due before its stated maturity or LESSEE is in default of payment obligations CONFIDENTIAL MATERIAL OMITTED under any other purchase agreement, lease, conditional sale agreement or other agreement pursuant to which LESSEE has possession of any aircraft; (q) Eurocontrol has notified LESSOR that there are unpaid Eurocontrol charges due from LESSEE (unless such charges are being contested in good faith and by appropriate proceedings, an adequate bond has been provided and such proceedings do not involve any danger of the detention, interference with the use or operation, sale, forfeiture or loss of the Aircraft) and such charges remain outstanding for a period of thirty (30) days from the date of Eurocontrol's notice to LESSOR provided that such thirty (30) day grace period will not apply if there is a danger of detention, interference with the use or operation, sale, forfeiture or loss of the Aircraft; or (r) LESSEE is in default under any other lease or agreement between LESSEE and LESSOR and the same is not cured within its specified cure period. 25.3 LESSOR'S GENERAL RIGHTS. Upon the occurrence of any Event of Default, LESSOR may do all or any of the following at its option (in addition to such other rights and remedies which LESSOR may have by statute or otherwise but subject to any requirements of applicable Law): (a) terminate this Lease by giving written notice to LESSEE; (b) require that LESSEE immediately move the Aircraft to an airport or other location designated by LESSOR; (c) for LESSEE's account, do anything that may reasonably be required to cure any default and recover from LESSEE all reasonable costs, including legal fees and expenses incurred in doing so and Default Interest; (d) proceed as appropriate to enforce performance of this Lease and to recover any damages for the breach hereof, including the amounts specified in Article 25.5; (e) terminate this Lease by taking possession of the Aircraft or by serving notice requiring LESSEE to return the Aircraft to LESSOR at the location specified by LESSOR. If LESSOR takes possession of the Aircraft, it may enter upon LESSEE's premises where the Aircraft is located without liability. Upon repossession of the Aircraft, LESSOR will then be entitled to sell, lease or otherwise deal with the Aircraft as if this Lease had never been made. LESSOR will be entitled to the full benefit of its bargain with LESSEE; or (f) apply all or any portion of the Security Deposit and any other security deposits held by LESSOR pursuant to any other agreements between LESSOR and LESSEE to any amounts due. 25.4 DEREGISTRATION AND EXPORT OF AIRCRAFT. If an Event of Default has occurred and is continuing, LESSOR may take all steps necessary to deregister the Aircraft in and export the Aircraft from the State of Registration. 25.5 LESSEE LIABILITY FOR DAMAGES. If an Event of Default occurs, in addition to all other remedies available at law or in equity, LESSOR has the right to recover from LESSEE and LESSEE will pay LESSOR within two (2) Business Days after LESSOR's written demand, all of the following: (a) all amounts which are then due and unpaid hereunder and which become due prior to the earlier of LESSOR's recovery of possession of the Aircraft or LESSEE making an effective tender thereof; (b) any losses suffered by LESSOR because of LESSOR's inability to place the Aircraft on lease with another lessee or to otherwise utilize the Aircraft on financial terms as favorable to LESSOR as the terms hereof or, if LESSOR elects to dispose of the Aircraft, the funds arising from a sale or other disposition of the Aircraft are not as profitable to LESSOR as leasing the Aircraft in accordance with the terms hereof would have been (and LESSOR will be entitled to accelerate any and all Rent which would have been due from the date of LESSOR's recovery or repossession of the Aircraft through the Expiration Date); (c) all costs associated with LESSOR's exercise of its remedies hereunder, including but not limited to repossession costs, legal fees, Aircraft storage costs, Aircraft re-lease or sale costs and LESSOR's internal costs and expenses (including the cost of personnel time calculated based upon the compensation paid to the individuals involved on an annual basis and a general LESSOR overhead allocation); (d) any amount of principal, interest, fees or other sums paid or payable on account of funds borrowed in order to carry any unpaid amount; (e) any loss, premium, penalty or expense which may be incurred in repaying funds raised to finance the Aircraft or in unwinding any financial instrument relating in whole or in part to LESSOR's financing of the Aircraft; (f) any loss, cost, expense or liability sustained by LESSOR due to LESSEE's failure to redeliver the Aircraft in the condition required by this Lease; and (g) any other loss, damage, expense, cost or liability which LESSOR suffers or incurs as a result of the Event of Default and/or termination of this Lease, including an amount sufficient to fully compensate LESSOR for any loss of or damage to LESSOR's residual interest in the Aircraft caused by LESSEE's default. 25.6 WAIVER OF DEFAULT. By written notice to LESSEE, LESSOR may at its election waive any Default or Event of Default and its consequences and rescind and annul any prior notice of termination of this Lease. The respective rights of the parties will then be as they would have been had no Default or Event of Default occurred and no such notice been given. 25.7 PRESENT VALUE OF PAYMENTS. In calculating LESSOR's damages hereunder, upon an Event of Default all Rent and other amounts which would have been due hereunder during the Lease Term if an Event of Default had not occurred will be calculated on a present value basis using a discounting rate of six percent (6%) per annum discounted to the earlier of the date on which LESSOR obtains possession of the Aircraft or LESSEE makes an effective tender thereof. 25.8 USE OF "TERMINATION DATE". For avoidance of doubt, it is agreed that if this Lease terminates and the Aircraft is repossessed by LESSOR due to an Event of Default, then, notwithstanding the use of the term "Termination Date" in this Lease, the period of the Lease Term and the "Expiration Date" will be utilized in calculating the damages to which LESSOR is entitled pursuant to Article 25.5. For example, it is agreed and understood that LESSOR is entitled to receive from LESSEE the Rent and the benefit of LESSEE's insurance and maintenance of the Aircraft until expiration of the Lease Term. ARTICLE 26 NOTICES 26.1 MANNER OF SENDING NOTICES. Any notice, request or information required or permissible under this Lease will be in writing and in English. Notices will be delivered in person or sent by fax, letter (mailed airmail, certified and return receipt requested), or by expedited delivery addressed to the parties as set forth in Article 26.2. In the case of a fax, notice will be deemed received upon actual receipt (and the date of actual receipt will be deemed to be the date set forth on the confirmation of receipt produced by the sender's fax machine immediately after the fax is sent). In the case of a notice sent by expedited delivery, notice will be deemed received on the date of delivery set forth in the records of the Person which accomplished the delivery. If any notice is sent by more than one of the above listed methods, notice will be deemed received on the earliest possible date in accordance with the above provisions. 26.2 NOTICE INFORMATION. Notices will be sent: If to LESSOR: INTERNATIONAL LEASE FINANCE CORPORATION 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067, U.S.A. Attention: Legal Department Fax: 310-788-1990 Telephone: 310-788-1999 If to LESSEE: AMERICAN TRANS AIR, INC. 7337 West Washington Street Indianapolis International Airport Indianapolis, Indiana 46231 United States of America Attention: Ken Wolff Executive Vice President and Chief Financial Officer Fax: 317-240-7091 Telephone: 317-247-4000 or to such other places and numbers as either party directs in writing to the other party. ARTICLE 27 GOVERNING LAW AND JURISDICTION 27.1 CALIFORNIA LAW. This Lease is being delivered in the State of California and will in all respects be governed by and construed in accordance with the Laws of the State of California (notwithstanding the conflict Laws of the State of California). 27.2 NON-EXCLUSIVE JURISDICTION IN CALIFORNIA. As permitted by Section 410.40 of the California Code of Civil Procedure, the parties hereby irrevocably submit to the non-exclusive jurisdiction of the Federal District Court for the Central District of California and the State of California Superior or Municipal Court in Los Angeles, California. Nothing herein will prevent either party from bringing suit in any other appropriate jurisdiction. 27.3 SERVICE OF PROCESS. The parties hereby consent to the service of process (a) out of any of the courts referred to above, (b) in accordance with Section 415.40 of the California Code of Civil Procedure by mailing copies of the summons and complaint to the person to be served by certified or registered mail to the address set forth in Article 26.2, postage prepaid, return receipt requested or (c) in accordance with the Hague Convention, if applicable. 27.4 PREVAILING PARTY IN DISPUTE. If any legal action or other proceeding is brought in connection with or arises out of any provisions in this Lease, the prevailing party will be entitled to recover reasonable attorneys' fees and other costs incurred in such action or proceedings. The prevailing party will also, to the extent permissible by Law, be entitled to receive pre- and post-judgment Default Interest. 27.5 WAIVER. LESSEE AND LESSOR HEREBY WAIVE THE RIGHT TO A TRIAL BY JURY. LESSEE AND LESSOR HEREBY IRREVOCABLY WAIVE ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATED TO THIS LEASE BROUGHT IN ANY OF THE COURTS REFERRED TO IN ARTICLE 27.2, AND HEREBY FURTHER IRREVOCABLY WAIVE ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. ARTICLE 28 MISCELLANEOUS 28.1 PRESS RELEASES. The parties will give copies to one another, in advance if possible, of all news, articles and other releases provided to the public media regarding this Lease. 28.2 LESSOR PERFORMANCE FOR LESSEE. The exercise by LESSOR of its remedy of performing a LESSEE obligation hereunder is not a waiver of and will not relieve LESSEE from the performance of such obligation at any subsequent time or from the performance of any of its other obligations hereunder. 28.3 LESSOR'S PAYMENT OBLIGATIONS. Any obligation of LESSOR under this Lease to pay or release any amount to LESSEE is conditioned upon (a) all amounts then due and payable by LESSEE to LESSOR under this Lease or under any other agreement between LESSOR and LESSEE having been paid in full and (b) no Default or Event of Default having occurred and continuing hereunder at the time such payment or release of payment is payable to LESSEE. 28.4 APPLICATION OF PAYMENTS. Any amounts paid or recovered in respect of LESSEE liabilities hereunder may be applied to Rent, Default Interest, fees or any other amount due hereunder in such proportions, order and manner as LESSOR determines. 28.5 USURY LAWS. The parties intend to contract in strict compliance with the usury Laws of the State of California and, to the extent applicable, the U.S. Notwithstanding anything to the contrary in the Operative Documents, LESSEE will not be obligated to pay Default Interest or other interest in excess of the maximum non-usurious interest rate, as in effect from time to time, which may by applicable Law be charged, contracted for, reserved, received or collected by LESSOR in connection with the Operative Documents. During any period of time in which the then-applicable highest lawful rate is lower than the Default Interest rate, Default Interest will accrue and be payable at such highest lawful rate; however, if at later times such highest lawful rate is greater than the Default Interest rate, then LESSEE will pay Default Interest at the highest lawful rate until the Default Interest which is paid by LESSEE equals the amount of interest that would have been payable in accordance with the interest rate set forth in Article 5.5. 28.6 DELEGATION BY LESSOR. LESSOR may delegate to any Person(s) all or any of the rights, powers or discretion vested in it by this Lease and any such delegation may be made upon such terms and conditions as LESSOR in its absolute discretion thinks fit. 28.7 CONFIDENTIALITY. The Operative Documents and all non-public information obtained by either party about the other are confidential and are between LESSOR and LESSEE only and will not be disclosed by a party to third parties (other than to such party's auditors or legal advisors or as required in connection with any filings of this Lease in accordance with Article 13) without the prior written consent of the other party. If disclosure is required as a result of applicable Law, LESSEE and LESSOR will cooperate with one another to obtain confidential treatment as to the commercial terms and other material provisions of this Lease. 28.8 RIGHTS OF PARTIES. The rights of the parties hereunder are cumulative, not exclusive, may be exercised as often as each party considers appropriate and are in addition to its rights under general Law. The rights of one party against the other party are not capable of being waived or amended except by an express waiver or amendment in writing. Any failure to exercise or any delay in exercising any of such rights will not operate as a waiver or amendment of that or any other such right any defective or partial exercise of any such rights will not preclude any other or further exercise of that or any other such right and no act or course of conduct or negotiation on a party's part or on its behalf will in any way preclude such party from exercising any such right or constitute a suspension or any amendment of any such right. 28.9 FURTHER ASSURANCES. Each party agrees from time to time to do and perform such other and further acts and execute and deliver any and all such other instruments as may be required by Law, reasonably requested by the auditors of the other party or requested by the other party to establish, maintain or protect the rights and remedies of the requesting party or to carry out and effect the intent and purpose of this Lease. 28.10 USE OF WORD "INCLUDING". The term "INCLUDING" is used herein without limitation. 28.11 HEADINGS. All article and paragraph headings and captions are purely for convenience and will not affect the interpretation of this Lease. Any reference to a specific article, paragraph or section will be interpreted as a reference to such article, paragraph or section of this Lease. 28.12 INVALIDITY OF ANY PROVISION. If any of the provisions of this Lease become invalid, illegal or unenforceable in any respect under any Law, the validity, legality and enforceability of the remaining provisions will not in any way be affected or impaired. 28.13 NEGOTIATION. The terms of this Lease are agreed by LESSOR from its principal place of business in Los Angeles, California. 28.14 TIME IS OF THE ESSENCE. Time is of the essence in the performance of all obligations of the parties under this Lease and, consequently, all time limitations set forth in the provisions of this Lease will be strictly observed. 28.15 AMENDMENTS IN WRITING. The provisions of this Lease may only be amended or modified by a writing executed by LESSOR and LESSEE. 28.16 COUNTERPARTS. This Lease may be executed in any number of identical counterparts, each of which will be deemed to be an original, and all of which together will be deemed to be one and the same instrument when each party has signed and delivered one such counterpart to the other party. 28.17 DELIVERY OF DOCUMENTS BY FAX. Delivery of an executed counterpart of this Lease or of any other documents in connection with this Lease by fax will be deemed as effective as delivery of an originally executed counterpart. Any party delivering an executed counterpart of this Lease or other document by fax will also deliver an originally executed counterpart, but the failure of any party to deliver an originally executed counterpart of this Lease or such other document will not affect the validity or effectiveness of this Lease or such other document. 28.18 ENTIRE AGREEMENT. The Operative Documents constitute the entire agreement between the parties in relation to the leasing of the Aircraft by LESSOR to LESSEE and supersede all previous proposals, agreements and other written and oral communications in relation hereto. The parties acknowledge that there have been no representations, warranties, promises, guarantees or agreements, express or implied, except as set forth herein and in the other Operative Documents. IN WITNESS WHEREOF, LESSEE and LESSOR have caused this Lease to be executed by their respective officers as of September 5, 2000. INTERNATIONAL LEASE FINANCE AMERICAN TRANS AIR, INC. CORPORATION By: /s/ Grant Levy By: /s/ Kenneth K. Wolff Its: Vice President Its: Executive Vice President & CFO EXHIBIT A AIRCRAFT DESCRIPTION Aircraft Manufacturer and Model: Boeing 737-800 Specification: Seating Configuration: Manufacturer's Serial Number: 28247 Registration Mark: ____ Engine Manufacturer and Model: CFM56-7B-27 Engine Serial Numbers: _______ and ________ Engine Thrust Rating: 27,300 pounds Maximum Gross Takeoff Weight: 160,000 pounds EXHIBIT B AGENCY AGREEMENT (Limited Authority) Relating to Boeing 737-800 Aircraft THIS AGENCY AGREEMENT ("AGREEMENT") is made and entered into as of ____________________. BETWEEN: AMERICAN TRANS AIR, INC., a Indiana corporation whose address and principal place of business is at 7337 West Washington Street, Indianapolis International Airport, Indianapolis, Indiana 46231, United States of America ("AGENT") and INTERNATIONAL LEASE FINANCE CORPORATION, a California corporation, whose address and principal place of business is at 1999 Avenue of the Stars, 39th Floor, Los Angeles, California 90067, U.S.A. ("BUYER"). RECITAL The Boeing Company ("MANUFACTURER") and Buyer have entered into Purchase Agreement 1830, dated as of June 27, 1995 (such purchase agreement as may be amended in accordance with the provisions thereof is hereinafter referred to as the "PURCHASE AGREEMENT") under which Manufacturer has agreed to manufacture and sell and Buyer has agreed to purchase certain Boeing 737-800 aircraft. Buyer has agreed to lease one (1) of such aircraft bearing manufacturer's serial number 28247 (the "AIRCRAFT") to the Agent pursuant to an Aircraft Lease Agreement between Buyer and Agent dated as of September 5, 2000 (the "LEASE"). The Agent is engaged in business as a commercial air carrier and intends to lease the Aircraft from Buyer, and Buyer is desirous of utilizing the expertise of the Agent as Buyer's agent in all matters to which the Purchase Agreement relates with respect to the Aircraft except certain items as indicated below, and the Agent, as Buyer's agent, is willing to make such expertise available to Buyer. Accordingly, the parties agree as follows: 1. Buyer hereby appoints the Agent as Buyer's sole and exclusive agent with authority to perform the following, on behalf of Buyer, as the Agent may in its discretion determine to be necessary or desirable: (a) monitor Manufacturer's production, testing and delivery of the Aircraft in accordance with the Purchase Agreement and (b) do all such other things permitted by the Purchase Agreement related to the technical and engineering aspects of Manufacturer's production of the Aircraft, except Buyer limits Agent's authority to perform on behalf of Buyer on any defect that occurs during manufacture that is considered significant in nature by Buyer as measured by the criteria set forth below. Buyer retains the sole authority to perform on any defect meeting such criteria. (i) Deviations from the drawing configuration that could affect future modifications, maintenance, repair or overhaul of the Aircraft; (ii) Defects that are obvious appearance items; (iii) Rework that requires stress concurrence to satisfy Manufacturer's Material Review Board (MRB) requirements; (iv) A high quantity of defects normally considered minor on a singular basis; (v) Major rework requiring extensive repair or modification, E.G. replacement of ---- skin panels, extensive use of oversize fasteners, repair of damaged areas and significant structural modifications; (vi) Rework that affects the aerodynamic drag coefficient of the Aircraft; or (vii) Rework that involves areas known to be sensitive to Buyer. 2. Notwithstanding anything in the provisions of paragraph 1, nothing in this Agreement will confer authority upon or otherwise permit the Agent: (a) to exercise any power of termination under the Purchase Agreement or (b) to make any payments due from Buyer to Manufacturer or to receive on behalf of Buyer any payments due from Manufacturer under the Purchase Agreement, or to alter any of the terms and conditions of the Purchase Agreement or the Detail Specifications of the Aircraft. 3. Buyer will not revoke the appointment of and authority granted under this Agreement to the Agent unless a termination of the Purchase Agreement or Lease has occurred with respect to the Aircraft or the Agent has failed to perform a material obligation under this Agreement. Notice of any such revocation will be provided in accordance with the provisions of Article 14 of the Purchase Agreement and given to both Manufacturer and the Agent. 4. Manufacturer acknowledges the appointment of the Agent for the purpose set forth hereunder and Manufacturer and Buyer agree that due performance by Manufacturer or Agent of an obligation under the Purchase Agreement will constitute due satisfaction of such obligation by such party and Buyer agrees to be bound by the acts of the Agent. 5. Buyer and Agent agree to identify the technical organization and/or person(s) with the limited authority to act for Agent during production of the Aircraft. Buyer will, if possible, provide such identification to Manufacturer in writing, along with office space requirements for Agent, if required, prior to or at the time of Manufacturer's acknowledgment of this Agreement. 6. Nothing in this Agreement will subject Manufacturer to any liability under the Purchase Agreement which it would not otherwise be subject to, or modify Manufacturer's rights thereunder, or require Manufacturer to divest itself of title to or possession of Aircraft or any other property which is subject to the Purchase Agreement until payment therefor and delivery thereof in accordance with the Purchase Agreement. 7. None of the parties hereto will be entitled to assign to any third party any of their rights under this Agreement. 8. The Agent will not delegate to any third party the performance of the obligations imposed on it by this Agreement or appoint a sub-agent. 9. References to Manufacturer in this Agreement will include any wholly-owned subsidiary of Manufacturer to which Manufacturer assigns any of its rights and obligations under the Purchase Agreement pursuant to the terms and conditions thereof. 10. This Agreement will be governed by the laws of the State of California; however, the Purchase Agreement shall remain governed by the laws of the State of Washington. This Agreement has been executed by the parties hereto as of the day and year first above written. INTERNATIONAL LEASE FINANCE CORPORATION AMERICAN TRANS AIR, INC. By: By: Its: Its: The Boeing Company acknowledges the appointment of AMERICAN TRANS AIR, INC. as agent of International Lease Finance Corporation in connection with the above referenced Aircraft as set forth in this Agreement. THE BOEING COMPANY By: Its: EXHIBIT C CERTIFICATE OF INSURANCE [Refer to Aircraft Lease Agreement dated as of September 5, 2000 between LESSEE and LESSOR (the "Lease"). If applicable, insurance certificates from both the insurers and reinsurers will be provided. If there is a LESSOR's Lender, include references to it where appropriate after references to LESSOR.] To: INTERNATIONAL LEASE FINANCE CORPORATION ("LESSOR") ------ 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States Re: AMERICAN TRANS AIR, INC. ("LESSEE") Boeing 737-800 Manufacturer's Serial No.: 28247 Registration Mark: ____ (the "AIRCRAFT") The following security has subscribed to the insurance and/or reinsurance policies: [LIST COMPANIES & PERCENTAGES] THIS IS TO CERTIFY THAT, as Insurance Brokers, we have effected Fleet Insurance in respect of aircraft owned or operated by LESSEE (including the Aircraft), and that insurance in respect of the Aircraft is as specified below. AIRCRAFT HULL ALL RISKS COVERING: All risks of physical loss or damage to the Aircraft from any cause (subject only to the exclusions as specified below), for an Agreed Value of Aircraft in the amount of [list amount calculated in accordance with Article 18.1] DEDUCTIBLES: (CONFIDENTIAL MATERIAL OMITTED) each and every loss (or such lesser amount as generally applicable to the rest of LESSEE's 737-800 fleet). Not applicable to Total Loss/Constructive Total Loss or Arranged Total Loss GEOGRAPHICAL COVERAGE: Worldwide [subject to customary exclusions] AVIATION AND AIRLINE GENERAL THIRD PARTY LIABILITY COVERING: Aircraft Third Party, Passenger, Baggage, Cargo and Mail Liability and Airline General Third Party Liability (including Premises, Hangarkeepers and Products Liability) for combined single limit of not less than (CONFIDENTIAL MATERIAL OMITTED) (or such higher amount as LESSEE may carry generally on other 737-800 aircraft in its fleet) any one accident/occurrence (but in the aggregate in relation to Products Liability), extended to cover LESSEE's liability under the Lease to the extent of the risks covered by the policy including war and allied perils under Extended Coverage Endorsement as per AVN 52 subject only to exclusions as specified below GEOGRAPHICAL LIMITS: Worldwide [subject to customary exclusions] HULL WAR AND ALLIED PERILS COVERING: Hull War Risks as per LSW555.B, but including (a) confiscation or requisition (including by State of Registration and state where airline is domiciled), (b) hijacking or other unlawful seizure or wrongful exercise of control of the Aircraft or crew in flight (including any attempt at such seizure or control) and including "All Risks" Continuation Clause and Extortion Risks (including expenses) and covering claims excluded from Hull All Risks Policy while Aircraft outside Assured's control by reason of perils insured under this policy, for an Agreed Value of Aircraft in the amount of [list amount calculated in accordance with Article 18.1] DEDUCTIBLE: No deductible GEOGRAPHICAL LIMITS: Worldwide AIRCRAFT SPARES ALL RISKS INSURANCE COVERING: All risks of physical loss or damage to Aircraft Parts or spares or Engines at all times when removed from the Aircraft from whatever cause, subject only to the exclusions specified below, including the risks set down in AVN 48B other than paragraphs (a) and (b) thereof (but including paragraph (a) in respect of transit risks) for limits of not less than: CONFIDENTIAL MATERIAL OMITTED and covering: With respect to an Engine, an agreed value (CONFIDENTIAL MATERIAL OMITTED) or, with LESSOR's written concurrence, replacement cost With respect to Parts, replacement cost DEDUCTIBLE: (CONFIDENTIAL MATERIAL OMITTED) GEOGRAPHICAL COVERAGE: Worldwide INSURANCE REQUIRED BY MANUFACTURER LESSEE will carry the insurance required by Manufacturer in connection with LESSOR's assignment of Manufacturer's warranties and product support to LESSEE CONTRACTUAL INDEMNITY To the extent of the risks covered by the policies, LESSEE has insurance coverage for the indemnities agreed to by LESSEE pursuant to Article 16 of the Lease, subject to AVN67B or equivalent PERIOD OF COVERAGE (ALL POLICIES) From the Delivery Date of Aircraft to [END OF POLICY PERIOD] It is further certified that LESSOR has an interest in respect of the Aircraft under the Lease. Accordingly, with respect to losses occurring during the period from the Effective Date until the expiry of the Insurance or until the expiry or agreed termination of the Lease or until the obligations under the Lease are terminated by any action of the Insured or LESSOR and in consideration of the Additional Premium it is confirmed that the Insurance afforded by the Policy is in full force and effect and it is further agreed that the following provisions are specifically endorsed to the Policy. 1. UNDER THE HULL (ALL RISKS AND HULL WAR AND ALLIED RISKS) AND AIRCRAFT SPARES INSURANCES (a) In respect of any claim on the Aircraft that becomes payable on the basis of a Total Loss, payment of any settlement will be made to, or to the order of LESSOR as sole loss payee, up to the Agreed Value. With respect to repairable damage to an Aircraft or Engine, LESSOR will receive all insurance proceeds in excess of CONFIDENTIAL MATERIAL OMITTED provided that upon receipt by the insurance broker of written notice of a material default on the part of LESSEE (and until notice that it has been cured), all insurance proceeds which otherwise would be payable to LESSEE will be made directly to LESSOR. In respect of any other claim, payment of any settlement (net of any relevant policy deductible) will be made with such party(ies) as may be necessary to repair the Aircraft unless otherwise agreed after consultation between the Insurers and the Insured and, where necessary under the terms of the Lease, LESSOR. Such payments will only be made provided they are in compliance with all applicable laws and regulations. (b) Insurers agree on a 50/50 settlement in terms of AVS 103. (c) Insurers have no right to replace the Aircraft on a Total Loss (arranged, constructive or otherwise). (d) Insurers confirm that under the insurance policies, if the Insured installs an engine owned by a third party on the Aircraft, either (i) the hull insurance will automatically increase to such higher amount as is necessary in order to satisfy both LESSOR's requirement to receive the Agreed Value in the event of a Total Loss, Constructive Total Loss or Arranged Total Loss and the amount required by the third party engine owner, or (ii) separate additional insurance on such engine will attach in order to satisfy separately the requirements of the Insured to such third party engine owner. 2. UNDER THE LEGAL LIABILITY INSURANCE (a) Subject to the provisions of this Endorsement, the Insurance will operate in all respects as if a separate Policy had been issued covering each party insured hereunder, but this provision will not operate to include any claim arising howsoever in respect of loss or damage to the Aircraft insured under the Hull or Spares Insurance of the Insured. Notwithstanding the foregoing the total liability of Insurers in respect of any and all Insureds will not exceed the limits of liability stated in the Policy. (b) The Insurance provided hereunder will be primary and without right of contribution from any other insurance which may be available to LESSOR. 3. UNDER ALL INSURANCES (a) LESSOR, its successors and assigns, and (with respect to Aviation and Airline General Third Party Liability only) its directors, officers and employees for their respective rights and interests, are included as Additional Insureds. (b) The cover afforded to LESSOR by the Policy in accordance with this Endorsement will 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 Policy. (c) LESSOR will have no responsibility for premium and insurers will waive any right of set-off or counterclaim against LESSOR except in respect of outstanding premium in respect of the Aircraft, provided that Insurer may only set-off for premiums against the proceeds of the hull insurance for outstanding premiums in connection with hull all risks and hull war and allied perils insurance. (d) Upon payment of any loss or claim to or on behalf of LESSOR, Insurers will to the extent and in respect of such payment be thereupon subrogated to all legal and equitable rights of LESSOR indemnified hereby (but not against LESSOR). Insurers will not exercise such rights without the consent of those indemnified, such consent not to be unreasonably withheld. At the expense of Insurers LESSOR will do all things reasonably necessary to assist the Insurers to exercise said rights. (e) Except in respect of any provision for Cancellation or Automatic Termination specified in the Policy or any endorsement thereof, cover provided by this Endorsement may only be cancelled or materially altered in a manner adverse to LESSOR by the giving of not less than thirty (30) days notice in writing to LESSOR. Notice will be deemed to commence from the date such notice is given by the Insurers. Such notice will NOT, however, be given at normal expiry date of the Policy or any endorsement. 4. EXCEPT AS SPECIFICALLY VARIED OR PROVIDED BY THE TERMS OF THIS CERTIFICATE (a) LESSOR IS COVERED BY THE POLICY SUBJECT TO ALL TERMS, CONDITIONS, LIMITATIONS,WARRANTIES, EXCLUSIONS AND CANCELLATION PROVISIONS THEREOF. (b) THE POLICY WILL NOT BE VARIED BY ANY PROVISIONS CONTAINED IN THE LEASE WHICH PURPORT TO SERVE AS AN ENDORSEMENT OR AMENDMENT TO THE POLICY. SUBJECT (save as specifically stated in this Certificate) to policy terms, conditions, limitations and exclusions. Yours faithfully, [BROKERS] EXHIBIT D BROKERS' LETTER OF UNDERTAKING To: INTERNATIONAL LEASE FINANCE CORPORATION 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States Date: Our Ref: Re: AMERICAN TRANS AIR, INC. ("LESSEE") ------ Boeing 737-800 Manufacturer's Serial No.: ____ Registration Mark: ____ (the "AIRCRAFT") Dear Sirs: We confirm that insurance has been effected for the account of [LESSEE] (the "OPERATOR") covering all aircraft owned or operated by them, including the above-referenced aircraft (the "Aircraft"). [Also confirm, if applicable, the amount of any hull all risks or hull war and allied perils on the Aircraft which LESSEE is carrying in excess of the Agreed Value (which excess insurance would be payable to LESSEE). Such excess insurance may not exceed ten percent (10%) of the Agreed Value.] Pursuant to instructions received from the Operator and in consideration of your approving the arrangement of the Operator's "Fleet Policy" (under which the above-referenced Aircraft is insured) through the intermediary of ourselves as Brokers in connection with the insurance (the "INSURANCE") mentioned in our Certificate of Insurance (Reference No. [ ] dated [ ] and attached hereto), we undertake as follows: 1. In relation to the Hull and War Risks Insurance to hold to your order the insurance Slips or Contracts and any Policies which may be issued or any policies substituted (with your consent) therefor (but only insofar as the same relate to the Aircraft only) and the benefit of the Hull and War Risks Insurance thereunder, but subject to our requirements to operate the Fleet Policy insofar as it relates to any other aircraft insured thereunder. 2. To advise you of any of the following: (a) If any insurer cancels or gives notice of cancellation of any of the Insurance at least thirty (30) days (or such lesser period as may be available in the case of War and Allied Perils) before such cancellation is to take effect in respect of the Aircraft. (b) Of any act or omission or of any event (including non-payment of premium) of which we have knowledge or are notified and which might invalidate or render unenforceable in whole or in part any of the Insurance, insofar as the same relate to the Aircraft. (c) If we do not receive instructions to renew all or any of the Insurance at least thirty (30) days prior to their expiration. (d) If any of the Insurance are not renewed on the same terms (save as to premium and period of cover and as you might otherwise have notified us to be acceptable to you) seven (7) days prior to expiry thereof. The above undertakings are given subject to our continuing appointment for the time being as Insurance Brokers to the Operator. We also undertake to advise you if we cease to be Insurance Brokers to the Operator. Yours faithfully, EXHIBIT E ESTOPPEL AND ACCEPTANCE CERTIFICATE AMERICAN TRANS AIR, INC. ("LESSEE"), a corporation organized under the laws of Indiana does hereby represent, acknowledge, warrant and agree as follows: 1. LESSEE and INTERNATIONAL LEASE FINANCE CORPORATION, as LESSOR, have entered into an Aircraft Lease Agreement dated as of September 5, 2000 (hereinafter referred to as the "LEASE"). Words used herein with capital letters and not otherwise defined will have the meanings set forth in the Lease. 2. LESSEE has this ____ day of __________, ____ (Time: __________) at ____________________ received from LESSOR possession of: (a) One (1) Boeing 737-800 aircraft bearing Manufacturer's serial number ____ and U.S. registration mark ____, together with two (2) CFM56-7B-27 engines bearing manufacturer's serial numbers _______ and ________ (each of which has 750 or more rated take-off horsepower), all in airworthy condition. (b) All Aircraft Documentation, including the usual and customary manuals, logbooks, flight records and historical information regarding the Aircraft, Engines and Parts. 3. All of the foregoing has been delivered and accepted on the date set forth above to LESSEE's full satisfaction and pursuant to the terms and provisions of the Lease. 4. The Agreed Value of the Aircraft is US$_______________. 5. The amount of fuel on board at Delivery is __________ (circle one) pounds/kilos (________ gallons). 6. The Aircraft, Engines, Parts and Aircraft Documentation as described in the Lease have been fully examined by LESSEE and have been received in a condition fully satisfactory to LESSEE and in full conformity with the Lease in every respect. 7. The Lease is in full force and effect, LESSEE has no claims, offsets, deductions or set-off of any kind or nature in connection with the Lease, except for any claims against LESSOR set forth on the attached List of Discrepancies. 8. LESSOR's Lender may rely upon all of the foregoing in granting substantial financial accommodations to LESSOR and LESSEE understands and agrees that any funds being advanced by LESSOR's Lender will be made in reliance upon the foregoing. 9. LESSEE has obtained all required permits, authorizations, licenses and fees of the State of Registration or any Government Entity thereof necessary in order for LESSEE to operate the Aircraft as permitted by the terms of the Lease. Dated on the date set forth above AMERICAN TRANS AIR, INC. By: Title: ATTACHMENTS: 1. List of Aircraft Documentation 2. List of Loose Equipment 3. List of Discrepancies ATTACHMENT 1 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE LIST OF AIRCRAFT DOCUMENTATION MANUALS 1. FAA Approved Flight Manual 2. Airplane Flight Operation Manual 3. Aircraft Recover Manual 4. Quick Reference Handbook (QRH) 5. Weight and Balance Manual 6. Aircraft Fueling Manual 7. Aircraft Maintenance Manual (MM) 8. Aircraft Maintenance Manual Supplement 9. Ramp Maintenance Manual (RMM) 10. Cargo Loading Manual 11. Fault Reporting Manual (FRM) 12. Fault Isolation Manual (FIM) 13. Illustrated Parts Catalog (IPC) 14. Life Limited Parts Manual 15. Structural Repair Manual (SRM) 16. Master Minimum Equipment List 17. Wiring Diagram Manual (WD) 18. Wiring Practices Manual 19. System Schematics Manual 20. B.I.T.E. Manual 21. Non-Destructive Test Manual 22. Corrosion Prevention Manual 23. Component Maintenance Manual 24. APU Log Book 25. Engine Maintenance Manual 26. Engine Log Book 27. Engine Illustrated Parts Catalog 28. Engine Data Submittal Book 29. Engine Overhaul Manual 30. Power Plant Build-up Manual AIRCRAFT RECORDS AND HISTORICAL DOCUMENTS 1. Copies of original Certificates delivered by Boeing: a. Airworthiness Certificate for Export b. Radio installation conformity certificate c. Noise limitation certificate 2. Copies of original Documents delivered by Boeing: a. Airworthiness Directive Compliance list b. Aircraft inspection report c. Aircraft Readiness Log d. Weighing report 3. Copies of current Certificates: a. Airworthiness Certificate b. Noise limitation c. Radio license d. Interior material burn certificates e. Certificate of Export f. Aircraft deregistration confirmation e. Aircraft Registration 4. Letters signed and stamped by Quality Assurance: a. Current aircraft hours and cycles b. Current engines hours and cycles c. Accident and Incident report d. Summary of Maintenance Program e. AD compliance during the lease term 5. Aircraft log books and Aircraft readiness log. 6. Aircraft Hard Time (HT) inspection status. 7. One year forecast for HT inspection. 8. Aircraft Modification status, including service bulletins. 9. Last weighing report prior to redelivery. 10. AD compliance report with original signoffs. 11. Routine and non-routine job cards of the last "C" and "D" checks. 12. Past year pilots and maintenance discrepancies. 13. Major and Minor structural repairs with applicable approvals. 14. Compass Swing report of the last three years. 15. Cabin Configuration drawing (LOPA). 16. Emergency equipment location drawing. 17. Last X-RAYs ENGINES RECORDS 1. Last test cell run reports. 2. Life Limited Parts status and traceability. 3. AD compliance report with original signoffs. 4. Engine Modification/service bulletin/inspection report and applicableforms. 5. Last heavy maintenance records for each module. 6. Engine log books. 7. Engine removal history. 8. Past year trend monitoring reports. 9. Historical borescope reports. 10. Engine component report. APU RECORDS 1. APU status (FH, FC, limits). 2. Life limited Part status and traceability. 3. AD compliance with original signoffs. 4. Modification status. 5. Last heavy maintenance documents. 6. APU log books. 7. Last test cell report. COMPONENT RECORDS 1. Aircraft component inventory. 2. Hard time component inventory. 3. All serviceable tags. 4. Landing Gear status with last overhaul and life limited Part status. 5. AD compliance with original signoffs. 6. Modification status. ATTACHMENT 2 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE LIST OF LOOSE EQUIPMENT ATTACHMENT 3 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE LIST OF DISCREPANCIES EXHIBIT F OPINION OF COUNSEL TO BE GIVEN BY INDEPENDENT OUTSIDE COUNSEL OF LESSEE OR OTHER LAWYERS ACCEPTABLE TO LESSOR To: International Lease Finance Corporation 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States Gentlemen: This opinion is furnished to you pursuant to Article 7 of the Aircraft Lease Agreement dated as of September 5, 2000 (the "LEASE") between AMERICAN TRANS AIR, INC. ("LESSEE") and INTERNATIONAL LEASE FINANCE CORPORATION ("LESSOR"). Defined terms in this opinion are used herein as defined in the Lease. I have acted as counsel for LESSEE in connection with the preparation, execution and delivery of the Lease. In that connection I have examined: (a) The Lease and Estoppel and Acceptance Certificate; (b) The charter of LESSEE and all amendments thereto (the "CHARTER"); and (c) Such other documents, agreements and instruments, and such treaties, laws, rules, regulations, decrees and the like, as I have deemed necessary as a basis for the opinions hereinafter expressed. [ (d) All of the agreements and any amendments thereto between LESSEE and all other lessors and lenders of LESSEE covering other aircraft operated by LESSEE on which the Engines can be installed.] Based upon the foregoing and having regard for legal considerations which I deem relevant, I am of the opinion that: 1. LESSEE is a corporation duly incorporated, validly existing and in good standing under the Laws of Indiana. It has the corporate power and authority to carry on its business as presently conducted and to perform its obligations under the Lease. 2. No authorization, approval, consent, license or order of, or registration with, or the giving of notice to the Aviation Authority or any other regulatory body or authority is required for the valid authorization, execution, delivery and performance by LESSEE of the Lease. 3. The Lease and the Estoppel and Acceptance Certificate have each been duly authorized, executed and delivered by LESSEE. Each such instrument is a valid, enforceable and binding obligation of LESSEE except as enforceability may be limited by bankruptcy, insolvency, reorganization or other Laws of general application affecting the enforcement of creditors' rights. 4. The execution and delivery of the Lease and the Estoppel and Acceptance Certificate, the consummation by LESSEE of the transactions contemplated therein and compliance by LESSEE with the terms and provisions thereof do not contravene any Law applicable to LESSEE, or result in any breach of or constitute any default under or result in the creation of any lien, charge or encumbrance upon any property of LESSEE, under any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which LESSEE is a party or by which LESSEE or its properties or assets is bound. 5. Except for any filing or recording that may be required with the [NAME OF AIRCRAFT REGISTER] and except for [DESCRIBE SUCH OTHER FILINGS OR RECORDINGS], no filing or recording of any instrument or document (including the filing of any financial statement) is necessary under the laws of the U.S. in order for the Lease to constitute a valid and perfected lease of record relating to the Aircraft, it being understood that such counsel expresses no opinion as to the nature of LESSOR's title to the Aircraft on the Delivery Date. 6. LESSEE holds all licenses, certificates and permits from applicable governmental authorities in the U.S. necessary for the conduct of its business as a certificated air carrier and performance of its obligations under the Lease. 7. To my knowledge, there are no suits or proceedings pending or threatened against LESSEE before any Government Entity against or affecting LESSEE which are reasonably likely to be adversely determined and, if adversely determined, would have a material adverse effect on the financial condition or business of LESSEE or its ability to perform under the Lease, except as described in the filings provided to LESSOR pursuant to Article 22. 8. The obligations of LESSEE under the Lease are direct, general and unconditional obligations of LESSEE and rank or will rank at least PARI PASSU with all other present and future unsecured and unsubordinated obligations (including contingent obligations) of LESSEE, with the exception of such obligations as are mandatorily preferred by law. 9. LESSEE, under the laws of the U.S. or of any other jurisdiction affecting LESSEE, is subject to private commercial law and suit. Neither LESSEE nor its properties or assets have the right of immunity from suit or execution on the grounds of sovereignty in such jurisdictions and the performance by LESSEE of its obligations under the Lease constitute commercial acts done for commercial purposes. 10. There is no applicable usury or interest limitation Law in Indiana which may restrict the recovery of payments in accordance with the Lease. 11. LESSOR will not violate any Law or become liable to any tax in Indiana or the U.S. by reason of entering into or performing its obligations under the Lease and it is not necessary to establish a place of business in Indiana in order to enforce any provisions of the Lease. Very truly yours, EXHIBIT G ASSIGNMENT OF RIGHTS (AIRFRAME) [DATE] Boeing Commercial Airplane Group P.O. Box 3707 Seattle, Washington 98124-2207 Attention: Vice President-Contracts Mail Code 21-34 Subject: Full Assignment of Rights and Obligations - International Lease Finance Corporation as Lessor and AMERICAN TRANS AIR, INC. as Lessee of Model Boeing 737-800 aircraft bearing manufacturer's serial number 28247 Ladies and Gentlemen: In connection with International Lease Finance Corporation's lease to AMERICAN TRANS AIR, INC. ("Lessee") of a Boeing aircraft (more fully described below), reference is made to the following documents: A. Purchase Agreement 1830, dated as of June 27, 1995, between The Boeing Company ("Boeing") and International Lease Finance Corporation ("ILFC") (the "Boeing Agreement") under which ILFC purchased a certain Boeing Model 737-800 aircraft bearing manufacturer's serial number 28247 (the "Aircraft"). B. Aircraft Lease Agreement (the "Lease") for the Aircraft dated as of September 5, 2000 between ILFC and Lessee. Capitalized terms used herein without definition will have the same meaning as in the Boeing Agreement. In connection with ILFC's lease of the Aircraft under the Lease, ILFC is transferring to Lessee certain rights of ILFC related to the Aircraft under the Boeing Agreement. To accomplish this transfer of rights, as authorized by the provisions of the Boeing Agreement: 1. Lessee acknowledges that it has received copies of the following specific provisions of the Boeing Agreement applicable to the Aircraft and agrees to be bound by and comply with all the terms, conditions, and limitations contained in such provisions, including without limitation the disclaimer and release, exclusion of liabilities, indemnity and insurance provisions thereof: Boeing Agreement Article 6 - Excusable Delay 6.1 General Article 10 - Assignment, Resale or Lease 10.1 Assignment 10.3 Sale by Buyer after Delivery 10.4 Lease by Buyer after Delivery 10.5 No Increase in Boeing Liability 10.6 Exculpatory or Indemnity Clause in Post-delivery Sale or Lease Article 12 - Product Assurance; Disclaimer and Release; Exclusion of Liabilities; Customer Support; Indemnification and Insurance (in its entirety) Article 14 - Contractual Notices and Requests Article 15 - Miscellaneous 15.4 Governing Law Exhibit B - Product Assurance Document Part A Boeing Warrant Part B Warranty Repairs and Modifications by Buyer Part C Boeing Service Life Policy Part D Boeing Indemnity Against Patent Infringement Part D-1 Boeing Indemnity Against Copyright Infringement Part E Supplier Warranties and Patent Indemnities Part G Boeing Interface Commitment Part H General Exhibit C-1 - Customer Support Document Part B Boeing Customer Support Services Part D Technical Data and Documents Part E Buyer's Indemnification of Boeing and Insurance Part F Alleviation or Cessation of Performance Exhibit E - Buyer Furnished Equipment Provisions Document Paragraph 8 Indemnification of Boeing Paragraph 9 Patent Indemnity Paragraph 10 Definitions Letter Agreement No. 1830-3 - Seller Purchased Equipment Paragraph 6 Buyer's Indemnification of Boeing 2. Lessee recognizes that Boeing's obligation to provide training, support and services to Lessee pursuant to Exhibit C of the Boeing Agreement is conditioned on the receipt by Boeing of evidence of compliance by Lessee with the insurance requirements set forth in paragraph 2 of Part E of Exhibit C or in such other form as may be satisfactory to Boeing, prior to the commencement of such training, support and services. 3. ILFC reserves to itself all rights, claims and interests it may have under the Boeing Agreement not expressly assigned to Lessee hereunder. ILFC will remain responsible to Boeing for any amounts with respect to the Aircraft owed to Boeing under the Boeing Agreement prior to the effective date of this letter, including any amounts owed by ILFC to Boeing under the specific articles and paragraphs of the Boeing Agreement referenced in paragraph 1 above based upon events or incidents relating to the Aircraft occurring prior to the effective date of this letter. 4. ILFC hereby assigns to Lessee the sole authority to exercise in Lessee's name all rights and powers of ILFC with respect to the Aircraft under the specific portions of the Boeing Agreement referenced in paragraph 1 above. Such authorization will continue until Boeing receives from ILFC written notice that the Lease has been cancelled or terminated, addressed to Boeing's Vice President, Contracts, P.O. Box 3707, MC 21-34, Seattle, Washington 98124-2207, U.S.A. Until Boeing receives such notice, Boeing will be entitled to deal exclusively with Lessee with respect to the Aircraft under the specific portions of the Boeing Agreement referenced in paragraph 1 above and, with respect to the rights, powers, duties or obligations under such portions of the Boeing Agreement, any and all actions taken by Lessee or agreements entered into by Lessee during the period prior to Boeing's receipt of such notice will be final and binding on ILFC. 5. Lessee hereby accepts the authorization set forth in paragraph 4 above and agrees to be bound by and to comply with all the terms, conditions and limitations of the portion of the Boeing Agreement referenced in paragraph 1 above. 6. This Assignment may be signed by the parties hereto in separate counterparts, each of which when executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. 7. This Assignment shall be governed by, and construed in accordance with,the laws of the State of Washington, including all matters of construction, validity and performance. We request that Boeing, upon receipt of this letter, acknowledge receipt thereof and the transfer of rights set forth above by signing the acknowledgment and forwarding one copy of this letter to each of the undersigned. IN WITNESS WHEREOF, the parties hereto have caused this Assignment Agreement to be duly executed as of the dates written below. INTERNATIONAL LEASE FINANCE AMERICAN TRANS AIR, INC., as Lessee CORPORATION, as Lessor and Buyer By: By: Its: Its: BOEING ACKNOWLEDGMENT AND CONSENT TO ASSIGNMENT Receipt of the above letter is acknowledged and transfer of certain rights as described above under the Boeing Agreement is confirmed, effective as of this date. THE BOEING COMPANY By: Its: Date: EXHIBIT H ASSIGNMENT OF RIGHTS (ENGINES) [DATE] CFM INTERNATIONAL, INC. 1 Neumann Way, F-17 Cincinnati, Ohio 45215 Attention: Commercial Contracts - Warranty Assignment Administrator Dear Warranty Assignment Administrator: Reference is hereby made to that Consent to Assignment made as of April 29, 1988 (the "CONSENT TO ASSIGNMENT"), by and between CFM INTERNATIONAL, INC. ("CFMI") and INTERNATIONAL LEASE FINANCE CORPORATION ("ILFC"). Terms defined in the Consent to Assignment are used herein with the same meaning as in the Consent to Assignment. As of ________________ ___, ______, ILFC has assigned all of its rights and interest in, to and under the Engine Warranties to AMERICAN TRANS AIR, INC. ("ASSIGNEE") in connection with its lease to Assignee of a Boeing 737-800 aircraft (the "AIRCRAFT") together with two (2) CFMI Model CFM56-7B-27 engines bearing Manufacturer's Serial Numbers _______ and ________ (the "ENGINES") as of the date each such Engine was delivered to Assignee. Such assignment shall be effective from such date until ILFC notifies CFMI that the Lease has been cancelled or terminated. The Assignee has accepted such assignment and all the limitations and liabilities pertaining to the Engine Warranties as stated in the provisions of the GTA listed in Schedule 2 to the Consent to Assignment. A copy of the aforesaid assignment is attached hereto. Very truly yours, INTERNATIONAL LEASE FINANCE CORPORATION By: Title: cc: Ruben M. Cabrera Director, Commercial Contracts ASSIGNMENT OF WARRANTIES [DATE] In consideration of AMERICAN TRANS AIR, INC. ("LESSEE") leasing from International Lease Finance Corporation ("ILFC") one (1) Boeing 737-800 aircraft together with two (2) CFMI Model CFM56-7B-27 engines bearing manufacturer's serial numbers _______ and ________, it is hereby agreed as follows: 1. ILFC hereby assigns and transfers to Lessee all of ILFC's respective rights and interest in and to and in and under the Engine Warranties set forth in and subject to the limitations and liabilities set forth in Exhibit B Warranty, Section X (the "ENGINE WARRANTIES") of CFM International, Inc. - ILFC General Terms Agreement No. 6-3987 dated 22 June 1984 (the "GTA") during the term of such leases so long as Lessee is not in default thereunder. 2. Lessee hereby accepts such assignment including all the limitations and liabilities pertaining to said Engine Warranties as stated in the provisions of Exhibit B Warranty, Section X of the GTA. 3. This Agreement shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors and assigns to the extent permitted by the GTA and hereunder. 4. This Agreement shall be governed by and construed in accordance with the laws of the State of California. 5. This Agreement may be executed in any number of counterparts, each of which when executed and delivered is an original but all of which taken together constitute one and the same instrument and any party may execute this Agreement by signing any counterpart. IN WITNESS WHEREOF, the authorized representative of the parties hereto have executed this Agreement as of the day and year first above written. For and on behalf of For and on behalf of INTERNATIONAL LEASE FINANCE AMERICAN TRANS AIR, INC. CORPORATION By: By: Its: Its: EXHIBIT I RETURN ACCEPTANCE RECEIPT Date: _________________ ___, ____ 1. AMERICAN TRANS AIR, INC., as LESSEE, and INTERNATIONAL LEASE FINANCE CORPORATION, as LESSOR, have entered into an Aircraft Lease Agreement dated as of September 5, 2000 (the "LEASE"). Words used herein with capital letters and not otherwise defined will have the meanings set forth in the Lease. 2. LESSOR has this ____ day of __________, ____ (Time: __________) at ____________________ received from LESSEE possession of: (a) One (1) Boeing 737-800 Aircraft bearing Manufacturer's serial number ____, together with two (2) CFM56-7B-27 engines bearing manufacturer's serial numbers _______ and ________, and all Parts attached thereto and thereon in an airworthy condition and (b) All Aircraft Documentation, including the usual and customary manuals, logbooks, flight records and historical information regarding the Aircraft, Engines and Parts, as listed in the Document Receipt attached hereto. 3. The Airframe, Engines and Parts had the following hours/cycles at return: (a) AIRFRAME: Total hours: _______________ Total Landings: _______________ (b) ENGINES: POSITION SERIAL NO. TOTAL HOURS TOTAL CYCLES HRS/CYCLES SINCE LAST SHOP VISIT Time Remaining to Next LIFE LIMITED PART REMOVAL PART NAME HOURS CYCLES MSN MSN (c) APU: MSN __________ Total hours: __________ ______ hours/ ______ cycles since last Overhaul ______ hours/ ______ cycles remaining on APU life-limited Parts (d) LANDING GEARS: POSITION SERIAL NO. Total Hrs/Cycles since Date of last HRS/CYCLES LAST OVERHAUL OVERHAUL Nose Right Main Left Main (e) FUEL ON BOARD AT RETURN: ______ (circle one) pounds/kilos (______ gallons) 4. Other technical information regarding the Aircraft and its components are correctly set forth on the Technical Evaluation Report (in the form of Exhibit L) attached hereto. 5. The above specified aircraft, engines and documentation are hereby accepted by LESSOR subject to correction by LESSEE (or procurement by LESSEE at LESSEE's cost) as soon as reasonably possible of the discrepancies specified in Attachment 2 hereto. 6. Subject to the following paragraph, the leasing of the Aircraft by LESSOR to LESSEE pursuant to the Lease is hereby terminated without prejudice to LESSEE's continuing obligations under the Lease including, without limitation, paragraph 6 above and Articles 10.5, 15 and 16. 7. LESSEE represents and warrants that during the term of the Lease all maintenance and repairs to the Airframe and Engines were performed in accordance with the requirements contained in the Lease. LESSEE further confirms that all of its obligations under the Lease whether accruing prior to the date hereof or which survive the termination of the Lease by their terms and accrue after the date hereof, will remain in full force and effect until all such obligations have been satisfactorily completed. 8. This Return Acceptance Supplement is executed and delivered by the parties in [place]. IN WITNESS WHEREOF, the parties hereto have caused this Return Acceptance Receipt to be executed in their respective corporate names by their duly authorized representatives as of the day and year first above written. INTERNATIONAL LEASE FINANCE CORPORATION AMERICAN TRANS AIR, INC. By: By: Its: Its: ATTACHMENTS: 1. List of Aircraft Documentation 2. List of Loose Equipment 3. List of Discrepancies 4. Engine Maximum Power Assurance Test Conditions and Results 5. Dent and Damage Chart 6. Form of No Accident/Incident Letter 7. Technical Evaluation Report (in the form of Exhibit L) ATTACHMENT 1 TO RETURN ACCEPTANCE RECEIPT LIST OF AIRCRAFT DOCUMENTATION [The (a) manuals and (b) Aircraft records and historical documents set forth below are to be returned with the Aircraft in a current, up-to-date and correct status] MANUALS 1. FAA Approved Flight Manual 2. Airplane Flight Operation Manual 3. Aircraft Recover Manual 4. Quick Reference Handbook (QRH) 5. Weight and Balance Manual 6. Aircraft Fueling Manual 7. Aircraft Maintenance Manual (MM) 8. Aircraft Maintenance Manual Supplement 9. Ramp Maintenance Manual (RMM) 10. Cargo Loading Manual 11. Fault Reporting Manual (FRM) 12. Fault Isolation Manual (FIM) 13. Illustrated Parts Catalog (IPC) 14. Life Limited Parts Manual 15. Structural Repair Manual (SRM) 16. Master Minimum Equipment List 17. Wiring Diagram Manual (WD) 18. Wiring Practices Manual 19. System Schematics Manual 20. B.I.T.E. Manual 21. Non-Destructive Test Manual 22. Corrosion Prevention Manual 23. Component Maintenance Manual 24. APU Log Book 25. Engine Maintenance Manual 26. Engine Log Book 27. Engine Illustrated Parts Catalog 28. Engine Data Submittal Book 29. Engine Overhaul Manual 30. Power Plant Build-up Manual AIRCRAFT RECORDS AND HISTORICAL DOCUMENTS 1. Copies of original Certificates delivered by Boeing: a. Airworthiness Certificate for Export b. Radio installation conformity certificate c. Noise limitation certificate 2. Copies of original Documents delivered by Boeing: a. Airworthiness Directive Compliance list b. Aircraft inspection report c. Aircraft Readiness Log d. Weighing report 3. Copies of current Certificates: a. Airworthiness Certificate b. Noise limitation c. Radio license d. Interior material burn certificates e. Certificate of Export f. Aircraft deregistration confirmation e. Aircraft Registration 4. Letters signed and stamped by Quality Assurance: a. Current aircraft hours and cycles b. Current engines hours and cycles c. Accident and Incident report d. Summary of Maintenance Program e. AD compliance during the lease term 5. Aircraft log books and Aircraft readiness log. 6. Aircraft Hard Time (HT) inspection status. 7. One year forecast for HT inspection. 8. Aircraft Modification status, including service bulletins. 9. Last weighing report prior to redelivery. 10. AD compliance report with original signoffs. 11. Routine and non-routine job cards of the last "C" and "D" checks. 12. Past year pilots and maintenance discrepancies. 13. Major and Minor structural repairs with applicable approvals. 14. Compass Swing report of the last three years. 15. Cabin Configuration drawing (LOPA). 16. Emergency equipment location drawing. 17. Last X-RAYs ENGINES RECORDS 1. Last test cell run reports. 2. Life Limited Parts status and traceability. 3. AD compliance report with original signoffs. 4. Engine Modification/service bulletin/inspection report and applicable forms. 5. Last heavy maintenance records for each module. 6. Engine log books. 7. Engine removal history. 8. Past year trend monitoring reports. 9. Historical borescope reports. 10. Engine component report. APU RECORDS 1. APU status (FH, FC, limits). 2. Life limited Part status and traceability. 3. AD compliance with original signoffs. 4. Modification status. 5. Last heavy maintenance documents. 6. APU log books. 7. Last test cell report. COMPONENT RECORDS 1. Aircraft component inventory. 2. Hard time component inventory. 3. All serviceable tags. 4. Landing Gear status with last overhaul and life limited Part status. 5. AD compliance with original signoffs. 6. Modification status. ATTACHMENT 2 TO RETURN ACCEPTANCE RECEIPT LIST OF LOOSE EQUIPMENT ATTACHMENT 3 TO RETURN ACCEPTANCE RECEIPT LIST OF DISCREPANCIES ATTACHMENT 4 TO RETURN ACCEPTANCE RECEIPT ENGINE MAXIMUM POWER ASSURANCE TEST CONDITIONS AND RESULTS ATTACHMENT 5 TO RETURN ACCEPTANCE RECEIPT DENT AND DAMAGE CHART ATTACHMENT 6 TO RETURN ACCEPTANCE RECEIPT FORM OF NO ACCIDENT/INCIDENT LETTER EXHIBIT J MONTHLY REPORT (SEE FOLLOWING SHEET) MONTHLY AIRCRAFT UTILIZATION AND STATUS REPORT Page 1 of 2 Report Due Date: To: INTERNATIONAL LEASE FINANCE CORPORATION Fax: (310) 788-1990 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067, United States Attn: Finance Department From: AMERICAN TRANS AIR, INC. Contact: Fax: AIRCRAFT TYPE: BOEING 737-800 ENGINE TYPE: CFM56-7B-27 REGISTRATION: ____ SERIAL NUMBER: ____ MONTH OF: NOTE: PLEASE RECORD TIME IN HOURS AND MINUTES NOT DECIMALS. Aircraft Total Time Since New As Of Last Month: Hours: Min: Aircraft Total Time Since New: Hours: Min: Aircraft Total Cycles Since New: Cycles: Airframe Hours Flown During Month: Hours: Min: Airframe Cycles/Landings During Month: Cycles: Time Remaining to "D" or Heavy Maintenance Check: HOURS OR US$ PER CYCLES FLOWN HOUR OR DURING MONTH (AS CYCLE (AS APPLICABLE) X APPLICABLE) = RESERVES TOTAL AIRFRAME: HRS: X = TOTAL LANDING GEAR: HRS: X = TOTAL APU: HRS: X = ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles(for Engine LLP Reserves): x = ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles (for Engine LLP Reserves): x = ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles (for LLP x = Reserves): ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles (for Engine LLP Reserves): x = TOTAL AMOUNT OF RESERVES (US$) PAID THIS MONTH: US$ Monthly Aircraft Utilization and Status Report From: AMERICAN TRANS AIR, INC. PAGE 2 OF 2 ENGINE SERIAL NUMBER: ENGINE SERIAL NUMBER: ORIGINAL POSITION: ORIGINAL POSITION: ACTUAL LOCATION: ACTUAL LOCATION: CURRENT THRUST RATING: CURRENT THRUST RATING: HOURS:/MIN: HOURS:/MIN: Total Time Since New As Of Total Time Since New As Of Last Month: Last Month: Total Time Since New: Total Time Since New: Total Cycles Since New: Total Cycles Since New: Hours Flown During Month: Hours Flown During Month: Cycles During Month: Cycles During Month: IMPORTANT: IF ILFC-OWNED ENGINE IS REMOVED OR INSTALLED ON ANOTHER AIRCRAFT, IT MUST BE REPORTED MONTHLY ON THIS FORM. EXHIBIT K AIRCRAFT DOCUMENTATION AIRCRAFT RECORDS 1. Copies of original Certificates delivered by Boeing: a. Airworthiness Certificate for Export b. Radio installation conformity certificate c. Noise limitation certificate 2. Copies of original Documents delivered by Boeing: a. Airworthiness Directive Compliance list b. Aircraft inspection report c. Aircraft Readiness Log d. Weighing report 3. Copies of current Certificates: a. Airworthiness Certificate b. Noise limitation c. Radio license d. Interior material burn certificates e. Certificate of Export f. Aircraft deregistration confirmation e. Aircraft Registration 4. Letters signed and stamped by Quality Assurance: a. Current aircraft hours and cycles b. Current engines hours and cycles c. Accident and Incident report d. Summary of Maintenance Program e. AD compliance during the lease term 5. Aircraft log books and Aircraft readiness log. 6. Aircraft Hard Time (HT) inspection status. 7. One year forecast for HT inspection. 8. Aircraft Modification status, including service bulletins. 9. Last weighing report prior to redelivery. 10. AD compliance report with original signoffs. 11. Routine and non-routine job cards of the last "C" and "D" checks. 12. Past year pilots and maintenance discrepancies. 13. Major and Minor structural repairs with applicable approvals. 14. Compass Swing report of the last three years. 15. Cabin Configuration drawing (LOPA). 16. Emergency equipment location drawing. 17. Last X-RAYs ENGINES RECORDS 1. Last test cell run reports. 2. Life Limited Parts status and traceability. 3. AD compliance report with original signoffs. 4. Engine Modification/service bulletin/inspection report and applicable forms. 5. Last heavy maintenance records for each module. 6. Engine log books. 7. Engine removal history. 8. Past year trend monitoring reports. 9. Historical borescope reports. 10. Engine component report. APU RECORDS 1. APU status (FH, FC, limits). 2. Life limited Part status and traceability. 3. AD compliance with original signoffs. 4. Modification status. 5. Last heavy maintenance documents. 6. APU log books. 7. Last test cell report. COMPONENT RECORDS 1. Aircraft component inventory. 2. Hard time component inventory. 3. All serviceable tags. 4. Landing Gear status with last overhaul and life limited Part status. 5. AD compliance with original signoffs. 6. Modification status. EXHIBIT L TECHNICAL EVALUATION REPORT (SEE FOLLOWING SHEETS) EX-10.6(I) 24 file070.txt AMTRAN, INC., 2000 10-K, EXHIBIT 10.6(I) AIRCRAFT LEASE AGREEMENT Dated as of September 5, 2000 BETWEEN AMERICAN TRANS AIR, INC. as LESSEE and INTERNATIONAL LEASE FINANCE CORPORATION as LESSOR ------------------------------------------------------------------------------- Aircraft Make and Model: New Boeing 737-800 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Aircraft Manufacturer's Serial Number: 30643 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Aircraft Registration Mark: Per Estoppel and Acceptance Certificate ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Make and Model of Engines: CFM56-7B-27 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Serial Numbers of Engines: Per Estoppel and Acceptance Certificate ------------------------------------------------------------------------------- NEW BOEING 737-800 AIRCRAFT NO. 10 TABLE OF CONTENTS ARTICLE 1 SUMMARY OF TRANSACTION.........................................2 1.1 Description of Aircraft........................................2 1.2 Scheduled Delivery Date and Location...........................2 1.3 Lease Term.....................................................2 1.4 Security Deposit...............................................2 1.5 Transaction Fee................................................2 1.6 Rent During Lease Term.........................................2 1.7 Country of Aircraft Registration...............................4 1.8 Maintenance Program............................................4 1.9 Agreed Value of Aircraft.......................................4 1.10 LESSOR's Bank Account..........................................4 ARTICLE 2 DEFINITIONS....................................................5 2.1 General Definitions............................................5 2.2 Specific Definitions...........................................9 ARTICLE 3 PLACE AND DATE OF DELIVERY....................................11 3.1 Place of Delivery.............................................11 3.2 Scheduled Delivery Date.......................................11 3.3 Delivery subject to Manufacturer Delivery.....................11 3.4 No LESSOR Liability...........................................11 3.5 Total Loss of Aircraft prior to Delivery......................11 3.6 Cancellation for Delay........................................11 ARTICLE 4 LEASE TERM....................................................12 4.1 Lease Term....................................................12 4.2 "Expiration Date".............................................12 4.3 "Termination Date"............................................12 ARTICLE 5 SECURITY DEPOSIT, TRANSACTION FEE, RENT AND OTHER PAYMENTS......................................................13 5.1 Security Deposit..............................................13 5.2 Transaction Fee...............................................14 5.3 Rent..........................................................14 5.4 LESSOR's Bank Account.........................................15 5.5 Default Interest..............................................16 5.6 No Deductions or Withholdings.................................16 5.7 Value Added Taxes.............................................16 5.8 Net Lease.....................................................17 5.9 LESSOR Performance of LESSEE Obligation.......................18 5.10 Consideration for Rent and other Amounts......................18 ARTICLE 6 INVOLVEMENT WITH AIRCRAFT MANUFACTURER........................19 6.1 LESSEE Selection of Aircraft..................................19 6.2 Agency Agreement..............................................19 6.3 Procurement of BFE............................................19 6.4 Assignment of Training........................................19 6.5 LESSEE Inspection of Aircraft.................................19 6.6 Aircraft at Delivery..........................................19 6.7 Delivery of the Aircraft to LESSEE............................20 6.8 LESSEE Acceptance of Aircraft.................................20 ARTICLE 7 PRE-DELIVERY, DELIVERY AND POST-DELIVERY DOCUMENTARY AND OTHER REQUIREMENTS............................21 7.1 Pre-Delivery Requirements.....................................21 7.2 Delivery Requirements.........................................22 7.3 Post-Delivery Requirements....................................23 ARTICLE 8 DISCLAIMERS...................................................24 8.1 "As Is, Where Is".............................................24 8.2 Waiver of Warranty of Description.............................24 8.3 LESSEE Waiver.................................................25 8.4 Conclusive Proof..............................................25 8.5 No LESSOR Liability for Losses................................25 8.6 No Liability to Repair or Replace.............................25 8.7 No Waiver.....................................................26 ARTICLE 9 MANUFACTURERS' AND VENDORS' WARRANTIES........................27 9.1 Warranties....................................................27 9.2 Reassignment..................................................27 ARTICLE 10 OPERATION OF AIRCRAFT.........................................28 10.1 Costs of Operation............................................28 10.2 Compliance with Laws..........................................28 10.3 Training......................................................28 10.4 No Violation of Insurance Policies............................28 10.5 Flight Charges................................................29 ARTICLE 11 SUBLEASES.....................................................30 11.1 No Sublease without LESSOR Consent............................30 11.2 LESSOR Costs..................................................30 11.3 Any Approved Sublease.........................................30 11.4 Assignment of Sublease........................................30 11.5 Continued Responsibility of LESSEE............................30 ARTICLE 12 MAINTENANCE AND USE OF AIRCRAFT...............................31 12.1 General Obligation............................................31 12.2 Specific Obligations..........................................31 12.3 Replacement of Parts..........................................32 12.4 Removal of Engines............................................33 12.5 Pooling of Engines and Parts..................................34 12.6 Installation of Engines on other aircraft.....................34 12.7 Modifications.................................................35 12.8 Performance of Work by Third Parties..........................36 12.9 Reporting Requirements........................................36 12.10 Information Regarding Maintenance Program.....................36 12.11 LESSOR Rights to Inspect Aircraft.............................36 ARTICLE 13 TITLE AND REGISTRATION........................................37 13.1 Title to the Aircraft During Lease Term.......................37 13.2 Registration of Aircraft......................................37 13.3 Filing of this Lease..........................................37 13.4 Evidence of Registration and Filings..........................37 ARTICLE 14 IDENTIFICATION PLATES.........................................38 14.1 Airframe Identification Plates................................38 14.2 Engine Identification Plates..................................38 ARTICLE 15 TAXES.........................................................39 15.1 General Obligation of LESSEE..................................39 15.2 Exceptions to Indemnity.......................................39 15.3 After-Tax Basis...............................................40 15.4 Claims and Contests...........................................40 15.5 Refunds.......................................................41 15.6 Cooperation in Filing Tax Returns.............................41 ARTICLE 16 INDEMNITIES...................................................42 16.1 General Indemnity.............................................42 16.2 Exceptions to General Indemnities.............................43 16.3 After-Tax Basis...............................................44 16.4 Timing of Payment.............................................44 16.5 Subrogation...................................................44 16.6 Notice........................................................44 16.7 Refunds.......................................................44 16.8 Defense of Claims.............................................45 16.9 Survival of Obligation........................................45 ARTICLE 17 INSURANCE.....................................................46 17.1 Categories of Insurance.......................................46 17.2 Insurance for Indemnities.....................................46 17.3 Insurance required by Manufacturer............................46 17.4 Renewal.......................................................46 17.5 Assignment of Rights by LESSOR................................46 17.6 Deductibles...................................................46 17.7 Other Insurance...............................................47 17.8 Information...................................................47 17.9 Currency......................................................47 17.10 Grounding of Aircraft.........................................47 17.11 Failure to Insure.............................................47 17.12 Limit on Hull in favor of LESSEE..............................47 17.13 Marketplace Limitations.......................................48 ARTICLE 18 LOSS, DAMAGE AND REQUISITION..................................49 18.1 Definitions...................................................49 18.2 Notice of Total Loss..........................................50 18.3 Total Loss of Aircraft or Airframe............................50 18.4 Surviving Engine(s)...........................................51 18.5 Total Loss of Engine and not Airframe.........................51 18.6 Other Loss or Damage..........................................52 18.7 Copy of Insurance Policy......................................53 18.8 Government Requisition........................................53 18.9 Conveyance to LESSEE..........................................53 ARTICLE 19 CRAF PROGRAM..................................................54 19.1 Dedication to CRAF............................................54 19.2 Notice to LESSOR..............................................54 19.3 Requisition of Engine.........................................54 19.4 Government Indemnification....................................54 19.5 No Geographic Limits..........................................54 19.6 Notice of Default.............................................55 19.7 Receipt of Payments...........................................55 ARTICLE 20 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE...........56 20.1 Representations and Warranties................................56 20.2 Covenants.....................................................58 ARTICLE 21 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSOR...........61 21.1 Representations and Warranties................................61 21.2 Covenant of Quiet Enjoyment...................................62 ARTICLE 22 FINANCIAL AND RELATED INFORMATION.............................63 ARTICLE 23 RETURN OF AIRCRAFT............................................64 23.1 Date of Return................................................64 23.2 Technical Report..............................................64 23.3 Return Location...............................................64 23.4 Full Aircraft Documentation Review............................64 23.5 Aircraft Inspection...........................................64 23.6 Certificate of Airworthiness Matters..........................65 23.7 General Condition of Aircraft at Return.......................66 23.8 Checks Prior to Return........................................69 23.9 Part Lives....................................................72 23.10 Export and Deregistration of Aircraft.........................74 23.11 LESSEE's Continuing Obligations...............................75 23.12 Airport and Navigation Charges................................75 23.13 Return Acceptance Certificate.................................76 23.14 Indemnities and Insurance.....................................76 ARTICLE 24 ASSIGNMENT....................................................77 24.1 No Assignment by LESSEE.......................................77 24.2 Sale or Assignment by LESSOR..................................77 24.3 LESSOR's Lender...............................................79 24.4 LESSEE Cooperation............................................79 24.5 Protections...................................................79 ARTICLE 25 DEFAULT OF LESSEE.............................................80 25.1 LESSEE Notice to LESSOR.......................................80 25.2 Events of Default.............................................80 25.3 LESSOR's General Rights.......................................82 25.4 Deregistration and Export of Aircraft.........................83 25.5 LESSEE Liability for Damages..................................83 25.6 Waiver of Default.............................................84 25.7 Present Value of Payments.....................................84 25.8 Use of "Termination Date".....................................84 ARTICLE 26 NOTICES.......................................................85 26.1 Manner of Sending Notices.....................................85 26.2 Notice Information............................................85 ARTICLE 27 GOVERNING LAW AND JURISDICTION................................86 27.1 California Law................................................86 27.2 Non-Exclusive Jurisdiction in California......................86 27.3 Service of Process............................................86 27.4 Prevailing Party in Dispute...................................86 27.5 Waiver........................................................86 ARTICLE 28 MISCELLANEOUS.................................................87 28.1 Press Releases................................................87 28.2 LESSOR Performance for LESSEE.................................87 28.3 LESSOR's Payment Obligations..................................87 28.4 Application of Payments.......................................87 28.5 Usury Laws....................................................87 28.6 Delegation by LESSOR..........................................87 28.7 Confidentiality...............................................88 28.8 Rights of Parties.............................................88 28.9 Further Assurances............................................88 28.10 Use of Word "including".......................................88 28.11 Headings......................................................88 28.12 Invalidity of any Provision...................................88 28.13 Negotiation...................................................88 28.14 Time is of the Essence........................................89 28.15 Amendments in Writing.........................................89 28.16 Counterparts..................................................89 28.17 Delivery of Documents by Fax..................................89 28.18 Entire Agreement..............................................89 EXHIBIT A AIRCRAFT DESCRIPTION..........................................91 EXHIBIT B AGENCY AGREEMENT..............................................92 EXHIBIT C CERTIFICATE OF INSURANCE......................................96 EXHIBIT D BROKERS' LETTER OF UNDERTAKING...............................102 EXHIBIT E ESTOPPEL AND ACCEPTANCE CERTIFICATE..........................104 EXHIBIT F OPINION OF COUNSEL...........................................111 EXHIBIT G ASSIGNMENT OF RIGHTS (AIRFRAME)..............................114 EXHIBIT H ASSIGNMENT OF RIGHTS (ENGINES)...............................119 EXHIBIT I RETURN ACCEPTANCE RECEIPT....................................123 EXHIBIT J MONTHLY REPORT...............................................134 EXHIBIT K AIRCRAFT DOCUMENTATION.......................................138 EXHIBIT L TECHNICAL EVALUATION REPORT..................................140 AIRCRAFT LEASE AGREEMENT THIS AIRCRAFT LEASE AGREEMENT is made and entered into as of September 5, 2000. BETWEEN: AMERICAN TRANS AIR, INC., a Indiana corporation whose address and principal place of business is at 7337 West Washington Street, Indianapolis International Airport, Indianapolis, Indiana 46231, United States of America ("LESSEE") and INTERNATIONAL LEASE FINANCE CORPORATION, a California corporation whose address and principal place of business is at 1999 Avenue of the Stars, 39th Floor, Los Angeles, California 90067, United States of America ("LESSOR"). The subject matter of this Lease is one (1) new Boeing 737-800 aircraft. In consideration of and subject to the mutual covenants, terms and conditions contained in this Lease, LESSOR hereby agrees to lease to LESSEE and LESSEE hereby agrees to lease from LESSOR the aircraft and the parties further agree as follows: ARTICLE 1 SUMMARY OF TRANSACTION The information in this Article 1 is a summary of the lease transaction between LESSEE and LESSOR. It is set forth for the convenience of the parties only and will not be deemed in any way to amend, detract from or simplify the other provisions of this Lease. 1.1 DESCRIPTION OF AIRCRAFT One new Boeing 737-800 aircraft 1.2 SCHEDULED DELIVERY DATE AND LOCATION In the month of (CONFIDENTIAL MATERIAL OMITTED) at Seattle, Washington 1.3 LEASE TERM 15 years 1.4 SECURITY DEPOSIT (CONFIDENTIAL MATERIAL OMITTED) 1.5 TRANSACTION FEE (CONFIDENTIAL MATERIAL OMITTED) 1.6 RENT DURING LEASE TERM Payable monthly in advance and equal to the sum of: (a The following amounts for the following years of the Lease Term: LEASE PERIOD MONTHLY RENTAL AMOUNT* (CONFIDENTIAL MATERIAL OMITTED) *The above base rent is expressed in January 1999 U.S.Dollars and will increase in the following amounts for the following periods: PERIOD ESCALATION FACTOR (CONFIDENTIAL MATERIAL OMITTED) 1.7 COUNTRY OF AIRCRAFT REGISTRATION U.S. 1.8 MAINTENANCE PROGRAM LESSEE's Maintenance Program 1.9 AGREED VALUE OF AIRCRAFT (CONFIDENTIAL MATERIAL OMITTED) The Agreed Value is expressed in March 2001 U.S. Dollars and will increase in accordance with Manufacturer's announced escalation rate from March 1, 2001 to the Delivery Date. On each annual renewal date of LESSEE's insurance policy commencing on the renewal date following the first anniversary of the Lease Term, the Agreed Value will decrease by two percent (2.0%) of the then existing Agreed Value. 1.10 LESSOR'S BANK ACCOUNT (Confidential Material Omitted) ARTICLE 2 DEFINITIONS Except where the context otherwise requires, the following words have the following meanings for all purposes of this Lease. The definitions are equally applicable to the singular and plural forms of the words. Any agreement defined below includes each amendment, modification, supplement and waiver thereto in effect from time to time. 2.1 GENERAL DEFINITIONS. "ACT" means the Federal Aviation Act of 1958, as amended from time to time, or any successor act thereto. "AIRCRAFT" means the Airframe, two (2) Engines, Parts and Aircraft Documentation, collectively. As the context requires, "Aircraft" may also mean the Airframe, any Engine, any Part, the Aircraft Documentation or any part thereof individually. For example, in the context of return to LESSOR the term "Aircraft" means the Airframe, Engines, Parts and Aircraft Documentation collectively, yet in the context of LESSEE not creating any Security Interests other than Permitted Liens on the Aircraft, the term "Aircraft" means any of the Airframe, any Engine, any Part or the Aircraft Documentation individually. "AIRCRAFT DOCUMENTATION" means all (a) log books, Aircraft records, manuals and other documents provided to LESSEE in connection with the Aircraft, (b) documents listed in Exhibits E and K and (c) any other documents required to be maintained during the Lease Term by the Aviation Authority, LESSEE's Maintenance Program and this Lease. "AIRFRAME" means the airframe listed in the Estoppel and Acceptance Certificate executed at Delivery together with all Parts relating thereto (except Engines or engines). "AIRWORTHINESS DIRECTIVES" or "ADS" means all airworthiness directives (or equivalent) of the FAA and the Aviation Authority applicable to the Aircraft. "APU" means the auxiliary power unit of the Aircraft. "AVIATION AUTHORITY" means the FAA or any Government Entity which under the Laws of the U.S. from time to time has control over civil aviation or the registration, airworthiness or operation of aircraft in the U.S. If the Aircraft is registered in a country other than the U.S., "Aviation Authority" means the agency which regulates civil aviation in such other country. "AVIATION DOCUMENTS" means any or all of the following which at any time may be obtainable from the Aviation Authority: (a) if required, a temporary certificate of airworthiness from the Aviation Authority allowing the Aircraft to be flown after Delivery to the State of Registration, (b) an application for registration of the Aircraft with the appropriate authority in the State of Registration, (c) the certificate of registration for the Aircraft issued by the State of Registration, (d) a full certificate of airworthiness for the Aircraft specifying transport category (passenger), (e) an air transport license, (f) an air operator's certificate, (g) such recordation of LESSOR's title to the Aircraft and interest in this Lease as may be available in the State of Registration and (h) all such other authorizations, approvals, consents and certificates in the State of Registration as may be required to enable LESSEE lawfully to operate the Aircraft. "BANKRUPTCY CODE" means The Bankruptcy Reform Act of 1978 (11 U.S.C. ss.ss. 101-1330), as amended or supplemented from time to time, and any successor statute, and all of the rules and regulations issued or promulgated in connection therewith. "BASIC ENGINE" means those units and components of the Engine which are used to induce and convert fuel/air mixture into thrust/power; to transmit power to the fan and accessory drives; to supplement the function of other defined systems external to the Engine; and to control and direct the flow of internal lubrication, plus all essential accessories as supplied by the Engine manufacturer. The nacelle, installed components related to the Aircraft systems, thrust reversers, QEC and the primary flight nozzle are excluded. "BFE" means any equipment which is to be provided by the purchaser of the Aircraft (whether actually provided by LESSOR as buyer-furnished equipment or Manufacturer as seller-purchased equipment). "BUSINESS DAY" means a day other than a Saturday or Sunday on which the banks in Indianapolis, Indiana and in the city where LESSOR's Bank is located are open for the transaction of business of the type required by this Lease. "CREDITOR" means any lessor, owner, bank, lender, mortgagee or other Person which is the owner of or has any interest in an aircraft engine or aircraft operated by LESSEE. "CREDITOR AGREEMENT" means the applicable agreement between a Creditor and LESSEE or between Creditors pursuant to which such Creditor owns, leases or has an interest in either an aircraft operated by LESSEE on which an Engine may be installed or in an aircraft engine which may be installed on the Airframe. "DEFAULT" means any event which, upon the giving of notice, the lapse of time and/or a relevant determination, would constitute an Event of Default. "DELIVERY" means the delivery of the Aircraft from LESSOR to LESSEE pursuant to Articles 3 and 6. "DELIVERY DATE" means the date on which Delivery takes place. "DOLLARS" and "$" means the lawful currency of the U.S. "ENGINE" means (a) each of the engines listed on the Estoppel and Acceptance Certificate; or (b) any replacement engine acquired by LESSOR and leased to LESSEE pursuant to Article 18.5 following a Total Loss of an Engine; including in each case all Parts installed in or on any of such engines at Delivery (or substituted, renewed or replacement Parts in accordance with this Lease) so long as title thereto is or remains vested in LESSOR in accordance with the terms of Article 12.3. "EVENT OF DEFAULT" means any of the events referred to in Article 25.2. "FAA" means the Federal Aviation Administration of the Department of Transportation or any successor thereto under the Laws of the U.S. "FARS" means the U.S. Federal Aviation Regulations embodied in Title 14 of the U.S. Code of Federal Regulations, as amended from time to time, or any successor regulations thereto. "GENEVA CONVENTION" means the Convention on the International Recognition of Rights in Aircraft signed in Geneva, Switzerland on June 19, 1948. "GOVERNMENT ENTITY" means any (a) national, state or local government, (b) board, commission, department, division, instrumentality, court, agency or political subdivision thereof and (c) association, organization or institution of which any of the entities listed in (a) or (b) is a member or to whose jurisdiction any such entity is subject. "LANDING GEAR" means the installed main and nose landing gear, components and their associated actuators, side braces and parts. "LAW" means any (a) statute, decree, constitution, regulation, order or any directive of any Government Entity, (b) treaty, pact, compact or other agreement to which any Government Entity is a signatory or party and (c) judicial or administrative interpretation or application of any of the foregoing. "LEASE" means this Aircraft Lease Agreement, together with all Exhibits hereto. "LESSOR'S LIEN" means any Security Interest created by LESSOR, or arising from a claim against LESSOR completely unrelated to this Lease or the other Operative Documents. "MAINTENANCE PROGRAM" means LESSEE's maintenance program as approved by the Aviation Authority or such other maintenance program as LESSOR may, in its discretion, accept in writing. "MANUFACTURER" means The Boeing Company, a Delaware corporation. "MPD" means the Maintenance Planning Document published by Manufacturer and applicable to the Aircraft. "OVERHAUL" means the full reconditioning of the Aircraft, an Engine, APU, Landing Gear, module or Part, as the case may be, in which such equipment has been fully disassembled; cleaned; thoroughly inspected; and returned to the highest standard specified by the applicable manufacturer's manual. "PART" means the APU, any part, component, appliance, system module, engine module, accessory, material, instrument, communications equipment, furnishing, LESSEE-furnished or LESSOR-purchased equipment or other item of equipment (other than complete Engines or engines) for the time being installed in or attached to the Airframe or any Engine or which, having been removed from the Airframe or any Engine, remains the property of LESSOR. "PERMITTED INSTITUTION" means any Person (other than a commercial air carrier, a commercial aircraft operator, a freight forwarder, or an affiliate of any of the foregoing), with either: (a) a combined capital and surplus or net worth of at least; or (b) have a credit rating on the majority of its unsecured debt which is at least equal to BBB or its equivalent from Standard and Poor's Rating Group, a division of The McGraw-Hill Companies, Inc. or Moody's Investors Service, Inc. "PERMITTED LIEN" means (a) LESSOR's Liens; (b) Security Interests arising in the ordinary course of LESSEE's business for Taxes either not yet due and payable or, if due and payable, being contested in good faith in accordance with Article 15.4; (c) materialmen's, mechanics', workmen's, repairmen's, employees' liens or similar Security Interests arising by operation of Law after the Delivery Date in the ordinary course of LESSEE's business for amounts which are either not yet due or are being contested in good faith by appropriate proceedings (and for which adequate reserves have been made or, when required in order to pursue such proceedings, an adequate bond has been provided) so long as such proceedings do not involve any material danger of sale, forfeiture or loss of the Aircraft; (d) the rights of LESSOR and any LESSOR's Lender and the rights of LESSEE under this Lease and the other Operative Documents; (e) the rights of others under agreements or arrangements to the extent permitted by Articles 10 and 11.5; and (f) any Security Interest against which LESSEE causes to be provided a bond in such amount and under such terms and conditions as are reasonably satisfactory to LESSOR. "PERSON" means any individual, firm, partnership, joint venture, trust, corporation, limited liability company, Government Entity, committee, department, authority or any body, incorporated or unincorporated, whether having distinct legal personality or not. "PRIME RATE" means the rate of interest from time to time announced by Bank of America Illinois in Chicago, Illinois as its prime commercial lending rate. "SECURITY INTEREST" means any encumbrance or security interest, however and wherever created or arising including (without prejudice to the generality of the foregoing) any right of ownership, security, mortgage, pledge, charge, encumbrance, lease, lien, statutory or other right in rem, hypothecation, title retention, attachment, levy, claim or right of possession or detention. "STATE OF REGISTRATION" means the U.S. or such other country or state of registration of the Aircraft as LESSOR may, in its absolute discretion, approve in writing. "U.S." means the United States of America. "U.S. AIR CARRIER" means any U.S. air carrier who is a Citizen of the U.S. holding an air carrier operating certificate issued by the Secretary of Transportation pursuant to chapter 447 of the Act for aircraft capable of carrying 10 or more individuals or 6000 pounds or more of cargo, and as to whom there is in force an air carrier operating certificate issued pursuant to FAR Part 121, or who may operate as an air carrier by certification or otherwise under any successor or substitute provisions therefor or in the absence thereof. 2.2 SPECIFIC DEFINITIONS. The following terms are defined in the Articles referenced below: TERMS ARTICLE Agreed Value 18.1 CRAF Program 19.1 CRAF Program Requisition 19.1 Period Default Interest 5.5 Delivery Location 3.1 Expenses 16.1 Expiration Date 4.3 Indemnities 16.1 Lease Term 4.1 LESSEE Customization 5.3.1 Costs LESSOR's Assignee 24.2.1 LESSOR's Bank 5.4 LESSOR's Lender 24.3 Manufacturer's Escalation 5.3.1 Rate Modifications 12.7.2 Net Total Loss Proceeds 18.1 Operative Documents 20.1.3 Rent 5.3.1 Return Check 23.8.1 Scheduled Delivery Date 3.2 Security Deposit 5.1.1 Taxes 15.1 Termination Date 4.3 Total Loss 18.1 Total Loss Date 18.1 Total Loss Proceeds 18.1 Transaction Fee 5.2 ARTICLE 3 PLACE AND DATE OF DELIVERY 3.1 PLACE OF DELIVERY. LESSOR will deliver the Aircraft to LESSEE at Manufacturer's facility at Seattle, Washington or such other place as may be agreed in writing between the parties (the "DELIVERY LOCATION"). 3.2 SCHEDULED DELIVERY DATE. As of the date of this Lease, delivery of the Aircraft from Manufacturer to LESSOR is scheduled to occur in the month of (CONFIDENTIAL MATERIAL OMITTED). LESSOR will not agree to reschedule such delivery without LESSEE's prior written consent. LESSOR will notify LESSEE from time to time and in a timely manner of the exact date on which LESSOR expects such delivery to take place (the "SCHEDULED DELIVERY DATE"). 3.3 DELIVERY SUBJECT TO MANUFACTURER DELIVERY. LESSOR and LESSEE expressly acknowledge that Delivery of the Aircraft to LESSEE is subject to and conditioned upon, and is to occur simultaneously with, delivery of the Aircraft by Manufacturer to LESSOR. 3.4 NO LESSOR LIABILITY. LESSOR will not be liable for any loss or expense, or any loss of profit, arising from any delay or failure in Delivery to LESSEE unless such delay or failure arises as a consequence of the willful misconduct of LESSOR, and in no event will LESSOR be liable for any delay or failure which is caused by any breach or delay on the part of Manufacturer or any BFE supplier. 3.5 TOTAL LOSS OF AIRCRAFT PRIOR TO DELIVERY. If a Total Loss of the Aircraft occurs prior to Delivery, neither party will have any further liability to the other except that LESSOR will return to LESSEE the Security Deposit in accordance with Article 5.1.3 and any prepaid Rent. 3.6 CANCELLATION FOR DELAY. Promptly after LESSOR becomes aware that in Manufacturer's opinion a delay will cause Delivery to be delayed beyond (CONFIDENTIAL MATERIAL OMITTED) LESSOR will notify LESSEE. By written notice given within ten (10) Business Days after LESSEE's receipt of such LESSOR notice, either party may by written notice to the other party terminate this Lease and this Lease will terminate on the date of receipt of such notice. In the event of such termination, neither party will have any further liability to the other party except that LESSOR will return to LESSEE the Security Deposit in accordance with Article 5.1.3 and any prepaid Rent. If neither party gives notice of termination within such ten (10) Business Days, both parties lose all right to terminate under this Article 3.6 unless otherwise agreed in writing by the parties. ARTICLE 4 LEASE TERM 4.1 LEASE TERM. The term of leasing of the Aircraft will commence on the Delivery Date and continue for a term of fifteen (15) years ("LEASE TERM"). 4.2 "EXPIRATION DATE". "EXPIRATION DATE" means the date on which LESSEE is required to redeliver the Aircraft to LESSOR in the condition required by this Lease on the last day of the Lease Term. 4.3 "TERMINATION DATE". This Lease may in fact terminate on any of the dates set forth below: (a the Expiration Date, provided LESSEE returns the Aircraft to LESSOR on the Expiration Date in the condition required by Article 23; or (b a date earlier than the Expiration Date, if: (i there is a Total Loss of the Aircraft prior to Delivery pursuant to Article 3.5; (ii cancellation of this Lease occurs pursuant to Article 3.6; (iii there is a Total Loss of the Aircraft and payment is made to LESSOR in accordance with Article 18.3; or (iv an Event of Default occurs and LESSOR repossesses the Aircraft or otherwise terminates this Lease pursuant to Article 25.3. (c a date later than the Expiration Date, if: (i an Event of Default occurs hereunder by LESSEE returning the Aircraft in the condition required by this Lease after the Expiration Date; or (ii an Event of Default occurs and LESSOR repossesses the Aircraft or otherwise terminates this Lease pursuant to Article 25.3. The "TERMINATION DATE" is the date on which this Lease terminates because one of the above has occurred. ARTICLE 5 SECURITY DEPOSIT, TRANSACTION FEE, RENT AND OTHER PAYMENTS 5.1 SECURITY DEPOSIT. 5.1.1 (CONFIDENTIAL MATERIAL OMITTED) 5.1.2 The Security Deposit may be commingled with LESSOR's general funds and any interest earned on such Security Deposit will be for LESSOR's account. If the Security Deposit is reduced below the required amount by application to meet LESSEE's unperformed obligations under this Lease, LESSEE will replenish the Security Deposit within ten (10) days after LESSOR's demand therefor. The Security Deposit will serve as security for the performance by LESSEE of its obligations under this Lease and any other agreements between LESSEE and LESSOR relating to aircraft, engines, aircraft equipment or the extension of credit and may be applied by LESSOR upon the occurrence of a Default or Event of Default hereunder or of a default by LESSEE under any such other agreements. 5.1.3 Upon termination of this Lease in accordance with Article 4.3 other than if an Event of Default has occurred and is continuing, LESSOR will return to LESSEE the amount of the Security Deposit then held by LESSOR (so long as no default by LESSEE exists under any other agreement between LESSEE and LESSOR relating to aircraft, engines or aircraft equipment or the extension of credit by LESSOR to LESSEE), without interest, less an amount determined by LESSOR to be a reasonable estimate of the costs, if any, which LESSOR will incur to remedy any unperformed obligations of LESSEE under this Lease, including the correction of any discrepancies from the required condition of the Aircraft on return of the Aircraft. 5.2 TRANSACTION FEE. Within two (2) Business Days after execution of this Lease, LESSEE will pay LESSOR a nonrefundable transaction fee (CONFIDENTIAL MATERIAL OMITTED) 5.3 RENT. 5.3.1 LESSEE will pay LESSOR the following amounts monthly in advance as rent for the Aircraft (the "RENT"): (a The following amounts for the following years of the Lease Term: LEASE PERIOD MONTHLY RENTAL AMOUNT* ------------ --------------------- (CONFIDENTIAL MATERIAL OMITTED) *The above base rent is expressed in January 1999 U.S. dollars and will increase in the following amounts for the following periods (the "MANUFACTURER'S ESCALATION RATE"): PERIOD ESCALATION FACTOR ------------ --------------------- (CONFIDENTIAL MATERIAL OMITTED) Any increases to the above base Rent during the Lease Term will be calculated immediately prior to Delivery. 5.3.2 The first payment of Rent during the Lease Term will be paid prior to the Scheduled Delivery Date. Each subsequent payment of Rent will be due monthly thereafter no later than the same day of the month as the Delivery Date of the Aircraft except that, if such day is not a Business Day, the Rent will be due on the immediately preceding Business Day. If Delivery occurred on the 29th, 30th or 31st of the month and in any given month during the Lease Term there is no such corresponding date, Rent will be payable on the last Business Day of such month. 5.4 LESSOR'S BANK ACCOUNT. The Security Deposit, Transaction Fee, Rent and any other payment due under this Lease will be paid by wire transfer of immediately available U.S. Dollar funds to LESSOR's bank account at: (CONFIDENTIAL MATERIAL OMITTED) or to such other bank account in the U.S. as LESSOR may from time to time designate by written notice ("LESSOR'S BANK"). When it is stated in this Lease that an installment of the Security Deposit, the monthly Rent or any other payment is due or must be paid or made by LESSEE by a specific date, then such payment actually must be received by LESSOR's Bank on or before such specific date, even if, in order for such payment to be received by LESSOR's Bank by such specific date, LESSEE must initiate the wire transfer prior to such specific date. 5.5 DEFAULT INTEREST. If LESSOR's Bank does not receive the Rent or any other amount on or before the specific date when due, LESSOR will suffer loss and damage the exact nature and amount of which are difficult or impossible to ascertain. LESSEE will pay LESSOR as supplemental Rent (by way of agreed compensation and not as a penalty) interest on any due and unpaid amounts payable by LESSEE under this Lease. Interest will be calculated at a per annum rate (based on a 360 day year) which is equal to three percent (3%) plus the Prime Rate in effect on the date on which the amount was originally due for the period from the date the amount originally was due through the date the amount actually is received at LESSOR's Bank or, in the case of LESSOR's performance of LESSEE's obligations hereunder, from the date of payment by LESSOR through the date of LESSEE's repayment to LESSOR ("DEFAULT INTEREST"). Default Interest will accrue on a day-to-day basis and be compounded monthly. 5.6 NO DEDUCTIONS OR WITHHOLDINGS. All payments by LESSEE under this Lease, including the Security Deposit, Transaction Fee, Rent, Default Interest, fees, indemnities or any other item, will be made in full without any deduction or withholding whether in respect of set-off, counterclaim, duties, or Taxes (as defined in Article 15) imposed in the State of Registration or any jurisdiction from which such payments are made unless LESSEE is prohibited by Law from doing so, in which event LESSEE will gross up the payment amount such that the net payment received by LESSOR after any deduction or withholding equals the amounts called for under this Lease. LESSEE's requirement to pay the amounts required by this Article 5.6 is subject to the exceptions provided in Article 15.2. 5.7 VALUE ADDED TAXES. The Rent and other amounts payable by LESSEE under this Lease are exclusive of any value added tax, turnover tax or similar tax or duty. 5.8 NET LEASE. 5.8.1 This Lease is a net lease and LESSEE's obligation to pay Rent and make other payments in accordance with this Lease will be absolute and unconditional under any and all circumstances and regardless of other events, including the following: (a) any right of set-off, counterclaim, recoupment, defense or other right (including any right of reimbursement) which LESSEE may have against LESSOR, Manufacturer, the Engine manufacturer or any other person for any reason, including any claim LESSEE may have for the foregoing; (b) unavailability or interruption in use of the Aircraft for any reason, including a requisition thereof or any prohibition or interference with or other restriction against LESSEE's use, operation or possession of the Aircraft (whether by Law or otherwise), any defect in title, airworthiness, merchantability, fitness for any purpose, condition, design, specification or operation of any kind or nature of the Aircraft, the ineligibility of the Aircraft for any particular use or trade or for registration under the Laws of any jurisdiction or Total Loss of the Aircraft; (c) insolvency, bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, liquidation, receivership, administration or similar proceedings by or against LESSOR, LESSEE, Manufacturer, the Engine manufacturer or any other Person; (d) invalidity or unenforceability or lack of due authorization of or other defect in this Lease; (e) failure or delay on the part of any party to perform its obligations under this Lease; or (f) any other circumstance which but for this provision would or might have the effect of terminating or in any other way affecting any obligation of LESSEE hereunder. 5.8.2 Nothing in Article 5.8 will be construed to limit LESSEE's rights and remedies in the event of LESSOR's breach of its warranty of quiet enjoyment set forth in Article 21.2 or to limit LESSEE's rights and remedies to pursue in a court of law any claim it may have against LESSOR or any other Person. 5.9 LESSOR PERFORMANCE OF LESSEE OBLIGATION. If LESSEE fails to make any payment under this Lease to a third party in connection with the Aircraft or fails to perform any other obligation required under this Lease, LESSOR may (but is not required to) at its election and without waiver of its rights perform such obligation and/or pay such amount. Within five (5) Business Days after written notice to LESSEE of the amount paid by LESSOR on behalf of LESSEE, LESSEE will repay such amount to LESSOR together with Default Interest. Such payment to LESSOR will constitute additional Rent payable by LESSEE to LESSOR hereunder. Any payment, performance or compliance by LESSOR of a LESSEE obligation hereunder will not affect the occurrence or continuance of a Default or Event of Default, as the case may be. 5.10 CONSIDERATION FOR RENT AND OTHER AMOUNTS. The amount of the Rent and other payments contained herein are in consideration of LESSEE's waiver of warranties and indemnities set forth in Articles 8 and 16, respectively, and the other provisions of this Lease. ARTICLE 6 INVOLVEMENT WITH AIRCRAFT MANUFACTURER 6.1 LESSEE SELECTION OF AIRCRAFT. LESSEE ACKNOWLEDGES THAT THE DESCRIPTION OF THE AIRCRAFT SET FORTH IN THIS LEASE IS BASED UPON INFORMATION SUPPLIED BY MANUFACTURER. LESSEE COVENANTS TO LESSOR THAT LESSEE HAS USED ITS OWN JUDGMENT IN SELECTING THE AIRCRAFT AND HAS DONE SO BASED ON ITS SIZE, DESIGN AND TYPE. LESSEE ACKNOWLEDGES THAT LESSOR IS NOT A MANUFACTURER, REPAIRER OR SERVICING AGENT OF THE AIRCRAFT. 6.2 AGENCY AGREEMENT. Certain obligations remain to be performed by LESSOR in connection with the manufacture, fabrication and completion of the Aircraft by Manufacturer which will be performed by LESSEE (as provided in the Agency Agreement). LESSEE will act as LESSOR's agent with respect to some of these matters pursuant to the terms of an Agency Agreement to be entered into between LESSEE and LESSOR in the form set forth in Exhibit B. 6.3 PROCUREMENT OF BFE. LESSEE's and LESSOR's technical representatives will meet and determine which of LESSEE or LESSOR will provide specific items of BFE. Such BFE will then be provided to Manufacturer by LESSEE or LESSOR, as applicable, within the time frames required by Manufacturer. 6.4 ASSIGNMENT OF TRAINING. LESSOR hereby assigns to LESSEE all rights to training to which LESSOR is entitled as a result of LESSOR's purchase of the Aircraft and lease of the Aircraft to LESSEE. If LESSEE fails to take Delivery of the Aircraft when tendered in accordance with Article 6.7, LESSEE will immediately pay to LESSOR an amount equal to the Dollar value of such training based on what the training would have cost LESSEE had LESSEE purchased such training directly from Manufacturer. 6.5 LESSEE INSPECTION OF AIRCRAFT. During the course of final assembly of the Aircraft, and at Delivery, LESSEE will have its own representative present to inspect the Aircraft and to ensure its conformity with LESSEE's needs and the terms of this Lease. LESSEE will have ground inspection and acceptance flight rights with respect to the Aircraft. LESSEE acknowledges that, as between LESSEE and LESSOR, in accepting the Aircraft LESSEE is relying on its own inspection and knowledge of the Aircraft in determining whether the Aircraft meets the requirements of this Lease. 6.6 AIRCRAFT AT DELIVERY. At Delivery, the Aircraft will be as set forth in Exhibit A, as such description may be modified by any change requests agreed to among LESSEE, LESSOR and Manufacturer (which will be reflected in amendment(s) to this Lease). In the event of any discrepancies, LESSEE and LESSOR will cooperate in good faith with one another and with Manufacturer and Engine manufacturer, as applicable, in order to arrive at a mutually acceptable resolution of any such discrepancies. 6.7 DELIVERY OF THE AIRCRAFT TO LESSEE. Subject to LESSEE having performed all of the conditions precedent to Delivery set forth herein, immediately following delivery of the Aircraft from Manufacturer to LESSOR, LESSOR will deliver the Aircraft to LESSEE at the Delivery Location. Provided that the Aircraft is in the condition required by Article 6.6, upon the tender of the Aircraft by LESSOR to LESSEE, LESSEE will accept the Aircraft and the date of tender by LESSOR to LESSEE will be deemed to be the Delivery Date for all purposes under this Lease, including, but not limited to, the commencement of LESSEE's obligation to pay Rent hereunder. 6.8 LESSEE ACCEPTANCE OF AIRCRAFT. If LESSEE fails to (a) comply with its obligations set forth in Article 6.2, (b) comply with the conditions contained in Articles 7.1 and 7.2 so as to allow Delivery to take place immediately following delivery of the Aircraft by Manufacturer to LESSOR or (c) take delivery of the Aircraft when properly tendered for delivery by LESSOR in the condition required hereunder, LESSEE will indemnify LESSOR for all costs and expenses incurred by LESSOR as a result thereof including (but without limitation) any payments other than the purchase price which LESSOR becomes obliged to make to Manufacturer. ARTICLE 7 PRE-DELIVERY, DELIVERY AND POST-DELIVERY DOCUMENTARY AND OTHER REQUIREMENTS 7.1 PRE-DELIVERY REQUIREMENTS. LESSEE will do each of the following prior to the Scheduled Delivery Date of the Aircraft within the time frames set forth below: 7.1.1 Within one (1) month after execution of this Lease, LESSEE will deliver to LESSOR each of the following: (a) copies of resolutions of the Board of Directors of LESSEE or other written evidence of appropriate corporate action, duly certifying and authorizing the lease of the Aircraft hereunder and the execution, delivery and performance of this Lease, together with an incumbency certificate as to the person or persons authorized to execute and deliver documents on behalf of LESSEE hereunder; and (b) an opinion of counsel in the form and substance of Exhibit F. 7.1.2 At least three (3) days prior to the Scheduled Delivery Date, LESSEE will have delivered to LESSOR a Certificate of Insurance and Brokers' Letter of Undertaking in the form and substance of Exhibits C and D, respectively, from LESSEE's insurance brokers evidencing insurance of the Aircraft in accordance with this Lease from the Delivery Date. 7.1.3 At least three (3) Business Days prior to the Scheduled Delivery Date, LESSEE will do each of the following: (a) provide LESSOR with a copy of such Aviation Documents as may be available prior to the Scheduled Delivery Date; (b) provide LESSOR with a power of attorney empowering LESSEE's representative, who may be an officer or employee of LESSEE, to accept the Aircraft on behalf of LESSEE; and (c) provide LESSOR with such other documents as LESSOR may reasonably request. 7.1.4 Prior to the Scheduled Delivery Date, LESSEE will pay LESSOR the first monthly installment of Rent in accordance with Article 5.3.2. 7.2 DELIVERY REQUIREMENTS. On the Delivery Date of the Aircraft, each of the following will occur: 7.2.1 LESSEE will execute and deliver to LESSOR an Estoppel and Acceptance Certificate in the form of Exhibit E covering the Aircraft and effective as of the Delivery Date. 7.2.2 If not previously done, LESSEE and LESSOR will sign an amendment or supplement to Exhibit A evidencing all agreed-to changes to the specification of the Aircraft. 7.2.3 LESSEE will deliver a certificate signed on behalf of LESSEE by an officer of LESSEE stating all of the following: (a) the representations and warranties contained in Article 20 are true and accurate on and as of the Delivery Date as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date); (b) no Default has occurred and is continuing or will result from LESSEE's lease of the Aircraft hereunder; and (c) none of the Creditor Agreements contains terms which provide or contemplate that any Creditor will obtain any right, title or interest in an Engine which is installed on another aircraft (or, if this is not the case, such certificate will identify the parties, the aircraft and the Creditor Agreements for which this statement is untrue). 7.2.4 LESSEE's counsel will deliver opinions confirming the matters set forth in the opinion of counsel described in Article 7.1 and advising that all filing and other requirements have been met or concurrently are being met. 7.2.5 If any Creditor Agreement provides or contemplates that such Creditor will obtain any right, title or interest in an Engine which is installed on such Creditor's aircraft, LESSEE will deliver to LESSOR an engines cooperation agreement in form and substance acceptable to LESSOR which is executed by LESSEE and LESSEE's Creditors (as defined therein). 7.2.6 LESSOR will deliver to LESSEE an assignment of Manufacturer and Engine manufacturer rights in the form and substance of Exhibits G and H, respectively, and concurrently therewith LESSOR, to the extent it has not previously done so, will be deemed to have assigned all training, product assurance and product support applicable to the owner or operator of the Aircraft to LESSEE during the Lease Term. 7.3 POST-DELIVERY REQUIREMENTS. 7.3.1 Promptly after Delivery, LESSEE will do each of the following: (a) provide LESSOR with copies of all Aviation Documents not previously delivered; and (b) provide LESSOR with a follow-up opinion of counsel advising that the Aircraft has been registered in the State of Registration and that all necessary filings have been made. ARTICLE 8 DISCLAIMERS LESSOR HAS COMMITTED TO LESSEE THAT ON THE DELIVERY DATE THE AIRCRAFT WILL BE IN THE CONDITION REQUIRED BY ARTICLE 6. SUCH COMMITMENT OR COVENANT ON THE PART OF LESSOR EXPIRES AND THE DISCLAIMERS SET FORTH IN THIS ARTICLE 8 APPLY UPON LESSEE'S ACCEPTANCE OF THE AIRCRAFT AND EXECUTION OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATE. AFTER SUCH TIME, THEN AS BETWEEN LESSOR AND LESSEE: 8.1 "AS IS, WHERE IS". LESSEE AGREES THAT IT IS LEASING THE AIRCRAFT "AS IS, WHERE IS". LESSEE UNCONDITIONALLY ACKNOWLEDGES AND AGREES THAT NEITHER LESSOR NOR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES OR REPRESENTATIVES HAVE MADE OR WILL BE DEEMED TO HAVE MADE ANY TERM, CONDITION, REPRESENTATION, WARRANTY OR COVENANT EXPRESS OR IMPLIED (WHETHER STATUTORY OR OTHERWISE) AS TO (a) THE CAPACITY, AGE, AIRWORTHINESS, VALUE, QUALITY, DURABILITY, CONFORMITY TO THE PROVISIONS OF THIS LEASE, DESCRIPTION, CONDITION (WHETHER OF THE AIRCRAFT, ANY ENGINE, ANY PART THEREOF OR THE AIRCRAFT DOCUMENTATION), DESIGN, WORKMANSHIP, MATERIALS, MANUFACTURE, CONSTRUCTION, OPERATION, DESCRIPTION, STATE, MERCHANTABILITY, PERFORMANCE, FITNESS FOR ANY PARTICULAR USE OR PURPOSE (INCLUDING THE ABILITY TO OPERATE OR REGISTER THE AIRCRAFT OR USE THE AIRCRAFT DOCUMENTATION IN ANY OR ALL JURISDICTIONS) OR SUITABILITY OF THE AIRCRAFT OR ANY PART THEREOF, OR THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, KNOWN OR UNKNOWN, APPARENT OR CONCEALED, EXTERIOR OR INTERIOR, (b) THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK, COPYRIGHT OR OTHER INTELLECTUAL PROPERTY RIGHTS, (c) ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE OR (d) EXCEPT AS SET FORTH IN ARTICLE 21.1, ANY OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY PART THEREOF, ALL OF WHICH ARE HEREBY EXPRESSLY EXCLUDED AND EXTINGUISHED. 8.2 WAIVER OF WARRANTY OF DESCRIPTION. IN CONSIDERATION OF (a) LESSEE'S RIGHTS HEREUNDER TO INSPECT THE AIRCRAFT AND (b) LESSOR'S ASSIGNMENT TO LESSEE OF ANY EXISTING AND ASSIGNABLE WARRANTIES OF MANUFACTURER AND THE ENGINE MANUFACTURER, LESSEE HEREBY AGREES THAT ITS ACCEPTANCE OF THE AIRCRAFT AT DELIVERY AND ITS EXECUTION AND DELIVERY OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATE CONSTITUTE LESSEE'S WAIVER OF THE WARRANTY OF DESCRIPTION, ANY CLAIMS LESSEE MAY HAVE AGAINST LESSOR BASED UPON THE FAILURE OF THE AIRCRAFT TO CONFORM WITH SUCH DESCRIPTION AND ANY AND ALL RIGHTS IT MAY HAVE TO THE REMEDIES SET FORTH IN SECTIONS 10508 THROUGH 10522 OF THE CALIFORNIA COMMERCIAL CODE. EVEN IF AT ANY TIME THE FAILURE OF THE AIRCRAFT TO CONFORM TO SUCH DESCRIPTION SUBSTANTIALLY IMPAIRS THE VALUE AND UTILITY OF THE AIRCRAFT AND EITHER (i) LESSEE ACCEPTED THE AIRCRAFT BASED ON A REASONABLE ASSUMPTION THAT THE NONCONFORMITY WOULD BE CURED AND IT WAS NOT SEASONABLY CURED OR (ii) LESSEE ACCEPTED THE AIRCRAFT WITHOUT DISCOVERING THE NONCONFORMITY BUT LESSEE'S ACCEPTANCE OF THE AIRCRAFT WAS REASONABLY INDUCED EITHER BY LESSOR'S ASSURANCES OR BY THE DIFFICULTY OF DISCOVERING ANY DEFECT PRIOR TO ACCEPTANCE, LESSEE AGREES NOT TO LOOK TO LESSOR FOR DAMAGES OR RELIEF ARISING OUT OF THE FAILURE OF THE AIRCRAFT TO CONFORM TO SUCH DESCRIPTION. 8.3 LESSEE WAIVER. LESSEE hereby waives as between itself and LESSOR and agrees not to seek to establish or enforce any rights and remedies, express or implied (whether statutory or otherwise) against LESSOR or the Aircraft relating to any of the matters mentioned in Articles 8.1 or 8.2. 8.4 CONCLUSIVE PROOF. DELIVERY BY LESSEE TO LESSOR OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATE WILL BE CONCLUSIVE PROOF AS BETWEEN LESSOR AND LESSEE THAT LESSEE'S TECHNICAL EXPERTS HAVE EXAMINED AND INVESTIGATED THE AIRCRAFT AND ENGINES AND (a) EACH IS AIRWORTHY AND IN GOOD WORKING ORDER AND REPAIR AND (b) THE AIRCRAFT AND ENGINES AND THE AIRCRAFT DOCUMENTATION ARE WITHOUT DEFECT (WHETHER OR NOT DISCOVERABLE AT DELIVERY) AND IN EVERY WAY SATISFACTORY TO LESSEE. 8.5 NO LESSOR LIABILITY FOR LOSSES. LESSEE agrees that LESSOR will not be liable to LESSEE, any sublessee or any Person, whether in contract or tort and however arising, for any cost, loss or damage (consequential or otherwise) arising out of the condition of the Aircraft, whether or not due in whole or in part to an act or omission or the active or passive negligence of LESSOR. 8.6 NO LIABILITY TO REPAIR OR REPLACE. LESSOR will not be liable for any expense in repairing or replacing any item of the Aircraft or be liable to supply another aircraft or any item in lieu of the Aircraft or any Part thereof if the same is lost, confiscated, damaged, destroyed or otherwise rendered unfit for use. 8.7 NO WAIVER. Nothing in this Article 8 or elsewhere in this Lease will be deemed to be a waiver by LESSEE of any rights it may have against Manufacturer, the Engine manufacturer or any other Person. ARTICLE 9 MANUFACTURERS' AND VENDORS' WARRANTIES 9.1 WARRANTIES. As set forth in Article 7.2.6, at Delivery LESSOR will assign to LESSEE for the duration of the Lease Term the benefit of all warranties and indemnities given to LESSOR by Manufacturer and the Engine manufacturer. Effective on the Delivery Date, all other vendor warranties with respect to the Aircraft are hereby assigned by LESSOR to LESSEE. 9.2 REASSIGNMENT. On the Termination Date, the benefit of any warranty assigned by LESSOR to LESSEE pursuant to Article 7.2.6 will be reassigned automatically to LESSOR or its designee. ARTICLE 10 OPERATION OF AIRCRAFT 10.1 COSTS OF OPERATION. As between LESSEE and LESSOR, LESSEE will pay all costs incurred in the operation of the Aircraft during the Lease Term, for profit or otherwise, including the costs of flight crews, cabin personnel, fuel, oil, lubricants, maintenance, insurance, storage, landing and navigation fees, airport charges, passenger service and any and all other expenses of any kind or nature, directly or indirectly, in connection with or related to the use, movement and operation of the Aircraft. The obligations, covenants and liabilities of LESSEE under this paragraph arising prior to return of the Aircraft to LESSOR will continue in full force and effect, notwithstanding the termination of this Lease or expiration of the Lease Term. 10.2 COMPLIANCE WITH LAWS. LESSEE agrees throughout the Lease Term that all use of the Aircraft will be in accordance with applicable Laws of the State of Registration and of any country, state, territory or municipality into or over which LESSEE may operate. LESSEE will not employ, suffer or cause the Aircraft to be used in any business which is forbidden by Law or in any manner which may render it liable to condemnation, destruction, seizure, or confiscation by any authority. LESSEE will not permit the Aircraft to fly to any airport or country if so doing would cause LESSEE to be in violation of any Law applicable to LESSEE or the Aircraft. The foregoing provisions in this Article 10.2 shall not prohibit any violation of Law (a) during a good-faith contest of the validity, application, or alleged violation thereof in any reasonable manner so long as there is no material danger of sale, forfeiture, or loss of the Aircraft (however, this good faith exception shall not apply in the case of a mandatory grounding order, the good faith contest of which does not permit LESSEE to operate the Aircraft during such contest), and which does not extend beyond the end of the Lease Term if the pendency of such contest would adversely affect the Aircraft or the remarketing thereof in any material respect; and (b) for minor or non-recurring violations (with the understanding that minor violations may cease to be minor if recurring) that LESSEE is diligently trying to rectify which do not render the Aircraft liable to any risk of condemnation, destruction, seizure, or confiscation by any Government Entity. 10.3 TRAINING. LESSEE will not use the Aircraft for testing or for training of flight crew members other than LESSEE crew members and will not use the Aircraft for training any more than it utilizes for training the other aircraft in its fleet. 10.4 NO VIOLATION OF INSURANCE POLICIES. LESSEE will not use or permit the Aircraft to be used in any manner or for any purpose which is not covered by the insurance policies LESSEE is required to carry and maintain as set forth in this Lease. LESSEE will not carry any goods of any description that would invalidate or limit such policies or do any other act or permit to be done anything which could reasonably be expected to invalidate or limit any such insurance policy. 10.5 FLIGHT CHARGES. 10.5.1 LESSEE will pay promptly when due all enroute navigation charges, navigation service charges and all other charges payable by LESSEE for the use of or for services provided at any airport, whether in respect of the Aircraft or any other aircraft of LESSEE, and will indemnify and hold LESSOR harmless in respect of the same. This indemnity will continue in full force and effect notwithstanding the termination or expiration of the Lease Term for any reason or the return of the Aircraft. 10.5.2 If requested by LESSOR, LESSEE will provide LESSOR with a list of the airports to which LESSEE regularly operates the Aircraft or its other aircraft. LESSEE hereby authorizes Eurocontrol or another aviation authority or airport or creditor claiming rights on the Aircraft to confirm the status of LESSEE's payments to such creditor for the Aircraft and its other aircraft, as and when requested by LESSOR. ARTICLE 11 SUBLEASES 11.1 NO SUBLEASE WITHOUT LESSOR CONSENT. LESSEE WILL NOT SUBLEASE OR PART WITH POSSESSION OF THE AIRCRAFT (EXCEPT FOR MAINTENANCE AND REPAIR) AT ANY TIME WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR (NOT TO BE UNREASONABLY WITHHELD) AND IN ACCORDANCE WITH SUCH REQUIREMENTS AS MAY FROM TIME TO TIME BE AGREED IN WRITING BETWEEN LESSOR AND LESSEE. The wet leasing of the Aircraft during the Lease Term (in which LESSEE and its crews retain operational control of the Aircraft) will not be considered a sublease of the Aircraft. 11.2 LESSOR COSTS. LESSEE will indemnify LESSOR on demand for all out-of-pocket expenses (including legal fees) incurred in connection with LESSOR's assessment of the subleasing proposal (whether or not LESSOR's consent to such sublease is ultimately given) and implementation of the sublease. 11.3 ANY APPROVED SUBLEASE. Any sublease approved by LESSOR will be for a term no greater than the remaining Lease Term and contain provisions consistent with this Lease protecting LESSOR's title to the Aircraft, providing appropriate LESSOR indemnities, regarding the maintenance and repair standards for the Aircraft, concerning the insurances which will be carried by the sublessee and the circumstances which constitute a Total Loss of the Aircraft. Any such sublease will be subject and subordinate to this Lease. In its sole discretion, LESSOR may require an opinion of counsel in connection with such sublease, including LESSOR's right to repossess the Aircraft in the event of an Event of Default hereunder or under the sublease. LESSEE will not amend the terms of any approved sublease without the prior written consent of LESSOR, which will not be unreasonably withheld. 11.4 ASSIGNMENT OF SUBLEASE. Any approved sublease will be assigned to LESSOR as security. LESSEE will deliver the original counterpart of the sublease to LESSOR and make any filings necessary to protect LESSOR's security interest. 11.5 CONTINUED RESPONSIBILITY OF LESSEE. LESSEE will continue to be responsible for performance of its obligations under this Lease during any period of sublease. ARTICLE 12 MAINTENANCE AND USE OF AIRCRAFT 12.1 GENERAL OBLIGATION. 12.1.1 During the Lease Term and until the Aircraft is returned to LESSOR, LESSEE alone has the obligation, at its expense, to maintain and repair the Aircraft, Engines and all of the Parts (a) in accordance with the Maintenance Program, (b) in accordance with the rules and regulations of the Aviation Authority, (c) in accordance with Manufacturer's type design, (d) in accordance with any other regulations or requirements necessary in order to maintain a valid Certificate of Airworthiness for the Aircraft and meet the requirements at all times during the Lease Term and upon return of the Aircraft to LESSOR for issuance of a Standard Certificate of Airworthiness for transport category aircraft issued by the Aviation Authority (except during those periods when the Aircraft is undergoing maintenance or repairs as required or permitted by this Lease) and (e) in the same manner and with the same care as used by LESSEE or its sublessee with respect to similar aircraft and engines operated by LESSEE or its sublessee and without in any way discriminating against the Aircraft. 12.1.2 LESSEE will maintain and repair the Engines in the same manner and in the equivalent time frame to its other engines and LESSEE will not discriminate against any of the Engines in respect of the repair and maintenance. 12.1.3 LESSEE will not enter into any Engine maintenance cost per flight hour, power-by-the-hour or similar agreement with Engine manufacturer or any other Engine maintenance facility or organization without LESSOR's prior written consent. 12.2 SPECIFIC OBLIGATIONS. Without limiting Article 12.1, LESSEE agrees that such maintenance and repairs will include but will not be limited to each of the following specific items: (a) performance in accordance with the Maintenance Program of all routine and non-routine maintenance work; (b) incorporation in the Aircraft of all Airworthiness Directives; (c) incorporation in the Aircraft of all service bulletins of Manufacturer, the Engine manufacturer and other vendors which LESSEE schedules to adopt within the Lease Term for the rest of its Boeing 737-800 aircraft fleet. It is the intent of the parties that the Aircraft will not be discriminated from the rest of LESSEE's fleet in service bulletin compliance (including method of compliance) or other maintenance matters. LESSEE will not discriminate against the Engines with respect to Overhaul build standards and life-limited part replacements; (d) incorporation in the Maintenance Program for the Aircraft of a corrosion prevention and control program; (e) maintaining in English and keeping in an up-to-date status the records and historical documents set forth in Attachment 1 of Exhibit I; (f) maintaining historical records, in English, for on condition, condition-monitored, hard time and life-limited Parts (including tags from the manufacturer of such Part or a repair facility which evidence that such Part is new or overhauled and establish authenticity, total time in service and time since overhaul for such Part), the hours and cycles the Aircraft and Engines operate and all maintenance and repairs performed on the Aircraft; and (g) properly documenting all repairs, Modifications and alterations and the addition, removal or replacement of equipment, systems or components in accordance with the rules and regulations of the Aviation Authority and reflecting such items in the Aircraft Documentation. In addition, all repairs to the Aircraft will be accomplished in accordance with Manufacturer's Structural Repair Manual (or FAA-approved data supported by FAA Form 8110-3 or equivalent). All Modifications and alterations will also be accomplished in accordance with FAA-approved data supported by FAA Form 8110-3 or equivalent. 12.3 REPLACEMENT OF PARTS. 12.3.1 LESSEE, at its own cost and expense, will promptly replace all Parts which may from time to time become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or rendered unfit or beyond economical repair (BER) for any reason. In the ordinary course of maintenance, service, repair, overhaul or testing, LESSEE may remove any Part provided that LESSEE replaces such Part as promptly as practicable. All replacement Parts will (a) be free and clear of all Security Interests (except Permitted Liens) of any kind or description, (b) be in airworthy condition and of at least equivalent model, service bulletin and modification status and have a value and utility at least equal to the Parts replaced, assuming such replaced Parts were in the condition and repair required to be maintained by the terms hereof and (c) have a current "serviceable tag" of the manufacturer or maintenance facility providing such items to LESSEE, indicating that such Parts are new, serviceable or Overhauled. So long as a substitution meets the requirements of the Maintenance Program and Aviation Authority, LESSEE may substitute for any Part a part that does not meet the requirements of the foregoing sentence if a complying Part cannot be procured or installed within the available groundtime of the Aircraft and as soon as practicable the noncomplying part is removed and replaced by a complying Part. 12.3.2 All Parts removed from the Airframe or any Engine will remain the property of LESSOR and subject to this Lease no matter where located, until such time as such Parts have been replaced by Parts (which have been incorporated or installed in or attached to the Airframe or such Engine) which meet the requirements for replacement Parts specified above and title to such replacement Parts has passed to LESSOR under the Laws of the State of Registration and LEX SITUS. To the extent permitted by the Laws of the State of --- ----- Registration and the LEX SITUS it is the intent of LESSOR and LESSEE that without further --- ----- act and immediately upon any replacement Part becoming incorporated, installed or attached to the Airframe or an Engine as above provided, (a) title to the removed Part will thereupon vest in LESSEE, free and clear of all rights of LESSOR, (b) title to the replacement Part will thereupon vest in LESSOR free and clear of all rights of LESSEE and (c) such replacement Part will become subject to this Lease and be deemed to be a Part hereunder to the same extent as the Parts originally incorporated or installed in or attached to the Airframe or such Engine. 12.4 REMOVAL OF ENGINES. 12.4.1 If an Engine is removed for testing, service, repair, maintenance, Overhaul work, alterations or modifications, title to such Engine will remain vested in LESSOR. 12.4.2 LESSEE will be entitled to remove any of the Engines from the Aircraft and install another engine or engines on the Aircraft, provided that LESSEE complies with each of the following obligations: (a) the insurance requirements set forth in Article 17 and Exhibit C are in place; (b) LESSEE ensures that the identification plates referred to in Article 14 are not removed from any Engine upon such Engine being detached from the Aircraft; and (c) title to the Engine remains with LESSOR free from all Security Interests (except Permitted Liens) regardless of the location of the Engine or its attachment to or detachment from the Aircraft. 12.5 POOLING OF ENGINES AND PARTS. With LESSOR's prior written consent, not to be unreasonably withheld, LESSEE may subject the Engines and Parts to normal interchange or pooling agreements with responsible commercial air carriers customary in the airline industry and entered into by LESSEE in the ordinary course of its business with respect to its Boeing 737-800 fleet generally, so long as (a) in the case of pooling of an Engine, such Engine is returned to LESSEE within two (2) months, (b) no transfer of title to the Engine occurs, (c) all other terms of this Lease continue to be observed with respect to the Engines or Parts, including but not limited to Articles 8, 10, 12, 13, 14, 15, 16, 17 and 18 and (d) LESSEE continues to be fully responsible to LESSOR for the performance of all of its obligations hereunder. 12.6 INSTALLATION OF ENGINES ON OTHER AIRCRAFT. Any Engine removed from the Aircraft may be installed on another airframe in LESSEE's fleet which utilizes engines of the same type as the Engine only if one of the situations described in this Article 12.6 exists: 12.6.1 LESSEE or LESSOR has title to such other aircraft free and clear of all Security Interests (except Permitted Liens). 12.6.2 LESSEE, LESSOR and all of the Creditors of LESSEE of such aircraft enter into an engines cooperation agreement in form and substance acceptable to LESSOR in which each party agrees to recognize one another's rights in the engines. LESSEE will reimburse LESSOR and LESSOR's Lender for their reasonable attorneys' fees and costs in negotiating and finalizing engine cooperation agreement arrangements with LESSEE and its Creditors. 12.6.3 Such other aircraft is subject to a Creditor Agreement (but no other Security Interests except Permitted Liens) which by its terms expressly or effectively states that such Creditor and its successors and assigns will not acquire any right, title or interest in any Engine by reason of such Engine being installed on such aircraft. LESSEE hereby agrees that if LESSOR's title to an Engine is in fact impaired under any such Creditor Agreement, such impairment will be a Total Loss of such Engine and the provisions of Article 18.5 will apply. To the extent another Creditor Agreement contains such provisions, then LESSOR hereby agrees for the benefit of the Creditor of such Creditor Agreement that neither LESSOR nor its successors or assigns will acquire or claim any right, title or interest in any engine in which LESSEE or another Creditor has an interest as a result of such engine being installed on the Airframe. 12.7 MODIFICATIONS. 12.7.1 No modification, alteration, addition or removal to the Aircraft ("MODIFICATION") expected to cost over Five Hundred Thousand U.S. Dollars (US$500,000) or deviation from the Aircraft's original type design or configuration will be made without the prior written consent of LESSOR, which consent will not be unreasonably withheld. "Modifications" do not include Airworthiness Directives or Manufacturer's recommended service bulletins, for which LESSOR's consent is not required. 12.7.2 LESSOR may review LESSEE's proposed designs, plans, engineering drawings and diagrams, and flight and maintenance manual revisions for any proposed Modification. If requested by LESSOR, LESSEE will furnish LESSOR (at LESSEE's expense) with such documents in final form and any other documents required by Law, as a result of such Modification. All Modifications incorporated on the Aircraft will be properly documented in the Aircraft Documentation and be fully approved by the Aviation Authority. 12.7.3 Notwithstanding any other provision of this Lease, no Modification will be made which has the effect of decreasing the utility or value of the Aircraft. 12.7.4 No Modification will be made by LESSEE if an Event of Default exists and is continuing hereunder. 12.7.5 Unless otherwise agreed by LESSOR in writing, all non-severable or structural Modifications will forthwith become a part of the Aircraft and LESSEE relinquishes to LESSOR all rights and title thereto. However, all severable Modifications will remain the property of LESSEE or the third-party owner and, at LESSOR's request and LESSEE's cost, will be removed from the Aircraft prior to return of the Aircraft, with LESSEE restoring the Aircraft to the condition it was in prior to the Modification. Notwithstanding the foregoing, no such removal will be permitted without LESSOR's permission after the occurrence of an Event of Default hereunder and immediately upon the occurrence of an Event of Default hereunder, without the requirement of any further act or notice, all right, title and interest in such Modifications will immediately vest in LESSOR. 12.7.6 LESSOR will bear no liability for the cost of Modifications of the Aircraft whether in the event of grounding or suspensions of certification, or for any other cause. 12.8 PERFORMANCE OF WORK BY THIRD PARTIES. Whenever maintenance and repair work on the Aircraft or Engines will be regularly performed by a Person other than LESSEE, such Person will be an FAA-authorized repair station. 12.9 REPORTING REQUIREMENTS. 12.9.1 Commencing with a report furnished ten (10) days after the end of the calendar month in which Delivery occurs, LESSEE will furnish to LESSOR a Monthly Report in English in the form attached hereto as Exhibit J. Each Monthly Report will be furnished within ten (10) days after the end of each calendar month, except that the Monthly Report pertaining to the last month (or any portion thereof) of the Lease Term will be furnished to LESSOR on the Termination Date. 12.9.2 On each anniversary of the Delivery Date, LESSEE will provide LESSOR with a Technical Evaluation Report for the Aircraft in the form and substance of Exhibit L, as revised. 12.10 INFORMATION REGARDING MAINTENANCE PROGRAM. LESSEE will provide LESSOR with a copy of or information regarding the Maintenance Program for the Aircraft, as requested by LESSOR. 12.11 LESSOR RIGHTS TO INSPECT AIRCRAFT. On reasonable notice, LESSOR and/or its authorized agents or representatives will have the right to inspect the Aircraft and Aircraft Documentation. LESSOR agrees that such requests will be coordinated with LESSEE so as to cause the minimum practical disturbance to LESSEE's operation or its personnel. LESSEE agrees to cooperate with LESSOR in making the Aircraft and Aircraft Documentation available to such authorized technical teams. No such inspection shall include opening panels, bays, or the like (although LESSOR may observe those that are then open), or disassembling any item. LESSOR will have no duty to make any such inspection and will not incur any liability or obligation by reason of (and LESSEE's indemnity obligations pursuant to Article 16 will apply notwithstanding) not making any such inspection or by reason of any reports it receives or any reviews it may make of the Aircraft records. ARTICLE 13 TITLE AND REGISTRATION 13.1 TITLE TO THE AIRCRAFT DURING LEASE TERM. Title to the Aircraft will be and remain vested in LESSOR. LESSOR and LESSEE intend this Lease to be a "true lease". LESSEE will have no right, title or interest in the Aircraft except as provided in this Lease. 13.2 REGISTRATION OF AIRCRAFT. LESSEE at its sole cost and expense will (a) register and maintain registration of the Aircraft in the name of LESSOR at the register of aircraft in the State of Registration and (b) from time to time take all other steps then required by Law (including the Geneva Convention if applicable) or by practice, custom or understanding or as LESSOR may reasonably request to protect and perfect LESSOR's interest in the Aircraft and this Lease in the State of Registration or in any other jurisdictions in or over which LESSEE may operate the Aircraft. 13.3 FILING OF THIS LEASE. To the extent permitted by Law and in accordance with the requirements of the Law from time to time, LESSEE at its sole cost and expense will cause this Lease to be kept, filed, recorded and refiled or rerecorded in the State of Registration and in any other offices necessary to protect LESSOR's rights hereunder. 13.4 EVIDENCE OF REGISTRATION AND FILINGS. As LESSOR may reasonably request from time to time, LESSEE will furnish to LESSOR an opinion of counsel or other evidence reasonably satisfactory to LESSOR of the registrations and filings required hereunder. ARTICLE 14 IDENTIFICATION PLATES LESSOR will affix and LESSEE will at all times maintain on the Airframe and each Engine the identification plates containing the following legends or any other legend reasonably requested by LESSOR in writing: 14.1 AIRFRAME IDENTIFICATION PLATES. Location: One to be affixed to the Aircraft structure above the forward entry door adjacent to and not less prominent than that of Manufacturer's data plate and another in a prominent place on the flight deck. Size: No smaller than 4" x 6". Legend: "THIS AIRCRAFT IS OWNED BY INTERNATIONAL LEASE FINANCE CORPORATION. MANUFACTURER'S SERIAL NO: 30643 OWNER'S ADDRESS: INTERNATIONAL LEASE FINANCE CORPORATION 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States of America Fax: (310) 788-1990" 14.2 ENGINE IDENTIFICATION PLATES. Location: The legend on the plate must be visible. Size: No smaller than 2" x 6". "THIS ENGINE IS OWNED BY INTERNATIONAL LEASE FINANCE CORPORATION, LOS ANGELES, CALIFORNIA, USA." ARTICLE 15 TAXES 15.1 GENERAL OBLIGATION OF LESSEE. Except as set forth in Article 15.2, LESSEE agrees to pay promptly when due, and to indemnify and hold harmless LESSOR on a full indemnity basis from, all license and registration fees and all taxes, fees, levies, imposts, duties, charges or withholdings of any nature whatsoever (including without limitation any value added, franchise, transfer, sales, gross receipts, use, business, occupation, excise, personal property, real property, stamp or other tax) together with any assessments, penalties, fines, additions to tax or interest thereon, however or wherever imposed (whether imposed upon LESSEE, LESSOR, on all or part of the Aircraft, the Engines or otherwise), by any Government Entity or taxing authority in the U.S., any State thereof, or any foreign country or by any international taxing authority, upon or with respect to, based upon or measured by any of the following (collectively, "TAXES"): (a) the Aircraft, the Engines or any Parts. (b) the use, operation or maintenance of the Aircraft or carriage of passengers or freight during the Lease Term. (c) this Lease, the payments due hereunder and the terms and conditions hereof. (d) the return of the Aircraft to LESSOR or other use or disposition of the Aircraft by LESSEE. 15.2 EXCEPTIONS TO INDEMNITY. The indemnity provided in Article 15.1 does not extend to any of the following Taxes: (a) Imposed by the U.S. (including without limitation any taxes collected by withholding) or any state or local government or governmental subdivision or state or local taxing authority in the U.S. (including any possession or territory of the U.S.) or by any foreign government, taxing authority or governmental subdivision of a foreign country which are based on, or measured by, the receipts, gross or net income, capital, net worth, franchises, excess profits, or conduct of business (including minimum taxes, withholding taxes and taxes on or measured by any items of tax preference) of LESSOR, except to the extent that such Tax would not have been imposed on or payable by LESSOR but for the location, use, registration or operation of the Aircraft or any part thereof, or any place of business or any activity of LESSEE in the jurisdiction imposing such Tax. (b) Imposed as a result of LESSOR's transfer, mortgage, pledge, financing or other disposition by LESSOR of all or a portion of its interest in the Aircraft or this Lease except a transfer or sale resulting from an exercise of remedies pursuant to Article 25.3 hereunder or in connection with a termination of the Lease pursuant to Article 18 hereof. (c) Attributable to the period prior to the Delivery Date or after return of the Aircraft to LESSOR in accordance with this Lease. (d) Attributable to LESSOR's gross negligence, willful misconduct or breach of this Lease. 15.3 AFTER-TAX BASIS. The amount which LESSEE is required to pay with respect to any Taxes indemnified against under Article 15.1 is an amount sufficient to restore LESSOR on an after-tax basis to the same position LESSOR would have been in had such Taxes not been incurred. 15.4 CLAIMS AND CONTESTS. If a written claim is received by LESSOR for Taxes, which claim, if sustained, would require the payment of an indemnity by LESSEE pursuant to this Article 15, LESSOR shall notify LESSEE of such claim within thirty (30) days after its receipt, provided that failure to provide such notice within thirty (30) days will not relieve LESSEE of any indemnification obligation pursuant to this Article 15 if such failure does not preclude LESSEE from exercising its contest rights hereunder. Payments due from LESSEE to LESSOR pursuant to this Article 15 shall be made directly to LESSOR within thirty (30) days of written demand by LESSOR to LESSEE. If requested by LESSEE in writing, LESSOR shall upon receipt of indemnity reasonably satisfactory to it and at the expense of LESSEE (including, without limitation, all reasonable costs, expenses, legal and accountants' fees, and disbursements, penalties, interest incurred in contesting such claim, and additions to tax) in good faith, in the name of LESSOR or, if requested by LESSEE, in the name of LESSEE (or permit LESSEE, if desired by LESSEE, to contest in the name of LESSEE) if permissible under applicable laws, the validity, applicability or amount of such Taxes by (i) resisting payment thereof if practicable only if adequate reserves have been made for such Taxes or, if required, an adequate bond has been posted, (ii) paying the same under protest, if protest shall be necessary and proper, (iii) if payment shall be made, using reasonable efforts to obtain a refund thereof in appropriate administrative and judicial proceedings, and (iv) taking such other action as is reasonably requested by LESSEE from time to time including not paying such Taxes only if adequate reserves have been made for such Taxes or, if required, an adequate bond has been posted. LESSOR shall determine the method of any contest and (in good faith consultation with LESSEE) control the conduct thereof. Notwithstanding anything contained in this Article 15.4, LESSOR will not be required to contest, or to continue to contest, the validity, applicability or amount of any Tax (or portion thereof) (x) if such contest would result in any material risk of criminal penalties or any material risk of sale, forfeiture or loss of the Aircraft, (y) if an Event of Default has occurred and is continuing, or (z) in the case of a contest of a Tax reflected on a return of LESSOR with other taxes of LESSOR that are not indemnified by the LESSEE hereunder, if LESSEE shall not have furnished an opinion of independent tax counsel selected by the LESSEE, and reasonably satisfactory to LESSOR, that a reasonable basis exists for such contest. If LESSOR shall obtain a refund of all or any part of such Taxes for which an indemnity was paid by LESSEE, LESSOR shall pay LESSEE the amount of such refund; PROVIDED, HOWEVER, that such amount shall not be payable before such time as LESSEE shall have made all payments or indemnities to LESSOR then due under this Article 15 and under the Lease or while an Event of Default shall have occurred and be continuing. If in addition to such refund LESSOR shall receive an amount representing interest on the amount of such refund, LESSEE shall be paid that proportion of such interest which is fairly attributable to Taxes paid with an indemnity payment by LESSEE prior to the receipt of such refund or interest and increased by any taxes saved by reason of the deductibility of such payment by LESSOR. LESSEE shall not be deemed to be in default under any of the indemnification provisions under this Article 15 so long as it or LESSOR shall diligently prosecute such contest and LESSEE has indemnified LESSOR to LESSOR's reasonable satisfaction. In case any report or return is required to be made with respect to any obligation of LESSEE under this Article 15.4 or arising out of this Article 15.4, LESSEE will either timely make such report or return in such manner as will show the ownership of the Aircraft in LESSOR, and will as soon as possible send a copy of such report or return to LESSOR, or will notify LESSOR of such requirement and prepare and deliver such report or return to LESSOR in such manner as shall be satisfactory to LESSOR. 15.5 REFUNDS. Upon receipt by LESSOR of a refund of all or any part of any Taxes (including any deductions or withholdings referred to in Article 15.1) which LESSEE has paid, LESSOR will pay to LESSEE the net amount of such Taxes refunded. 15.6 COOPERATION IN FILING TAX RETURNS. LESSEE and LESSOR will cooperate with one another in providing information which may be reasonably required to fulfill each party's tax filing requirements and any audit information request arising from such filing. ARTICLE 16 INDEMNITIES 16.1 GENERAL INDEMNITY. Except as set forth in Article 16.2, LESSEE agrees to indemnify and hold harmless LESSOR and its officers, directors, employees, agents and shareholders (individually an "INDEMNITEE" and collectively "INDEMNITEES") from any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs, disbursements and expenses (including legal fees, costs and related expenses) of every kind and nature, whether or not any of the transactions contemplated by this Lease are consummated (collectively "EXPENSES"), which are imposed on, incurred by or asserted against any Indemnitee and which are in any way relating to, based on or arising out of any of the following: (a) this Lease or any transactions contemplated hereby; (b) the operation, possession, use, non-use, control, leasing, subleasing, maintenance, storage, overhaul, testing, inspections or acceptance flights at return of the Aircraft, any Engine or any Part during the Lease Term by LESSEE, any sublessee or any other Person, whether or not the same is in compliance with the terms of this Lease, including without limitation claims for death, personal injury, property damage, other loss or harm to any Person and claims relating to any Laws, including without limitation environmental control, noise and pollution laws, rules or regulations; (c) the manufacture, design, acceptance, rejection, delivery, return, sale in connection with an Event of Default, import, export, condition, repair, modification, servicing, rebuilding, enforcement of warranties whether in LESSOR's or LESSEE's name, customer and product support provided by Manufacturer and other vendors, airworthiness, registration, reregistration, performance, sublease, merchantability, fitness for use, substitution or replacement of the Aircraft, Engine or any Part under this Lease or other transfer of use or possession of the Aircraft, Engine or any Part, including under a pooling or interchange arrangement, including without limitation latent and other defects, whether or not discoverable and patent, trademark or copyright infringement; (d) any non-compliance by LESSEE with any term of this Lease or the falsity or inaccuracy of any representation or warranty of LESSEE set forth herein; (e) the prevention or attempt to prevent the arrest, confiscation, seizure, taking in execution, impounding, forfeiture or detention of the Aircraft, or in securing the release of the Aircraft; or (f) as a consequence of any Default in payment by LESSEE of any sum to be paid by LESSEE when due under this Lease or any other Default by LESSEE in the due and punctual performance of its obligations under this Lease. The foregoing indemnity by LESSEE is intended to include and cover any Expense to which an Indemnitee may be subject (in contract, tort, strict liability or under any other theory) regardless of the negligence, active or passive or any other type, of such Indemnitee, so long as such Expense does not fall within any of the exceptions listed in Article 16.2. 16.2 EXCEPTIONS TO GENERAL INDEMNITIES. The indemnity provided for in Article 16.1 will not extend to Expenses of any Indemnitee to the extent resulting from or arising out of any of the following: (a) Expenses which have resulted from the willful misconduct of such Indemnitee; (b) Expenses which LESSEE and LESSOR mutually agree or, absent mutual agreement, are judicially determined to be attributable to acts or events which occur after the Termination Date and return of the Aircraft to LESSOR in the condition required hereunder, but in any such case only to the extent not attributable to acts or omissions of LESSEE; (c) Expenses representing Taxes, it being acknowledged that the terms of Article 15 apply exclusively to LESSEE's indemnity obligations with respect to Taxes; (d) Expenses due to the breach by LESSOR of its covenant of quiet enjoyment pursuant to Article 21.2 (except to the extent covered by LESSEE's insurances); (e) Expenses which arise in connection with the transfer by LESSOR of any interest in the Aircraft or this Lease, except for any transfer in connection with any Event of Default or a Total Loss of the Aircraft or an Engine. (f) Expenses which are solely attributable to the representation or warranty of LESSOR contained in or made pursuant to any Operative Document being untrue; (g) Expenses which are solely related to the failure of such Indemnitees to perform or observe any agreement, covenant, or condition on its part to be performed or observed in any Operative Document; (h) Expenses which are solely an ordinary and usual internal customary operating expense; or (i) Expenses which are solely related to a breach of Article 21.1.6, or (j) Expenses which are solely related to a LESSOR's Lien. 16.3 AFTER-TAX BASIS. The amount which LESSEE will be required to pay with respect to any Expense indemnified against under Article 16.1 will be an amount sufficient to restore the Indemnitee, on an after-tax basis, to the same position such Indemnitee would have been in had such Expense not been incurred. 16.4 TIMING OF PAYMENT. It is the intent of the parties that each Indemnitee will have the right to indemnification for Expenses hereunder as soon as a claim is made and as soon as an Expense is incurred, whether or not such claim is meritorious and whether or not liability is established (but subject to Articles 16.2 and 16.8). LESSEE will pay an Indemnitee for Expenses pursuant to this Article 16 within ten (10) days after receipt of a written demand therefor from such Indemnitee accompanied by a written statement describing in reasonable detail the basis for such indemnity (but not before payment is due from such Indemnitee). 16.5 SUBROGATION. Upon the payment in full of any indemnity pursuant to this Article 16 by LESSEE, LESSEE will be subrogated to any right of the Indemnitee in respect of the matter against which such indemnity has been made. 16.6 NOTICE. Each Indemnitee and LESSEE will give prompt written notice one to the other of any liability of which such party has knowledge for which LESSEE is, or may be, liable under Article 16.1; provided, however, that failure to give such notice will not terminate any of the rights of Indemnitees under this Article 16 except to the extent that LESSEE has been materially prejudiced by the failure to provide such notice. 16.7 REFUNDS. If any Indemnitee obtains a recovery of all or any part of any amount which LESSEE has paid to such Indemnitee, such Indemnitee will pay to LESSEE the net amount recovered by such Indemnitee. 16.8 DEFENSE OF CLAIMS. (a) LESSEE and its insurers will have the right (in each such case at LESSEE's sole expense) to investigate or, provided that LESSEE or its insurers have not reserved the right to dispute liability with respect to any insurance policies pursuant to which coverage is sought, defend or compromise any claim covered by insurance for which indemnification is sought pursuant to Article 16.1 and each Indemnitee will cooperate with LESSEE or its insurers with respect thereto. If LESSEE or its insurers are retaining attorneys to handle such claim, such counsel must be reasonably satisfactory to the Indemnitees. If not, the Indemnitees will have the right to retain counsel of their choice at LESSEE's expense. (b) Unless LESSOR agrees in writing otherwise, no settlement of any claim hereunder may require LESSOR to agree to any remedy apart from the payment of money damages (for which such payment of money damages LESSEE will in any event indemnify the Indemnitees). (c) In no event shall any Indemnitee enter into a settlement or other compromise with respect to any Expense without LESSEE's prior written consent (which shall not be unreasonably withheld or delayed), unless such Indemnitee waives its right to be indemnified with respect to such Expense under this Article 16. (d) To the extent that any Expense indemnified by LESSEE hereunder may be covered by insurance maintained by LESSEE, at LESSEE's expense, each Indemnitee agrees to cooperate with the insurers in the exercise of their rights to investigate, defend, or compromise that Expense as may be required to retain the benefits of the insurance for that Expense. (e) If an Indemnitee is not a party to this Lease, LESSEE may require that Indemnitee to agree in writing to the terms of this Article 16 before making any payment to such Indemnitee under this Article 16. 16.9 SURVIVAL OF OBLIGATION. Notwithstanding anything in this Lease to the contrary, the provisions of this Article 16 will survive the Termination Date and continue in full force and effect notwithstanding any breach by LESSOR or LESSEE of the terms of this Lease, the termination of the lease of the Aircraft to LESSEE under this Lease or the repudiation by LESSOR or LESSEE of this Lease. ARTICLE 17 INSURANCE 17.1 CATEGORIES OF INSURANCE. Throughout the Lease Term and until the Termination Date LESSEE will, at its own expense, effect and maintain in full force and effect the types of insurance and amounts of insurance (including deductibles) described in Exhibit C through such brokers and with such insurers favorably regarded in the airline industry. 17.2 INSURANCE FOR INDEMNITIES. The insurance referred to in Article 17.1 will in each case include and insure (to the extent of the risks covered by the policies) the indemnity provisions of Article 16 and LESSEE will maintain such insurance of the indemnities for a minimum of two (2) years following the Termination Date. 17.3 INSURANCE REQUIRED BY MANUFACTURER. During the Lease Term, LESSEE will carry the insurance required by Manufacturer in connection with LESSOR's assignment of Manufacturer's warranties and product support to LESSEE. 17.4 RENEWAL. Not less than two (2) Business Days before the expiration or termination date of any insurance required hereunder, LESSEE will provide LESSOR with fax confirmation from LESSEE's insurance brokers that renewed certificates of insurance evidencing the renewal or replacement of such insurance and complying with Exhibit C will be issued on the termination date of the prior certificate. Within seven (7) days after such renewal, LESSEE will furnish its brokers' certificates of insurance to LESSOR. 17.5 ASSIGNMENT OF RIGHTS BY LESSOR. If LESSOR assigns all or any of its rights under this Lease as permitted by this Lease or otherwise disposes of any interest in the Aircraft to any other Person, LESSEE will, upon request, procure that (to the extent of the assignment or disposition) such Person hereunder be added as loss payee and/or additional assured in the policies effected hereunder and enjoy the same rights and insurance enjoyed by LESSOR under such policies. To the extent of its retained interest or as provided in Article 24.2.1, LESSOR will nevertheless continue to be covered by such policies. 17.6 DEDUCTIBLES. If there is a material adverse change in the financial condition of LESSEE which LESSOR reasonably believes will not enable LESSEE to pay the deductible upon the occurrence of a partial loss of the Aircraft or an Engine, then LESSOR may require LESSEE at LESSEE's expense to lower its deductibles on the insurance maintained hereunder to a level which is available on commercially reasonable terms in the insurance market. 17.7 OTHER INSURANCE. LESSOR may from time to time by notice to LESSEE require LESSEE at LESSEE's expense to effect such other insurance or such variations to the terms of the existing insurance as may then be customary in the airline industry for aircraft of the same type as the Aircraft and at the time commonly available in the insurance market. 17.8 INFORMATION. LESSEE will provide LESSOR with any information reasonably requested by LESSOR from time to time concerning the insurance maintained with respect to the Aircraft or in connection with any claim being made or proposed to be made thereunder. 17.9 CURRENCY. All proceeds of insurance pursuant to this Lease will be payable in Dollars except as may be otherwise agreed by LESSOR. 17.10 GROUNDING OF AIRCRAFT. If at any time any of the insurance required pursuant to this Lease will cease to be in full force and effect, LESSEE will forthwith ground the Aircraft and keep the Aircraft grounded until such time as such insurance is in full force and effect again. 17.11 FAILURE TO INSURE. If at any time LESSEE fails to maintain insurance in compliance with this Article 17, LESSOR will be entitled but not bound to do any of the following (without prejudice to any other rights which it may have under this Lease by reason of such failure): (a) to pay any premiums due or to effect or maintain substitute insurance or otherwise remedy such failure in any reasonable manner (and LESSEE will upon demand reimburse LESSOR in full for any amount so expended in that connection); or (b) at any time while such failure is continuing, to require the Aircraft to remain at any airport or (as the case may be), proceed to and remain at any airport designated by LESSOR. 17.12 LIMIT ON HULL IN FAVOR OF LESSEE. LESSEE may carry hull all risks or hull war and allied perils on the Aircraft in excess of the Agreed Value (which Agreed Value is payable to LESSOR) only to the extent such excess insurance which would be payable to LESSEE in the event of a Total Loss does not exceed fifteen percent (15%) of the Agreed Value and only to the extent that such additional insurance will not prejudice the insurances required herein or the recovery by LESSOR thereunder. LESSEE agrees that it will not create or permit to exist any liens or encumbrances over the insurances, or its interest therein, except as constituted by this Lease. 17.13 MARKETPLACE LIMITATIONS. The insurance required by this Lease may be subject to any limitations generally prevailing in the airline insurance marketplace at the time (e.g., AVN67B). ARTICLE 18 LOSS, DAMAGE AND REQUISITION Throughout the Lease Term and until the Termination Date, LESSEE will bear all risk of loss, theft, damage and destruction to the Aircraft. 18.1 DEFINITIONS. In this Article 18: "AGREED VALUE" (CONFIDENTIAL MATERIAL OMITTED) The Agreed Value is set forth in March 2001 U.S. Dollars and will be increased in accordance with Manufacturer's announced escalation rate from March 1, 2001 to the Delivery Date. On each annual renewal date of LESSEE's insurance policy commencing on the renewal date following the first anniversary of the Lease Term, the Agreed Value will decrease by two percent (2.0%) of the then-existing Agreed Value. "NET TOTAL LOSS PROCEEDS" means the Total Loss Proceeds actually received by LESSOR following a Total Loss, less any legal and other out-of-pocket expenses or duties incurred by LESSOR in connection with the collection of such proceeds. "TOTAL LOSS" means any of the following in relation to the Aircraft, Airframe or any Engine and "TOTAL LOSS DATE" means the date set forth in parenthesis after each Total Loss: (a) destruction, damage beyond repair or being rendered permanently unfit for normal use for any reason (the date such event occurs or, if not known, the date on which the Aircraft, Airframe or Engine was last heard of); (b) actual, constructive, compromised, arranged or agreed total loss (the earlier of the date on which the loss is agreed or compromised by the insurers or thirty (30) days after the date of notice to LESSEE's brokers or insurers claiming such total loss); (c) requisition of title, confiscation, forfeiture or any compulsory acquisition of title or other similar event (the date on which the same takes effect); (d) sequestration, detention, seizure or any similar event for more than one hundred eighty (180) consecutive days (the earlier of the date on which insurers make payment on the basis of a total loss or the date of expiration of such period); (e) requisition for use for more than one hundred eighty (180) consecutive days, except as set forth in Article 18.8 (the earlier of the date on which the insurers make payment on the basis of a total loss or the date of expiration of such period); (f) in the case of an Engine, the event described in Article 12.6.3 (the date on which the same takes effect); "TOTAL LOSS PROCEEDS" means the proceeds of any insurance or any compensation or similar payment arising in respect of a Total Loss. 18.2 NOTICE OF TOTAL LOSS. LESSEE will notify LESSOR in writing within two (2) Business Days after a Total Loss Date of the Aircraft, Airframe or any Engine. 18.3 TOTAL LOSS OF AIRCRAFT OR AIRFRAME. If the Total Loss of the Aircraft or Airframe occurs during the Lease Term, the following will occur: 18.3.1 After the Total Loss Date and until receipt by LESSOR of the Agreed Value and all other amounts then due under this Lease, LESSEE will continue to pay Rent and the parties will perform all of their other obligations under this Lease. 18.3.2 On the date which is the earlier of the following dates: (a) the date on which the Total Loss Proceeds of the Aircraft or the Airframe are paid by LESSEE's insurance underwriters or brokers and (b) the date which falls sixty (60) days after the Total Loss Date, LESSEE will pay to LESSOR an amount equal to the sum of: (a) the Agreed Value and (b) all other amounts then due and payable under this Lease, less an amount equal to the Net Total Loss Proceeds received by LESSOR by such date. 18.3.3 LESSOR will apply the Net Total Loss Proceeds and any amounts received from LESSEE pursuant to Article 18.3.2 as follows: (a) first, in discharge of any unpaid Rent and any other amounts accrued and unpaid up to the date of LESSOR's receipt of the Agreed Value; (b) second, in discharge of the Agreed Value; and (c) third, payment of the balance, if any, to LESSEE. 18.3.4 Upon receipt by LESSOR of all monies payable by LESSEE in Article 18.3, provided no Default has occurred and is continuing, this Lease will terminate except for LESSEE's obligations under Articles 10.5, 15 and 16 which survive the Termination Date and the Security Deposit will be returned to LESSEE in accordance with Article 5.3.1. FOR AVOIDANCE OF DOUBT, THE AGREED VALUE OF THE AIRCRAFT WILL BE PAYABLE TO LESSOR PURSUANT TO THIS ARTICLE 18.3 IF A TOTAL LOSS OF THE AIRFRAME OCCURS EVEN IF THERE HAS NOT BEEN A TOTAL LOSS OF AN ENGINE OR ENGINES. 18.4 SURVIVING ENGINE(S). If a Total Loss of the Airframe occurs and there has not been a Total Loss of an Engine or Engines, then provided no Default has occurred and is continuing, at the request of LESSEE (subject to agreement of relevant insurers) and on receipt of all monies due under Article 18.3 and payment by LESSEE of all airport, navigation and other charges on the Aircraft, LESSOR will transfer all of its right, title and interest in the surviving Engine(s) to LESSEE, but without any responsibility, condition or warranty on the part of LESSOR other than as to freedom from any LESSOR's Lien. 18.5 TOTAL LOSS OF ENGINE AND NOT AIRFRAME. 18.5.1 Upon a Total Loss of any Engine not installed on the Airframe or a Total Loss of an Engine installed on the Airframe not involving a Total Loss of the Airframe, LESSEE will replace such Engine as soon as reasonably possible by duly conveying to LESSOR title to another engine (a) free and clear of all Security Interests (except Permitted Liens) of any kind or description, (b) in airworthy condition and of the same or improved model, service bulletin and modification status and having a value and utility at least equal to the Engine which sustained the Total Loss, and (c) not older (by reference to serial number or manufacture date) than three (3) years older than the oldest of the two Engines delivered by LESSOR to LESSEE with the Aircraft on the Delivery Date. Such replacement engine will be an Engine as defined herein and the Engine which sustained such Total Loss will cease to be an Engine. 18.5.2 LESSEE agrees at its own expense to take such action as LESSOR may reasonably request in order that any such replacement Engine becomes the property of LESSOR and is leased hereunder on the same terms as the destroyed Engine. LESSEE's obligation to pay Rent will continue in full force and effect, but an amount equal to the Net Total Loss Proceeds received by LESSOR with respect to such destroyed Engine will, subject to LESSOR's right to deduct therefrom any amounts then due and payable by LESSEE under this Lease, be paid to LESSEE. 18.6 OTHER LOSS OR DAMAGE. 18.6.1 If the Aircraft or any Part thereof suffers loss or damage not constituting a Total Loss of the Aircraft or the Airframe or any Engine, all the obligations of LESSEE under this Lease (including payment of Rent) will continue in full force. 18.6.2 In the event of any loss or damage to the Aircraft or Airframe which does not constitute a Total Loss of the Aircraft or the Airframe, or any loss or damage to an Engine which does not constitute a Total Loss of such Engine, LESSEE will at its sole cost and expense fully repair the Aircraft or Engine in order that the Aircraft or Engine is placed in an airworthy condition and substantially the same condition as it was prior to such loss or damage. All repairs will be performed in accordance with sound airline procedures. LESSEE will notify LESSOR forthwith of any loss, theft or damage to the Aircraft for which the cost of repairs is estimated to exceed Seven Hundred Fifty Thousand U.S. Dollars (US$750,000), together with LESSEE's proposal for carrying out the repair. In the event that LESSOR does not agree with LESSEE's proposals for repair, LESSOR will so notify LESSEE within two (2) Business Days after its receipt of such proposal. LESSEE and LESSOR will then consult with Manufacturer and LESSEE and LESSOR agree to accept as conclusive, and be bound by, Manufacturer's directions or recommendations as to the manner in which to carry out such repairs. If Manufacturer declines to give directions or recommendations, LESSEE will carry out the repairs in accordance with the directions of LESSOR. 18.6.3 To the extent that LESSOR has received insurance proceeds from LESSEE's insurers with respect to any loss or damage, LESSOR will (subject to LESSOR's right to deduct therefrom any amounts then due and payable by LESSEE under this Lease and submission by LESSEE of reasonable documentation confirming the completion of the repairs in accordance with the requirements of this Lease) pay to LESSEE insurance proceeds received by LESSOR as and when such repair work is performed on the Aircraft. 18.7 COPY OF INSURANCE POLICY. Promptly after LESSOR's request following the occurrence of a partial loss or Total Loss of the Aircraft or an Engine, LESSEE will provide LESSOR with a copy of LESSEE's insurance policy. 18.8 GOVERNMENT REQUISITION. If the Aircraft, Airframe or any Engine is requisitioned for use by any Government Entity, LESSEE will promptly notify LESSOR of such requisition. All of LESSEE's obligations hereunder will continue as if such requisition had not occurred. Except if a Default or an Event of Default has occurred and is continuing, all payments received by LESSOR or LESSEE from such Government Entity will be paid over to or retained by LESSEE. 18.9 CONVEYANCE TO LESSEE. Upon compliance by LESSEE with the applicable terms of Article 18.3 or 18.5, LESSOR will transfer to LESSEE the Airframe or Engine(s), as applicable, with respect to which such Total Loss. ARTICLE 19 CRAF PROGRAM 19.1 DEDICATION TO CRAF. LESSEE may transfer possession of the Airframe or any Engine to the United States of America or any instrumentality or agency thereof as part of the Civil Reserve Air Fleet Program authorized under 10 U.S.C. ss. 9511 ET SEQ. (or any substantially similar program) ("CRAF PROGRAM") for a period which includes (collectively, the "CRAF PROGRAM REQUISITION PERIOD") the entire period of requisition under the CRAF Program. If the CRAF Program Requisition Period extends beyond the Expiration Date provided by this Lease, then the Lease will be deemed to continue for six (6) months after the end of the CRAF Program Requisition Period at a monthly rental rate equal to the monthly rental rate during the Lease Term. If such extension extends beyond the Lease Term, then LESSEE will provide LESSOR with written notice of the proposed redelivery by the earlier of six (6) months prior to the proposed redelivery date or five (5) Business Days after the date of receipt of the actual notice given to LESSEE by the government prior to the government's redelivery date and LESSEE will return the Aircraft to LESSOR in the condition required by Article 23 on LESSEE's proposed redelivery date set forth in such notice. 19.2 NOTICE TO LESSOR. LESSEE will promptly notify LESSOR in writing in the event of the requisition for use of the Aircraft under CRAF activation by the U.S. Government. All of LESSEE's obligations under this Lease will continue to the same extent as if such requisition had not occurred. 19.3 REQUISITION OF ENGINE. If there is a requisition for use of any Engine (but not the Airframe) by the U.S. Government in connection with the CRAF Program, LESSEE will replace such Engine by complying with the terms of Article 18.5 hereof. 19.4 GOVERNMENT INDEMNIFICATION. Any provisions of this Lease to the contrary notwithstanding, if there is a requisition for use of the Aircraft pursuant to the CRAF Program and/or CRAF activation, LESSOR agrees that LESSEE's insurances described in Exhibit C may be supplemented by insurances provided under Title XIII of the Act, and/or U.S. Government indemnification (which Title XIII insurances and indemnification will be in amounts not less than those established in Exhibit C); provided, however, that LESSEE will remain responsible for full compliance with all the provisions of this Lease, including Articles 14 and 16, to the extent Title XIII and/or the U.S. Government indemnification do not satisfy LESSEE's obligations under this Lease. 19.5 NO GEOGRAPHIC LIMITS. If there is a requisition for use of the Aircraft pursuant to the CRAF Program and/or CRAF activation, there will be no limitation on the geographic area in which the Aircraft may be operated so long as, taken as a whole, LESSEE's insurance, the Title XIII insurance and/or the indemnification provided by the U.S. Government fully cover (without any geographic exclusions) LESSEE's Exhibit C insurance requirements. 19.6 NOTICE OF DEFAULT. If an Event of Default occurs under this Lease and LESSOR elects to pursue its remedies under Article 25.3(e) to terminate this Lease and repossess the Aircraft, LESSOR will so notify the U.S. Government by sending a written communication as follows: Headquarters Air Mobility Command AMC Contracting Office -- XOKA Scott Air Force Base, Illinois 62225-5007 19.7 RECEIPT OF PAYMENTS. Subject to the following sentence, all payments received by LESSOR or LESSEE from such Government Entity in connection with the requisition of the Aircraft under the CRAF Program will be paid over to or retained by LESSEE. If a Default has occurred and is continuing, all payments received by LESSEE or LESSOR from such Government Entity in connection with the requisition of the Aircraft under the CRAF Program may be used by LESSOR to satisfy any obligations owing by LESSEE. ARTICLE 20 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE 20.1 REPRESENTATIONS AND WARRANTIES. LESSEE represents and warrants the following to LESSOR as of the date of execution of this Lease and as of the Delivery Date: 20.1.1 CORPORATE STATUS. LESSEE is a corporation duly incorporated, validly existing and in good standing under the Laws of Indiana (or, on the Delivery Date, the state of its incorporation). It has the corporate power and authority to carry on its business as presently conducted and to perform its obligations hereunder. 20.1.2 GOVERNMENTAL APPROVALS. No authorization, approval, consent, license or order of, or registration with, or the giving of notice to the Aviation Authority or any other Government Entity is required for the valid authorization, execution, delivery and performance by LESSEE of this Lease, except as will have been duly effected as of the Delivery Date. 20.1.3 BINDING. LESSEE's Board of Directors has authorized LESSEE to enter into this Lease, any Side Letters hereto and any other documentation in connection with the leasing of the Aircraft from LESSOR (collectively, the "OPERATIVE DOCUMENTS") and perform its obligations under the Operative Documents. This Lease and the other Operative Documents have been duly executed and delivered by LESSEE and represent the valid, binding and enforceable obligations of LESSEE except as enforceability may be limited by bankruptcy, insolvency, reorganization or other Laws of general application affecting the enforcement of creditors' rights. When executed by LESSEE at Delivery, the same will apply to the Estoppel and Acceptance Certificate. 20.1.4 NO BREACH. The execution and delivery of the Operative Documents, the consummation by LESSEE of the transactions contemplated herein and compliance by LESSEE with the terms and provisions hereof do not and will not contravene any Law applicable to LESSEE, or result in any breach of or constitute any default under or result in the creation of any Security Interest upon any property of LESSEE, pursuant to any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which LESSEE is a party or by which LESSEE or its properties or assets may be bound or affected. When executed by LESSEE at Delivery, the same will apply to the Estoppel and Acceptance Certificate. 20.1.5 FILINGS. Except for any filing or recording that may be required by the FARs, no filing or recording of any instrument or document (including the filing of any financial statement) is necessary under the Laws of the State of Registration in order for this Lease to constitute a valid and perfected lease of record relating to the Aircraft. 20.1.6 LICENSES. LESSEE holds all licenses, certificates and permits from applicable Government Entities in the U.S. for the conduct of its business as a certificated air carrier and performance of its obligations under this Lease. 20.1.7 NO SUITS. There are no suits, arbitrations or other proceedings pending or threatened before any court or administrative agency against LESSEE which are reasonably likely to be determined adversely and, if adversely determined, would have a material adverse effect on the business, assets or condition (financial or otherwise) of LESSEE or its ability to perform under this Lease, except as described in the filings provided to LESSOR pursuant to Article 22. 20.1.8 GENERAL OBLIGATIONS. The obligations of LESSEE under this Lease are direct, general and unconditional obligations of LESSEE and rank or will rank at least PARI PASSU with all other present and future unsecured and unsubordinated obligations (including contingent obligations) of LESSEE, with the exception of such obligations as are mandatorily preferred by law and not by reason of any encumbrance. 20.1.9 NO SOVEREIGN IMMUNITY. LESSEE, under the Laws of the U.S. or of any other jurisdiction affecting LESSEE, is subject to private commercial law and suit. Neither LESSEE nor its properties or assets is entitled to sovereign immunity under any such Laws. LESSEE's performance of its obligations hereunder constitute commercial acts done for commercial purposes. 20.1.10 TAX RETURNS. All necessary federal and state income tax returns have been delivered by LESSEE to all relevant taxation authorities in the U.S. or any state thereof and LESSEE is not in default in the payment of any taxes due and payable as shown on any such returns or on any assessment received by LESSEE. 20.1.11 NO MATERIAL ADVERSE EFFECT. LESSEE is not in default under any agreement to which it is a party or by which it may be bound which would have a material adverse effect on its business, assets or condition. 20.1.12 NO DEFAULT UNDER THIS LEASE. At the time of execution of this Lease, no Default has occurred and is continuing and the financial statements provided to LESSOR pursuant to Article 22 fairly present the financial condition of LESSEE. 20.2 COVENANTS. LESSEE covenants to LESSOR that it will comply with the following throughout the entire Lease Term: 20.2.1 LICENSING. LESSEE will hold all licenses, certificates and permits from applicable Government Entities in the U.S. for the conduct of its business as a certificated air carrier and performance of its obligations under this Lease. LESSEE will advise LESSOR promptly in the event any such licenses, certificates or permits are cancelled, terminated, revoked or not renewed. 20.2.2 SOVEREIGN IMMUNITY. LESSEE, under the Laws of the U.S. or of any other jurisdiction affecting LESSEE, will continue to be subject to private commercial law and suit. Neither LESSEE nor its properties or assets will be entitled to sovereign immunity under any such Laws. LESSEE's performance of its obligations hereunder will constitute commercial acts done for commercial purposes. LESSEE will advise LESSOR promptly of any change in the foregoing. 20.2.3 INFORMATION ABOUT SUITS. LESSEE will promptly give to LESSOR a notice in writing of any suit, arbitration or proceeding against LESSEE before any court, administrative agency or Government Entity which is reasonably likely to be determined adversely and, if adversely determined, would materially adversely affect LESSEE's financial condition, affairs, operations or its ability to perform under this Lease. 20.2.4 MERGER OF LESSEE. (a) LESSEE shall not consolidate with or merge into any other Person under circumstances in which LESSEE is not the surviving corporation, or convey, transfer, or lease in one or more transactions all or substantially all of its assets to any other Person, unless: (i) such Person is organized, existing, and in good standing under the Laws of the U.S., any state of the U.S., or the District of Columbia, and, upon consummation of such transaction, such Person will be a U.S. Air Carrier; (ii) such Person executes and delivers to LESSOR a duly authorized, legal, valid, binding and enforceable agreement, reasonably satisfactory in form and substance to LESSOR, containing an effective assumption by such Person of the due and punctual performance and observance of each covenant, agreement and condition in the Operative Documents to be performed or observed by LESSEE; (iii) such Person makes such filings and recordings with the FAA pursuant to the Act as shall be necessary to evidence such consolidation or merger; (iv) LESSEE furnishes LESSOR an opinion of counsel reasonably satisfactory to LESSOR to the effect that such consolidation or merger has satisfied at the closing of such consolidation or merger items (i), (ii) and (iii) above; (v) immediately after giving effect to such consolidation or merger, no Default or Event of Default exists; (vi) unless LESSOR otherwise consents, immediately after giving effect to such consolidation or merger, such Person will have a tangible net worth of not less than sixty-five percent (65%) of the LESSEE's tangible net worth immediately prior to such merger; and (vii) upon such merger becoming effective, LESSOR will enjoy the same degree of protection under ss. 1110 of the Bankruptcy Code with respect to the Aircraft as LESSOR enjoyed prior to such merger. (b) Upon any such consolidation or merger of LESSEE with or into, or the conveyance, transfer, or lease by LESSEE of all or substantially all of its assets to, any Person in accordance with this Article 20.2.4, such Person will succeed to, and be substituted for, and may exercise every right and power of, LESSEE under the Operative Documents with the same effect as if such Person had been named as "LESSEE" therein. No such consolidation, merger, conveyance, transfer, or lease shall have the effect of releasing LESSEE or such Person from any of LESSEE's obligations, liabilities, covenants, or undertakings under this Lease. 20.2.5 RESTRICTION ON RELINQUISHMENT OF POSSESSION. LESSEE will not, without the prior consent of LESSOR, deliver, transfer or relinquish possession of the Aircraft except in accordance with Articles 11 and 12. 20.2.6 NO SECURITY INTERESTS. LESSEE will not create or agree to or permit to arise any Security Interest (other than Permitted Liens) on or with respect to the Aircraft, title thereto or any interest therein. LESSEE will forthwith, at its own expense, take all action as may be necessary to discharge or remove any such Security Interest if it exists at any time. LESSEE will within five (5) Business Days after becoming aware of the existence of any such Security Interest give written notice thereof to LESSOR. 20.2.7 REPRESENTATIONS TO OTHER PARTIES. LESSEE will not represent or hold out LESSOR as carrying goods or passengers on the Aircraft or as being in any way connected or associated with any operation of the Aircraft. ARTICLE 21 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSOR 21.1 REPRESENTATIONS AND WARRANTIES. LESSOR represents and warrants the following to LESSEE as of the date of execution of the Lease and as of the Delivery Date and ALL OTHER WARRANTIES, EXPRESS OR IMPLIED HAVE BEEN WAIVED IN ACCORDANCE WITH ARTICLE 8: 21.1.1 CORPORATE STATUS. LESSOR is a corporation duly incorporated, validly existing and in good standing under the Laws of the State of California. It has the corporate power and authority to carry on its business as presently conducted and to perform its obligations hereunder. 21.1.2 GOVERNMENTAL APPROVALS. No authorization, approval, consent, license or order of, or registration with, or the giving of notice to any U.S. Government Entity is required for the valid authorization, execution, delivery and performance by LESSOR of this Lease. 21.1.3 BINDING. This Lease and the other Operative Documents have been duly authorized, executed and delivered by LESSOR and represent the valid, enforceable and binding obligations of LESSOR except as enforceability may be limited by bankruptcy, insolvency, reorganization or other Laws of general application affecting the enforcement of creditors' rights. 21.1.4 NO BREACH. The execution and delivery of the Operative Documents, the consummation by LESSOR of the transactions contemplated herein and compliance by LESSOR with the terms and provisions hereof do not and will not contravene any Law applicable to LESSOR, or result in any breach of or constitute any default under any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which LESSOR is a party or by which LESSOR or its properties or assets may be bound or affected. 21.1.5 TITLE TO AIRCRAFT. On the Delivery Date LESSOR will have good and valid title to the Aircraft. 21.1.6 CITIZENSHIP. LESSOR is a "citizen of the United States" within the meaning of 49 U.S. Code 40102(a)(15). 21.1.7 INVESTMENT BY LESSOR. LESSOR is acquiring its interest in the Aircraft for its own account from its corporate funds, for investment and not with a view to any resale or distribution thereof that would require registration under the Securities Act of 1933; PROVIDED, HOWEVER, that subject to the transfer restrictions in Article 24.2, its disposition of its interest in the Aircraft shall at all times be within its control. 21.2 COVENANT OF QUIET ENJOYMENT. So long as no Event of Default has occurred and is continuing hereunder, LESSOR covenants that neither LESSOR nor any person lawfully claiming through LESSOR will interfere with LESSEE's quiet, peaceful use and enjoyment of the Aircraft. ARTICLE 22 FINANCIAL AND RELATED INFORMATION LESSEE agrees to furnish each of the following to LESSOR: (a) within sixty (60) days after the end of each fiscal quarter of LESSEE, the unaudited consolidated financial statements (including a balance sheet and profit and loss statement) prepared for such quarter in accordance with generally accepted accounting principles in the U.S.; (b) within one hundred twenty (120) days after the end of each fiscal year of LESSEE, the audited consolidated financial statements (including a balance sheet and profit and loss statement) prepared as of the close of such fiscal year in accordance with generally accepted accounting principles in the U.S. LESSEE's chief financial officer will also provide a certificate of LESSEE stating that, to such officer's knowledge, no Default exists under this Lease (or if, to such officer's knowledge, a Default does exist, identifying it); (c) promptly after distribution, all reports and financial statements which Amtran, Inc. sends or makes generally available to its stockholders or creditors; and (d) from time to time, such other reasonable information as LESSOR or LESSOR's Lender may reasonably request concerning the location, condition, use and operation of the Aircraft or the financial condition of LESSEE. ARTICLE 23 RETURN OF AIRCRAFT 23.1 DATE OF RETURN. LESSEE is obligated to return the Aircraft, Engines Parts and Aircraft Documentation to LESSOR on the Expiration Date, unless a Total Loss of the Aircraft occurred prior to the Expiration Date and this Lease was terminated early in accordance with Article 18.3. If LESSEE is in Default hereunder by failing to return the Aircraft on the Expiration Date or if an Event of Default occurs prior to the Expiration Date and LESSOR repossesses the Aircraft, the return requirements set forth in this Article 23 nonetheless must be met on the date the Aircraft is actually returned to LESSOR or repossessed by LESSOR. 23.2 TECHNICAL REPORT. Six (6) months prior to the Expiration Date (and in an updated form at return of the Aircraft), LESSEE will provide LESSOR with a Technical Evaluation Report in the form and substance of Exhibit L, as revised, and, in addition upon LESSOR's request, will make copies available of (a) drawings of the interior configuration of the Aircraft both as it presently exists and as it will exist at return, (b) an Airworthiness Directive status list, (c) a service bulletin incorporation list, (d) rotable tracked, hard-time and life-limited component listings, (e) a list of LESSEE-initiated modifications and alterations, (f) interior material burn certificates, (g) the Aircraft Maintenance Program, (h) the complete workscope for the checks, inspections and other work to be performed prior to return, (i) a list of all no-charge service bulletin kits with respect to the Aircraft which were ordered by LESSEE from Manufacturer or Engine manufacturer, (j) current Engine disk sheets and a description of the last shop visit for each Engine and (k) any other data which is reasonably requested by LESSOR. 23.3 RETURN LOCATION. LESSEE at its expense will return the Aircraft, Engines, Parts and Aircraft Documentation to LESSOR at Indianapolis International Airport, Indianapolis, Indiana or to such other airport as may be mutually agreed to by LESSEE and LESSOR. 23.4 FULL AIRCRAFT DOCUMENTATION REVIEW. For the period commencing at least ten (10) Business Days prior to the proposed redelivery date and continuing until the date on which the Aircraft is returned to LESSOR in the condition required by this Lease, LESSEE will provide for the review of LESSOR and/or its representative all of the Aircraft records and historical documents described in Exhibit K in one central room at the Aircraft return location. 23.5 AIRCRAFT INSPECTION. 23.5.1 During the maintenance checks performed immediately prior to the proposed redelivery and at the actual return of the Aircraft, LESSOR and/or its representatives will have an opportunity to conduct a full systems functional and operational inspection of the Aircraft (and other types of reasonable inspections based upon the Aircraft type, age, use and other known factors with respect to the Aircraft) and a full inspection of the Aircraft Documentation (including records and manuals), all to LESSOR's satisfaction. The inspection will occur during the Return Check when the panels, bays or the like are open and certain Parts are disassembled. LESSOR may inspect such opened panels, bays or the like and the disassembled Parts so long as LESSOR does not disrupt the Return Check or cause such Return Check to be extended beyond the anticipated completion date of such Return Check. Any deficiencies from the Aircraft return condition requirements set forth in this Article 23 will be corrected by LESSEE at its cost prior to the acceptance flight described in Article 23.5.2. 23.5.2 Immediately prior to the proposed redelivery of the Aircraft, LESSEE will carry out for LESSOR and/or LESSOR's representatives an Aircraft acceptance flight in accordance with Manufacturer's standard flight operation check flight procedures or, if agreed to in writing by LESSOR, in accordance with an airline acceptance flight procedure, either of which will be for the duration necessary to perform such check flight procedures but in any event not less than two (2) hours. Flight costs and fuel will be furnished by and at the expense of LESSEE. Any deficiencies from the Aircraft return condition requirements set forth in this Article 23 will be corrected by LESSEE at its cost prior to return of the Aircraft. 23.5.3 To the extent that the ground inspection and acceptance flight extend beyond the Expiration Date, the Lease Term will be deemed to have been automatically extended and the obligations of LESSEE hereunder (including Article 23.11.3) will continue on a day-to-day basis until the Aircraft is accepted by LESSOR executing the Return Acceptance Receipt in the form of Exhibit I. 23.6 CERTIFICATE OF AIRWORTHINESS MATTERS. 23.6.1 The Aircraft will possess a current Certificate of Airworthiness issued by the Aviation Authority (although this Certificate of Airworthiness may later be substituted by the Export Certificate of Airworthiness or equivalent if requested by LESSOR pursuant to Article 23.10). The Aircraft at return must be in the condition required in order to meet the requirements of a U.S. Standard Certificate of Airworthiness for transport category aircraft issued by the FAA in accordance with FAR Part 21 and, in addition, to meet the operating requirements of FAR Part 121. 23.6.2 LESSEE at its cost will demonstrate that the Aircraft meets the requirements for issuance of the U.S. Standard Certificate of Airworthiness for transport category aircraft specified in Article 23.6.1 by delivering to LESSOR an actual U.S. Standard Certificate of Airworthiness. If there is a dispute in regards to the condition of the Aircraft or the Aircraft Documentation, then LESSEE will provide LESSOR with a letter acceptable to LESSOR signed by an FAA Designated Airworthiness Representative (DAR) or another Person acceptable to LESSOR stating that the DAR or such Person has inspected the Aircraft and Aircraft Documentation (including records and manuals) and has found that the Aircraft meets the requirements for issuance of a U.S. Standard Certificate of Airworthiness for transport category aircraft in accordance with FAR Part 21 and, in addition, meets the operating requirements of FAR Part 121. 23.6.3 If the Aircraft is to be registered in a country other than in the U.S. after return from LESSEE, LESSOR may in its sole discretion waive the requirements of Article 23.6.2 and instead require that LESSEE at its expense (to the extent such expense is no greater than that which LESSEE would have incurred pursuant to Articles 23.6.1 and 23.6.2, with any additional expenses being for LESSOR's account) put the Aircraft in a condition to meet the requirements for issuance of a Certificate of Airworthiness of the Aviation Authority of the next country of register. 23.7 GENERAL CONDITION OF AIRCRAFT AT RETURN. 23.7.1 The Aircraft, Engines and Parts will have been maintained and repaired in accordance with the Maintenance Program, the rules and regulations of the Aviation Authority and this Lease. 23.7.2 Aircraft Documentation (including records and manuals) will have been maintained in an up-to-date status, in accordance with the rules and regulations of the Aviation Authority and the FAA and this Lease and in a form necessary in order to meet the requirements of Article 23.6.2. The records and historical documents set forth in Attachment 1 of Exhibit I will be in English. 23.7.3 The Aircraft will be in the same working order and condition as at Delivery (subject to the other provisions of this Article 23, reasonable wear and tear from normal flight operations excepted), with all pilot discrepancies and deferred maintenance items cleared on a terminating action basis. 23.7.4 The Aircraft will be airworthy (conform to type design and be in a condition for safe operation), with all Aircraft equipment, components and systems operating in accordance with their intended use and within limits approved by the Manufacturer, Aviation Authority and FAA. 23.7.5 The Aircraft interior (including cabin and windows) and exterior will be clean and all compartments will be reasonably free of foreign objects, dirt, grease, fluids, stains, grime, cracks, tears and rips (with the exception of normal wear and tear) and ready to be placed into immediate commercial airline operations. 23.7.6 No special or unique Manufacturer, Engine manufacturer or Aviation Authority inspection or check requirements which are specific to the Aircraft or Engines (as opposed to all aircraft or engines of their types) will exist with respect to the Airframe, Engines and Aircraft equipment, components and systems. 23.7.7 All repairs, modifications and alterations to the Aircraft will have been accomplished in accordance with Manufacturer's Structural Repair Manual (or FAA-approved data supported by FAA Form 8110-3) for the Aircraft. 23.7.8 The Aircraft will be returned with LESSOR's Engines installed and with the same equipment as at Delivery, subject only to those replacements, additions and Modifications permitted under this Lease. LESSEE will inform LESSOR of whether LESSEE will be able to redeliver the Engines with the Aircraft and the proposed replacement engines that LESSEE wants to provide LESSOR in place of the Engines. LESSEE will provide LESSOR with whatever data, records and information that LESSOR reasonably requests in order to evaluate the proposed replacement engines. In the event that LESSEE is unable to return either of the Engines in the conditions required by this Article 23, then LESSEE may provide a replacement engine (a "REPLACEMENT ENGINE") for such Engine to LESSOR by duly conveying to LESSOR as owner hereunder title to another engine of the same manufacturer and of the same or an improved model as the Engine being replaced and suitable for installation and use on the Aircraft, which engine shall be free and clear of all Security Interests, and shall be no more than three (3) years older by reference to serial number than the replaced Engine and have a modification status, value and utility at least equal to the Engine which such Replacement Engine is replacing on the Aircraft assuming that such Engine which such Replacement Engine is replacing was then of the value, utility, condition, and airworthiness required to be maintained by the terms of this Lease. Such Replacement Engine, after approval and acceptance by LESSOR, shall be deemed an "Engine" as defined herein for all purposes hereunder. LESSEE agrees to take such action as LESSOR may reasonably request in order that such Replacement Engine shall be duly and properly titled in the name of LESSOR. Prior to or at the time of any such conveyance, LESSEE, at its own expense, will promptly: (a) furnish LESSOR with a warranty bill of sale, in form and substance satisfactory to LESSOR, with respect to such Replacement Engine, (b) furnish LESSOR with such evidence of title to such Replacement Engine as reasonably requested by LESSOR, and (c) furnish LESSOR with an opinion of LESSEE's counsel to the effect that title to such Replacement Engine has been duly conveyed to LESSOR free and clear of all Security Interests of any kind or nature and that such exchange qualifies for tax free treatment under the Internal Revenue Code of 1986, as amended. Upon full compliance with this Article, LESSOR shall transfer to LESSEE all of LESSOR's right, title and interest, on an "AS-IS", "WHERE-IS" basis in and to the Engine being replaced by such Replacement Engine, without recourse or warranty, express or implied, except that LESSOR has good and marketable title to such Engine and such Engine shall be free and clear of LESSOR's Liens. 23.7.9 All Airworthiness Directives which are issued prior to the date of return of the Aircraft and require compliance (either by means of repetitive inspections, modifications or terminating action) prior to return of the Aircraft to LESSOR or within one (1) year after the Termination Date will have been complied with on the Aircraft on a terminating action basis at LESSEE's cost. Airworthiness Directives which do not have a terminating action will be accomplished at the highest level of inspection or modification possible. If, after using best efforts, LESSEE is unable to acquire the material, parts or components necessary to accomplish such Airworthiness Directive, LESSEE will pay to LESSOR upon return of the Aircraft the estimated cost of terminating such Airworthiness Directive. If the estimated cost cannot be mutually agreed upon by LESSEE and LESSOR, LESSEE and LESSOR will each obtain an estimate from a reputable FAA-approved maintenance facility (unaffiliated with LESSEE or LESSOR) and the estimated cost will be the average of the two estimates. 23.7.10 The Aircraft will be in compliance with the Corrosion Prevention and Control Program (CPCP) specified in LESSEE's Maintenance Program. 23.7.11 If any waivers, deviations, dispensations, alternate means of compliance, extensions or carry-overs with respect to maintenance or operating requirements, repairs or Airworthiness Directives are granted by the Aviation Authority or permitted by the Maintenance Program, LESSEE at its sole cost and expense will nonetheless perform such maintenance or operating requirements, repairs or Airworthiness Directives as if such waivers, deviations, dispensations, alternate means of compliance, or extensions or carry-overs did not exist. 23.7.12 The Aircraft will be free from any Security Interest except LESSOR's Liens and no circumstance will have so arisen whereby the Aircraft is or could become subject to any Security Interest or right of detention or sale in favor of the Aviation Authority, any airport authority, or any other authority. 23.7.13 All no-charge vendor and Manufacturer's service bulletin kits received by LESSEE for the Aircraft but not installed thereon will be on board the Aircraft as cargo. At LESSOR's request, any other service bulletin kit which LESSEE paid for will also be delivered to LESSOR on board the Aircraft, but LESSOR will reimburse LESSEE for its actual out-of-pocket costs for such kit, unless LESSEE purchased such kit as part of its implementation of a service bulletin on its fleet of aircraft of the same type as the Aircraft but had not yet installed such kit on the Aircraft, in which case such kit will be furnished free of charge to LESSOR. 23.7.14 The Aircraft will be free of any leaks and any damage resulting therefrom. All repairs will have been performed on a permanent basis in accordance with the applicable manufacturer's instructions. 23.7.15 The Aircraft fluid reservoirs (including oil, oxygen, hydraulic and water) will be serviced to full and the waste tank serviced in accordance with Manufacturer's instructions. (Fuel tanks will be at least as full as at Delivery.) 23.8 CHECKS PRIOR TO RETURN. Immediately prior to return of the Aircraft to LESSOR, LESSEE at its expense will do each of the following: 23.8.1 Have performed, and completed, by an FAA-approved repair station, all maintenance tasks specified in LESSEE's Maintenance Program and the MPD which (a) are necessary to clear the Aircraft of all such tasks for eighteen (18) months, five thousand (5,000) hours, and three thousand (3,000) cycles from the date of return of the Aircraft, and (b) are required to be performed at lesser intervals than eighteen (18) months, five thousand (5,000) hours or three thousand (3,000) cycles (all such work collectively referred to as the "RETURN CHECK"). If a maintenance task is specific to LESSEE's Maintenance Program and not required or recommended to be performed by the MPD, then LESSEE will not be required to perform such maintenance task so long as the Return Check is performed in such a manner that clears the Aircraft of all maintenance tasks in accordance with the requirements of the preceding sentence. As part of the Return Check, all non-routine tasks generated as a result of the performance of the work included in the Return Check and any other discrepancies revealed during the Return Check must also be performed in accordance with the FAA approved procedures. LESSEE will also weigh the Aircraft. LESSEE agrees to perform during the Return Check any other work reasonably required by LESSOR (and not otherwise required under this Lease) and LESSOR will, promptly upon receipt of an invoice from LESSEE, reimburse LESSEE for such work at LESSEE's preferred customer rates. 23.8.2 Have the Aircraft in compliance with Corrosion Prevention and Control Program (CPCP) as specified in the MPD and LESSEE's Maintenance Program. 23.8.3 Remove LESSEE's exterior markings, including all exterior paint, by stripping (or, at LESSOR's option, pneumatically scuff/sanding) the paint from the fuselage, empennage, wings and Engine cowlings, and clean, reseal, refinish, prepare (including application of alodine or another corrosion inhibitor) and prime the surfaces to be painted, all in accordance with Manufacturer's and paint manufacturer's recommendations. LESSEE will then repaint the fuselage, empennage, wings and Engine cowlings in the colors and logo specified by LESSOR ; PROVIDED, HOWEVER, that LESSEE will be responsible for only paying the amount that it would cost to strip or scuff/sand (whichever is performed on the Aircraft at return) and properly paint the Aircraft in LESSEE's colors and logo and LESSOR will be responsible for the excess cost to paint the Aircraft in the next lessee's colors and logo. Such painting will be accomplished in such a manner as to result in a uniformly smooth and cosmetically acceptable aerodynamic surface. All external placards, signs and markings will be properly attached, free from damage, clean and legible. 23.8.4 Clean the exterior and interior of the Aircraft. 23.8.5 If reasonably required by LESSOR, apply touch up to paint to the interior of the Aircraft, including flight deck, and replace any missing or broken placards. 23.8.6 In accordance with Article 23.7.7, permanently repair damage to the Aircraft that exceeds Manufacturer's limits and replace any non-flush structural patch repairs installed on the Aircraft with flush-type repairs, so long as the Manufacturer or the Manufacturer's Structural Repair Manual permits flush-type repairs on the portion of the Aircraft where the non-flush structural repairs were made. 23.8.7 With LESSOR or its representatives present, perform a full and complete hot and cold section videotape borescope on each Engine and its modules in accordance with the Engine manufacturer's maintenance manual. 23.8.8 If the Engine historical and technical records and/or condition trend monitoring data of any Engine (including the APU) indicate an acceleration in the rate of deterioration in the performance of an Engine, LESSEE will correct, to LESSOR's satisfaction, such conditions which are determined to be causing such accelerated rate of deterioration. 23.8.9 With LESSOR or its representatives present, accomplish a maximum power assurance run on the Engines. LESSEE will evaluate the Engine performance and record the Engine maximum power assurance test conditions and results on the Return Acceptance Receipt. 23.8.10 LESSEE will provide evidence to LESSOR's satisfaction that the Engine historical and technical records, borescope inspection, trend monitoring and other checks specified in Article 23.8.9 do not reveal any condition which would cause the Engines or any module to be unserviceable, beyond serviceable limits or serviceable with an increased frequency of inspection or with calendar time, flight hour or flight cycle restrictions under the Engine manufacturer's maintenance manual. LESSEE will correct any discrepancies in accordance with the guidelines set out by the Engine manufacturer which may be discovered during such inspection. 23.8.11 In the event the Engine historical and technical records, borescope inspection, trend monitoring and other checks specified in Article 23.8.9 result in a dispute regarding the conformity of an Engine with the requirements of this Article 23, LESSEE and LESSOR will consult with Engine manufacturer and follow Engine manufacturer's recommendations (including the accomplishment of an Engine test cell operational check) with regard to determining if such Engine complies with the requirements of this Article 23 and the manner in which any discrepancies from the requirements of this Article 23 will be rectified. 23.9 PART LIVES. At return, the condition of the Aircraft will be as follows: (CONFIDENTIAL MATERIAL OMITTED) 23.10 EXPORT AND DEREGISTRATION OF AIRCRAFT. At LESSOR's request, LESSEE at its cost will (a) provide an Export Certificate of Airworthiness or its equivalent from the State of Registration so that the Aircraft can be exported to the country designated by LESSOR, (b) assist with deregistration of the Aircraft from the register of aircraft in the State of Registration, (c) assist with arranging for prompt confirmation of such deregistration to be sent by the registry in the State of Registration to the next country of registration and (d) perform any other acts reasonably required by LESSOR in connection with the foregoing. If any Aircraft work which LESSEE is not otherwise required to perform hereunder, including engineering, is required in order to obtain such Export Certificate of Airworthiness, LESSEE will perform such work and LESSOR will reimburse LESSEE for such work at LESSEE's preferred customer rates. 23.11 LESSEE'S CONTINUING OBLIGATIONS. In the event that LESSEE does not return the Aircraft to LESSOR on the Expiration Date and in the condition required by this Article 23 for any reason (whether or not the reason is within LESSEE's control): 23.11.1 the obligations of LESSEE under this Lease will continue in full force and effect on a day-to-day basis until such return. This will not be considered a waiver of LESSEE's Event of Default or any right of LESSOR hereunder. 23.11.2 Until such return, the Agreed Value will be an amount equal to the Agreed Value on the day the Aircraft should have been returned to LESSOR pursuant to this Lease. 23.11.3 LESSEE will fully indemnify LESSOR on demand for all losses (including consequential damages), liabilities, actions, proceedings, costs and expenses thereby suffered or incurred by LESSOR and, in addition, if a delay in return of the Aircraft was due to reasons within LESSEE's reasonable control, then until such time as the Aircraft is redelivered to LESSOR and put into the condition required by this Article 23, instead of paying the Rent specified in Article 5.3, LESSEE will pay twice the amount of Rent for each day from the scheduled Expiration Date until the Termination Date (the monthly Rent payable under Article 5.3.1 will be prorated based on the actual number of days in the applicable month). Payment will be made upon presentation of LESSOR's invoice. 23.11.4 LESSOR may elect, in its sole and absolute discretion, to accept the return of the Aircraft prior to the Aircraft being put in the condition required by this Article 23 and thereafter have any such non-conformance corrected at such time as LESSOR may deem appropriate (but within ninety (90) days following the return of the Aircraft) and at commercial rates then-charged by the Person selected by LESSOR to perform such correction. Any direct expenses incurred by LESSOR for such correction will become additional Rent payable by LESSEE within fifteen (15) days following the submission of a written statement by LESSOR to LESSEE, identifying the items corrected and setting forth the expense of such corrections. LESSEE's obligation to pay such supplemental Rent will survive the Termination Date. 23.12 AIRPORT AND NAVIGATION CHARGES. LESSEE will ensure that at return of the Aircraft any and all airport, navigation and other charges which give rise or may if unpaid give rise to any lien, right of detention, right of sale or other Security Interest in relation to the Aircraft, Engine or any Part have been paid and discharged in full and will at LESSOR's request produce evidence thereof satisfactory to LESSOR. 23.13 RETURN ACCEPTANCE CERTIFICATE. Upon return of the Aircraft in accordance with the terms of this Lease, LESSEE will prepare and execute two (2) Return Acceptance Certificates in the form and substance of Exhibit I and LESSOR will countersign and return one such Return Acceptance Certificate to LESSEE. In addition, LESSEE and LESSOR will execute a Lease Termination for filing with the FAA evidencing termination of this Lease. 23.14 INDEMNITIES AND INSURANCE. The indemnities and insurance requirements set forth in Articles 16 and 17, respectively, will apply to Indemnitees and LESSOR's representatives during return of the Aircraft, including the ground inspection and acceptance flight. With respect to the acceptance flight, LESSOR's representatives will receive the same protections as LESSOR on LESSEE's Aviation and Airline General Third Party Liability Insurance. ARTICLE 24 ASSIGNMENT 24.1 NO ASSIGNMENT BY LESSEE. EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED BY THE TERMS OF THIS LEASE, NO ASSIGNMENT, NOVATION, TRANSFER, MORTGAGE OR OTHER CHARGE MAY BE MADE BY LESSEE OF ANY OF ITS RIGHTS WITH RESPECT TO THE AIRCRAFT, ENGINE OR PART OF THIS LEASE. 24.2 SALE OR ASSIGNMENT BY LESSOR. 24.2.1 Subject to LESSEE's rights pursuant to this Lease, LESSOR may at any time and without LESSEE's consent sell, assign or transfer its rights, interest and obligations hereunder or with respect to the Aircraft to a third party ("LESSOR'S ASSIGNEE"), but only if: (a) LESSOR's Assignee has full power, authority, and legal right to execute, deliver, and perform the obligations of LESSOR under the Operative Documents and provides reasonably satisfactory evidence of such power and authority to LESSEE; (b) LESSOR's Assignee enters into one or more legal, valid, binding and enforceable agreements effective to confirm that LESSOR's Assignee agrees to be bound by all the terms of, and to undertake all of the obligations arising after such transfer of LESSOR in, the Operative Documents, and in which it makes representations and warranties substantially the same as those in Article 21.1 of this Lease; (c) upon such transfer LESSEE shall not be obligated to pay any greater amount or incur any greater obligation (other than indemnifying additional indemnitees, insuring additional insureds and other minor ministerial matters) than that which it would have been obliged to pay or incur under the Operative Documents if no transfer or assignment had taken place, and upon such transfer the terms and conditions of the Operative Documents insofar as they relate to the rights and obligations of LESSEE are not altered; (d) LESSOR shall cause LESSOR's Assignee to deliver to LESSEE an opinion of counsel reasonably satisfactory to LESSEE to the effect that such agreement or agreements referred to in clause (2) and, if applicable, clause (6) are legal, binding, and enforceable in accordance with its or their terms, subject to the typical exceptions. (e) the transfer shall relate to LESSOR's entire interest as owner or lessor; (f) LESSOR's Assignee is a citizen of the United States under 49 U.S. Code ss.40102(a)(15) (such status to be determined without considering FAR ss.47.9 or any other provision that may restrict LESSEE's use or operation of the Aircraft), or shall use a voting powers trust or similar arrangement in order to hold an interest in the Aircraft such that the Aircraft can be registered in the U.S. (without considering FAR ss.47.9 or any other provision that may restrict LESSEE's use or operation of the Aircraft); (g) LESSOR's Assignee is a single Person and is either (i) a Permitted Institution, or (ii) or an affiliate of a Permitted Institution, if such affiliate's obligations under the Operative Documents are guaranteed by such Permitted Institution pursuant to a written guaranty, in form and substance reasonably satisfactory to LESSEE; and (h) LESSOR shall give written notice to LESSEE at least five (5) days before any such transfer, specifying the name and address of the proposed LESSOR's Assignee, and providing reasonably satisfactory evidence that the proposed LESSOR's Assignee meets the requirements described in Article 24.2.1(g)(i) or (ii). For a period of two (2) years after such sale or assignment and at LESSEE's cost, LESSEE will continue to name LESSOR as an additional insured under the Aviation and Airline General Third Party Liability Insurance required pursuant to Article 17 and Exhibit C. 24.2.2 The term "LESSOR" as used in this Lease means the lessor of the Aircraft at the time in question. In the event of the sale of the Aircraft and transfer of LESSOR's rights and obligations under this Lease, LESSOR's Assignee will become "LESSOR" of the Aircraft under this Lease and the transferring party (the prior "LESSOR") will be relieved of all liability to LESSEE under this Lease for obligations arising on and after the date the Aircraft is sold. LESSEE will acknowledge and accept LESSOR's Assignee as the new "LESSOR" under this Lease and will look solely to LESSOR's Assignee for the performance of all LESSOR obligations and covenants under this Lease arising on and after the Aircraft sale date. 24.3 LESSOR'S LENDER. Subject to LESSEE's rights pursuant to this Lease, LESSOR may at any time and without LESSEE's consent grant security interests over the Aircraft and assign the benefit of this Lease to a lender ("LESSOR'S LENDER") as security for LESSOR's obligations to LESSOR's Lender. Accordingly, if LESSOR's Lender requires, as a condition to providing financing, any nonsubstantive modification of this Lease, LESSEE agrees to enter into an agreement so modifying this Lease. 24.4 LESSEE COOPERATION. On request by LESSOR, LESSOR's Assignee or LESSOR's Lender, LESSEE will execute all such documents (such as a lease assignment agreement) as LESSOR, LESSOR's Assignee or LESSOR's Lender may reasonably require to confirm LESSEE's obligations under this Lease and obtain LESSEE's acknowledgment that to the best of LESSEE's knowledge, LESSOR is not in breach of this Lease. LESSEE will provide all other reasonable assistance and cooperation to LESSOR, LESSOR's Assignee and LESSOR's Lender in connection with any such sale or assignment or the perfection and maintenance of any such security interest, at LESSOR's cost, including making all necessary filings and registrations in the State of Registration and providing all opinions of counsel with respect to matters reasonably requested by LESSOR, LESSOR's Lender or LESSOR's Assignee. LESSOR will reimburse LESSEE for its reasonable out-of-pocket costs in reviewing documents required by LESSOR or LESSOR's Lender. 24.5 PROTECTIONS. 24.5.1 LESSOR will obtain for the benefit of LESSEE an acknowledgment from any LESSOR's Assignee or LESSOR's Lender that, so long as no Event of Default has occurred and is continuing hereunder, such Person will not interfere with LESSEE's quiet, peaceful use and enjoyment of the Aircraft. 24.5.2 Wherever the term "LESSOR" is used in this Lease in relation to any of the provisions relating to disclaimer, title and registration, indemnity and insurance contained in Articles 8, 13, 16 and 17, respectively, or with respect to Article 20.2.7, the term "LESSOR" will be deemed to include LESSOR's Assignee and LESSOR's Lender, if applicable. For avoidance of doubt, in the event of LESSOR's sale or financing of the Aircraft, the disclaimer and indemnity provisions contained in Articles 8 and 16 will continue to be applicable after the sale or assignment to International Lease Finance Corporation, as well as being applicable to LESSOR's Assignee and LESSOR's Lender. ARTICLE 25 DEFAULT OF LESSEE 25.1 LESSEE NOTICE TO LESSOR. LESSEE will promptly notify LESSOR if LESSEE becomes aware of the occurrence of any Default. 25.2 EVENTS OF DEFAULT. The occurrence of any of the following will constitute an Event of Default and material breach of this Lease by LESSEE: (a) LESSEE fails to take delivery of the Aircraft when obligated to do so under the terms of this Lease; (b) LESSEE fails to make a Rent or other payment due hereunder in the manner and by the date provided herein and fails to make such payment within five (5) Business Days after its receipt of notice that such payment is due; (c) LESSEE fails to obtain or maintain the insurance required by Article 17; (d) LESSEE fails to return the Aircraft to LESSOR on the Expiration Date in accordance with Article 23; (e) LESSEE fails to observe or perform any of its other obligations hereunder and fails to cure the same within thirty (30) days after written notice thereof to LESSEE; provided, that LESSEE will have up to a total of sixty (60) days to cure such failure so long as it uses diligent efforts to do so; (f) any representation or warranty of LESSEE herein proves to have been untrue in any material respect when made; provided, that, if the effect of such falsity is curable, LESSEE shall have thirty (30) days after LESSEE has knowledge that the representation or warranty is untrue; (g) the registration of the Aircraft is cancelled other than as a result of an act or omission of LESSOR; (h) LESSEE abandons the Aircraft or Engines; (i) LESSEE or an approved sublessee no longer has unencumbered control (other than Permitted Liens) or possession of the Aircraft or Engines, except as otherwise permitted by this Lease; (j) LESSEE temporarily or permanently discontinues business or (except as permitted by Article 20.2.4) sells or otherwise disposes of all or substantially all of its assets; (k) a material adverse change occurs in the financial condition of LESSEE; (l) LESSEE no longer possesses the licenses, certificates and permits required for the conduct of its business as a certificated air carrier in the U.S.; (m) LESSEE (i) suspends payment on its debts or other obligations generally, (ii) is unable to or admits its inability to pay its debts or other obligations generally as they fall due, (iii) is adjudicated or becomes bankrupt or insolvent or (iv) enters into any composition or other arrangement for the benefit of its creditors generally; (n) any proceedings, resolutions, filings or other steps are instituted with respect to LESSEE relating to the bankruptcy, liquidation, reorganization or protection from creditors of LESSEE or at least half of LESSEE's property. If instituted by LESSEE, the same will be an immediate Event of Default. If instituted by another Person, the same will be an Event of Default if not dismissed, remedied or relinquished within sixty (60) days; (o) any order, judgment or decree is entered by any court of competent jurisdiction appointing a receiver, trustee or liquidator of LESSEE or at least half of its property, or if at least half of LESSEE's property is to be sequestered. If instituted by or done with the consent of LESSEE, the same will be an immediate Event of Default. If instituted by another Person, the same will be an Event of Default if not dismissed, stayed, remedied or relinquished within sixty (60) days; PROVIDED, HOWEVER, that if such proceeding is stayed, then such proceeding will become an immediate Event of Default if such stay is removed or terminates and the proceeding is not dismissed, remedied or relinquished when such stay is removed or terminates. (p) any indebtedness for borrowed moneys or a guarantee or similar obligation owed by LESSEE with an unpaid balance of CONFIDENTIAL MATERIAL OMITTED is declared due before its stated maturity or LESSEE is in default of payment obligations CONFIDENTIAL MATERIAL OMITTED under any other purchase agreement, lease, conditional sale agreement or other agreement pursuant to which LESSEE has possession of any aircraft; (q) Eurocontrol has notified LESSOR that there are unpaid Eurocontrol charges due from LESSEE (unless such charges are being contested in good faith and by appropriate proceedings, an adequate bond has been provided and such proceedings do not involve any danger of the detention, interference with the use or operation, sale, forfeiture or loss of the Aircraft) and such charges remain outstanding for a period of thirty (30) days from the date of Eurocontrol's notice to LESSOR provided that such thirty (30) day grace period will not apply if there is a danger of detention, interference with the use or operation, sale, forfeiture or loss of the Aircraft; or (r) LESSEE is in default under any other lease or agreement between LESSEE and LESSOR and the same is not cured within its specified cure period. 25.3 LESSOR'S GENERAL RIGHTS. Upon the occurrence of any Event of Default, LESSOR may do all or any of the following at its option (in addition to such other rights and remedies which LESSOR may have by statute or otherwise but subject to any requirements of applicable Law): (a) terminate this Lease by giving written notice to LESSEE; (b) require that LESSEE immediately move the Aircraft to an airport or other location designated by LESSOR; (c) for LESSEE's account, do anything that may reasonably be required to cure any default and recover from LESSEE all reasonable costs, including legal fees and expenses incurred in doing so and Default Interest; (d) proceed as appropriate to enforce performance of this Lease and to recover any damages for the breach hereof, including the amounts specified in Article 25.5; (e) terminate this Lease by taking possession of the Aircraft or by serving notice requiring LESSEE to return the Aircraft to LESSOR at the location specified by LESSOR. If LESSOR takes possession of the Aircraft, it may enter upon LESSEE's premises where the Aircraft is located without liability. Upon repossession of the Aircraft, LESSOR will then be entitled to sell, lease or otherwise deal with the Aircraft as if this Lease had never been made. LESSOR will be entitled to the full benefit of its bargain with LESSEE; or (f) apply all or any portion of the Security Deposit and any other security deposits held by LESSOR pursuant to any other agreements between LESSOR and LESSEE to any amounts due. 25.4 DEREGISTRATION AND EXPORT OF AIRCRAFT. If an Event of Default has occurred and is continuing, LESSOR may take all steps necessary to deregister the Aircraft in and export the Aircraft from the State of Registration. 25.5 LESSEE LIABILITY FOR DAMAGES. If an Event of Default occurs, in addition to all other remedies available at law or in equity, LESSOR has the right to recover from LESSEE and LESSEE will pay LESSOR within two (2) Business Days after LESSOR's written demand, all of the following: (a) all amounts which are then due and unpaid hereunder and which become due prior to the earlier of LESSOR's recovery of possession of the Aircraft or LESSEE making an effective tender thereof; (b) any losses suffered by LESSOR because of LESSOR's inability to place the Aircraft on lease with another lessee or to otherwise utilize the Aircraft on financial terms as favorable to LESSOR as the terms hereof or, if LESSOR elects to dispose of the Aircraft, the funds arising from a sale or other disposition of the Aircraft are not as profitable to LESSOR as leasing the Aircraft in accordance with the terms hereof would have been (and LESSOR will be entitled to accelerate any and all Rent which would have been due from the date of LESSOR's recovery or repossession of the Aircraft through the Expiration Date); (c) all costs associated with LESSOR's exercise of its remedies hereunder, including but not limited to repossession costs, legal fees, Aircraft storage costs, Aircraft re-lease or sale costs and LESSOR's internal costs and expenses (including the cost of personnel time calculated based upon the compensation paid to the individuals involved on an annual basis and a general LESSOR overhead allocation); (d) any amount of principal, interest, fees or other sums paid or payable on account of funds borrowed in order to carry any unpaid amount; (e) any loss, premium, penalty or expense which may be incurred in repaying funds raised to finance the Aircraft or in unwinding any financial instrument relating in whole or in part to LESSOR's financing of the Aircraft; (f) any loss, cost, expense or liability sustained by LESSOR due to LESSEE's failure to redeliver the Aircraft in the condition required by this Lease; and (g) any other loss, damage, expense, cost or liability which LESSOR suffers or incurs as a result of the Event of Default and/or termination of this Lease, including an amount sufficient to fully compensate LESSOR for any loss of or damage to LESSOR's residual interest in the Aircraft caused by LESSEE's default. 25.6 WAIVER OF DEFAULT. By written notice to LESSEE, LESSOR may at its election waive any Default or Event of Default and its consequences and rescind and annul any prior notice of termination of this Lease. The respective rights of the parties will then be as they would have been had no Default or Event of Default occurred and no such notice been given. 25.7 PRESENT VALUE OF PAYMENTS. In calculating LESSOR's damages hereunder, upon an Event of Default all Rent and other amounts which would have been due hereunder during the Lease Term if an Event of Default had not occurred will be calculated on a present value basis using a discounting rate of six percent (6%) per annum discounted to the earlier of the date on which LESSOR obtains possession of the Aircraft or LESSEE makes an effective tender thereof. 25.8 USE OF "TERMINATION DATE". For avoidance of doubt, it is agreed that if this Lease terminates and the Aircraft is repossessed by LESSOR due to an Event of Default, then, notwithstanding the use of the term "Termination Date" in this Lease, the period of the Lease Term and the "Expiration Date" will be utilized in calculating the damages to which LESSOR is entitled pursuant to Article 25.5. For example, it is agreed and understood that LESSOR is entitled to receive from LESSEE the Rent and the benefit of LESSEE's insurance and maintenance of the Aircraft until expiration of the Lease Term. ARTICLE 26 NOTICES 26.1 MANNER OF SENDING NOTICES. Any notice, request or information required or permissible under this Lease will be in writing and in English. Notices will be delivered in person or sent by fax, letter (mailed airmail, certified and return receipt requested), or by expedited delivery addressed to the parties as set forth in Article 26.2. In the case of a fax, notice will be deemed received upon actual receipt (and the date of actual receipt will be deemed to be the date set forth on the confirmation of receipt produced by the sender's fax machine immediately after the fax is sent). In the case of a notice sent by expedited delivery, notice will be deemed received on the date of delivery set forth in the records of the Person which accomplished the delivery. If any notice is sent by more than one of the above listed methods, notice will be deemed received on the earliest possible date in accordance with the above provisions. 26.2 NOTICE INFORMATION. Notices will be sent: If to LESSOR: INTERNATIONAL LEASE FINANCE CORPORATION 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067, U.S.A. Attention: Legal Department Fax: 310-788-1990 Telephone: 310-788-1999 If to LESSEE: AMERICAN TRANS AIR, INC. 7337 West Washington Street Indianapolis International Airport Indianapolis, Indiana 46231 United States of America Attention: Ken Wolff Executive Vice President and Chief Financial Officer Fax: 317-240-7091 Telephone: 317-247-4000 or to such other places and numbers as either party directs in writing to the other party. ARTICLE 27 GOVERNING LAW AND JURISDICTION 27.1 CALIFORNIA LAW. This Lease is being delivered in the State of California and will in all respects be governed by and construed in accordance with the Laws of the State of California (notwithstanding the conflict Laws of the State of California). 27.2 NON-EXCLUSIVE JURISDICTION IN CALIFORNIA. As permitted by Section 410.40 of the California Code of Civil Procedure, the parties hereby irrevocably submit to the non-exclusive jurisdiction of the Federal District Court for the Central District of California and the State of California Superior or Municipal Court in Los Angeles, California. Nothing herein will prevent either party from bringing suit in any other appropriate jurisdiction. 27.3 SERVICE OF PROCESS. The parties hereby consent to the service of process (a) out of any of the courts referred to above, (b) in accordance with Section 415.40 of the California Code of Civil Procedure by mailing copies of the summons and complaint to the person to be served by certified or registered mail to the address set forth in Article 26.2, postage prepaid, return receipt requested or (c) in accordance with the Hague Convention, if applicable. 27.4 PREVAILING PARTY IN DISPUTE. If any legal action or other proceeding is brought in connection with or arises out of any provisions in this Lease, the prevailing party will be entitled to recover reasonable attorneys' fees and other costs incurred in such action or proceedings. The prevailing party will also, to the extent permissible by Law, be entitled to receive pre- and post-judgment Default Interest. 27.5 WAIVER. LESSEE AND LESSOR HEREBY WAIVE THE RIGHT TO A TRIAL BY JURY. LESSEE AND LESSOR HEREBY IRREVOCABLY WAIVE ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATED TO THIS LEASE BROUGHT IN ANY OF THE COURTS REFERRED TO IN ARTICLE 27.2, AND HEREBY FURTHER IRREVOCABLY WAIVE ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. ARTICLE 28 MISCELLANEOUS 28.1 PRESS RELEASES. The parties will give copies to one another, in advance if possible, of all news, articles and other releases provided to the public media regarding this Lease. 28.2 LESSOR PERFORMANCE FOR LESSEE. The exercise by LESSOR of its remedy of performing a LESSEE obligation hereunder is not a waiver of and will not relieve LESSEE from the performance of such obligation at any subsequent time or from the performance of any of its other obligations hereunder. 28.3 LESSOR'S PAYMENT OBLIGATIONS. Any obligation of LESSOR under this Lease to pay or release any amount to LESSEE is conditioned upon (a) all amounts then due and payable by LESSEE to LESSOR under this Lease or under any other agreement between LESSOR and LESSEE having been paid in full and (b) no Default or Event of Default having occurred and continuing hereunder at the time such payment or release of payment is payable to LESSEE. 28.4 APPLICATION OF PAYMENTS. Any amounts paid or recovered in respect of LESSEE liabilities hereunder may be applied to Rent, Default Interest, fees or any other amount due hereunder in such proportions, order and manner as LESSOR determines. 28.5 USURY LAWS. The parties intend to contract in strict compliance with the usury Laws of the State of California and, to the extent applicable, the U.S. Notwithstanding anything to the contrary in the Operative Documents, LESSEE will not be obligated to pay Default Interest or other interest in excess of the maximum non-usurious interest rate, as in effect from time to time, which may by applicable Law be charged, contracted for, reserved, received or collected by LESSOR in connection with the Operative Documents. During any period of time in which the then-applicable highest lawful rate is lower than the Default Interest rate, Default Interest will accrue and be payable at such highest lawful rate; however, if at later times such highest lawful rate is greater than the Default Interest rate, then LESSEE will pay Default Interest at the highest lawful rate until the Default Interest which is paid by LESSEE equals the amount of interest that would have been payable in accordance with the interest rate set forth in Article 5.5. 28.6 DELEGATION BY LESSOR. LESSOR may delegate to any Person(s) all or any of the rights, powers or discretion vested in it by this Lease and any such delegation may be made upon such terms and conditions as LESSOR in its absolute discretion thinks fit. 28.7 CONFIDENTIALITY. The Operative Documents and all non-public information obtained by either party about the other are confidential and are between LESSOR and LESSEE only and will not be disclosed by a party to third parties (other than to such party's auditors or legal advisors or as required in connection with any filings of this Lease in accordance with Article 13) without the prior written consent of the other party. If disclosure is required as a result of applicable Law, LESSEE and LESSOR will cooperate with one another to obtain confidential treatment as to the commercial terms and other material provisions of this Lease. 28.8 RIGHTS OF PARTIES. The rights of the parties hereunder are cumulative, not exclusive, may be exercised as often as each party considers appropriate and are in addition to its rights under general Law. The rights of one party against the other party are not capable of being waived or amended except by an express waiver or amendment in writing. Any failure to exercise or any delay in exercising any of such rights will not operate as a waiver or amendment of that or any other such right any defective or partial exercise of any such rights will not preclude any other or further exercise of that or any other such right and no act or course of conduct or negotiation on a party's part or on its behalf will in any way preclude such party from exercising any such right or constitute a suspension or any amendment of any such right. 28.9 FURTHER ASSURANCES. Each party agrees from time to time to do and perform such other and further acts and execute and deliver any and all such other instruments as may be required by Law, reasonably requested by the auditors of the other party or requested by the other party to establish, maintain or protect the rights and remedies of the requesting party or to carry out and effect the intent and purpose of this Lease. 28.10 USE OF WORD "INCLUDING". The term "INCLUDING" is used herein without limitation. 28.11 HEADINGS. All article and paragraph headings and captions are purely for convenience and will not affect the interpretation of this Lease. Any reference to a specific article, paragraph or section will be interpreted as a reference to such article, paragraph or section of this Lease. 28.12 INVALIDITY OF ANY PROVISION. If any of the provisions of this Lease become invalid, illegal or unenforceable in any respect under any Law, the validity, legality and enforceability of the remaining provisions will not in any way be affected or impaired. 28.13 NEGOTIATION. The terms of this Lease are agreed by LESSOR from its principal place of business in Los Angeles, California. 28.14 TIME IS OF THE ESSENCE. Time is of the essence in the performance of all obligations of the parties under this Lease and, consequently, all time limitations set forth in the provisions of this Lease will be strictly observed. 28.15 AMENDMENTS IN WRITING. The provisions of this Lease may only be amended or modified by a writing executed by LESSOR and LESSEE. 28.16 COUNTERPARTS. This Lease may be executed in any number of identical counterparts, each of which will be deemed to be an original, and all of which together will be deemed to be one and the same instrument when each party has signed and delivered one such counterpart to the other party. 28.17 DELIVERY OF DOCUMENTS BY FAX. Delivery of an executed counterpart of this Lease or of any other documents in connection with this Lease by fax will be deemed as effective as delivery of an originally executed counterpart. Any party delivering an executed counterpart of this Lease or other document by fax will also deliver an originally executed counterpart, but the failure of any party to deliver an originally executed counterpart of this Lease or such other document will not affect the validity or effectiveness of this Lease or such other document. 28.18 ENTIRE AGREEMENT. The Operative Documents constitute the entire agreement between the parties in relation to the leasing of the Aircraft by LESSOR to LESSEE and supersede all previous proposals, agreements and other written and oral communications in relation hereto. The parties acknowledge that there have been no representations, warranties, promises, guarantees or agreements, express or implied, except as set forth herein and in the other Operative Documents. IN WITNESS WHEREOF, LESSEE and LESSOR have caused this Lease to be executed by their respective officers as of September 5, 2000. INTERNATIONAL LEASE FINANCE AMERICAN TRANS AIR, INC. CORPORATION By: /s/ Grant Levy By: /s/ Kenneth K. Wolff Its: Vice President Its: Executive Vice President & CFO EXHIBIT A AIRCRAFT DESCRIPTION Aircraft Manufacturer and Model: Boeing 737-800 Specification: Seating Configuration: Manufacturer's Serial Number: 30643 Registration Mark: ____ Engine Manufacturer and Model: CFM56-7B-27 Engine Serial Numbers: _______ and ________ Engine Thrust Rating: 27,300 pounds Maximum Gross Takeoff Weight: 160,000 pounds EXHIBIT B AGENCY AGREEMENT (Limited Authority) Relating to Boeing 737-800 Aircraft THIS AGENCY AGREEMENT ("AGREEMENT") is made and entered into as of ____________________. BETWEEN: AMERICAN TRANS AIR, INC., a Indiana corporation whose address and principal place of business is at 7337 West Washington Street, Indianapolis International Airport, Indianapolis, Indiana 46231, United States of America ("AGENT") and INTERNATIONAL LEASE FINANCE CORPORATION, a California corporation, whose address and principal place of business is at 1999 Avenue of the Stars, 39th Floor, Los Angeles, California 90067, U.S.A. ("BUYER"). RECITAL The Boeing Company ("MANUFACTURER") and Buyer have entered into Purchase Agreement 2241, dated as of July 30, 1999 (such purchase agreement as may be amended in accordance with the provisions thereof is hereinafter referred to as the "PURCHASE AGREEMENT") under which Manufacturer has agreed to manufacture and sell and Buyer has agreed to purchase certain Boeing 737-800 aircraft. Buyer has agreed to lease one (1) of such aircraft bearing manufacturer's serial number 30643 (the "AIRCRAFT") to the Agent pursuant to an Aircraft Lease Agreement between Buyer and Agent dated as of September 5, 2000 (the "LEASE"). The Agent is engaged in business as a commercial air carrier and intends to lease the Aircraft from Buyer, and Buyer is desirous of utilizing the expertise of the Agent as Buyer's agent in all matters to which the Purchase Agreement relates with respect to the Aircraft except certain items as indicated below, and the Agent, as Buyer's agent, is willing to make such expertise available to Buyer. Accordingly, the parties agree as follows: 1. Buyer hereby appoints the Agent as Buyer's sole and exclusive agent with authority to perform the following, on behalf of Buyer, as the Agent may in its discretion determine to be necessary or desirable: (a) monitor Manufacturer's production, testing and delivery of the Aircraft in accordance with the Purchase Agreement and (b) do all such other things permitted by the Purchase Agreement related to the technical and engineering aspects of Manufacturer's production of the Aircraft, except Buyer limits Agent's authority to perform on behalf of Buyer on any defect that occurs during manufacture that is considered significant in nature by Buyer as measured by the criteria set forth below. Buyer retains the sole authority to perform on any defect meeting such criteria. (i) Deviations from the drawing configuration that could affect future modifications, maintenance, repair or overhaul of the Aircraft; (ii) Defects that are obvious appearance items; (iii) Rework that requires stress concurrence to satisfy Manufacturer's Material Review Board (MRB) requirements; (iv) A high quantity of defects normally considered minor on a singular basis; (v) Major rework requiring extensive repair or modification, E.G. replacement of ---- skin panels, extensive use of oversize fasteners, repair of damaged areas and significant structural modifications; (vi) Rework that affects the aerodynamic drag coefficient of the Aircraft; or (vii) Rework that involves areas known to be sensitive to Buyer. 2. Notwithstanding anything in the provisions of paragraph 1, nothing in this Agreement will confer authority upon or otherwise permit the Agent: (a) to exercise any power of termination under the Purchase Agreement or (b) to make any payments due from Buyer to Manufacturer or to receive on behalf of Buyer any payments due from Manufacturer under the Purchase Agreement, or to alter any of the terms and conditions of the Purchase Agreement or the Detail Specifications of the Aircraft. 3. Buyer will not revoke the appointment of and authority granted under this Agreement to the Agent unless a termination of the Purchase Agreement or Lease has occurred with respect to the Aircraft or the Agent has failed to perform a material obligation under this Agreement. Notice of any such revocation will be provided in accordance with the provisions of Article 14 of the Purchase Agreement and given to both Manufacturer and the Agent. 4. Manufacturer acknowledges the appointment of the Agent for the purpose set forth hereunder and Manufacturer and Buyer agree that due performance by Manufacturer or Agent of an obligation under the Purchase Agreement will constitute due satisfaction of such obligation by such party and Buyer agrees to be bound by the acts of the Agent. 5. Buyer and Agent agree to identify the technical organization and/or person(s) with the limited authority to act for Agent during production of the Aircraft. Buyer will, if possible, provide such identification to Manufacturer in writing, along with office space requirements for Agent, if required, prior to or at the time of Manufacturer's acknowledgment of this Agreement. 6. Nothing in this Agreement will subject Manufacturer to any liability under the Purchase Agreement which it would not otherwise be subject to, or modify Manufacturer's rights thereunder, or require Manufacturer to divest itself of title to or possession of Aircraft or any other property which is subject to the Purchase Agreement until payment therefor and delivery thereof in accordance with the Purchase Agreement. 7. None of the parties hereto will be entitled to assign to any third party any of their rights under this Agreement. 8. The Agent will not delegate to any third party the performance of the obligations imposed on it by this Agreement or appoint a sub-agent. 9. References to Manufacturer in this Agreement will include any wholly-owned subsidiary of Manufacturer to which Manufacturer assigns any of its rights and obligations under the Purchase Agreement pursuant to the terms and conditions thereof. 10. This Agreement will be governed by the laws of the State of California; however, the Purchase Agreement shall remain governed by the laws of the State of Washington. This Agreement has been executed by the parties hereto as of the day and year first above written. INTERNATIONAL LEASE FINANCE CORPORATION AMERICAN TRANS AIR, INC. By: By: Its: Its: The Boeing Company acknowledges the appointment of AMERICAN TRANS AIR, INC. as agent of International Lease Finance Corporation in connection with the above referenced Aircraft as set forth in this Agreement. THE BOEING COMPANY By: Its: EXHIBIT C CERTIFICATE OF INSURANCE [Refer to Aircraft Lease Agreement dated as of September 5, 2000 between LESSEE and LESSOR (the "Lease"). If applicable, insurance certificates from both the insurers and reinsurers will be provided. If there is a LESSOR's Lender, include references to it where appropriate after references to LESSOR.] To: INTERNATIONAL LEASE FINANCE CORPORATION ("LESSOR") ------ 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States Re: AMERICAN TRANS AIR, INC. ("LESSEE") Boeing 737-800 Manufacturer's Serial No.: 30643 Registration Mark: ____ (the "AIRCRAFT") The following security has subscribed to the insurance and/or reinsurance policies: [LIST COMPANIES & PERCENTAGES] THIS IS TO CERTIFY THAT, as Insurance Brokers, we have effected Fleet Insurance in respect of aircraft owned or operated by LESSEE (including the Aircraft), and that insurance in respect of the Aircraft is as specified below. AIRCRAFT HULL ALL RISKS COVERING: All risks of physical loss or damage to the Aircraft from any cause (subject only to the exclusions as specified below), for an Agreed Value of Aircraft in the amount of [list amount calculated in accordance with Article 18.1] DEDUCTIBLES: (CONFIDENTIAL MATERIAL OMITTED) each and every loss (or such lesser amount as generally applicable to the rest of LESSEE's 737-800 fleet). Not applicable to Total Loss/Constructive Total Loss or Arranged Total Loss GEOGRAPHICAL COVERAGE: Worldwide [subject to customary exclusions] AVIATION AND AIRLINE GENERAL THIRD PARTY LIABILITY COVERING: Aircraft Third Party, Passenger, Baggage, Cargo and Mail Liability and Airline General Third Party Liability (including Premises, Hangarkeepers and Products Liability) for combined single limit of not less than (CONFIDENTIAL MATERIAL OMITTED) (or such higher amount as LESSEE may carry generally on other 737-800 aircraft in its fleet) any one accident/occurrence (but in the aggregate in relation to Products Liability), extended to cover LESSEE's liability under the Lease to the extent of the risks covered by the policy including war and allied perils under Extended Coverage Endorsement as per AVN 52 subject only to exclusions as specified below GEOGRAPHICAL LIMITS: Worldwide [subject to customary exclusions] HULL WAR AND ALLIED PERILS COVERING: Hull War Risks as per LSW555.B, but including (a) confiscation or requisition (including by State of Registration and state where airline is domiciled), (b) hijacking or other unlawful seizure or wrongful exercise of control of the Aircraft or crew in flight (including any attempt at such seizure or control) and including "All Risks" Continuation Clause and Extortion Risks (including expenses) and covering claims excluded from Hull All Risks Policy while Aircraft outside Assured's control by reason of perils insured under this policy, for an Agreed Value of Aircraft in the amount of [list amount calculated in accordance with Article 18.1] DEDUCTIBLE: No deductible GEOGRAPHICAL LIMITS: Worldwide AIRCRAFT SPARES ALL RISKS INSURANCE COVERING: All risks of physical loss or damage to Aircraft Parts or spares or Engines at all times when removed from the Aircraft from whatever cause, subject only to the exclusions specified below, including the risks set down in AVN 48B other than paragraphs (a) and (b) thereof (but including paragraph (a) in respect of transit risks) for limits of not less than: CONFIDENTIAL MATERIAL OMITTED and covering: With respect to an Engine, an agreed value (CONFIDENTIAL MATERIAL OMITTED) or, with LESSOR's written concurrence, replacement cost With respect to Parts, replacement cost DEDUCTIBLE: (CONFIDENTIAL MATERIAL OMITTED) GEOGRAPHICAL COVERAGE: Worldwide INSURANCE REQUIRED BY MANUFACTURER LESSEE will carry the insurance required by Manufacturer in connection with LESSOR's assignment of Manufacturer's warranties and product support to LESSEE CONTRACTUAL INDEMNITY To the extent of the risks covered by the policies, LESSEE has insurance coverage for the indemnities agreed to by LESSEE pursuant to Article 16 of the Lease, subject to AVN67B or equivalent PERIOD OF COVERAGE (ALL POLICIES) From the Delivery Date of Aircraft to [END OF POLICY PERIOD] It is further certified that LESSOR has an interest in respect of the Aircraft under the Lease. Accordingly, with respect to losses occurring during the period from the Effective Date until the expiry of the Insurance or until the expiry or agreed termination of the Lease or until the obligations under the Lease are terminated by any action of the Insured or LESSOR and in consideration of the Additional Premium it is confirmed that the Insurance afforded by the Policy is in full force and effect and it is further agreed that the following provisions are specifically endorsed to the Policy. 1. UNDER THE HULL (ALL RISKS AND HULL WAR AND ALLIED RISKS) AND AIRCRAFT SPARES INSURANCES (a) In respect of any claim on the Aircraft that becomes payable on the basis of a Total Loss, payment of any settlement will be made to, or to the order of LESSOR as sole loss payee, up to the Agreed Value. With respect to repairable damage to an Aircraft or Engine, LESSOR will receive all insurance proceeds in excess of CONFIDENTIAL MATERIAL OMITTED provided that upon receipt by the insurance broker of written notice of a material default on the part of LESSEE (and until notice that it has been cured), all insurance proceeds which otherwise would be payable to LESSEE will be made directly to LESSOR. In respect of any other claim, payment of any settlement (net of any relevant policy deductible) will be made with such party(ies) as may be necessary to repair the Aircraft unless otherwise agreed after consultation between the Insurers and the Insured and, where necessary under the terms of the Lease, LESSOR. Such payments will only be made provided they are in compliance with all applicable laws and regulations. (b) Insurers agree on a 50/50 settlement in terms of AVS 103. (c) Insurers have no right to replace the Aircraft on a Total Loss (arranged, constructive or otherwise). (d) Insurers confirm that under the insurance policies, if the Insured installs an engine owned by a third party on the Aircraft, either (i) the hull insurance will automatically increase to such higher amount as is necessary in order to satisfy both LESSOR's requirement to receive the Agreed Value in the event of a Total Loss, Constructive Total Loss or Arranged Total Loss and the amount required by the third party engine owner, or (ii) separate additional insurance on such engine will attach in order to satisfy separately the requirements of the Insured to such third party engine owner. 2. UNDER THE LEGAL LIABILITY INSURANCE (a) Subject to the provisions of this Endorsement, the Insurance will operate in all respects as if a separate Policy had been issued covering each party insured hereunder, but this provision will not operate to include any claim arising howsoever in respect of loss or damage to the Aircraft insured under the Hull or Spares Insurance of the Insured. Notwithstanding the foregoing the total liability of Insurers in respect of any and all Insureds will not exceed the limits of liability stated in the Policy. (b) The Insurance provided hereunder will be primary and without right of contribution from any other insurance which may be available to LESSOR. 3. UNDER ALL INSURANCES (a) LESSOR, its successors and assigns, and (with respect to Aviation and Airline General Third Party Liability only) its directors, officers and employees for their respective rights and interests, are included as Additional Insureds. (b) The cover afforded to LESSOR by the Policy in accordance with this Endorsement will 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 Policy. (c) LESSOR will have no responsibility for premium and insurers will waive any right of set-off or counterclaim against LESSOR except in respect of outstanding premium in respect of the Aircraft, provided that Insurer may only set-off for premiums against the proceeds of the hull insurance for outstanding premiums in connection with hull all risks and hull war and allied perils insurance. (d) Upon payment of any loss or claim to or on behalf of LESSOR, Insurers will to the extent and in respect of such payment be thereupon subrogated to all legal and equitable rights of LESSOR indemnified hereby (but not against LESSOR). Insurers will not exercise such rights without the consent of those indemnified, such consent not to be unreasonably withheld. At the expense of Insurers LESSOR will do all things reasonably necessary to assist the Insurers to exercise said rights. (e) Except in respect of any provision for Cancellation or Automatic Termination specified in the Policy or any endorsement thereof, cover provided by this Endorsement may only be cancelled or materially altered in a manner adverse to LESSOR by the giving of not less than thirty (30) days notice in writing to LESSOR. Notice will be deemed to commence from the date such notice is given by the Insurers. Such notice will NOT, however, be given at normal expiry date of the Policy or any endorsement. 4. EXCEPT AS SPECIFICALLY VARIED OR PROVIDED BY THE TERMS OF THIS CERTIFICATE (a) LESSOR IS COVERED BY THE POLICY SUBJECT TO ALL TERMS, CONDITIONS, LIMITATIONS,WARRANTIES, EXCLUSIONS AND CANCELLATION PROVISIONS THEREOF. (b) THE POLICY WILL NOT BE VARIED BY ANY PROVISIONS CONTAINED IN THE LEASE WHICH PURPORT TO SERVE AS AN ENDORSEMENT OR AMENDMENT TO THE POLICY. SUBJECT (save as specifically stated in this Certificate) to policy terms, conditions, limitations and exclusions. Yours faithfully, [BROKERS] EXHIBIT D BROKERS' LETTER OF UNDERTAKING To: INTERNATIONAL LEASE FINANCE CORPORATION 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States Date: Our Ref: Re: AMERICAN TRANS AIR, INC. ("LESSEE") ------ Boeing 737-800 Manufacturer's Serial No.: ____ Registration Mark: ____ (the "AIRCRAFT") Dear Sirs: We confirm that insurance has been effected for the account of [LESSEE] (the "OPERATOR") covering all aircraft owned or operated by them, including the above-referenced aircraft (the "Aircraft"). [Also confirm, if applicable, the amount of any hull all risks or hull war and allied perils on the Aircraft which LESSEE is carrying in excess of the Agreed Value (which excess insurance would be payable to LESSEE). Such excess insurance may not exceed ten percent (10%) of the Agreed Value.] Pursuant to instructions received from the Operator and in consideration of your approving the arrangement of the Operator's "Fleet Policy" (under which the above-referenced Aircraft is insured) through the intermediary of ourselves as Brokers in connection with the insurance (the "INSURANCE") mentioned in our Certificate of Insurance (Reference No. [ ] dated [ ] and attached hereto), we undertake as follows: 1. In relation to the Hull and War Risks Insurance to hold to your order the insurance Slips or Contracts and any Policies which may be issued or any policies substituted (with your consent) therefor (but only insofar as the same relate to the Aircraft only) and the benefit of the Hull and War Risks Insurance thereunder, but subject to our requirements to operate the Fleet Policy insofar as it relates to any other aircraft insured thereunder. 2. To advise you of any of the following: (a) If any insurer cancels or gives notice of cancellation of any of the Insurance at least thirty (30) days (or such lesser period as may be available in the case of War and Allied Perils) before such cancellation is to take effect in respect of the Aircraft. (b) Of any act or omission or of any event (including non-payment of premium) of which we have knowledge or are notified and which might invalidate or render unenforceable in whole or in part any of the Insurance, insofar as the same relate to the Aircraft. (c) If we do not receive instructions to renew all or any of the Insurance at least thirty (30) days prior to their expiration. (d) If any of the Insurance are not renewed on the same terms (save as to premium and period of cover and as you might otherwise have notified us to be acceptable to you) seven (7) days prior to expiry thereof. The above undertakings are given subject to our continuing appointment for the time being as Insurance Brokers to the Operator. We also undertake to advise you if we cease to be Insurance Brokers to the Operator. Yours faithfully, EXHIBIT E ESTOPPEL AND ACCEPTANCE CERTIFICATE AMERICAN TRANS AIR, INC. ("LESSEE"), a corporation organized under the laws of Indiana does hereby represent, acknowledge, warrant and agree as follows: 1. LESSEE and INTERNATIONAL LEASE FINANCE CORPORATION, as LESSOR, have entered into an Aircraft Lease Agreement dated as of September 5, 2000 (hereinafter referred to as the "LEASE"). Words used herein with capital letters and not otherwise defined will have the meanings set forth in the Lease. 2. LESSEE has this ____ day of __________, ____ (Time: __________) at ____________________ received from LESSOR possession of: (a) One (1) Boeing 737-800 aircraft bearing Manufacturer's serial number ____ and U.S. registration mark ____, together with two (2) CFM56-7B-27 engines bearing manufacturer's serial numbers _______ and ________ (each of which has 750 or more rated take-off horsepower), all in airworthy condition. (b) All Aircraft Documentation, including the usual and customary manuals, logbooks, flight records and historical information regarding the Aircraft, Engines and Parts. 3. All of the foregoing has been delivered and accepted on the date set forth above to LESSEE's full satisfaction and pursuant to the terms and provisions of the Lease. 4. The Agreed Value of the Aircraft is US$_______________. 5. The amount of fuel on board at Delivery is __________ (circle one) pounds/kilos (________ gallons). 6. The Aircraft, Engines, Parts and Aircraft Documentation as described in the Lease have been fully examined by LESSEE and have been received in a condition fully satisfactory to LESSEE and in full conformity with the Lease in every respect. 7. The Lease is in full force and effect, LESSEE has no claims, offsets, deductions or set-off of any kind or nature in connection with the Lease, except for any claims against LESSOR set forth on the attached List of Discrepancies. 8. LESSOR's Lender may rely upon all of the foregoing in granting substantial financial accommodations to LESSOR and LESSEE understands and agrees that any funds being advanced by LESSOR's Lender will be made in reliance upon the foregoing. 9. LESSEE has obtained all required permits, authorizations, licenses and fees of the State of Registration or any Government Entity thereof necessary in order for LESSEE to operate the Aircraft as permitted by the terms of the Lease. Dated on the date set forth above AMERICAN TRANS AIR, INC. By: Title: ATTACHMENTS: 1. List of Aircraft Documentation 2. List of Loose Equipment 3. List of Discrepancies ATTACHMENT 1 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE LIST OF AIRCRAFT DOCUMENTATION MANUALS 1. FAA Approved Flight Manual 2. Airplane Flight Operation Manual 3. Aircraft Recover Manual 4. Quick Reference Handbook (QRH) 5. Weight and Balance Manual 6. Aircraft Fueling Manual 7. Aircraft Maintenance Manual (MM) 8. Aircraft Maintenance Manual Supplement 9. Ramp Maintenance Manual (RMM) 10. Cargo Loading Manual 11. Fault Reporting Manual (FRM) 12. Fault Isolation Manual (FIM) 13. Illustrated Parts Catalog (IPC) 14. Life Limited Parts Manual 15. Structural Repair Manual (SRM) 16. Master Minimum Equipment List 17. Wiring Diagram Manual (WD) 18. Wiring Practices Manual 19. System Schematics Manual 20. B.I.T.E. Manual 21. Non-Destructive Test Manual 22. Corrosion Prevention Manual 23. Component Maintenance Manual 24. APU Log Book 25. Engine Maintenance Manual 26. Engine Log Book 27. Engine Illustrated Parts Catalog 28. Engine Data Submittal Book 29. Engine Overhaul Manual 30. Power Plant Build-up Manual AIRCRAFT RECORDS AND HISTORICAL DOCUMENTS 1. Copies of original Certificates delivered by Boeing: a. Airworthiness Certificate for Export b. Radio installation conformity certificate c. Noise limitation certificate 2. Copies of original Documents delivered by Boeing: a. Airworthiness Directive Compliance list b. Aircraft inspection report c. Aircraft Readiness Log d. Weighing report 3. Copies of current Certificates: a. Airworthiness Certificate b. Noise limitation c. Radio license d. Interior material burn certificates e. Certificate of Export f. Aircraft deregistration confirmation e. Aircraft Registration 4. Letters signed and stamped by Quality Assurance: a. Current aircraft hours and cycles b. Current engines hours and cycles c. Accident and Incident report d. Summary of Maintenance Program e. AD compliance during the lease term 5. Aircraft log books and Aircraft readiness log. 6. Aircraft Hard Time (HT) inspection status. 7. One year forecast for HT inspection. 8. Aircraft Modification status, including service bulletins. 9. Last weighing report prior to redelivery. 10. AD compliance report with original signoffs. 11. Routine and non-routine job cards of the last "C" and "D" checks. 12. Past year pilots and maintenance discrepancies. 13. Major and Minor structural repairs with applicable approvals. 14. Compass Swing report of the last three years. 15. Cabin Configuration drawing (LOPA). 16. Emergency equipment location drawing. 17. Last X-RAYs ENGINES RECORDS 1. Last test cell run reports. 2. Life Limited Parts status and traceability. 3. AD compliance report with original signoffs. 4. Engine Modification/service bulletin/inspection report and applicableforms. 5. Last heavy maintenance records for each module. 6. Engine log books. 7. Engine removal history. 8. Past year trend monitoring reports. 9. Historical borescope reports. 10. Engine component report. APU RECORDS 1. APU status (FH, FC, limits). 2. Life limited Part status and traceability. 3. AD compliance with original signoffs. 4. Modification status. 5. Last heavy maintenance documents. 6. APU log books. 7. Last test cell report. COMPONENT RECORDS 1. Aircraft component inventory. 2. Hard time component inventory. 3. All serviceable tags. 4. Landing Gear status with last overhaul and life limited Part status. 5. AD compliance with original signoffs. 6. Modification status. ATTACHMENT 2 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE LIST OF LOOSE EQUIPMENT ATTACHMENT 3 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE LIST OF DISCREPANCIES EXHIBIT F OPINION OF COUNSEL TO BE GIVEN BY INDEPENDENT OUTSIDE COUNSEL OF LESSEE OR OTHER LAWYERS ACCEPTABLE TO LESSOR To: International Lease Finance Corporation 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States Gentlemen: This opinion is furnished to you pursuant to Article 7 of the Aircraft Lease Agreement dated as of September 5, 2000 (the "LEASE") between AMERICAN TRANS AIR, INC. ("LESSEE") and INTERNATIONAL LEASE FINANCE CORPORATION ("LESSOR"). Defined terms in this opinion are used herein as defined in the Lease. I have acted as counsel for LESSEE in connection with the preparation, execution and delivery of the Lease. In that connection I have examined: (a) The Lease and Estoppel and Acceptance Certificate; (b) The charter of LESSEE and all amendments thereto (the "CHARTER"); and (c) Such other documents, agreements and instruments, and such treaties, laws, rules, regulations, decrees and the like, as I have deemed necessary as a basis for the opinions hereinafter expressed. [ (d) All of the agreements and any amendments thereto between LESSEE and all other lessors and lenders of LESSEE covering other aircraft operated by LESSEE on which the Engines can be installed.] Based upon the foregoing and having regard for legal considerations which I deem relevant, I am of the opinion that: 1. LESSEE is a corporation duly incorporated, validly existing and in good standing under the Laws of Indiana. It has the corporate power and authority to carry on its business as presently conducted and to perform its obligations under the Lease. 2. No authorization, approval, consent, license or order of, or registration with, or the giving of notice to the Aviation Authority or any other regulatory body or authority is required for the valid authorization, execution, delivery and performance by LESSEE of the Lease. 3. The Lease and the Estoppel and Acceptance Certificate have each been duly authorized, executed and delivered by LESSEE. Each such instrument is a valid, enforceable and binding obligation of LESSEE except as enforceability may be limited by bankruptcy, insolvency, reorganization or other Laws of general application affecting the enforcement of creditors' rights. 4. The execution and delivery of the Lease and the Estoppel and Acceptance Certificate, the consummation by LESSEE of the transactions contemplated therein and compliance by LESSEE with the terms and provisions thereof do not contravene any Law applicable to LESSEE, or result in any breach of or constitute any default under or result in the creation of any lien, charge or encumbrance upon any property of LESSEE, under any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which LESSEE is a party or by which LESSEE or its properties or assets is bound. 5. Except for any filing or recording that may be required with the [NAME OF AIRCRAFT REGISTER] and except for [DESCRIBE SUCH OTHER FILINGS OR RECORDINGS], no filing or recording of any instrument or document (including the filing of any financial statement) is necessary under the laws of the U.S. in order for the Lease to constitute a valid and perfected lease of record relating to the Aircraft, it being understood that such counsel expresses no opinion as to the nature of LESSOR's title to the Aircraft on the Delivery Date. 6. LESSEE holds all licenses, certificates and permits from applicable governmental authorities in the U.S. necessary for the conduct of its business as a certificated air carrier and performance of its obligations under the Lease. 7. To my knowledge, there are no suits or proceedings pending or threatened against LESSEE before any Government Entity against or affecting LESSEE which are reasonably likely to be adversely determined and, if adversely determined, would have a material adverse effect on the financial condition or business of LESSEE or its ability to perform under the Lease, except as described in the filings provided to LESSOR pursuant to Article 22. 8. The obligations of LESSEE under the Lease are direct, general and unconditional obligations of LESSEE and rank or will rank at least PARI PASSU with all other present and future unsecured and unsubordinated obligations (including contingent obligations) of LESSEE, with the exception of such obligations as are mandatorily preferred by law. 9. LESSEE, under the laws of the U.S. or of any other jurisdiction affecting LESSEE, is subject to private commercial law and suit. Neither LESSEE nor its properties or assets have the right of immunity from suit or execution on the grounds of sovereignty in such jurisdictions and the performance by LESSEE of its obligations under the Lease constitute commercial acts done for commercial purposes. 10. There is no applicable usury or interest limitation Law in Indiana which may restrict the recovery of payments in accordance with the Lease. 11. LESSOR will not violate any Law or become liable to any tax in Indiana or the U.S. by reason of entering into or performing its obligations under the Lease and it is not necessary to establish a place of business in Indiana in order to enforce any provisions of the Lease. Very truly yours, EXHIBIT G ASSIGNMENT OF RIGHTS (AIRFRAME) [DATE] Boeing Commercial Airplane Group P.O. Box 3707 Seattle, Washington 98124-2207 Attention: Vice President-Contracts Mail Code 21-34 Subject: Full Assignment of Rights and Obligations - International Lease Finance Corporation as Lessor and AMERICAN TRANS AIR, INC. as Lessee of Model Boeing 737-800 aircraft bearing manufacturer's serial number 30643 Ladies and Gentlemen: In connection with International Lease Finance Corporation's lease to AMERICAN TRANS AIR, INC. ("Lessee") of a Boeing aircraft (more fully described below), reference is made to the following documents: A. Purchase Agreement 2241, dated as of July 30, 1999, between The Boeing Company ("Boeing") and International Lease Finance Corporation ("ILFC") (the "Boeing Agreement") under which ILFC purchased a certain Boeing Model 737-800 aircraft bearing manufacturer's serial number 30643 (the "Aircraft"). B. Aircraft Lease Agreement (the "Lease") for the Aircraft dated as of September 5, 2000 between ILFC and Lessee. Capitalized terms used herein without definition will have the same meaning as in the Boeing Agreement. In connection with ILFC's lease of the Aircraft under the Lease, ILFC is transferring to Lessee certain rights of ILFC related to the Aircraft under the Boeing Agreement. To accomplish this transfer of rights, as authorized by the provisions of the Boeing Agreement: 1. Lessee acknowledges that it has received copies of the following specific provisions of the Boeing Agreement applicable to the Aircraft and agrees to be bound by and comply with all the terms, conditions, and limitations contained in such provisions, including without limitation the disclaimer and release, exclusion of liabilities, indemnity and insurance provisions thereof: Boeing Agreement Article 6 - Excusable Delay 6.1 General Article 10 - Assignment, Resale or Lease 10.1 Assignment 10.3 Sale by Buyer after Delivery 10.4 Lease by Buyer after Delivery 10.5 No Increase in Boeing Liability 10.6 Exculpatory or Indemnity Clause in Post-delivery Sale or Lease Article 12 - Product Assurance; Disclaimer and Release; Exclusion of Liabilities; Customer Support; Indemnification and Insurance (in its entirety) Article 14 - Contractual Notices and Requests Article 15 - Miscellaneous 15.4 Governing Law Exhibit B - Product Assurance Document Part A Boeing Warrant Part B Warranty Repairs and Modifications by Buyer Part C Boeing Service Life Policy Part D Boeing Indemnity Against Patent Infringement Part D-1 Boeing Indemnity Against Copyright Infringement Part E Supplier Warranties and Patent Indemnities Part G Boeing Interface Commitment Part H General Exhibit C-1 - Customer Support Document Part B Boeing Customer Support Services Part D Technical Data and Documents Part E Buyer's Indemnification of Boeing and Insurance Part F Alleviation or Cessation of Performance Exhibit E - Buyer Furnished Equipment Provisions Document Paragraph 8 Indemnification of Boeing Paragraph 9 Patent Indemnity Paragraph 10 Definitions Letter Agreement No. 1830-3 - Seller Purchased Equipment Paragraph 6 Buyer's Indemnification of Boeing 2. Lessee recognizes that Boeing's obligation to provide training, support and services to Lessee pursuant to Exhibit C of the Boeing Agreement is conditioned on the receipt by Boeing of evidence of compliance by Lessee with the insurance requirements set forth in paragraph 2 of Part E of Exhibit C or in such other form as may be satisfactory to Boeing, prior to the commencement of such training, support and services. 3. ILFC reserves to itself all rights, claims and interests it may have under the Boeing Agreement not expressly assigned to Lessee hereunder. ILFC will remain responsible to Boeing for any amounts with respect to the Aircraft owed to Boeing under the Boeing Agreement prior to the effective date of this letter, including any amounts owed by ILFC to Boeing under the specific articles and paragraphs of the Boeing Agreement referenced in paragraph 1 above based upon events or incidents relating to the Aircraft occurring prior to the effective date of this letter. 4. ILFC hereby assigns to Lessee the sole authority to exercise in Lessee's name all rights and powers of ILFC with respect to the Aircraft under the specific portions of the Boeing Agreement referenced in paragraph 1 above. Such authorization will continue until Boeing receives from ILFC written notice that the Lease has been cancelled or terminated, addressed to Boeing's Vice President, Contracts, P.O. Box 3707, MC 21-34, Seattle, Washington 98124-2207, U.S.A. Until Boeing receives such notice, Boeing will be entitled to deal exclusively with Lessee with respect to the Aircraft under the specific portions of the Boeing Agreement referenced in paragraph 1 above and, with respect to the rights, powers, duties or obligations under such portions of the Boeing Agreement, any and all actions taken by Lessee or agreements entered into by Lessee during the period prior to Boeing's receipt of such notice will be final and binding on ILFC. 5. Lessee hereby accepts the authorization set forth in paragraph 4 above and agrees to be bound by and to comply with all the terms, conditions and limitations of the portion of the Boeing Agreement referenced in paragraph 1 above. 6. This Assignment may be signed by the parties hereto in separate counterparts, each of which when executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. 7. This Assignment shall be governed by, and construed in accordance with,the laws of the State of Washington, including all matters of construction, validity and performance. We request that Boeing, upon receipt of this letter, acknowledge receipt thereof and the transfer of rights set forth above by signing the acknowledgment and forwarding one copy of this letter to each of the undersigned. IN WITNESS WHEREOF, the parties hereto have caused this Assignment Agreement to be duly executed as of the dates written below. INTERNATIONAL LEASE FINANCE AMERICAN TRANS AIR, INC., as Lessee CORPORATION, as Lessor and Buyer By: By: Its: Its: BOEING ACKNOWLEDGMENT AND CONSENT TO ASSIGNMENT Receipt of the above letter is acknowledged and transfer of certain rights as described above under the Boeing Agreement is confirmed, effective as of this date. THE BOEING COMPANY By: Its: Date: EXHIBIT H ASSIGNMENT OF RIGHTS (ENGINES) [DATE] CFM INTERNATIONAL, INC. 1 Neumann Way, F-17 Cincinnati, Ohio 45215 Attention: Commercial Contracts - Warranty Assignment Administrator Dear Warranty Assignment Administrator: Reference is hereby made to that Consent to Assignment made as of April 29, 1988 (the "CONSENT TO ASSIGNMENT"), by and between CFM INTERNATIONAL, INC. ("CFMI") and INTERNATIONAL LEASE FINANCE CORPORATION ("ILFC"). Terms defined in the Consent to Assignment are used herein with the same meaning as in the Consent to Assignment. As of ________________ ___, ______, ILFC has assigned all of its rights and interest in, to and under the Engine Warranties to AMERICAN TRANS AIR, INC. ("ASSIGNEE") in connection with its lease to Assignee of a Boeing 737-800 aircraft (the "AIRCRAFT") together with two (2) CFMI Model CFM56-7B-27 engines bearing Manufacturer's Serial Numbers _______ and ________ (the "ENGINES") as of the date each such Engine was delivered to Assignee. Such assignment shall be effective from such date until ILFC notifies CFMI that the Lease has been cancelled or terminated. The Assignee has accepted such assignment and all the limitations and liabilities pertaining to the Engine Warranties as stated in the provisions of the GTA listed in Schedule 2 to the Consent to Assignment. A copy of the aforesaid assignment is attached hereto. Very truly yours, INTERNATIONAL LEASE FINANCE CORPORATION By: Title: cc: Ruben M. Cabrera Director, Commercial Contracts ASSIGNMENT OF WARRANTIES [DATE] In consideration of AMERICAN TRANS AIR, INC. ("LESSEE") leasing from International Lease Finance Corporation ("ILFC") one (1) Boeing 737-800 aircraft together with two (2) CFMI Model CFM56-7B-27 engines bearing manufacturer's serial numbers _______ and ________, it is hereby agreed as follows: 1. ILFC hereby assigns and transfers to Lessee all of ILFC's respective rights and interest in and to and in and under the Engine Warranties set forth in and subject to the limitations and liabilities set forth in Exhibit B Warranty, Section X (the "ENGINE WARRANTIES") of CFM International, Inc. - ILFC General Terms Agreement No. 6-3987 dated 22 June 1984 (the "GTA") during the term of such leases so long as Lessee is not in default thereunder. 2. Lessee hereby accepts such assignment including all the limitations and liabilities pertaining to said Engine Warranties as stated in the provisions of Exhibit B Warranty, Section X of the GTA. 3. This Agreement shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors and assigns to the extent permitted by the GTA and hereunder. 4. This Agreement shall be governed by and construed in accordance with the laws of the State of California. 5. This Agreement may be executed in any number of counterparts, each of which when executed and delivered is an original but all of which taken together constitute one and the same instrument and any party may execute this Agreement by signing any counterpart. IN WITNESS WHEREOF, the authorized representative of the parties hereto have executed this Agreement as of the day and year first above written. For and on behalf of For and on behalf of INTERNATIONAL LEASE FINANCE AMERICAN TRANS AIR, INC. CORPORATION By: By: Its: Its: EXHIBIT I RETURN ACCEPTANCE RECEIPT Date: _________________ ___, ____ 1. AMERICAN TRANS AIR, INC., as LESSEE, and INTERNATIONAL LEASE FINANCE CORPORATION, as LESSOR, have entered into an Aircraft Lease Agreement dated as of September 5, 2000 (the "LEASE"). Words used herein with capital letters and not otherwise defined will have the meanings set forth in the Lease. 2. LESSOR has this ____ day of __________, ____ (Time: __________) at ____________________ received from LESSEE possession of: (a) One (1) Boeing 737-800 Aircraft bearing Manufacturer's serial number ____, together with two (2) CFM56-7B-27 engines bearing manufacturer's serial numbers _______ and ________, and all Parts attached thereto and thereon in an airworthy condition and (b) All Aircraft Documentation, including the usual and customary manuals, logbooks, flight records and historical information regarding the Aircraft, Engines and Parts, as listed in the Document Receipt attached hereto. 3. The Airframe, Engines and Parts had the following hours/cycles at return: (a) AIRFRAME: Total hours: _______________ Total Landings: _______________ (b) ENGINES: POSITION SERIAL NO. TOTAL HOURS TOTAL CYCLES HRS/CYCLES SINCE LAST SHOP VISIT Time Remaining to Next LIFE LIMITED PART REMOVAL PART NAME HOURS CYCLES MSN MSN (c) APU: MSN __________ Total hours: __________ ______ hours/ ______ cycles since last Overhaul ______ hours/ ______ cycles remaining on APU life-limited Parts (d) LANDING GEARS: POSITION SERIAL NO. Total Hrs/Cycles since Date of last HRS/CYCLES LAST OVERHAUL OVERHAUL Nose Right Main Left Main (e) FUEL ON BOARD AT RETURN: ______ (circle one) pounds/kilos (______ gallons) 4. Other technical information regarding the Aircraft and its components are correctly set forth on the Technical Evaluation Report (in the form of Exhibit L) attached hereto. 5. The above specified aircraft, engines and documentation are hereby accepted by LESSOR subject to correction by LESSEE (or procurement by LESSEE at LESSEE's cost) as soon as reasonably possible of the discrepancies specified in Attachment 2 hereto. 6. Subject to the following paragraph, the leasing of the Aircraft by LESSOR to LESSEE pursuant to the Lease is hereby terminated without prejudice to LESSEE's continuing obligations under the Lease including, without limitation, paragraph 6 above and Articles 10.5, 15 and 16. 7. LESSEE represents and warrants that during the term of the Lease all maintenance and repairs to the Airframe and Engines were performed in accordance with the requirements contained in the Lease. LESSEE further confirms that all of its obligations under the Lease whether accruing prior to the date hereof or which survive the termination of the Lease by their terms and accrue after the date hereof, will remain in full force and effect until all such obligations have been satisfactorily completed. 8. This Return Acceptance Supplement is executed and delivered by the parties in [place]. IN WITNESS WHEREOF, the parties hereto have caused this Return Acceptance Receipt to be executed in their respective corporate names by their duly authorized representatives as of the day and year first above written. INTERNATIONAL LEASE FINANCE CORPORATION AMERICAN TRANS AIR, INC. By: By: Its: Its: ATTACHMENTS: 1. List of Aircraft Documentation 2. List of Loose Equipment 3. List of Discrepancies 4. Engine Maximum Power Assurance Test Conditions and Results 5. Dent and Damage Chart 6. Form of No Accident/Incident Letter 7. Technical Evaluation Report (in the form of Exhibit L) ATTACHMENT 1 TO RETURN ACCEPTANCE RECEIPT LIST OF AIRCRAFT DOCUMENTATION [The (a) manuals and (b) Aircraft records and historical documents set forth below are to be returned with the Aircraft in a current, up-to-date and correct status] MANUALS 1. FAA Approved Flight Manual 2. Airplane Flight Operation Manual 3. Aircraft Recover Manual 4. Quick Reference Handbook (QRH) 5. Weight and Balance Manual 6. Aircraft Fueling Manual 7. Aircraft Maintenance Manual (MM) 8. Aircraft Maintenance Manual Supplement 9. Ramp Maintenance Manual (RMM) 10. Cargo Loading Manual 11. Fault Reporting Manual (FRM) 12. Fault Isolation Manual (FIM) 13. Illustrated Parts Catalog (IPC) 14. Life Limited Parts Manual 15. Structural Repair Manual (SRM) 16. Master Minimum Equipment List 17. Wiring Diagram Manual (WD) 18. Wiring Practices Manual 19. System Schematics Manual 20. B.I.T.E. Manual 21. Non-Destructive Test Manual 22. Corrosion Prevention Manual 23. Component Maintenance Manual 24. APU Log Book 25. Engine Maintenance Manual 26. Engine Log Book 27. Engine Illustrated Parts Catalog 28. Engine Data Submittal Book 29. Engine Overhaul Manual 30. Power Plant Build-up Manual AIRCRAFT RECORDS AND HISTORICAL DOCUMENTS 1. Copies of original Certificates delivered by Boeing: a. Airworthiness Certificate for Export b. Radio installation conformity certificate c. Noise limitation certificate 2. Copies of original Documents delivered by Boeing: a. Airworthiness Directive Compliance list b. Aircraft inspection report c. Aircraft Readiness Log d. Weighing report 3. Copies of current Certificates: a. Airworthiness Certificate b. Noise limitation c. Radio license d. Interior material burn certificates e. Certificate of Export f. Aircraft deregistration confirmation e. Aircraft Registration 4. Letters signed and stamped by Quality Assurance: a. Current aircraft hours and cycles b. Current engines hours and cycles c. Accident and Incident report d. Summary of Maintenance Program e. AD compliance during the lease term 5. Aircraft log books and Aircraft readiness log. 6. Aircraft Hard Time (HT) inspection status. 7. One year forecast for HT inspection. 8. Aircraft Modification status, including service bulletins. 9. Last weighing report prior to redelivery. 10. AD compliance report with original signoffs. 11. Routine and non-routine job cards of the last "C" and "D" checks. 12. Past year pilots and maintenance discrepancies. 13. Major and Minor structural repairs with applicable approvals. 14. Compass Swing report of the last three years. 15. Cabin Configuration drawing (LOPA). 16. Emergency equipment location drawing. 17. Last X-RAYs ENGINES RECORDS 1. Last test cell run reports. 2. Life Limited Parts status and traceability. 3. AD compliance report with original signoffs. 4. Engine Modification/service bulletin/inspection report and applicable forms. 5. Last heavy maintenance records for each module. 6. Engine log books. 7. Engine removal history. 8. Past year trend monitoring reports. 9. Historical borescope reports. 10. Engine component report. APU RECORDS 1. APU status (FH, FC, limits). 2. Life limited Part status and traceability. 3. AD compliance with original signoffs. 4. Modification status. 5. Last heavy maintenance documents. 6. APU log books. 7. Last test cell report. COMPONENT RECORDS 1. Aircraft component inventory. 2. Hard time component inventory. 3. All serviceable tags. 4. Landing Gear status with last overhaul and life limited Part status. 5. AD compliance with original signoffs. 6. Modification status. ATTACHMENT 2 TO RETURN ACCEPTANCE RECEIPT LIST OF LOOSE EQUIPMENT ATTACHMENT 3 TO RETURN ACCEPTANCE RECEIPT LIST OF DISCREPANCIES ATTACHMENT 4 TO RETURN ACCEPTANCE RECEIPT ENGINE MAXIMUM POWER ASSURANCE TEST CONDITIONS AND RESULTS ATTACHMENT 5 TO RETURN ACCEPTANCE RECEIPT DENT AND DAMAGE CHART ATTACHMENT 6 TO RETURN ACCEPTANCE RECEIPT FORM OF NO ACCIDENT/INCIDENT LETTER EXHIBIT J MONTHLY REPORT (SEE FOLLOWING SHEET) MONTHLY AIRCRAFT UTILIZATION AND STATUS REPORT Page 1 of 2 Report Due Date: To: INTERNATIONAL LEASE FINANCE CORPORATION Fax: (310) 788-1990 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067, United States Attn: Finance Department From: AMERICAN TRANS AIR, INC. Contact: Fax: AIRCRAFT TYPE: BOEING 737-800 ENGINE TYPE: CFM56-7B-27 REGISTRATION: ____ SERIAL NUMBER: ____ MONTH OF: NOTE: PLEASE RECORD TIME IN HOURS AND MINUTES NOT DECIMALS. Aircraft Total Time Since New As Of Last Month: Hours: Min: Aircraft Total Time Since New: Hours: Min: Aircraft Total Cycles Since New: Cycles: Airframe Hours Flown During Month: Hours: Min: Airframe Cycles/Landings During Month: Cycles: Time Remaining to "D" or Heavy Maintenance Check: HOURS OR US$ PER CYCLES FLOWN HOUR OR DURING MONTH (AS CYCLE (AS APPLICABLE) X APPLICABLE) = RESERVES TOTAL AIRFRAME: HRS: X = TOTAL LANDING GEAR: HRS: X = TOTAL APU: HRS: X = ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles(for Engine LLP Reserves): x = ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles (for Engine LLP Reserves): x = ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles (for LLP x = Reserves): ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles (for Engine LLP Reserves): x = TOTAL AMOUNT OF RESERVES (US$) PAID THIS MONTH: US$ Monthly Aircraft Utilization and Status Report From: AMERICAN TRANS AIR, INC. PAGE 2 OF 2 ENGINE SERIAL NUMBER: ENGINE SERIAL NUMBER: ORIGINAL POSITION: ORIGINAL POSITION: ACTUAL LOCATION: ACTUAL LOCATION: CURRENT THRUST RATING: CURRENT THRUST RATING: HOURS:/MIN: HOURS:/MIN: Total Time Since New As Of Total Time Since New As Of Last Month: Last Month: Total Time Since New: Total Time Since New: Total Cycles Since New: Total Cycles Since New: Hours Flown During Month: Hours Flown During Month: Cycles During Month: Cycles During Month: IMPORTANT: IF ILFC-OWNED ENGINE IS REMOVED OR INSTALLED ON ANOTHER AIRCRAFT, IT MUST BE REPORTED MONTHLY ON THIS FORM. EXHIBIT K AIRCRAFT DOCUMENTATION AIRCRAFT RECORDS 1. Copies of original Certificates delivered by Boeing: a. Airworthiness Certificate for Export b. Radio installation conformity certificate c. Noise limitation certificate 2. Copies of original Documents delivered by Boeing: a. Airworthiness Directive Compliance list b. Aircraft inspection report c. Aircraft Readiness Log d. Weighing report 3. Copies of current Certificates: a. Airworthiness Certificate b. Noise limitation c. Radio license d. Interior material burn certificates e. Certificate of Export f. Aircraft deregistration confirmation e. Aircraft Registration 4. Letters signed and stamped by Quality Assurance: a. Current aircraft hours and cycles b. Current engines hours and cycles c. Accident and Incident report d. Summary of Maintenance Program e. AD compliance during the lease term 5. Aircraft log books and Aircraft readiness log. 6. Aircraft Hard Time (HT) inspection status. 7. One year forecast for HT inspection. 8. Aircraft Modification status, including service bulletins. 9. Last weighing report prior to redelivery. 10. AD compliance report with original signoffs. 11. Routine and non-routine job cards of the last "C" and "D" checks. 12. Past year pilots and maintenance discrepancies. 13. Major and Minor structural repairs with applicable approvals. 14. Compass Swing report of the last three years. 15. Cabin Configuration drawing (LOPA). 16. Emergency equipment location drawing. 17. Last X-RAYs ENGINES RECORDS 1. Last test cell run reports. 2. Life Limited Parts status and traceability. 3. AD compliance report with original signoffs. 4. Engine Modification/service bulletin/inspection report and applicable forms. 5. Last heavy maintenance records for each module. 6. Engine log books. 7. Engine removal history. 8. Past year trend monitoring reports. 9. Historical borescope reports. 10. Engine component report. APU RECORDS 1. APU status (FH, FC, limits). 2. Life limited Part status and traceability. 3. AD compliance with original signoffs. 4. Modification status. 5. Last heavy maintenance documents. 6. APU log books. 7. Last test cell report. COMPONENT RECORDS 1. Aircraft component inventory. 2. Hard time component inventory. 3. All serviceable tags. 4. Landing Gear status with last overhaul and life limited Part status. 5. AD compliance with original signoffs. 6. Modification status. EXHIBIT L TECHNICAL EVALUATION REPORT (SEE FOLLOWING SHEETS) EX-10.6(J) 25 file071.txt AMTRAN, INC., 2000 10-K, EXHIBIT 10.6(J) AIRCRAFT LEASE AGREEMENT Dated as of September 5, 2000 BETWEEN AMERICAN TRANS AIR, INC. as LESSEE and INTERNATIONAL LEASE FINANCE CORPORATION as LESSOR ------------------------------------------------------------------------------- Aircraft Make and Model: New Boeing 737-800 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Aircraft Manufacturer's Serial Number: 28249 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Aircraft Registration Mark: Per Estoppel and Acceptance Certificate ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Make and Model of Engines: CFM56-7B-27 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Serial Numbers of Engines: Per Estoppel and Acceptance Certificate ------------------------------------------------------------------------------- NEW BOEING 737-800 AIRCRAFT NO. 11 TABLE OF CONTENTS ARTICLE 1 SUMMARY OF TRANSACTION.........................................2 1.1 Description of Aircraft........................................2 1.2 Scheduled Delivery Date and Location...........................2 1.3 Lease Term.....................................................2 1.4 Security Deposit...............................................2 1.5 Transaction Fee................................................2 1.6 Rent During Lease Term.........................................2 1.7 Country of Aircraft Registration...............................4 1.8 Maintenance Program............................................4 1.9 Agreed Value of Aircraft.......................................4 1.10 LESSOR's Bank Account..........................................4 ARTICLE 2 DEFINITIONS....................................................5 2.1 General Definitions............................................5 2.2 Specific Definitions...........................................9 ARTICLE 3 PLACE AND DATE OF DELIVERY....................................11 3.1 Place of Delivery.............................................11 3.2 Scheduled Delivery Date.......................................11 3.3 Delivery subject to Manufacturer Delivery.....................11 3.4 No LESSOR Liability...........................................11 3.5 Total Loss of Aircraft prior to Delivery......................11 3.6 Cancellation for Delay........................................11 ARTICLE 4 LEASE TERM....................................................12 4.1 Lease Term....................................................12 4.2 "Expiration Date".............................................12 4.3 "Termination Date"............................................12 ARTICLE 5 SECURITY DEPOSIT, TRANSACTION FEE, RENT AND OTHER PAYMENTS......................................................13 5.1 Security Deposit..............................................13 5.2 Transaction Fee...............................................14 5.3 Rent..........................................................14 5.4 LESSOR's Bank Account.........................................15 5.5 Default Interest..............................................16 5.6 No Deductions or Withholdings.................................16 5.7 Value Added Taxes.............................................16 5.8 Net Lease.....................................................17 5.9 LESSOR Performance of LESSEE Obligation.......................18 5.10 Consideration for Rent and other Amounts......................18 ARTICLE 6 INVOLVEMENT WITH AIRCRAFT MANUFACTURER........................19 6.1 LESSEE Selection of Aircraft..................................19 6.2 Agency Agreement..............................................19 6.3 Procurement of BFE............................................19 6.4 Assignment of Training........................................19 6.5 LESSEE Inspection of Aircraft.................................19 6.6 Aircraft at Delivery..........................................19 6.7 Delivery of the Aircraft to LESSEE............................20 6.8 LESSEE Acceptance of Aircraft.................................20 ARTICLE 7 PRE-DELIVERY, DELIVERY AND POST-DELIVERY DOCUMENTARY AND OTHER REQUIREMENTS............................21 7.1 Pre-Delivery Requirements.....................................21 7.2 Delivery Requirements.........................................22 7.3 Post-Delivery Requirements....................................23 ARTICLE 8 DISCLAIMERS...................................................24 8.1 "As Is, Where Is".............................................24 8.2 Waiver of Warranty of Description.............................24 8.3 LESSEE Waiver.................................................25 8.4 Conclusive Proof..............................................25 8.5 No LESSOR Liability for Losses................................25 8.6 No Liability to Repair or Replace.............................25 8.7 No Waiver.....................................................26 ARTICLE 9 MANUFACTURERS' AND VENDORS' WARRANTIES........................27 9.1 Warranties....................................................27 9.2 Reassignment..................................................27 ARTICLE 10 OPERATION OF AIRCRAFT.........................................28 10.1 Costs of Operation............................................28 10.2 Compliance with Laws..........................................28 10.3 Training......................................................28 10.4 No Violation of Insurance Policies............................28 10.5 Flight Charges................................................29 ARTICLE 11 SUBLEASES.....................................................30 11.1 No Sublease without LESSOR Consent............................30 11.2 LESSOR Costs..................................................30 11.3 Any Approved Sublease.........................................30 11.4 Assignment of Sublease........................................30 11.5 Continued Responsibility of LESSEE............................30 ARTICLE 12 MAINTENANCE AND USE OF AIRCRAFT...............................31 12.1 General Obligation............................................31 12.2 Specific Obligations..........................................31 12.3 Replacement of Parts..........................................32 12.4 Removal of Engines............................................33 12.5 Pooling of Engines and Parts..................................34 12.6 Installation of Engines on other aircraft.....................34 12.7 Modifications.................................................35 12.8 Performance of Work by Third Parties..........................36 12.9 Reporting Requirements........................................36 12.10 Information Regarding Maintenance Program.....................36 12.11 LESSOR Rights to Inspect Aircraft.............................36 ARTICLE 13 TITLE AND REGISTRATION........................................37 13.1 Title to the Aircraft During Lease Term.......................37 13.2 Registration of Aircraft......................................37 13.3 Filing of this Lease..........................................37 13.4 Evidence of Registration and Filings..........................37 ARTICLE 14 IDENTIFICATION PLATES.........................................38 14.1 Airframe Identification Plates................................38 14.2 Engine Identification Plates..................................38 ARTICLE 15 TAXES.........................................................39 15.1 General Obligation of LESSEE..................................39 15.2 Exceptions to Indemnity.......................................39 15.3 After-Tax Basis...............................................40 15.4 Claims and Contests...........................................40 15.5 Refunds.......................................................41 15.6 Cooperation in Filing Tax Returns.............................41 ARTICLE 16 INDEMNITIES...................................................42 16.1 General Indemnity.............................................42 16.2 Exceptions to General Indemnities.............................43 16.3 After-Tax Basis...............................................44 16.4 Timing of Payment.............................................44 16.5 Subrogation...................................................44 16.6 Notice........................................................44 16.7 Refunds.......................................................44 16.8 Defense of Claims.............................................45 16.9 Survival of Obligation........................................45 ARTICLE 17 INSURANCE.....................................................46 17.1 Categories of Insurance.......................................46 17.2 Insurance for Indemnities.....................................46 17.3 Insurance required by Manufacturer............................46 17.4 Renewal.......................................................46 17.5 Assignment of Rights by LESSOR................................46 17.6 Deductibles...................................................46 17.7 Other Insurance...............................................47 17.8 Information...................................................47 17.9 Currency......................................................47 17.10 Grounding of Aircraft.........................................47 17.11 Failure to Insure.............................................47 17.12 Limit on Hull in favor of LESSEE..............................47 17.13 Marketplace Limitations.......................................48 ARTICLE 18 LOSS, DAMAGE AND REQUISITION..................................49 18.1 Definitions...................................................49 18.2 Notice of Total Loss..........................................50 18.3 Total Loss of Aircraft or Airframe............................50 18.4 Surviving Engine(s)...........................................51 18.5 Total Loss of Engine and not Airframe.........................51 18.6 Other Loss or Damage..........................................52 18.7 Copy of Insurance Policy......................................53 18.8 Government Requisition........................................53 18.9 Conveyance to LESSEE..........................................53 ARTICLE 19 CRAF PROGRAM..................................................54 19.1 Dedication to CRAF............................................54 19.2 Notice to LESSOR..............................................54 19.3 Requisition of Engine.........................................54 19.4 Government Indemnification....................................54 19.5 No Geographic Limits..........................................54 19.6 Notice of Default.............................................55 19.7 Receipt of Payments...........................................55 ARTICLE 20 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE...........56 20.1 Representations and Warranties................................56 20.2 Covenants.....................................................58 ARTICLE 21 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSOR...........61 21.1 Representations and Warranties................................61 21.2 Covenant of Quiet Enjoyment...................................62 ARTICLE 22 FINANCIAL AND RELATED INFORMATION.............................63 ARTICLE 23 RETURN OF AIRCRAFT............................................64 23.1 Date of Return................................................64 23.2 Technical Report..............................................64 23.3 Return Location...............................................64 23.4 Full Aircraft Documentation Review............................64 23.5 Aircraft Inspection...........................................64 23.6 Certificate of Airworthiness Matters..........................65 23.7 General Condition of Aircraft at Return.......................66 23.8 Checks Prior to Return........................................69 23.9 Part Lives....................................................72 23.10 Export and Deregistration of Aircraft.........................74 23.11 LESSEE's Continuing Obligations...............................75 23.12 Airport and Navigation Charges................................75 23.13 Return Acceptance Certificate.................................76 23.14 Indemnities and Insurance.....................................76 ARTICLE 24 ASSIGNMENT....................................................77 24.1 No Assignment by LESSEE.......................................77 24.2 Sale or Assignment by LESSOR..................................77 24.3 LESSOR's Lender...............................................79 24.4 LESSEE Cooperation............................................79 24.5 Protections...................................................79 ARTICLE 25 DEFAULT OF LESSEE.............................................80 25.1 LESSEE Notice to LESSOR.......................................80 25.2 Events of Default.............................................80 25.3 LESSOR's General Rights.......................................82 25.4 Deregistration and Export of Aircraft.........................83 25.5 LESSEE Liability for Damages..................................83 25.6 Waiver of Default.............................................84 25.7 Present Value of Payments.....................................84 25.8 Use of "Termination Date".....................................84 ARTICLE 26 NOTICES.......................................................85 26.1 Manner of Sending Notices.....................................85 26.2 Notice Information............................................85 ARTICLE 27 GOVERNING LAW AND JURISDICTION................................86 27.1 California Law................................................86 27.2 Non-Exclusive Jurisdiction in California......................86 27.3 Service of Process............................................86 27.4 Prevailing Party in Dispute...................................86 27.5 Waiver........................................................86 ARTICLE 28 MISCELLANEOUS.................................................87 28.1 Press Releases................................................87 28.2 LESSOR Performance for LESSEE.................................87 28.3 LESSOR's Payment Obligations..................................87 28.4 Application of Payments.......................................87 28.5 Usury Laws....................................................87 28.6 Delegation by LESSOR..........................................87 28.7 Confidentiality...............................................88 28.8 Rights of Parties.............................................88 28.9 Further Assurances............................................88 28.10 Use of Word "including".......................................88 28.11 Headings......................................................88 28.12 Invalidity of any Provision...................................88 28.13 Negotiation...................................................88 28.14 Time is of the Essence........................................89 28.15 Amendments in Writing.........................................89 28.16 Counterparts..................................................89 28.17 Delivery of Documents by Fax..................................89 28.18 Entire Agreement..............................................89 EXHIBIT A AIRCRAFT DESCRIPTION..........................................91 EXHIBIT B AGENCY AGREEMENT..............................................92 EXHIBIT C CERTIFICATE OF INSURANCE......................................96 EXHIBIT D BROKERS' LETTER OF UNDERTAKING...............................102 EXHIBIT E ESTOPPEL AND ACCEPTANCE CERTIFICATE..........................104 EXHIBIT F OPINION OF COUNSEL...........................................111 EXHIBIT G ASSIGNMENT OF RIGHTS (AIRFRAME)..............................114 EXHIBIT H ASSIGNMENT OF RIGHTS (ENGINES)...............................119 EXHIBIT I RETURN ACCEPTANCE RECEIPT....................................123 EXHIBIT J MONTHLY REPORT...............................................134 EXHIBIT K AIRCRAFT DOCUMENTATION.......................................138 EXHIBIT L TECHNICAL EVALUATION REPORT..................................140 AIRCRAFT LEASE AGREEMENT THIS AIRCRAFT LEASE AGREEMENT is made and entered into as of September 5, 2000. BETWEEN: AMERICAN TRANS AIR, INC., a Indiana corporation whose address and principal place of business is at 7337 West Washington Street, Indianapolis International Airport, Indianapolis, Indiana 46231, United States of America ("LESSEE") and INTERNATIONAL LEASE FINANCE CORPORATION, a California corporation whose address and principal place of business is at 1999 Avenue of the Stars, 39th Floor, Los Angeles, California 90067, United States of America ("LESSOR"). The subject matter of this Lease is one (1) new Boeing 737-800 aircraft. In consideration of and subject to the mutual covenants, terms and conditions contained in this Lease, LESSOR hereby agrees to lease to LESSEE and LESSEE hereby agrees to lease from LESSOR the aircraft and the parties further agree as follows: ARTICLE 1 SUMMARY OF TRANSACTION The information in this Article 1 is a summary of the lease transaction between LESSEE and LESSOR. It is set forth for the convenience of the parties only and will not be deemed in any way to amend, detract from or simplify the other provisions of this Lease. 1.1 DESCRIPTION OF AIRCRAFT One new Boeing 737-800 aircraft 1.2 SCHEDULED DELIVERY DATE AND LOCATION In the month of (CONFIDENTIAL MATERIAL OMITTED) at Seattle, Washington 1.3 LEASE TERM 15 years 1.4 SECURITY DEPOSIT (CONFIDENTIAL MATERIAL OMITTED) 1.5 TRANSACTION FEE (CONFIDENTIAL MATERIAL OMITTED) 1.6 RENT DURING LEASE TERM Payable monthly in advance and equal to the sum of: (a The following amounts for the following years of the Lease Term: LEASE PERIOD MONTHLY RENTAL AMOUNT* (CONFIDENTIAL MATERIAL OMITTED) *The above base rent is expressed in January 1999 U.S.Dollars and will increase in the following amounts for the following periods: PERIOD ESCALATION FACTOR (CONFIDENTIAL MATERIAL OMITTED) 1.7 COUNTRY OF AIRCRAFT REGISTRATION U.S. 1.8 MAINTENANCE PROGRAM LESSEE's Maintenance Program 1.9 AGREED VALUE OF AIRCRAFT (CONFIDENTIAL MATERIAL OMITTED) The Agreed Value is expressed in March 2001 U.S. Dollars and will increase in accordance with Manufacturer's announced escalation rate from March 1, 2001 to the Delivery Date. On each annual renewal date of LESSEE's insurance policy commencing on the renewal date following the first anniversary of the Lease Term, the Agreed Value will decrease by two percent (2.0%) of the then existing Agreed Value. 1.10 LESSOR'S BANK ACCOUNT (Confidential Material Omitted) ARTICLE 2 DEFINITIONS Except where the context otherwise requires, the following words have the following meanings for all purposes of this Lease. The definitions are equally applicable to the singular and plural forms of the words. Any agreement defined below includes each amendment, modification, supplement and waiver thereto in effect from time to time. 2.1 GENERAL DEFINITIONS. "ACT" means the Federal Aviation Act of 1958, as amended from time to time, or any successor act thereto. "AIRCRAFT" means the Airframe, two (2) Engines, Parts and Aircraft Documentation, collectively. As the context requires, "Aircraft" may also mean the Airframe, any Engine, any Part, the Aircraft Documentation or any part thereof individually. For example, in the context of return to LESSOR the term "Aircraft" means the Airframe, Engines, Parts and Aircraft Documentation collectively, yet in the context of LESSEE not creating any Security Interests other than Permitted Liens on the Aircraft, the term "Aircraft" means any of the Airframe, any Engine, any Part or the Aircraft Documentation individually. "AIRCRAFT DOCUMENTATION" means all (a) log books, Aircraft records, manuals and other documents provided to LESSEE in connection with the Aircraft, (b) documents listed in Exhibits E and K and (c) any other documents required to be maintained during the Lease Term by the Aviation Authority, LESSEE's Maintenance Program and this Lease. "AIRFRAME" means the airframe listed in the Estoppel and Acceptance Certificate executed at Delivery together with all Parts relating thereto (except Engines or engines). "AIRWORTHINESS DIRECTIVES" or "ADS" means all airworthiness directives (or equivalent) of the FAA and the Aviation Authority applicable to the Aircraft. "APU" means the auxiliary power unit of the Aircraft. "AVIATION AUTHORITY" means the FAA or any Government Entity which under the Laws of the U.S. from time to time has control over civil aviation or the registration, airworthiness or operation of aircraft in the U.S. If the Aircraft is registered in a country other than the U.S., "Aviation Authority" means the agency which regulates civil aviation in such other country. "AVIATION DOCUMENTS" means any or all of the following which at any time may be obtainable from the Aviation Authority: (a) if required, a temporary certificate of airworthiness from the Aviation Authority allowing the Aircraft to be flown after Delivery to the State of Registration, (b) an application for registration of the Aircraft with the appropriate authority in the State of Registration, (c) the certificate of registration for the Aircraft issued by the State of Registration, (d) a full certificate of airworthiness for the Aircraft specifying transport category (passenger), (e) an air transport license, (f) an air operator's certificate, (g) such recordation of LESSOR's title to the Aircraft and interest in this Lease as may be available in the State of Registration and (h) all such other authorizations, approvals, consents and certificates in the State of Registration as may be required to enable LESSEE lawfully to operate the Aircraft. "BANKRUPTCY CODE" means The Bankruptcy Reform Act of 1978 (11 U.S.C. ss.ss. 101-1330), as amended or supplemented from time to time, and any successor statute, and all of the rules and regulations issued or promulgated in connection therewith. "BASIC ENGINE" means those units and components of the Engine which are used to induce and convert fuel/air mixture into thrust/power; to transmit power to the fan and accessory drives; to supplement the function of other defined systems external to the Engine; and to control and direct the flow of internal lubrication, plus all essential accessories as supplied by the Engine manufacturer. The nacelle, installed components related to the Aircraft systems, thrust reversers, QEC and the primary flight nozzle are excluded. "BFE" means any equipment which is to be provided by the purchaser of the Aircraft (whether actually provided by LESSOR as buyer-furnished equipment or Manufacturer as seller-purchased equipment). "BUSINESS DAY" means a day other than a Saturday or Sunday on which the banks in Indianapolis, Indiana and in the city where LESSOR's Bank is located are open for the transaction of business of the type required by this Lease. "CREDITOR" means any lessor, owner, bank, lender, mortgagee or other Person which is the owner of or has any interest in an aircraft engine or aircraft operated by LESSEE. "CREDITOR AGREEMENT" means the applicable agreement between a Creditor and LESSEE or between Creditors pursuant to which such Creditor owns, leases or has an interest in either an aircraft operated by LESSEE on which an Engine may be installed or in an aircraft engine which may be installed on the Airframe. "DEFAULT" means any event which, upon the giving of notice, the lapse of time and/or a relevant determination, would constitute an Event of Default. "DELIVERY" means the delivery of the Aircraft from LESSOR to LESSEE pursuant to Articles 3 and 6. "DELIVERY DATE" means the date on which Delivery takes place. "DOLLARS" and "$" means the lawful currency of the U.S. "ENGINE" means (a) each of the engines listed on the Estoppel and Acceptance Certificate; or (b) any replacement engine acquired by LESSOR and leased to LESSEE pursuant to Article 18.5 following a Total Loss of an Engine; including in each case all Parts installed in or on any of such engines at Delivery (or substituted, renewed or replacement Parts in accordance with this Lease) so long as title thereto is or remains vested in LESSOR in accordance with the terms of Article 12.3. "EVENT OF DEFAULT" means any of the events referred to in Article 25.2. "FAA" means the Federal Aviation Administration of the Department of Transportation or any successor thereto under the Laws of the U.S. "FARS" means the U.S. Federal Aviation Regulations embodied in Title 14 of the U.S. Code of Federal Regulations, as amended from time to time, or any successor regulations thereto. "GENEVA CONVENTION" means the Convention on the International Recognition of Rights in Aircraft signed in Geneva, Switzerland on June 19, 1948. "GOVERNMENT ENTITY" means any (a) national, state or local government, (b) board, commission, department, division, instrumentality, court, agency or political subdivision thereof and (c) association, organization or institution of which any of the entities listed in (a) or (b) is a member or to whose jurisdiction any such entity is subject. "LANDING GEAR" means the installed main and nose landing gear, components and their associated actuators, side braces and parts. "LAW" means any (a) statute, decree, constitution, regulation, order or any directive of any Government Entity, (b) treaty, pact, compact or other agreement to which any Government Entity is a signatory or party and (c) judicial or administrative interpretation or application of any of the foregoing. "LEASE" means this Aircraft Lease Agreement, together with all Exhibits hereto. "LESSOR'S LIEN" means any Security Interest created by LESSOR, or arising from a claim against LESSOR completely unrelated to this Lease or the other Operative Documents. "MAINTENANCE PROGRAM" means LESSEE's maintenance program as approved by the Aviation Authority or such other maintenance program as LESSOR may, in its discretion, accept in writing. "MANUFACTURER" means The Boeing Company, a Delaware corporation. "MPD" means the Maintenance Planning Document published by Manufacturer and applicable to the Aircraft. "OVERHAUL" means the full reconditioning of the Aircraft, an Engine, APU, Landing Gear, module or Part, as the case may be, in which such equipment has been fully disassembled; cleaned; thoroughly inspected; and returned to the highest standard specified by the applicable manufacturer's manual. "PART" means the APU, any part, component, appliance, system module, engine module, accessory, material, instrument, communications equipment, furnishing, LESSEE-furnished or LESSOR-purchased equipment or other item of equipment (other than complete Engines or engines) for the time being installed in or attached to the Airframe or any Engine or which, having been removed from the Airframe or any Engine, remains the property of LESSOR. "PERMITTED INSTITUTION" means any Person (other than a commercial air carrier, a commercial aircraft operator, a freight forwarder, or an affiliate of any of the foregoing), with either: (a) a combined capital and surplus or net worth of at least; or (b) have a credit rating on the majority of its unsecured debt which is at least equal to BBB or its equivalent from Standard and Poor's Rating Group, a division of The McGraw-Hill Companies, Inc. or Moody's Investors Service, Inc. "PERMITTED LIEN" means (a) LESSOR's Liens; (b) Security Interests arising in the ordinary course of LESSEE's business for Taxes either not yet due and payable or, if due and payable, being contested in good faith in accordance with Article 15.4; (c) materialmen's, mechanics', workmen's, repairmen's, employees' liens or similar Security Interests arising by operation of Law after the Delivery Date in the ordinary course of LESSEE's business for amounts which are either not yet due or are being contested in good faith by appropriate proceedings (and for which adequate reserves have been made or, when required in order to pursue such proceedings, an adequate bond has been provided) so long as such proceedings do not involve any material danger of sale, forfeiture or loss of the Aircraft; (d) the rights of LESSOR and any LESSOR's Lender and the rights of LESSEE under this Lease and the other Operative Documents; (e) the rights of others under agreements or arrangements to the extent permitted by Articles 10 and 11.5; and (f) any Security Interest against which LESSEE causes to be provided a bond in such amount and under such terms and conditions as are reasonably satisfactory to LESSOR. "PERSON" means any individual, firm, partnership, joint venture, trust, corporation, limited liability company, Government Entity, committee, department, authority or any body, incorporated or unincorporated, whether having distinct legal personality or not. "PRIME RATE" means the rate of interest from time to time announced by Bank of America Illinois in Chicago, Illinois as its prime commercial lending rate. "SECURITY INTEREST" means any encumbrance or security interest, however and wherever created or arising including (without prejudice to the generality of the foregoing) any right of ownership, security, mortgage, pledge, charge, encumbrance, lease, lien, statutory or other right in rem, hypothecation, title retention, attachment, levy, claim or right of possession or detention. "STATE OF REGISTRATION" means the U.S. or such other country or state of registration of the Aircraft as LESSOR may, in its absolute discretion, approve in writing. "U.S." means the United States of America. "U.S. AIR CARRIER" means any U.S. air carrier who is a Citizen of the U.S. holding an air carrier operating certificate issued by the Secretary of Transportation pursuant to chapter 447 of the Act for aircraft capable of carrying 10 or more individuals or 6000 pounds or more of cargo, and as to whom there is in force an air carrier operating certificate issued pursuant to FAR Part 121, or who may operate as an air carrier by certification or otherwise under any successor or substitute provisions therefor or in the absence thereof. 2.2 SPECIFIC DEFINITIONS. The following terms are defined in the Articles referenced below: TERMS ARTICLE Agreed Value 18.1 CRAF Program 19.1 CRAF Program Requisition 19.1 Period Default Interest 5.5 Delivery Location 3.1 Expenses 16.1 Expiration Date 4.3 Indemnities 16.1 Lease Term 4.1 LESSEE Customization 5.3.1 Costs LESSOR's Assignee 24.2.1 LESSOR's Bank 5.4 LESSOR's Lender 24.3 Manufacturer's Escalation 5.3.1 Rate Modifications 12.7.2 Net Total Loss Proceeds 18.1 Operative Documents 20.1.3 Rent 5.3.1 Return Check 23.8.1 Scheduled Delivery Date 3.2 Security Deposit 5.1.1 Taxes 15.1 Termination Date 4.3 Total Loss 18.1 Total Loss Date 18.1 Total Loss Proceeds 18.1 Transaction Fee 5.2 ARTICLE 3 PLACE AND DATE OF DELIVERY 3.1 PLACE OF DELIVERY. LESSOR will deliver the Aircraft to LESSEE at Manufacturer's facility at Seattle, Washington or such other place as may be agreed in writing between the parties (the "DELIVERY LOCATION"). 3.2 SCHEDULED DELIVERY DATE. As of the date of this Lease, delivery of the Aircraft from Manufacturer to LESSOR is scheduled to occur in the month of (CONFIDENTIAL MATERIAL OMITTED). LESSOR will not agree to reschedule such delivery without LESSEE's prior written consent. LESSOR will notify LESSEE from time to time and in a timely manner of the exact date on which LESSOR expects such delivery to take place (the "SCHEDULED DELIVERY DATE"). 3.3 DELIVERY SUBJECT TO MANUFACTURER DELIVERY. LESSOR and LESSEE expressly acknowledge that Delivery of the Aircraft to LESSEE is subject to and conditioned upon, and is to occur simultaneously with, delivery of the Aircraft by Manufacturer to LESSOR. 3.4 NO LESSOR LIABILITY. LESSOR will not be liable for any loss or expense, or any loss of profit, arising from any delay or failure in Delivery to LESSEE unless such delay or failure arises as a consequence of the willful misconduct of LESSOR, and in no event will LESSOR be liable for any delay or failure which is caused by any breach or delay on the part of Manufacturer or any BFE supplier. 3.5 TOTAL LOSS OF AIRCRAFT PRIOR TO DELIVERY. If a Total Loss of the Aircraft occurs prior to Delivery, neither party will have any further liability to the other except that LESSOR will return to LESSEE the Security Deposit in accordance with Article 5.1.3 and any prepaid Rent. 3.6 CANCELLATION FOR DELAY. Promptly after LESSOR becomes aware that in Manufacturer's opinion a delay will cause Delivery to be delayed beyond (CONFIDENTIAL MATERIAL OMITTED) LESSOR will notify LESSEE. By written notice given within ten (10) Business Days after LESSEE's receipt of such LESSOR notice, either party may by written notice to the other party terminate this Lease and this Lease will terminate on the date of receipt of such notice. In the event of such termination, neither party will have any further liability to the other party except that LESSOR will return to LESSEE the Security Deposit in accordance with Article 5.1.3 and any prepaid Rent. If neither party gives notice of termination within such ten (10) Business Days, both parties lose all right to terminate under this Article 3.6 unless otherwise agreed in writing by the parties. ARTICLE 4 LEASE TERM 4.1 LEASE TERM. The term of leasing of the Aircraft will commence on the Delivery Date and continue for a term of fifteen (15) years ("LEASE TERM"). 4.2 "EXPIRATION DATE". "EXPIRATION DATE" means the date on which LESSEE is required to redeliver the Aircraft to LESSOR in the condition required by this Lease on the last day of the Lease Term. 4.3 "TERMINATION DATE". This Lease may in fact terminate on any of the dates set forth below: (a the Expiration Date, provided LESSEE returns the Aircraft to LESSOR on the Expiration Date in the condition required by Article 23; or (b a date earlier than the Expiration Date, if: (i there is a Total Loss of the Aircraft prior to Delivery pursuant to Article 3.5; (ii cancellation of this Lease occurs pursuant to Article 3.6; (iii there is a Total Loss of the Aircraft and payment is made to LESSOR in accordance with Article 18.3; or (iv an Event of Default occurs and LESSOR repossesses the Aircraft or otherwise terminates this Lease pursuant to Article 25.3. (c a date later than the Expiration Date, if: (i an Event of Default occurs hereunder by LESSEE returning the Aircraft in the condition required by this Lease after the Expiration Date; or (ii an Event of Default occurs and LESSOR repossesses the Aircraft or otherwise terminates this Lease pursuant to Article 25.3. The "TERMINATION DATE" is the date on which this Lease terminates because one of the above has occurred. ARTICLE 5 SECURITY DEPOSIT, TRANSACTION FEE, RENT AND OTHER PAYMENTS 5.1 SECURITY DEPOSIT. 5.1.1 (CONFIDENTIAL MATERIAL OMITTED) 5.1.2 The Security Deposit may be commingled with LESSOR's general funds and any interest earned on such Security Deposit will be for LESSOR's account. If the Security Deposit is reduced below the required amount by application to meet LESSEE's unperformed obligations under this Lease, LESSEE will replenish the Security Deposit within ten (10) days after LESSOR's demand therefor. The Security Deposit will serve as security for the performance by LESSEE of its obligations under this Lease and any other agreements between LESSEE and LESSOR relating to aircraft, engines, aircraft equipment or the extension of credit and may be applied by LESSOR upon the occurrence of a Default or Event of Default hereunder or of a default by LESSEE under any such other agreements. 5.1.3 Upon termination of this Lease in accordance with Article 4.3 other than if an Event of Default has occurred and is continuing, LESSOR will return to LESSEE the amount of the Security Deposit then held by LESSOR (so long as no default by LESSEE exists under any other agreement between LESSEE and LESSOR relating to aircraft, engines or aircraft equipment or the extension of credit by LESSOR to LESSEE), without interest, less an amount determined by LESSOR to be a reasonable estimate of the costs, if any, which LESSOR will incur to remedy any unperformed obligations of LESSEE under this Lease, including the correction of any discrepancies from the required condition of the Aircraft on return of the Aircraft. 5.2 TRANSACTION FEE. Within two (2) Business Days after execution of this Lease, LESSEE will pay LESSOR a nonrefundable transaction fee (CONFIDENTIAL MATERIAL OMITTED) 5.3 RENT. 5.3.1 LESSEE will pay LESSOR the following amounts monthly in advance as rent for the Aircraft (the "RENT"): (a The following amounts for the following years of the Lease Term: LEASE PERIOD MONTHLY RENTAL AMOUNT* ------------ --------------------- (CONFIDENTIAL MATERIAL OMITTED) *The above base rent is expressed in January 1999 U.S. dollars and will increase in the following amounts for the following periods (the "MANUFACTURER'S ESCALATION RATE"): PERIOD ESCALATION FACTOR ------------ --------------------- (CONFIDENTIAL MATERIAL OMITTED) Any increases to the above base Rent during the Lease Term will be calculated immediately prior to Delivery. 5.3.2 The first payment of Rent during the Lease Term will be paid prior to the Scheduled Delivery Date. Each subsequent payment of Rent will be due monthly thereafter no later than the same day of the month as the Delivery Date of the Aircraft except that, if such day is not a Business Day, the Rent will be due on the immediately preceding Business Day. If Delivery occurred on the 29th, 30th or 31st of the month and in any given month during the Lease Term there is no such corresponding date, Rent will be payable on the last Business Day of such month. 5.4 LESSOR'S BANK ACCOUNT. The Security Deposit, Transaction Fee, Rent and any other payment due under this Lease will be paid by wire transfer of immediately available U.S. Dollar funds to LESSOR's bank account at: (CONFIDENTIAL MATERIAL OMITTED) or to such other bank account in the U.S. as LESSOR may from time to time designate by written notice ("LESSOR'S BANK"). When it is stated in this Lease that an installment of the Security Deposit, the monthly Rent or any other payment is due or must be paid or made by LESSEE by a specific date, then such payment actually must be received by LESSOR's Bank on or before such specific date, even if, in order for such payment to be received by LESSOR's Bank by such specific date, LESSEE must initiate the wire transfer prior to such specific date. 5.5 DEFAULT INTEREST. If LESSOR's Bank does not receive the Rent or any other amount on or before the specific date when due, LESSOR will suffer loss and damage the exact nature and amount of which are difficult or impossible to ascertain. LESSEE will pay LESSOR as supplemental Rent (by way of agreed compensation and not as a penalty) interest on any due and unpaid amounts payable by LESSEE under this Lease. Interest will be calculated at a per annum rate (based on a 360 day year) which is equal to three percent (3%) plus the Prime Rate in effect on the date on which the amount was originally due for the period from the date the amount originally was due through the date the amount actually is received at LESSOR's Bank or, in the case of LESSOR's performance of LESSEE's obligations hereunder, from the date of payment by LESSOR through the date of LESSEE's repayment to LESSOR ("DEFAULT INTEREST"). Default Interest will accrue on a day-to-day basis and be compounded monthly. 5.6 NO DEDUCTIONS OR WITHHOLDINGS. All payments by LESSEE under this Lease, including the Security Deposit, Transaction Fee, Rent, Default Interest, fees, indemnities or any other item, will be made in full without any deduction or withholding whether in respect of set-off, counterclaim, duties, or Taxes (as defined in Article 15) imposed in the State of Registration or any jurisdiction from which such payments are made unless LESSEE is prohibited by Law from doing so, in which event LESSEE will gross up the payment amount such that the net payment received by LESSOR after any deduction or withholding equals the amounts called for under this Lease. LESSEE's requirement to pay the amounts required by this Article 5.6 is subject to the exceptions provided in Article 15.2. 5.7 VALUE ADDED TAXES. The Rent and other amounts payable by LESSEE under this Lease are exclusive of any value added tax, turnover tax or similar tax or duty. 5.8 NET LEASE. 5.8.1 This Lease is a net lease and LESSEE's obligation to pay Rent and make other payments in accordance with this Lease will be absolute and unconditional under any and all circumstances and regardless of other events, including the following: (a) any right of set-off, counterclaim, recoupment, defense or other right (including any right of reimbursement) which LESSEE may have against LESSOR, Manufacturer, the Engine manufacturer or any other person for any reason, including any claim LESSEE may have for the foregoing; (b) unavailability or interruption in use of the Aircraft for any reason, including a requisition thereof or any prohibition or interference with or other restriction against LESSEE's use, operation or possession of the Aircraft (whether by Law or otherwise), any defect in title, airworthiness, merchantability, fitness for any purpose, condition, design, specification or operation of any kind or nature of the Aircraft, the ineligibility of the Aircraft for any particular use or trade or for registration under the Laws of any jurisdiction or Total Loss of the Aircraft; (c) insolvency, bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, liquidation, receivership, administration or similar proceedings by or against LESSOR, LESSEE, Manufacturer, the Engine manufacturer or any other Person; (d) invalidity or unenforceability or lack of due authorization of or other defect in this Lease; (e) failure or delay on the part of any party to perform its obligations under this Lease; or (f) any other circumstance which but for this provision would or might have the effect of terminating or in any other way affecting any obligation of LESSEE hereunder. 5.8.2 Nothing in Article 5.8 will be construed to limit LESSEE's rights and remedies in the event of LESSOR's breach of its warranty of quiet enjoyment set forth in Article 21.2 or to limit LESSEE's rights and remedies to pursue in a court of law any claim it may have against LESSOR or any other Person. 5.9 LESSOR PERFORMANCE OF LESSEE OBLIGATION. If LESSEE fails to make any payment under this Lease to a third party in connection with the Aircraft or fails to perform any other obligation required under this Lease, LESSOR may (but is not required to) at its election and without waiver of its rights perform such obligation and/or pay such amount. Within five (5) Business Days after written notice to LESSEE of the amount paid by LESSOR on behalf of LESSEE, LESSEE will repay such amount to LESSOR together with Default Interest. Such payment to LESSOR will constitute additional Rent payable by LESSEE to LESSOR hereunder. Any payment, performance or compliance by LESSOR of a LESSEE obligation hereunder will not affect the occurrence or continuance of a Default or Event of Default, as the case may be. 5.10 CONSIDERATION FOR RENT AND OTHER AMOUNTS. The amount of the Rent and other payments contained herein are in consideration of LESSEE's waiver of warranties and indemnities set forth in Articles 8 and 16, respectively, and the other provisions of this Lease. ARTICLE 6 INVOLVEMENT WITH AIRCRAFT MANUFACTURER 6.1 LESSEE SELECTION OF AIRCRAFT. LESSEE ACKNOWLEDGES THAT THE DESCRIPTION OF THE AIRCRAFT SET FORTH IN THIS LEASE IS BASED UPON INFORMATION SUPPLIED BY MANUFACTURER. LESSEE COVENANTS TO LESSOR THAT LESSEE HAS USED ITS OWN JUDGMENT IN SELECTING THE AIRCRAFT AND HAS DONE SO BASED ON ITS SIZE, DESIGN AND TYPE. LESSEE ACKNOWLEDGES THAT LESSOR IS NOT A MANUFACTURER, REPAIRER OR SERVICING AGENT OF THE AIRCRAFT. 6.2 AGENCY AGREEMENT. Certain obligations remain to be performed by LESSOR in connection with the manufacture, fabrication and completion of the Aircraft by Manufacturer which will be performed by LESSEE (as provided in the Agency Agreement). LESSEE will act as LESSOR's agent with respect to some of these matters pursuant to the terms of an Agency Agreement to be entered into between LESSEE and LESSOR in the form set forth in Exhibit B. 6.3 PROCUREMENT OF BFE. LESSEE's and LESSOR's technical representatives will meet and determine which of LESSEE or LESSOR will provide specific items of BFE. Such BFE will then be provided to Manufacturer by LESSEE or LESSOR, as applicable, within the time frames required by Manufacturer. 6.4 ASSIGNMENT OF TRAINING. LESSOR hereby assigns to LESSEE all rights to training to which LESSOR is entitled as a result of LESSOR's purchase of the Aircraft and lease of the Aircraft to LESSEE. If LESSEE fails to take Delivery of the Aircraft when tendered in accordance with Article 6.7, LESSEE will immediately pay to LESSOR an amount equal to the Dollar value of such training based on what the training would have cost LESSEE had LESSEE purchased such training directly from Manufacturer. 6.5 LESSEE INSPECTION OF AIRCRAFT. During the course of final assembly of the Aircraft, and at Delivery, LESSEE will have its own representative present to inspect the Aircraft and to ensure its conformity with LESSEE's needs and the terms of this Lease. LESSEE will have ground inspection and acceptance flight rights with respect to the Aircraft. LESSEE acknowledges that, as between LESSEE and LESSOR, in accepting the Aircraft LESSEE is relying on its own inspection and knowledge of the Aircraft in determining whether the Aircraft meets the requirements of this Lease. 6.6 AIRCRAFT AT DELIVERY. At Delivery, the Aircraft will be as set forth in Exhibit A, as such description may be modified by any change requests agreed to among LESSEE, LESSOR and Manufacturer (which will be reflected in amendment(s) to this Lease). In the event of any discrepancies, LESSEE and LESSOR will cooperate in good faith with one another and with Manufacturer and Engine manufacturer, as applicable, in order to arrive at a mutually acceptable resolution of any such discrepancies. 6.7 DELIVERY OF THE AIRCRAFT TO LESSEE. Subject to LESSEE having performed all of the conditions precedent to Delivery set forth herein, immediately following delivery of the Aircraft from Manufacturer to LESSOR, LESSOR will deliver the Aircraft to LESSEE at the Delivery Location. Provided that the Aircraft is in the condition required by Article 6.6, upon the tender of the Aircraft by LESSOR to LESSEE, LESSEE will accept the Aircraft and the date of tender by LESSOR to LESSEE will be deemed to be the Delivery Date for all purposes under this Lease, including, but not limited to, the commencement of LESSEE's obligation to pay Rent hereunder. 6.8 LESSEE ACCEPTANCE OF AIRCRAFT. If LESSEE fails to (a) comply with its obligations set forth in Article 6.2, (b) comply with the conditions contained in Articles 7.1 and 7.2 so as to allow Delivery to take place immediately following delivery of the Aircraft by Manufacturer to LESSOR or (c) take delivery of the Aircraft when properly tendered for delivery by LESSOR in the condition required hereunder, LESSEE will indemnify LESSOR for all costs and expenses incurred by LESSOR as a result thereof including (but without limitation) any payments other than the purchase price which LESSOR becomes obliged to make to Manufacturer. ARTICLE 7 PRE-DELIVERY, DELIVERY AND POST-DELIVERY DOCUMENTARY AND OTHER REQUIREMENTS 7.1 PRE-DELIVERY REQUIREMENTS. LESSEE will do each of the following prior to the Scheduled Delivery Date of the Aircraft within the time frames set forth below: 7.1.1 Within one (1) month after execution of this Lease, LESSEE will deliver to LESSOR each of the following: (a) copies of resolutions of the Board of Directors of LESSEE or other written evidence of appropriate corporate action, duly certifying and authorizing the lease of the Aircraft hereunder and the execution, delivery and performance of this Lease, together with an incumbency certificate as to the person or persons authorized to execute and deliver documents on behalf of LESSEE hereunder; and (b) an opinion of counsel in the form and substance of Exhibit F. 7.1.2 At least three (3) days prior to the Scheduled Delivery Date, LESSEE will have delivered to LESSOR a Certificate of Insurance and Brokers' Letter of Undertaking in the form and substance of Exhibits C and D, respectively, from LESSEE's insurance brokers evidencing insurance of the Aircraft in accordance with this Lease from the Delivery Date. 7.1.3 At least three (3) Business Days prior to the Scheduled Delivery Date, LESSEE will do each of the following: (a) provide LESSOR with a copy of such Aviation Documents as may be available prior to the Scheduled Delivery Date; (b) provide LESSOR with a power of attorney empowering LESSEE's representative, who may be an officer or employee of LESSEE, to accept the Aircraft on behalf of LESSEE; and (c) provide LESSOR with such other documents as LESSOR may reasonably request. 7.1.4 Prior to the Scheduled Delivery Date, LESSEE will pay LESSOR the first monthly installment of Rent in accordance with Article 5.3.2. 7.2 DELIVERY REQUIREMENTS. On the Delivery Date of the Aircraft, each of the following will occur: 7.2.1 LESSEE will execute and deliver to LESSOR an Estoppel and Acceptance Certificate in the form of Exhibit E covering the Aircraft and effective as of the Delivery Date. 7.2.2 If not previously done, LESSEE and LESSOR will sign an amendment or supplement to Exhibit A evidencing all agreed-to changes to the specification of the Aircraft. 7.2.3 LESSEE will deliver a certificate signed on behalf of LESSEE by an officer of LESSEE stating all of the following: (a) the representations and warranties contained in Article 20 are true and accurate on and as of the Delivery Date as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date); (b) no Default has occurred and is continuing or will result from LESSEE's lease of the Aircraft hereunder; and (c) none of the Creditor Agreements contains terms which provide or contemplate that any Creditor will obtain any right, title or interest in an Engine which is installed on another aircraft (or, if this is not the case, such certificate will identify the parties, the aircraft and the Creditor Agreements for which this statement is untrue). 7.2.4 LESSEE's counsel will deliver opinions confirming the matters set forth in the opinion of counsel described in Article 7.1 and advising that all filing and other requirements have been met or concurrently are being met. 7.2.5 If any Creditor Agreement provides or contemplates that such Creditor will obtain any right, title or interest in an Engine which is installed on such Creditor's aircraft, LESSEE will deliver to LESSOR an engines cooperation agreement in form and substance acceptable to LESSOR which is executed by LESSEE and LESSEE's Creditors (as defined therein). 7.2.6 LESSOR will deliver to LESSEE an assignment of Manufacturer and Engine manufacturer rights in the form and substance of Exhibits G and H, respectively, and concurrently therewith LESSOR, to the extent it has not previously done so, will be deemed to have assigned all training, product assurance and product support applicable to the owner or operator of the Aircraft to LESSEE during the Lease Term. 7.3 POST-DELIVERY REQUIREMENTS. 7.3.1 Promptly after Delivery, LESSEE will do each of the following: (a) provide LESSOR with copies of all Aviation Documents not previously delivered; and (b) provide LESSOR with a follow-up opinion of counsel advising that the Aircraft has been registered in the State of Registration and that all necessary filings have been made. ARTICLE 8 DISCLAIMERS LESSOR HAS COMMITTED TO LESSEE THAT ON THE DELIVERY DATE THE AIRCRAFT WILL BE IN THE CONDITION REQUIRED BY ARTICLE 6. SUCH COMMITMENT OR COVENANT ON THE PART OF LESSOR EXPIRES AND THE DISCLAIMERS SET FORTH IN THIS ARTICLE 8 APPLY UPON LESSEE'S ACCEPTANCE OF THE AIRCRAFT AND EXECUTION OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATE. AFTER SUCH TIME, THEN AS BETWEEN LESSOR AND LESSEE: 8.1 "AS IS, WHERE IS". LESSEE AGREES THAT IT IS LEASING THE AIRCRAFT "AS IS, WHERE IS". LESSEE UNCONDITIONALLY ACKNOWLEDGES AND AGREES THAT NEITHER LESSOR NOR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES OR REPRESENTATIVES HAVE MADE OR WILL BE DEEMED TO HAVE MADE ANY TERM, CONDITION, REPRESENTATION, WARRANTY OR COVENANT EXPRESS OR IMPLIED (WHETHER STATUTORY OR OTHERWISE) AS TO (a) THE CAPACITY, AGE, AIRWORTHINESS, VALUE, QUALITY, DURABILITY, CONFORMITY TO THE PROVISIONS OF THIS LEASE, DESCRIPTION, CONDITION (WHETHER OF THE AIRCRAFT, ANY ENGINE, ANY PART THEREOF OR THE AIRCRAFT DOCUMENTATION), DESIGN, WORKMANSHIP, MATERIALS, MANUFACTURE, CONSTRUCTION, OPERATION, DESCRIPTION, STATE, MERCHANTABILITY, PERFORMANCE, FITNESS FOR ANY PARTICULAR USE OR PURPOSE (INCLUDING THE ABILITY TO OPERATE OR REGISTER THE AIRCRAFT OR USE THE AIRCRAFT DOCUMENTATION IN ANY OR ALL JURISDICTIONS) OR SUITABILITY OF THE AIRCRAFT OR ANY PART THEREOF, OR THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, KNOWN OR UNKNOWN, APPARENT OR CONCEALED, EXTERIOR OR INTERIOR, (b) THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK, COPYRIGHT OR OTHER INTELLECTUAL PROPERTY RIGHTS, (c) ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE OR (d) EXCEPT AS SET FORTH IN ARTICLE 21.1, ANY OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY PART THEREOF, ALL OF WHICH ARE HEREBY EXPRESSLY EXCLUDED AND EXTINGUISHED. 8.2 WAIVER OF WARRANTY OF DESCRIPTION. IN CONSIDERATION OF (a) LESSEE'S RIGHTS HEREUNDER TO INSPECT THE AIRCRAFT AND (b) LESSOR'S ASSIGNMENT TO LESSEE OF ANY EXISTING AND ASSIGNABLE WARRANTIES OF MANUFACTURER AND THE ENGINE MANUFACTURER, LESSEE HEREBY AGREES THAT ITS ACCEPTANCE OF THE AIRCRAFT AT DELIVERY AND ITS EXECUTION AND DELIVERY OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATE CONSTITUTE LESSEE'S WAIVER OF THE WARRANTY OF DESCRIPTION, ANY CLAIMS LESSEE MAY HAVE AGAINST LESSOR BASED UPON THE FAILURE OF THE AIRCRAFT TO CONFORM WITH SUCH DESCRIPTION AND ANY AND ALL RIGHTS IT MAY HAVE TO THE REMEDIES SET FORTH IN SECTIONS 10508 THROUGH 10522 OF THE CALIFORNIA COMMERCIAL CODE. EVEN IF AT ANY TIME THE FAILURE OF THE AIRCRAFT TO CONFORM TO SUCH DESCRIPTION SUBSTANTIALLY IMPAIRS THE VALUE AND UTILITY OF THE AIRCRAFT AND EITHER (i) LESSEE ACCEPTED THE AIRCRAFT BASED ON A REASONABLE ASSUMPTION THAT THE NONCONFORMITY WOULD BE CURED AND IT WAS NOT SEASONABLY CURED OR (ii) LESSEE ACCEPTED THE AIRCRAFT WITHOUT DISCOVERING THE NONCONFORMITY BUT LESSEE'S ACCEPTANCE OF THE AIRCRAFT WAS REASONABLY INDUCED EITHER BY LESSOR'S ASSURANCES OR BY THE DIFFICULTY OF DISCOVERING ANY DEFECT PRIOR TO ACCEPTANCE, LESSEE AGREES NOT TO LOOK TO LESSOR FOR DAMAGES OR RELIEF ARISING OUT OF THE FAILURE OF THE AIRCRAFT TO CONFORM TO SUCH DESCRIPTION. 8.3 LESSEE WAIVER. LESSEE hereby waives as between itself and LESSOR and agrees not to seek to establish or enforce any rights and remedies, express or implied (whether statutory or otherwise) against LESSOR or the Aircraft relating to any of the matters mentioned in Articles 8.1 or 8.2. 8.4 CONCLUSIVE PROOF. DELIVERY BY LESSEE TO LESSOR OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATE WILL BE CONCLUSIVE PROOF AS BETWEEN LESSOR AND LESSEE THAT LESSEE'S TECHNICAL EXPERTS HAVE EXAMINED AND INVESTIGATED THE AIRCRAFT AND ENGINES AND (a) EACH IS AIRWORTHY AND IN GOOD WORKING ORDER AND REPAIR AND (b) THE AIRCRAFT AND ENGINES AND THE AIRCRAFT DOCUMENTATION ARE WITHOUT DEFECT (WHETHER OR NOT DISCOVERABLE AT DELIVERY) AND IN EVERY WAY SATISFACTORY TO LESSEE. 8.5 NO LESSOR LIABILITY FOR LOSSES. LESSEE agrees that LESSOR will not be liable to LESSEE, any sublessee or any Person, whether in contract or tort and however arising, for any cost, loss or damage (consequential or otherwise) arising out of the condition of the Aircraft, whether or not due in whole or in part to an act or omission or the active or passive negligence of LESSOR. 8.6 NO LIABILITY TO REPAIR OR REPLACE. LESSOR will not be liable for any expense in repairing or replacing any item of the Aircraft or be liable to supply another aircraft or any item in lieu of the Aircraft or any Part thereof if the same is lost, confiscated, damaged, destroyed or otherwise rendered unfit for use. 8.7 NO WAIVER. Nothing in this Article 8 or elsewhere in this Lease will be deemed to be a waiver by LESSEE of any rights it may have against Manufacturer, the Engine manufacturer or any other Person. ARTICLE 9 MANUFACTURERS' AND VENDORS' WARRANTIES 9.1 WARRANTIES. As set forth in Article 7.2.6, at Delivery LESSOR will assign to LESSEE for the duration of the Lease Term the benefit of all warranties and indemnities given to LESSOR by Manufacturer and the Engine manufacturer. Effective on the Delivery Date, all other vendor warranties with respect to the Aircraft are hereby assigned by LESSOR to LESSEE. 9.2 REASSIGNMENT. On the Termination Date, the benefit of any warranty assigned by LESSOR to LESSEE pursuant to Article 7.2.6 will be reassigned automatically to LESSOR or its designee. ARTICLE 10 OPERATION OF AIRCRAFT 10.1 COSTS OF OPERATION. As between LESSEE and LESSOR, LESSEE will pay all costs incurred in the operation of the Aircraft during the Lease Term, for profit or otherwise, including the costs of flight crews, cabin personnel, fuel, oil, lubricants, maintenance, insurance, storage, landing and navigation fees, airport charges, passenger service and any and all other expenses of any kind or nature, directly or indirectly, in connection with or related to the use, movement and operation of the Aircraft. The obligations, covenants and liabilities of LESSEE under this paragraph arising prior to return of the Aircraft to LESSOR will continue in full force and effect, notwithstanding the termination of this Lease or expiration of the Lease Term. 10.2 COMPLIANCE WITH LAWS. LESSEE agrees throughout the Lease Term that all use of the Aircraft will be in accordance with applicable Laws of the State of Registration and of any country, state, territory or municipality into or over which LESSEE may operate. LESSEE will not employ, suffer or cause the Aircraft to be used in any business which is forbidden by Law or in any manner which may render it liable to condemnation, destruction, seizure, or confiscation by any authority. LESSEE will not permit the Aircraft to fly to any airport or country if so doing would cause LESSEE to be in violation of any Law applicable to LESSEE or the Aircraft. The foregoing provisions in this Article 10.2 shall not prohibit any violation of Law (a) during a good-faith contest of the validity, application, or alleged violation thereof in any reasonable manner so long as there is no material danger of sale, forfeiture, or loss of the Aircraft (however, this good faith exception shall not apply in the case of a mandatory grounding order, the good faith contest of which does not permit LESSEE to operate the Aircraft during such contest), and which does not extend beyond the end of the Lease Term if the pendency of such contest would adversely affect the Aircraft or the remarketing thereof in any material respect; and (b) for minor or non-recurring violations (with the understanding that minor violations may cease to be minor if recurring) that LESSEE is diligently trying to rectify which do not render the Aircraft liable to any risk of condemnation, destruction, seizure, or confiscation by any Government Entity. 10.3 TRAINING. LESSEE will not use the Aircraft for testing or for training of flight crew members other than LESSEE crew members and will not use the Aircraft for training any more than it utilizes for training the other aircraft in its fleet. 10.4 NO VIOLATION OF INSURANCE POLICIES. LESSEE will not use or permit the Aircraft to be used in any manner or for any purpose which is not covered by the insurance policies LESSEE is required to carry and maintain as set forth in this Lease. LESSEE will not carry any goods of any description that would invalidate or limit such policies or do any other act or permit to be done anything which could reasonably be expected to invalidate or limit any such insurance policy. 10.5 FLIGHT CHARGES. 10.5.1 LESSEE will pay promptly when due all enroute navigation charges, navigation service charges and all other charges payable by LESSEE for the use of or for services provided at any airport, whether in respect of the Aircraft or any other aircraft of LESSEE, and will indemnify and hold LESSOR harmless in respect of the same. This indemnity will continue in full force and effect notwithstanding the termination or expiration of the Lease Term for any reason or the return of the Aircraft. 10.5.2 If requested by LESSOR, LESSEE will provide LESSOR with a list of the airports to which LESSEE regularly operates the Aircraft or its other aircraft. LESSEE hereby authorizes Eurocontrol or another aviation authority or airport or creditor claiming rights on the Aircraft to confirm the status of LESSEE's payments to such creditor for the Aircraft and its other aircraft, as and when requested by LESSOR. ARTICLE 11 SUBLEASES 11.1 NO SUBLEASE WITHOUT LESSOR CONSENT. LESSEE WILL NOT SUBLEASE OR PART WITH POSSESSION OF THE AIRCRAFT (EXCEPT FOR MAINTENANCE AND REPAIR) AT ANY TIME WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR (NOT TO BE UNREASONABLY WITHHELD) AND IN ACCORDANCE WITH SUCH REQUIREMENTS AS MAY FROM TIME TO TIME BE AGREED IN WRITING BETWEEN LESSOR AND LESSEE. The wet leasing of the Aircraft during the Lease Term (in which LESSEE and its crews retain operational control of the Aircraft) will not be considered a sublease of the Aircraft. 11.2 LESSOR COSTS. LESSEE will indemnify LESSOR on demand for all out-of-pocket expenses (including legal fees) incurred in connection with LESSOR's assessment of the subleasing proposal (whether or not LESSOR's consent to such sublease is ultimately given) and implementation of the sublease. 11.3 ANY APPROVED SUBLEASE. Any sublease approved by LESSOR will be for a term no greater than the remaining Lease Term and contain provisions consistent with this Lease protecting LESSOR's title to the Aircraft, providing appropriate LESSOR indemnities, regarding the maintenance and repair standards for the Aircraft, concerning the insurances which will be carried by the sublessee and the circumstances which constitute a Total Loss of the Aircraft. Any such sublease will be subject and subordinate to this Lease. In its sole discretion, LESSOR may require an opinion of counsel in connection with such sublease, including LESSOR's right to repossess the Aircraft in the event of an Event of Default hereunder or under the sublease. LESSEE will not amend the terms of any approved sublease without the prior written consent of LESSOR, which will not be unreasonably withheld. 11.4 ASSIGNMENT OF SUBLEASE. Any approved sublease will be assigned to LESSOR as security. LESSEE will deliver the original counterpart of the sublease to LESSOR and make any filings necessary to protect LESSOR's security interest. 11.5 CONTINUED RESPONSIBILITY OF LESSEE. LESSEE will continue to be responsible for performance of its obligations under this Lease during any period of sublease. ARTICLE 12 MAINTENANCE AND USE OF AIRCRAFT 12.1 GENERAL OBLIGATION. 12.1.1 During the Lease Term and until the Aircraft is returned to LESSOR, LESSEE alone has the obligation, at its expense, to maintain and repair the Aircraft, Engines and all of the Parts (a) in accordance with the Maintenance Program, (b) in accordance with the rules and regulations of the Aviation Authority, (c) in accordance with Manufacturer's type design, (d) in accordance with any other regulations or requirements necessary in order to maintain a valid Certificate of Airworthiness for the Aircraft and meet the requirements at all times during the Lease Term and upon return of the Aircraft to LESSOR for issuance of a Standard Certificate of Airworthiness for transport category aircraft issued by the Aviation Authority (except during those periods when the Aircraft is undergoing maintenance or repairs as required or permitted by this Lease) and (e) in the same manner and with the same care as used by LESSEE or its sublessee with respect to similar aircraft and engines operated by LESSEE or its sublessee and without in any way discriminating against the Aircraft. 12.1.2 LESSEE will maintain and repair the Engines in the same manner and in the equivalent time frame to its other engines and LESSEE will not discriminate against any of the Engines in respect of the repair and maintenance. 12.1.3 LESSEE will not enter into any Engine maintenance cost per flight hour, power-by-the-hour or similar agreement with Engine manufacturer or any other Engine maintenance facility or organization without LESSOR's prior written consent. 12.2 SPECIFIC OBLIGATIONS. Without limiting Article 12.1, LESSEE agrees that such maintenance and repairs will include but will not be limited to each of the following specific items: (a) performance in accordance with the Maintenance Program of all routine and non-routine maintenance work; (b) incorporation in the Aircraft of all Airworthiness Directives; (c) incorporation in the Aircraft of all service bulletins of Manufacturer, the Engine manufacturer and other vendors which LESSEE schedules to adopt within the Lease Term for the rest of its Boeing 737-800 aircraft fleet. It is the intent of the parties that the Aircraft will not be discriminated from the rest of LESSEE's fleet in service bulletin compliance (including method of compliance) or other maintenance matters. LESSEE will not discriminate against the Engines with respect to Overhaul build standards and life-limited part replacements; (d) incorporation in the Maintenance Program for the Aircraft of a corrosion prevention and control program; (e) maintaining in English and keeping in an up-to-date status the records and historical documents set forth in Attachment 1 of Exhibit I; (f) maintaining historical records, in English, for on condition, condition-monitored, hard time and life-limited Parts (including tags from the manufacturer of such Part or a repair facility which evidence that such Part is new or overhauled and establish authenticity, total time in service and time since overhaul for such Part), the hours and cycles the Aircraft and Engines operate and all maintenance and repairs performed on the Aircraft; and (g) properly documenting all repairs, Modifications and alterations and the addition, removal or replacement of equipment, systems or components in accordance with the rules and regulations of the Aviation Authority and reflecting such items in the Aircraft Documentation. In addition, all repairs to the Aircraft will be accomplished in accordance with Manufacturer's Structural Repair Manual (or FAA-approved data supported by FAA Form 8110-3 or equivalent). All Modifications and alterations will also be accomplished in accordance with FAA-approved data supported by FAA Form 8110-3 or equivalent. 12.3 REPLACEMENT OF PARTS. 12.3.1 LESSEE, at its own cost and expense, will promptly replace all Parts which may from time to time become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or rendered unfit or beyond economical repair (BER) for any reason. In the ordinary course of maintenance, service, repair, overhaul or testing, LESSEE may remove any Part provided that LESSEE replaces such Part as promptly as practicable. All replacement Parts will (a) be free and clear of all Security Interests (except Permitted Liens) of any kind or description, (b) be in airworthy condition and of at least equivalent model, service bulletin and modification status and have a value and utility at least equal to the Parts replaced, assuming such replaced Parts were in the condition and repair required to be maintained by the terms hereof and (c) have a current "serviceable tag" of the manufacturer or maintenance facility providing such items to LESSEE, indicating that such Parts are new, serviceable or Overhauled. So long as a substitution meets the requirements of the Maintenance Program and Aviation Authority, LESSEE may substitute for any Part a part that does not meet the requirements of the foregoing sentence if a complying Part cannot be procured or installed within the available groundtime of the Aircraft and as soon as practicable the noncomplying part is removed and replaced by a complying Part. 12.3.2 All Parts removed from the Airframe or any Engine will remain the property of LESSOR and subject to this Lease no matter where located, until such time as such Parts have been replaced by Parts (which have been incorporated or installed in or attached to the Airframe or such Engine) which meet the requirements for replacement Parts specified above and title to such replacement Parts has passed to LESSOR under the Laws of the State of Registration and LEX SITUS. To the extent permitted by the Laws of the State of --- ----- Registration and the LEX SITUS it is the intent of LESSOR and LESSEE that without further --- ----- act and immediately upon any replacement Part becoming incorporated, installed or attached to the Airframe or an Engine as above provided, (a) title to the removed Part will thereupon vest in LESSEE, free and clear of all rights of LESSOR, (b) title to the replacement Part will thereupon vest in LESSOR free and clear of all rights of LESSEE and (c) such replacement Part will become subject to this Lease and be deemed to be a Part hereunder to the same extent as the Parts originally incorporated or installed in or attached to the Airframe or such Engine. 12.4 REMOVAL OF ENGINES. 12.4.1 If an Engine is removed for testing, service, repair, maintenance, Overhaul work, alterations or modifications, title to such Engine will remain vested in LESSOR. 12.4.2 LESSEE will be entitled to remove any of the Engines from the Aircraft and install another engine or engines on the Aircraft, provided that LESSEE complies with each of the following obligations: (a) the insurance requirements set forth in Article 17 and Exhibit C are in place; (b) LESSEE ensures that the identification plates referred to in Article 14 are not removed from any Engine upon such Engine being detached from the Aircraft; and (c) title to the Engine remains with LESSOR free from all Security Interests (except Permitted Liens) regardless of the location of the Engine or its attachment to or detachment from the Aircraft. 12.5 POOLING OF ENGINES AND PARTS. With LESSOR's prior written consent, not to be unreasonably withheld, LESSEE may subject the Engines and Parts to normal interchange or pooling agreements with responsible commercial air carriers customary in the airline industry and entered into by LESSEE in the ordinary course of its business with respect to its Boeing 737-800 fleet generally, so long as (a) in the case of pooling of an Engine, such Engine is returned to LESSEE within two (2) months, (b) no transfer of title to the Engine occurs, (c) all other terms of this Lease continue to be observed with respect to the Engines or Parts, including but not limited to Articles 8, 10, 12, 13, 14, 15, 16, 17 and 18 and (d) LESSEE continues to be fully responsible to LESSOR for the performance of all of its obligations hereunder. 12.6 INSTALLATION OF ENGINES ON OTHER AIRCRAFT. Any Engine removed from the Aircraft may be installed on another airframe in LESSEE's fleet which utilizes engines of the same type as the Engine only if one of the situations described in this Article 12.6 exists: 12.6.1 LESSEE or LESSOR has title to such other aircraft free and clear of all Security Interests (except Permitted Liens). 12.6.2 LESSEE, LESSOR and all of the Creditors of LESSEE of such aircraft enter into an engines cooperation agreement in form and substance acceptable to LESSOR in which each party agrees to recognize one another's rights in the engines. LESSEE will reimburse LESSOR and LESSOR's Lender for their reasonable attorneys' fees and costs in negotiating and finalizing engine cooperation agreement arrangements with LESSEE and its Creditors. 12.6.3 Such other aircraft is subject to a Creditor Agreement (but no other Security Interests except Permitted Liens) which by its terms expressly or effectively states that such Creditor and its successors and assigns will not acquire any right, title or interest in any Engine by reason of such Engine being installed on such aircraft. LESSEE hereby agrees that if LESSOR's title to an Engine is in fact impaired under any such Creditor Agreement, such impairment will be a Total Loss of such Engine and the provisions of Article 18.5 will apply. To the extent another Creditor Agreement contains such provisions, then LESSOR hereby agrees for the benefit of the Creditor of such Creditor Agreement that neither LESSOR nor its successors or assigns will acquire or claim any right, title or interest in any engine in which LESSEE or another Creditor has an interest as a result of such engine being installed on the Airframe. 12.7 MODIFICATIONS. 12.7.1 No modification, alteration, addition or removal to the Aircraft ("MODIFICATION") expected to cost over Five Hundred Thousand U.S. Dollars (US$500,000) or deviation from the Aircraft's original type design or configuration will be made without the prior written consent of LESSOR, which consent will not be unreasonably withheld. "Modifications" do not include Airworthiness Directives or Manufacturer's recommended service bulletins, for which LESSOR's consent is not required. 12.7.2 LESSOR may review LESSEE's proposed designs, plans, engineering drawings and diagrams, and flight and maintenance manual revisions for any proposed Modification. If requested by LESSOR, LESSEE will furnish LESSOR (at LESSEE's expense) with such documents in final form and any other documents required by Law, as a result of such Modification. All Modifications incorporated on the Aircraft will be properly documented in the Aircraft Documentation and be fully approved by the Aviation Authority. 12.7.3 Notwithstanding any other provision of this Lease, no Modification will be made which has the effect of decreasing the utility or value of the Aircraft. 12.7.4 No Modification will be made by LESSEE if an Event of Default exists and is continuing hereunder. 12.7.5 Unless otherwise agreed by LESSOR in writing, all non-severable or structural Modifications will forthwith become a part of the Aircraft and LESSEE relinquishes to LESSOR all rights and title thereto. However, all severable Modifications will remain the property of LESSEE or the third-party owner and, at LESSOR's request and LESSEE's cost, will be removed from the Aircraft prior to return of the Aircraft, with LESSEE restoring the Aircraft to the condition it was in prior to the Modification. Notwithstanding the foregoing, no such removal will be permitted without LESSOR's permission after the occurrence of an Event of Default hereunder and immediately upon the occurrence of an Event of Default hereunder, without the requirement of any further act or notice, all right, title and interest in such Modifications will immediately vest in LESSOR. 12.7.6 LESSOR will bear no liability for the cost of Modifications of the Aircraft whether in the event of grounding or suspensions of certification, or for any other cause. 12.8 PERFORMANCE OF WORK BY THIRD PARTIES. Whenever maintenance and repair work on the Aircraft or Engines will be regularly performed by a Person other than LESSEE, such Person will be an FAA-authorized repair station. 12.9 REPORTING REQUIREMENTS. 12.9.1 Commencing with a report furnished ten (10) days after the end of the calendar month in which Delivery occurs, LESSEE will furnish to LESSOR a Monthly Report in English in the form attached hereto as Exhibit J. Each Monthly Report will be furnished within ten (10) days after the end of each calendar month, except that the Monthly Report pertaining to the last month (or any portion thereof) of the Lease Term will be furnished to LESSOR on the Termination Date. 12.9.2 On each anniversary of the Delivery Date, LESSEE will provide LESSOR with a Technical Evaluation Report for the Aircraft in the form and substance of Exhibit L, as revised. 12.10 INFORMATION REGARDING MAINTENANCE PROGRAM. LESSEE will provide LESSOR with a copy of or information regarding the Maintenance Program for the Aircraft, as requested by LESSOR. 12.11 LESSOR RIGHTS TO INSPECT AIRCRAFT. On reasonable notice, LESSOR and/or its authorized agents or representatives will have the right to inspect the Aircraft and Aircraft Documentation. LESSOR agrees that such requests will be coordinated with LESSEE so as to cause the minimum practical disturbance to LESSEE's operation or its personnel. LESSEE agrees to cooperate with LESSOR in making the Aircraft and Aircraft Documentation available to such authorized technical teams. No such inspection shall include opening panels, bays, or the like (although LESSOR may observe those that are then open), or disassembling any item. LESSOR will have no duty to make any such inspection and will not incur any liability or obligation by reason of (and LESSEE's indemnity obligations pursuant to Article 16 will apply notwithstanding) not making any such inspection or by reason of any reports it receives or any reviews it may make of the Aircraft records. ARTICLE 13 TITLE AND REGISTRATION 13.1 TITLE TO THE AIRCRAFT DURING LEASE TERM. Title to the Aircraft will be and remain vested in LESSOR. LESSOR and LESSEE intend this Lease to be a "true lease". LESSEE will have no right, title or interest in the Aircraft except as provided in this Lease. 13.2 REGISTRATION OF AIRCRAFT. LESSEE at its sole cost and expense will (a) register and maintain registration of the Aircraft in the name of LESSOR at the register of aircraft in the State of Registration and (b) from time to time take all other steps then required by Law (including the Geneva Convention if applicable) or by practice, custom or understanding or as LESSOR may reasonably request to protect and perfect LESSOR's interest in the Aircraft and this Lease in the State of Registration or in any other jurisdictions in or over which LESSEE may operate the Aircraft. 13.3 FILING OF THIS LEASE. To the extent permitted by Law and in accordance with the requirements of the Law from time to time, LESSEE at its sole cost and expense will cause this Lease to be kept, filed, recorded and refiled or rerecorded in the State of Registration and in any other offices necessary to protect LESSOR's rights hereunder. 13.4 EVIDENCE OF REGISTRATION AND FILINGS. As LESSOR may reasonably request from time to time, LESSEE will furnish to LESSOR an opinion of counsel or other evidence reasonably satisfactory to LESSOR of the registrations and filings required hereunder. ARTICLE 14 IDENTIFICATION PLATES LESSOR will affix and LESSEE will at all times maintain on the Airframe and each Engine the identification plates containing the following legends or any other legend reasonably requested by LESSOR in writing: 14.1 AIRFRAME IDENTIFICATION PLATES. Location: One to be affixed to the Aircraft structure above the forward entry door adjacent to and not less prominent than that of Manufacturer's data plate and another in a prominent place on the flight deck. Size: No smaller than 4" x 6". Legend: "THIS AIRCRAFT IS OWNED BY INTERNATIONAL LEASE FINANCE CORPORATION. MANUFACTURER'S SERIAL NO: 28249 OWNER'S ADDRESS: INTERNATIONAL LEASE FINANCE CORPORATION 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States of America Fax: (310) 788-1990" 14.2 ENGINE IDENTIFICATION PLATES. Location: The legend on the plate must be visible. Size: No smaller than 2" x 6". "THIS ENGINE IS OWNED BY INTERNATIONAL LEASE FINANCE CORPORATION, LOS ANGELES, CALIFORNIA, USA." ARTICLE 15 TAXES 15.1 GENERAL OBLIGATION OF LESSEE. Except as set forth in Article 15.2, LESSEE agrees to pay promptly when due, and to indemnify and hold harmless LESSOR on a full indemnity basis from, all license and registration fees and all taxes, fees, levies, imposts, duties, charges or withholdings of any nature whatsoever (including without limitation any value added, franchise, transfer, sales, gross receipts, use, business, occupation, excise, personal property, real property, stamp or other tax) together with any assessments, penalties, fines, additions to tax or interest thereon, however or wherever imposed (whether imposed upon LESSEE, LESSOR, on all or part of the Aircraft, the Engines or otherwise), by any Government Entity or taxing authority in the U.S., any State thereof, or any foreign country or by any international taxing authority, upon or with respect to, based upon or measured by any of the following (collectively, "TAXES"): (a) the Aircraft, the Engines or any Parts. (b) the use, operation or maintenance of the Aircraft or carriage of passengers or freight during the Lease Term. (c) this Lease, the payments due hereunder and the terms and conditions hereof. (d) the return of the Aircraft to LESSOR or other use or disposition of the Aircraft by LESSEE. 15.2 EXCEPTIONS TO INDEMNITY. The indemnity provided in Article 15.1 does not extend to any of the following Taxes: (a) Imposed by the U.S. (including without limitation any taxes collected by withholding) or any state or local government or governmental subdivision or state or local taxing authority in the U.S. (including any possession or territory of the U.S.) or by any foreign government, taxing authority or governmental subdivision of a foreign country which are based on, or measured by, the receipts, gross or net income, capital, net worth, franchises, excess profits, or conduct of business (including minimum taxes, withholding taxes and taxes on or measured by any items of tax preference) of LESSOR, except to the extent that such Tax would not have been imposed on or payable by LESSOR but for the location, use, registration or operation of the Aircraft or any part thereof, or any place of business or any activity of LESSEE in the jurisdiction imposing such Tax. (b) Imposed as a result of LESSOR's transfer, mortgage, pledge, financing or other disposition by LESSOR of all or a portion of its interest in the Aircraft or this Lease except a transfer or sale resulting from an exercise of remedies pursuant to Article 25.3 hereunder or in connection with a termination of the Lease pursuant to Article 18 hereof. (c) Attributable to the period prior to the Delivery Date or after return of the Aircraft to LESSOR in accordance with this Lease. (d) Attributable to LESSOR's gross negligence, willful misconduct or breach of this Lease. 15.3 AFTER-TAX BASIS. The amount which LESSEE is required to pay with respect to any Taxes indemnified against under Article 15.1 is an amount sufficient to restore LESSOR on an after-tax basis to the same position LESSOR would have been in had such Taxes not been incurred. 15.4 CLAIMS AND CONTESTS. If a written claim is received by LESSOR for Taxes, which claim, if sustained, would require the payment of an indemnity by LESSEE pursuant to this Article 15, LESSOR shall notify LESSEE of such claim within thirty (30) days after its receipt, provided that failure to provide such notice within thirty (30) days will not relieve LESSEE of any indemnification obligation pursuant to this Article 15 if such failure does not preclude LESSEE from exercising its contest rights hereunder. Payments due from LESSEE to LESSOR pursuant to this Article 15 shall be made directly to LESSOR within thirty (30) days of written demand by LESSOR to LESSEE. If requested by LESSEE in writing, LESSOR shall upon receipt of indemnity reasonably satisfactory to it and at the expense of LESSEE (including, without limitation, all reasonable costs, expenses, legal and accountants' fees, and disbursements, penalties, interest incurred in contesting such claim, and additions to tax) in good faith, in the name of LESSOR or, if requested by LESSEE, in the name of LESSEE (or permit LESSEE, if desired by LESSEE, to contest in the name of LESSEE) if permissible under applicable laws, the validity, applicability or amount of such Taxes by (i) resisting payment thereof if practicable only if adequate reserves have been made for such Taxes or, if required, an adequate bond has been posted, (ii) paying the same under protest, if protest shall be necessary and proper, (iii) if payment shall be made, using reasonable efforts to obtain a refund thereof in appropriate administrative and judicial proceedings, and (iv) taking such other action as is reasonably requested by LESSEE from time to time including not paying such Taxes only if adequate reserves have been made for such Taxes or, if required, an adequate bond has been posted. LESSOR shall determine the method of any contest and (in good faith consultation with LESSEE) control the conduct thereof. Notwithstanding anything contained in this Article 15.4, LESSOR will not be required to contest, or to continue to contest, the validity, applicability or amount of any Tax (or portion thereof) (x) if such contest would result in any material risk of criminal penalties or any material risk of sale, forfeiture or loss of the Aircraft, (y) if an Event of Default has occurred and is continuing, or (z) in the case of a contest of a Tax reflected on a return of LESSOR with other taxes of LESSOR that are not indemnified by the LESSEE hereunder, if LESSEE shall not have furnished an opinion of independent tax counsel selected by the LESSEE, and reasonably satisfactory to LESSOR, that a reasonable basis exists for such contest. If LESSOR shall obtain a refund of all or any part of such Taxes for which an indemnity was paid by LESSEE, LESSOR shall pay LESSEE the amount of such refund; PROVIDED, HOWEVER, that such amount shall not be payable before such time as LESSEE shall have made all payments or indemnities to LESSOR then due under this Article 15 and under the Lease or while an Event of Default shall have occurred and be continuing. If in addition to such refund LESSOR shall receive an amount representing interest on the amount of such refund, LESSEE shall be paid that proportion of such interest which is fairly attributable to Taxes paid with an indemnity payment by LESSEE prior to the receipt of such refund or interest and increased by any taxes saved by reason of the deductibility of such payment by LESSOR. LESSEE shall not be deemed to be in default under any of the indemnification provisions under this Article 15 so long as it or LESSOR shall diligently prosecute such contest and LESSEE has indemnified LESSOR to LESSOR's reasonable satisfaction. In case any report or return is required to be made with respect to any obligation of LESSEE under this Article 15.4 or arising out of this Article 15.4, LESSEE will either timely make such report or return in such manner as will show the ownership of the Aircraft in LESSOR, and will as soon as possible send a copy of such report or return to LESSOR, or will notify LESSOR of such requirement and prepare and deliver such report or return to LESSOR in such manner as shall be satisfactory to LESSOR. 15.5 REFUNDS. Upon receipt by LESSOR of a refund of all or any part of any Taxes (including any deductions or withholdings referred to in Article 15.1) which LESSEE has paid, LESSOR will pay to LESSEE the net amount of such Taxes refunded. 15.6 COOPERATION IN FILING TAX RETURNS. LESSEE and LESSOR will cooperate with one another in providing information which may be reasonably required to fulfill each party's tax filing requirements and any audit information request arising from such filing. ARTICLE 16 INDEMNITIES 16.1 GENERAL INDEMNITY. Except as set forth in Article 16.2, LESSEE agrees to indemnify and hold harmless LESSOR and its officers, directors, employees, agents and shareholders (individually an "INDEMNITEE" and collectively "INDEMNITEES") from any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs, disbursements and expenses (including legal fees, costs and related expenses) of every kind and nature, whether or not any of the transactions contemplated by this Lease are consummated (collectively "EXPENSES"), which are imposed on, incurred by or asserted against any Indemnitee and which are in any way relating to, based on or arising out of any of the following: (a) this Lease or any transactions contemplated hereby; (b) the operation, possession, use, non-use, control, leasing, subleasing, maintenance, storage, overhaul, testing, inspections or acceptance flights at return of the Aircraft, any Engine or any Part during the Lease Term by LESSEE, any sublessee or any other Person, whether or not the same is in compliance with the terms of this Lease, including without limitation claims for death, personal injury, property damage, other loss or harm to any Person and claims relating to any Laws, including without limitation environmental control, noise and pollution laws, rules or regulations; (c) the manufacture, design, acceptance, rejection, delivery, return, sale in connection with an Event of Default, import, export, condition, repair, modification, servicing, rebuilding, enforcement of warranties whether in LESSOR's or LESSEE's name, customer and product support provided by Manufacturer and other vendors, airworthiness, registration, reregistration, performance, sublease, merchantability, fitness for use, substitution or replacement of the Aircraft, Engine or any Part under this Lease or other transfer of use or possession of the Aircraft, Engine or any Part, including under a pooling or interchange arrangement, including without limitation latent and other defects, whether or not discoverable and patent, trademark or copyright infringement; (d) any non-compliance by LESSEE with any term of this Lease or the falsity or inaccuracy of any representation or warranty of LESSEE set forth herein; (e) the prevention or attempt to prevent the arrest, confiscation, seizure, taking in execution, impounding, forfeiture or detention of the Aircraft, or in securing the release of the Aircraft; or (f) as a consequence of any Default in payment by LESSEE of any sum to be paid by LESSEE when due under this Lease or any other Default by LESSEE in the due and punctual performance of its obligations under this Lease. The foregoing indemnity by LESSEE is intended to include and cover any Expense to which an Indemnitee may be subject (in contract, tort, strict liability or under any other theory) regardless of the negligence, active or passive or any other type, of such Indemnitee, so long as such Expense does not fall within any of the exceptions listed in Article 16.2. 16.2 EXCEPTIONS TO GENERAL INDEMNITIES. The indemnity provided for in Article 16.1 will not extend to Expenses of any Indemnitee to the extent resulting from or arising out of any of the following: (a) Expenses which have resulted from the willful misconduct of such Indemnitee; (b) Expenses which LESSEE and LESSOR mutually agree or, absent mutual agreement, are judicially determined to be attributable to acts or events which occur after the Termination Date and return of the Aircraft to LESSOR in the condition required hereunder, but in any such case only to the extent not attributable to acts or omissions of LESSEE; (c) Expenses representing Taxes, it being acknowledged that the terms of Article 15 apply exclusively to LESSEE's indemnity obligations with respect to Taxes; (d) Expenses due to the breach by LESSOR of its covenant of quiet enjoyment pursuant to Article 21.2 (except to the extent covered by LESSEE's insurances); (e) Expenses which arise in connection with the transfer by LESSOR of any interest in the Aircraft or this Lease, except for any transfer in connection with any Event of Default or a Total Loss of the Aircraft or an Engine. (f) Expenses which are solely attributable to the representation or warranty of LESSOR contained in or made pursuant to any Operative Document being untrue; (g) Expenses which are solely related to the failure of such Indemnitees to perform or observe any agreement, covenant, or condition on its part to be performed or observed in any Operative Document; (h) Expenses which are solely an ordinary and usual internal customary operating expense; or (i) Expenses which are solely related to a breach of Article 21.1.6, or (j) Expenses which are solely related to a LESSOR's Lien. 16.3 AFTER-TAX BASIS. The amount which LESSEE will be required to pay with respect to any Expense indemnified against under Article 16.1 will be an amount sufficient to restore the Indemnitee, on an after-tax basis, to the same position such Indemnitee would have been in had such Expense not been incurred. 16.4 TIMING OF PAYMENT. It is the intent of the parties that each Indemnitee will have the right to indemnification for Expenses hereunder as soon as a claim is made and as soon as an Expense is incurred, whether or not such claim is meritorious and whether or not liability is established (but subject to Articles 16.2 and 16.8). LESSEE will pay an Indemnitee for Expenses pursuant to this Article 16 within ten (10) days after receipt of a written demand therefor from such Indemnitee accompanied by a written statement describing in reasonable detail the basis for such indemnity (but not before payment is due from such Indemnitee). 16.5 SUBROGATION. Upon the payment in full of any indemnity pursuant to this Article 16 by LESSEE, LESSEE will be subrogated to any right of the Indemnitee in respect of the matter against which such indemnity has been made. 16.6 NOTICE. Each Indemnitee and LESSEE will give prompt written notice one to the other of any liability of which such party has knowledge for which LESSEE is, or may be, liable under Article 16.1; provided, however, that failure to give such notice will not terminate any of the rights of Indemnitees under this Article 16 except to the extent that LESSEE has been materially prejudiced by the failure to provide such notice. 16.7 REFUNDS. If any Indemnitee obtains a recovery of all or any part of any amount which LESSEE has paid to such Indemnitee, such Indemnitee will pay to LESSEE the net amount recovered by such Indemnitee. 16.8 DEFENSE OF CLAIMS. (a) LESSEE and its insurers will have the right (in each such case at LESSEE's sole expense) to investigate or, provided that LESSEE or its insurers have not reserved the right to dispute liability with respect to any insurance policies pursuant to which coverage is sought, defend or compromise any claim covered by insurance for which indemnification is sought pursuant to Article 16.1 and each Indemnitee will cooperate with LESSEE or its insurers with respect thereto. If LESSEE or its insurers are retaining attorneys to handle such claim, such counsel must be reasonably satisfactory to the Indemnitees. If not, the Indemnitees will have the right to retain counsel of their choice at LESSEE's expense. (b) Unless LESSOR agrees in writing otherwise, no settlement of any claim hereunder may require LESSOR to agree to any remedy apart from the payment of money damages (for which such payment of money damages LESSEE will in any event indemnify the Indemnitees). (c) In no event shall any Indemnitee enter into a settlement or other compromise with respect to any Expense without LESSEE's prior written consent (which shall not be unreasonably withheld or delayed), unless such Indemnitee waives its right to be indemnified with respect to such Expense under this Article 16. (d) To the extent that any Expense indemnified by LESSEE hereunder may be covered by insurance maintained by LESSEE, at LESSEE's expense, each Indemnitee agrees to cooperate with the insurers in the exercise of their rights to investigate, defend, or compromise that Expense as may be required to retain the benefits of the insurance for that Expense. (e) If an Indemnitee is not a party to this Lease, LESSEE may require that Indemnitee to agree in writing to the terms of this Article 16 before making any payment to such Indemnitee under this Article 16. 16.9 SURVIVAL OF OBLIGATION. Notwithstanding anything in this Lease to the contrary, the provisions of this Article 16 will survive the Termination Date and continue in full force and effect notwithstanding any breach by LESSOR or LESSEE of the terms of this Lease, the termination of the lease of the Aircraft to LESSEE under this Lease or the repudiation by LESSOR or LESSEE of this Lease. ARTICLE 17 INSURANCE 17.1 CATEGORIES OF INSURANCE. Throughout the Lease Term and until the Termination Date LESSEE will, at its own expense, effect and maintain in full force and effect the types of insurance and amounts of insurance (including deductibles) described in Exhibit C through such brokers and with such insurers favorably regarded in the airline industry. 17.2 INSURANCE FOR INDEMNITIES. The insurance referred to in Article 17.1 will in each case include and insure (to the extent of the risks covered by the policies) the indemnity provisions of Article 16 and LESSEE will maintain such insurance of the indemnities for a minimum of two (2) years following the Termination Date. 17.3 INSURANCE REQUIRED BY MANUFACTURER. During the Lease Term, LESSEE will carry the insurance required by Manufacturer in connection with LESSOR's assignment of Manufacturer's warranties and product support to LESSEE. 17.4 RENEWAL. Not less than two (2) Business Days before the expiration or termination date of any insurance required hereunder, LESSEE will provide LESSOR with fax confirmation from LESSEE's insurance brokers that renewed certificates of insurance evidencing the renewal or replacement of such insurance and complying with Exhibit C will be issued on the termination date of the prior certificate. Within seven (7) days after such renewal, LESSEE will furnish its brokers' certificates of insurance to LESSOR. 17.5 ASSIGNMENT OF RIGHTS BY LESSOR. If LESSOR assigns all or any of its rights under this Lease as permitted by this Lease or otherwise disposes of any interest in the Aircraft to any other Person, LESSEE will, upon request, procure that (to the extent of the assignment or disposition) such Person hereunder be added as loss payee and/or additional assured in the policies effected hereunder and enjoy the same rights and insurance enjoyed by LESSOR under such policies. To the extent of its retained interest or as provided in Article 24.2.1, LESSOR will nevertheless continue to be covered by such policies. 17.6 DEDUCTIBLES. If there is a material adverse change in the financial condition of LESSEE which LESSOR reasonably believes will not enable LESSEE to pay the deductible upon the occurrence of a partial loss of the Aircraft or an Engine, then LESSOR may require LESSEE at LESSEE's expense to lower its deductibles on the insurance maintained hereunder to a level which is available on commercially reasonable terms in the insurance market. 17.7 OTHER INSURANCE. LESSOR may from time to time by notice to LESSEE require LESSEE at LESSEE's expense to effect such other insurance or such variations to the terms of the existing insurance as may then be customary in the airline industry for aircraft of the same type as the Aircraft and at the time commonly available in the insurance market. 17.8 INFORMATION. LESSEE will provide LESSOR with any information reasonably requested by LESSOR from time to time concerning the insurance maintained with respect to the Aircraft or in connection with any claim being made or proposed to be made thereunder. 17.9 CURRENCY. All proceeds of insurance pursuant to this Lease will be payable in Dollars except as may be otherwise agreed by LESSOR. 17.10 GROUNDING OF AIRCRAFT. If at any time any of the insurance required pursuant to this Lease will cease to be in full force and effect, LESSEE will forthwith ground the Aircraft and keep the Aircraft grounded until such time as such insurance is in full force and effect again. 17.11 FAILURE TO INSURE. If at any time LESSEE fails to maintain insurance in compliance with this Article 17, LESSOR will be entitled but not bound to do any of the following (without prejudice to any other rights which it may have under this Lease by reason of such failure): (a) to pay any premiums due or to effect or maintain substitute insurance or otherwise remedy such failure in any reasonable manner (and LESSEE will upon demand reimburse LESSOR in full for any amount so expended in that connection); or (b) at any time while such failure is continuing, to require the Aircraft to remain at any airport or (as the case may be), proceed to and remain at any airport designated by LESSOR. 17.12 LIMIT ON HULL IN FAVOR OF LESSEE. LESSEE may carry hull all risks or hull war and allied perils on the Aircraft in excess of the Agreed Value (which Agreed Value is payable to LESSOR) only to the extent such excess insurance which would be payable to LESSEE in the event of a Total Loss does not exceed fifteen percent (15%) of the Agreed Value and only to the extent that such additional insurance will not prejudice the insurances required herein or the recovery by LESSOR thereunder. LESSEE agrees that it will not create or permit to exist any liens or encumbrances over the insurances, or its interest therein, except as constituted by this Lease. 17.13 MARKETPLACE LIMITATIONS. The insurance required by this Lease may be subject to any limitations generally prevailing in the airline insurance marketplace at the time (e.g., AVN67B). ARTICLE 18 LOSS, DAMAGE AND REQUISITION Throughout the Lease Term and until the Termination Date, LESSEE will bear all risk of loss, theft, damage and destruction to the Aircraft. 18.1 DEFINITIONS. In this Article 18: "AGREED VALUE" (CONFIDENTIAL MATERIAL OMITTED) The Agreed Value is set forth in March 2001 U.S. Dollars and will be increased in accordance with Manufacturer's announced escalation rate from March 1, 2001 to the Delivery Date. On each annual renewal date of LESSEE's insurance policy commencing on the renewal date following the first anniversary of the Lease Term, the Agreed Value will decrease by two percent (2.0%) of the then-existing Agreed Value. "NET TOTAL LOSS PROCEEDS" means the Total Loss Proceeds actually received by LESSOR following a Total Loss, less any legal and other out-of-pocket expenses or duties incurred by LESSOR in connection with the collection of such proceeds. "TOTAL LOSS" means any of the following in relation to the Aircraft, Airframe or any Engine and "TOTAL LOSS DATE" means the date set forth in parenthesis after each Total Loss: (a) destruction, damage beyond repair or being rendered permanently unfit for normal use for any reason (the date such event occurs or, if not known, the date on which the Aircraft, Airframe or Engine was last heard of); (b) actual, constructive, compromised, arranged or agreed total loss (the earlier of the date on which the loss is agreed or compromised by the insurers or thirty (30) days after the date of notice to LESSEE's brokers or insurers claiming such total loss); (c) requisition of title, confiscation, forfeiture or any compulsory acquisition of title or other similar event (the date on which the same takes effect); (d) sequestration, detention, seizure or any similar event for more than one hundred eighty (180) consecutive days (the earlier of the date on which insurers make payment on the basis of a total loss or the date of expiration of such period); (e) requisition for use for more than one hundred eighty (180) consecutive days, except as set forth in Article 18.8 (the earlier of the date on which the insurers make payment on the basis of a total loss or the date of expiration of such period); (f) in the case of an Engine, the event described in Article 12.6.3 (the date on which the same takes effect); "TOTAL LOSS PROCEEDS" means the proceeds of any insurance or any compensation or similar payment arising in respect of a Total Loss. 18.2 NOTICE OF TOTAL LOSS. LESSEE will notify LESSOR in writing within two (2) Business Days after a Total Loss Date of the Aircraft, Airframe or any Engine. 18.3 TOTAL LOSS OF AIRCRAFT OR AIRFRAME. If the Total Loss of the Aircraft or Airframe occurs during the Lease Term, the following will occur: 18.3.1 After the Total Loss Date and until receipt by LESSOR of the Agreed Value and all other amounts then due under this Lease, LESSEE will continue to pay Rent and the parties will perform all of their other obligations under this Lease. 18.3.2 On the date which is the earlier of the following dates: (a) the date on which the Total Loss Proceeds of the Aircraft or the Airframe are paid by LESSEE's insurance underwriters or brokers and (b) the date which falls sixty (60) days after the Total Loss Date, LESSEE will pay to LESSOR an amount equal to the sum of: (a) the Agreed Value and (b) all other amounts then due and payable under this Lease, less an amount equal to the Net Total Loss Proceeds received by LESSOR by such date. 18.3.3 LESSOR will apply the Net Total Loss Proceeds and any amounts received from LESSEE pursuant to Article 18.3.2 as follows: (a) first, in discharge of any unpaid Rent and any other amounts accrued and unpaid up to the date of LESSOR's receipt of the Agreed Value; (b) second, in discharge of the Agreed Value; and (c) third, payment of the balance, if any, to LESSEE. 18.3.4 Upon receipt by LESSOR of all monies payable by LESSEE in Article 18.3, provided no Default has occurred and is continuing, this Lease will terminate except for LESSEE's obligations under Articles 10.5, 15 and 16 which survive the Termination Date and the Security Deposit will be returned to LESSEE in accordance with Article 5.3.1. FOR AVOIDANCE OF DOUBT, THE AGREED VALUE OF THE AIRCRAFT WILL BE PAYABLE TO LESSOR PURSUANT TO THIS ARTICLE 18.3 IF A TOTAL LOSS OF THE AIRFRAME OCCURS EVEN IF THERE HAS NOT BEEN A TOTAL LOSS OF AN ENGINE OR ENGINES. 18.4 SURVIVING ENGINE(S). If a Total Loss of the Airframe occurs and there has not been a Total Loss of an Engine or Engines, then provided no Default has occurred and is continuing, at the request of LESSEE (subject to agreement of relevant insurers) and on receipt of all monies due under Article 18.3 and payment by LESSEE of all airport, navigation and other charges on the Aircraft, LESSOR will transfer all of its right, title and interest in the surviving Engine(s) to LESSEE, but without any responsibility, condition or warranty on the part of LESSOR other than as to freedom from any LESSOR's Lien. 18.5 TOTAL LOSS OF ENGINE AND NOT AIRFRAME. 18.5.1 Upon a Total Loss of any Engine not installed on the Airframe or a Total Loss of an Engine installed on the Airframe not involving a Total Loss of the Airframe, LESSEE will replace such Engine as soon as reasonably possible by duly conveying to LESSOR title to another engine (a) free and clear of all Security Interests (except Permitted Liens) of any kind or description, (b) in airworthy condition and of the same or improved model, service bulletin and modification status and having a value and utility at least equal to the Engine which sustained the Total Loss, and (c) not older (by reference to serial number or manufacture date) than three (3) years older than the oldest of the two Engines delivered by LESSOR to LESSEE with the Aircraft on the Delivery Date. Such replacement engine will be an Engine as defined herein and the Engine which sustained such Total Loss will cease to be an Engine. 18.5.2 LESSEE agrees at its own expense to take such action as LESSOR may reasonably request in order that any such replacement Engine becomes the property of LESSOR and is leased hereunder on the same terms as the destroyed Engine. LESSEE's obligation to pay Rent will continue in full force and effect, but an amount equal to the Net Total Loss Proceeds received by LESSOR with respect to such destroyed Engine will, subject to LESSOR's right to deduct therefrom any amounts then due and payable by LESSEE under this Lease, be paid to LESSEE. 18.6 OTHER LOSS OR DAMAGE. 18.6.1 If the Aircraft or any Part thereof suffers loss or damage not constituting a Total Loss of the Aircraft or the Airframe or any Engine, all the obligations of LESSEE under this Lease (including payment of Rent) will continue in full force. 18.6.2 In the event of any loss or damage to the Aircraft or Airframe which does not constitute a Total Loss of the Aircraft or the Airframe, or any loss or damage to an Engine which does not constitute a Total Loss of such Engine, LESSEE will at its sole cost and expense fully repair the Aircraft or Engine in order that the Aircraft or Engine is placed in an airworthy condition and substantially the same condition as it was prior to such loss or damage. All repairs will be performed in accordance with sound airline procedures. LESSEE will notify LESSOR forthwith of any loss, theft or damage to the Aircraft for which the cost of repairs is estimated to exceed Seven Hundred Fifty Thousand U.S. Dollars (US$750,000), together with LESSEE's proposal for carrying out the repair. In the event that LESSOR does not agree with LESSEE's proposals for repair, LESSOR will so notify LESSEE within two (2) Business Days after its receipt of such proposal. LESSEE and LESSOR will then consult with Manufacturer and LESSEE and LESSOR agree to accept as conclusive, and be bound by, Manufacturer's directions or recommendations as to the manner in which to carry out such repairs. If Manufacturer declines to give directions or recommendations, LESSEE will carry out the repairs in accordance with the directions of LESSOR. 18.6.3 To the extent that LESSOR has received insurance proceeds from LESSEE's insurers with respect to any loss or damage, LESSOR will (subject to LESSOR's right to deduct therefrom any amounts then due and payable by LESSEE under this Lease and submission by LESSEE of reasonable documentation confirming the completion of the repairs in accordance with the requirements of this Lease) pay to LESSEE insurance proceeds received by LESSOR as and when such repair work is performed on the Aircraft. 18.7 COPY OF INSURANCE POLICY. Promptly after LESSOR's request following the occurrence of a partial loss or Total Loss of the Aircraft or an Engine, LESSEE will provide LESSOR with a copy of LESSEE's insurance policy. 18.8 GOVERNMENT REQUISITION. If the Aircraft, Airframe or any Engine is requisitioned for use by any Government Entity, LESSEE will promptly notify LESSOR of such requisition. All of LESSEE's obligations hereunder will continue as if such requisition had not occurred. Except if a Default or an Event of Default has occurred and is continuing, all payments received by LESSOR or LESSEE from such Government Entity will be paid over to or retained by LESSEE. 18.9 CONVEYANCE TO LESSEE. Upon compliance by LESSEE with the applicable terms of Article 18.3 or 18.5, LESSOR will transfer to LESSEE the Airframe or Engine(s), as applicable, with respect to which such Total Loss. ARTICLE 19 CRAF PROGRAM 19.1 DEDICATION TO CRAF. LESSEE may transfer possession of the Airframe or any Engine to the United States of America or any instrumentality or agency thereof as part of the Civil Reserve Air Fleet Program authorized under 10 U.S.C. ss. 9511 ET SEQ. (or any substantially similar program) ("CRAF PROGRAM") for a period which includes (collectively, the "CRAF PROGRAM REQUISITION PERIOD") the entire period of requisition under the CRAF Program. If the CRAF Program Requisition Period extends beyond the Expiration Date provided by this Lease, then the Lease will be deemed to continue for six (6) months after the end of the CRAF Program Requisition Period at a monthly rental rate equal to the monthly rental rate during the Lease Term. If such extension extends beyond the Lease Term, then LESSEE will provide LESSOR with written notice of the proposed redelivery by the earlier of six (6) months prior to the proposed redelivery date or five (5) Business Days after the date of receipt of the actual notice given to LESSEE by the government prior to the government's redelivery date and LESSEE will return the Aircraft to LESSOR in the condition required by Article 23 on LESSEE's proposed redelivery date set forth in such notice. 19.2 NOTICE TO LESSOR. LESSEE will promptly notify LESSOR in writing in the event of the requisition for use of the Aircraft under CRAF activation by the U.S. Government. All of LESSEE's obligations under this Lease will continue to the same extent as if such requisition had not occurred. 19.3 REQUISITION OF ENGINE. If there is a requisition for use of any Engine (but not the Airframe) by the U.S. Government in connection with the CRAF Program, LESSEE will replace such Engine by complying with the terms of Article 18.5 hereof. 19.4 GOVERNMENT INDEMNIFICATION. Any provisions of this Lease to the contrary notwithstanding, if there is a requisition for use of the Aircraft pursuant to the CRAF Program and/or CRAF activation, LESSOR agrees that LESSEE's insurances described in Exhibit C may be supplemented by insurances provided under Title XIII of the Act, and/or U.S. Government indemnification (which Title XIII insurances and indemnification will be in amounts not less than those established in Exhibit C); provided, however, that LESSEE will remain responsible for full compliance with all the provisions of this Lease, including Articles 14 and 16, to the extent Title XIII and/or the U.S. Government indemnification do not satisfy LESSEE's obligations under this Lease. 19.5 NO GEOGRAPHIC LIMITS. If there is a requisition for use of the Aircraft pursuant to the CRAF Program and/or CRAF activation, there will be no limitation on the geographic area in which the Aircraft may be operated so long as, taken as a whole, LESSEE's insurance, the Title XIII insurance and/or the indemnification provided by the U.S. Government fully cover (without any geographic exclusions) LESSEE's Exhibit C insurance requirements. 19.6 NOTICE OF DEFAULT. If an Event of Default occurs under this Lease and LESSOR elects to pursue its remedies under Article 25.3(e) to terminate this Lease and repossess the Aircraft, LESSOR will so notify the U.S. Government by sending a written communication as follows: Headquarters Air Mobility Command AMC Contracting Office -- XOKA Scott Air Force Base, Illinois 62225-5007 19.7 RECEIPT OF PAYMENTS. Subject to the following sentence, all payments received by LESSOR or LESSEE from such Government Entity in connection with the requisition of the Aircraft under the CRAF Program will be paid over to or retained by LESSEE. If a Default has occurred and is continuing, all payments received by LESSEE or LESSOR from such Government Entity in connection with the requisition of the Aircraft under the CRAF Program may be used by LESSOR to satisfy any obligations owing by LESSEE. ARTICLE 20 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE 20.1 REPRESENTATIONS AND WARRANTIES. LESSEE represents and warrants the following to LESSOR as of the date of execution of this Lease and as of the Delivery Date: 20.1.1 CORPORATE STATUS. LESSEE is a corporation duly incorporated, validly existing and in good standing under the Laws of Indiana (or, on the Delivery Date, the state of its incorporation). It has the corporate power and authority to carry on its business as presently conducted and to perform its obligations hereunder. 20.1.2 GOVERNMENTAL APPROVALS. No authorization, approval, consent, license or order of, or registration with, or the giving of notice to the Aviation Authority or any other Government Entity is required for the valid authorization, execution, delivery and performance by LESSEE of this Lease, except as will have been duly effected as of the Delivery Date. 20.1.3 BINDING. LESSEE's Board of Directors has authorized LESSEE to enter into this Lease, any Side Letters hereto and any other documentation in connection with the leasing of the Aircraft from LESSOR (collectively, the "OPERATIVE DOCUMENTS") and perform its obligations under the Operative Documents. This Lease and the other Operative Documents have been duly executed and delivered by LESSEE and represent the valid, binding and enforceable obligations of LESSEE except as enforceability may be limited by bankruptcy, insolvency, reorganization or other Laws of general application affecting the enforcement of creditors' rights. When executed by LESSEE at Delivery, the same will apply to the Estoppel and Acceptance Certificate. 20.1.4 NO BREACH. The execution and delivery of the Operative Documents, the consummation by LESSEE of the transactions contemplated herein and compliance by LESSEE with the terms and provisions hereof do not and will not contravene any Law applicable to LESSEE, or result in any breach of or constitute any default under or result in the creation of any Security Interest upon any property of LESSEE, pursuant to any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which LESSEE is a party or by which LESSEE or its properties or assets may be bound or affected. When executed by LESSEE at Delivery, the same will apply to the Estoppel and Acceptance Certificate. 20.1.5 FILINGS. Except for any filing or recording that may be required by the FARs, no filing or recording of any instrument or document (including the filing of any financial statement) is necessary under the Laws of the State of Registration in order for this Lease to constitute a valid and perfected lease of record relating to the Aircraft. 20.1.6 LICENSES. LESSEE holds all licenses, certificates and permits from applicable Government Entities in the U.S. for the conduct of its business as a certificated air carrier and performance of its obligations under this Lease. 20.1.7 NO SUITS. There are no suits, arbitrations or other proceedings pending or threatened before any court or administrative agency against LESSEE which are reasonably likely to be determined adversely and, if adversely determined, would have a material adverse effect on the business, assets or condition (financial or otherwise) of LESSEE or its ability to perform under this Lease, except as described in the filings provided to LESSOR pursuant to Article 22. 20.1.8 GENERAL OBLIGATIONS. The obligations of LESSEE under this Lease are direct, general and unconditional obligations of LESSEE and rank or will rank at least PARI PASSU with all other present and future unsecured and unsubordinated obligations (including contingent obligations) of LESSEE, with the exception of such obligations as are mandatorily preferred by law and not by reason of any encumbrance. 20.1.9 NO SOVEREIGN IMMUNITY. LESSEE, under the Laws of the U.S. or of any other jurisdiction affecting LESSEE, is subject to private commercial law and suit. Neither LESSEE nor its properties or assets is entitled to sovereign immunity under any such Laws. LESSEE's performance of its obligations hereunder constitute commercial acts done for commercial purposes. 20.1.10 TAX RETURNS. All necessary federal and state income tax returns have been delivered by LESSEE to all relevant taxation authorities in the U.S. or any state thereof and LESSEE is not in default in the payment of any taxes due and payable as shown on any such returns or on any assessment received by LESSEE. 20.1.11 NO MATERIAL ADVERSE EFFECT. LESSEE is not in default under any agreement to which it is a party or by which it may be bound which would have a material adverse effect on its business, assets or condition. 20.1.12 NO DEFAULT UNDER THIS LEASE. At the time of execution of this Lease, no Default has occurred and is continuing and the financial statements provided to LESSOR pursuant to Article 22 fairly present the financial condition of LESSEE. 20.2 COVENANTS. LESSEE covenants to LESSOR that it will comply with the following throughout the entire Lease Term: 20.2.1 LICENSING. LESSEE will hold all licenses, certificates and permits from applicable Government Entities in the U.S. for the conduct of its business as a certificated air carrier and performance of its obligations under this Lease. LESSEE will advise LESSOR promptly in the event any such licenses, certificates or permits are cancelled, terminated, revoked or not renewed. 20.2.2 SOVEREIGN IMMUNITY. LESSEE, under the Laws of the U.S. or of any other jurisdiction affecting LESSEE, will continue to be subject to private commercial law and suit. Neither LESSEE nor its properties or assets will be entitled to sovereign immunity under any such Laws. LESSEE's performance of its obligations hereunder will constitute commercial acts done for commercial purposes. LESSEE will advise LESSOR promptly of any change in the foregoing. 20.2.3 INFORMATION ABOUT SUITS. LESSEE will promptly give to LESSOR a notice in writing of any suit, arbitration or proceeding against LESSEE before any court, administrative agency or Government Entity which is reasonably likely to be determined adversely and, if adversely determined, would materially adversely affect LESSEE's financial condition, affairs, operations or its ability to perform under this Lease. 20.2.4 MERGER OF LESSEE. (a) LESSEE shall not consolidate with or merge into any other Person under circumstances in which LESSEE is not the surviving corporation, or convey, transfer, or lease in one or more transactions all or substantially all of its assets to any other Person, unless: (i) such Person is organized, existing, and in good standing under the Laws of the U.S., any state of the U.S., or the District of Columbia, and, upon consummation of such transaction, such Person will be a U.S. Air Carrier; (ii) such Person executes and delivers to LESSOR a duly authorized, legal, valid, binding and enforceable agreement, reasonably satisfactory in form and substance to LESSOR, containing an effective assumption by such Person of the due and punctual performance and observance of each covenant, agreement and condition in the Operative Documents to be performed or observed by LESSEE; (iii) such Person makes such filings and recordings with the FAA pursuant to the Act as shall be necessary to evidence such consolidation or merger; (iv) LESSEE furnishes LESSOR an opinion of counsel reasonably satisfactory to LESSOR to the effect that such consolidation or merger has satisfied at the closing of such consolidation or merger items (i), (ii) and (iii) above; (v) immediately after giving effect to such consolidation or merger, no Default or Event of Default exists; (vi) unless LESSOR otherwise consents, immediately after giving effect to such consolidation or merger, such Person will have a tangible net worth of not less than sixty-five percent (65%) of the LESSEE's tangible net worth immediately prior to such merger; and (vii) upon such merger becoming effective, LESSOR will enjoy the same degree of protection under ss. 1110 of the Bankruptcy Code with respect to the Aircraft as LESSOR enjoyed prior to such merger. (b) Upon any such consolidation or merger of LESSEE with or into, or the conveyance, transfer, or lease by LESSEE of all or substantially all of its assets to, any Person in accordance with this Article 20.2.4, such Person will succeed to, and be substituted for, and may exercise every right and power of, LESSEE under the Operative Documents with the same effect as if such Person had been named as "LESSEE" therein. No such consolidation, merger, conveyance, transfer, or lease shall have the effect of releasing LESSEE or such Person from any of LESSEE's obligations, liabilities, covenants, or undertakings under this Lease. 20.2.5 RESTRICTION ON RELINQUISHMENT OF POSSESSION. LESSEE will not, without the prior consent of LESSOR, deliver, transfer or relinquish possession of the Aircraft except in accordance with Articles 11 and 12. 20.2.6 NO SECURITY INTERESTS. LESSEE will not create or agree to or permit to arise any Security Interest (other than Permitted Liens) on or with respect to the Aircraft, title thereto or any interest therein. LESSEE will forthwith, at its own expense, take all action as may be necessary to discharge or remove any such Security Interest if it exists at any time. LESSEE will within five (5) Business Days after becoming aware of the existence of any such Security Interest give written notice thereof to LESSOR. 20.2.7 REPRESENTATIONS TO OTHER PARTIES. LESSEE will not represent or hold out LESSOR as carrying goods or passengers on the Aircraft or as being in any way connected or associated with any operation of the Aircraft. ARTICLE 21 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSOR 21.1 REPRESENTATIONS AND WARRANTIES. LESSOR represents and warrants the following to LESSEE as of the date of execution of the Lease and as of the Delivery Date and ALL OTHER WARRANTIES, EXPRESS OR IMPLIED HAVE BEEN WAIVED IN ACCORDANCE WITH ARTICLE 8: 21.1.1 CORPORATE STATUS. LESSOR is a corporation duly incorporated, validly existing and in good standing under the Laws of the State of California. It has the corporate power and authority to carry on its business as presently conducted and to perform its obligations hereunder. 21.1.2 GOVERNMENTAL APPROVALS. No authorization, approval, consent, license or order of, or registration with, or the giving of notice to any U.S. Government Entity is required for the valid authorization, execution, delivery and performance by LESSOR of this Lease. 21.1.3 BINDING. This Lease and the other Operative Documents have been duly authorized, executed and delivered by LESSOR and represent the valid, enforceable and binding obligations of LESSOR except as enforceability may be limited by bankruptcy, insolvency, reorganization or other Laws of general application affecting the enforcement of creditors' rights. 21.1.4 NO BREACH. The execution and delivery of the Operative Documents, the consummation by LESSOR of the transactions contemplated herein and compliance by LESSOR with the terms and provisions hereof do not and will not contravene any Law applicable to LESSOR, or result in any breach of or constitute any default under any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which LESSOR is a party or by which LESSOR or its properties or assets may be bound or affected. 21.1.5 TITLE TO AIRCRAFT. On the Delivery Date LESSOR will have good and valid title to the Aircraft. 21.1.6 CITIZENSHIP. LESSOR is a "citizen of the United States" within the meaning of 49 U.S. Code 40102(a)(15). 21.1.7 INVESTMENT BY LESSOR. LESSOR is acquiring its interest in the Aircraft for its own account from its corporate funds, for investment and not with a view to any resale or distribution thereof that would require registration under the Securities Act of 1933; PROVIDED, HOWEVER, that subject to the transfer restrictions in Article 24.2, its disposition of its interest in the Aircraft shall at all times be within its control. 21.2 COVENANT OF QUIET ENJOYMENT. So long as no Event of Default has occurred and is continuing hereunder, LESSOR covenants that neither LESSOR nor any person lawfully claiming through LESSOR will interfere with LESSEE's quiet, peaceful use and enjoyment of the Aircraft. ARTICLE 22 FINANCIAL AND RELATED INFORMATION LESSEE agrees to furnish each of the following to LESSOR: (a) within sixty (60) days after the end of each fiscal quarter of LESSEE, the unaudited consolidated financial statements (including a balance sheet and profit and loss statement) prepared for such quarter in accordance with generally accepted accounting principles in the U.S.; (b) within one hundred twenty (120) days after the end of each fiscal year of LESSEE, the audited consolidated financial statements (including a balance sheet and profit and loss statement) prepared as of the close of such fiscal year in accordance with generally accepted accounting principles in the U.S. LESSEE's chief financial officer will also provide a certificate of LESSEE stating that, to such officer's knowledge, no Default exists under this Lease (or if, to such officer's knowledge, a Default does exist, identifying it); (c) promptly after distribution, all reports and financial statements which Amtran, Inc. sends or makes generally available to its stockholders or creditors; and (d) from time to time, such other reasonable information as LESSOR or LESSOR's Lender may reasonably request concerning the location, condition, use and operation of the Aircraft or the financial condition of LESSEE. ARTICLE 23 RETURN OF AIRCRAFT 23.1 DATE OF RETURN. LESSEE is obligated to return the Aircraft, Engines Parts and Aircraft Documentation to LESSOR on the Expiration Date, unless a Total Loss of the Aircraft occurred prior to the Expiration Date and this Lease was terminated early in accordance with Article 18.3. If LESSEE is in Default hereunder by failing to return the Aircraft on the Expiration Date or if an Event of Default occurs prior to the Expiration Date and LESSOR repossesses the Aircraft, the return requirements set forth in this Article 23 nonetheless must be met on the date the Aircraft is actually returned to LESSOR or repossessed by LESSOR. 23.2 TECHNICAL REPORT. Six (6) months prior to the Expiration Date (and in an updated form at return of the Aircraft), LESSEE will provide LESSOR with a Technical Evaluation Report in the form and substance of Exhibit L, as revised, and, in addition upon LESSOR's request, will make copies available of (a) drawings of the interior configuration of the Aircraft both as it presently exists and as it will exist at return, (b) an Airworthiness Directive status list, (c) a service bulletin incorporation list, (d) rotable tracked, hard-time and life-limited component listings, (e) a list of LESSEE-initiated modifications and alterations, (f) interior material burn certificates, (g) the Aircraft Maintenance Program, (h) the complete workscope for the checks, inspections and other work to be performed prior to return, (i) a list of all no-charge service bulletin kits with respect to the Aircraft which were ordered by LESSEE from Manufacturer or Engine manufacturer, (j) current Engine disk sheets and a description of the last shop visit for each Engine and (k) any other data which is reasonably requested by LESSOR. 23.3 RETURN LOCATION. LESSEE at its expense will return the Aircraft, Engines, Parts and Aircraft Documentation to LESSOR at Indianapolis International Airport, Indianapolis, Indiana or to such other airport as may be mutually agreed to by LESSEE and LESSOR. 23.4 FULL AIRCRAFT DOCUMENTATION REVIEW. For the period commencing at least ten (10) Business Days prior to the proposed redelivery date and continuing until the date on which the Aircraft is returned to LESSOR in the condition required by this Lease, LESSEE will provide for the review of LESSOR and/or its representative all of the Aircraft records and historical documents described in Exhibit K in one central room at the Aircraft return location. 23.5 AIRCRAFT INSPECTION. 23.5.1 During the maintenance checks performed immediately prior to the proposed redelivery and at the actual return of the Aircraft, LESSOR and/or its representatives will have an opportunity to conduct a full systems functional and operational inspection of the Aircraft (and other types of reasonable inspections based upon the Aircraft type, age, use and other known factors with respect to the Aircraft) and a full inspection of the Aircraft Documentation (including records and manuals), all to LESSOR's satisfaction. The inspection will occur during the Return Check when the panels, bays or the like are open and certain Parts are disassembled. LESSOR may inspect such opened panels, bays or the like and the disassembled Parts so long as LESSOR does not disrupt the Return Check or cause such Return Check to be extended beyond the anticipated completion date of such Return Check. Any deficiencies from the Aircraft return condition requirements set forth in this Article 23 will be corrected by LESSEE at its cost prior to the acceptance flight described in Article 23.5.2. 23.5.2 Immediately prior to the proposed redelivery of the Aircraft, LESSEE will carry out for LESSOR and/or LESSOR's representatives an Aircraft acceptance flight in accordance with Manufacturer's standard flight operation check flight procedures or, if agreed to in writing by LESSOR, in accordance with an airline acceptance flight procedure, either of which will be for the duration necessary to perform such check flight procedures but in any event not less than two (2) hours. Flight costs and fuel will be furnished by and at the expense of LESSEE. Any deficiencies from the Aircraft return condition requirements set forth in this Article 23 will be corrected by LESSEE at its cost prior to return of the Aircraft. 23.5.3 To the extent that the ground inspection and acceptance flight extend beyond the Expiration Date, the Lease Term will be deemed to have been automatically extended and the obligations of LESSEE hereunder (including Article 23.11.3) will continue on a day-to-day basis until the Aircraft is accepted by LESSOR executing the Return Acceptance Receipt in the form of Exhibit I. 23.6 CERTIFICATE OF AIRWORTHINESS MATTERS. 23.6.1 The Aircraft will possess a current Certificate of Airworthiness issued by the Aviation Authority (although this Certificate of Airworthiness may later be substituted by the Export Certificate of Airworthiness or equivalent if requested by LESSOR pursuant to Article 23.10). The Aircraft at return must be in the condition required in order to meet the requirements of a U.S. Standard Certificate of Airworthiness for transport category aircraft issued by the FAA in accordance with FAR Part 21 and, in addition, to meet the operating requirements of FAR Part 121. 23.6.2 LESSEE at its cost will demonstrate that the Aircraft meets the requirements for issuance of the U.S. Standard Certificate of Airworthiness for transport category aircraft specified in Article 23.6.1 by delivering to LESSOR an actual U.S. Standard Certificate of Airworthiness. If there is a dispute in regards to the condition of the Aircraft or the Aircraft Documentation, then LESSEE will provide LESSOR with a letter acceptable to LESSOR signed by an FAA Designated Airworthiness Representative (DAR) or another Person acceptable to LESSOR stating that the DAR or such Person has inspected the Aircraft and Aircraft Documentation (including records and manuals) and has found that the Aircraft meets the requirements for issuance of a U.S. Standard Certificate of Airworthiness for transport category aircraft in accordance with FAR Part 21 and, in addition, meets the operating requirements of FAR Part 121. 23.6.3 If the Aircraft is to be registered in a country other than in the U.S. after return from LESSEE, LESSOR may in its sole discretion waive the requirements of Article 23.6.2 and instead require that LESSEE at its expense (to the extent such expense is no greater than that which LESSEE would have incurred pursuant to Articles 23.6.1 and 23.6.2, with any additional expenses being for LESSOR's account) put the Aircraft in a condition to meet the requirements for issuance of a Certificate of Airworthiness of the Aviation Authority of the next country of register. 23.7 GENERAL CONDITION OF AIRCRAFT AT RETURN. 23.7.1 The Aircraft, Engines and Parts will have been maintained and repaired in accordance with the Maintenance Program, the rules and regulations of the Aviation Authority and this Lease. 23.7.2 Aircraft Documentation (including records and manuals) will have been maintained in an up-to-date status, in accordance with the rules and regulations of the Aviation Authority and the FAA and this Lease and in a form necessary in order to meet the requirements of Article 23.6.2. The records and historical documents set forth in Attachment 1 of Exhibit I will be in English. 23.7.3 The Aircraft will be in the same working order and condition as at Delivery (subject to the other provisions of this Article 23, reasonable wear and tear from normal flight operations excepted), with all pilot discrepancies and deferred maintenance items cleared on a terminating action basis. 23.7.4 The Aircraft will be airworthy (conform to type design and be in a condition for safe operation), with all Aircraft equipment, components and systems operating in accordance with their intended use and within limits approved by the Manufacturer, Aviation Authority and FAA. 23.7.5 The Aircraft interior (including cabin and windows) and exterior will be clean and all compartments will be reasonably free of foreign objects, dirt, grease, fluids, stains, grime, cracks, tears and rips (with the exception of normal wear and tear) and ready to be placed into immediate commercial airline operations. 23.7.6 No special or unique Manufacturer, Engine manufacturer or Aviation Authority inspection or check requirements which are specific to the Aircraft or Engines (as opposed to all aircraft or engines of their types) will exist with respect to the Airframe, Engines and Aircraft equipment, components and systems. 23.7.7 All repairs, modifications and alterations to the Aircraft will have been accomplished in accordance with Manufacturer's Structural Repair Manual (or FAA-approved data supported by FAA Form 8110-3) for the Aircraft. 23.7.8 The Aircraft will be returned with LESSOR's Engines installed and with the same equipment as at Delivery, subject only to those replacements, additions and Modifications permitted under this Lease. LESSEE will inform LESSOR of whether LESSEE will be able to redeliver the Engines with the Aircraft and the proposed replacement engines that LESSEE wants to provide LESSOR in place of the Engines. LESSEE will provide LESSOR with whatever data, records and information that LESSOR reasonably requests in order to evaluate the proposed replacement engines. In the event that LESSEE is unable to return either of the Engines in the conditions required by this Article 23, then LESSEE may provide a replacement engine (a "REPLACEMENT ENGINE") for such Engine to LESSOR by duly conveying to LESSOR as owner hereunder title to another engine of the same manufacturer and of the same or an improved model as the Engine being replaced and suitable for installation and use on the Aircraft, which engine shall be free and clear of all Security Interests, and shall be no more than three (3) years older by reference to serial number than the replaced Engine and have a modification status, value and utility at least equal to the Engine which such Replacement Engine is replacing on the Aircraft assuming that such Engine which such Replacement Engine is replacing was then of the value, utility, condition, and airworthiness required to be maintained by the terms of this Lease. Such Replacement Engine, after approval and acceptance by LESSOR, shall be deemed an "Engine" as defined herein for all purposes hereunder. LESSEE agrees to take such action as LESSOR may reasonably request in order that such Replacement Engine shall be duly and properly titled in the name of LESSOR. Prior to or at the time of any such conveyance, LESSEE, at its own expense, will promptly: (a) furnish LESSOR with a warranty bill of sale, in form and substance satisfactory to LESSOR, with respect to such Replacement Engine, (b) furnish LESSOR with such evidence of title to such Replacement Engine as reasonably requested by LESSOR, and (c) furnish LESSOR with an opinion of LESSEE's counsel to the effect that title to such Replacement Engine has been duly conveyed to LESSOR free and clear of all Security Interests of any kind or nature and that such exchange qualifies for tax free treatment under the Internal Revenue Code of 1986, as amended. Upon full compliance with this Article, LESSOR shall transfer to LESSEE all of LESSOR's right, title and interest, on an "AS-IS", "WHERE-IS" basis in and to the Engine being replaced by such Replacement Engine, without recourse or warranty, express or implied, except that LESSOR has good and marketable title to such Engine and such Engine shall be free and clear of LESSOR's Liens. 23.7.9 All Airworthiness Directives which are issued prior to the date of return of the Aircraft and require compliance (either by means of repetitive inspections, modifications or terminating action) prior to return of the Aircraft to LESSOR or within one (1) year after the Termination Date will have been complied with on the Aircraft on a terminating action basis at LESSEE's cost. Airworthiness Directives which do not have a terminating action will be accomplished at the highest level of inspection or modification possible. If, after using best efforts, LESSEE is unable to acquire the material, parts or components necessary to accomplish such Airworthiness Directive, LESSEE will pay to LESSOR upon return of the Aircraft the estimated cost of terminating such Airworthiness Directive. If the estimated cost cannot be mutually agreed upon by LESSEE and LESSOR, LESSEE and LESSOR will each obtain an estimate from a reputable FAA-approved maintenance facility (unaffiliated with LESSEE or LESSOR) and the estimated cost will be the average of the two estimates. 23.7.10 The Aircraft will be in compliance with the Corrosion Prevention and Control Program (CPCP) specified in LESSEE's Maintenance Program. 23.7.11 If any waivers, deviations, dispensations, alternate means of compliance, extensions or carry-overs with respect to maintenance or operating requirements, repairs or Airworthiness Directives are granted by the Aviation Authority or permitted by the Maintenance Program, LESSEE at its sole cost and expense will nonetheless perform such maintenance or operating requirements, repairs or Airworthiness Directives as if such waivers, deviations, dispensations, alternate means of compliance, or extensions or carry-overs did not exist. 23.7.12 The Aircraft will be free from any Security Interest except LESSOR's Liens and no circumstance will have so arisen whereby the Aircraft is or could become subject to any Security Interest or right of detention or sale in favor of the Aviation Authority, any airport authority, or any other authority. 23.7.13 All no-charge vendor and Manufacturer's service bulletin kits received by LESSEE for the Aircraft but not installed thereon will be on board the Aircraft as cargo. At LESSOR's request, any other service bulletin kit which LESSEE paid for will also be delivered to LESSOR on board the Aircraft, but LESSOR will reimburse LESSEE for its actual out-of-pocket costs for such kit, unless LESSEE purchased such kit as part of its implementation of a service bulletin on its fleet of aircraft of the same type as the Aircraft but had not yet installed such kit on the Aircraft, in which case such kit will be furnished free of charge to LESSOR. 23.7.14 The Aircraft will be free of any leaks and any damage resulting therefrom. All repairs will have been performed on a permanent basis in accordance with the applicable manufacturer's instructions. 23.7.15 The Aircraft fluid reservoirs (including oil, oxygen, hydraulic and water) will be serviced to full and the waste tank serviced in accordance with Manufacturer's instructions. (Fuel tanks will be at least as full as at Delivery.) 23.8 CHECKS PRIOR TO RETURN. Immediately prior to return of the Aircraft to LESSOR, LESSEE at its expense will do each of the following: 23.8.1 Have performed, and completed, by an FAA-approved repair station, all maintenance tasks specified in LESSEE's Maintenance Program and the MPD which (a) are necessary to clear the Aircraft of all such tasks for eighteen (18) months, five thousand (5,000) hours, and three thousand (3,000) cycles from the date of return of the Aircraft, and (b) are required to be performed at lesser intervals than eighteen (18) months, five thousand (5,000) hours or three thousand (3,000) cycles (all such work collectively referred to as the "RETURN CHECK"). If a maintenance task is specific to LESSEE's Maintenance Program and not required or recommended to be performed by the MPD, then LESSEE will not be required to perform such maintenance task so long as the Return Check is performed in such a manner that clears the Aircraft of all maintenance tasks in accordance with the requirements of the preceding sentence. As part of the Return Check, all non-routine tasks generated as a result of the performance of the work included in the Return Check and any other discrepancies revealed during the Return Check must also be performed in accordance with the FAA approved procedures. LESSEE will also weigh the Aircraft. LESSEE agrees to perform during the Return Check any other work reasonably required by LESSOR (and not otherwise required under this Lease) and LESSOR will, promptly upon receipt of an invoice from LESSEE, reimburse LESSEE for such work at LESSEE's preferred customer rates. 23.8.2 Have the Aircraft in compliance with Corrosion Prevention and Control Program (CPCP) as specified in the MPD and LESSEE's Maintenance Program. 23.8.3 Remove LESSEE's exterior markings, including all exterior paint, by stripping (or, at LESSOR's option, pneumatically scuff/sanding) the paint from the fuselage, empennage, wings and Engine cowlings, and clean, reseal, refinish, prepare (including application of alodine or another corrosion inhibitor) and prime the surfaces to be painted, all in accordance with Manufacturer's and paint manufacturer's recommendations. LESSEE will then repaint the fuselage, empennage, wings and Engine cowlings in the colors and logo specified by LESSOR ; PROVIDED, HOWEVER, that LESSEE will be responsible for only paying the amount that it would cost to strip or scuff/sand (whichever is performed on the Aircraft at return) and properly paint the Aircraft in LESSEE's colors and logo and LESSOR will be responsible for the excess cost to paint the Aircraft in the next lessee's colors and logo. Such painting will be accomplished in such a manner as to result in a uniformly smooth and cosmetically acceptable aerodynamic surface. All external placards, signs and markings will be properly attached, free from damage, clean and legible. 23.8.4 Clean the exterior and interior of the Aircraft. 23.8.5 If reasonably required by LESSOR, apply touch up to paint to the interior of the Aircraft, including flight deck, and replace any missing or broken placards. 23.8.6 In accordance with Article 23.7.7, permanently repair damage to the Aircraft that exceeds Manufacturer's limits and replace any non-flush structural patch repairs installed on the Aircraft with flush-type repairs, so long as the Manufacturer or the Manufacturer's Structural Repair Manual permits flush-type repairs on the portion of the Aircraft where the non-flush structural repairs were made. 23.8.7 With LESSOR or its representatives present, perform a full and complete hot and cold section videotape borescope on each Engine and its modules in accordance with the Engine manufacturer's maintenance manual. 23.8.8 If the Engine historical and technical records and/or condition trend monitoring data of any Engine (including the APU) indicate an acceleration in the rate of deterioration in the performance of an Engine, LESSEE will correct, to LESSOR's satisfaction, such conditions which are determined to be causing such accelerated rate of deterioration. 23.8.9 With LESSOR or its representatives present, accomplish a maximum power assurance run on the Engines. LESSEE will evaluate the Engine performance and record the Engine maximum power assurance test conditions and results on the Return Acceptance Receipt. 23.8.10 LESSEE will provide evidence to LESSOR's satisfaction that the Engine historical and technical records, borescope inspection, trend monitoring and other checks specified in Article 23.8.9 do not reveal any condition which would cause the Engines or any module to be unserviceable, beyond serviceable limits or serviceable with an increased frequency of inspection or with calendar time, flight hour or flight cycle restrictions under the Engine manufacturer's maintenance manual. LESSEE will correct any discrepancies in accordance with the guidelines set out by the Engine manufacturer which may be discovered during such inspection. 23.8.11 In the event the Engine historical and technical records, borescope inspection, trend monitoring and other checks specified in Article 23.8.9 result in a dispute regarding the conformity of an Engine with the requirements of this Article 23, LESSEE and LESSOR will consult with Engine manufacturer and follow Engine manufacturer's recommendations (including the accomplishment of an Engine test cell operational check) with regard to determining if such Engine complies with the requirements of this Article 23 and the manner in which any discrepancies from the requirements of this Article 23 will be rectified. 23.9 PART LIVES. At return, the condition of the Aircraft will be as follows: (CONFIDENTIAL MATERIAL OMITTED) 23.10 EXPORT AND DEREGISTRATION OF AIRCRAFT. At LESSOR's request, LESSEE at its cost will (a) provide an Export Certificate of Airworthiness or its equivalent from the State of Registration so that the Aircraft can be exported to the country designated by LESSOR, (b) assist with deregistration of the Aircraft from the register of aircraft in the State of Registration, (c) assist with arranging for prompt confirmation of such deregistration to be sent by the registry in the State of Registration to the next country of registration and (d) perform any other acts reasonably required by LESSOR in connection with the foregoing. If any Aircraft work which LESSEE is not otherwise required to perform hereunder, including engineering, is required in order to obtain such Export Certificate of Airworthiness, LESSEE will perform such work and LESSOR will reimburse LESSEE for such work at LESSEE's preferred customer rates. 23.11 LESSEE'S CONTINUING OBLIGATIONS. In the event that LESSEE does not return the Aircraft to LESSOR on the Expiration Date and in the condition required by this Article 23 for any reason (whether or not the reason is within LESSEE's control): 23.11.1 the obligations of LESSEE under this Lease will continue in full force and effect on a day-to-day basis until such return. This will not be considered a waiver of LESSEE's Event of Default or any right of LESSOR hereunder. 23.11.2 Until such return, the Agreed Value will be an amount equal to the Agreed Value on the day the Aircraft should have been returned to LESSOR pursuant to this Lease. 23.11.3 LESSEE will fully indemnify LESSOR on demand for all losses (including consequential damages), liabilities, actions, proceedings, costs and expenses thereby suffered or incurred by LESSOR and, in addition, if a delay in return of the Aircraft was due to reasons within LESSEE's reasonable control, then until such time as the Aircraft is redelivered to LESSOR and put into the condition required by this Article 23, instead of paying the Rent specified in Article 5.3, LESSEE will pay twice the amount of Rent for each day from the scheduled Expiration Date until the Termination Date (the monthly Rent payable under Article 5.3.1 will be prorated based on the actual number of days in the applicable month). Payment will be made upon presentation of LESSOR's invoice. 23.11.4 LESSOR may elect, in its sole and absolute discretion, to accept the return of the Aircraft prior to the Aircraft being put in the condition required by this Article 23 and thereafter have any such non-conformance corrected at such time as LESSOR may deem appropriate (but within ninety (90) days following the return of the Aircraft) and at commercial rates then-charged by the Person selected by LESSOR to perform such correction. Any direct expenses incurred by LESSOR for such correction will become additional Rent payable by LESSEE within fifteen (15) days following the submission of a written statement by LESSOR to LESSEE, identifying the items corrected and setting forth the expense of such corrections. LESSEE's obligation to pay such supplemental Rent will survive the Termination Date. 23.12 AIRPORT AND NAVIGATION CHARGES. LESSEE will ensure that at return of the Aircraft any and all airport, navigation and other charges which give rise or may if unpaid give rise to any lien, right of detention, right of sale or other Security Interest in relation to the Aircraft, Engine or any Part have been paid and discharged in full and will at LESSOR's request produce evidence thereof satisfactory to LESSOR. 23.13 RETURN ACCEPTANCE CERTIFICATE. Upon return of the Aircraft in accordance with the terms of this Lease, LESSEE will prepare and execute two (2) Return Acceptance Certificates in the form and substance of Exhibit I and LESSOR will countersign and return one such Return Acceptance Certificate to LESSEE. In addition, LESSEE and LESSOR will execute a Lease Termination for filing with the FAA evidencing termination of this Lease. 23.14 INDEMNITIES AND INSURANCE. The indemnities and insurance requirements set forth in Articles 16 and 17, respectively, will apply to Indemnitees and LESSOR's representatives during return of the Aircraft, including the ground inspection and acceptance flight. With respect to the acceptance flight, LESSOR's representatives will receive the same protections as LESSOR on LESSEE's Aviation and Airline General Third Party Liability Insurance. ARTICLE 24 ASSIGNMENT 24.1 NO ASSIGNMENT BY LESSEE. EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED BY THE TERMS OF THIS LEASE, NO ASSIGNMENT, NOVATION, TRANSFER, MORTGAGE OR OTHER CHARGE MAY BE MADE BY LESSEE OF ANY OF ITS RIGHTS WITH RESPECT TO THE AIRCRAFT, ENGINE OR PART OF THIS LEASE. 24.2 SALE OR ASSIGNMENT BY LESSOR. 24.2.1 Subject to LESSEE's rights pursuant to this Lease, LESSOR may at any time and without LESSEE's consent sell, assign or transfer its rights, interest and obligations hereunder or with respect to the Aircraft to a third party ("LESSOR'S ASSIGNEE"), but only if: (a) LESSOR's Assignee has full power, authority, and legal right to execute, deliver, and perform the obligations of LESSOR under the Operative Documents and provides reasonably satisfactory evidence of such power and authority to LESSEE; (b) LESSOR's Assignee enters into one or more legal, valid, binding and enforceable agreements effective to confirm that LESSOR's Assignee agrees to be bound by all the terms of, and to undertake all of the obligations arising after such transfer of LESSOR in, the Operative Documents, and in which it makes representations and warranties substantially the same as those in Article 21.1 of this Lease; (c) upon such transfer LESSEE shall not be obligated to pay any greater amount or incur any greater obligation (other than indemnifying additional indemnitees, insuring additional insureds and other minor ministerial matters) than that which it would have been obliged to pay or incur under the Operative Documents if no transfer or assignment had taken place, and upon such transfer the terms and conditions of the Operative Documents insofar as they relate to the rights and obligations of LESSEE are not altered; (d) LESSOR shall cause LESSOR's Assignee to deliver to LESSEE an opinion of counsel reasonably satisfactory to LESSEE to the effect that such agreement or agreements referred to in clause (2) and, if applicable, clause (6) are legal, binding, and enforceable in accordance with its or their terms, subject to the typical exceptions. (e) the transfer shall relate to LESSOR's entire interest as owner or lessor; (f) LESSOR's Assignee is a citizen of the United States under 49 U.S. Code ss.40102(a)(15) (such status to be determined without considering FAR ss.47.9 or any other provision that may restrict LESSEE's use or operation of the Aircraft), or shall use a voting powers trust or similar arrangement in order to hold an interest in the Aircraft such that the Aircraft can be registered in the U.S. (without considering FAR ss.47.9 or any other provision that may restrict LESSEE's use or operation of the Aircraft); (g) LESSOR's Assignee is a single Person and is either (i) a Permitted Institution, or (ii) or an affiliate of a Permitted Institution, if such affiliate's obligations under the Operative Documents are guaranteed by such Permitted Institution pursuant to a written guaranty, in form and substance reasonably satisfactory to LESSEE; and (h) LESSOR shall give written notice to LESSEE at least five (5) days before any such transfer, specifying the name and address of the proposed LESSOR's Assignee, and providing reasonably satisfactory evidence that the proposed LESSOR's Assignee meets the requirements described in Article 24.2.1(g)(i) or (ii). For a period of two (2) years after such sale or assignment and at LESSEE's cost, LESSEE will continue to name LESSOR as an additional insured under the Aviation and Airline General Third Party Liability Insurance required pursuant to Article 17 and Exhibit C. 24.2.2 The term "LESSOR" as used in this Lease means the lessor of the Aircraft at the time in question. In the event of the sale of the Aircraft and transfer of LESSOR's rights and obligations under this Lease, LESSOR's Assignee will become "LESSOR" of the Aircraft under this Lease and the transferring party (the prior "LESSOR") will be relieved of all liability to LESSEE under this Lease for obligations arising on and after the date the Aircraft is sold. LESSEE will acknowledge and accept LESSOR's Assignee as the new "LESSOR" under this Lease and will look solely to LESSOR's Assignee for the performance of all LESSOR obligations and covenants under this Lease arising on and after the Aircraft sale date. 24.3 LESSOR'S LENDER. Subject to LESSEE's rights pursuant to this Lease, LESSOR may at any time and without LESSEE's consent grant security interests over the Aircraft and assign the benefit of this Lease to a lender ("LESSOR'S LENDER") as security for LESSOR's obligations to LESSOR's Lender. Accordingly, if LESSOR's Lender requires, as a condition to providing financing, any nonsubstantive modification of this Lease, LESSEE agrees to enter into an agreement so modifying this Lease. 24.4 LESSEE COOPERATION. On request by LESSOR, LESSOR's Assignee or LESSOR's Lender, LESSEE will execute all such documents (such as a lease assignment agreement) as LESSOR, LESSOR's Assignee or LESSOR's Lender may reasonably require to confirm LESSEE's obligations under this Lease and obtain LESSEE's acknowledgment that to the best of LESSEE's knowledge, LESSOR is not in breach of this Lease. LESSEE will provide all other reasonable assistance and cooperation to LESSOR, LESSOR's Assignee and LESSOR's Lender in connection with any such sale or assignment or the perfection and maintenance of any such security interest, at LESSOR's cost, including making all necessary filings and registrations in the State of Registration and providing all opinions of counsel with respect to matters reasonably requested by LESSOR, LESSOR's Lender or LESSOR's Assignee. LESSOR will reimburse LESSEE for its reasonable out-of-pocket costs in reviewing documents required by LESSOR or LESSOR's Lender. 24.5 PROTECTIONS. 24.5.1 LESSOR will obtain for the benefit of LESSEE an acknowledgment from any LESSOR's Assignee or LESSOR's Lender that, so long as no Event of Default has occurred and is continuing hereunder, such Person will not interfere with LESSEE's quiet, peaceful use and enjoyment of the Aircraft. 24.5.2 Wherever the term "LESSOR" is used in this Lease in relation to any of the provisions relating to disclaimer, title and registration, indemnity and insurance contained in Articles 8, 13, 16 and 17, respectively, or with respect to Article 20.2.7, the term "LESSOR" will be deemed to include LESSOR's Assignee and LESSOR's Lender, if applicable. For avoidance of doubt, in the event of LESSOR's sale or financing of the Aircraft, the disclaimer and indemnity provisions contained in Articles 8 and 16 will continue to be applicable after the sale or assignment to International Lease Finance Corporation, as well as being applicable to LESSOR's Assignee and LESSOR's Lender. ARTICLE 25 DEFAULT OF LESSEE 25.1 LESSEE NOTICE TO LESSOR. LESSEE will promptly notify LESSOR if LESSEE becomes aware of the occurrence of any Default. 25.2 EVENTS OF DEFAULT. The occurrence of any of the following will constitute an Event of Default and material breach of this Lease by LESSEE: (a) LESSEE fails to take delivery of the Aircraft when obligated to do so under the terms of this Lease; (b) LESSEE fails to make a Rent or other payment due hereunder in the manner and by the date provided herein and fails to make such payment within five (5) Business Days after its receipt of notice that such payment is due; (c) LESSEE fails to obtain or maintain the insurance required by Article 17; (d) LESSEE fails to return the Aircraft to LESSOR on the Expiration Date in accordance with Article 23; (e) LESSEE fails to observe or perform any of its other obligations hereunder and fails to cure the same within thirty (30) days after written notice thereof to LESSEE; provided, that LESSEE will have up to a total of sixty (60) days to cure such failure so long as it uses diligent efforts to do so; (f) any representation or warranty of LESSEE herein proves to have been untrue in any material respect when made; provided, that, if the effect of such falsity is curable, LESSEE shall have thirty (30) days after LESSEE has knowledge that the representation or warranty is untrue; (g) the registration of the Aircraft is cancelled other than as a result of an act or omission of LESSOR; (h) LESSEE abandons the Aircraft or Engines; (i) LESSEE or an approved sublessee no longer has unencumbered control (other than Permitted Liens) or possession of the Aircraft or Engines, except as otherwise permitted by this Lease; (j) LESSEE temporarily or permanently discontinues business or (except as permitted by Article 20.2.4) sells or otherwise disposes of all or substantially all of its assets; (k) a material adverse change occurs in the financial condition of LESSEE; (l) LESSEE no longer possesses the licenses, certificates and permits required for the conduct of its business as a certificated air carrier in the U.S.; (m) LESSEE (i) suspends payment on its debts or other obligations generally, (ii) is unable to or admits its inability to pay its debts or other obligations generally as they fall due, (iii) is adjudicated or becomes bankrupt or insolvent or (iv) enters into any composition or other arrangement for the benefit of its creditors generally; (n) any proceedings, resolutions, filings or other steps are instituted with respect to LESSEE relating to the bankruptcy, liquidation, reorganization or protection from creditors of LESSEE or at least half of LESSEE's property. If instituted by LESSEE, the same will be an immediate Event of Default. If instituted by another Person, the same will be an Event of Default if not dismissed, remedied or relinquished within sixty (60) days; (o) any order, judgment or decree is entered by any court of competent jurisdiction appointing a receiver, trustee or liquidator of LESSEE or at least half of its property, or if at least half of LESSEE's property is to be sequestered. If instituted by or done with the consent of LESSEE, the same will be an immediate Event of Default. If instituted by another Person, the same will be an Event of Default if not dismissed, stayed, remedied or relinquished within sixty (60) days; PROVIDED, HOWEVER, that if such proceeding is stayed, then such proceeding will become an immediate Event of Default if such stay is removed or terminates and the proceeding is not dismissed, remedied or relinquished when such stay is removed or terminates. (p) any indebtedness for borrowed moneys or a guarantee or similar obligation owed by LESSEE with an unpaid balance of CONFIDENTIAL MATERIAL OMITTED is declared due before its stated maturity or LESSEE is in default of payment obligations CONFIDENTIAL MATERIAL OMITTED under any other purchase agreement, lease, conditional sale agreement or other agreement pursuant to which LESSEE has possession of any aircraft; (q) Eurocontrol has notified LESSOR that there are unpaid Eurocontrol charges due from LESSEE (unless such charges are being contested in good faith and by appropriate proceedings, an adequate bond has been provided and such proceedings do not involve any danger of the detention, interference with the use or operation, sale, forfeiture or loss of the Aircraft) and such charges remain outstanding for a period of thirty (30) days from the date of Eurocontrol's notice to LESSOR provided that such thirty (30) day grace period will not apply if there is a danger of detention, interference with the use or operation, sale, forfeiture or loss of the Aircraft; or (r) LESSEE is in default under any other lease or agreement between LESSEE and LESSOR and the same is not cured within its specified cure period. 25.3 LESSOR'S GENERAL RIGHTS. Upon the occurrence of any Event of Default, LESSOR may do all or any of the following at its option (in addition to such other rights and remedies which LESSOR may have by statute or otherwise but subject to any requirements of applicable Law): (a) terminate this Lease by giving written notice to LESSEE; (b) require that LESSEE immediately move the Aircraft to an airport or other location designated by LESSOR; (c) for LESSEE's account, do anything that may reasonably be required to cure any default and recover from LESSEE all reasonable costs, including legal fees and expenses incurred in doing so and Default Interest; (d) proceed as appropriate to enforce performance of this Lease and to recover any damages for the breach hereof, including the amounts specified in Article 25.5; (e) terminate this Lease by taking possession of the Aircraft or by serving notice requiring LESSEE to return the Aircraft to LESSOR at the location specified by LESSOR. If LESSOR takes possession of the Aircraft, it may enter upon LESSEE's premises where the Aircraft is located without liability. Upon repossession of the Aircraft, LESSOR will then be entitled to sell, lease or otherwise deal with the Aircraft as if this Lease had never been made. LESSOR will be entitled to the full benefit of its bargain with LESSEE; or (f) apply all or any portion of the Security Deposit and any other security deposits held by LESSOR pursuant to any other agreements between LESSOR and LESSEE to any amounts due. 25.4 DEREGISTRATION AND EXPORT OF AIRCRAFT. If an Event of Default has occurred and is continuing, LESSOR may take all steps necessary to deregister the Aircraft in and export the Aircraft from the State of Registration. 25.5 LESSEE LIABILITY FOR DAMAGES. If an Event of Default occurs, in addition to all other remedies available at law or in equity, LESSOR has the right to recover from LESSEE and LESSEE will pay LESSOR within two (2) Business Days after LESSOR's written demand, all of the following: (a) all amounts which are then due and unpaid hereunder and which become due prior to the earlier of LESSOR's recovery of possession of the Aircraft or LESSEE making an effective tender thereof; (b) any losses suffered by LESSOR because of LESSOR's inability to place the Aircraft on lease with another lessee or to otherwise utilize the Aircraft on financial terms as favorable to LESSOR as the terms hereof or, if LESSOR elects to dispose of the Aircraft, the funds arising from a sale or other disposition of the Aircraft are not as profitable to LESSOR as leasing the Aircraft in accordance with the terms hereof would have been (and LESSOR will be entitled to accelerate any and all Rent which would have been due from the date of LESSOR's recovery or repossession of the Aircraft through the Expiration Date); (c) all costs associated with LESSOR's exercise of its remedies hereunder, including but not limited to repossession costs, legal fees, Aircraft storage costs, Aircraft re-lease or sale costs and LESSOR's internal costs and expenses (including the cost of personnel time calculated based upon the compensation paid to the individuals involved on an annual basis and a general LESSOR overhead allocation); (d) any amount of principal, interest, fees or other sums paid or payable on account of funds borrowed in order to carry any unpaid amount; (e) any loss, premium, penalty or expense which may be incurred in repaying funds raised to finance the Aircraft or in unwinding any financial instrument relating in whole or in part to LESSOR's financing of the Aircraft; (f) any loss, cost, expense or liability sustained by LESSOR due to LESSEE's failure to redeliver the Aircraft in the condition required by this Lease; and (g) any other loss, damage, expense, cost or liability which LESSOR suffers or incurs as a result of the Event of Default and/or termination of this Lease, including an amount sufficient to fully compensate LESSOR for any loss of or damage to LESSOR's residual interest in the Aircraft caused by LESSEE's default. 25.6 WAIVER OF DEFAULT. By written notice to LESSEE, LESSOR may at its election waive any Default or Event of Default and its consequences and rescind and annul any prior notice of termination of this Lease. The respective rights of the parties will then be as they would have been had no Default or Event of Default occurred and no such notice been given. 25.7 PRESENT VALUE OF PAYMENTS. In calculating LESSOR's damages hereunder, upon an Event of Default all Rent and other amounts which would have been due hereunder during the Lease Term if an Event of Default had not occurred will be calculated on a present value basis using a discounting rate of six percent (6%) per annum discounted to the earlier of the date on which LESSOR obtains possession of the Aircraft or LESSEE makes an effective tender thereof. 25.8 USE OF "TERMINATION DATE". For avoidance of doubt, it is agreed that if this Lease terminates and the Aircraft is repossessed by LESSOR due to an Event of Default, then, notwithstanding the use of the term "Termination Date" in this Lease, the period of the Lease Term and the "Expiration Date" will be utilized in calculating the damages to which LESSOR is entitled pursuant to Article 25.5. For example, it is agreed and understood that LESSOR is entitled to receive from LESSEE the Rent and the benefit of LESSEE's insurance and maintenance of the Aircraft until expiration of the Lease Term. ARTICLE 26 NOTICES 26.1 MANNER OF SENDING NOTICES. Any notice, request or information required or permissible under this Lease will be in writing and in English. Notices will be delivered in person or sent by fax, letter (mailed airmail, certified and return receipt requested), or by expedited delivery addressed to the parties as set forth in Article 26.2. In the case of a fax, notice will be deemed received upon actual receipt (and the date of actual receipt will be deemed to be the date set forth on the confirmation of receipt produced by the sender's fax machine immediately after the fax is sent). In the case of a notice sent by expedited delivery, notice will be deemed received on the date of delivery set forth in the records of the Person which accomplished the delivery. If any notice is sent by more than one of the above listed methods, notice will be deemed received on the earliest possible date in accordance with the above provisions. 26.2 NOTICE INFORMATION. Notices will be sent: If to LESSOR: INTERNATIONAL LEASE FINANCE CORPORATION 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067, U.S.A. Attention: Legal Department Fax: 310-788-1990 Telephone: 310-788-1999 If to LESSEE: AMERICAN TRANS AIR, INC. 7337 West Washington Street Indianapolis International Airport Indianapolis, Indiana 46231 United States of America Attention: Ken Wolff Executive Vice President and Chief Financial Officer Fax: 317-240-7091 Telephone: 317-247-4000 or to such other places and numbers as either party directs in writing to the other party. ARTICLE 27 GOVERNING LAW AND JURISDICTION 27.1 CALIFORNIA LAW. This Lease is being delivered in the State of California and will in all respects be governed by and construed in accordance with the Laws of the State of California (notwithstanding the conflict Laws of the State of California). 27.2 NON-EXCLUSIVE JURISDICTION IN CALIFORNIA. As permitted by Section 410.40 of the California Code of Civil Procedure, the parties hereby irrevocably submit to the non-exclusive jurisdiction of the Federal District Court for the Central District of California and the State of California Superior or Municipal Court in Los Angeles, California. Nothing herein will prevent either party from bringing suit in any other appropriate jurisdiction. 27.3 SERVICE OF PROCESS. The parties hereby consent to the service of process (a) out of any of the courts referred to above, (b) in accordance with Section 415.40 of the California Code of Civil Procedure by mailing copies of the summons and complaint to the person to be served by certified or registered mail to the address set forth in Article 26.2, postage prepaid, return receipt requested or (c) in accordance with the Hague Convention, if applicable. 27.4 PREVAILING PARTY IN DISPUTE. If any legal action or other proceeding is brought in connection with or arises out of any provisions in this Lease, the prevailing party will be entitled to recover reasonable attorneys' fees and other costs incurred in such action or proceedings. The prevailing party will also, to the extent permissible by Law, be entitled to receive pre- and post-judgment Default Interest. 27.5 WAIVER. LESSEE AND LESSOR HEREBY WAIVE THE RIGHT TO A TRIAL BY JURY. LESSEE AND LESSOR HEREBY IRREVOCABLY WAIVE ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATED TO THIS LEASE BROUGHT IN ANY OF THE COURTS REFERRED TO IN ARTICLE 27.2, AND HEREBY FURTHER IRREVOCABLY WAIVE ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. ARTICLE 28 MISCELLANEOUS 28.1 PRESS RELEASES. The parties will give copies to one another, in advance if possible, of all news, articles and other releases provided to the public media regarding this Lease. 28.2 LESSOR PERFORMANCE FOR LESSEE. The exercise by LESSOR of its remedy of performing a LESSEE obligation hereunder is not a waiver of and will not relieve LESSEE from the performance of such obligation at any subsequent time or from the performance of any of its other obligations hereunder. 28.3 LESSOR'S PAYMENT OBLIGATIONS. Any obligation of LESSOR under this Lease to pay or release any amount to LESSEE is conditioned upon (a) all amounts then due and payable by LESSEE to LESSOR under this Lease or under any other agreement between LESSOR and LESSEE having been paid in full and (b) no Default or Event of Default having occurred and continuing hereunder at the time such payment or release of payment is payable to LESSEE. 28.4 APPLICATION OF PAYMENTS. Any amounts paid or recovered in respect of LESSEE liabilities hereunder may be applied to Rent, Default Interest, fees or any other amount due hereunder in such proportions, order and manner as LESSOR determines. 28.5 USURY LAWS. The parties intend to contract in strict compliance with the usury Laws of the State of California and, to the extent applicable, the U.S. Notwithstanding anything to the contrary in the Operative Documents, LESSEE will not be obligated to pay Default Interest or other interest in excess of the maximum non-usurious interest rate, as in effect from time to time, which may by applicable Law be charged, contracted for, reserved, received or collected by LESSOR in connection with the Operative Documents. During any period of time in which the then-applicable highest lawful rate is lower than the Default Interest rate, Default Interest will accrue and be payable at such highest lawful rate; however, if at later times such highest lawful rate is greater than the Default Interest rate, then LESSEE will pay Default Interest at the highest lawful rate until the Default Interest which is paid by LESSEE equals the amount of interest that would have been payable in accordance with the interest rate set forth in Article 5.5. 28.6 DELEGATION BY LESSOR. LESSOR may delegate to any Person(s) all or any of the rights, powers or discretion vested in it by this Lease and any such delegation may be made upon such terms and conditions as LESSOR in its absolute discretion thinks fit. 28.7 CONFIDENTIALITY. The Operative Documents and all non-public information obtained by either party about the other are confidential and are between LESSOR and LESSEE only and will not be disclosed by a party to third parties (other than to such party's auditors or legal advisors or as required in connection with any filings of this Lease in accordance with Article 13) without the prior written consent of the other party. If disclosure is required as a result of applicable Law, LESSEE and LESSOR will cooperate with one another to obtain confidential treatment as to the commercial terms and other material provisions of this Lease. 28.8 RIGHTS OF PARTIES. The rights of the parties hereunder are cumulative, not exclusive, may be exercised as often as each party considers appropriate and are in addition to its rights under general Law. The rights of one party against the other party are not capable of being waived or amended except by an express waiver or amendment in writing. Any failure to exercise or any delay in exercising any of such rights will not operate as a waiver or amendment of that or any other such right any defective or partial exercise of any such rights will not preclude any other or further exercise of that or any other such right and no act or course of conduct or negotiation on a party's part or on its behalf will in any way preclude such party from exercising any such right or constitute a suspension or any amendment of any such right. 28.9 FURTHER ASSURANCES. Each party agrees from time to time to do and perform such other and further acts and execute and deliver any and all such other instruments as may be required by Law, reasonably requested by the auditors of the other party or requested by the other party to establish, maintain or protect the rights and remedies of the requesting party or to carry out and effect the intent and purpose of this Lease. 28.10 USE OF WORD "INCLUDING". The term "INCLUDING" is used herein without limitation. 28.11 HEADINGS. All article and paragraph headings and captions are purely for convenience and will not affect the interpretation of this Lease. Any reference to a specific article, paragraph or section will be interpreted as a reference to such article, paragraph or section of this Lease. 28.12 INVALIDITY OF ANY PROVISION. If any of the provisions of this Lease become invalid, illegal or unenforceable in any respect under any Law, the validity, legality and enforceability of the remaining provisions will not in any way be affected or impaired. 28.13 NEGOTIATION. The terms of this Lease are agreed by LESSOR from its principal place of business in Los Angeles, California. 28.14 TIME IS OF THE ESSENCE. Time is of the essence in the performance of all obligations of the parties under this Lease and, consequently, all time limitations set forth in the provisions of this Lease will be strictly observed. 28.15 AMENDMENTS IN WRITING. The provisions of this Lease may only be amended or modified by a writing executed by LESSOR and LESSEE. 28.16 COUNTERPARTS. This Lease may be executed in any number of identical counterparts, each of which will be deemed to be an original, and all of which together will be deemed to be one and the same instrument when each party has signed and delivered one such counterpart to the other party. 28.17 DELIVERY OF DOCUMENTS BY FAX. Delivery of an executed counterpart of this Lease or of any other documents in connection with this Lease by fax will be deemed as effective as delivery of an originally executed counterpart. Any party delivering an executed counterpart of this Lease or other document by fax will also deliver an originally executed counterpart, but the failure of any party to deliver an originally executed counterpart of this Lease or such other document will not affect the validity or effectiveness of this Lease or such other document. 28.18 ENTIRE AGREEMENT. The Operative Documents constitute the entire agreement between the parties in relation to the leasing of the Aircraft by LESSOR to LESSEE and supersede all previous proposals, agreements and other written and oral communications in relation hereto. The parties acknowledge that there have been no representations, warranties, promises, guarantees or agreements, express or implied, except as set forth herein and in the other Operative Documents. IN WITNESS WHEREOF, LESSEE and LESSOR have caused this Lease to be executed by their respective officers as of September 5, 2000. INTERNATIONAL LEASE FINANCE AMERICAN TRANS AIR, INC. CORPORATION By: /s/ Grant Levy By: /s/ Kenneth K. Wolff Its: Vice President Its: Executive Vice President & CFO EXHIBIT A AIRCRAFT DESCRIPTION Aircraft Manufacturer and Model: Boeing 737-800 Specification: Seating Configuration: Manufacturer's Serial Number: 28249 Registration Mark: ____ Engine Manufacturer and Model: CFM56-7B-27 Engine Serial Numbers: _______ and ________ Engine Thrust Rating: 27,300 pounds Maximum Gross Takeoff Weight: 160,000 pounds EXHIBIT B AGENCY AGREEMENT (Limited Authority) Relating to Boeing 737-800 Aircraft THIS AGENCY AGREEMENT ("AGREEMENT") is made and entered into as of ____________________. BETWEEN: AMERICAN TRANS AIR, INC., a Indiana corporation whose address and principal place of business is at 7337 West Washington Street, Indianapolis International Airport, Indianapolis, Indiana 46231, United States of America ("AGENT") and INTERNATIONAL LEASE FINANCE CORPORATION, a California corporation, whose address and principal place of business is at 1999 Avenue of the Stars, 39th Floor, Los Angeles, California 90067, U.S.A. ("BUYER"). RECITAL The Boeing Company ("MANUFACTURER") and Buyer have entered into Purchase Agreement 1830, dated as of June 27, 1995 (such purchase agreement as may be amended in accordance with the provisions thereof is hereinafter referred to as the "PURCHASE AGREEMENT") under which Manufacturer has agreed to manufacture and sell and Buyer has agreed to purchase certain Boeing 737-800 aircraft. Buyer has agreed to lease one (1) of such aircraft bearing manufacturer's serial number 28249 (the "AIRCRAFT") to the Agent pursuant to an Aircraft Lease Agreement between Buyer and Agent dated as of September 5, 2000 (the "LEASE"). The Agent is engaged in business as a commercial air carrier and intends to lease the Aircraft from Buyer, and Buyer is desirous of utilizing the expertise of the Agent as Buyer's agent in all matters to which the Purchase Agreement relates with respect to the Aircraft except certain items as indicated below, and the Agent, as Buyer's agent, is willing to make such expertise available to Buyer. Accordingly, the parties agree as follows: 1. Buyer hereby appoints the Agent as Buyer's sole and exclusive agent with authority to perform the following, on behalf of Buyer, as the Agent may in its discretion determine to be necessary or desirable: (a) monitor Manufacturer's production, testing and delivery of the Aircraft in accordance with the Purchase Agreement and (b) do all such other things permitted by the Purchase Agreement related to the technical and engineering aspects of Manufacturer's production of the Aircraft, except Buyer limits Agent's authority to perform on behalf of Buyer on any defect that occurs during manufacture that is considered significant in nature by Buyer as measured by the criteria set forth below. Buyer retains the sole authority to perform on any defect meeting such criteria. (i) Deviations from the drawing configuration that could affect future modifications, maintenance, repair or overhaul of the Aircraft; (ii) Defects that are obvious appearance items; (iii) Rework that requires stress concurrence to satisfy Manufacturer's Material Review Board (MRB) requirements; (iv) A high quantity of defects normally considered minor on a singular basis; (v) Major rework requiring extensive repair or modification, E.G. replacement of ---- skin panels, extensive use of oversize fasteners, repair of damaged areas and significant structural modifications; (vi) Rework that affects the aerodynamic drag coefficient of the Aircraft; or (vii) Rework that involves areas known to be sensitive to Buyer. 2. Notwithstanding anything in the provisions of paragraph 1, nothing in this Agreement will confer authority upon or otherwise permit the Agent: (a) to exercise any power of termination under the Purchase Agreement or (b) to make any payments due from Buyer to Manufacturer or to receive on behalf of Buyer any payments due from Manufacturer under the Purchase Agreement, or to alter any of the terms and conditions of the Purchase Agreement or the Detail Specifications of the Aircraft. 3. Buyer will not revoke the appointment of and authority granted under this Agreement to the Agent unless a termination of the Purchase Agreement or Lease has occurred with respect to the Aircraft or the Agent has failed to perform a material obligation under this Agreement. Notice of any such revocation will be provided in accordance with the provisions of Article 14 of the Purchase Agreement and given to both Manufacturer and the Agent. 4. Manufacturer acknowledges the appointment of the Agent for the purpose set forth hereunder and Manufacturer and Buyer agree that due performance by Manufacturer or Agent of an obligation under the Purchase Agreement will constitute due satisfaction of such obligation by such party and Buyer agrees to be bound by the acts of the Agent. 5. Buyer and Agent agree to identify the technical organization and/or person(s) with the limited authority to act for Agent during production of the Aircraft. Buyer will, if possible, provide such identification to Manufacturer in writing, along with office space requirements for Agent, if required, prior to or at the time of Manufacturer's acknowledgment of this Agreement. 6. Nothing in this Agreement will subject Manufacturer to any liability under the Purchase Agreement which it would not otherwise be subject to, or modify Manufacturer's rights thereunder, or require Manufacturer to divest itself of title to or possession of Aircraft or any other property which is subject to the Purchase Agreement until payment therefor and delivery thereof in accordance with the Purchase Agreement. 7. None of the parties hereto will be entitled to assign to any third party any of their rights under this Agreement. 8. The Agent will not delegate to any third party the performance of the obligations imposed on it by this Agreement or appoint a sub-agent. 9. References to Manufacturer in this Agreement will include any wholly-owned subsidiary of Manufacturer to which Manufacturer assigns any of its rights and obligations under the Purchase Agreement pursuant to the terms and conditions thereof. 10. This Agreement will be governed by the laws of the State of California; however, the Purchase Agreement shall remain governed by the laws of the State of Washington. This Agreement has been executed by the parties hereto as of the day and year first above written. INTERNATIONAL LEASE FINANCE CORPORATION AMERICAN TRANS AIR, INC. By: By: Its: Its: The Boeing Company acknowledges the appointment of AMERICAN TRANS AIR, INC. as agent of International Lease Finance Corporation in connection with the above referenced Aircraft as set forth in this Agreement. THE BOEING COMPANY By: Its: EXHIBIT C CERTIFICATE OF INSURANCE [Refer to Aircraft Lease Agreement dated as of September 5, 2000 between LESSEE and LESSOR (the "Lease"). If applicable, insurance certificates from both the insurers and reinsurers will be provided. If there is a LESSOR's Lender, include references to it where appropriate after references to LESSOR.] To: INTERNATIONAL LEASE FINANCE CORPORATION ("LESSOR") ------ 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States Re: AMERICAN TRANS AIR, INC. ("LESSEE") Boeing 737-800 Manufacturer's Serial No.: 28249 Registration Mark: ____ (the "AIRCRAFT") The following security has subscribed to the insurance and/or reinsurance policies: [LIST COMPANIES & PERCENTAGES] THIS IS TO CERTIFY THAT, as Insurance Brokers, we have effected Fleet Insurance in respect of aircraft owned or operated by LESSEE (including the Aircraft), and that insurance in respect of the Aircraft is as specified below. AIRCRAFT HULL ALL RISKS COVERING: All risks of physical loss or damage to the Aircraft from any cause (subject only to the exclusions as specified below), for an Agreed Value of Aircraft in the amount of [list amount calculated in accordance with Article 18.1] DEDUCTIBLES: (CONFIDENTIAL MATERIAL OMITTED) each and every loss (or such lesser amount as generally applicable to the rest of LESSEE's 737-800 fleet). Not applicable to Total Loss/Constructive Total Loss or Arranged Total Loss GEOGRAPHICAL COVERAGE: Worldwide [subject to customary exclusions] AVIATION AND AIRLINE GENERAL THIRD PARTY LIABILITY COVERING: Aircraft Third Party, Passenger, Baggage, Cargo and Mail Liability and Airline General Third Party Liability (including Premises, Hangarkeepers and Products Liability) for combined single limit of not less than (CONFIDENTIAL MATERIAL OMITTED) (or such higher amount as LESSEE may carry generally on other 737-800 aircraft in its fleet) any one accident/occurrence (but in the aggregate in relation to Products Liability), extended to cover LESSEE's liability under the Lease to the extent of the risks covered by the policy including war and allied perils under Extended Coverage Endorsement as per AVN 52 subject only to exclusions as specified below GEOGRAPHICAL LIMITS: Worldwide [subject to customary exclusions] HULL WAR AND ALLIED PERILS COVERING: Hull War Risks as per LSW555.B, but including (a) confiscation or requisition (including by State of Registration and state where airline is domiciled), (b) hijacking or other unlawful seizure or wrongful exercise of control of the Aircraft or crew in flight (including any attempt at such seizure or control) and including "All Risks" Continuation Clause and Extortion Risks (including expenses) and covering claims excluded from Hull All Risks Policy while Aircraft outside Assured's control by reason of perils insured under this policy, for an Agreed Value of Aircraft in the amount of [list amount calculated in accordance with Article 18.1] DEDUCTIBLE: No deductible GEOGRAPHICAL LIMITS: Worldwide AIRCRAFT SPARES ALL RISKS INSURANCE COVERING: All risks of physical loss or damage to Aircraft Parts or spares or Engines at all times when removed from the Aircraft from whatever cause, subject only to the exclusions specified below, including the risks set down in AVN 48B other than paragraphs (a) and (b) thereof (but including paragraph (a) in respect of transit risks) for limits of not less than: CONFIDENTIAL MATERIAL OMITTED and covering: With respect to an Engine, an agreed value (CONFIDENTIAL MATERIAL OMITTED) or, with LESSOR's written concurrence, replacement cost With respect to Parts, replacement cost DEDUCTIBLE: (CONFIDENTIAL MATERIAL OMITTED) GEOGRAPHICAL COVERAGE: Worldwide INSURANCE REQUIRED BY MANUFACTURER LESSEE will carry the insurance required by Manufacturer in connection with LESSOR's assignment of Manufacturer's warranties and product support to LESSEE CONTRACTUAL INDEMNITY To the extent of the risks covered by the policies, LESSEE has insurance coverage for the indemnities agreed to by LESSEE pursuant to Article 16 of the Lease, subject to AVN67B or equivalent PERIOD OF COVERAGE (ALL POLICIES) From the Delivery Date of Aircraft to [END OF POLICY PERIOD] It is further certified that LESSOR has an interest in respect of the Aircraft under the Lease. Accordingly, with respect to losses occurring during the period from the Effective Date until the expiry of the Insurance or until the expiry or agreed termination of the Lease or until the obligations under the Lease are terminated by any action of the Insured or LESSOR and in consideration of the Additional Premium it is confirmed that the Insurance afforded by the Policy is in full force and effect and it is further agreed that the following provisions are specifically endorsed to the Policy. 1. UNDER THE HULL (ALL RISKS AND HULL WAR AND ALLIED RISKS) AND AIRCRAFT SPARES INSURANCES (a) In respect of any claim on the Aircraft that becomes payable on the basis of a Total Loss, payment of any settlement will be made to, or to the order of LESSOR as sole loss payee, up to the Agreed Value. With respect to repairable damage to an Aircraft or Engine, LESSOR will receive all insurance proceeds in excess of CONFIDENTIAL MATERIAL OMITTED provided that upon receipt by the insurance broker of written notice of a material default on the part of LESSEE (and until notice that it has been cured), all insurance proceeds which otherwise would be payable to LESSEE will be made directly to LESSOR. In respect of any other claim, payment of any settlement (net of any relevant policy deductible) will be made with such party(ies) as may be necessary to repair the Aircraft unless otherwise agreed after consultation between the Insurers and the Insured and, where necessary under the terms of the Lease, LESSOR. Such payments will only be made provided they are in compliance with all applicable laws and regulations. (b) Insurers agree on a 50/50 settlement in terms of AVS 103. (c) Insurers have no right to replace the Aircraft on a Total Loss (arranged, constructive or otherwise). (d) Insurers confirm that under the insurance policies, if the Insured installs an engine owned by a third party on the Aircraft, either (i) the hull insurance will automatically increase to such higher amount as is necessary in order to satisfy both LESSOR's requirement to receive the Agreed Value in the event of a Total Loss, Constructive Total Loss or Arranged Total Loss and the amount required by the third party engine owner, or (ii) separate additional insurance on such engine will attach in order to satisfy separately the requirements of the Insured to such third party engine owner. 2. UNDER THE LEGAL LIABILITY INSURANCE (a) Subject to the provisions of this Endorsement, the Insurance will operate in all respects as if a separate Policy had been issued covering each party insured hereunder, but this provision will not operate to include any claim arising howsoever in respect of loss or damage to the Aircraft insured under the Hull or Spares Insurance of the Insured. Notwithstanding the foregoing the total liability of Insurers in respect of any and all Insureds will not exceed the limits of liability stated in the Policy. (b) The Insurance provided hereunder will be primary and without right of contribution from any other insurance which may be available to LESSOR. 3. UNDER ALL INSURANCES (a) LESSOR, its successors and assigns, and (with respect to Aviation and Airline General Third Party Liability only) its directors, officers and employees for their respective rights and interests, are included as Additional Insureds. (b) The cover afforded to LESSOR by the Policy in accordance with this Endorsement will 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 Policy. (c) LESSOR will have no responsibility for premium and insurers will waive any right of set-off or counterclaim against LESSOR except in respect of outstanding premium in respect of the Aircraft, provided that Insurer may only set-off for premiums against the proceeds of the hull insurance for outstanding premiums in connection with hull all risks and hull war and allied perils insurance. (d) Upon payment of any loss or claim to or on behalf of LESSOR, Insurers will to the extent and in respect of such payment be thereupon subrogated to all legal and equitable rights of LESSOR indemnified hereby (but not against LESSOR). Insurers will not exercise such rights without the consent of those indemnified, such consent not to be unreasonably withheld. At the expense of Insurers LESSOR will do all things reasonably necessary to assist the Insurers to exercise said rights. (e) Except in respect of any provision for Cancellation or Automatic Termination specified in the Policy or any endorsement thereof, cover provided by this Endorsement may only be cancelled or materially altered in a manner adverse to LESSOR by the giving of not less than thirty (30) days notice in writing to LESSOR. Notice will be deemed to commence from the date such notice is given by the Insurers. Such notice will NOT, however, be given at normal expiry date of the Policy or any endorsement. 4. EXCEPT AS SPECIFICALLY VARIED OR PROVIDED BY THE TERMS OF THIS CERTIFICATE (a) LESSOR IS COVERED BY THE POLICY SUBJECT TO ALL TERMS, CONDITIONS, LIMITATIONS,WARRANTIES, EXCLUSIONS AND CANCELLATION PROVISIONS THEREOF. (b) THE POLICY WILL NOT BE VARIED BY ANY PROVISIONS CONTAINED IN THE LEASE WHICH PURPORT TO SERVE AS AN ENDORSEMENT OR AMENDMENT TO THE POLICY. SUBJECT (save as specifically stated in this Certificate) to policy terms, conditions, limitations and exclusions. Yours faithfully, [BROKERS] EXHIBIT D BROKERS' LETTER OF UNDERTAKING To: INTERNATIONAL LEASE FINANCE CORPORATION 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States Date: Our Ref: Re: AMERICAN TRANS AIR, INC. ("LESSEE") ------ Boeing 737-800 Manufacturer's Serial No.: ____ Registration Mark: ____ (the "AIRCRAFT") Dear Sirs: We confirm that insurance has been effected for the account of [LESSEE] (the "OPERATOR") covering all aircraft owned or operated by them, including the above-referenced aircraft (the "Aircraft"). [Also confirm, if applicable, the amount of any hull all risks or hull war and allied perils on the Aircraft which LESSEE is carrying in excess of the Agreed Value (which excess insurance would be payable to LESSEE). Such excess insurance may not exceed ten percent (10%) of the Agreed Value.] Pursuant to instructions received from the Operator and in consideration of your approving the arrangement of the Operator's "Fleet Policy" (under which the above-referenced Aircraft is insured) through the intermediary of ourselves as Brokers in connection with the insurance (the "INSURANCE") mentioned in our Certificate of Insurance (Reference No. [ ] dated [ ] and attached hereto), we undertake as follows: 1. In relation to the Hull and War Risks Insurance to hold to your order the insurance Slips or Contracts and any Policies which may be issued or any policies substituted (with your consent) therefor (but only insofar as the same relate to the Aircraft only) and the benefit of the Hull and War Risks Insurance thereunder, but subject to our requirements to operate the Fleet Policy insofar as it relates to any other aircraft insured thereunder. 2. To advise you of any of the following: (a) If any insurer cancels or gives notice of cancellation of any of the Insurance at least thirty (30) days (or such lesser period as may be available in the case of War and Allied Perils) before such cancellation is to take effect in respect of the Aircraft. (b) Of any act or omission or of any event (including non-payment of premium) of which we have knowledge or are notified and which might invalidate or render unenforceable in whole or in part any of the Insurance, insofar as the same relate to the Aircraft. (c) If we do not receive instructions to renew all or any of the Insurance at least thirty (30) days prior to their expiration. (d) If any of the Insurance are not renewed on the same terms (save as to premium and period of cover and as you might otherwise have notified us to be acceptable to you) seven (7) days prior to expiry thereof. The above undertakings are given subject to our continuing appointment for the time being as Insurance Brokers to the Operator. We also undertake to advise you if we cease to be Insurance Brokers to the Operator. Yours faithfully, EXHIBIT E ESTOPPEL AND ACCEPTANCE CERTIFICATE AMERICAN TRANS AIR, INC. ("LESSEE"), a corporation organized under the laws of Indiana does hereby represent, acknowledge, warrant and agree as follows: 1. LESSEE and INTERNATIONAL LEASE FINANCE CORPORATION, as LESSOR, have entered into an Aircraft Lease Agreement dated as of September 5, 2000 (hereinafter referred to as the "LEASE"). Words used herein with capital letters and not otherwise defined will have the meanings set forth in the Lease. 2. LESSEE has this ____ day of __________, ____ (Time: __________) at ____________________ received from LESSOR possession of: (a) One (1) Boeing 737-800 aircraft bearing Manufacturer's serial number ____ and U.S. registration mark ____, together with two (2) CFM56-7B-27 engines bearing manufacturer's serial numbers _______ and ________ (each of which has 750 or more rated take-off horsepower), all in airworthy condition. (b) All Aircraft Documentation, including the usual and customary manuals, logbooks, flight records and historical information regarding the Aircraft, Engines and Parts. 3. All of the foregoing has been delivered and accepted on the date set forth above to LESSEE's full satisfaction and pursuant to the terms and provisions of the Lease. 4. The Agreed Value of the Aircraft is US$_______________. 5. The amount of fuel on board at Delivery is __________ (circle one) pounds/kilos (________ gallons). 6. The Aircraft, Engines, Parts and Aircraft Documentation as described in the Lease have been fully examined by LESSEE and have been received in a condition fully satisfactory to LESSEE and in full conformity with the Lease in every respect. 7. The Lease is in full force and effect, LESSEE has no claims, offsets, deductions or set-off of any kind or nature in connection with the Lease, except for any claims against LESSOR set forth on the attached List of Discrepancies. 8. LESSOR's Lender may rely upon all of the foregoing in granting substantial financial accommodations to LESSOR and LESSEE understands and agrees that any funds being advanced by LESSOR's Lender will be made in reliance upon the foregoing. 9. LESSEE has obtained all required permits, authorizations, licenses and fees of the State of Registration or any Government Entity thereof necessary in order for LESSEE to operate the Aircraft as permitted by the terms of the Lease. Dated on the date set forth above AMERICAN TRANS AIR, INC. By: Title: ATTACHMENTS: 1. List of Aircraft Documentation 2. List of Loose Equipment 3. List of Discrepancies ATTACHMENT 1 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE LIST OF AIRCRAFT DOCUMENTATION MANUALS 1. FAA Approved Flight Manual 2. Airplane Flight Operation Manual 3. Aircraft Recover Manual 4. Quick Reference Handbook (QRH) 5. Weight and Balance Manual 6. Aircraft Fueling Manual 7. Aircraft Maintenance Manual (MM) 8. Aircraft Maintenance Manual Supplement 9. Ramp Maintenance Manual (RMM) 10. Cargo Loading Manual 11. Fault Reporting Manual (FRM) 12. Fault Isolation Manual (FIM) 13. Illustrated Parts Catalog (IPC) 14. Life Limited Parts Manual 15. Structural Repair Manual (SRM) 16. Master Minimum Equipment List 17. Wiring Diagram Manual (WD) 18. Wiring Practices Manual 19. System Schematics Manual 20. B.I.T.E. Manual 21. Non-Destructive Test Manual 22. Corrosion Prevention Manual 23. Component Maintenance Manual 24. APU Log Book 25. Engine Maintenance Manual 26. Engine Log Book 27. Engine Illustrated Parts Catalog 28. Engine Data Submittal Book 29. Engine Overhaul Manual 30. Power Plant Build-up Manual AIRCRAFT RECORDS AND HISTORICAL DOCUMENTS 1. Copies of original Certificates delivered by Boeing: a. Airworthiness Certificate for Export b. Radio installation conformity certificate c. Noise limitation certificate 2. Copies of original Documents delivered by Boeing: a. Airworthiness Directive Compliance list b. Aircraft inspection report c. Aircraft Readiness Log d. Weighing report 3. Copies of current Certificates: a. Airworthiness Certificate b. Noise limitation c. Radio license d. Interior material burn certificates e. Certificate of Export f. Aircraft deregistration confirmation e. Aircraft Registration 4. Letters signed and stamped by Quality Assurance: a. Current aircraft hours and cycles b. Current engines hours and cycles c. Accident and Incident report d. Summary of Maintenance Program e. AD compliance during the lease term 5. Aircraft log books and Aircraft readiness log. 6. Aircraft Hard Time (HT) inspection status. 7. One year forecast for HT inspection. 8. Aircraft Modification status, including service bulletins. 9. Last weighing report prior to redelivery. 10. AD compliance report with original signoffs. 11. Routine and non-routine job cards of the last "C" and "D" checks. 12. Past year pilots and maintenance discrepancies. 13. Major and Minor structural repairs with applicable approvals. 14. Compass Swing report of the last three years. 15. Cabin Configuration drawing (LOPA). 16. Emergency equipment location drawing. 17. Last X-RAYs ENGINES RECORDS 1. Last test cell run reports. 2. Life Limited Parts status and traceability. 3. AD compliance report with original signoffs. 4. Engine Modification/service bulletin/inspection report and applicableforms. 5. Last heavy maintenance records for each module. 6. Engine log books. 7. Engine removal history. 8. Past year trend monitoring reports. 9. Historical borescope reports. 10. Engine component report. APU RECORDS 1. APU status (FH, FC, limits). 2. Life limited Part status and traceability. 3. AD compliance with original signoffs. 4. Modification status. 5. Last heavy maintenance documents. 6. APU log books. 7. Last test cell report. COMPONENT RECORDS 1. Aircraft component inventory. 2. Hard time component inventory. 3. All serviceable tags. 4. Landing Gear status with last overhaul and life limited Part status. 5. AD compliance with original signoffs. 6. Modification status. ATTACHMENT 2 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE LIST OF LOOSE EQUIPMENT ATTACHMENT 3 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE LIST OF DISCREPANCIES EXHIBIT F OPINION OF COUNSEL TO BE GIVEN BY INDEPENDENT OUTSIDE COUNSEL OF LESSEE OR OTHER LAWYERS ACCEPTABLE TO LESSOR To: International Lease Finance Corporation 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States Gentlemen: This opinion is furnished to you pursuant to Article 7 of the Aircraft Lease Agreement dated as of September 5, 2000 (the "LEASE") between AMERICAN TRANS AIR, INC. ("LESSEE") and INTERNATIONAL LEASE FINANCE CORPORATION ("LESSOR"). Defined terms in this opinion are used herein as defined in the Lease. I have acted as counsel for LESSEE in connection with the preparation, execution and delivery of the Lease. In that connection I have examined: (a) The Lease and Estoppel and Acceptance Certificate; (b) The charter of LESSEE and all amendments thereto (the "CHARTER"); and (c) Such other documents, agreements and instruments, and such treaties, laws, rules, regulations, decrees and the like, as I have deemed necessary as a basis for the opinions hereinafter expressed. [ (d) All of the agreements and any amendments thereto between LESSEE and all other lessors and lenders of LESSEE covering other aircraft operated by LESSEE on which the Engines can be installed.] Based upon the foregoing and having regard for legal considerations which I deem relevant, I am of the opinion that: 1. LESSEE is a corporation duly incorporated, validly existing and in good standing under the Laws of Indiana. It has the corporate power and authority to carry on its business as presently conducted and to perform its obligations under the Lease. 2. No authorization, approval, consent, license or order of, or registration with, or the giving of notice to the Aviation Authority or any other regulatory body or authority is required for the valid authorization, execution, delivery and performance by LESSEE of the Lease. 3. The Lease and the Estoppel and Acceptance Certificate have each been duly authorized, executed and delivered by LESSEE. Each such instrument is a valid, enforceable and binding obligation of LESSEE except as enforceability may be limited by bankruptcy, insolvency, reorganization or other Laws of general application affecting the enforcement of creditors' rights. 4. The execution and delivery of the Lease and the Estoppel and Acceptance Certificate, the consummation by LESSEE of the transactions contemplated therein and compliance by LESSEE with the terms and provisions thereof do not contravene any Law applicable to LESSEE, or result in any breach of or constitute any default under or result in the creation of any lien, charge or encumbrance upon any property of LESSEE, under any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which LESSEE is a party or by which LESSEE or its properties or assets is bound. 5. Except for any filing or recording that may be required with the [NAME OF AIRCRAFT REGISTER] and except for [DESCRIBE SUCH OTHER FILINGS OR RECORDINGS], no filing or recording of any instrument or document (including the filing of any financial statement) is necessary under the laws of the U.S. in order for the Lease to constitute a valid and perfected lease of record relating to the Aircraft, it being understood that such counsel expresses no opinion as to the nature of LESSOR's title to the Aircraft on the Delivery Date. 6. LESSEE holds all licenses, certificates and permits from applicable governmental authorities in the U.S. necessary for the conduct of its business as a certificated air carrier and performance of its obligations under the Lease. 7. To my knowledge, there are no suits or proceedings pending or threatened against LESSEE before any Government Entity against or affecting LESSEE which are reasonably likely to be adversely determined and, if adversely determined, would have a material adverse effect on the financial condition or business of LESSEE or its ability to perform under the Lease, except as described in the filings provided to LESSOR pursuant to Article 22. 8. The obligations of LESSEE under the Lease are direct, general and unconditional obligations of LESSEE and rank or will rank at least PARI PASSU with all other present and future unsecured and unsubordinated obligations (including contingent obligations) of LESSEE, with the exception of such obligations as are mandatorily preferred by law. 9. LESSEE, under the laws of the U.S. or of any other jurisdiction affecting LESSEE, is subject to private commercial law and suit. Neither LESSEE nor its properties or assets have the right of immunity from suit or execution on the grounds of sovereignty in such jurisdictions and the performance by LESSEE of its obligations under the Lease constitute commercial acts done for commercial purposes. 10. There is no applicable usury or interest limitation Law in Indiana which may restrict the recovery of payments in accordance with the Lease. 11. LESSOR will not violate any Law or become liable to any tax in Indiana or the U.S. by reason of entering into or performing its obligations under the Lease and it is not necessary to establish a place of business in Indiana in order to enforce any provisions of the Lease. Very truly yours, EXHIBIT G ASSIGNMENT OF RIGHTS (AIRFRAME) [DATE] Boeing Commercial Airplane Group P.O. Box 3707 Seattle, Washington 98124-2207 Attention: Vice President-Contracts Mail Code 21-34 Subject: Full Assignment of Rights and Obligations - International Lease Finance Corporation as Lessor and AMERICAN TRANS AIR, INC. as Lessee of Model Boeing 737-800 aircraft bearing manufacturer's serial number 28249 Ladies and Gentlemen: In connection with International Lease Finance Corporation's lease to AMERICAN TRANS AIR, INC. ("Lessee") of a Boeing aircraft (more fully described below), reference is made to the following documents: A. Purchase Agreement 1830, dated as of June 27, 1995, between The Boeing Company ("Boeing") and International Lease Finance Corporation ("ILFC") (the "Boeing Agreement") under which ILFC purchased a certain Boeing Model 737-800 aircraft bearing manufacturer's serial number 28249 (the "Aircraft"). B. Aircraft Lease Agreement (the "Lease") for the Aircraft dated as of September 5, 2000 between ILFC and Lessee. Capitalized terms used herein without definition will have the same meaning as in the Boeing Agreement. In connection with ILFC's lease of the Aircraft under the Lease, ILFC is transferring to Lessee certain rights of ILFC related to the Aircraft under the Boeing Agreement. To accomplish this transfer of rights, as authorized by the provisions of the Boeing Agreement: 1. Lessee acknowledges that it has received copies of the following specific provisions of the Boeing Agreement applicable to the Aircraft and agrees to be bound by and comply with all the terms, conditions, and limitations contained in such provisions, including without limitation the disclaimer and release, exclusion of liabilities, indemnity and insurance provisions thereof: Boeing Agreement Article 6 - Excusable Delay 6.1 General Article 10 - Assignment, Resale or Lease 10.1 Assignment 10.3 Sale by Buyer after Delivery 10.4 Lease by Buyer after Delivery 10.5 No Increase in Boeing Liability 10.6 Exculpatory or Indemnity Clause in Post-delivery Sale or Lease Article 12 - Product Assurance; Disclaimer and Release; Exclusion of Liabilities; Customer Support; Indemnification and Insurance (in its entirety) Article 14 - Contractual Notices and Requests Article 15 - Miscellaneous 15.4 Governing Law Exhibit B - Product Assurance Document Part A Boeing Warrant Part B Warranty Repairs and Modifications by Buyer Part C Boeing Service Life Policy Part D Boeing Indemnity Against Patent Infringement Part D-1 Boeing Indemnity Against Copyright Infringement Part E Supplier Warranties and Patent Indemnities Part G Boeing Interface Commitment Part H General Exhibit C-1 - Customer Support Document Part B Boeing Customer Support Services Part D Technical Data and Documents Part E Buyer's Indemnification of Boeing and Insurance Part F Alleviation or Cessation of Performance Exhibit E - Buyer Furnished Equipment Provisions Document Paragraph 8 Indemnification of Boeing Paragraph 9 Patent Indemnity Paragraph 10 Definitions Letter Agreement No. 1830-3 - Seller Purchased Equipment Paragraph 6 Buyer's Indemnification of Boeing 2. Lessee recognizes that Boeing's obligation to provide training, support and services to Lessee pursuant to Exhibit C of the Boeing Agreement is conditioned on the receipt by Boeing of evidence of compliance by Lessee with the insurance requirements set forth in paragraph 2 of Part E of Exhibit C or in such other form as may be satisfactory to Boeing, prior to the commencement of such training, support and services. 3. ILFC reserves to itself all rights, claims and interests it may have under the Boeing Agreement not expressly assigned to Lessee hereunder. ILFC will remain responsible to Boeing for any amounts with respect to the Aircraft owed to Boeing under the Boeing Agreement prior to the effective date of this letter, including any amounts owed by ILFC to Boeing under the specific articles and paragraphs of the Boeing Agreement referenced in paragraph 1 above based upon events or incidents relating to the Aircraft occurring prior to the effective date of this letter. 4. ILFC hereby assigns to Lessee the sole authority to exercise in Lessee's name all rights and powers of ILFC with respect to the Aircraft under the specific portions of the Boeing Agreement referenced in paragraph 1 above. Such authorization will continue until Boeing receives from ILFC written notice that the Lease has been cancelled or terminated, addressed to Boeing's Vice President, Contracts, P.O. Box 3707, MC 21-34, Seattle, Washington 98124-2207, U.S.A. Until Boeing receives such notice, Boeing will be entitled to deal exclusively with Lessee with respect to the Aircraft under the specific portions of the Boeing Agreement referenced in paragraph 1 above and, with respect to the rights, powers, duties or obligations under such portions of the Boeing Agreement, any and all actions taken by Lessee or agreements entered into by Lessee during the period prior to Boeing's receipt of such notice will be final and binding on ILFC. 5. Lessee hereby accepts the authorization set forth in paragraph 4 above and agrees to be bound by and to comply with all the terms, conditions and limitations of the portion of the Boeing Agreement referenced in paragraph 1 above. 6. This Assignment may be signed by the parties hereto in separate counterparts, each of which when executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. 7. This Assignment shall be governed by, and construed in accordance with,the laws of the State of Washington, including all matters of construction, validity and performance. We request that Boeing, upon receipt of this letter, acknowledge receipt thereof and the transfer of rights set forth above by signing the acknowledgment and forwarding one copy of this letter to each of the undersigned. IN WITNESS WHEREOF, the parties hereto have caused this Assignment Agreement to be duly executed as of the dates written below. INTERNATIONAL LEASE FINANCE AMERICAN TRANS AIR, INC., as Lessee CORPORATION, as Lessor and Buyer By: By: Its: Its: BOEING ACKNOWLEDGMENT AND CONSENT TO ASSIGNMENT Receipt of the above letter is acknowledged and transfer of certain rights as described above under the Boeing Agreement is confirmed, effective as of this date. THE BOEING COMPANY By: Its: Date: EXHIBIT H ASSIGNMENT OF RIGHTS (ENGINES) [DATE] CFM INTERNATIONAL, INC. 1 Neumann Way, F-17 Cincinnati, Ohio 45215 Attention: Commercial Contracts - Warranty Assignment Administrator Dear Warranty Assignment Administrator: Reference is hereby made to that Consent to Assignment made as of April 29, 1988 (the "CONSENT TO ASSIGNMENT"), by and between CFM INTERNATIONAL, INC. ("CFMI") and INTERNATIONAL LEASE FINANCE CORPORATION ("ILFC"). Terms defined in the Consent to Assignment are used herein with the same meaning as in the Consent to Assignment. As of ________________ ___, ______, ILFC has assigned all of its rights and interest in, to and under the Engine Warranties to AMERICAN TRANS AIR, INC. ("ASSIGNEE") in connection with its lease to Assignee of a Boeing 737-800 aircraft (the "AIRCRAFT") together with two (2) CFMI Model CFM56-7B-27 engines bearing Manufacturer's Serial Numbers _______ and ________ (the "ENGINES") as of the date each such Engine was delivered to Assignee. Such assignment shall be effective from such date until ILFC notifies CFMI that the Lease has been cancelled or terminated. The Assignee has accepted such assignment and all the limitations and liabilities pertaining to the Engine Warranties as stated in the provisions of the GTA listed in Schedule 2 to the Consent to Assignment. A copy of the aforesaid assignment is attached hereto. Very truly yours, INTERNATIONAL LEASE FINANCE CORPORATION By: Title: cc: Ruben M. Cabrera Director, Commercial Contracts ASSIGNMENT OF WARRANTIES [DATE] In consideration of AMERICAN TRANS AIR, INC. ("LESSEE") leasing from International Lease Finance Corporation ("ILFC") one (1) Boeing 737-800 aircraft together with two (2) CFMI Model CFM56-7B-27 engines bearing manufacturer's serial numbers _______ and ________, it is hereby agreed as follows: 1. ILFC hereby assigns and transfers to Lessee all of ILFC's respective rights and interest in and to and in and under the Engine Warranties set forth in and subject to the limitations and liabilities set forth in Exhibit B Warranty, Section X (the "ENGINE WARRANTIES") of CFM International, Inc. - ILFC General Terms Agreement No. 6-3987 dated 22 June 1984 (the "GTA") during the term of such leases so long as Lessee is not in default thereunder. 2. Lessee hereby accepts such assignment including all the limitations and liabilities pertaining to said Engine Warranties as stated in the provisions of Exhibit B Warranty, Section X of the GTA. 3. This Agreement shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors and assigns to the extent permitted by the GTA and hereunder. 4. This Agreement shall be governed by and construed in accordance with the laws of the State of California. 5. This Agreement may be executed in any number of counterparts, each of which when executed and delivered is an original but all of which taken together constitute one and the same instrument and any party may execute this Agreement by signing any counterpart. IN WITNESS WHEREOF, the authorized representative of the parties hereto have executed this Agreement as of the day and year first above written. For and on behalf of For and on behalf of INTERNATIONAL LEASE FINANCE AMERICAN TRANS AIR, INC. CORPORATION By: By: Its: Its: EXHIBIT I RETURN ACCEPTANCE RECEIPT Date: _________________ ___, ____ 1. AMERICAN TRANS AIR, INC., as LESSEE, and INTERNATIONAL LEASE FINANCE CORPORATION, as LESSOR, have entered into an Aircraft Lease Agreement dated as of September 5, 2000 (the "LEASE"). Words used herein with capital letters and not otherwise defined will have the meanings set forth in the Lease. 2. LESSOR has this ____ day of __________, ____ (Time: __________) at ____________________ received from LESSEE possession of: (a) One (1) Boeing 737-800 Aircraft bearing Manufacturer's serial number ____, together with two (2) CFM56-7B-27 engines bearing manufacturer's serial numbers _______ and ________, and all Parts attached thereto and thereon in an airworthy condition and (b) All Aircraft Documentation, including the usual and customary manuals, logbooks, flight records and historical information regarding the Aircraft, Engines and Parts, as listed in the Document Receipt attached hereto. 3. The Airframe, Engines and Parts had the following hours/cycles at return: (a) AIRFRAME: Total hours: _______________ Total Landings: _______________ (b) ENGINES: POSITION SERIAL NO. TOTAL HOURS TOTAL CYCLES HRS/CYCLES SINCE LAST SHOP VISIT Time Remaining to Next LIFE LIMITED PART REMOVAL PART NAME HOURS CYCLES MSN MSN (c) APU: MSN __________ Total hours: __________ ______ hours/ ______ cycles since last Overhaul ______ hours/ ______ cycles remaining on APU life-limited Parts (d) LANDING GEARS: POSITION SERIAL NO. Total Hrs/Cycles since Date of last HRS/CYCLES LAST OVERHAUL OVERHAUL Nose Right Main Left Main (e) FUEL ON BOARD AT RETURN: ______ (circle one) pounds/kilos (______ gallons) 4. Other technical information regarding the Aircraft and its components are correctly set forth on the Technical Evaluation Report (in the form of Exhibit L) attached hereto. 5. The above specified aircraft, engines and documentation are hereby accepted by LESSOR subject to correction by LESSEE (or procurement by LESSEE at LESSEE's cost) as soon as reasonably possible of the discrepancies specified in Attachment 2 hereto. 6. Subject to the following paragraph, the leasing of the Aircraft by LESSOR to LESSEE pursuant to the Lease is hereby terminated without prejudice to LESSEE's continuing obligations under the Lease including, without limitation, paragraph 6 above and Articles 10.5, 15 and 16. 7. LESSEE represents and warrants that during the term of the Lease all maintenance and repairs to the Airframe and Engines were performed in accordance with the requirements contained in the Lease. LESSEE further confirms that all of its obligations under the Lease whether accruing prior to the date hereof or which survive the termination of the Lease by their terms and accrue after the date hereof, will remain in full force and effect until all such obligations have been satisfactorily completed. 8. This Return Acceptance Supplement is executed and delivered by the parties in [place]. IN WITNESS WHEREOF, the parties hereto have caused this Return Acceptance Receipt to be executed in their respective corporate names by their duly authorized representatives as of the day and year first above written. INTERNATIONAL LEASE FINANCE CORPORATION AMERICAN TRANS AIR, INC. By: By: Its: Its: ATTACHMENTS: 1. List of Aircraft Documentation 2. List of Loose Equipment 3. List of Discrepancies 4. Engine Maximum Power Assurance Test Conditions and Results 5. Dent and Damage Chart 6. Form of No Accident/Incident Letter 7. Technical Evaluation Report (in the form of Exhibit L) ATTACHMENT 1 TO RETURN ACCEPTANCE RECEIPT LIST OF AIRCRAFT DOCUMENTATION [The (a) manuals and (b) Aircraft records and historical documents set forth below are to be returned with the Aircraft in a current, up-to-date and correct status] MANUALS 1. FAA Approved Flight Manual 2. Airplane Flight Operation Manual 3. Aircraft Recover Manual 4. Quick Reference Handbook (QRH) 5. Weight and Balance Manual 6. Aircraft Fueling Manual 7. Aircraft Maintenance Manual (MM) 8. Aircraft Maintenance Manual Supplement 9. Ramp Maintenance Manual (RMM) 10. Cargo Loading Manual 11. Fault Reporting Manual (FRM) 12. Fault Isolation Manual (FIM) 13. Illustrated Parts Catalog (IPC) 14. Life Limited Parts Manual 15. Structural Repair Manual (SRM) 16. Master Minimum Equipment List 17. Wiring Diagram Manual (WD) 18. Wiring Practices Manual 19. System Schematics Manual 20. B.I.T.E. Manual 21. Non-Destructive Test Manual 22. Corrosion Prevention Manual 23. Component Maintenance Manual 24. APU Log Book 25. Engine Maintenance Manual 26. Engine Log Book 27. Engine Illustrated Parts Catalog 28. Engine Data Submittal Book 29. Engine Overhaul Manual 30. Power Plant Build-up Manual AIRCRAFT RECORDS AND HISTORICAL DOCUMENTS 1. Copies of original Certificates delivered by Boeing: a. Airworthiness Certificate for Export b. Radio installation conformity certificate c. Noise limitation certificate 2. Copies of original Documents delivered by Boeing: a. Airworthiness Directive Compliance list b. Aircraft inspection report c. Aircraft Readiness Log d. Weighing report 3. Copies of current Certificates: a. Airworthiness Certificate b. Noise limitation c. Radio license d. Interior material burn certificates e. Certificate of Export f. Aircraft deregistration confirmation e. Aircraft Registration 4. Letters signed and stamped by Quality Assurance: a. Current aircraft hours and cycles b. Current engines hours and cycles c. Accident and Incident report d. Summary of Maintenance Program e. AD compliance during the lease term 5. Aircraft log books and Aircraft readiness log. 6. Aircraft Hard Time (HT) inspection status. 7. One year forecast for HT inspection. 8. Aircraft Modification status, including service bulletins. 9. Last weighing report prior to redelivery. 10. AD compliance report with original signoffs. 11. Routine and non-routine job cards of the last "C" and "D" checks. 12. Past year pilots and maintenance discrepancies. 13. Major and Minor structural repairs with applicable approvals. 14. Compass Swing report of the last three years. 15. Cabin Configuration drawing (LOPA). 16. Emergency equipment location drawing. 17. Last X-RAYs ENGINES RECORDS 1. Last test cell run reports. 2. Life Limited Parts status and traceability. 3. AD compliance report with original signoffs. 4. Engine Modification/service bulletin/inspection report and applicable forms. 5. Last heavy maintenance records for each module. 6. Engine log books. 7. Engine removal history. 8. Past year trend monitoring reports. 9. Historical borescope reports. 10. Engine component report. APU RECORDS 1. APU status (FH, FC, limits). 2. Life limited Part status and traceability. 3. AD compliance with original signoffs. 4. Modification status. 5. Last heavy maintenance documents. 6. APU log books. 7. Last test cell report. COMPONENT RECORDS 1. Aircraft component inventory. 2. Hard time component inventory. 3. All serviceable tags. 4. Landing Gear status with last overhaul and life limited Part status. 5. AD compliance with original signoffs. 6. Modification status. ATTACHMENT 2 TO RETURN ACCEPTANCE RECEIPT LIST OF LOOSE EQUIPMENT ATTACHMENT 3 TO RETURN ACCEPTANCE RECEIPT LIST OF DISCREPANCIES ATTACHMENT 4 TO RETURN ACCEPTANCE RECEIPT ENGINE MAXIMUM POWER ASSURANCE TEST CONDITIONS AND RESULTS ATTACHMENT 5 TO RETURN ACCEPTANCE RECEIPT DENT AND DAMAGE CHART ATTACHMENT 6 TO RETURN ACCEPTANCE RECEIPT FORM OF NO ACCIDENT/INCIDENT LETTER EXHIBIT J MONTHLY REPORT (SEE FOLLOWING SHEET) MONTHLY AIRCRAFT UTILIZATION AND STATUS REPORT Page 1 of 2 Report Due Date: To: INTERNATIONAL LEASE FINANCE CORPORATION Fax: (310) 788-1990 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067, United States Attn: Finance Department From: AMERICAN TRANS AIR, INC. Contact: Fax: AIRCRAFT TYPE: BOEING 737-800 ENGINE TYPE: CFM56-7B-27 REGISTRATION: ____ SERIAL NUMBER: ____ MONTH OF: NOTE: PLEASE RECORD TIME IN HOURS AND MINUTES NOT DECIMALS. Aircraft Total Time Since New As Of Last Month: Hours: Min: Aircraft Total Time Since New: Hours: Min: Aircraft Total Cycles Since New: Cycles: Airframe Hours Flown During Month: Hours: Min: Airframe Cycles/Landings During Month: Cycles: Time Remaining to "D" or Heavy Maintenance Check: HOURS OR US$ PER CYCLES FLOWN HOUR OR DURING MONTH (AS CYCLE (AS APPLICABLE) X APPLICABLE) = RESERVES TOTAL AIRFRAME: HRS: X = TOTAL LANDING GEAR: HRS: X = TOTAL APU: HRS: X = ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles(for Engine LLP Reserves): x = ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles (for Engine LLP Reserves): x = ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles (for LLP x = Reserves): ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles (for Engine LLP Reserves): x = TOTAL AMOUNT OF RESERVES (US$) PAID THIS MONTH: US$ Monthly Aircraft Utilization and Status Report From: AMERICAN TRANS AIR, INC. PAGE 2 OF 2 ENGINE SERIAL NUMBER: ENGINE SERIAL NUMBER: ORIGINAL POSITION: ORIGINAL POSITION: ACTUAL LOCATION: ACTUAL LOCATION: CURRENT THRUST RATING: CURRENT THRUST RATING: HOURS:/MIN: HOURS:/MIN: Total Time Since New As Of Total Time Since New As Of Last Month: Last Month: Total Time Since New: Total Time Since New: Total Cycles Since New: Total Cycles Since New: Hours Flown During Month: Hours Flown During Month: Cycles During Month: Cycles During Month: IMPORTANT: IF ILFC-OWNED ENGINE IS REMOVED OR INSTALLED ON ANOTHER AIRCRAFT, IT MUST BE REPORTED MONTHLY ON THIS FORM. EXHIBIT K AIRCRAFT DOCUMENTATION AIRCRAFT RECORDS 1. Copies of original Certificates delivered by Boeing: a. Airworthiness Certificate for Export b. Radio installation conformity certificate c. Noise limitation certificate 2. Copies of original Documents delivered by Boeing: a. Airworthiness Directive Compliance list b. Aircraft inspection report c. Aircraft Readiness Log d. Weighing report 3. Copies of current Certificates: a. Airworthiness Certificate b. Noise limitation c. Radio license d. Interior material burn certificates e. Certificate of Export f. Aircraft deregistration confirmation e. Aircraft Registration 4. Letters signed and stamped by Quality Assurance: a. Current aircraft hours and cycles b. Current engines hours and cycles c. Accident and Incident report d. Summary of Maintenance Program e. AD compliance during the lease term 5. Aircraft log books and Aircraft readiness log. 6. Aircraft Hard Time (HT) inspection status. 7. One year forecast for HT inspection. 8. Aircraft Modification status, including service bulletins. 9. Last weighing report prior to redelivery. 10. AD compliance report with original signoffs. 11. Routine and non-routine job cards of the last "C" and "D" checks. 12. Past year pilots and maintenance discrepancies. 13. Major and Minor structural repairs with applicable approvals. 14. Compass Swing report of the last three years. 15. Cabin Configuration drawing (LOPA). 16. Emergency equipment location drawing. 17. Last X-RAYs ENGINES RECORDS 1. Last test cell run reports. 2. Life Limited Parts status and traceability. 3. AD compliance report with original signoffs. 4. Engine Modification/service bulletin/inspection report and applicable forms. 5. Last heavy maintenance records for each module. 6. Engine log books. 7. Engine removal history. 8. Past year trend monitoring reports. 9. Historical borescope reports. 10. Engine component report. APU RECORDS 1. APU status (FH, FC, limits). 2. Life limited Part status and traceability. 3. AD compliance with original signoffs. 4. Modification status. 5. Last heavy maintenance documents. 6. APU log books. 7. Last test cell report. COMPONENT RECORDS 1. Aircraft component inventory. 2. Hard time component inventory. 3. All serviceable tags. 4. Landing Gear status with last overhaul and life limited Part status. 5. AD compliance with original signoffs. 6. Modification status. EXHIBIT L TECHNICAL EVALUATION REPORT (SEE FOLLOWING SHEETS) EX-10.6(K) 26 file072.txt AMTRAN, INC., 2000 10-K, EXHIBIT 10.6(K) AIRCRAFT LEASE AGREEMENT Dated as of September 5, 2000 BETWEEN AMERICAN TRANS AIR, INC. as LESSEE and INTERNATIONAL LEASE FINANCE CORPORATION as LESSOR ------------------------------------------------------------------------------- Aircraft Make and Model: New Boeing 737-800 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Aircraft Manufacturer's Serial Number: 30033 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Aircraft Registration Mark: Per Estoppel and Acceptance Certificate ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Make and Model of Engines: CFM56-7B-27 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Serial Numbers of Engines: Per Estoppel and Acceptance Certificate ------------------------------------------------------------------------------- NEW BOEING 737-800 AIRCRAFT NO. 12 TABLE OF CONTENTS ARTICLE 1 SUMMARY OF TRANSACTION.........................................2 1.1 Description of Aircraft........................................2 1.2 Scheduled Delivery Date and Location...........................2 1.3 Lease Term.....................................................2 1.4 Security Deposit...............................................2 1.5 Transaction Fee................................................2 1.6 Rent During Lease Term.........................................2 1.7 Country of Aircraft Registration...............................4 1.8 Maintenance Program............................................4 1.9 Agreed Value of Aircraft.......................................4 1.10 LESSOR's Bank Account..........................................4 ARTICLE 2 DEFINITIONS....................................................5 2.1 General Definitions............................................5 2.2 Specific Definitions...........................................9 ARTICLE 3 PLACE AND DATE OF DELIVERY....................................11 3.1 Place of Delivery.............................................11 3.2 Scheduled Delivery Date.......................................11 3.3 Delivery subject to Manufacturer Delivery.....................11 3.4 No LESSOR Liability...........................................11 3.5 Total Loss of Aircraft prior to Delivery......................11 3.6 Cancellation for Delay........................................11 ARTICLE 4 LEASE TERM....................................................12 4.1 Lease Term....................................................12 4.2 "Expiration Date".............................................12 4.3 "Termination Date"............................................12 ARTICLE 5 SECURITY DEPOSIT, TRANSACTION FEE, RENT AND OTHER PAYMENTS......................................................13 5.1 Security Deposit..............................................13 5.2 Transaction Fee...............................................14 5.3 Rent..........................................................14 5.4 LESSOR's Bank Account.........................................15 5.5 Default Interest..............................................16 5.6 No Deductions or Withholdings.................................16 5.7 Value Added Taxes.............................................16 5.8 Net Lease.....................................................17 5.9 LESSOR Performance of LESSEE Obligation.......................18 5.10 Consideration for Rent and other Amounts......................18 ARTICLE 6 INVOLVEMENT WITH AIRCRAFT MANUFACTURER........................19 6.1 LESSEE Selection of Aircraft..................................19 6.2 Agency Agreement..............................................19 6.3 Procurement of BFE............................................19 6.4 Assignment of Training........................................19 6.5 LESSEE Inspection of Aircraft.................................19 6.6 Aircraft at Delivery..........................................19 6.7 Delivery of the Aircraft to LESSEE............................20 6.8 LESSEE Acceptance of Aircraft.................................20 ARTICLE 7 PRE-DELIVERY, DELIVERY AND POST-DELIVERY DOCUMENTARY AND OTHER REQUIREMENTS............................21 7.1 Pre-Delivery Requirements.....................................21 7.2 Delivery Requirements.........................................22 7.3 Post-Delivery Requirements....................................23 ARTICLE 8 DISCLAIMERS...................................................24 8.1 "As Is, Where Is".............................................24 8.2 Waiver of Warranty of Description.............................24 8.3 LESSEE Waiver.................................................25 8.4 Conclusive Proof..............................................25 8.5 No LESSOR Liability for Losses................................25 8.6 No Liability to Repair or Replace.............................25 8.7 No Waiver.....................................................26 ARTICLE 9 MANUFACTURERS' AND VENDORS' WARRANTIES........................27 9.1 Warranties....................................................27 9.2 Reassignment..................................................27 ARTICLE 10 OPERATION OF AIRCRAFT.........................................28 10.1 Costs of Operation............................................28 10.2 Compliance with Laws..........................................28 10.3 Training......................................................28 10.4 No Violation of Insurance Policies............................28 10.5 Flight Charges................................................29 ARTICLE 11 SUBLEASES.....................................................30 11.1 No Sublease without LESSOR Consent............................30 11.2 LESSOR Costs..................................................30 11.3 Any Approved Sublease.........................................30 11.4 Assignment of Sublease........................................30 11.5 Continued Responsibility of LESSEE............................30 ARTICLE 12 MAINTENANCE AND USE OF AIRCRAFT...............................31 12.1 General Obligation............................................31 12.2 Specific Obligations..........................................31 12.3 Replacement of Parts..........................................32 12.4 Removal of Engines............................................33 12.5 Pooling of Engines and Parts..................................34 12.6 Installation of Engines on other aircraft.....................34 12.7 Modifications.................................................35 12.8 Performance of Work by Third Parties..........................36 12.9 Reporting Requirements........................................36 12.10 Information Regarding Maintenance Program.....................36 12.11 LESSOR Rights to Inspect Aircraft.............................36 ARTICLE 13 TITLE AND REGISTRATION........................................37 13.1 Title to the Aircraft During Lease Term.......................37 13.2 Registration of Aircraft......................................37 13.3 Filing of this Lease..........................................37 13.4 Evidence of Registration and Filings..........................37 ARTICLE 14 IDENTIFICATION PLATES.........................................38 14.1 Airframe Identification Plates................................38 14.2 Engine Identification Plates..................................38 ARTICLE 15 TAXES.........................................................39 15.1 General Obligation of LESSEE..................................39 15.2 Exceptions to Indemnity.......................................39 15.3 After-Tax Basis...............................................40 15.4 Claims and Contests...........................................40 15.5 Refunds.......................................................41 15.6 Cooperation in Filing Tax Returns.............................41 ARTICLE 16 INDEMNITIES...................................................42 16.1 General Indemnity.............................................42 16.2 Exceptions to General Indemnities.............................43 16.3 After-Tax Basis...............................................44 16.4 Timing of Payment.............................................44 16.5 Subrogation...................................................44 16.6 Notice........................................................44 16.7 Refunds.......................................................44 16.8 Defense of Claims.............................................45 16.9 Survival of Obligation........................................45 ARTICLE 17 INSURANCE.....................................................46 17.1 Categories of Insurance.......................................46 17.2 Insurance for Indemnities.....................................46 17.3 Insurance required by Manufacturer............................46 17.4 Renewal.......................................................46 17.5 Assignment of Rights by LESSOR................................46 17.6 Deductibles...................................................46 17.7 Other Insurance...............................................47 17.8 Information...................................................47 17.9 Currency......................................................47 17.10 Grounding of Aircraft.........................................47 17.11 Failure to Insure.............................................47 17.12 Limit on Hull in favor of LESSEE..............................47 17.13 Marketplace Limitations.......................................48 ARTICLE 18 LOSS, DAMAGE AND REQUISITION..................................49 18.1 Definitions...................................................49 18.2 Notice of Total Loss..........................................50 18.3 Total Loss of Aircraft or Airframe............................50 18.4 Surviving Engine(s)...........................................51 18.5 Total Loss of Engine and not Airframe.........................51 18.6 Other Loss or Damage..........................................52 18.7 Copy of Insurance Policy......................................53 18.8 Government Requisition........................................53 18.9 Conveyance to LESSEE..........................................53 ARTICLE 19 CRAF PROGRAM..................................................54 19.1 Dedication to CRAF............................................54 19.2 Notice to LESSOR..............................................54 19.3 Requisition of Engine.........................................54 19.4 Government Indemnification....................................54 19.5 No Geographic Limits..........................................54 19.6 Notice of Default.............................................55 19.7 Receipt of Payments...........................................55 ARTICLE 20 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE...........56 20.1 Representations and Warranties................................56 20.2 Covenants.....................................................58 ARTICLE 21 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSOR...........61 21.1 Representations and Warranties................................61 21.2 Covenant of Quiet Enjoyment...................................62 ARTICLE 22 FINANCIAL AND RELATED INFORMATION.............................63 ARTICLE 23 RETURN OF AIRCRAFT............................................64 23.1 Date of Return................................................64 23.2 Technical Report..............................................64 23.3 Return Location...............................................64 23.4 Full Aircraft Documentation Review............................64 23.5 Aircraft Inspection...........................................64 23.6 Certificate of Airworthiness Matters..........................65 23.7 General Condition of Aircraft at Return.......................66 23.8 Checks Prior to Return........................................69 23.9 Part Lives....................................................72 23.10 Export and Deregistration of Aircraft.........................74 23.11 LESSEE's Continuing Obligations...............................75 23.12 Airport and Navigation Charges................................75 23.13 Return Acceptance Certificate.................................76 23.14 Indemnities and Insurance.....................................76 ARTICLE 24 ASSIGNMENT....................................................77 24.1 No Assignment by LESSEE.......................................77 24.2 Sale or Assignment by LESSOR..................................77 24.3 LESSOR's Lender...............................................79 24.4 LESSEE Cooperation............................................79 24.5 Protections...................................................79 ARTICLE 25 DEFAULT OF LESSEE.............................................80 25.1 LESSEE Notice to LESSOR.......................................80 25.2 Events of Default.............................................80 25.3 LESSOR's General Rights.......................................82 25.4 Deregistration and Export of Aircraft.........................83 25.5 LESSEE Liability for Damages..................................83 25.6 Waiver of Default.............................................84 25.7 Present Value of Payments.....................................84 25.8 Use of "Termination Date".....................................84 ARTICLE 26 NOTICES.......................................................85 26.1 Manner of Sending Notices.....................................85 26.2 Notice Information............................................85 ARTICLE 27 GOVERNING LAW AND JURISDICTION................................86 27.1 California Law................................................86 27.2 Non-Exclusive Jurisdiction in California......................86 27.3 Service of Process............................................86 27.4 Prevailing Party in Dispute...................................86 27.5 Waiver........................................................86 ARTICLE 28 MISCELLANEOUS.................................................87 28.1 Press Releases................................................87 28.2 LESSOR Performance for LESSEE.................................87 28.3 LESSOR's Payment Obligations..................................87 28.4 Application of Payments.......................................87 28.5 Usury Laws....................................................87 28.6 Delegation by LESSOR..........................................87 28.7 Confidentiality...............................................88 28.8 Rights of Parties.............................................88 28.9 Further Assurances............................................88 28.10 Use of Word "including".......................................88 28.11 Headings......................................................88 28.12 Invalidity of any Provision...................................88 28.13 Negotiation...................................................88 28.14 Time is of the Essence........................................89 28.15 Amendments in Writing.........................................89 28.16 Counterparts..................................................89 28.17 Delivery of Documents by Fax..................................89 28.18 Entire Agreement..............................................89 EXHIBIT A AIRCRAFT DESCRIPTION..........................................91 EXHIBIT B AGENCY AGREEMENT..............................................92 EXHIBIT C CERTIFICATE OF INSURANCE......................................96 EXHIBIT D BROKERS' LETTER OF UNDERTAKING...............................102 EXHIBIT E ESTOPPEL AND ACCEPTANCE CERTIFICATE..........................104 EXHIBIT F OPINION OF COUNSEL...........................................111 EXHIBIT G ASSIGNMENT OF RIGHTS (AIRFRAME)..............................114 EXHIBIT H ASSIGNMENT OF RIGHTS (ENGINES)...............................119 EXHIBIT I RETURN ACCEPTANCE RECEIPT....................................123 EXHIBIT J MONTHLY REPORT...............................................134 EXHIBIT K AIRCRAFT DOCUMENTATION.......................................138 EXHIBIT L TECHNICAL EVALUATION REPORT..................................140 AIRCRAFT LEASE AGREEMENT THIS AIRCRAFT LEASE AGREEMENT is made and entered into as of September 5, 2000. BETWEEN: AMERICAN TRANS AIR, INC., a Indiana corporation whose address and principal place of business is at 7337 West Washington Street, Indianapolis International Airport, Indianapolis, Indiana 46231, United States of America ("LESSEE") and INTERNATIONAL LEASE FINANCE CORPORATION, a California corporation whose address and principal place of business is at 1999 Avenue of the Stars, 39th Floor, Los Angeles, California 90067, United States of America ("LESSOR"). The subject matter of this Lease is one (1) new Boeing 737-800 aircraft. In consideration of and subject to the mutual covenants, terms and conditions contained in this Lease, LESSOR hereby agrees to lease to LESSEE and LESSEE hereby agrees to lease from LESSOR the aircraft and the parties further agree as follows: ARTICLE 1 SUMMARY OF TRANSACTION The information in this Article 1 is a summary of the lease transaction between LESSEE and LESSOR. It is set forth for the convenience of the parties only and will not be deemed in any way to amend, detract from or simplify the other provisions of this Lease. 1.1 DESCRIPTION OF AIRCRAFT One new Boeing 737-800 aircraft 1.2 SCHEDULED DELIVERY DATE AND LOCATION In the month of (CONFIDENTIAL MATERIAL OMITTED) at Seattle, Washington 1.3 LEASE TERM 15 years 1.4 SECURITY DEPOSIT (CONFIDENTIAL MATERIAL OMITTED) 1.5 TRANSACTION FEE (CONFIDENTIAL MATERIAL OMITTED) 1.6 RENT DURING LEASE TERM Payable monthly in advance and equal to the sum of: (a The following amounts for the following years of the Lease Term: LEASE PERIOD MONTHLY RENTAL AMOUNT* (CONFIDENTIAL MATERIAL OMITTED) *The above base rent is expressed in January 1999 U.S.Dollars and will increase in the following amounts for the following periods: PERIOD ESCALATION FACTOR (CONFIDENTIAL MATERIAL OMITTED) 1.7 COUNTRY OF AIRCRAFT REGISTRATION U.S. 1.8 MAINTENANCE PROGRAM LESSEE's Maintenance Program 1.9 AGREED VALUE OF AIRCRAFT (CONFIDENTIAL MATERIAL OMITTED) The Agreed Value is expressed in March 2001 U.S. Dollars and will increase in accordance with Manufacturer's announced escalation rate from March 1, 2001 to the Delivery Date. On each annual renewal date of LESSEE's insurance policy commencing on the renewal date following the first anniversary of the Lease Term, the Agreed Value will decrease by two percent (2.0%) of the then existing Agreed Value. 1.10 LESSOR'S BANK ACCOUNT (Confidential Material Omitted) ARTICLE 2 DEFINITIONS Except where the context otherwise requires, the following words have the following meanings for all purposes of this Lease. The definitions are equally applicable to the singular and plural forms of the words. Any agreement defined below includes each amendment, modification, supplement and waiver thereto in effect from time to time. 2.1 GENERAL DEFINITIONS. "ACT" means the Federal Aviation Act of 1958, as amended from time to time, or any successor act thereto. "AIRCRAFT" means the Airframe, two (2) Engines, Parts and Aircraft Documentation, collectively. As the context requires, "Aircraft" may also mean the Airframe, any Engine, any Part, the Aircraft Documentation or any part thereof individually. For example, in the context of return to LESSOR the term "Aircraft" means the Airframe, Engines, Parts and Aircraft Documentation collectively, yet in the context of LESSEE not creating any Security Interests other than Permitted Liens on the Aircraft, the term "Aircraft" means any of the Airframe, any Engine, any Part or the Aircraft Documentation individually. "AIRCRAFT DOCUMENTATION" means all (a) log books, Aircraft records, manuals and other documents provided to LESSEE in connection with the Aircraft, (b) documents listed in Exhibits E and K and (c) any other documents required to be maintained during the Lease Term by the Aviation Authority, LESSEE's Maintenance Program and this Lease. "AIRFRAME" means the airframe listed in the Estoppel and Acceptance Certificate executed at Delivery together with all Parts relating thereto (except Engines or engines). "AIRWORTHINESS DIRECTIVES" or "ADS" means all airworthiness directives (or equivalent) of the FAA and the Aviation Authority applicable to the Aircraft. "APU" means the auxiliary power unit of the Aircraft. "AVIATION AUTHORITY" means the FAA or any Government Entity which under the Laws of the U.S. from time to time has control over civil aviation or the registration, airworthiness or operation of aircraft in the U.S. If the Aircraft is registered in a country other than the U.S., "Aviation Authority" means the agency which regulates civil aviation in such other country. "AVIATION DOCUMENTS" means any or all of the following which at any time may be obtainable from the Aviation Authority: (a) if required, a temporary certificate of airworthiness from the Aviation Authority allowing the Aircraft to be flown after Delivery to the State of Registration, (b) an application for registration of the Aircraft with the appropriate authority in the State of Registration, (c) the certificate of registration for the Aircraft issued by the State of Registration, (d) a full certificate of airworthiness for the Aircraft specifying transport category (passenger), (e) an air transport license, (f) an air operator's certificate, (g) such recordation of LESSOR's title to the Aircraft and interest in this Lease as may be available in the State of Registration and (h) all such other authorizations, approvals, consents and certificates in the State of Registration as may be required to enable LESSEE lawfully to operate the Aircraft. "BANKRUPTCY CODE" means The Bankruptcy Reform Act of 1978 (11 U.S.C. ss.ss. 101-1330), as amended or supplemented from time to time, and any successor statute, and all of the rules and regulations issued or promulgated in connection therewith. "BASIC ENGINE" means those units and components of the Engine which are used to induce and convert fuel/air mixture into thrust/power; to transmit power to the fan and accessory drives; to supplement the function of other defined systems external to the Engine; and to control and direct the flow of internal lubrication, plus all essential accessories as supplied by the Engine manufacturer. The nacelle, installed components related to the Aircraft systems, thrust reversers, QEC and the primary flight nozzle are excluded. "BFE" means any equipment which is to be provided by the purchaser of the Aircraft (whether actually provided by LESSOR as buyer-furnished equipment or Manufacturer as seller-purchased equipment). "BUSINESS DAY" means a day other than a Saturday or Sunday on which the banks in Indianapolis, Indiana and in the city where LESSOR's Bank is located are open for the transaction of business of the type required by this Lease. "CREDITOR" means any lessor, owner, bank, lender, mortgagee or other Person which is the owner of or has any interest in an aircraft engine or aircraft operated by LESSEE. "CREDITOR AGREEMENT" means the applicable agreement between a Creditor and LESSEE or between Creditors pursuant to which such Creditor owns, leases or has an interest in either an aircraft operated by LESSEE on which an Engine may be installed or in an aircraft engine which may be installed on the Airframe. "DEFAULT" means any event which, upon the giving of notice, the lapse of time and/or a relevant determination, would constitute an Event of Default. "DELIVERY" means the delivery of the Aircraft from LESSOR to LESSEE pursuant to Articles 3 and 6. "DELIVERY DATE" means the date on which Delivery takes place. "DOLLARS" and "$" means the lawful currency of the U.S. "ENGINE" means (a) each of the engines listed on the Estoppel and Acceptance Certificate; or (b) any replacement engine acquired by LESSOR and leased to LESSEE pursuant to Article 18.5 following a Total Loss of an Engine; including in each case all Parts installed in or on any of such engines at Delivery (or substituted, renewed or replacement Parts in accordance with this Lease) so long as title thereto is or remains vested in LESSOR in accordance with the terms of Article 12.3. "EVENT OF DEFAULT" means any of the events referred to in Article 25.2. "FAA" means the Federal Aviation Administration of the Department of Transportation or any successor thereto under the Laws of the U.S. "FARS" means the U.S. Federal Aviation Regulations embodied in Title 14 of the U.S. Code of Federal Regulations, as amended from time to time, or any successor regulations thereto. "GENEVA CONVENTION" means the Convention on the International Recognition of Rights in Aircraft signed in Geneva, Switzerland on June 19, 1948. "GOVERNMENT ENTITY" means any (a) national, state or local government, (b) board, commission, department, division, instrumentality, court, agency or political subdivision thereof and (c) association, organization or institution of which any of the entities listed in (a) or (b) is a member or to whose jurisdiction any such entity is subject. "LANDING GEAR" means the installed main and nose landing gear, components and their associated actuators, side braces and parts. "LAW" means any (a) statute, decree, constitution, regulation, order or any directive of any Government Entity, (b) treaty, pact, compact or other agreement to which any Government Entity is a signatory or party and (c) judicial or administrative interpretation or application of any of the foregoing. "LEASE" means this Aircraft Lease Agreement, together with all Exhibits hereto. "LESSOR'S LIEN" means any Security Interest created by LESSOR, or arising from a claim against LESSOR completely unrelated to this Lease or the other Operative Documents. "MAINTENANCE PROGRAM" means LESSEE's maintenance program as approved by the Aviation Authority or such other maintenance program as LESSOR may, in its discretion, accept in writing. "MANUFACTURER" means The Boeing Company, a Delaware corporation. "MPD" means the Maintenance Planning Document published by Manufacturer and applicable to the Aircraft. "OVERHAUL" means the full reconditioning of the Aircraft, an Engine, APU, Landing Gear, module or Part, as the case may be, in which such equipment has been fully disassembled; cleaned; thoroughly inspected; and returned to the highest standard specified by the applicable manufacturer's manual. "PART" means the APU, any part, component, appliance, system module, engine module, accessory, material, instrument, communications equipment, furnishing, LESSEE-furnished or LESSOR-purchased equipment or other item of equipment (other than complete Engines or engines) for the time being installed in or attached to the Airframe or any Engine or which, having been removed from the Airframe or any Engine, remains the property of LESSOR. "PERMITTED INSTITUTION" means any Person (other than a commercial air carrier, a commercial aircraft operator, a freight forwarder, or an affiliate of any of the foregoing), with either: (a) a combined capital and surplus or net worth of at least; or (b) have a credit rating on the majority of its unsecured debt which is at least equal to BBB or its equivalent from Standard and Poor's Rating Group, a division of The McGraw-Hill Companies, Inc. or Moody's Investors Service, Inc. "PERMITTED LIEN" means (a) LESSOR's Liens; (b) Security Interests arising in the ordinary course of LESSEE's business for Taxes either not yet due and payable or, if due and payable, being contested in good faith in accordance with Article 15.4; (c) materialmen's, mechanics', workmen's, repairmen's, employees' liens or similar Security Interests arising by operation of Law after the Delivery Date in the ordinary course of LESSEE's business for amounts which are either not yet due or are being contested in good faith by appropriate proceedings (and for which adequate reserves have been made or, when required in order to pursue such proceedings, an adequate bond has been provided) so long as such proceedings do not involve any material danger of sale, forfeiture or loss of the Aircraft; (d) the rights of LESSOR and any LESSOR's Lender and the rights of LESSEE under this Lease and the other Operative Documents; (e) the rights of others under agreements or arrangements to the extent permitted by Articles 10 and 11.5; and (f) any Security Interest against which LESSEE causes to be provided a bond in such amount and under such terms and conditions as are reasonably satisfactory to LESSOR. "PERSON" means any individual, firm, partnership, joint venture, trust, corporation, limited liability company, Government Entity, committee, department, authority or any body, incorporated or unincorporated, whether having distinct legal personality or not. "PRIME RATE" means the rate of interest from time to time announced by Bank of America Illinois in Chicago, Illinois as its prime commercial lending rate. "SECURITY INTEREST" means any encumbrance or security interest, however and wherever created or arising including (without prejudice to the generality of the foregoing) any right of ownership, security, mortgage, pledge, charge, encumbrance, lease, lien, statutory or other right in rem, hypothecation, title retention, attachment, levy, claim or right of possession or detention. "STATE OF REGISTRATION" means the U.S. or such other country or state of registration of the Aircraft as LESSOR may, in its absolute discretion, approve in writing. "U.S." means the United States of America. "U.S. AIR CARRIER" means any U.S. air carrier who is a Citizen of the U.S. holding an air carrier operating certificate issued by the Secretary of Transportation pursuant to chapter 447 of the Act for aircraft capable of carrying 10 or more individuals or 6000 pounds or more of cargo, and as to whom there is in force an air carrier operating certificate issued pursuant to FAR Part 121, or who may operate as an air carrier by certification or otherwise under any successor or substitute provisions therefor or in the absence thereof. 2.2 SPECIFIC DEFINITIONS. The following terms are defined in the Articles referenced below: TERMS ARTICLE Agreed Value 18.1 CRAF Program 19.1 CRAF Program Requisition 19.1 Period Default Interest 5.5 Delivery Location 3.1 Expenses 16.1 Expiration Date 4.3 Indemnities 16.1 Lease Term 4.1 LESSEE Customization 5.3.1 Costs LESSOR's Assignee 24.2.1 LESSOR's Bank 5.4 LESSOR's Lender 24.3 Manufacturer's Escalation 5.3.1 Rate Modifications 12.7.2 Net Total Loss Proceeds 18.1 Operative Documents 20.1.3 Rent 5.3.1 Return Check 23.8.1 Scheduled Delivery Date 3.2 Security Deposit 5.1.1 Taxes 15.1 Termination Date 4.3 Total Loss 18.1 Total Loss Date 18.1 Total Loss Proceeds 18.1 Transaction Fee 5.2 ARTICLE 3 PLACE AND DATE OF DELIVERY 3.1 PLACE OF DELIVERY. LESSOR will deliver the Aircraft to LESSEE at Manufacturer's facility at Seattle, Washington or such other place as may be agreed in writing between the parties (the "DELIVERY LOCATION"). 3.2 SCHEDULED DELIVERY DATE. As of the date of this Lease, delivery of the Aircraft from Manufacturer to LESSOR is scheduled to occur in the month of (CONFIDENTIAL MATERIAL OMITTED). LESSOR will not agree to reschedule such delivery without LESSEE's prior written consent. LESSOR will notify LESSEE from time to time and in a timely manner of the exact date on which LESSOR expects such delivery to take place (the "SCHEDULED DELIVERY DATE"). 3.3 DELIVERY SUBJECT TO MANUFACTURER DELIVERY. LESSOR and LESSEE expressly acknowledge that Delivery of the Aircraft to LESSEE is subject to and conditioned upon, and is to occur simultaneously with, delivery of the Aircraft by Manufacturer to LESSOR. 3.4 NO LESSOR LIABILITY. LESSOR will not be liable for any loss or expense, or any loss of profit, arising from any delay or failure in Delivery to LESSEE unless such delay or failure arises as a consequence of the willful misconduct of LESSOR, and in no event will LESSOR be liable for any delay or failure which is caused by any breach or delay on the part of Manufacturer or any BFE supplier. 3.5 TOTAL LOSS OF AIRCRAFT PRIOR TO DELIVERY. If a Total Loss of the Aircraft occurs prior to Delivery, neither party will have any further liability to the other except that LESSOR will return to LESSEE the Security Deposit in accordance with Article 5.1.3 and any prepaid Rent. 3.6 CANCELLATION FOR DELAY. Promptly after LESSOR becomes aware that in Manufacturer's opinion a delay will cause Delivery to be delayed beyond (CONFIDENTIAL MATERIAL OMITTED) LESSOR will notify LESSEE. By written notice given within ten (10) Business Days after LESSEE's receipt of such LESSOR notice, either party may by written notice to the other party terminate this Lease and this Lease will terminate on the date of receipt of such notice. In the event of such termination, neither party will have any further liability to the other party except that LESSOR will return to LESSEE the Security Deposit in accordance with Article 5.1.3 and any prepaid Rent. If neither party gives notice of termination within such ten (10) Business Days, both parties lose all right to terminate under this Article 3.6 unless otherwise agreed in writing by the parties. ARTICLE 4 LEASE TERM 4.1 LEASE TERM. The term of leasing of the Aircraft will commence on the Delivery Date and continue for a term of fifteen (15) years ("LEASE TERM"). 4.2 "EXPIRATION DATE". "EXPIRATION DATE" means the date on which LESSEE is required to redeliver the Aircraft to LESSOR in the condition required by this Lease on the last day of the Lease Term. 4.3 "TERMINATION DATE". This Lease may in fact terminate on any of the dates set forth below: (a the Expiration Date, provided LESSEE returns the Aircraft to LESSOR on the Expiration Date in the condition required by Article 23; or (b a date earlier than the Expiration Date, if: (i there is a Total Loss of the Aircraft prior to Delivery pursuant to Article 3.5; (ii cancellation of this Lease occurs pursuant to Article 3.6; (iii there is a Total Loss of the Aircraft and payment is made to LESSOR in accordance with Article 18.3; or (iv an Event of Default occurs and LESSOR repossesses the Aircraft or otherwise terminates this Lease pursuant to Article 25.3. (c a date later than the Expiration Date, if: (i an Event of Default occurs hereunder by LESSEE returning the Aircraft in the condition required by this Lease after the Expiration Date; or (ii an Event of Default occurs and LESSOR repossesses the Aircraft or otherwise terminates this Lease pursuant to Article 25.3. The "TERMINATION DATE" is the date on which this Lease terminates because one of the above has occurred. ARTICLE 5 SECURITY DEPOSIT, TRANSACTION FEE, RENT AND OTHER PAYMENTS 5.1 SECURITY DEPOSIT. 5.1.1 (CONFIDENTIAL MATERIAL OMITTED) 5.1.2 The Security Deposit may be commingled with LESSOR's general funds and any interest earned on such Security Deposit will be for LESSOR's account. If the Security Deposit is reduced below the required amount by application to meet LESSEE's unperformed obligations under this Lease, LESSEE will replenish the Security Deposit within ten (10) days after LESSOR's demand therefor. The Security Deposit will serve as security for the performance by LESSEE of its obligations under this Lease and any other agreements between LESSEE and LESSOR relating to aircraft, engines, aircraft equipment or the extension of credit and may be applied by LESSOR upon the occurrence of a Default or Event of Default hereunder or of a default by LESSEE under any such other agreements. 5.1.3 Upon termination of this Lease in accordance with Article 4.3 other than if an Event of Default has occurred and is continuing, LESSOR will return to LESSEE the amount of the Security Deposit then held by LESSOR (so long as no default by LESSEE exists under any other agreement between LESSEE and LESSOR relating to aircraft, engines or aircraft equipment or the extension of credit by LESSOR to LESSEE), without interest, less an amount determined by LESSOR to be a reasonable estimate of the costs, if any, which LESSOR will incur to remedy any unperformed obligations of LESSEE under this Lease, including the correction of any discrepancies from the required condition of the Aircraft on return of the Aircraft. 5.2 TRANSACTION FEE. Within two (2) Business Days after execution of this Lease, LESSEE will pay LESSOR a nonrefundable transaction fee (CONFIDENTIAL MATERIAL OMITTED) 5.3 RENT. 5.3.1 LESSEE will pay LESSOR the following amounts monthly in advance as rent for the Aircraft (the "RENT"): (a The following amounts for the following years of the Lease Term: LEASE PERIOD MONTHLY RENTAL AMOUNT* ------------ --------------------- (CONFIDENTIAL MATERIAL OMITTED) *The above base rent is expressed in January 1999 U.S. dollars and will increase in the following amounts for the following periods (the "MANUFACTURER'S ESCALATION RATE"): PERIOD ESCALATION FACTOR ------------ --------------------- (CONFIDENTIAL MATERIAL OMITTED) Any increases to the above base Rent during the Lease Term will be calculated immediately prior to Delivery. 5.3.2 The first payment of Rent during the Lease Term will be paid prior to the Scheduled Delivery Date. Each subsequent payment of Rent will be due monthly thereafter no later than the same day of the month as the Delivery Date of the Aircraft except that, if such day is not a Business Day, the Rent will be due on the immediately preceding Business Day. If Delivery occurred on the 29th, 30th or 31st of the month and in any given month during the Lease Term there is no such corresponding date, Rent will be payable on the last Business Day of such month. 5.4 LESSOR'S BANK ACCOUNT. The Security Deposit, Transaction Fee, Rent and any other payment due under this Lease will be paid by wire transfer of immediately available U.S. Dollar funds to LESSOR's bank account at: (CONFIDENTIAL MATERIAL OMITTED) or to such other bank account in the U.S. as LESSOR may from time to time designate by written notice ("LESSOR'S BANK"). When it is stated in this Lease that an installment of the Security Deposit, the monthly Rent or any other payment is due or must be paid or made by LESSEE by a specific date, then such payment actually must be received by LESSOR's Bank on or before such specific date, even if, in order for such payment to be received by LESSOR's Bank by such specific date, LESSEE must initiate the wire transfer prior to such specific date. 5.5 DEFAULT INTEREST. If LESSOR's Bank does not receive the Rent or any other amount on or before the specific date when due, LESSOR will suffer loss and damage the exact nature and amount of which are difficult or impossible to ascertain. LESSEE will pay LESSOR as supplemental Rent (by way of agreed compensation and not as a penalty) interest on any due and unpaid amounts payable by LESSEE under this Lease. Interest will be calculated at a per annum rate (based on a 360 day year) which is equal to three percent (3%) plus the Prime Rate in effect on the date on which the amount was originally due for the period from the date the amount originally was due through the date the amount actually is received at LESSOR's Bank or, in the case of LESSOR's performance of LESSEE's obligations hereunder, from the date of payment by LESSOR through the date of LESSEE's repayment to LESSOR ("DEFAULT INTEREST"). Default Interest will accrue on a day-to-day basis and be compounded monthly. 5.6 NO DEDUCTIONS OR WITHHOLDINGS. All payments by LESSEE under this Lease, including the Security Deposit, Transaction Fee, Rent, Default Interest, fees, indemnities or any other item, will be made in full without any deduction or withholding whether in respect of set-off, counterclaim, duties, or Taxes (as defined in Article 15) imposed in the State of Registration or any jurisdiction from which such payments are made unless LESSEE is prohibited by Law from doing so, in which event LESSEE will gross up the payment amount such that the net payment received by LESSOR after any deduction or withholding equals the amounts called for under this Lease. LESSEE's requirement to pay the amounts required by this Article 5.6 is subject to the exceptions provided in Article 15.2. 5.7 VALUE ADDED TAXES. The Rent and other amounts payable by LESSEE under this Lease are exclusive of any value added tax, turnover tax or similar tax or duty. 5.8 NET LEASE. 5.8.1 This Lease is a net lease and LESSEE's obligation to pay Rent and make other payments in accordance with this Lease will be absolute and unconditional under any and all circumstances and regardless of other events, including the following: (a) any right of set-off, counterclaim, recoupment, defense or other right (including any right of reimbursement) which LESSEE may have against LESSOR, Manufacturer, the Engine manufacturer or any other person for any reason, including any claim LESSEE may have for the foregoing; (b) unavailability or interruption in use of the Aircraft for any reason, including a requisition thereof or any prohibition or interference with or other restriction against LESSEE's use, operation or possession of the Aircraft (whether by Law or otherwise), any defect in title, airworthiness, merchantability, fitness for any purpose, condition, design, specification or operation of any kind or nature of the Aircraft, the ineligibility of the Aircraft for any particular use or trade or for registration under the Laws of any jurisdiction or Total Loss of the Aircraft; (c) insolvency, bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, liquidation, receivership, administration or similar proceedings by or against LESSOR, LESSEE, Manufacturer, the Engine manufacturer or any other Person; (d) invalidity or unenforceability or lack of due authorization of or other defect in this Lease; (e) failure or delay on the part of any party to perform its obligations under this Lease; or (f) any other circumstance which but for this provision would or might have the effect of terminating or in any other way affecting any obligation of LESSEE hereunder. 5.8.2 Nothing in Article 5.8 will be construed to limit LESSEE's rights and remedies in the event of LESSOR's breach of its warranty of quiet enjoyment set forth in Article 21.2 or to limit LESSEE's rights and remedies to pursue in a court of law any claim it may have against LESSOR or any other Person. 5.9 LESSOR PERFORMANCE OF LESSEE OBLIGATION. If LESSEE fails to make any payment under this Lease to a third party in connection with the Aircraft or fails to perform any other obligation required under this Lease, LESSOR may (but is not required to) at its election and without waiver of its rights perform such obligation and/or pay such amount. Within five (5) Business Days after written notice to LESSEE of the amount paid by LESSOR on behalf of LESSEE, LESSEE will repay such amount to LESSOR together with Default Interest. Such payment to LESSOR will constitute additional Rent payable by LESSEE to LESSOR hereunder. Any payment, performance or compliance by LESSOR of a LESSEE obligation hereunder will not affect the occurrence or continuance of a Default or Event of Default, as the case may be. 5.10 CONSIDERATION FOR RENT AND OTHER AMOUNTS. The amount of the Rent and other payments contained herein are in consideration of LESSEE's waiver of warranties and indemnities set forth in Articles 8 and 16, respectively, and the other provisions of this Lease. ARTICLE 6 INVOLVEMENT WITH AIRCRAFT MANUFACTURER 6.1 LESSEE SELECTION OF AIRCRAFT. LESSEE ACKNOWLEDGES THAT THE DESCRIPTION OF THE AIRCRAFT SET FORTH IN THIS LEASE IS BASED UPON INFORMATION SUPPLIED BY MANUFACTURER. LESSEE COVENANTS TO LESSOR THAT LESSEE HAS USED ITS OWN JUDGMENT IN SELECTING THE AIRCRAFT AND HAS DONE SO BASED ON ITS SIZE, DESIGN AND TYPE. LESSEE ACKNOWLEDGES THAT LESSOR IS NOT A MANUFACTURER, REPAIRER OR SERVICING AGENT OF THE AIRCRAFT. 6.2 AGENCY AGREEMENT. Certain obligations remain to be performed by LESSOR in connection with the manufacture, fabrication and completion of the Aircraft by Manufacturer which will be performed by LESSEE (as provided in the Agency Agreement). LESSEE will act as LESSOR's agent with respect to some of these matters pursuant to the terms of an Agency Agreement to be entered into between LESSEE and LESSOR in the form set forth in Exhibit B. 6.3 PROCUREMENT OF BFE. LESSEE's and LESSOR's technical representatives will meet and determine which of LESSEE or LESSOR will provide specific items of BFE. Such BFE will then be provided to Manufacturer by LESSEE or LESSOR, as applicable, within the time frames required by Manufacturer. 6.4 ASSIGNMENT OF TRAINING. LESSOR hereby assigns to LESSEE all rights to training to which LESSOR is entitled as a result of LESSOR's purchase of the Aircraft and lease of the Aircraft to LESSEE. If LESSEE fails to take Delivery of the Aircraft when tendered in accordance with Article 6.7, LESSEE will immediately pay to LESSOR an amount equal to the Dollar value of such training based on what the training would have cost LESSEE had LESSEE purchased such training directly from Manufacturer. 6.5 LESSEE INSPECTION OF AIRCRAFT. During the course of final assembly of the Aircraft, and at Delivery, LESSEE will have its own representative present to inspect the Aircraft and to ensure its conformity with LESSEE's needs and the terms of this Lease. LESSEE will have ground inspection and acceptance flight rights with respect to the Aircraft. LESSEE acknowledges that, as between LESSEE and LESSOR, in accepting the Aircraft LESSEE is relying on its own inspection and knowledge of the Aircraft in determining whether the Aircraft meets the requirements of this Lease. 6.6 AIRCRAFT AT DELIVERY. At Delivery, the Aircraft will be as set forth in Exhibit A, as such description may be modified by any change requests agreed to among LESSEE, LESSOR and Manufacturer (which will be reflected in amendment(s) to this Lease). In the event of any discrepancies, LESSEE and LESSOR will cooperate in good faith with one another and with Manufacturer and Engine manufacturer, as applicable, in order to arrive at a mutually acceptable resolution of any such discrepancies. 6.7 DELIVERY OF THE AIRCRAFT TO LESSEE. Subject to LESSEE having performed all of the conditions precedent to Delivery set forth herein, immediately following delivery of the Aircraft from Manufacturer to LESSOR, LESSOR will deliver the Aircraft to LESSEE at the Delivery Location. Provided that the Aircraft is in the condition required by Article 6.6, upon the tender of the Aircraft by LESSOR to LESSEE, LESSEE will accept the Aircraft and the date of tender by LESSOR to LESSEE will be deemed to be the Delivery Date for all purposes under this Lease, including, but not limited to, the commencement of LESSEE's obligation to pay Rent hereunder. 6.8 LESSEE ACCEPTANCE OF AIRCRAFT. If LESSEE fails to (a) comply with its obligations set forth in Article 6.2, (b) comply with the conditions contained in Articles 7.1 and 7.2 so as to allow Delivery to take place immediately following delivery of the Aircraft by Manufacturer to LESSOR or (c) take delivery of the Aircraft when properly tendered for delivery by LESSOR in the condition required hereunder, LESSEE will indemnify LESSOR for all costs and expenses incurred by LESSOR as a result thereof including (but without limitation) any payments other than the purchase price which LESSOR becomes obliged to make to Manufacturer. ARTICLE 7 PRE-DELIVERY, DELIVERY AND POST-DELIVERY DOCUMENTARY AND OTHER REQUIREMENTS 7.1 PRE-DELIVERY REQUIREMENTS. LESSEE will do each of the following prior to the Scheduled Delivery Date of the Aircraft within the time frames set forth below: 7.1.1 Within one (1) month after execution of this Lease, LESSEE will deliver to LESSOR each of the following: (a) copies of resolutions of the Board of Directors of LESSEE or other written evidence of appropriate corporate action, duly certifying and authorizing the lease of the Aircraft hereunder and the execution, delivery and performance of this Lease, together with an incumbency certificate as to the person or persons authorized to execute and deliver documents on behalf of LESSEE hereunder; and (b) an opinion of counsel in the form and substance of Exhibit F. 7.1.2 At least three (3) days prior to the Scheduled Delivery Date, LESSEE will have delivered to LESSOR a Certificate of Insurance and Brokers' Letter of Undertaking in the form and substance of Exhibits C and D, respectively, from LESSEE's insurance brokers evidencing insurance of the Aircraft in accordance with this Lease from the Delivery Date. 7.1.3 At least three (3) Business Days prior to the Scheduled Delivery Date, LESSEE will do each of the following: (a) provide LESSOR with a copy of such Aviation Documents as may be available prior to the Scheduled Delivery Date; (b) provide LESSOR with a power of attorney empowering LESSEE's representative, who may be an officer or employee of LESSEE, to accept the Aircraft on behalf of LESSEE; and (c) provide LESSOR with such other documents as LESSOR may reasonably request. 7.1.4 Prior to the Scheduled Delivery Date, LESSEE will pay LESSOR the first monthly installment of Rent in accordance with Article 5.3.2. 7.2 DELIVERY REQUIREMENTS. On the Delivery Date of the Aircraft, each of the following will occur: 7.2.1 LESSEE will execute and deliver to LESSOR an Estoppel and Acceptance Certificate in the form of Exhibit E covering the Aircraft and effective as of the Delivery Date. 7.2.2 If not previously done, LESSEE and LESSOR will sign an amendment or supplement to Exhibit A evidencing all agreed-to changes to the specification of the Aircraft. 7.2.3 LESSEE will deliver a certificate signed on behalf of LESSEE by an officer of LESSEE stating all of the following: (a) the representations and warranties contained in Article 20 are true and accurate on and as of the Delivery Date as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date); (b) no Default has occurred and is continuing or will result from LESSEE's lease of the Aircraft hereunder; and (c) none of the Creditor Agreements contains terms which provide or contemplate that any Creditor will obtain any right, title or interest in an Engine which is installed on another aircraft (or, if this is not the case, such certificate will identify the parties, the aircraft and the Creditor Agreements for which this statement is untrue). 7.2.4 LESSEE's counsel will deliver opinions confirming the matters set forth in the opinion of counsel described in Article 7.1 and advising that all filing and other requirements have been met or concurrently are being met. 7.2.5 If any Creditor Agreement provides or contemplates that such Creditor will obtain any right, title or interest in an Engine which is installed on such Creditor's aircraft, LESSEE will deliver to LESSOR an engines cooperation agreement in form and substance acceptable to LESSOR which is executed by LESSEE and LESSEE's Creditors (as defined therein). 7.2.6 LESSOR will deliver to LESSEE an assignment of Manufacturer and Engine manufacturer rights in the form and substance of Exhibits G and H, respectively, and concurrently therewith LESSOR, to the extent it has not previously done so, will be deemed to have assigned all training, product assurance and product support applicable to the owner or operator of the Aircraft to LESSEE during the Lease Term. 7.3 POST-DELIVERY REQUIREMENTS. 7.3.1 Promptly after Delivery, LESSEE will do each of the following: (a) provide LESSOR with copies of all Aviation Documents not previously delivered; and (b) provide LESSOR with a follow-up opinion of counsel advising that the Aircraft has been registered in the State of Registration and that all necessary filings have been made. ARTICLE 8 DISCLAIMERS LESSOR HAS COMMITTED TO LESSEE THAT ON THE DELIVERY DATE THE AIRCRAFT WILL BE IN THE CONDITION REQUIRED BY ARTICLE 6. SUCH COMMITMENT OR COVENANT ON THE PART OF LESSOR EXPIRES AND THE DISCLAIMERS SET FORTH IN THIS ARTICLE 8 APPLY UPON LESSEE'S ACCEPTANCE OF THE AIRCRAFT AND EXECUTION OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATE. AFTER SUCH TIME, THEN AS BETWEEN LESSOR AND LESSEE: 8.1 "AS IS, WHERE IS". LESSEE AGREES THAT IT IS LEASING THE AIRCRAFT "AS IS, WHERE IS". LESSEE UNCONDITIONALLY ACKNOWLEDGES AND AGREES THAT NEITHER LESSOR NOR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES OR REPRESENTATIVES HAVE MADE OR WILL BE DEEMED TO HAVE MADE ANY TERM, CONDITION, REPRESENTATION, WARRANTY OR COVENANT EXPRESS OR IMPLIED (WHETHER STATUTORY OR OTHERWISE) AS TO (a) THE CAPACITY, AGE, AIRWORTHINESS, VALUE, QUALITY, DURABILITY, CONFORMITY TO THE PROVISIONS OF THIS LEASE, DESCRIPTION, CONDITION (WHETHER OF THE AIRCRAFT, ANY ENGINE, ANY PART THEREOF OR THE AIRCRAFT DOCUMENTATION), DESIGN, WORKMANSHIP, MATERIALS, MANUFACTURE, CONSTRUCTION, OPERATION, DESCRIPTION, STATE, MERCHANTABILITY, PERFORMANCE, FITNESS FOR ANY PARTICULAR USE OR PURPOSE (INCLUDING THE ABILITY TO OPERATE OR REGISTER THE AIRCRAFT OR USE THE AIRCRAFT DOCUMENTATION IN ANY OR ALL JURISDICTIONS) OR SUITABILITY OF THE AIRCRAFT OR ANY PART THEREOF, OR THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, KNOWN OR UNKNOWN, APPARENT OR CONCEALED, EXTERIOR OR INTERIOR, (b) THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK, COPYRIGHT OR OTHER INTELLECTUAL PROPERTY RIGHTS, (c) ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE OR (d) EXCEPT AS SET FORTH IN ARTICLE 21.1, ANY OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY PART THEREOF, ALL OF WHICH ARE HEREBY EXPRESSLY EXCLUDED AND EXTINGUISHED. 8.2 WAIVER OF WARRANTY OF DESCRIPTION. IN CONSIDERATION OF (a) LESSEE'S RIGHTS HEREUNDER TO INSPECT THE AIRCRAFT AND (b) LESSOR'S ASSIGNMENT TO LESSEE OF ANY EXISTING AND ASSIGNABLE WARRANTIES OF MANUFACTURER AND THE ENGINE MANUFACTURER, LESSEE HEREBY AGREES THAT ITS ACCEPTANCE OF THE AIRCRAFT AT DELIVERY AND ITS EXECUTION AND DELIVERY OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATE CONSTITUTE LESSEE'S WAIVER OF THE WARRANTY OF DESCRIPTION, ANY CLAIMS LESSEE MAY HAVE AGAINST LESSOR BASED UPON THE FAILURE OF THE AIRCRAFT TO CONFORM WITH SUCH DESCRIPTION AND ANY AND ALL RIGHTS IT MAY HAVE TO THE REMEDIES SET FORTH IN SECTIONS 10508 THROUGH 10522 OF THE CALIFORNIA COMMERCIAL CODE. EVEN IF AT ANY TIME THE FAILURE OF THE AIRCRAFT TO CONFORM TO SUCH DESCRIPTION SUBSTANTIALLY IMPAIRS THE VALUE AND UTILITY OF THE AIRCRAFT AND EITHER (i) LESSEE ACCEPTED THE AIRCRAFT BASED ON A REASONABLE ASSUMPTION THAT THE NONCONFORMITY WOULD BE CURED AND IT WAS NOT SEASONABLY CURED OR (ii) LESSEE ACCEPTED THE AIRCRAFT WITHOUT DISCOVERING THE NONCONFORMITY BUT LESSEE'S ACCEPTANCE OF THE AIRCRAFT WAS REASONABLY INDUCED EITHER BY LESSOR'S ASSURANCES OR BY THE DIFFICULTY OF DISCOVERING ANY DEFECT PRIOR TO ACCEPTANCE, LESSEE AGREES NOT TO LOOK TO LESSOR FOR DAMAGES OR RELIEF ARISING OUT OF THE FAILURE OF THE AIRCRAFT TO CONFORM TO SUCH DESCRIPTION. 8.3 LESSEE WAIVER. LESSEE hereby waives as between itself and LESSOR and agrees not to seek to establish or enforce any rights and remedies, express or implied (whether statutory or otherwise) against LESSOR or the Aircraft relating to any of the matters mentioned in Articles 8.1 or 8.2. 8.4 CONCLUSIVE PROOF. DELIVERY BY LESSEE TO LESSOR OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATE WILL BE CONCLUSIVE PROOF AS BETWEEN LESSOR AND LESSEE THAT LESSEE'S TECHNICAL EXPERTS HAVE EXAMINED AND INVESTIGATED THE AIRCRAFT AND ENGINES AND (a) EACH IS AIRWORTHY AND IN GOOD WORKING ORDER AND REPAIR AND (b) THE AIRCRAFT AND ENGINES AND THE AIRCRAFT DOCUMENTATION ARE WITHOUT DEFECT (WHETHER OR NOT DISCOVERABLE AT DELIVERY) AND IN EVERY WAY SATISFACTORY TO LESSEE. 8.5 NO LESSOR LIABILITY FOR LOSSES. LESSEE agrees that LESSOR will not be liable to LESSEE, any sublessee or any Person, whether in contract or tort and however arising, for any cost, loss or damage (consequential or otherwise) arising out of the condition of the Aircraft, whether or not due in whole or in part to an act or omission or the active or passive negligence of LESSOR. 8.6 NO LIABILITY TO REPAIR OR REPLACE. LESSOR will not be liable for any expense in repairing or replacing any item of the Aircraft or be liable to supply another aircraft or any item in lieu of the Aircraft or any Part thereof if the same is lost, confiscated, damaged, destroyed or otherwise rendered unfit for use. 8.7 NO WAIVER. Nothing in this Article 8 or elsewhere in this Lease will be deemed to be a waiver by LESSEE of any rights it may have against Manufacturer, the Engine manufacturer or any other Person. ARTICLE 9 MANUFACTURERS' AND VENDORS' WARRANTIES 9.1 WARRANTIES. As set forth in Article 7.2.6, at Delivery LESSOR will assign to LESSEE for the duration of the Lease Term the benefit of all warranties and indemnities given to LESSOR by Manufacturer and the Engine manufacturer. Effective on the Delivery Date, all other vendor warranties with respect to the Aircraft are hereby assigned by LESSOR to LESSEE. 9.2 REASSIGNMENT. On the Termination Date, the benefit of any warranty assigned by LESSOR to LESSEE pursuant to Article 7.2.6 will be reassigned automatically to LESSOR or its designee. ARTICLE 10 OPERATION OF AIRCRAFT 10.1 COSTS OF OPERATION. As between LESSEE and LESSOR, LESSEE will pay all costs incurred in the operation of the Aircraft during the Lease Term, for profit or otherwise, including the costs of flight crews, cabin personnel, fuel, oil, lubricants, maintenance, insurance, storage, landing and navigation fees, airport charges, passenger service and any and all other expenses of any kind or nature, directly or indirectly, in connection with or related to the use, movement and operation of the Aircraft. The obligations, covenants and liabilities of LESSEE under this paragraph arising prior to return of the Aircraft to LESSOR will continue in full force and effect, notwithstanding the termination of this Lease or expiration of the Lease Term. 10.2 COMPLIANCE WITH LAWS. LESSEE agrees throughout the Lease Term that all use of the Aircraft will be in accordance with applicable Laws of the State of Registration and of any country, state, territory or municipality into or over which LESSEE may operate. LESSEE will not employ, suffer or cause the Aircraft to be used in any business which is forbidden by Law or in any manner which may render it liable to condemnation, destruction, seizure, or confiscation by any authority. LESSEE will not permit the Aircraft to fly to any airport or country if so doing would cause LESSEE to be in violation of any Law applicable to LESSEE or the Aircraft. The foregoing provisions in this Article 10.2 shall not prohibit any violation of Law (a) during a good-faith contest of the validity, application, or alleged violation thereof in any reasonable manner so long as there is no material danger of sale, forfeiture, or loss of the Aircraft (however, this good faith exception shall not apply in the case of a mandatory grounding order, the good faith contest of which does not permit LESSEE to operate the Aircraft during such contest), and which does not extend beyond the end of the Lease Term if the pendency of such contest would adversely affect the Aircraft or the remarketing thereof in any material respect; and (b) for minor or non-recurring violations (with the understanding that minor violations may cease to be minor if recurring) that LESSEE is diligently trying to rectify which do not render the Aircraft liable to any risk of condemnation, destruction, seizure, or confiscation by any Government Entity. 10.3 TRAINING. LESSEE will not use the Aircraft for testing or for training of flight crew members other than LESSEE crew members and will not use the Aircraft for training any more than it utilizes for training the other aircraft in its fleet. 10.4 NO VIOLATION OF INSURANCE POLICIES. LESSEE will not use or permit the Aircraft to be used in any manner or for any purpose which is not covered by the insurance policies LESSEE is required to carry and maintain as set forth in this Lease. LESSEE will not carry any goods of any description that would invalidate or limit such policies or do any other act or permit to be done anything which could reasonably be expected to invalidate or limit any such insurance policy. 10.5 FLIGHT CHARGES. 10.5.1 LESSEE will pay promptly when due all enroute navigation charges, navigation service charges and all other charges payable by LESSEE for the use of or for services provided at any airport, whether in respect of the Aircraft or any other aircraft of LESSEE, and will indemnify and hold LESSOR harmless in respect of the same. This indemnity will continue in full force and effect notwithstanding the termination or expiration of the Lease Term for any reason or the return of the Aircraft. 10.5.2 If requested by LESSOR, LESSEE will provide LESSOR with a list of the airports to which LESSEE regularly operates the Aircraft or its other aircraft. LESSEE hereby authorizes Eurocontrol or another aviation authority or airport or creditor claiming rights on the Aircraft to confirm the status of LESSEE's payments to such creditor for the Aircraft and its other aircraft, as and when requested by LESSOR. ARTICLE 11 SUBLEASES 11.1 NO SUBLEASE WITHOUT LESSOR CONSENT. LESSEE WILL NOT SUBLEASE OR PART WITH POSSESSION OF THE AIRCRAFT (EXCEPT FOR MAINTENANCE AND REPAIR) AT ANY TIME WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR (NOT TO BE UNREASONABLY WITHHELD) AND IN ACCORDANCE WITH SUCH REQUIREMENTS AS MAY FROM TIME TO TIME BE AGREED IN WRITING BETWEEN LESSOR AND LESSEE. The wet leasing of the Aircraft during the Lease Term (in which LESSEE and its crews retain operational control of the Aircraft) will not be considered a sublease of the Aircraft. 11.2 LESSOR COSTS. LESSEE will indemnify LESSOR on demand for all out-of-pocket expenses (including legal fees) incurred in connection with LESSOR's assessment of the subleasing proposal (whether or not LESSOR's consent to such sublease is ultimately given) and implementation of the sublease. 11.3 ANY APPROVED SUBLEASE. Any sublease approved by LESSOR will be for a term no greater than the remaining Lease Term and contain provisions consistent with this Lease protecting LESSOR's title to the Aircraft, providing appropriate LESSOR indemnities, regarding the maintenance and repair standards for the Aircraft, concerning the insurances which will be carried by the sublessee and the circumstances which constitute a Total Loss of the Aircraft. Any such sublease will be subject and subordinate to this Lease. In its sole discretion, LESSOR may require an opinion of counsel in connection with such sublease, including LESSOR's right to repossess the Aircraft in the event of an Event of Default hereunder or under the sublease. LESSEE will not amend the terms of any approved sublease without the prior written consent of LESSOR, which will not be unreasonably withheld. 11.4 ASSIGNMENT OF SUBLEASE. Any approved sublease will be assigned to LESSOR as security. LESSEE will deliver the original counterpart of the sublease to LESSOR and make any filings necessary to protect LESSOR's security interest. 11.5 CONTINUED RESPONSIBILITY OF LESSEE. LESSEE will continue to be responsible for performance of its obligations under this Lease during any period of sublease. ARTICLE 12 MAINTENANCE AND USE OF AIRCRAFT 12.1 GENERAL OBLIGATION. 12.1.1 During the Lease Term and until the Aircraft is returned to LESSOR, LESSEE alone has the obligation, at its expense, to maintain and repair the Aircraft, Engines and all of the Parts (a) in accordance with the Maintenance Program, (b) in accordance with the rules and regulations of the Aviation Authority, (c) in accordance with Manufacturer's type design, (d) in accordance with any other regulations or requirements necessary in order to maintain a valid Certificate of Airworthiness for the Aircraft and meet the requirements at all times during the Lease Term and upon return of the Aircraft to LESSOR for issuance of a Standard Certificate of Airworthiness for transport category aircraft issued by the Aviation Authority (except during those periods when the Aircraft is undergoing maintenance or repairs as required or permitted by this Lease) and (e) in the same manner and with the same care as used by LESSEE or its sublessee with respect to similar aircraft and engines operated by LESSEE or its sublessee and without in any way discriminating against the Aircraft. 12.1.2 LESSEE will maintain and repair the Engines in the same manner and in the equivalent time frame to its other engines and LESSEE will not discriminate against any of the Engines in respect of the repair and maintenance. 12.1.3 LESSEE will not enter into any Engine maintenance cost per flight hour, power-by-the-hour or similar agreement with Engine manufacturer or any other Engine maintenance facility or organization without LESSOR's prior written consent. 12.2 SPECIFIC OBLIGATIONS. Without limiting Article 12.1, LESSEE agrees that such maintenance and repairs will include but will not be limited to each of the following specific items: (a) performance in accordance with the Maintenance Program of all routine and non-routine maintenance work; (b) incorporation in the Aircraft of all Airworthiness Directives; (c) incorporation in the Aircraft of all service bulletins of Manufacturer, the Engine manufacturer and other vendors which LESSEE schedules to adopt within the Lease Term for the rest of its Boeing 737-800 aircraft fleet. It is the intent of the parties that the Aircraft will not be discriminated from the rest of LESSEE's fleet in service bulletin compliance (including method of compliance) or other maintenance matters. LESSEE will not discriminate against the Engines with respect to Overhaul build standards and life-limited part replacements; (d) incorporation in the Maintenance Program for the Aircraft of a corrosion prevention and control program; (e) maintaining in English and keeping in an up-to-date status the records and historical documents set forth in Attachment 1 of Exhibit I; (f) maintaining historical records, in English, for on condition, condition-monitored, hard time and life-limited Parts (including tags from the manufacturer of such Part or a repair facility which evidence that such Part is new or overhauled and establish authenticity, total time in service and time since overhaul for such Part), the hours and cycles the Aircraft and Engines operate and all maintenance and repairs performed on the Aircraft; and (g) properly documenting all repairs, Modifications and alterations and the addition, removal or replacement of equipment, systems or components in accordance with the rules and regulations of the Aviation Authority and reflecting such items in the Aircraft Documentation. In addition, all repairs to the Aircraft will be accomplished in accordance with Manufacturer's Structural Repair Manual (or FAA-approved data supported by FAA Form 8110-3 or equivalent). All Modifications and alterations will also be accomplished in accordance with FAA-approved data supported by FAA Form 8110-3 or equivalent. 12.3 REPLACEMENT OF PARTS. 12.3.1 LESSEE, at its own cost and expense, will promptly replace all Parts which may from time to time become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or rendered unfit or beyond economical repair (BER) for any reason. In the ordinary course of maintenance, service, repair, overhaul or testing, LESSEE may remove any Part provided that LESSEE replaces such Part as promptly as practicable. All replacement Parts will (a) be free and clear of all Security Interests (except Permitted Liens) of any kind or description, (b) be in airworthy condition and of at least equivalent model, service bulletin and modification status and have a value and utility at least equal to the Parts replaced, assuming such replaced Parts were in the condition and repair required to be maintained by the terms hereof and (c) have a current "serviceable tag" of the manufacturer or maintenance facility providing such items to LESSEE, indicating that such Parts are new, serviceable or Overhauled. So long as a substitution meets the requirements of the Maintenance Program and Aviation Authority, LESSEE may substitute for any Part a part that does not meet the requirements of the foregoing sentence if a complying Part cannot be procured or installed within the available groundtime of the Aircraft and as soon as practicable the noncomplying part is removed and replaced by a complying Part. 12.3.2 All Parts removed from the Airframe or any Engine will remain the property of LESSOR and subject to this Lease no matter where located, until such time as such Parts have been replaced by Parts (which have been incorporated or installed in or attached to the Airframe or such Engine) which meet the requirements for replacement Parts specified above and title to such replacement Parts has passed to LESSOR under the Laws of the State of Registration and LEX SITUS. To the extent permitted by the Laws of the State of --- ----- Registration and the LEX SITUS it is the intent of LESSOR and LESSEE that without further --- ----- act and immediately upon any replacement Part becoming incorporated, installed or attached to the Airframe or an Engine as above provided, (a) title to the removed Part will thereupon vest in LESSEE, free and clear of all rights of LESSOR, (b) title to the replacement Part will thereupon vest in LESSOR free and clear of all rights of LESSEE and (c) such replacement Part will become subject to this Lease and be deemed to be a Part hereunder to the same extent as the Parts originally incorporated or installed in or attached to the Airframe or such Engine. 12.4 REMOVAL OF ENGINES. 12.4.1 If an Engine is removed for testing, service, repair, maintenance, Overhaul work, alterations or modifications, title to such Engine will remain vested in LESSOR. 12.4.2 LESSEE will be entitled to remove any of the Engines from the Aircraft and install another engine or engines on the Aircraft, provided that LESSEE complies with each of the following obligations: (a) the insurance requirements set forth in Article 17 and Exhibit C are in place; (b) LESSEE ensures that the identification plates referred to in Article 14 are not removed from any Engine upon such Engine being detached from the Aircraft; and (c) title to the Engine remains with LESSOR free from all Security Interests (except Permitted Liens) regardless of the location of the Engine or its attachment to or detachment from the Aircraft. 12.5 POOLING OF ENGINES AND PARTS. With LESSOR's prior written consent, not to be unreasonably withheld, LESSEE may subject the Engines and Parts to normal interchange or pooling agreements with responsible commercial air carriers customary in the airline industry and entered into by LESSEE in the ordinary course of its business with respect to its Boeing 737-800 fleet generally, so long as (a) in the case of pooling of an Engine, such Engine is returned to LESSEE within two (2) months, (b) no transfer of title to the Engine occurs, (c) all other terms of this Lease continue to be observed with respect to the Engines or Parts, including but not limited to Articles 8, 10, 12, 13, 14, 15, 16, 17 and 18 and (d) LESSEE continues to be fully responsible to LESSOR for the performance of all of its obligations hereunder. 12.6 INSTALLATION OF ENGINES ON OTHER AIRCRAFT. Any Engine removed from the Aircraft may be installed on another airframe in LESSEE's fleet which utilizes engines of the same type as the Engine only if one of the situations described in this Article 12.6 exists: 12.6.1 LESSEE or LESSOR has title to such other aircraft free and clear of all Security Interests (except Permitted Liens). 12.6.2 LESSEE, LESSOR and all of the Creditors of LESSEE of such aircraft enter into an engines cooperation agreement in form and substance acceptable to LESSOR in which each party agrees to recognize one another's rights in the engines. LESSEE will reimburse LESSOR and LESSOR's Lender for their reasonable attorneys' fees and costs in negotiating and finalizing engine cooperation agreement arrangements with LESSEE and its Creditors. 12.6.3 Such other aircraft is subject to a Creditor Agreement (but no other Security Interests except Permitted Liens) which by its terms expressly or effectively states that such Creditor and its successors and assigns will not acquire any right, title or interest in any Engine by reason of such Engine being installed on such aircraft. LESSEE hereby agrees that if LESSOR's title to an Engine is in fact impaired under any such Creditor Agreement, such impairment will be a Total Loss of such Engine and the provisions of Article 18.5 will apply. To the extent another Creditor Agreement contains such provisions, then LESSOR hereby agrees for the benefit of the Creditor of such Creditor Agreement that neither LESSOR nor its successors or assigns will acquire or claim any right, title or interest in any engine in which LESSEE or another Creditor has an interest as a result of such engine being installed on the Airframe. 12.7 MODIFICATIONS. 12.7.1 No modification, alteration, addition or removal to the Aircraft ("MODIFICATION") expected to cost over Five Hundred Thousand U.S. Dollars (US$500,000) or deviation from the Aircraft's original type design or configuration will be made without the prior written consent of LESSOR, which consent will not be unreasonably withheld. "Modifications" do not include Airworthiness Directives or Manufacturer's recommended service bulletins, for which LESSOR's consent is not required. 12.7.2 LESSOR may review LESSEE's proposed designs, plans, engineering drawings and diagrams, and flight and maintenance manual revisions for any proposed Modification. If requested by LESSOR, LESSEE will furnish LESSOR (at LESSEE's expense) with such documents in final form and any other documents required by Law, as a result of such Modification. All Modifications incorporated on the Aircraft will be properly documented in the Aircraft Documentation and be fully approved by the Aviation Authority. 12.7.3 Notwithstanding any other provision of this Lease, no Modification will be made which has the effect of decreasing the utility or value of the Aircraft. 12.7.4 No Modification will be made by LESSEE if an Event of Default exists and is continuing hereunder. 12.7.5 Unless otherwise agreed by LESSOR in writing, all non-severable or structural Modifications will forthwith become a part of the Aircraft and LESSEE relinquishes to LESSOR all rights and title thereto. However, all severable Modifications will remain the property of LESSEE or the third-party owner and, at LESSOR's request and LESSEE's cost, will be removed from the Aircraft prior to return of the Aircraft, with LESSEE restoring the Aircraft to the condition it was in prior to the Modification. Notwithstanding the foregoing, no such removal will be permitted without LESSOR's permission after the occurrence of an Event of Default hereunder and immediately upon the occurrence of an Event of Default hereunder, without the requirement of any further act or notice, all right, title and interest in such Modifications will immediately vest in LESSOR. 12.7.6 LESSOR will bear no liability for the cost of Modifications of the Aircraft whether in the event of grounding or suspensions of certification, or for any other cause. 12.8 PERFORMANCE OF WORK BY THIRD PARTIES. Whenever maintenance and repair work on the Aircraft or Engines will be regularly performed by a Person other than LESSEE, such Person will be an FAA-authorized repair station. 12.9 REPORTING REQUIREMENTS. 12.9.1 Commencing with a report furnished ten (10) days after the end of the calendar month in which Delivery occurs, LESSEE will furnish to LESSOR a Monthly Report in English in the form attached hereto as Exhibit J. Each Monthly Report will be furnished within ten (10) days after the end of each calendar month, except that the Monthly Report pertaining to the last month (or any portion thereof) of the Lease Term will be furnished to LESSOR on the Termination Date. 12.9.2 On each anniversary of the Delivery Date, LESSEE will provide LESSOR with a Technical Evaluation Report for the Aircraft in the form and substance of Exhibit L, as revised. 12.10 INFORMATION REGARDING MAINTENANCE PROGRAM. LESSEE will provide LESSOR with a copy of or information regarding the Maintenance Program for the Aircraft, as requested by LESSOR. 12.11 LESSOR RIGHTS TO INSPECT AIRCRAFT. On reasonable notice, LESSOR and/or its authorized agents or representatives will have the right to inspect the Aircraft and Aircraft Documentation. LESSOR agrees that such requests will be coordinated with LESSEE so as to cause the minimum practical disturbance to LESSEE's operation or its personnel. LESSEE agrees to cooperate with LESSOR in making the Aircraft and Aircraft Documentation available to such authorized technical teams. No such inspection shall include opening panels, bays, or the like (although LESSOR may observe those that are then open), or disassembling any item. LESSOR will have no duty to make any such inspection and will not incur any liability or obligation by reason of (and LESSEE's indemnity obligations pursuant to Article 16 will apply notwithstanding) not making any such inspection or by reason of any reports it receives or any reviews it may make of the Aircraft records. ARTICLE 13 TITLE AND REGISTRATION 13.1 TITLE TO THE AIRCRAFT DURING LEASE TERM. Title to the Aircraft will be and remain vested in LESSOR. LESSOR and LESSEE intend this Lease to be a "true lease". LESSEE will have no right, title or interest in the Aircraft except as provided in this Lease. 13.2 REGISTRATION OF AIRCRAFT. LESSEE at its sole cost and expense will (a) register and maintain registration of the Aircraft in the name of LESSOR at the register of aircraft in the State of Registration and (b) from time to time take all other steps then required by Law (including the Geneva Convention if applicable) or by practice, custom or understanding or as LESSOR may reasonably request to protect and perfect LESSOR's interest in the Aircraft and this Lease in the State of Registration or in any other jurisdictions in or over which LESSEE may operate the Aircraft. 13.3 FILING OF THIS LEASE. To the extent permitted by Law and in accordance with the requirements of the Law from time to time, LESSEE at its sole cost and expense will cause this Lease to be kept, filed, recorded and refiled or rerecorded in the State of Registration and in any other offices necessary to protect LESSOR's rights hereunder. 13.4 EVIDENCE OF REGISTRATION AND FILINGS. As LESSOR may reasonably request from time to time, LESSEE will furnish to LESSOR an opinion of counsel or other evidence reasonably satisfactory to LESSOR of the registrations and filings required hereunder. ARTICLE 14 IDENTIFICATION PLATES LESSOR will affix and LESSEE will at all times maintain on the Airframe and each Engine the identification plates containing the following legends or any other legend reasonably requested by LESSOR in writing: 14.1 AIRFRAME IDENTIFICATION PLATES. Location: One to be affixed to the Aircraft structure above the forward entry door adjacent to and not less prominent than that of Manufacturer's data plate and another in a prominent place on the flight deck. Size: No smaller than 4" x 6". Legend: "THIS AIRCRAFT IS OWNED BY INTERNATIONAL LEASE FINANCE CORPORATION. MANUFACTURER'S SERIAL NO: 30033 OWNER'S ADDRESS: INTERNATIONAL LEASE FINANCE CORPORATION 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States of America Fax: (310) 788-1990" 14.2 ENGINE IDENTIFICATION PLATES. Location: The legend on the plate must be visible. Size: No smaller than 2" x 6". "THIS ENGINE IS OWNED BY INTERNATIONAL LEASE FINANCE CORPORATION, LOS ANGELES, CALIFORNIA, USA." ARTICLE 15 TAXES 15.1 GENERAL OBLIGATION OF LESSEE. Except as set forth in Article 15.2, LESSEE agrees to pay promptly when due, and to indemnify and hold harmless LESSOR on a full indemnity basis from, all license and registration fees and all taxes, fees, levies, imposts, duties, charges or withholdings of any nature whatsoever (including without limitation any value added, franchise, transfer, sales, gross receipts, use, business, occupation, excise, personal property, real property, stamp or other tax) together with any assessments, penalties, fines, additions to tax or interest thereon, however or wherever imposed (whether imposed upon LESSEE, LESSOR, on all or part of the Aircraft, the Engines or otherwise), by any Government Entity or taxing authority in the U.S., any State thereof, or any foreign country or by any international taxing authority, upon or with respect to, based upon or measured by any of the following (collectively, "TAXES"): (a) the Aircraft, the Engines or any Parts. (b) the use, operation or maintenance of the Aircraft or carriage of passengers or freight during the Lease Term. (c) this Lease, the payments due hereunder and the terms and conditions hereof. (d) the return of the Aircraft to LESSOR or other use or disposition of the Aircraft by LESSEE. 15.2 EXCEPTIONS TO INDEMNITY. The indemnity provided in Article 15.1 does not extend to any of the following Taxes: (a) Imposed by the U.S. (including without limitation any taxes collected by withholding) or any state or local government or governmental subdivision or state or local taxing authority in the U.S. (including any possession or territory of the U.S.) or by any foreign government, taxing authority or governmental subdivision of a foreign country which are based on, or measured by, the receipts, gross or net income, capital, net worth, franchises, excess profits, or conduct of business (including minimum taxes, withholding taxes and taxes on or measured by any items of tax preference) of LESSOR, except to the extent that such Tax would not have been imposed on or payable by LESSOR but for the location, use, registration or operation of the Aircraft or any part thereof, or any place of business or any activity of LESSEE in the jurisdiction imposing such Tax. (b) Imposed as a result of LESSOR's transfer, mortgage, pledge, financing or other disposition by LESSOR of all or a portion of its interest in the Aircraft or this Lease except a transfer or sale resulting from an exercise of remedies pursuant to Article 25.3 hereunder or in connection with a termination of the Lease pursuant to Article 18 hereof. (c) Attributable to the period prior to the Delivery Date or after return of the Aircraft to LESSOR in accordance with this Lease. (d) Attributable to LESSOR's gross negligence, willful misconduct or breach of this Lease. 15.3 AFTER-TAX BASIS. The amount which LESSEE is required to pay with respect to any Taxes indemnified against under Article 15.1 is an amount sufficient to restore LESSOR on an after-tax basis to the same position LESSOR would have been in had such Taxes not been incurred. 15.4 CLAIMS AND CONTESTS. If a written claim is received by LESSOR for Taxes, which claim, if sustained, would require the payment of an indemnity by LESSEE pursuant to this Article 15, LESSOR shall notify LESSEE of such claim within thirty (30) days after its receipt, provided that failure to provide such notice within thirty (30) days will not relieve LESSEE of any indemnification obligation pursuant to this Article 15 if such failure does not preclude LESSEE from exercising its contest rights hereunder. Payments due from LESSEE to LESSOR pursuant to this Article 15 shall be made directly to LESSOR within thirty (30) days of written demand by LESSOR to LESSEE. If requested by LESSEE in writing, LESSOR shall upon receipt of indemnity reasonably satisfactory to it and at the expense of LESSEE (including, without limitation, all reasonable costs, expenses, legal and accountants' fees, and disbursements, penalties, interest incurred in contesting such claim, and additions to tax) in good faith, in the name of LESSOR or, if requested by LESSEE, in the name of LESSEE (or permit LESSEE, if desired by LESSEE, to contest in the name of LESSEE) if permissible under applicable laws, the validity, applicability or amount of such Taxes by (i) resisting payment thereof if practicable only if adequate reserves have been made for such Taxes or, if required, an adequate bond has been posted, (ii) paying the same under protest, if protest shall be necessary and proper, (iii) if payment shall be made, using reasonable efforts to obtain a refund thereof in appropriate administrative and judicial proceedings, and (iv) taking such other action as is reasonably requested by LESSEE from time to time including not paying such Taxes only if adequate reserves have been made for such Taxes or, if required, an adequate bond has been posted. LESSOR shall determine the method of any contest and (in good faith consultation with LESSEE) control the conduct thereof. Notwithstanding anything contained in this Article 15.4, LESSOR will not be required to contest, or to continue to contest, the validity, applicability or amount of any Tax (or portion thereof) (x) if such contest would result in any material risk of criminal penalties or any material risk of sale, forfeiture or loss of the Aircraft, (y) if an Event of Default has occurred and is continuing, or (z) in the case of a contest of a Tax reflected on a return of LESSOR with other taxes of LESSOR that are not indemnified by the LESSEE hereunder, if LESSEE shall not have furnished an opinion of independent tax counsel selected by the LESSEE, and reasonably satisfactory to LESSOR, that a reasonable basis exists for such contest. If LESSOR shall obtain a refund of all or any part of such Taxes for which an indemnity was paid by LESSEE, LESSOR shall pay LESSEE the amount of such refund; PROVIDED, HOWEVER, that such amount shall not be payable before such time as LESSEE shall have made all payments or indemnities to LESSOR then due under this Article 15 and under the Lease or while an Event of Default shall have occurred and be continuing. If in addition to such refund LESSOR shall receive an amount representing interest on the amount of such refund, LESSEE shall be paid that proportion of such interest which is fairly attributable to Taxes paid with an indemnity payment by LESSEE prior to the receipt of such refund or interest and increased by any taxes saved by reason of the deductibility of such payment by LESSOR. LESSEE shall not be deemed to be in default under any of the indemnification provisions under this Article 15 so long as it or LESSOR shall diligently prosecute such contest and LESSEE has indemnified LESSOR to LESSOR's reasonable satisfaction. In case any report or return is required to be made with respect to any obligation of LESSEE under this Article 15.4 or arising out of this Article 15.4, LESSEE will either timely make such report or return in such manner as will show the ownership of the Aircraft in LESSOR, and will as soon as possible send a copy of such report or return to LESSOR, or will notify LESSOR of such requirement and prepare and deliver such report or return to LESSOR in such manner as shall be satisfactory to LESSOR. 15.5 REFUNDS. Upon receipt by LESSOR of a refund of all or any part of any Taxes (including any deductions or withholdings referred to in Article 15.1) which LESSEE has paid, LESSOR will pay to LESSEE the net amount of such Taxes refunded. 15.6 COOPERATION IN FILING TAX RETURNS. LESSEE and LESSOR will cooperate with one another in providing information which may be reasonably required to fulfill each party's tax filing requirements and any audit information request arising from such filing. ARTICLE 16 INDEMNITIES 16.1 GENERAL INDEMNITY. Except as set forth in Article 16.2, LESSEE agrees to indemnify and hold harmless LESSOR and its officers, directors, employees, agents and shareholders (individually an "INDEMNITEE" and collectively "INDEMNITEES") from any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs, disbursements and expenses (including legal fees, costs and related expenses) of every kind and nature, whether or not any of the transactions contemplated by this Lease are consummated (collectively "EXPENSES"), which are imposed on, incurred by or asserted against any Indemnitee and which are in any way relating to, based on or arising out of any of the following: (a) this Lease or any transactions contemplated hereby; (b) the operation, possession, use, non-use, control, leasing, subleasing, maintenance, storage, overhaul, testing, inspections or acceptance flights at return of the Aircraft, any Engine or any Part during the Lease Term by LESSEE, any sublessee or any other Person, whether or not the same is in compliance with the terms of this Lease, including without limitation claims for death, personal injury, property damage, other loss or harm to any Person and claims relating to any Laws, including without limitation environmental control, noise and pollution laws, rules or regulations; (c) the manufacture, design, acceptance, rejection, delivery, return, sale in connection with an Event of Default, import, export, condition, repair, modification, servicing, rebuilding, enforcement of warranties whether in LESSOR's or LESSEE's name, customer and product support provided by Manufacturer and other vendors, airworthiness, registration, reregistration, performance, sublease, merchantability, fitness for use, substitution or replacement of the Aircraft, Engine or any Part under this Lease or other transfer of use or possession of the Aircraft, Engine or any Part, including under a pooling or interchange arrangement, including without limitation latent and other defects, whether or not discoverable and patent, trademark or copyright infringement; (d) any non-compliance by LESSEE with any term of this Lease or the falsity or inaccuracy of any representation or warranty of LESSEE set forth herein; (e) the prevention or attempt to prevent the arrest, confiscation, seizure, taking in execution, impounding, forfeiture or detention of the Aircraft, or in securing the release of the Aircraft; or (f) as a consequence of any Default in payment by LESSEE of any sum to be paid by LESSEE when due under this Lease or any other Default by LESSEE in the due and punctual performance of its obligations under this Lease. The foregoing indemnity by LESSEE is intended to include and cover any Expense to which an Indemnitee may be subject (in contract, tort, strict liability or under any other theory) regardless of the negligence, active or passive or any other type, of such Indemnitee, so long as such Expense does not fall within any of the exceptions listed in Article 16.2. 16.2 EXCEPTIONS TO GENERAL INDEMNITIES. The indemnity provided for in Article 16.1 will not extend to Expenses of any Indemnitee to the extent resulting from or arising out of any of the following: (a) Expenses which have resulted from the willful misconduct of such Indemnitee; (b) Expenses which LESSEE and LESSOR mutually agree or, absent mutual agreement, are judicially determined to be attributable to acts or events which occur after the Termination Date and return of the Aircraft to LESSOR in the condition required hereunder, but in any such case only to the extent not attributable to acts or omissions of LESSEE; (c) Expenses representing Taxes, it being acknowledged that the terms of Article 15 apply exclusively to LESSEE's indemnity obligations with respect to Taxes; (d) Expenses due to the breach by LESSOR of its covenant of quiet enjoyment pursuant to Article 21.2 (except to the extent covered by LESSEE's insurances); (e) Expenses which arise in connection with the transfer by LESSOR of any interest in the Aircraft or this Lease, except for any transfer in connection with any Event of Default or a Total Loss of the Aircraft or an Engine. (f) Expenses which are solely attributable to the representation or warranty of LESSOR contained in or made pursuant to any Operative Document being untrue; (g) Expenses which are solely related to the failure of such Indemnitees to perform or observe any agreement, covenant, or condition on its part to be performed or observed in any Operative Document; (h) Expenses which are solely an ordinary and usual internal customary operating expense; or (i) Expenses which are solely related to a breach of Article 21.1.6, or (j) Expenses which are solely related to a LESSOR's Lien. 16.3 AFTER-TAX BASIS. The amount which LESSEE will be required to pay with respect to any Expense indemnified against under Article 16.1 will be an amount sufficient to restore the Indemnitee, on an after-tax basis, to the same position such Indemnitee would have been in had such Expense not been incurred. 16.4 TIMING OF PAYMENT. It is the intent of the parties that each Indemnitee will have the right to indemnification for Expenses hereunder as soon as a claim is made and as soon as an Expense is incurred, whether or not such claim is meritorious and whether or not liability is established (but subject to Articles 16.2 and 16.8). LESSEE will pay an Indemnitee for Expenses pursuant to this Article 16 within ten (10) days after receipt of a written demand therefor from such Indemnitee accompanied by a written statement describing in reasonable detail the basis for such indemnity (but not before payment is due from such Indemnitee). 16.5 SUBROGATION. Upon the payment in full of any indemnity pursuant to this Article 16 by LESSEE, LESSEE will be subrogated to any right of the Indemnitee in respect of the matter against which such indemnity has been made. 16.6 NOTICE. Each Indemnitee and LESSEE will give prompt written notice one to the other of any liability of which such party has knowledge for which LESSEE is, or may be, liable under Article 16.1; provided, however, that failure to give such notice will not terminate any of the rights of Indemnitees under this Article 16 except to the extent that LESSEE has been materially prejudiced by the failure to provide such notice. 16.7 REFUNDS. If any Indemnitee obtains a recovery of all or any part of any amount which LESSEE has paid to such Indemnitee, such Indemnitee will pay to LESSEE the net amount recovered by such Indemnitee. 16.8 DEFENSE OF CLAIMS. (a) LESSEE and its insurers will have the right (in each such case at LESSEE's sole expense) to investigate or, provided that LESSEE or its insurers have not reserved the right to dispute liability with respect to any insurance policies pursuant to which coverage is sought, defend or compromise any claim covered by insurance for which indemnification is sought pursuant to Article 16.1 and each Indemnitee will cooperate with LESSEE or its insurers with respect thereto. If LESSEE or its insurers are retaining attorneys to handle such claim, such counsel must be reasonably satisfactory to the Indemnitees. If not, the Indemnitees will have the right to retain counsel of their choice at LESSEE's expense. (b) Unless LESSOR agrees in writing otherwise, no settlement of any claim hereunder may require LESSOR to agree to any remedy apart from the payment of money damages (for which such payment of money damages LESSEE will in any event indemnify the Indemnitees). (c) In no event shall any Indemnitee enter into a settlement or other compromise with respect to any Expense without LESSEE's prior written consent (which shall not be unreasonably withheld or delayed), unless such Indemnitee waives its right to be indemnified with respect to such Expense under this Article 16. (d) To the extent that any Expense indemnified by LESSEE hereunder may be covered by insurance maintained by LESSEE, at LESSEE's expense, each Indemnitee agrees to cooperate with the insurers in the exercise of their rights to investigate, defend, or compromise that Expense as may be required to retain the benefits of the insurance for that Expense. (e) If an Indemnitee is not a party to this Lease, LESSEE may require that Indemnitee to agree in writing to the terms of this Article 16 before making any payment to such Indemnitee under this Article 16. 16.9 SURVIVAL OF OBLIGATION. Notwithstanding anything in this Lease to the contrary, the provisions of this Article 16 will survive the Termination Date and continue in full force and effect notwithstanding any breach by LESSOR or LESSEE of the terms of this Lease, the termination of the lease of the Aircraft to LESSEE under this Lease or the repudiation by LESSOR or LESSEE of this Lease. ARTICLE 17 INSURANCE 17.1 CATEGORIES OF INSURANCE. Throughout the Lease Term and until the Termination Date LESSEE will, at its own expense, effect and maintain in full force and effect the types of insurance and amounts of insurance (including deductibles) described in Exhibit C through such brokers and with such insurers favorably regarded in the airline industry. 17.2 INSURANCE FOR INDEMNITIES. The insurance referred to in Article 17.1 will in each case include and insure (to the extent of the risks covered by the policies) the indemnity provisions of Article 16 and LESSEE will maintain such insurance of the indemnities for a minimum of two (2) years following the Termination Date. 17.3 INSURANCE REQUIRED BY MANUFACTURER. During the Lease Term, LESSEE will carry the insurance required by Manufacturer in connection with LESSOR's assignment of Manufacturer's warranties and product support to LESSEE. 17.4 RENEWAL. Not less than two (2) Business Days before the expiration or termination date of any insurance required hereunder, LESSEE will provide LESSOR with fax confirmation from LESSEE's insurance brokers that renewed certificates of insurance evidencing the renewal or replacement of such insurance and complying with Exhibit C will be issued on the termination date of the prior certificate. Within seven (7) days after such renewal, LESSEE will furnish its brokers' certificates of insurance to LESSOR. 17.5 ASSIGNMENT OF RIGHTS BY LESSOR. If LESSOR assigns all or any of its rights under this Lease as permitted by this Lease or otherwise disposes of any interest in the Aircraft to any other Person, LESSEE will, upon request, procure that (to the extent of the assignment or disposition) such Person hereunder be added as loss payee and/or additional assured in the policies effected hereunder and enjoy the same rights and insurance enjoyed by LESSOR under such policies. To the extent of its retained interest or as provided in Article 24.2.1, LESSOR will nevertheless continue to be covered by such policies. 17.6 DEDUCTIBLES. If there is a material adverse change in the financial condition of LESSEE which LESSOR reasonably believes will not enable LESSEE to pay the deductible upon the occurrence of a partial loss of the Aircraft or an Engine, then LESSOR may require LESSEE at LESSEE's expense to lower its deductibles on the insurance maintained hereunder to a level which is available on commercially reasonable terms in the insurance market. 17.7 OTHER INSURANCE. LESSOR may from time to time by notice to LESSEE require LESSEE at LESSEE's expense to effect such other insurance or such variations to the terms of the existing insurance as may then be customary in the airline industry for aircraft of the same type as the Aircraft and at the time commonly available in the insurance market. 17.8 INFORMATION. LESSEE will provide LESSOR with any information reasonably requested by LESSOR from time to time concerning the insurance maintained with respect to the Aircraft or in connection with any claim being made or proposed to be made thereunder. 17.9 CURRENCY. All proceeds of insurance pursuant to this Lease will be payable in Dollars except as may be otherwise agreed by LESSOR. 17.10 GROUNDING OF AIRCRAFT. If at any time any of the insurance required pursuant to this Lease will cease to be in full force and effect, LESSEE will forthwith ground the Aircraft and keep the Aircraft grounded until such time as such insurance is in full force and effect again. 17.11 FAILURE TO INSURE. If at any time LESSEE fails to maintain insurance in compliance with this Article 17, LESSOR will be entitled but not bound to do any of the following (without prejudice to any other rights which it may have under this Lease by reason of such failure): (a) to pay any premiums due or to effect or maintain substitute insurance or otherwise remedy such failure in any reasonable manner (and LESSEE will upon demand reimburse LESSOR in full for any amount so expended in that connection); or (b) at any time while such failure is continuing, to require the Aircraft to remain at any airport or (as the case may be), proceed to and remain at any airport designated by LESSOR. 17.12 LIMIT ON HULL IN FAVOR OF LESSEE. LESSEE may carry hull all risks or hull war and allied perils on the Aircraft in excess of the Agreed Value (which Agreed Value is payable to LESSOR) only to the extent such excess insurance which would be payable to LESSEE in the event of a Total Loss does not exceed fifteen percent (15%) of the Agreed Value and only to the extent that such additional insurance will not prejudice the insurances required herein or the recovery by LESSOR thereunder. LESSEE agrees that it will not create or permit to exist any liens or encumbrances over the insurances, or its interest therein, except as constituted by this Lease. 17.13 MARKETPLACE LIMITATIONS. The insurance required by this Lease may be subject to any limitations generally prevailing in the airline insurance marketplace at the time (e.g., AVN67B). ARTICLE 18 LOSS, DAMAGE AND REQUISITION Throughout the Lease Term and until the Termination Date, LESSEE will bear all risk of loss, theft, damage and destruction to the Aircraft. 18.1 DEFINITIONS. In this Article 18: "AGREED VALUE" (CONFIDENTIAL MATERIAL OMITTED) The Agreed Value is set forth in March 2001 U.S. Dollars and will be increased in accordance with Manufacturer's announced escalation rate from March 1, 2001 to the Delivery Date. On each annual renewal date of LESSEE's insurance policy commencing on the renewal date following the first anniversary of the Lease Term, the Agreed Value will decrease by two percent (2.0%) of the then-existing Agreed Value. "NET TOTAL LOSS PROCEEDS" means the Total Loss Proceeds actually received by LESSOR following a Total Loss, less any legal and other out-of-pocket expenses or duties incurred by LESSOR in connection with the collection of such proceeds. "TOTAL LOSS" means any of the following in relation to the Aircraft, Airframe or any Engine and "TOTAL LOSS DATE" means the date set forth in parenthesis after each Total Loss: (a) destruction, damage beyond repair or being rendered permanently unfit for normal use for any reason (the date such event occurs or, if not known, the date on which the Aircraft, Airframe or Engine was last heard of); (b) actual, constructive, compromised, arranged or agreed total loss (the earlier of the date on which the loss is agreed or compromised by the insurers or thirty (30) days after the date of notice to LESSEE's brokers or insurers claiming such total loss); (c) requisition of title, confiscation, forfeiture or any compulsory acquisition of title or other similar event (the date on which the same takes effect); (d) sequestration, detention, seizure or any similar event for more than one hundred eighty (180) consecutive days (the earlier of the date on which insurers make payment on the basis of a total loss or the date of expiration of such period); (e) requisition for use for more than one hundred eighty (180) consecutive days, except as set forth in Article 18.8 (the earlier of the date on which the insurers make payment on the basis of a total loss or the date of expiration of such period); (f) in the case of an Engine, the event described in Article 12.6.3 (the date on which the same takes effect); "TOTAL LOSS PROCEEDS" means the proceeds of any insurance or any compensation or similar payment arising in respect of a Total Loss. 18.2 NOTICE OF TOTAL LOSS. LESSEE will notify LESSOR in writing within two (2) Business Days after a Total Loss Date of the Aircraft, Airframe or any Engine. 18.3 TOTAL LOSS OF AIRCRAFT OR AIRFRAME. If the Total Loss of the Aircraft or Airframe occurs during the Lease Term, the following will occur: 18.3.1 After the Total Loss Date and until receipt by LESSOR of the Agreed Value and all other amounts then due under this Lease, LESSEE will continue to pay Rent and the parties will perform all of their other obligations under this Lease. 18.3.2 On the date which is the earlier of the following dates: (a) the date on which the Total Loss Proceeds of the Aircraft or the Airframe are paid by LESSEE's insurance underwriters or brokers and (b) the date which falls sixty (60) days after the Total Loss Date, LESSEE will pay to LESSOR an amount equal to the sum of: (a) the Agreed Value and (b) all other amounts then due and payable under this Lease, less an amount equal to the Net Total Loss Proceeds received by LESSOR by such date. 18.3.3 LESSOR will apply the Net Total Loss Proceeds and any amounts received from LESSEE pursuant to Article 18.3.2 as follows: (a) first, in discharge of any unpaid Rent and any other amounts accrued and unpaid up to the date of LESSOR's receipt of the Agreed Value; (b) second, in discharge of the Agreed Value; and (c) third, payment of the balance, if any, to LESSEE. 18.3.4 Upon receipt by LESSOR of all monies payable by LESSEE in Article 18.3, provided no Default has occurred and is continuing, this Lease will terminate except for LESSEE's obligations under Articles 10.5, 15 and 16 which survive the Termination Date and the Security Deposit will be returned to LESSEE in accordance with Article 5.3.1. FOR AVOIDANCE OF DOUBT, THE AGREED VALUE OF THE AIRCRAFT WILL BE PAYABLE TO LESSOR PURSUANT TO THIS ARTICLE 18.3 IF A TOTAL LOSS OF THE AIRFRAME OCCURS EVEN IF THERE HAS NOT BEEN A TOTAL LOSS OF AN ENGINE OR ENGINES. 18.4 SURVIVING ENGINE(S). If a Total Loss of the Airframe occurs and there has not been a Total Loss of an Engine or Engines, then provided no Default has occurred and is continuing, at the request of LESSEE (subject to agreement of relevant insurers) and on receipt of all monies due under Article 18.3 and payment by LESSEE of all airport, navigation and other charges on the Aircraft, LESSOR will transfer all of its right, title and interest in the surviving Engine(s) to LESSEE, but without any responsibility, condition or warranty on the part of LESSOR other than as to freedom from any LESSOR's Lien. 18.5 TOTAL LOSS OF ENGINE AND NOT AIRFRAME. 18.5.1 Upon a Total Loss of any Engine not installed on the Airframe or a Total Loss of an Engine installed on the Airframe not involving a Total Loss of the Airframe, LESSEE will replace such Engine as soon as reasonably possible by duly conveying to LESSOR title to another engine (a) free and clear of all Security Interests (except Permitted Liens) of any kind or description, (b) in airworthy condition and of the same or improved model, service bulletin and modification status and having a value and utility at least equal to the Engine which sustained the Total Loss, and (c) not older (by reference to serial number or manufacture date) than three (3) years older than the oldest of the two Engines delivered by LESSOR to LESSEE with the Aircraft on the Delivery Date. Such replacement engine will be an Engine as defined herein and the Engine which sustained such Total Loss will cease to be an Engine. 18.5.2 LESSEE agrees at its own expense to take such action as LESSOR may reasonably request in order that any such replacement Engine becomes the property of LESSOR and is leased hereunder on the same terms as the destroyed Engine. LESSEE's obligation to pay Rent will continue in full force and effect, but an amount equal to the Net Total Loss Proceeds received by LESSOR with respect to such destroyed Engine will, subject to LESSOR's right to deduct therefrom any amounts then due and payable by LESSEE under this Lease, be paid to LESSEE. 18.6 OTHER LOSS OR DAMAGE. 18.6.1 If the Aircraft or any Part thereof suffers loss or damage not constituting a Total Loss of the Aircraft or the Airframe or any Engine, all the obligations of LESSEE under this Lease (including payment of Rent) will continue in full force. 18.6.2 In the event of any loss or damage to the Aircraft or Airframe which does not constitute a Total Loss of the Aircraft or the Airframe, or any loss or damage to an Engine which does not constitute a Total Loss of such Engine, LESSEE will at its sole cost and expense fully repair the Aircraft or Engine in order that the Aircraft or Engine is placed in an airworthy condition and substantially the same condition as it was prior to such loss or damage. All repairs will be performed in accordance with sound airline procedures. LESSEE will notify LESSOR forthwith of any loss, theft or damage to the Aircraft for which the cost of repairs is estimated to exceed Seven Hundred Fifty Thousand U.S. Dollars (US$750,000), together with LESSEE's proposal for carrying out the repair. In the event that LESSOR does not agree with LESSEE's proposals for repair, LESSOR will so notify LESSEE within two (2) Business Days after its receipt of such proposal. LESSEE and LESSOR will then consult with Manufacturer and LESSEE and LESSOR agree to accept as conclusive, and be bound by, Manufacturer's directions or recommendations as to the manner in which to carry out such repairs. If Manufacturer declines to give directions or recommendations, LESSEE will carry out the repairs in accordance with the directions of LESSOR. 18.6.3 To the extent that LESSOR has received insurance proceeds from LESSEE's insurers with respect to any loss or damage, LESSOR will (subject to LESSOR's right to deduct therefrom any amounts then due and payable by LESSEE under this Lease and submission by LESSEE of reasonable documentation confirming the completion of the repairs in accordance with the requirements of this Lease) pay to LESSEE insurance proceeds received by LESSOR as and when such repair work is performed on the Aircraft. 18.7 COPY OF INSURANCE POLICY. Promptly after LESSOR's request following the occurrence of a partial loss or Total Loss of the Aircraft or an Engine, LESSEE will provide LESSOR with a copy of LESSEE's insurance policy. 18.8 GOVERNMENT REQUISITION. If the Aircraft, Airframe or any Engine is requisitioned for use by any Government Entity, LESSEE will promptly notify LESSOR of such requisition. All of LESSEE's obligations hereunder will continue as if such requisition had not occurred. Except if a Default or an Event of Default has occurred and is continuing, all payments received by LESSOR or LESSEE from such Government Entity will be paid over to or retained by LESSEE. 18.9 CONVEYANCE TO LESSEE. Upon compliance by LESSEE with the applicable terms of Article 18.3 or 18.5, LESSOR will transfer to LESSEE the Airframe or Engine(s), as applicable, with respect to which such Total Loss. ARTICLE 19 CRAF PROGRAM 19.1 DEDICATION TO CRAF. LESSEE may transfer possession of the Airframe or any Engine to the United States of America or any instrumentality or agency thereof as part of the Civil Reserve Air Fleet Program authorized under 10 U.S.C. ss. 9511 ET SEQ. (or any substantially similar program) ("CRAF PROGRAM") for a period which includes (collectively, the "CRAF PROGRAM REQUISITION PERIOD") the entire period of requisition under the CRAF Program. If the CRAF Program Requisition Period extends beyond the Expiration Date provided by this Lease, then the Lease will be deemed to continue for six (6) months after the end of the CRAF Program Requisition Period at a monthly rental rate equal to the monthly rental rate during the Lease Term. If such extension extends beyond the Lease Term, then LESSEE will provide LESSOR with written notice of the proposed redelivery by the earlier of six (6) months prior to the proposed redelivery date or five (5) Business Days after the date of receipt of the actual notice given to LESSEE by the government prior to the government's redelivery date and LESSEE will return the Aircraft to LESSOR in the condition required by Article 23 on LESSEE's proposed redelivery date set forth in such notice. 19.2 NOTICE TO LESSOR. LESSEE will promptly notify LESSOR in writing in the event of the requisition for use of the Aircraft under CRAF activation by the U.S. Government. All of LESSEE's obligations under this Lease will continue to the same extent as if such requisition had not occurred. 19.3 REQUISITION OF ENGINE. If there is a requisition for use of any Engine (but not the Airframe) by the U.S. Government in connection with the CRAF Program, LESSEE will replace such Engine by complying with the terms of Article 18.5 hereof. 19.4 GOVERNMENT INDEMNIFICATION. Any provisions of this Lease to the contrary notwithstanding, if there is a requisition for use of the Aircraft pursuant to the CRAF Program and/or CRAF activation, LESSOR agrees that LESSEE's insurances described in Exhibit C may be supplemented by insurances provided under Title XIII of the Act, and/or U.S. Government indemnification (which Title XIII insurances and indemnification will be in amounts not less than those established in Exhibit C); provided, however, that LESSEE will remain responsible for full compliance with all the provisions of this Lease, including Articles 14 and 16, to the extent Title XIII and/or the U.S. Government indemnification do not satisfy LESSEE's obligations under this Lease. 19.5 NO GEOGRAPHIC LIMITS. If there is a requisition for use of the Aircraft pursuant to the CRAF Program and/or CRAF activation, there will be no limitation on the geographic area in which the Aircraft may be operated so long as, taken as a whole, LESSEE's insurance, the Title XIII insurance and/or the indemnification provided by the U.S. Government fully cover (without any geographic exclusions) LESSEE's Exhibit C insurance requirements. 19.6 NOTICE OF DEFAULT. If an Event of Default occurs under this Lease and LESSOR elects to pursue its remedies under Article 25.3(e) to terminate this Lease and repossess the Aircraft, LESSOR will so notify the U.S. Government by sending a written communication as follows: Headquarters Air Mobility Command AMC Contracting Office -- XOKA Scott Air Force Base, Illinois 62225-5007 19.7 RECEIPT OF PAYMENTS. Subject to the following sentence, all payments received by LESSOR or LESSEE from such Government Entity in connection with the requisition of the Aircraft under the CRAF Program will be paid over to or retained by LESSEE. If a Default has occurred and is continuing, all payments received by LESSEE or LESSOR from such Government Entity in connection with the requisition of the Aircraft under the CRAF Program may be used by LESSOR to satisfy any obligations owing by LESSEE. ARTICLE 20 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE 20.1 REPRESENTATIONS AND WARRANTIES. LESSEE represents and warrants the following to LESSOR as of the date of execution of this Lease and as of the Delivery Date: 20.1.1 CORPORATE STATUS. LESSEE is a corporation duly incorporated, validly existing and in good standing under the Laws of Indiana (or, on the Delivery Date, the state of its incorporation). It has the corporate power and authority to carry on its business as presently conducted and to perform its obligations hereunder. 20.1.2 GOVERNMENTAL APPROVALS. No authorization, approval, consent, license or order of, or registration with, or the giving of notice to the Aviation Authority or any other Government Entity is required for the valid authorization, execution, delivery and performance by LESSEE of this Lease, except as will have been duly effected as of the Delivery Date. 20.1.3 BINDING. LESSEE's Board of Directors has authorized LESSEE to enter into this Lease, any Side Letters hereto and any other documentation in connection with the leasing of the Aircraft from LESSOR (collectively, the "OPERATIVE DOCUMENTS") and perform its obligations under the Operative Documents. This Lease and the other Operative Documents have been duly executed and delivered by LESSEE and represent the valid, binding and enforceable obligations of LESSEE except as enforceability may be limited by bankruptcy, insolvency, reorganization or other Laws of general application affecting the enforcement of creditors' rights. When executed by LESSEE at Delivery, the same will apply to the Estoppel and Acceptance Certificate. 20.1.4 NO BREACH. The execution and delivery of the Operative Documents, the consummation by LESSEE of the transactions contemplated herein and compliance by LESSEE with the terms and provisions hereof do not and will not contravene any Law applicable to LESSEE, or result in any breach of or constitute any default under or result in the creation of any Security Interest upon any property of LESSEE, pursuant to any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which LESSEE is a party or by which LESSEE or its properties or assets may be bound or affected. When executed by LESSEE at Delivery, the same will apply to the Estoppel and Acceptance Certificate. 20.1.5 FILINGS. Except for any filing or recording that may be required by the FARs, no filing or recording of any instrument or document (including the filing of any financial statement) is necessary under the Laws of the State of Registration in order for this Lease to constitute a valid and perfected lease of record relating to the Aircraft. 20.1.6 LICENSES. LESSEE holds all licenses, certificates and permits from applicable Government Entities in the U.S. for the conduct of its business as a certificated air carrier and performance of its obligations under this Lease. 20.1.7 NO SUITS. There are no suits, arbitrations or other proceedings pending or threatened before any court or administrative agency against LESSEE which are reasonably likely to be determined adversely and, if adversely determined, would have a material adverse effect on the business, assets or condition (financial or otherwise) of LESSEE or its ability to perform under this Lease, except as described in the filings provided to LESSOR pursuant to Article 22. 20.1.8 GENERAL OBLIGATIONS. The obligations of LESSEE under this Lease are direct, general and unconditional obligations of LESSEE and rank or will rank at least PARI PASSU with all other present and future unsecured and unsubordinated obligations (including contingent obligations) of LESSEE, with the exception of such obligations as are mandatorily preferred by law and not by reason of any encumbrance. 20.1.9 NO SOVEREIGN IMMUNITY. LESSEE, under the Laws of the U.S. or of any other jurisdiction affecting LESSEE, is subject to private commercial law and suit. Neither LESSEE nor its properties or assets is entitled to sovereign immunity under any such Laws. LESSEE's performance of its obligations hereunder constitute commercial acts done for commercial purposes. 20.1.10 TAX RETURNS. All necessary federal and state income tax returns have been delivered by LESSEE to all relevant taxation authorities in the U.S. or any state thereof and LESSEE is not in default in the payment of any taxes due and payable as shown on any such returns or on any assessment received by LESSEE. 20.1.11 NO MATERIAL ADVERSE EFFECT. LESSEE is not in default under any agreement to which it is a party or by which it may be bound which would have a material adverse effect on its business, assets or condition. 20.1.12 NO DEFAULT UNDER THIS LEASE. At the time of execution of this Lease, no Default has occurred and is continuing and the financial statements provided to LESSOR pursuant to Article 22 fairly present the financial condition of LESSEE. 20.2 COVENANTS. LESSEE covenants to LESSOR that it will comply with the following throughout the entire Lease Term: 20.2.1 LICENSING. LESSEE will hold all licenses, certificates and permits from applicable Government Entities in the U.S. for the conduct of its business as a certificated air carrier and performance of its obligations under this Lease. LESSEE will advise LESSOR promptly in the event any such licenses, certificates or permits are cancelled, terminated, revoked or not renewed. 20.2.2 SOVEREIGN IMMUNITY. LESSEE, under the Laws of the U.S. or of any other jurisdiction affecting LESSEE, will continue to be subject to private commercial law and suit. Neither LESSEE nor its properties or assets will be entitled to sovereign immunity under any such Laws. LESSEE's performance of its obligations hereunder will constitute commercial acts done for commercial purposes. LESSEE will advise LESSOR promptly of any change in the foregoing. 20.2.3 INFORMATION ABOUT SUITS. LESSEE will promptly give to LESSOR a notice in writing of any suit, arbitration or proceeding against LESSEE before any court, administrative agency or Government Entity which is reasonably likely to be determined adversely and, if adversely determined, would materially adversely affect LESSEE's financial condition, affairs, operations or its ability to perform under this Lease. 20.2.4 MERGER OF LESSEE. (a) LESSEE shall not consolidate with or merge into any other Person under circumstances in which LESSEE is not the surviving corporation, or convey, transfer, or lease in one or more transactions all or substantially all of its assets to any other Person, unless: (i) such Person is organized, existing, and in good standing under the Laws of the U.S., any state of the U.S., or the District of Columbia, and, upon consummation of such transaction, such Person will be a U.S. Air Carrier; (ii) such Person executes and delivers to LESSOR a duly authorized, legal, valid, binding and enforceable agreement, reasonably satisfactory in form and substance to LESSOR, containing an effective assumption by such Person of the due and punctual performance and observance of each covenant, agreement and condition in the Operative Documents to be performed or observed by LESSEE; (iii) such Person makes such filings and recordings with the FAA pursuant to the Act as shall be necessary to evidence such consolidation or merger; (iv) LESSEE furnishes LESSOR an opinion of counsel reasonably satisfactory to LESSOR to the effect that such consolidation or merger has satisfied at the closing of such consolidation or merger items (i), (ii) and (iii) above; (v) immediately after giving effect to such consolidation or merger, no Default or Event of Default exists; (vi) unless LESSOR otherwise consents, immediately after giving effect to such consolidation or merger, such Person will have a tangible net worth of not less than sixty-five percent (65%) of the LESSEE's tangible net worth immediately prior to such merger; and (vii) upon such merger becoming effective, LESSOR will enjoy the same degree of protection under ss. 1110 of the Bankruptcy Code with respect to the Aircraft as LESSOR enjoyed prior to such merger. (b) Upon any such consolidation or merger of LESSEE with or into, or the conveyance, transfer, or lease by LESSEE of all or substantially all of its assets to, any Person in accordance with this Article 20.2.4, such Person will succeed to, and be substituted for, and may exercise every right and power of, LESSEE under the Operative Documents with the same effect as if such Person had been named as "LESSEE" therein. No such consolidation, merger, conveyance, transfer, or lease shall have the effect of releasing LESSEE or such Person from any of LESSEE's obligations, liabilities, covenants, or undertakings under this Lease. 20.2.5 RESTRICTION ON RELINQUISHMENT OF POSSESSION. LESSEE will not, without the prior consent of LESSOR, deliver, transfer or relinquish possession of the Aircraft except in accordance with Articles 11 and 12. 20.2.6 NO SECURITY INTERESTS. LESSEE will not create or agree to or permit to arise any Security Interest (other than Permitted Liens) on or with respect to the Aircraft, title thereto or any interest therein. LESSEE will forthwith, at its own expense, take all action as may be necessary to discharge or remove any such Security Interest if it exists at any time. LESSEE will within five (5) Business Days after becoming aware of the existence of any such Security Interest give written notice thereof to LESSOR. 20.2.7 REPRESENTATIONS TO OTHER PARTIES. LESSEE will not represent or hold out LESSOR as carrying goods or passengers on the Aircraft or as being in any way connected or associated with any operation of the Aircraft. ARTICLE 21 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSOR 21.1 REPRESENTATIONS AND WARRANTIES. LESSOR represents and warrants the following to LESSEE as of the date of execution of the Lease and as of the Delivery Date and ALL OTHER WARRANTIES, EXPRESS OR IMPLIED HAVE BEEN WAIVED IN ACCORDANCE WITH ARTICLE 8: 21.1.1 CORPORATE STATUS. LESSOR is a corporation duly incorporated, validly existing and in good standing under the Laws of the State of California. It has the corporate power and authority to carry on its business as presently conducted and to perform its obligations hereunder. 21.1.2 GOVERNMENTAL APPROVALS. No authorization, approval, consent, license or order of, or registration with, or the giving of notice to any U.S. Government Entity is required for the valid authorization, execution, delivery and performance by LESSOR of this Lease. 21.1.3 BINDING. This Lease and the other Operative Documents have been duly authorized, executed and delivered by LESSOR and represent the valid, enforceable and binding obligations of LESSOR except as enforceability may be limited by bankruptcy, insolvency, reorganization or other Laws of general application affecting the enforcement of creditors' rights. 21.1.4 NO BREACH. The execution and delivery of the Operative Documents, the consummation by LESSOR of the transactions contemplated herein and compliance by LESSOR with the terms and provisions hereof do not and will not contravene any Law applicable to LESSOR, or result in any breach of or constitute any default under any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which LESSOR is a party or by which LESSOR or its properties or assets may be bound or affected. 21.1.5 TITLE TO AIRCRAFT. On the Delivery Date LESSOR will have good and valid title to the Aircraft. 21.1.6 CITIZENSHIP. LESSOR is a "citizen of the United States" within the meaning of 49 U.S. Code 40102(a)(15). 21.1.7 INVESTMENT BY LESSOR. LESSOR is acquiring its interest in the Aircraft for its own account from its corporate funds, for investment and not with a view to any resale or distribution thereof that would require registration under the Securities Act of 1933; PROVIDED, HOWEVER, that subject to the transfer restrictions in Article 24.2, its disposition of its interest in the Aircraft shall at all times be within its control. 21.2 COVENANT OF QUIET ENJOYMENT. So long as no Event of Default has occurred and is continuing hereunder, LESSOR covenants that neither LESSOR nor any person lawfully claiming through LESSOR will interfere with LESSEE's quiet, peaceful use and enjoyment of the Aircraft. ARTICLE 22 FINANCIAL AND RELATED INFORMATION LESSEE agrees to furnish each of the following to LESSOR: (a) within sixty (60) days after the end of each fiscal quarter of LESSEE, the unaudited consolidated financial statements (including a balance sheet and profit and loss statement) prepared for such quarter in accordance with generally accepted accounting principles in the U.S.; (b) within one hundred twenty (120) days after the end of each fiscal year of LESSEE, the audited consolidated financial statements (including a balance sheet and profit and loss statement) prepared as of the close of such fiscal year in accordance with generally accepted accounting principles in the U.S. LESSEE's chief financial officer will also provide a certificate of LESSEE stating that, to such officer's knowledge, no Default exists under this Lease (or if, to such officer's knowledge, a Default does exist, identifying it); (c) promptly after distribution, all reports and financial statements which Amtran, Inc. sends or makes generally available to its stockholders or creditors; and (d) from time to time, such other reasonable information as LESSOR or LESSOR's Lender may reasonably request concerning the location, condition, use and operation of the Aircraft or the financial condition of LESSEE. ARTICLE 23 RETURN OF AIRCRAFT 23.1 DATE OF RETURN. LESSEE is obligated to return the Aircraft, Engines Parts and Aircraft Documentation to LESSOR on the Expiration Date, unless a Total Loss of the Aircraft occurred prior to the Expiration Date and this Lease was terminated early in accordance with Article 18.3. If LESSEE is in Default hereunder by failing to return the Aircraft on the Expiration Date or if an Event of Default occurs prior to the Expiration Date and LESSOR repossesses the Aircraft, the return requirements set forth in this Article 23 nonetheless must be met on the date the Aircraft is actually returned to LESSOR or repossessed by LESSOR. 23.2 TECHNICAL REPORT. Six (6) months prior to the Expiration Date (and in an updated form at return of the Aircraft), LESSEE will provide LESSOR with a Technical Evaluation Report in the form and substance of Exhibit L, as revised, and, in addition upon LESSOR's request, will make copies available of (a) drawings of the interior configuration of the Aircraft both as it presently exists and as it will exist at return, (b) an Airworthiness Directive status list, (c) a service bulletin incorporation list, (d) rotable tracked, hard-time and life-limited component listings, (e) a list of LESSEE-initiated modifications and alterations, (f) interior material burn certificates, (g) the Aircraft Maintenance Program, (h) the complete workscope for the checks, inspections and other work to be performed prior to return, (i) a list of all no-charge service bulletin kits with respect to the Aircraft which were ordered by LESSEE from Manufacturer or Engine manufacturer, (j) current Engine disk sheets and a description of the last shop visit for each Engine and (k) any other data which is reasonably requested by LESSOR. 23.3 RETURN LOCATION. LESSEE at its expense will return the Aircraft, Engines, Parts and Aircraft Documentation to LESSOR at Indianapolis International Airport, Indianapolis, Indiana or to such other airport as may be mutually agreed to by LESSEE and LESSOR. 23.4 FULL AIRCRAFT DOCUMENTATION REVIEW. For the period commencing at least ten (10) Business Days prior to the proposed redelivery date and continuing until the date on which the Aircraft is returned to LESSOR in the condition required by this Lease, LESSEE will provide for the review of LESSOR and/or its representative all of the Aircraft records and historical documents described in Exhibit K in one central room at the Aircraft return location. 23.5 AIRCRAFT INSPECTION. 23.5.1 During the maintenance checks performed immediately prior to the proposed redelivery and at the actual return of the Aircraft, LESSOR and/or its representatives will have an opportunity to conduct a full systems functional and operational inspection of the Aircraft (and other types of reasonable inspections based upon the Aircraft type, age, use and other known factors with respect to the Aircraft) and a full inspection of the Aircraft Documentation (including records and manuals), all to LESSOR's satisfaction. The inspection will occur during the Return Check when the panels, bays or the like are open and certain Parts are disassembled. LESSOR may inspect such opened panels, bays or the like and the disassembled Parts so long as LESSOR does not disrupt the Return Check or cause such Return Check to be extended beyond the anticipated completion date of such Return Check. Any deficiencies from the Aircraft return condition requirements set forth in this Article 23 will be corrected by LESSEE at its cost prior to the acceptance flight described in Article 23.5.2. 23.5.2 Immediately prior to the proposed redelivery of the Aircraft, LESSEE will carry out for LESSOR and/or LESSOR's representatives an Aircraft acceptance flight in accordance with Manufacturer's standard flight operation check flight procedures or, if agreed to in writing by LESSOR, in accordance with an airline acceptance flight procedure, either of which will be for the duration necessary to perform such check flight procedures but in any event not less than two (2) hours. Flight costs and fuel will be furnished by and at the expense of LESSEE. Any deficiencies from the Aircraft return condition requirements set forth in this Article 23 will be corrected by LESSEE at its cost prior to return of the Aircraft. 23.5.3 To the extent that the ground inspection and acceptance flight extend beyond the Expiration Date, the Lease Term will be deemed to have been automatically extended and the obligations of LESSEE hereunder (including Article 23.11.3) will continue on a day-to-day basis until the Aircraft is accepted by LESSOR executing the Return Acceptance Receipt in the form of Exhibit I. 23.6 CERTIFICATE OF AIRWORTHINESS MATTERS. 23.6.1 The Aircraft will possess a current Certificate of Airworthiness issued by the Aviation Authority (although this Certificate of Airworthiness may later be substituted by the Export Certificate of Airworthiness or equivalent if requested by LESSOR pursuant to Article 23.10). The Aircraft at return must be in the condition required in order to meet the requirements of a U.S. Standard Certificate of Airworthiness for transport category aircraft issued by the FAA in accordance with FAR Part 21 and, in addition, to meet the operating requirements of FAR Part 121. 23.6.2 LESSEE at its cost will demonstrate that the Aircraft meets the requirements for issuance of the U.S. Standard Certificate of Airworthiness for transport category aircraft specified in Article 23.6.1 by delivering to LESSOR an actual U.S. Standard Certificate of Airworthiness. If there is a dispute in regards to the condition of the Aircraft or the Aircraft Documentation, then LESSEE will provide LESSOR with a letter acceptable to LESSOR signed by an FAA Designated Airworthiness Representative (DAR) or another Person acceptable to LESSOR stating that the DAR or such Person has inspected the Aircraft and Aircraft Documentation (including records and manuals) and has found that the Aircraft meets the requirements for issuance of a U.S. Standard Certificate of Airworthiness for transport category aircraft in accordance with FAR Part 21 and, in addition, meets the operating requirements of FAR Part 121. 23.6.3 If the Aircraft is to be registered in a country other than in the U.S. after return from LESSEE, LESSOR may in its sole discretion waive the requirements of Article 23.6.2 and instead require that LESSEE at its expense (to the extent such expense is no greater than that which LESSEE would have incurred pursuant to Articles 23.6.1 and 23.6.2, with any additional expenses being for LESSOR's account) put the Aircraft in a condition to meet the requirements for issuance of a Certificate of Airworthiness of the Aviation Authority of the next country of register. 23.7 GENERAL CONDITION OF AIRCRAFT AT RETURN. 23.7.1 The Aircraft, Engines and Parts will have been maintained and repaired in accordance with the Maintenance Program, the rules and regulations of the Aviation Authority and this Lease. 23.7.2 Aircraft Documentation (including records and manuals) will have been maintained in an up-to-date status, in accordance with the rules and regulations of the Aviation Authority and the FAA and this Lease and in a form necessary in order to meet the requirements of Article 23.6.2. The records and historical documents set forth in Attachment 1 of Exhibit I will be in English. 23.7.3 The Aircraft will be in the same working order and condition as at Delivery (subject to the other provisions of this Article 23, reasonable wear and tear from normal flight operations excepted), with all pilot discrepancies and deferred maintenance items cleared on a terminating action basis. 23.7.4 The Aircraft will be airworthy (conform to type design and be in a condition for safe operation), with all Aircraft equipment, components and systems operating in accordance with their intended use and within limits approved by the Manufacturer, Aviation Authority and FAA. 23.7.5 The Aircraft interior (including cabin and windows) and exterior will be clean and all compartments will be reasonably free of foreign objects, dirt, grease, fluids, stains, grime, cracks, tears and rips (with the exception of normal wear and tear) and ready to be placed into immediate commercial airline operations. 23.7.6 No special or unique Manufacturer, Engine manufacturer or Aviation Authority inspection or check requirements which are specific to the Aircraft or Engines (as opposed to all aircraft or engines of their types) will exist with respect to the Airframe, Engines and Aircraft equipment, components and systems. 23.7.7 All repairs, modifications and alterations to the Aircraft will have been accomplished in accordance with Manufacturer's Structural Repair Manual (or FAA-approved data supported by FAA Form 8110-3) for the Aircraft. 23.7.8 The Aircraft will be returned with LESSOR's Engines installed and with the same equipment as at Delivery, subject only to those replacements, additions and Modifications permitted under this Lease. LESSEE will inform LESSOR of whether LESSEE will be able to redeliver the Engines with the Aircraft and the proposed replacement engines that LESSEE wants to provide LESSOR in place of the Engines. LESSEE will provide LESSOR with whatever data, records and information that LESSOR reasonably requests in order to evaluate the proposed replacement engines. In the event that LESSEE is unable to return either of the Engines in the conditions required by this Article 23, then LESSEE may provide a replacement engine (a "REPLACEMENT ENGINE") for such Engine to LESSOR by duly conveying to LESSOR as owner hereunder title to another engine of the same manufacturer and of the same or an improved model as the Engine being replaced and suitable for installation and use on the Aircraft, which engine shall be free and clear of all Security Interests, and shall be no more than three (3) years older by reference to serial number than the replaced Engine and have a modification status, value and utility at least equal to the Engine which such Replacement Engine is replacing on the Aircraft assuming that such Engine which such Replacement Engine is replacing was then of the value, utility, condition, and airworthiness required to be maintained by the terms of this Lease. Such Replacement Engine, after approval and acceptance by LESSOR, shall be deemed an "Engine" as defined herein for all purposes hereunder. LESSEE agrees to take such action as LESSOR may reasonably request in order that such Replacement Engine shall be duly and properly titled in the name of LESSOR. Prior to or at the time of any such conveyance, LESSEE, at its own expense, will promptly: (a) furnish LESSOR with a warranty bill of sale, in form and substance satisfactory to LESSOR, with respect to such Replacement Engine, (b) furnish LESSOR with such evidence of title to such Replacement Engine as reasonably requested by LESSOR, and (c) furnish LESSOR with an opinion of LESSEE's counsel to the effect that title to such Replacement Engine has been duly conveyed to LESSOR free and clear of all Security Interests of any kind or nature and that such exchange qualifies for tax free treatment under the Internal Revenue Code of 1986, as amended. Upon full compliance with this Article, LESSOR shall transfer to LESSEE all of LESSOR's right, title and interest, on an "AS-IS", "WHERE-IS" basis in and to the Engine being replaced by such Replacement Engine, without recourse or warranty, express or implied, except that LESSOR has good and marketable title to such Engine and such Engine shall be free and clear of LESSOR's Liens. 23.7.9 All Airworthiness Directives which are issued prior to the date of return of the Aircraft and require compliance (either by means of repetitive inspections, modifications or terminating action) prior to return of the Aircraft to LESSOR or within one (1) year after the Termination Date will have been complied with on the Aircraft on a terminating action basis at LESSEE's cost. Airworthiness Directives which do not have a terminating action will be accomplished at the highest level of inspection or modification possible. If, after using best efforts, LESSEE is unable to acquire the material, parts or components necessary to accomplish such Airworthiness Directive, LESSEE will pay to LESSOR upon return of the Aircraft the estimated cost of terminating such Airworthiness Directive. If the estimated cost cannot be mutually agreed upon by LESSEE and LESSOR, LESSEE and LESSOR will each obtain an estimate from a reputable FAA-approved maintenance facility (unaffiliated with LESSEE or LESSOR) and the estimated cost will be the average of the two estimates. 23.7.10 The Aircraft will be in compliance with the Corrosion Prevention and Control Program (CPCP) specified in LESSEE's Maintenance Program. 23.7.11 If any waivers, deviations, dispensations, alternate means of compliance, extensions or carry-overs with respect to maintenance or operating requirements, repairs or Airworthiness Directives are granted by the Aviation Authority or permitted by the Maintenance Program, LESSEE at its sole cost and expense will nonetheless perform such maintenance or operating requirements, repairs or Airworthiness Directives as if such waivers, deviations, dispensations, alternate means of compliance, or extensions or carry-overs did not exist. 23.7.12 The Aircraft will be free from any Security Interest except LESSOR's Liens and no circumstance will have so arisen whereby the Aircraft is or could become subject to any Security Interest or right of detention or sale in favor of the Aviation Authority, any airport authority, or any other authority. 23.7.13 All no-charge vendor and Manufacturer's service bulletin kits received by LESSEE for the Aircraft but not installed thereon will be on board the Aircraft as cargo. At LESSOR's request, any other service bulletin kit which LESSEE paid for will also be delivered to LESSOR on board the Aircraft, but LESSOR will reimburse LESSEE for its actual out-of-pocket costs for such kit, unless LESSEE purchased such kit as part of its implementation of a service bulletin on its fleet of aircraft of the same type as the Aircraft but had not yet installed such kit on the Aircraft, in which case such kit will be furnished free of charge to LESSOR. 23.7.14 The Aircraft will be free of any leaks and any damage resulting therefrom. All repairs will have been performed on a permanent basis in accordance with the applicable manufacturer's instructions. 23.7.15 The Aircraft fluid reservoirs (including oil, oxygen, hydraulic and water) will be serviced to full and the waste tank serviced in accordance with Manufacturer's instructions. (Fuel tanks will be at least as full as at Delivery.) 23.8 CHECKS PRIOR TO RETURN. Immediately prior to return of the Aircraft to LESSOR, LESSEE at its expense will do each of the following: 23.8.1 Have performed, and completed, by an FAA-approved repair station, all maintenance tasks specified in LESSEE's Maintenance Program and the MPD which (a) are necessary to clear the Aircraft of all such tasks for eighteen (18) months, five thousand (5,000) hours, and three thousand (3,000) cycles from the date of return of the Aircraft, and (b) are required to be performed at lesser intervals than eighteen (18) months, five thousand (5,000) hours or three thousand (3,000) cycles (all such work collectively referred to as the "RETURN CHECK"). If a maintenance task is specific to LESSEE's Maintenance Program and not required or recommended to be performed by the MPD, then LESSEE will not be required to perform such maintenance task so long as the Return Check is performed in such a manner that clears the Aircraft of all maintenance tasks in accordance with the requirements of the preceding sentence. As part of the Return Check, all non-routine tasks generated as a result of the performance of the work included in the Return Check and any other discrepancies revealed during the Return Check must also be performed in accordance with the FAA approved procedures. LESSEE will also weigh the Aircraft. LESSEE agrees to perform during the Return Check any other work reasonably required by LESSOR (and not otherwise required under this Lease) and LESSOR will, promptly upon receipt of an invoice from LESSEE, reimburse LESSEE for such work at LESSEE's preferred customer rates. 23.8.2 Have the Aircraft in compliance with Corrosion Prevention and Control Program (CPCP) as specified in the MPD and LESSEE's Maintenance Program. 23.8.3 Remove LESSEE's exterior markings, including all exterior paint, by stripping (or, at LESSOR's option, pneumatically scuff/sanding) the paint from the fuselage, empennage, wings and Engine cowlings, and clean, reseal, refinish, prepare (including application of alodine or another corrosion inhibitor) and prime the surfaces to be painted, all in accordance with Manufacturer's and paint manufacturer's recommendations. LESSEE will then repaint the fuselage, empennage, wings and Engine cowlings in the colors and logo specified by LESSOR ; PROVIDED, HOWEVER, that LESSEE will be responsible for only paying the amount that it would cost to strip or scuff/sand (whichever is performed on the Aircraft at return) and properly paint the Aircraft in LESSEE's colors and logo and LESSOR will be responsible for the excess cost to paint the Aircraft in the next lessee's colors and logo. Such painting will be accomplished in such a manner as to result in a uniformly smooth and cosmetically acceptable aerodynamic surface. All external placards, signs and markings will be properly attached, free from damage, clean and legible. 23.8.4 Clean the exterior and interior of the Aircraft. 23.8.5 If reasonably required by LESSOR, apply touch up to paint to the interior of the Aircraft, including flight deck, and replace any missing or broken placards. 23.8.6 In accordance with Article 23.7.7, permanently repair damage to the Aircraft that exceeds Manufacturer's limits and replace any non-flush structural patch repairs installed on the Aircraft with flush-type repairs, so long as the Manufacturer or the Manufacturer's Structural Repair Manual permits flush-type repairs on the portion of the Aircraft where the non-flush structural repairs were made. 23.8.7 With LESSOR or its representatives present, perform a full and complete hot and cold section videotape borescope on each Engine and its modules in accordance with the Engine manufacturer's maintenance manual. 23.8.8 If the Engine historical and technical records and/or condition trend monitoring data of any Engine (including the APU) indicate an acceleration in the rate of deterioration in the performance of an Engine, LESSEE will correct, to LESSOR's satisfaction, such conditions which are determined to be causing such accelerated rate of deterioration. 23.8.9 With LESSOR or its representatives present, accomplish a maximum power assurance run on the Engines. LESSEE will evaluate the Engine performance and record the Engine maximum power assurance test conditions and results on the Return Acceptance Receipt. 23.8.10 LESSEE will provide evidence to LESSOR's satisfaction that the Engine historical and technical records, borescope inspection, trend monitoring and other checks specified in Article 23.8.9 do not reveal any condition which would cause the Engines or any module to be unserviceable, beyond serviceable limits or serviceable with an increased frequency of inspection or with calendar time, flight hour or flight cycle restrictions under the Engine manufacturer's maintenance manual. LESSEE will correct any discrepancies in accordance with the guidelines set out by the Engine manufacturer which may be discovered during such inspection. 23.8.11 In the event the Engine historical and technical records, borescope inspection, trend monitoring and other checks specified in Article 23.8.9 result in a dispute regarding the conformity of an Engine with the requirements of this Article 23, LESSEE and LESSOR will consult with Engine manufacturer and follow Engine manufacturer's recommendations (including the accomplishment of an Engine test cell operational check) with regard to determining if such Engine complies with the requirements of this Article 23 and the manner in which any discrepancies from the requirements of this Article 23 will be rectified. 23.9 PART LIVES. At return, the condition of the Aircraft will be as follows: (CONFIDENTIAL MATERIAL OMITTED) 23.10 EXPORT AND DEREGISTRATION OF AIRCRAFT. At LESSOR's request, LESSEE at its cost will (a) provide an Export Certificate of Airworthiness or its equivalent from the State of Registration so that the Aircraft can be exported to the country designated by LESSOR, (b) assist with deregistration of the Aircraft from the register of aircraft in the State of Registration, (c) assist with arranging for prompt confirmation of such deregistration to be sent by the registry in the State of Registration to the next country of registration and (d) perform any other acts reasonably required by LESSOR in connection with the foregoing. If any Aircraft work which LESSEE is not otherwise required to perform hereunder, including engineering, is required in order to obtain such Export Certificate of Airworthiness, LESSEE will perform such work and LESSOR will reimburse LESSEE for such work at LESSEE's preferred customer rates. 23.11 LESSEE'S CONTINUING OBLIGATIONS. In the event that LESSEE does not return the Aircraft to LESSOR on the Expiration Date and in the condition required by this Article 23 for any reason (whether or not the reason is within LESSEE's control): 23.11.1 the obligations of LESSEE under this Lease will continue in full force and effect on a day-to-day basis until such return. This will not be considered a waiver of LESSEE's Event of Default or any right of LESSOR hereunder. 23.11.2 Until such return, the Agreed Value will be an amount equal to the Agreed Value on the day the Aircraft should have been returned to LESSOR pursuant to this Lease. 23.11.3 LESSEE will fully indemnify LESSOR on demand for all losses (including consequential damages), liabilities, actions, proceedings, costs and expenses thereby suffered or incurred by LESSOR and, in addition, if a delay in return of the Aircraft was due to reasons within LESSEE's reasonable control, then until such time as the Aircraft is redelivered to LESSOR and put into the condition required by this Article 23, instead of paying the Rent specified in Article 5.3, LESSEE will pay twice the amount of Rent for each day from the scheduled Expiration Date until the Termination Date (the monthly Rent payable under Article 5.3.1 will be prorated based on the actual number of days in the applicable month). Payment will be made upon presentation of LESSOR's invoice. 23.11.4 LESSOR may elect, in its sole and absolute discretion, to accept the return of the Aircraft prior to the Aircraft being put in the condition required by this Article 23 and thereafter have any such non-conformance corrected at such time as LESSOR may deem appropriate (but within ninety (90) days following the return of the Aircraft) and at commercial rates then-charged by the Person selected by LESSOR to perform such correction. Any direct expenses incurred by LESSOR for such correction will become additional Rent payable by LESSEE within fifteen (15) days following the submission of a written statement by LESSOR to LESSEE, identifying the items corrected and setting forth the expense of such corrections. LESSEE's obligation to pay such supplemental Rent will survive the Termination Date. 23.12 AIRPORT AND NAVIGATION CHARGES. LESSEE will ensure that at return of the Aircraft any and all airport, navigation and other charges which give rise or may if unpaid give rise to any lien, right of detention, right of sale or other Security Interest in relation to the Aircraft, Engine or any Part have been paid and discharged in full and will at LESSOR's request produce evidence thereof satisfactory to LESSOR. 23.13 RETURN ACCEPTANCE CERTIFICATE. Upon return of the Aircraft in accordance with the terms of this Lease, LESSEE will prepare and execute two (2) Return Acceptance Certificates in the form and substance of Exhibit I and LESSOR will countersign and return one such Return Acceptance Certificate to LESSEE. In addition, LESSEE and LESSOR will execute a Lease Termination for filing with the FAA evidencing termination of this Lease. 23.14 INDEMNITIES AND INSURANCE. The indemnities and insurance requirements set forth in Articles 16 and 17, respectively, will apply to Indemnitees and LESSOR's representatives during return of the Aircraft, including the ground inspection and acceptance flight. With respect to the acceptance flight, LESSOR's representatives will receive the same protections as LESSOR on LESSEE's Aviation and Airline General Third Party Liability Insurance. ARTICLE 24 ASSIGNMENT 24.1 NO ASSIGNMENT BY LESSEE. EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED BY THE TERMS OF THIS LEASE, NO ASSIGNMENT, NOVATION, TRANSFER, MORTGAGE OR OTHER CHARGE MAY BE MADE BY LESSEE OF ANY OF ITS RIGHTS WITH RESPECT TO THE AIRCRAFT, ENGINE OR PART OF THIS LEASE. 24.2 SALE OR ASSIGNMENT BY LESSOR. 24.2.1 Subject to LESSEE's rights pursuant to this Lease, LESSOR may at any time and without LESSEE's consent sell, assign or transfer its rights, interest and obligations hereunder or with respect to the Aircraft to a third party ("LESSOR'S ASSIGNEE"), but only if: (a) LESSOR's Assignee has full power, authority, and legal right to execute, deliver, and perform the obligations of LESSOR under the Operative Documents and provides reasonably satisfactory evidence of such power and authority to LESSEE; (b) LESSOR's Assignee enters into one or more legal, valid, binding and enforceable agreements effective to confirm that LESSOR's Assignee agrees to be bound by all the terms of, and to undertake all of the obligations arising after such transfer of LESSOR in, the Operative Documents, and in which it makes representations and warranties substantially the same as those in Article 21.1 of this Lease; (c) upon such transfer LESSEE shall not be obligated to pay any greater amount or incur any greater obligation (other than indemnifying additional indemnitees, insuring additional insureds and other minor ministerial matters) than that which it would have been obliged to pay or incur under the Operative Documents if no transfer or assignment had taken place, and upon such transfer the terms and conditions of the Operative Documents insofar as they relate to the rights and obligations of LESSEE are not altered; (d) LESSOR shall cause LESSOR's Assignee to deliver to LESSEE an opinion of counsel reasonably satisfactory to LESSEE to the effect that such agreement or agreements referred to in clause (2) and, if applicable, clause (6) are legal, binding, and enforceable in accordance with its or their terms, subject to the typical exceptions. (e) the transfer shall relate to LESSOR's entire interest as owner or lessor; (f) LESSOR's Assignee is a citizen of the United States under 49 U.S. Code ss.40102(a)(15) (such status to be determined without considering FAR ss.47.9 or any other provision that may restrict LESSEE's use or operation of the Aircraft), or shall use a voting powers trust or similar arrangement in order to hold an interest in the Aircraft such that the Aircraft can be registered in the U.S. (without considering FAR ss.47.9 or any other provision that may restrict LESSEE's use or operation of the Aircraft); (g) LESSOR's Assignee is a single Person and is either (i) a Permitted Institution, or (ii) or an affiliate of a Permitted Institution, if such affiliate's obligations under the Operative Documents are guaranteed by such Permitted Institution pursuant to a written guaranty, in form and substance reasonably satisfactory to LESSEE; and (h) LESSOR shall give written notice to LESSEE at least five (5) days before any such transfer, specifying the name and address of the proposed LESSOR's Assignee, and providing reasonably satisfactory evidence that the proposed LESSOR's Assignee meets the requirements described in Article 24.2.1(g)(i) or (ii). For a period of two (2) years after such sale or assignment and at LESSEE's cost, LESSEE will continue to name LESSOR as an additional insured under the Aviation and Airline General Third Party Liability Insurance required pursuant to Article 17 and Exhibit C. 24.2.2 The term "LESSOR" as used in this Lease means the lessor of the Aircraft at the time in question. In the event of the sale of the Aircraft and transfer of LESSOR's rights and obligations under this Lease, LESSOR's Assignee will become "LESSOR" of the Aircraft under this Lease and the transferring party (the prior "LESSOR") will be relieved of all liability to LESSEE under this Lease for obligations arising on and after the date the Aircraft is sold. LESSEE will acknowledge and accept LESSOR's Assignee as the new "LESSOR" under this Lease and will look solely to LESSOR's Assignee for the performance of all LESSOR obligations and covenants under this Lease arising on and after the Aircraft sale date. 24.3 LESSOR'S LENDER. Subject to LESSEE's rights pursuant to this Lease, LESSOR may at any time and without LESSEE's consent grant security interests over the Aircraft and assign the benefit of this Lease to a lender ("LESSOR'S LENDER") as security for LESSOR's obligations to LESSOR's Lender. Accordingly, if LESSOR's Lender requires, as a condition to providing financing, any nonsubstantive modification of this Lease, LESSEE agrees to enter into an agreement so modifying this Lease. 24.4 LESSEE COOPERATION. On request by LESSOR, LESSOR's Assignee or LESSOR's Lender, LESSEE will execute all such documents (such as a lease assignment agreement) as LESSOR, LESSOR's Assignee or LESSOR's Lender may reasonably require to confirm LESSEE's obligations under this Lease and obtain LESSEE's acknowledgment that to the best of LESSEE's knowledge, LESSOR is not in breach of this Lease. LESSEE will provide all other reasonable assistance and cooperation to LESSOR, LESSOR's Assignee and LESSOR's Lender in connection with any such sale or assignment or the perfection and maintenance of any such security interest, at LESSOR's cost, including making all necessary filings and registrations in the State of Registration and providing all opinions of counsel with respect to matters reasonably requested by LESSOR, LESSOR's Lender or LESSOR's Assignee. LESSOR will reimburse LESSEE for its reasonable out-of-pocket costs in reviewing documents required by LESSOR or LESSOR's Lender. 24.5 PROTECTIONS. 24.5.1 LESSOR will obtain for the benefit of LESSEE an acknowledgment from any LESSOR's Assignee or LESSOR's Lender that, so long as no Event of Default has occurred and is continuing hereunder, such Person will not interfere with LESSEE's quiet, peaceful use and enjoyment of the Aircraft. 24.5.2 Wherever the term "LESSOR" is used in this Lease in relation to any of the provisions relating to disclaimer, title and registration, indemnity and insurance contained in Articles 8, 13, 16 and 17, respectively, or with respect to Article 20.2.7, the term "LESSOR" will be deemed to include LESSOR's Assignee and LESSOR's Lender, if applicable. For avoidance of doubt, in the event of LESSOR's sale or financing of the Aircraft, the disclaimer and indemnity provisions contained in Articles 8 and 16 will continue to be applicable after the sale or assignment to International Lease Finance Corporation, as well as being applicable to LESSOR's Assignee and LESSOR's Lender. ARTICLE 25 DEFAULT OF LESSEE 25.1 LESSEE NOTICE TO LESSOR. LESSEE will promptly notify LESSOR if LESSEE becomes aware of the occurrence of any Default. 25.2 EVENTS OF DEFAULT. The occurrence of any of the following will constitute an Event of Default and material breach of this Lease by LESSEE: (a) LESSEE fails to take delivery of the Aircraft when obligated to do so under the terms of this Lease; (b) LESSEE fails to make a Rent or other payment due hereunder in the manner and by the date provided herein and fails to make such payment within five (5) Business Days after its receipt of notice that such payment is due; (c) LESSEE fails to obtain or maintain the insurance required by Article 17; (d) LESSEE fails to return the Aircraft to LESSOR on the Expiration Date in accordance with Article 23; (e) LESSEE fails to observe or perform any of its other obligations hereunder and fails to cure the same within thirty (30) days after written notice thereof to LESSEE; provided, that LESSEE will have up to a total of sixty (60) days to cure such failure so long as it uses diligent efforts to do so; (f) any representation or warranty of LESSEE herein proves to have been untrue in any material respect when made; provided, that, if the effect of such falsity is curable, LESSEE shall have thirty (30) days after LESSEE has knowledge that the representation or warranty is untrue; (g) the registration of the Aircraft is cancelled other than as a result of an act or omission of LESSOR; (h) LESSEE abandons the Aircraft or Engines; (i) LESSEE or an approved sublessee no longer has unencumbered control (other than Permitted Liens) or possession of the Aircraft or Engines, except as otherwise permitted by this Lease; (j) LESSEE temporarily or permanently discontinues business or (except as permitted by Article 20.2.4) sells or otherwise disposes of all or substantially all of its assets; (k) a material adverse change occurs in the financial condition of LESSEE; (l) LESSEE no longer possesses the licenses, certificates and permits required for the conduct of its business as a certificated air carrier in the U.S.; (m) LESSEE (i) suspends payment on its debts or other obligations generally, (ii) is unable to or admits its inability to pay its debts or other obligations generally as they fall due, (iii) is adjudicated or becomes bankrupt or insolvent or (iv) enters into any composition or other arrangement for the benefit of its creditors generally; (n) any proceedings, resolutions, filings or other steps are instituted with respect to LESSEE relating to the bankruptcy, liquidation, reorganization or protection from creditors of LESSEE or at least half of LESSEE's property. If instituted by LESSEE, the same will be an immediate Event of Default. If instituted by another Person, the same will be an Event of Default if not dismissed, remedied or relinquished within sixty (60) days; (o) any order, judgment or decree is entered by any court of competent jurisdiction appointing a receiver, trustee or liquidator of LESSEE or at least half of its property, or if at least half of LESSEE's property is to be sequestered. If instituted by or done with the consent of LESSEE, the same will be an immediate Event of Default. If instituted by another Person, the same will be an Event of Default if not dismissed, stayed, remedied or relinquished within sixty (60) days; PROVIDED, HOWEVER, that if such proceeding is stayed, then such proceeding will become an immediate Event of Default if such stay is removed or terminates and the proceeding is not dismissed, remedied or relinquished when such stay is removed or terminates. (p) any indebtedness for borrowed moneys or a guarantee or similar obligation owed by LESSEE with an unpaid balance of CONFIDENTIAL MATERIAL OMITTED is declared due before its stated maturity or LESSEE is in default of payment obligations CONFIDENTIAL MATERIAL OMITTED under any other purchase agreement, lease, conditional sale agreement or other agreement pursuant to which LESSEE has possession of any aircraft; (q) Eurocontrol has notified LESSOR that there are unpaid Eurocontrol charges due from LESSEE (unless such charges are being contested in good faith and by appropriate proceedings, an adequate bond has been provided and such proceedings do not involve any danger of the detention, interference with the use or operation, sale, forfeiture or loss of the Aircraft) and such charges remain outstanding for a period of thirty (30) days from the date of Eurocontrol's notice to LESSOR provided that such thirty (30) day grace period will not apply if there is a danger of detention, interference with the use or operation, sale, forfeiture or loss of the Aircraft; or (r) LESSEE is in default under any other lease or agreement between LESSEE and LESSOR and the same is not cured within its specified cure period. 25.3 LESSOR'S GENERAL RIGHTS. Upon the occurrence of any Event of Default, LESSOR may do all or any of the following at its option (in addition to such other rights and remedies which LESSOR may have by statute or otherwise but subject to any requirements of applicable Law): (a) terminate this Lease by giving written notice to LESSEE; (b) require that LESSEE immediately move the Aircraft to an airport or other location designated by LESSOR; (c) for LESSEE's account, do anything that may reasonably be required to cure any default and recover from LESSEE all reasonable costs, including legal fees and expenses incurred in doing so and Default Interest; (d) proceed as appropriate to enforce performance of this Lease and to recover any damages for the breach hereof, including the amounts specified in Article 25.5; (e) terminate this Lease by taking possession of the Aircraft or by serving notice requiring LESSEE to return the Aircraft to LESSOR at the location specified by LESSOR. If LESSOR takes possession of the Aircraft, it may enter upon LESSEE's premises where the Aircraft is located without liability. Upon repossession of the Aircraft, LESSOR will then be entitled to sell, lease or otherwise deal with the Aircraft as if this Lease had never been made. LESSOR will be entitled to the full benefit of its bargain with LESSEE; or (f) apply all or any portion of the Security Deposit and any other security deposits held by LESSOR pursuant to any other agreements between LESSOR and LESSEE to any amounts due. 25.4 DEREGISTRATION AND EXPORT OF AIRCRAFT. If an Event of Default has occurred and is continuing, LESSOR may take all steps necessary to deregister the Aircraft in and export the Aircraft from the State of Registration. 25.5 LESSEE LIABILITY FOR DAMAGES. If an Event of Default occurs, in addition to all other remedies available at law or in equity, LESSOR has the right to recover from LESSEE and LESSEE will pay LESSOR within two (2) Business Days after LESSOR's written demand, all of the following: (a) all amounts which are then due and unpaid hereunder and which become due prior to the earlier of LESSOR's recovery of possession of the Aircraft or LESSEE making an effective tender thereof; (b) any losses suffered by LESSOR because of LESSOR's inability to place the Aircraft on lease with another lessee or to otherwise utilize the Aircraft on financial terms as favorable to LESSOR as the terms hereof or, if LESSOR elects to dispose of the Aircraft, the funds arising from a sale or other disposition of the Aircraft are not as profitable to LESSOR as leasing the Aircraft in accordance with the terms hereof would have been (and LESSOR will be entitled to accelerate any and all Rent which would have been due from the date of LESSOR's recovery or repossession of the Aircraft through the Expiration Date); (c) all costs associated with LESSOR's exercise of its remedies hereunder, including but not limited to repossession costs, legal fees, Aircraft storage costs, Aircraft re-lease or sale costs and LESSOR's internal costs and expenses (including the cost of personnel time calculated based upon the compensation paid to the individuals involved on an annual basis and a general LESSOR overhead allocation); (d) any amount of principal, interest, fees or other sums paid or payable on account of funds borrowed in order to carry any unpaid amount; (e) any loss, premium, penalty or expense which may be incurred in repaying funds raised to finance the Aircraft or in unwinding any financial instrument relating in whole or in part to LESSOR's financing of the Aircraft; (f) any loss, cost, expense or liability sustained by LESSOR due to LESSEE's failure to redeliver the Aircraft in the condition required by this Lease; and (g) any other loss, damage, expense, cost or liability which LESSOR suffers or incurs as a result of the Event of Default and/or termination of this Lease, including an amount sufficient to fully compensate LESSOR for any loss of or damage to LESSOR's residual interest in the Aircraft caused by LESSEE's default. 25.6 WAIVER OF DEFAULT. By written notice to LESSEE, LESSOR may at its election waive any Default or Event of Default and its consequences and rescind and annul any prior notice of termination of this Lease. The respective rights of the parties will then be as they would have been had no Default or Event of Default occurred and no such notice been given. 25.7 PRESENT VALUE OF PAYMENTS. In calculating LESSOR's damages hereunder, upon an Event of Default all Rent and other amounts which would have been due hereunder during the Lease Term if an Event of Default had not occurred will be calculated on a present value basis using a discounting rate of six percent (6%) per annum discounted to the earlier of the date on which LESSOR obtains possession of the Aircraft or LESSEE makes an effective tender thereof. 25.8 USE OF "TERMINATION DATE". For avoidance of doubt, it is agreed that if this Lease terminates and the Aircraft is repossessed by LESSOR due to an Event of Default, then, notwithstanding the use of the term "Termination Date" in this Lease, the period of the Lease Term and the "Expiration Date" will be utilized in calculating the damages to which LESSOR is entitled pursuant to Article 25.5. For example, it is agreed and understood that LESSOR is entitled to receive from LESSEE the Rent and the benefit of LESSEE's insurance and maintenance of the Aircraft until expiration of the Lease Term. ARTICLE 26 NOTICES 26.1 MANNER OF SENDING NOTICES. Any notice, request or information required or permissible under this Lease will be in writing and in English. Notices will be delivered in person or sent by fax, letter (mailed airmail, certified and return receipt requested), or by expedited delivery addressed to the parties as set forth in Article 26.2. In the case of a fax, notice will be deemed received upon actual receipt (and the date of actual receipt will be deemed to be the date set forth on the confirmation of receipt produced by the sender's fax machine immediately after the fax is sent). In the case of a notice sent by expedited delivery, notice will be deemed received on the date of delivery set forth in the records of the Person which accomplished the delivery. If any notice is sent by more than one of the above listed methods, notice will be deemed received on the earliest possible date in accordance with the above provisions. 26.2 NOTICE INFORMATION. Notices will be sent: If to LESSOR: INTERNATIONAL LEASE FINANCE CORPORATION 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067, U.S.A. Attention: Legal Department Fax: 310-788-1990 Telephone: 310-788-1999 If to LESSEE: AMERICAN TRANS AIR, INC. 7337 West Washington Street Indianapolis International Airport Indianapolis, Indiana 46231 United States of America Attention: Ken Wolff Executive Vice President and Chief Financial Officer Fax: 317-240-7091 Telephone: 317-247-4000 or to such other places and numbers as either party directs in writing to the other party. ARTICLE 27 GOVERNING LAW AND JURISDICTION 27.1 CALIFORNIA LAW. This Lease is being delivered in the State of California and will in all respects be governed by and construed in accordance with the Laws of the State of California (notwithstanding the conflict Laws of the State of California). 27.2 NON-EXCLUSIVE JURISDICTION IN CALIFORNIA. As permitted by Section 410.40 of the California Code of Civil Procedure, the parties hereby irrevocably submit to the non-exclusive jurisdiction of the Federal District Court for the Central District of California and the State of California Superior or Municipal Court in Los Angeles, California. Nothing herein will prevent either party from bringing suit in any other appropriate jurisdiction. 27.3 SERVICE OF PROCESS. The parties hereby consent to the service of process (a) out of any of the courts referred to above, (b) in accordance with Section 415.40 of the California Code of Civil Procedure by mailing copies of the summons and complaint to the person to be served by certified or registered mail to the address set forth in Article 26.2, postage prepaid, return receipt requested or (c) in accordance with the Hague Convention, if applicable. 27.4 PREVAILING PARTY IN DISPUTE. If any legal action or other proceeding is brought in connection with or arises out of any provisions in this Lease, the prevailing party will be entitled to recover reasonable attorneys' fees and other costs incurred in such action or proceedings. The prevailing party will also, to the extent permissible by Law, be entitled to receive pre- and post-judgment Default Interest. 27.5 WAIVER. LESSEE AND LESSOR HEREBY WAIVE THE RIGHT TO A TRIAL BY JURY. LESSEE AND LESSOR HEREBY IRREVOCABLY WAIVE ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATED TO THIS LEASE BROUGHT IN ANY OF THE COURTS REFERRED TO IN ARTICLE 27.2, AND HEREBY FURTHER IRREVOCABLY WAIVE ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. ARTICLE 28 MISCELLANEOUS 28.1 PRESS RELEASES. The parties will give copies to one another, in advance if possible, of all news, articles and other releases provided to the public media regarding this Lease. 28.2 LESSOR PERFORMANCE FOR LESSEE. The exercise by LESSOR of its remedy of performing a LESSEE obligation hereunder is not a waiver of and will not relieve LESSEE from the performance of such obligation at any subsequent time or from the performance of any of its other obligations hereunder. 28.3 LESSOR'S PAYMENT OBLIGATIONS. Any obligation of LESSOR under this Lease to pay or release any amount to LESSEE is conditioned upon (a) all amounts then due and payable by LESSEE to LESSOR under this Lease or under any other agreement between LESSOR and LESSEE having been paid in full and (b) no Default or Event of Default having occurred and continuing hereunder at the time such payment or release of payment is payable to LESSEE. 28.4 APPLICATION OF PAYMENTS. Any amounts paid or recovered in respect of LESSEE liabilities hereunder may be applied to Rent, Default Interest, fees or any other amount due hereunder in such proportions, order and manner as LESSOR determines. 28.5 USURY LAWS. The parties intend to contract in strict compliance with the usury Laws of the State of California and, to the extent applicable, the U.S. Notwithstanding anything to the contrary in the Operative Documents, LESSEE will not be obligated to pay Default Interest or other interest in excess of the maximum non-usurious interest rate, as in effect from time to time, which may by applicable Law be charged, contracted for, reserved, received or collected by LESSOR in connection with the Operative Documents. During any period of time in which the then-applicable highest lawful rate is lower than the Default Interest rate, Default Interest will accrue and be payable at such highest lawful rate; however, if at later times such highest lawful rate is greater than the Default Interest rate, then LESSEE will pay Default Interest at the highest lawful rate until the Default Interest which is paid by LESSEE equals the amount of interest that would have been payable in accordance with the interest rate set forth in Article 5.5. 28.6 DELEGATION BY LESSOR. LESSOR may delegate to any Person(s) all or any of the rights, powers or discretion vested in it by this Lease and any such delegation may be made upon such terms and conditions as LESSOR in its absolute discretion thinks fit. 28.7 CONFIDENTIALITY. The Operative Documents and all non-public information obtained by either party about the other are confidential and are between LESSOR and LESSEE only and will not be disclosed by a party to third parties (other than to such party's auditors or legal advisors or as required in connection with any filings of this Lease in accordance with Article 13) without the prior written consent of the other party. If disclosure is required as a result of applicable Law, LESSEE and LESSOR will cooperate with one another to obtain confidential treatment as to the commercial terms and other material provisions of this Lease. 28.8 RIGHTS OF PARTIES. The rights of the parties hereunder are cumulative, not exclusive, may be exercised as often as each party considers appropriate and are in addition to its rights under general Law. The rights of one party against the other party are not capable of being waived or amended except by an express waiver or amendment in writing. Any failure to exercise or any delay in exercising any of such rights will not operate as a waiver or amendment of that or any other such right any defective or partial exercise of any such rights will not preclude any other or further exercise of that or any other such right and no act or course of conduct or negotiation on a party's part or on its behalf will in any way preclude such party from exercising any such right or constitute a suspension or any amendment of any such right. 28.9 FURTHER ASSURANCES. Each party agrees from time to time to do and perform such other and further acts and execute and deliver any and all such other instruments as may be required by Law, reasonably requested by the auditors of the other party or requested by the other party to establish, maintain or protect the rights and remedies of the requesting party or to carry out and effect the intent and purpose of this Lease. 28.10 USE OF WORD "INCLUDING". The term "INCLUDING" is used herein without limitation. 28.11 HEADINGS. All article and paragraph headings and captions are purely for convenience and will not affect the interpretation of this Lease. Any reference to a specific article, paragraph or section will be interpreted as a reference to such article, paragraph or section of this Lease. 28.12 INVALIDITY OF ANY PROVISION. If any of the provisions of this Lease become invalid, illegal or unenforceable in any respect under any Law, the validity, legality and enforceability of the remaining provisions will not in any way be affected or impaired. 28.13 NEGOTIATION. The terms of this Lease are agreed by LESSOR from its principal place of business in Los Angeles, California. 28.14 TIME IS OF THE ESSENCE. Time is of the essence in the performance of all obligations of the parties under this Lease and, consequently, all time limitations set forth in the provisions of this Lease will be strictly observed. 28.15 AMENDMENTS IN WRITING. The provisions of this Lease may only be amended or modified by a writing executed by LESSOR and LESSEE. 28.16 COUNTERPARTS. This Lease may be executed in any number of identical counterparts, each of which will be deemed to be an original, and all of which together will be deemed to be one and the same instrument when each party has signed and delivered one such counterpart to the other party. 28.17 DELIVERY OF DOCUMENTS BY FAX. Delivery of an executed counterpart of this Lease or of any other documents in connection with this Lease by fax will be deemed as effective as delivery of an originally executed counterpart. Any party delivering an executed counterpart of this Lease or other document by fax will also deliver an originally executed counterpart, but the failure of any party to deliver an originally executed counterpart of this Lease or such other document will not affect the validity or effectiveness of this Lease or such other document. 28.18 ENTIRE AGREEMENT. The Operative Documents constitute the entire agreement between the parties in relation to the leasing of the Aircraft by LESSOR to LESSEE and supersede all previous proposals, agreements and other written and oral communications in relation hereto. The parties acknowledge that there have been no representations, warranties, promises, guarantees or agreements, express or implied, except as set forth herein and in the other Operative Documents. IN WITNESS WHEREOF, LESSEE and LESSOR have caused this Lease to be executed by their respective officers as of September 5, 2000. INTERNATIONAL LEASE FINANCE AMERICAN TRANS AIR, INC. CORPORATION By: /s/ Grant Levy By: /s/ Kenneth K. Wolff Its: Vice President Its: Executive Vice President & CFO EXHIBIT A AIRCRAFT DESCRIPTION Aircraft Manufacturer and Model: Boeing 737-800 Specification: Seating Configuration: Manufacturer's Serial Number: 30033 Registration Mark: ____ Engine Manufacturer and Model: CFM56-7B-27 Engine Serial Numbers: _______ and ________ Engine Thrust Rating: 27,300 pounds Maximum Gross Takeoff Weight: 160,000 pounds EXHIBIT B AGENCY AGREEMENT (Limited Authority) Relating to Boeing 737-800 Aircraft THIS AGENCY AGREEMENT ("AGREEMENT") is made and entered into as of ____________________. BETWEEN: AMERICAN TRANS AIR, INC., a Indiana corporation whose address and principal place of business is at 7337 West Washington Street, Indianapolis International Airport, Indianapolis, Indiana 46231, United States of America ("AGENT") and INTERNATIONAL LEASE FINANCE CORPORATION, a California corporation, whose address and principal place of business is at 1999 Avenue of the Stars, 39th Floor, Los Angeles, California 90067, U.S.A. ("BUYER"). RECITAL The Boeing Company ("MANUFACTURER") and Buyer have entered into Purchase Agreement 1830, dated as of June 27, 1995 (such purchase agreement as may be amended in accordance with the provisions thereof is hereinafter referred to as the "PURCHASE AGREEMENT") under which Manufacturer has agreed to manufacture and sell and Buyer has agreed to purchase certain Boeing 737-800 aircraft. Buyer has agreed to lease one (1) of such aircraft bearing manufacturer's serial number 30033 (the "AIRCRAFT") to the Agent pursuant to an Aircraft Lease Agreement between Buyer and Agent dated as of September 5, 2000 (the "LEASE"). The Agent is engaged in business as a commercial air carrier and intends to lease the Aircraft from Buyer, and Buyer is desirous of utilizing the expertise of the Agent as Buyer's agent in all matters to which the Purchase Agreement relates with respect to the Aircraft except certain items as indicated below, and the Agent, as Buyer's agent, is willing to make such expertise available to Buyer. Accordingly, the parties agree as follows: 1. Buyer hereby appoints the Agent as Buyer's sole and exclusive agent with authority to perform the following, on behalf of Buyer, as the Agent may in its discretion determine to be necessary or desirable: (a) monitor Manufacturer's production, testing and delivery of the Aircraft in accordance with the Purchase Agreement and (b) do all such other things permitted by the Purchase Agreement related to the technical and engineering aspects of Manufacturer's production of the Aircraft, except Buyer limits Agent's authority to perform on behalf of Buyer on any defect that occurs during manufacture that is considered significant in nature by Buyer as measured by the criteria set forth below. Buyer retains the sole authority to perform on any defect meeting such criteria. (i) Deviations from the drawing configuration that could affect future modifications, maintenance, repair or overhaul of the Aircraft; (ii) Defects that are obvious appearance items; (iii) Rework that requires stress concurrence to satisfy Manufacturer's Material Review Board (MRB) requirements; (iv) A high quantity of defects normally considered minor on a singular basis; (v) Major rework requiring extensive repair or modification, E.G. replacement of ---- skin panels, extensive use of oversize fasteners, repair of damaged areas and significant structural modifications; (vi) Rework that affects the aerodynamic drag coefficient of the Aircraft; or (vii) Rework that involves areas known to be sensitive to Buyer. 2. Notwithstanding anything in the provisions of paragraph 1, nothing in this Agreement will confer authority upon or otherwise permit the Agent: (a) to exercise any power of termination under the Purchase Agreement or (b) to make any payments due from Buyer to Manufacturer or to receive on behalf of Buyer any payments due from Manufacturer under the Purchase Agreement, or to alter any of the terms and conditions of the Purchase Agreement or the Detail Specifications of the Aircraft. 3. Buyer will not revoke the appointment of and authority granted under this Agreement to the Agent unless a termination of the Purchase Agreement or Lease has occurred with respect to the Aircraft or the Agent has failed to perform a material obligation under this Agreement. Notice of any such revocation will be provided in accordance with the provisions of Article 14 of the Purchase Agreement and given to both Manufacturer and the Agent. 4. Manufacturer acknowledges the appointment of the Agent for the purpose set forth hereunder and Manufacturer and Buyer agree that due performance by Manufacturer or Agent of an obligation under the Purchase Agreement will constitute due satisfaction of such obligation by such party and Buyer agrees to be bound by the acts of the Agent. 5. Buyer and Agent agree to identify the technical organization and/or person(s) with the limited authority to act for Agent during production of the Aircraft. Buyer will, if possible, provide such identification to Manufacturer in writing, along with office space requirements for Agent, if required, prior to or at the time of Manufacturer's acknowledgment of this Agreement. 6. Nothing in this Agreement will subject Manufacturer to any liability under the Purchase Agreement which it would not otherwise be subject to, or modify Manufacturer's rights thereunder, or require Manufacturer to divest itself of title to or possession of Aircraft or any other property which is subject to the Purchase Agreement until payment therefor and delivery thereof in accordance with the Purchase Agreement. 7. None of the parties hereto will be entitled to assign to any third party any of their rights under this Agreement. 8. The Agent will not delegate to any third party the performance of the obligations imposed on it by this Agreement or appoint a sub-agent. 9. References to Manufacturer in this Agreement will include any wholly-owned subsidiary of Manufacturer to which Manufacturer assigns any of its rights and obligations under the Purchase Agreement pursuant to the terms and conditions thereof. 10. This Agreement will be governed by the laws of the State of California; however, the Purchase Agreement shall remain governed by the laws of the State of Washington. This Agreement has been executed by the parties hereto as of the day and year first above written. INTERNATIONAL LEASE FINANCE CORPORATION AMERICAN TRANS AIR, INC. By: By: Its: Its: The Boeing Company acknowledges the appointment of AMERICAN TRANS AIR, INC. as agent of International Lease Finance Corporation in connection with the above referenced Aircraft as set forth in this Agreement. THE BOEING COMPANY By: Its: EXHIBIT C CERTIFICATE OF INSURANCE [Refer to Aircraft Lease Agreement dated as of September 5, 2000 between LESSEE and LESSOR (the "Lease"). If applicable, insurance certificates from both the insurers and reinsurers will be provided. If there is a LESSOR's Lender, include references to it where appropriate after references to LESSOR.] To: INTERNATIONAL LEASE FINANCE CORPORATION ("LESSOR") ------ 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States Re: AMERICAN TRANS AIR, INC. ("LESSEE") Boeing 737-800 Manufacturer's Serial No.: 30033 Registration Mark: ____ (the "AIRCRAFT") The following security has subscribed to the insurance and/or reinsurance policies: [LIST COMPANIES & PERCENTAGES] THIS IS TO CERTIFY THAT, as Insurance Brokers, we have effected Fleet Insurance in respect of aircraft owned or operated by LESSEE (including the Aircraft), and that insurance in respect of the Aircraft is as specified below. AIRCRAFT HULL ALL RISKS COVERING: All risks of physical loss or damage to the Aircraft from any cause (subject only to the exclusions as specified below), for an Agreed Value of Aircraft in the amount of [list amount calculated in accordance with Article 18.1] DEDUCTIBLES: (CONFIDENTIAL MATERIAL OMITTED) each and every loss (or such lesser amount as generally applicable to the rest of LESSEE's 737-800 fleet). Not applicable to Total Loss/Constructive Total Loss or Arranged Total Loss GEOGRAPHICAL COVERAGE: Worldwide [subject to customary exclusions] AVIATION AND AIRLINE GENERAL THIRD PARTY LIABILITY COVERING: Aircraft Third Party, Passenger, Baggage, Cargo and Mail Liability and Airline General Third Party Liability (including Premises, Hangarkeepers and Products Liability) for combined single limit of not less than (CONFIDENTIAL MATERIAL OMITTED) (or such higher amount as LESSEE may carry generally on other 737-800 aircraft in its fleet) any one accident/occurrence (but in the aggregate in relation to Products Liability), extended to cover LESSEE's liability under the Lease to the extent of the risks covered by the policy including war and allied perils under Extended Coverage Endorsement as per AVN 52 subject only to exclusions as specified below GEOGRAPHICAL LIMITS: Worldwide [subject to customary exclusions] HULL WAR AND ALLIED PERILS COVERING: Hull War Risks as per LSW555.B, but including (a) confiscation or requisition (including by State of Registration and state where airline is domiciled), (b) hijacking or other unlawful seizure or wrongful exercise of control of the Aircraft or crew in flight (including any attempt at such seizure or control) and including "All Risks" Continuation Clause and Extortion Risks (including expenses) and covering claims excluded from Hull All Risks Policy while Aircraft outside Assured's control by reason of perils insured under this policy, for an Agreed Value of Aircraft in the amount of [list amount calculated in accordance with Article 18.1] DEDUCTIBLE: No deductible GEOGRAPHICAL LIMITS: Worldwide AIRCRAFT SPARES ALL RISKS INSURANCE COVERING: All risks of physical loss or damage to Aircraft Parts or spares or Engines at all times when removed from the Aircraft from whatever cause, subject only to the exclusions specified below, including the risks set down in AVN 48B other than paragraphs (a) and (b) thereof (but including paragraph (a) in respect of transit risks) for limits of not less than: CONFIDENTIAL MATERIAL OMITTED and covering: With respect to an Engine, an agreed value (CONFIDENTIAL MATERIAL OMITTED) or, with LESSOR's written concurrence, replacement cost With respect to Parts, replacement cost DEDUCTIBLE: (CONFIDENTIAL MATERIAL OMITTED) GEOGRAPHICAL COVERAGE: Worldwide INSURANCE REQUIRED BY MANUFACTURER LESSEE will carry the insurance required by Manufacturer in connection with LESSOR's assignment of Manufacturer's warranties and product support to LESSEE CONTRACTUAL INDEMNITY To the extent of the risks covered by the policies, LESSEE has insurance coverage for the indemnities agreed to by LESSEE pursuant to Article 16 of the Lease, subject to AVN67B or equivalent PERIOD OF COVERAGE (ALL POLICIES) From the Delivery Date of Aircraft to [END OF POLICY PERIOD] It is further certified that LESSOR has an interest in respect of the Aircraft under the Lease. Accordingly, with respect to losses occurring during the period from the Effective Date until the expiry of the Insurance or until the expiry or agreed termination of the Lease or until the obligations under the Lease are terminated by any action of the Insured or LESSOR and in consideration of the Additional Premium it is confirmed that the Insurance afforded by the Policy is in full force and effect and it is further agreed that the following provisions are specifically endorsed to the Policy. 1. UNDER THE HULL (ALL RISKS AND HULL WAR AND ALLIED RISKS) AND AIRCRAFT SPARES INSURANCES (a) In respect of any claim on the Aircraft that becomes payable on the basis of a Total Loss, payment of any settlement will be made to, or to the order of LESSOR as sole loss payee, up to the Agreed Value. With respect to repairable damage to an Aircraft or Engine, LESSOR will receive all insurance proceeds in excess of CONFIDENTIAL MATERIAL OMITTED provided that upon receipt by the insurance broker of written notice of a material default on the part of LESSEE (and until notice that it has been cured), all insurance proceeds which otherwise would be payable to LESSEE will be made directly to LESSOR. In respect of any other claim, payment of any settlement (net of any relevant policy deductible) will be made with such party(ies) as may be necessary to repair the Aircraft unless otherwise agreed after consultation between the Insurers and the Insured and, where necessary under the terms of the Lease, LESSOR. Such payments will only be made provided they are in compliance with all applicable laws and regulations. (b) Insurers agree on a 50/50 settlement in terms of AVS 103. (c) Insurers have no right to replace the Aircraft on a Total Loss (arranged, constructive or otherwise). (d) Insurers confirm that under the insurance policies, if the Insured installs an engine owned by a third party on the Aircraft, either (i) the hull insurance will automatically increase to such higher amount as is necessary in order to satisfy both LESSOR's requirement to receive the Agreed Value in the event of a Total Loss, Constructive Total Loss or Arranged Total Loss and the amount required by the third party engine owner, or (ii) separate additional insurance on such engine will attach in order to satisfy separately the requirements of the Insured to such third party engine owner. 2. UNDER THE LEGAL LIABILITY INSURANCE (a) Subject to the provisions of this Endorsement, the Insurance will operate in all respects as if a separate Policy had been issued covering each party insured hereunder, but this provision will not operate to include any claim arising howsoever in respect of loss or damage to the Aircraft insured under the Hull or Spares Insurance of the Insured. Notwithstanding the foregoing the total liability of Insurers in respect of any and all Insureds will not exceed the limits of liability stated in the Policy. (b) The Insurance provided hereunder will be primary and without right of contribution from any other insurance which may be available to LESSOR. 3. UNDER ALL INSURANCES (a) LESSOR, its successors and assigns, and (with respect to Aviation and Airline General Third Party Liability only) its directors, officers and employees for their respective rights and interests, are included as Additional Insureds. (b) The cover afforded to LESSOR by the Policy in accordance with this Endorsement will 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 Policy. (c) LESSOR will have no responsibility for premium and insurers will waive any right of set-off or counterclaim against LESSOR except in respect of outstanding premium in respect of the Aircraft, provided that Insurer may only set-off for premiums against the proceeds of the hull insurance for outstanding premiums in connection with hull all risks and hull war and allied perils insurance. (d) Upon payment of any loss or claim to or on behalf of LESSOR, Insurers will to the extent and in respect of such payment be thereupon subrogated to all legal and equitable rights of LESSOR indemnified hereby (but not against LESSOR). Insurers will not exercise such rights without the consent of those indemnified, such consent not to be unreasonably withheld. At the expense of Insurers LESSOR will do all things reasonably necessary to assist the Insurers to exercise said rights. (e) Except in respect of any provision for Cancellation or Automatic Termination specified in the Policy or any endorsement thereof, cover provided by this Endorsement may only be cancelled or materially altered in a manner adverse to LESSOR by the giving of not less than thirty (30) days notice in writing to LESSOR. Notice will be deemed to commence from the date such notice is given by the Insurers. Such notice will NOT, however, be given at normal expiry date of the Policy or any endorsement. 4. EXCEPT AS SPECIFICALLY VARIED OR PROVIDED BY THE TERMS OF THIS CERTIFICATE (a) LESSOR IS COVERED BY THE POLICY SUBJECT TO ALL TERMS, CONDITIONS, LIMITATIONS,WARRANTIES, EXCLUSIONS AND CANCELLATION PROVISIONS THEREOF. (b) THE POLICY WILL NOT BE VARIED BY ANY PROVISIONS CONTAINED IN THE LEASE WHICH PURPORT TO SERVE AS AN ENDORSEMENT OR AMENDMENT TO THE POLICY. SUBJECT (save as specifically stated in this Certificate) to policy terms, conditions, limitations and exclusions. Yours faithfully, [BROKERS] EXHIBIT D BROKERS' LETTER OF UNDERTAKING To: INTERNATIONAL LEASE FINANCE CORPORATION 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States Date: Our Ref: Re: AMERICAN TRANS AIR, INC. ("LESSEE") ------ Boeing 737-800 Manufacturer's Serial No.: ____ Registration Mark: ____ (the "AIRCRAFT") Dear Sirs: We confirm that insurance has been effected for the account of [LESSEE] (the "OPERATOR") covering all aircraft owned or operated by them, including the above-referenced aircraft (the "Aircraft"). [Also confirm, if applicable, the amount of any hull all risks or hull war and allied perils on the Aircraft which LESSEE is carrying in excess of the Agreed Value (which excess insurance would be payable to LESSEE). Such excess insurance may not exceed ten percent (10%) of the Agreed Value.] Pursuant to instructions received from the Operator and in consideration of your approving the arrangement of the Operator's "Fleet Policy" (under which the above-referenced Aircraft is insured) through the intermediary of ourselves as Brokers in connection with the insurance (the "INSURANCE") mentioned in our Certificate of Insurance (Reference No. [ ] dated [ ] and attached hereto), we undertake as follows: 1. In relation to the Hull and War Risks Insurance to hold to your order the insurance Slips or Contracts and any Policies which may be issued or any policies substituted (with your consent) therefor (but only insofar as the same relate to the Aircraft only) and the benefit of the Hull and War Risks Insurance thereunder, but subject to our requirements to operate the Fleet Policy insofar as it relates to any other aircraft insured thereunder. 2. To advise you of any of the following: (a) If any insurer cancels or gives notice of cancellation of any of the Insurance at least thirty (30) days (or such lesser period as may be available in the case of War and Allied Perils) before such cancellation is to take effect in respect of the Aircraft. (b) Of any act or omission or of any event (including non-payment of premium) of which we have knowledge or are notified and which might invalidate or render unenforceable in whole or in part any of the Insurance, insofar as the same relate to the Aircraft. (c) If we do not receive instructions to renew all or any of the Insurance at least thirty (30) days prior to their expiration. (d) If any of the Insurance are not renewed on the same terms (save as to premium and period of cover and as you might otherwise have notified us to be acceptable to you) seven (7) days prior to expiry thereof. The above undertakings are given subject to our continuing appointment for the time being as Insurance Brokers to the Operator. We also undertake to advise you if we cease to be Insurance Brokers to the Operator. Yours faithfully, EXHIBIT E ESTOPPEL AND ACCEPTANCE CERTIFICATE AMERICAN TRANS AIR, INC. ("LESSEE"), a corporation organized under the laws of Indiana does hereby represent, acknowledge, warrant and agree as follows: 1. LESSEE and INTERNATIONAL LEASE FINANCE CORPORATION, as LESSOR, have entered into an Aircraft Lease Agreement dated as of September 5, 2000 (hereinafter referred to as the "LEASE"). Words used herein with capital letters and not otherwise defined will have the meanings set forth in the Lease. 2. LESSEE has this ____ day of __________, ____ (Time: __________) at ____________________ received from LESSOR possession of: (a) One (1) Boeing 737-800 aircraft bearing Manufacturer's serial number ____ and U.S. registration mark ____, together with two (2) CFM56-7B-27 engines bearing manufacturer's serial numbers _______ and ________ (each of which has 750 or more rated take-off horsepower), all in airworthy condition. (b) All Aircraft Documentation, including the usual and customary manuals, logbooks, flight records and historical information regarding the Aircraft, Engines and Parts. 3. All of the foregoing has been delivered and accepted on the date set forth above to LESSEE's full satisfaction and pursuant to the terms and provisions of the Lease. 4. The Agreed Value of the Aircraft is US$_______________. 5. The amount of fuel on board at Delivery is __________ (circle one) pounds/kilos (________ gallons). 6. The Aircraft, Engines, Parts and Aircraft Documentation as described in the Lease have been fully examined by LESSEE and have been received in a condition fully satisfactory to LESSEE and in full conformity with the Lease in every respect. 7. The Lease is in full force and effect, LESSEE has no claims, offsets, deductions or set-off of any kind or nature in connection with the Lease, except for any claims against LESSOR set forth on the attached List of Discrepancies. 8. LESSOR's Lender may rely upon all of the foregoing in granting substantial financial accommodations to LESSOR and LESSEE understands and agrees that any funds being advanced by LESSOR's Lender will be made in reliance upon the foregoing. 9. LESSEE has obtained all required permits, authorizations, licenses and fees of the State of Registration or any Government Entity thereof necessary in order for LESSEE to operate the Aircraft as permitted by the terms of the Lease. Dated on the date set forth above AMERICAN TRANS AIR, INC. By: Title: ATTACHMENTS: 1. List of Aircraft Documentation 2. List of Loose Equipment 3. List of Discrepancies ATTACHMENT 1 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE LIST OF AIRCRAFT DOCUMENTATION MANUALS 1. FAA Approved Flight Manual 2. Airplane Flight Operation Manual 3. Aircraft Recover Manual 4. Quick Reference Handbook (QRH) 5. Weight and Balance Manual 6. Aircraft Fueling Manual 7. Aircraft Maintenance Manual (MM) 8. Aircraft Maintenance Manual Supplement 9. Ramp Maintenance Manual (RMM) 10. Cargo Loading Manual 11. Fault Reporting Manual (FRM) 12. Fault Isolation Manual (FIM) 13. Illustrated Parts Catalog (IPC) 14. Life Limited Parts Manual 15. Structural Repair Manual (SRM) 16. Master Minimum Equipment List 17. Wiring Diagram Manual (WD) 18. Wiring Practices Manual 19. System Schematics Manual 20. B.I.T.E. Manual 21. Non-Destructive Test Manual 22. Corrosion Prevention Manual 23. Component Maintenance Manual 24. APU Log Book 25. Engine Maintenance Manual 26. Engine Log Book 27. Engine Illustrated Parts Catalog 28. Engine Data Submittal Book 29. Engine Overhaul Manual 30. Power Plant Build-up Manual AIRCRAFT RECORDS AND HISTORICAL DOCUMENTS 1. Copies of original Certificates delivered by Boeing: a. Airworthiness Certificate for Export b. Radio installation conformity certificate c. Noise limitation certificate 2. Copies of original Documents delivered by Boeing: a. Airworthiness Directive Compliance list b. Aircraft inspection report c. Aircraft Readiness Log d. Weighing report 3. Copies of current Certificates: a. Airworthiness Certificate b. Noise limitation c. Radio license d. Interior material burn certificates e. Certificate of Export f. Aircraft deregistration confirmation e. Aircraft Registration 4. Letters signed and stamped by Quality Assurance: a. Current aircraft hours and cycles b. Current engines hours and cycles c. Accident and Incident report d. Summary of Maintenance Program e. AD compliance during the lease term 5. Aircraft log books and Aircraft readiness log. 6. Aircraft Hard Time (HT) inspection status. 7. One year forecast for HT inspection. 8. Aircraft Modification status, including service bulletins. 9. Last weighing report prior to redelivery. 10. AD compliance report with original signoffs. 11. Routine and non-routine job cards of the last "C" and "D" checks. 12. Past year pilots and maintenance discrepancies. 13. Major and Minor structural repairs with applicable approvals. 14. Compass Swing report of the last three years. 15. Cabin Configuration drawing (LOPA). 16. Emergency equipment location drawing. 17. Last X-RAYs ENGINES RECORDS 1. Last test cell run reports. 2. Life Limited Parts status and traceability. 3. AD compliance report with original signoffs. 4. Engine Modification/service bulletin/inspection report and applicableforms. 5. Last heavy maintenance records for each module. 6. Engine log books. 7. Engine removal history. 8. Past year trend monitoring reports. 9. Historical borescope reports. 10. Engine component report. APU RECORDS 1. APU status (FH, FC, limits). 2. Life limited Part status and traceability. 3. AD compliance with original signoffs. 4. Modification status. 5. Last heavy maintenance documents. 6. APU log books. 7. Last test cell report. COMPONENT RECORDS 1. Aircraft component inventory. 2. Hard time component inventory. 3. All serviceable tags. 4. Landing Gear status with last overhaul and life limited Part status. 5. AD compliance with original signoffs. 6. Modification status. ATTACHMENT 2 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE LIST OF LOOSE EQUIPMENT ATTACHMENT 3 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE LIST OF DISCREPANCIES EXHIBIT F OPINION OF COUNSEL TO BE GIVEN BY INDEPENDENT OUTSIDE COUNSEL OF LESSEE OR OTHER LAWYERS ACCEPTABLE TO LESSOR To: International Lease Finance Corporation 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States Gentlemen: This opinion is furnished to you pursuant to Article 7 of the Aircraft Lease Agreement dated as of September 5, 2000 (the "LEASE") between AMERICAN TRANS AIR, INC. ("LESSEE") and INTERNATIONAL LEASE FINANCE CORPORATION ("LESSOR"). Defined terms in this opinion are used herein as defined in the Lease. I have acted as counsel for LESSEE in connection with the preparation, execution and delivery of the Lease. In that connection I have examined: (a) The Lease and Estoppel and Acceptance Certificate; (b) The charter of LESSEE and all amendments thereto (the "CHARTER"); and (c) Such other documents, agreements and instruments, and such treaties, laws, rules, regulations, decrees and the like, as I have deemed necessary as a basis for the opinions hereinafter expressed. [ (d) All of the agreements and any amendments thereto between LESSEE and all other lessors and lenders of LESSEE covering other aircraft operated by LESSEE on which the Engines can be installed.] Based upon the foregoing and having regard for legal considerations which I deem relevant, I am of the opinion that: 1. LESSEE is a corporation duly incorporated, validly existing and in good standing under the Laws of Indiana. It has the corporate power and authority to carry on its business as presently conducted and to perform its obligations under the Lease. 2. No authorization, approval, consent, license or order of, or registration with, or the giving of notice to the Aviation Authority or any other regulatory body or authority is required for the valid authorization, execution, delivery and performance by LESSEE of the Lease. 3. The Lease and the Estoppel and Acceptance Certificate have each been duly authorized, executed and delivered by LESSEE. Each such instrument is a valid, enforceable and binding obligation of LESSEE except as enforceability may be limited by bankruptcy, insolvency, reorganization or other Laws of general application affecting the enforcement of creditors' rights. 4. The execution and delivery of the Lease and the Estoppel and Acceptance Certificate, the consummation by LESSEE of the transactions contemplated therein and compliance by LESSEE with the terms and provisions thereof do not contravene any Law applicable to LESSEE, or result in any breach of or constitute any default under or result in the creation of any lien, charge or encumbrance upon any property of LESSEE, under any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which LESSEE is a party or by which LESSEE or its properties or assets is bound. 5. Except for any filing or recording that may be required with the [NAME OF AIRCRAFT REGISTER] and except for [DESCRIBE SUCH OTHER FILINGS OR RECORDINGS], no filing or recording of any instrument or document (including the filing of any financial statement) is necessary under the laws of the U.S. in order for the Lease to constitute a valid and perfected lease of record relating to the Aircraft, it being understood that such counsel expresses no opinion as to the nature of LESSOR's title to the Aircraft on the Delivery Date. 6. LESSEE holds all licenses, certificates and permits from applicable governmental authorities in the U.S. necessary for the conduct of its business as a certificated air carrier and performance of its obligations under the Lease. 7. To my knowledge, there are no suits or proceedings pending or threatened against LESSEE before any Government Entity against or affecting LESSEE which are reasonably likely to be adversely determined and, if adversely determined, would have a material adverse effect on the financial condition or business of LESSEE or its ability to perform under the Lease, except as described in the filings provided to LESSOR pursuant to Article 22. 8. The obligations of LESSEE under the Lease are direct, general and unconditional obligations of LESSEE and rank or will rank at least PARI PASSU with all other present and future unsecured and unsubordinated obligations (including contingent obligations) of LESSEE, with the exception of such obligations as are mandatorily preferred by law. 9. LESSEE, under the laws of the U.S. or of any other jurisdiction affecting LESSEE, is subject to private commercial law and suit. Neither LESSEE nor its properties or assets have the right of immunity from suit or execution on the grounds of sovereignty in such jurisdictions and the performance by LESSEE of its obligations under the Lease constitute commercial acts done for commercial purposes. 10. There is no applicable usury or interest limitation Law in Indiana which may restrict the recovery of payments in accordance with the Lease. 11. LESSOR will not violate any Law or become liable to any tax in Indiana or the U.S. by reason of entering into or performing its obligations under the Lease and it is not necessary to establish a place of business in Indiana in order to enforce any provisions of the Lease. Very truly yours, EXHIBIT G ASSIGNMENT OF RIGHTS (AIRFRAME) [DATE] Boeing Commercial Airplane Group P.O. Box 3707 Seattle, Washington 98124-2207 Attention: Vice President-Contracts Mail Code 21-34 Subject: Full Assignment of Rights and Obligations - International Lease Finance Corporation as Lessor and AMERICAN TRANS AIR, INC. as Lessee of Model Boeing 737-800 aircraft bearing manufacturer's serial number 30033 Ladies and Gentlemen: In connection with International Lease Finance Corporation's lease to AMERICAN TRANS AIR, INC. ("Lessee") of a Boeing aircraft (more fully described below), reference is made to the following documents: A. Purchase Agreement 1830, dated as of June 27, 1995, between The Boeing Company ("Boeing") and International Lease Finance Corporation ("ILFC") (the "Boeing Agreement") under which ILFC purchased a certain Boeing Model 737-800 aircraft bearing manufacturer's serial number 30033 (the "Aircraft"). B. Aircraft Lease Agreement (the "Lease") for the Aircraft dated as of September 5, 2000 between ILFC and Lessee. Capitalized terms used herein without definition will have the same meaning as in the Boeing Agreement. In connection with ILFC's lease of the Aircraft under the Lease, ILFC is transferring to Lessee certain rights of ILFC related to the Aircraft under the Boeing Agreement. To accomplish this transfer of rights, as authorized by the provisions of the Boeing Agreement: 1. Lessee acknowledges that it has received copies of the following specific provisions of the Boeing Agreement applicable to the Aircraft and agrees to be bound by and comply with all the terms, conditions, and limitations contained in such provisions, including without limitation the disclaimer and release, exclusion of liabilities, indemnity and insurance provisions thereof: Boeing Agreement Article 6 - Excusable Delay 6.1 General Article 10 - Assignment, Resale or Lease 10.1 Assignment 10.3 Sale by Buyer after Delivery 10.4 Lease by Buyer after Delivery 10.5 No Increase in Boeing Liability 10.6 Exculpatory or Indemnity Clause in Post-delivery Sale or Lease Article 12 - Product Assurance; Disclaimer and Release; Exclusion of Liabilities; Customer Support; Indemnification and Insurance (in its entirety) Article 14 - Contractual Notices and Requests Article 15 - Miscellaneous 15.4 Governing Law Exhibit B - Product Assurance Document Part A Boeing Warrant Part B Warranty Repairs and Modifications by Buyer Part C Boeing Service Life Policy Part D Boeing Indemnity Against Patent Infringement Part D-1 Boeing Indemnity Against Copyright Infringement Part E Supplier Warranties and Patent Indemnities Part G Boeing Interface Commitment Part H General Exhibit C-1 - Customer Support Document Part B Boeing Customer Support Services Part D Technical Data and Documents Part E Buyer's Indemnification of Boeing and Insurance Part F Alleviation or Cessation of Performance Exhibit E - Buyer Furnished Equipment Provisions Document Paragraph 8 Indemnification of Boeing Paragraph 9 Patent Indemnity Paragraph 10 Definitions Letter Agreement No. 1830-3 - Seller Purchased Equipment Paragraph 6 Buyer's Indemnification of Boeing 2. Lessee recognizes that Boeing's obligation to provide training, support and services to Lessee pursuant to Exhibit C of the Boeing Agreement is conditioned on the receipt by Boeing of evidence of compliance by Lessee with the insurance requirements set forth in paragraph 2 of Part E of Exhibit C or in such other form as may be satisfactory to Boeing, prior to the commencement of such training, support and services. 3. ILFC reserves to itself all rights, claims and interests it may have under the Boeing Agreement not expressly assigned to Lessee hereunder. ILFC will remain responsible to Boeing for any amounts with respect to the Aircraft owed to Boeing under the Boeing Agreement prior to the effective date of this letter, including any amounts owed by ILFC to Boeing under the specific articles and paragraphs of the Boeing Agreement referenced in paragraph 1 above based upon events or incidents relating to the Aircraft occurring prior to the effective date of this letter. 4. ILFC hereby assigns to Lessee the sole authority to exercise in Lessee's name all rights and powers of ILFC with respect to the Aircraft under the specific portions of the Boeing Agreement referenced in paragraph 1 above. Such authorization will continue until Boeing receives from ILFC written notice that the Lease has been cancelled or terminated, addressed to Boeing's Vice President, Contracts, P.O. Box 3707, MC 21-34, Seattle, Washington 98124-2207, U.S.A. Until Boeing receives such notice, Boeing will be entitled to deal exclusively with Lessee with respect to the Aircraft under the specific portions of the Boeing Agreement referenced in paragraph 1 above and, with respect to the rights, powers, duties or obligations under such portions of the Boeing Agreement, any and all actions taken by Lessee or agreements entered into by Lessee during the period prior to Boeing's receipt of such notice will be final and binding on ILFC. 5. Lessee hereby accepts the authorization set forth in paragraph 4 above and agrees to be bound by and to comply with all the terms, conditions and limitations of the portion of the Boeing Agreement referenced in paragraph 1 above. 6. This Assignment may be signed by the parties hereto in separate counterparts, each of which when executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. 7. This Assignment shall be governed by, and construed in accordance with,the laws of the State of Washington, including all matters of construction, validity and performance. We request that Boeing, upon receipt of this letter, acknowledge receipt thereof and the transfer of rights set forth above by signing the acknowledgment and forwarding one copy of this letter to each of the undersigned. IN WITNESS WHEREOF, the parties hereto have caused this Assignment Agreement to be duly executed as of the dates written below. INTERNATIONAL LEASE FINANCE AMERICAN TRANS AIR, INC., as Lessee CORPORATION, as Lessor and Buyer By: By: Its: Its: BOEING ACKNOWLEDGMENT AND CONSENT TO ASSIGNMENT Receipt of the above letter is acknowledged and transfer of certain rights as described above under the Boeing Agreement is confirmed, effective as of this date. THE BOEING COMPANY By: Its: Date: EXHIBIT H ASSIGNMENT OF RIGHTS (ENGINES) [DATE] CFM INTERNATIONAL, INC. 1 Neumann Way, F-17 Cincinnati, Ohio 45215 Attention: Commercial Contracts - Warranty Assignment Administrator Dear Warranty Assignment Administrator: Reference is hereby made to that Consent to Assignment made as of April 29, 1988 (the "CONSENT TO ASSIGNMENT"), by and between CFM INTERNATIONAL, INC. ("CFMI") and INTERNATIONAL LEASE FINANCE CORPORATION ("ILFC"). Terms defined in the Consent to Assignment are used herein with the same meaning as in the Consent to Assignment. As of ________________ ___, ______, ILFC has assigned all of its rights and interest in, to and under the Engine Warranties to AMERICAN TRANS AIR, INC. ("ASSIGNEE") in connection with its lease to Assignee of a Boeing 737-800 aircraft (the "AIRCRAFT") together with two (2) CFMI Model CFM56-7B-27 engines bearing Manufacturer's Serial Numbers _______ and ________ (the "ENGINES") as of the date each such Engine was delivered to Assignee. Such assignment shall be effective from such date until ILFC notifies CFMI that the Lease has been cancelled or terminated. The Assignee has accepted such assignment and all the limitations and liabilities pertaining to the Engine Warranties as stated in the provisions of the GTA listed in Schedule 2 to the Consent to Assignment. A copy of the aforesaid assignment is attached hereto. Very truly yours, INTERNATIONAL LEASE FINANCE CORPORATION By: Title: cc: Ruben M. Cabrera Director, Commercial Contracts ASSIGNMENT OF WARRANTIES [DATE] In consideration of AMERICAN TRANS AIR, INC. ("LESSEE") leasing from International Lease Finance Corporation ("ILFC") one (1) Boeing 737-800 aircraft together with two (2) CFMI Model CFM56-7B-27 engines bearing manufacturer's serial numbers _______ and ________, it is hereby agreed as follows: 1. ILFC hereby assigns and transfers to Lessee all of ILFC's respective rights and interest in and to and in and under the Engine Warranties set forth in and subject to the limitations and liabilities set forth in Exhibit B Warranty, Section X (the "ENGINE WARRANTIES") of CFM International, Inc. - ILFC General Terms Agreement No. 6-3987 dated 22 June 1984 (the "GTA") during the term of such leases so long as Lessee is not in default thereunder. 2. Lessee hereby accepts such assignment including all the limitations and liabilities pertaining to said Engine Warranties as stated in the provisions of Exhibit B Warranty, Section X of the GTA. 3. This Agreement shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors and assigns to the extent permitted by the GTA and hereunder. 4. This Agreement shall be governed by and construed in accordance with the laws of the State of California. 5. This Agreement may be executed in any number of counterparts, each of which when executed and delivered is an original but all of which taken together constitute one and the same instrument and any party may execute this Agreement by signing any counterpart. IN WITNESS WHEREOF, the authorized representative of the parties hereto have executed this Agreement as of the day and year first above written. For and on behalf of For and on behalf of INTERNATIONAL LEASE FINANCE AMERICAN TRANS AIR, INC. CORPORATION By: By: Its: Its: EXHIBIT I RETURN ACCEPTANCE RECEIPT Date: _________________ ___, ____ 1. AMERICAN TRANS AIR, INC., as LESSEE, and INTERNATIONAL LEASE FINANCE CORPORATION, as LESSOR, have entered into an Aircraft Lease Agreement dated as of September 5, 2000 (the "LEASE"). Words used herein with capital letters and not otherwise defined will have the meanings set forth in the Lease. 2. LESSOR has this ____ day of __________, ____ (Time: __________) at ____________________ received from LESSEE possession of: (a) One (1) Boeing 737-800 Aircraft bearing Manufacturer's serial number ____, together with two (2) CFM56-7B-27 engines bearing manufacturer's serial numbers _______ and ________, and all Parts attached thereto and thereon in an airworthy condition and (b) All Aircraft Documentation, including the usual and customary manuals, logbooks, flight records and historical information regarding the Aircraft, Engines and Parts, as listed in the Document Receipt attached hereto. 3. The Airframe, Engines and Parts had the following hours/cycles at return: (a) AIRFRAME: Total hours: _______________ Total Landings: _______________ (b) ENGINES: POSITION SERIAL NO. TOTAL HOURS TOTAL CYCLES HRS/CYCLES SINCE LAST SHOP VISIT Time Remaining to Next LIFE LIMITED PART REMOVAL PART NAME HOURS CYCLES MSN MSN (c) APU: MSN __________ Total hours: __________ ______ hours/ ______ cycles since last Overhaul ______ hours/ ______ cycles remaining on APU life-limited Parts (d) LANDING GEARS: POSITION SERIAL NO. Total Hrs/Cycles since Date of last HRS/CYCLES LAST OVERHAUL OVERHAUL Nose Right Main Left Main (e) FUEL ON BOARD AT RETURN: ______ (circle one) pounds/kilos (______ gallons) 4. Other technical information regarding the Aircraft and its components are correctly set forth on the Technical Evaluation Report (in the form of Exhibit L) attached hereto. 5. The above specified aircraft, engines and documentation are hereby accepted by LESSOR subject to correction by LESSEE (or procurement by LESSEE at LESSEE's cost) as soon as reasonably possible of the discrepancies specified in Attachment 2 hereto. 6. Subject to the following paragraph, the leasing of the Aircraft by LESSOR to LESSEE pursuant to the Lease is hereby terminated without prejudice to LESSEE's continuing obligations under the Lease including, without limitation, paragraph 6 above and Articles 10.5, 15 and 16. 7. LESSEE represents and warrants that during the term of the Lease all maintenance and repairs to the Airframe and Engines were performed in accordance with the requirements contained in the Lease. LESSEE further confirms that all of its obligations under the Lease whether accruing prior to the date hereof or which survive the termination of the Lease by their terms and accrue after the date hereof, will remain in full force and effect until all such obligations have been satisfactorily completed. 8. This Return Acceptance Supplement is executed and delivered by the parties in [place]. IN WITNESS WHEREOF, the parties hereto have caused this Return Acceptance Receipt to be executed in their respective corporate names by their duly authorized representatives as of the day and year first above written. INTERNATIONAL LEASE FINANCE CORPORATION AMERICAN TRANS AIR, INC. By: By: Its: Its: ATTACHMENTS: 1. List of Aircraft Documentation 2. List of Loose Equipment 3. List of Discrepancies 4. Engine Maximum Power Assurance Test Conditions and Results 5. Dent and Damage Chart 6. Form of No Accident/Incident Letter 7. Technical Evaluation Report (in the form of Exhibit L) ATTACHMENT 1 TO RETURN ACCEPTANCE RECEIPT LIST OF AIRCRAFT DOCUMENTATION [The (a) manuals and (b) Aircraft records and historical documents set forth below are to be returned with the Aircraft in a current, up-to-date and correct status] MANUALS 1. FAA Approved Flight Manual 2. Airplane Flight Operation Manual 3. Aircraft Recover Manual 4. Quick Reference Handbook (QRH) 5. Weight and Balance Manual 6. Aircraft Fueling Manual 7. Aircraft Maintenance Manual (MM) 8. Aircraft Maintenance Manual Supplement 9. Ramp Maintenance Manual (RMM) 10. Cargo Loading Manual 11. Fault Reporting Manual (FRM) 12. Fault Isolation Manual (FIM) 13. Illustrated Parts Catalog (IPC) 14. Life Limited Parts Manual 15. Structural Repair Manual (SRM) 16. Master Minimum Equipment List 17. Wiring Diagram Manual (WD) 18. Wiring Practices Manual 19. System Schematics Manual 20. B.I.T.E. Manual 21. Non-Destructive Test Manual 22. Corrosion Prevention Manual 23. Component Maintenance Manual 24. APU Log Book 25. Engine Maintenance Manual 26. Engine Log Book 27. Engine Illustrated Parts Catalog 28. Engine Data Submittal Book 29. Engine Overhaul Manual 30. Power Plant Build-up Manual AIRCRAFT RECORDS AND HISTORICAL DOCUMENTS 1. Copies of original Certificates delivered by Boeing: a. Airworthiness Certificate for Export b. Radio installation conformity certificate c. Noise limitation certificate 2. Copies of original Documents delivered by Boeing: a. Airworthiness Directive Compliance list b. Aircraft inspection report c. Aircraft Readiness Log d. Weighing report 3. Copies of current Certificates: a. Airworthiness Certificate b. Noise limitation c. Radio license d. Interior material burn certificates e. Certificate of Export f. Aircraft deregistration confirmation e. Aircraft Registration 4. Letters signed and stamped by Quality Assurance: a. Current aircraft hours and cycles b. Current engines hours and cycles c. Accident and Incident report d. Summary of Maintenance Program e. AD compliance during the lease term 5. Aircraft log books and Aircraft readiness log. 6. Aircraft Hard Time (HT) inspection status. 7. One year forecast for HT inspection. 8. Aircraft Modification status, including service bulletins. 9. Last weighing report prior to redelivery. 10. AD compliance report with original signoffs. 11. Routine and non-routine job cards of the last "C" and "D" checks. 12. Past year pilots and maintenance discrepancies. 13. Major and Minor structural repairs with applicable approvals. 14. Compass Swing report of the last three years. 15. Cabin Configuration drawing (LOPA). 16. Emergency equipment location drawing. 17. Last X-RAYs ENGINES RECORDS 1. Last test cell run reports. 2. Life Limited Parts status and traceability. 3. AD compliance report with original signoffs. 4. Engine Modification/service bulletin/inspection report and applicable forms. 5. Last heavy maintenance records for each module. 6. Engine log books. 7. Engine removal history. 8. Past year trend monitoring reports. 9. Historical borescope reports. 10. Engine component report. APU RECORDS 1. APU status (FH, FC, limits). 2. Life limited Part status and traceability. 3. AD compliance with original signoffs. 4. Modification status. 5. Last heavy maintenance documents. 6. APU log books. 7. Last test cell report. COMPONENT RECORDS 1. Aircraft component inventory. 2. Hard time component inventory. 3. All serviceable tags. 4. Landing Gear status with last overhaul and life limited Part status. 5. AD compliance with original signoffs. 6. Modification status. ATTACHMENT 2 TO RETURN ACCEPTANCE RECEIPT LIST OF LOOSE EQUIPMENT ATTACHMENT 3 TO RETURN ACCEPTANCE RECEIPT LIST OF DISCREPANCIES ATTACHMENT 4 TO RETURN ACCEPTANCE RECEIPT ENGINE MAXIMUM POWER ASSURANCE TEST CONDITIONS AND RESULTS ATTACHMENT 5 TO RETURN ACCEPTANCE RECEIPT DENT AND DAMAGE CHART ATTACHMENT 6 TO RETURN ACCEPTANCE RECEIPT FORM OF NO ACCIDENT/INCIDENT LETTER EXHIBIT J MONTHLY REPORT (SEE FOLLOWING SHEET) MONTHLY AIRCRAFT UTILIZATION AND STATUS REPORT Page 1 of 2 Report Due Date: To: INTERNATIONAL LEASE FINANCE CORPORATION Fax: (310) 788-1990 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067, United States Attn: Finance Department From: AMERICAN TRANS AIR, INC. Contact: Fax: AIRCRAFT TYPE: BOEING 737-800 ENGINE TYPE: CFM56-7B-27 REGISTRATION: ____ SERIAL NUMBER: ____ MONTH OF: NOTE: PLEASE RECORD TIME IN HOURS AND MINUTES NOT DECIMALS. Aircraft Total Time Since New As Of Last Month: Hours: Min: Aircraft Total Time Since New: Hours: Min: Aircraft Total Cycles Since New: Cycles: Airframe Hours Flown During Month: Hours: Min: Airframe Cycles/Landings During Month: Cycles: Time Remaining to "D" or Heavy Maintenance Check: HOURS OR US$ PER CYCLES FLOWN HOUR OR DURING MONTH (AS CYCLE (AS APPLICABLE) X APPLICABLE) = RESERVES TOTAL AIRFRAME: HRS: X = TOTAL LANDING GEAR: HRS: X = TOTAL APU: HRS: X = ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles(for Engine LLP Reserves): x = ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles (for Engine LLP Reserves): x = ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles (for LLP x = Reserves): ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles (for Engine LLP Reserves): x = TOTAL AMOUNT OF RESERVES (US$) PAID THIS MONTH: US$ Monthly Aircraft Utilization and Status Report From: AMERICAN TRANS AIR, INC. PAGE 2 OF 2 ENGINE SERIAL NUMBER: ENGINE SERIAL NUMBER: ORIGINAL POSITION: ORIGINAL POSITION: ACTUAL LOCATION: ACTUAL LOCATION: CURRENT THRUST RATING: CURRENT THRUST RATING: HOURS:/MIN: HOURS:/MIN: Total Time Since New As Of Total Time Since New As Of Last Month: Last Month: Total Time Since New: Total Time Since New: Total Cycles Since New: Total Cycles Since New: Hours Flown During Month: Hours Flown During Month: Cycles During Month: Cycles During Month: IMPORTANT: IF ILFC-OWNED ENGINE IS REMOVED OR INSTALLED ON ANOTHER AIRCRAFT, IT MUST BE REPORTED MONTHLY ON THIS FORM. EXHIBIT K AIRCRAFT DOCUMENTATION AIRCRAFT RECORDS 1. Copies of original Certificates delivered by Boeing: a. Airworthiness Certificate for Export b. Radio installation conformity certificate c. Noise limitation certificate 2. Copies of original Documents delivered by Boeing: a. Airworthiness Directive Compliance list b. Aircraft inspection report c. Aircraft Readiness Log d. Weighing report 3. Copies of current Certificates: a. Airworthiness Certificate b. Noise limitation c. Radio license d. Interior material burn certificates e. Certificate of Export f. Aircraft deregistration confirmation e. Aircraft Registration 4. Letters signed and stamped by Quality Assurance: a. Current aircraft hours and cycles b. Current engines hours and cycles c. Accident and Incident report d. Summary of Maintenance Program e. AD compliance during the lease term 5. Aircraft log books and Aircraft readiness log. 6. Aircraft Hard Time (HT) inspection status. 7. One year forecast for HT inspection. 8. Aircraft Modification status, including service bulletins. 9. Last weighing report prior to redelivery. 10. AD compliance report with original signoffs. 11. Routine and non-routine job cards of the last "C" and "D" checks. 12. Past year pilots and maintenance discrepancies. 13. Major and Minor structural repairs with applicable approvals. 14. Compass Swing report of the last three years. 15. Cabin Configuration drawing (LOPA). 16. Emergency equipment location drawing. 17. Last X-RAYs ENGINES RECORDS 1. Last test cell run reports. 2. Life Limited Parts status and traceability. 3. AD compliance report with original signoffs. 4. Engine Modification/service bulletin/inspection report and applicable forms. 5. Last heavy maintenance records for each module. 6. Engine log books. 7. Engine removal history. 8. Past year trend monitoring reports. 9. Historical borescope reports. 10. Engine component report. APU RECORDS 1. APU status (FH, FC, limits). 2. Life limited Part status and traceability. 3. AD compliance with original signoffs. 4. Modification status. 5. Last heavy maintenance documents. 6. APU log books. 7. Last test cell report. COMPONENT RECORDS 1. Aircraft component inventory. 2. Hard time component inventory. 3. All serviceable tags. 4. Landing Gear status with last overhaul and life limited Part status. 5. AD compliance with original signoffs. 6. Modification status. EXHIBIT L TECHNICAL EVALUATION REPORT (SEE FOLLOWING SHEETS) EX-10.6(L) 27 file073.txt AMTRAN, INC., 2000 10-K, EXHIBIT 10.6(L) AIRCRAFT LEASE AGREEMENT Dated as of September 5, 2000 BETWEEN AMERICAN TRANS AIR, INC. as LESSEE and INTERNATIONAL LEASE FINANCE CORPORATION as LESSOR ------------------------------------------------------------------------------- Aircraft Make and Model: New Boeing 737-800 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Aircraft Manufacturer's Serial Number: 30035 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Aircraft Registration Mark: Per Estoppel and Acceptance Certificate ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Make and Model of Engines: CFM56-7B-27 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Serial Numbers of Engines: Per Estoppel and Acceptance Certificate ------------------------------------------------------------------------------- NEW BOEING 737-800 AIRCRAFT NO. 13 TABLE OF CONTENTS ARTICLE 1 SUMMARY OF TRANSACTION.........................................2 1.1 Description of Aircraft........................................2 1.2 Scheduled Delivery Date and Location...........................2 1.3 Lease Term.....................................................2 1.4 Security Deposit...............................................2 1.5 Transaction Fee................................................2 1.6 Rent During Lease Term.........................................2 1.7 Country of Aircraft Registration...............................4 1.8 Maintenance Program............................................4 1.9 Agreed Value of Aircraft.......................................4 1.10 LESSOR's Bank Account..........................................4 ARTICLE 2 DEFINITIONS....................................................5 2.1 General Definitions............................................5 2.2 Specific Definitions...........................................9 ARTICLE 3 PLACE AND DATE OF DELIVERY....................................11 3.1 Place of Delivery.............................................11 3.2 Scheduled Delivery Date.......................................11 3.3 Delivery subject to Manufacturer Delivery.....................11 3.4 No LESSOR Liability...........................................11 3.5 Total Loss of Aircraft prior to Delivery......................11 3.6 Cancellation for Delay........................................11 ARTICLE 4 LEASE TERM....................................................12 4.1 Lease Term....................................................12 4.2 "Expiration Date".............................................12 4.3 "Termination Date"............................................12 ARTICLE 5 SECURITY DEPOSIT, TRANSACTION FEE, RENT AND OTHER PAYMENTS......................................................13 5.1 Security Deposit..............................................13 5.2 Transaction Fee...............................................14 5.3 Rent..........................................................14 5.4 LESSOR's Bank Account.........................................15 5.5 Default Interest..............................................16 5.6 No Deductions or Withholdings.................................16 5.7 Value Added Taxes.............................................16 5.8 Net Lease.....................................................17 5.9 LESSOR Performance of LESSEE Obligation.......................18 5.10 Consideration for Rent and other Amounts......................18 ARTICLE 6 INVOLVEMENT WITH AIRCRAFT MANUFACTURER........................19 6.1 LESSEE Selection of Aircraft..................................19 6.2 Agency Agreement..............................................19 6.3 Procurement of BFE............................................19 6.4 Assignment of Training........................................19 6.5 LESSEE Inspection of Aircraft.................................19 6.6 Aircraft at Delivery..........................................19 6.7 Delivery of the Aircraft to LESSEE............................20 6.8 LESSEE Acceptance of Aircraft.................................20 ARTICLE 7 PRE-DELIVERY, DELIVERY AND POST-DELIVERY DOCUMENTARY AND OTHER REQUIREMENTS............................21 7.1 Pre-Delivery Requirements.....................................21 7.2 Delivery Requirements.........................................22 7.3 Post-Delivery Requirements....................................23 ARTICLE 8 DISCLAIMERS...................................................24 8.1 "As Is, Where Is".............................................24 8.2 Waiver of Warranty of Description.............................24 8.3 LESSEE Waiver.................................................25 8.4 Conclusive Proof..............................................25 8.5 No LESSOR Liability for Losses................................25 8.6 No Liability to Repair or Replace.............................25 8.7 No Waiver.....................................................26 ARTICLE 9 MANUFACTURERS' AND VENDORS' WARRANTIES........................27 9.1 Warranties....................................................27 9.2 Reassignment..................................................27 ARTICLE 10 OPERATION OF AIRCRAFT.........................................28 10.1 Costs of Operation............................................28 10.2 Compliance with Laws..........................................28 10.3 Training......................................................28 10.4 No Violation of Insurance Policies............................28 10.5 Flight Charges................................................29 ARTICLE 11 SUBLEASES.....................................................30 11.1 No Sublease without LESSOR Consent............................30 11.2 LESSOR Costs..................................................30 11.3 Any Approved Sublease.........................................30 11.4 Assignment of Sublease........................................30 11.5 Continued Responsibility of LESSEE............................30 ARTICLE 12 MAINTENANCE AND USE OF AIRCRAFT...............................31 12.1 General Obligation............................................31 12.2 Specific Obligations..........................................31 12.3 Replacement of Parts..........................................32 12.4 Removal of Engines............................................33 12.5 Pooling of Engines and Parts..................................34 12.6 Installation of Engines on other aircraft.....................34 12.7 Modifications.................................................35 12.8 Performance of Work by Third Parties..........................36 12.9 Reporting Requirements........................................36 12.10 Information Regarding Maintenance Program.....................36 12.11 LESSOR Rights to Inspect Aircraft.............................36 ARTICLE 13 TITLE AND REGISTRATION........................................37 13.1 Title to the Aircraft During Lease Term.......................37 13.2 Registration of Aircraft......................................37 13.3 Filing of this Lease..........................................37 13.4 Evidence of Registration and Filings..........................37 ARTICLE 14 IDENTIFICATION PLATES.........................................38 14.1 Airframe Identification Plates................................38 14.2 Engine Identification Plates..................................38 ARTICLE 15 TAXES.........................................................39 15.1 General Obligation of LESSEE..................................39 15.2 Exceptions to Indemnity.......................................39 15.3 After-Tax Basis...............................................40 15.4 Claims and Contests...........................................40 15.5 Refunds.......................................................41 15.6 Cooperation in Filing Tax Returns.............................41 ARTICLE 16 INDEMNITIES...................................................42 16.1 General Indemnity.............................................42 16.2 Exceptions to General Indemnities.............................43 16.3 After-Tax Basis...............................................44 16.4 Timing of Payment.............................................44 16.5 Subrogation...................................................44 16.6 Notice........................................................44 16.7 Refunds.......................................................44 16.8 Defense of Claims.............................................45 16.9 Survival of Obligation........................................45 ARTICLE 17 INSURANCE.....................................................46 17.1 Categories of Insurance.......................................46 17.2 Insurance for Indemnities.....................................46 17.3 Insurance required by Manufacturer............................46 17.4 Renewal.......................................................46 17.5 Assignment of Rights by LESSOR................................46 17.6 Deductibles...................................................46 17.7 Other Insurance...............................................47 17.8 Information...................................................47 17.9 Currency......................................................47 17.10 Grounding of Aircraft.........................................47 17.11 Failure to Insure.............................................47 17.12 Limit on Hull in favor of LESSEE..............................47 17.13 Marketplace Limitations.......................................48 ARTICLE 18 LOSS, DAMAGE AND REQUISITION..................................49 18.1 Definitions...................................................49 18.2 Notice of Total Loss..........................................50 18.3 Total Loss of Aircraft or Airframe............................50 18.4 Surviving Engine(s)...........................................51 18.5 Total Loss of Engine and not Airframe.........................51 18.6 Other Loss or Damage..........................................52 18.7 Copy of Insurance Policy......................................53 18.8 Government Requisition........................................53 18.9 Conveyance to LESSEE..........................................53 ARTICLE 19 CRAF PROGRAM..................................................54 19.1 Dedication to CRAF............................................54 19.2 Notice to LESSOR..............................................54 19.3 Requisition of Engine.........................................54 19.4 Government Indemnification....................................54 19.5 No Geographic Limits..........................................54 19.6 Notice of Default.............................................55 19.7 Receipt of Payments...........................................55 ARTICLE 20 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE...........56 20.1 Representations and Warranties................................56 20.2 Covenants.....................................................58 ARTICLE 21 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSOR...........61 21.1 Representations and Warranties................................61 21.2 Covenant of Quiet Enjoyment...................................62 ARTICLE 22 FINANCIAL AND RELATED INFORMATION.............................63 ARTICLE 23 RETURN OF AIRCRAFT............................................64 23.1 Date of Return................................................64 23.2 Technical Report..............................................64 23.3 Return Location...............................................64 23.4 Full Aircraft Documentation Review............................64 23.5 Aircraft Inspection...........................................64 23.6 Certificate of Airworthiness Matters..........................65 23.7 General Condition of Aircraft at Return.......................66 23.8 Checks Prior to Return........................................69 23.9 Part Lives....................................................72 23.10 Export and Deregistration of Aircraft.........................74 23.11 LESSEE's Continuing Obligations...............................75 23.12 Airport and Navigation Charges................................75 23.13 Return Acceptance Certificate.................................76 23.14 Indemnities and Insurance.....................................76 ARTICLE 24 ASSIGNMENT....................................................77 24.1 No Assignment by LESSEE.......................................77 24.2 Sale or Assignment by LESSOR..................................77 24.3 LESSOR's Lender...............................................79 24.4 LESSEE Cooperation............................................79 24.5 Protections...................................................79 ARTICLE 25 DEFAULT OF LESSEE.............................................80 25.1 LESSEE Notice to LESSOR.......................................80 25.2 Events of Default.............................................80 25.3 LESSOR's General Rights.......................................82 25.4 Deregistration and Export of Aircraft.........................83 25.5 LESSEE Liability for Damages..................................83 25.6 Waiver of Default.............................................84 25.7 Present Value of Payments.....................................84 25.8 Use of "Termination Date".....................................84 ARTICLE 26 NOTICES.......................................................85 26.1 Manner of Sending Notices.....................................85 26.2 Notice Information............................................85 ARTICLE 27 GOVERNING LAW AND JURISDICTION................................86 27.1 California Law................................................86 27.2 Non-Exclusive Jurisdiction in California......................86 27.3 Service of Process............................................86 27.4 Prevailing Party in Dispute...................................86 27.5 Waiver........................................................86 ARTICLE 28 MISCELLANEOUS.................................................87 28.1 Press Releases................................................87 28.2 LESSOR Performance for LESSEE.................................87 28.3 LESSOR's Payment Obligations..................................87 28.4 Application of Payments.......................................87 28.5 Usury Laws....................................................87 28.6 Delegation by LESSOR..........................................87 28.7 Confidentiality...............................................88 28.8 Rights of Parties.............................................88 28.9 Further Assurances............................................88 28.10 Use of Word "including".......................................88 28.11 Headings......................................................88 28.12 Invalidity of any Provision...................................88 28.13 Negotiation...................................................88 28.14 Time is of the Essence........................................89 28.15 Amendments in Writing.........................................89 28.16 Counterparts..................................................89 28.17 Delivery of Documents by Fax..................................89 28.18 Entire Agreement..............................................89 EXHIBIT A AIRCRAFT DESCRIPTION..........................................91 EXHIBIT B AGENCY AGREEMENT..............................................92 EXHIBIT C CERTIFICATE OF INSURANCE......................................96 EXHIBIT D BROKERS' LETTER OF UNDERTAKING...............................102 EXHIBIT E ESTOPPEL AND ACCEPTANCE CERTIFICATE..........................104 EXHIBIT F OPINION OF COUNSEL...........................................111 EXHIBIT G ASSIGNMENT OF RIGHTS (AIRFRAME)..............................114 EXHIBIT H ASSIGNMENT OF RIGHTS (ENGINES)...............................119 EXHIBIT I RETURN ACCEPTANCE RECEIPT....................................123 EXHIBIT J MONTHLY REPORT...............................................134 EXHIBIT K AIRCRAFT DOCUMENTATION.......................................138 EXHIBIT L TECHNICAL EVALUATION REPORT..................................140 AIRCRAFT LEASE AGREEMENT THIS AIRCRAFT LEASE AGREEMENT is made and entered into as of September 5, 2000. BETWEEN: AMERICAN TRANS AIR, INC., a Indiana corporation whose address and principal place of business is at 7337 West Washington Street, Indianapolis International Airport, Indianapolis, Indiana 46231, United States of America ("LESSEE") and INTERNATIONAL LEASE FINANCE CORPORATION, a California corporation whose address and principal place of business is at 1999 Avenue of the Stars, 39th Floor, Los Angeles, California 90067, United States of America ("LESSOR"). The subject matter of this Lease is one (1) new Boeing 737-800 aircraft. In consideration of and subject to the mutual covenants, terms and conditions contained in this Lease, LESSOR hereby agrees to lease to LESSEE and LESSEE hereby agrees to lease from LESSOR the aircraft and the parties further agree as follows: ARTICLE 1 SUMMARY OF TRANSACTION The information in this Article 1 is a summary of the lease transaction between LESSEE and LESSOR. It is set forth for the convenience of the parties only and will not be deemed in any way to amend, detract from or simplify the other provisions of this Lease. 1.1 DESCRIPTION OF AIRCRAFT One new Boeing 737-800 aircraft 1.2 SCHEDULED DELIVERY DATE AND LOCATION In the month of (CONFIDENTIAL MATERIAL OMITTED) at Seattle, Washington 1.3 LEASE TERM 15 years 1.4 SECURITY DEPOSIT (CONFIDENTIAL MATERIAL OMITTED) 1.5 TRANSACTION FEE (CONFIDENTIAL MATERIAL OMITTED) 1.6 RENT DURING LEASE TERM Payable monthly in advance and equal to the sum of: (a The following amounts for the following years of the Lease Term: LEASE PERIOD MONTHLY RENTAL AMOUNT* (CONFIDENTIAL MATERIAL OMITTED) *The above base rent is expressed in January 1999 U.S.Dollars and will increase in the following amounts for the following periods: PERIOD ESCALATION FACTOR (CONFIDENTIAL MATERIAL OMITTED) 1.7 COUNTRY OF AIRCRAFT REGISTRATION U.S. 1.8 MAINTENANCE PROGRAM LESSEE's Maintenance Program 1.9 AGREED VALUE OF AIRCRAFT (CONFIDENTIAL MATERIAL OMITTED) The Agreed Value is expressed in March 2001 U.S. Dollars and will increase in accordance with Manufacturer's announced escalation rate from March 1, 2001 to the Delivery Date. On each annual renewal date of LESSEE's insurance policy commencing on the renewal date following the first anniversary of the Lease Term, the Agreed Value will decrease by two percent (2.0%) of the then existing Agreed Value. 1.10 LESSOR'S BANK ACCOUNT (Confidential Material Omitted) ARTICLE 2 DEFINITIONS Except where the context otherwise requires, the following words have the following meanings for all purposes of this Lease. The definitions are equally applicable to the singular and plural forms of the words. Any agreement defined below includes each amendment, modification, supplement and waiver thereto in effect from time to time. 2.1 GENERAL DEFINITIONS. "ACT" means the Federal Aviation Act of 1958, as amended from time to time, or any successor act thereto. "AIRCRAFT" means the Airframe, two (2) Engines, Parts and Aircraft Documentation, collectively. As the context requires, "Aircraft" may also mean the Airframe, any Engine, any Part, the Aircraft Documentation or any part thereof individually. For example, in the context of return to LESSOR the term "Aircraft" means the Airframe, Engines, Parts and Aircraft Documentation collectively, yet in the context of LESSEE not creating any Security Interests other than Permitted Liens on the Aircraft, the term "Aircraft" means any of the Airframe, any Engine, any Part or the Aircraft Documentation individually. "AIRCRAFT DOCUMENTATION" means all (a) log books, Aircraft records, manuals and other documents provided to LESSEE in connection with the Aircraft, (b) documents listed in Exhibits E and K and (c) any other documents required to be maintained during the Lease Term by the Aviation Authority, LESSEE's Maintenance Program and this Lease. "AIRFRAME" means the airframe listed in the Estoppel and Acceptance Certificate executed at Delivery together with all Parts relating thereto (except Engines or engines). "AIRWORTHINESS DIRECTIVES" or "ADS" means all airworthiness directives (or equivalent) of the FAA and the Aviation Authority applicable to the Aircraft. "APU" means the auxiliary power unit of the Aircraft. "AVIATION AUTHORITY" means the FAA or any Government Entity which under the Laws of the U.S. from time to time has control over civil aviation or the registration, airworthiness or operation of aircraft in the U.S. If the Aircraft is registered in a country other than the U.S., "Aviation Authority" means the agency which regulates civil aviation in such other country. "AVIATION DOCUMENTS" means any or all of the following which at any time may be obtainable from the Aviation Authority: (a) if required, a temporary certificate of airworthiness from the Aviation Authority allowing the Aircraft to be flown after Delivery to the State of Registration, (b) an application for registration of the Aircraft with the appropriate authority in the State of Registration, (c) the certificate of registration for the Aircraft issued by the State of Registration, (d) a full certificate of airworthiness for the Aircraft specifying transport category (passenger), (e) an air transport license, (f) an air operator's certificate, (g) such recordation of LESSOR's title to the Aircraft and interest in this Lease as may be available in the State of Registration and (h) all such other authorizations, approvals, consents and certificates in the State of Registration as may be required to enable LESSEE lawfully to operate the Aircraft. "BANKRUPTCY CODE" means The Bankruptcy Reform Act of 1978 (11 U.S.C. ss.ss. 101-1330), as amended or supplemented from time to time, and any successor statute, and all of the rules and regulations issued or promulgated in connection therewith. "BASIC ENGINE" means those units and components of the Engine which are used to induce and convert fuel/air mixture into thrust/power; to transmit power to the fan and accessory drives; to supplement the function of other defined systems external to the Engine; and to control and direct the flow of internal lubrication, plus all essential accessories as supplied by the Engine manufacturer. The nacelle, installed components related to the Aircraft systems, thrust reversers, QEC and the primary flight nozzle are excluded. "BFE" means any equipment which is to be provided by the purchaser of the Aircraft (whether actually provided by LESSOR as buyer-furnished equipment or Manufacturer as seller-purchased equipment). "BUSINESS DAY" means a day other than a Saturday or Sunday on which the banks in Indianapolis, Indiana and in the city where LESSOR's Bank is located are open for the transaction of business of the type required by this Lease. "CREDITOR" means any lessor, owner, bank, lender, mortgagee or other Person which is the owner of or has any interest in an aircraft engine or aircraft operated by LESSEE. "CREDITOR AGREEMENT" means the applicable agreement between a Creditor and LESSEE or between Creditors pursuant to which such Creditor owns, leases or has an interest in either an aircraft operated by LESSEE on which an Engine may be installed or in an aircraft engine which may be installed on the Airframe. "DEFAULT" means any event which, upon the giving of notice, the lapse of time and/or a relevant determination, would constitute an Event of Default. "DELIVERY" means the delivery of the Aircraft from LESSOR to LESSEE pursuant to Articles 3 and 6. "DELIVERY DATE" means the date on which Delivery takes place. "DOLLARS" and "$" means the lawful currency of the U.S. "ENGINE" means (a) each of the engines listed on the Estoppel and Acceptance Certificate; or (b) any replacement engine acquired by LESSOR and leased to LESSEE pursuant to Article 18.5 following a Total Loss of an Engine; including in each case all Parts installed in or on any of such engines at Delivery (or substituted, renewed or replacement Parts in accordance with this Lease) so long as title thereto is or remains vested in LESSOR in accordance with the terms of Article 12.3. "EVENT OF DEFAULT" means any of the events referred to in Article 25.2. "FAA" means the Federal Aviation Administration of the Department of Transportation or any successor thereto under the Laws of the U.S. "FARS" means the U.S. Federal Aviation Regulations embodied in Title 14 of the U.S. Code of Federal Regulations, as amended from time to time, or any successor regulations thereto. "GENEVA CONVENTION" means the Convention on the International Recognition of Rights in Aircraft signed in Geneva, Switzerland on June 19, 1948. "GOVERNMENT ENTITY" means any (a) national, state or local government, (b) board, commission, department, division, instrumentality, court, agency or political subdivision thereof and (c) association, organization or institution of which any of the entities listed in (a) or (b) is a member or to whose jurisdiction any such entity is subject. "LANDING GEAR" means the installed main and nose landing gear, components and their associated actuators, side braces and parts. "LAW" means any (a) statute, decree, constitution, regulation, order or any directive of any Government Entity, (b) treaty, pact, compact or other agreement to which any Government Entity is a signatory or party and (c) judicial or administrative interpretation or application of any of the foregoing. "LEASE" means this Aircraft Lease Agreement, together with all Exhibits hereto. "LESSOR'S LIEN" means any Security Interest created by LESSOR, or arising from a claim against LESSOR completely unrelated to this Lease or the other Operative Documents. "MAINTENANCE PROGRAM" means LESSEE's maintenance program as approved by the Aviation Authority or such other maintenance program as LESSOR may, in its discretion, accept in writing. "MANUFACTURER" means The Boeing Company, a Delaware corporation. "MPD" means the Maintenance Planning Document published by Manufacturer and applicable to the Aircraft. "OVERHAUL" means the full reconditioning of the Aircraft, an Engine, APU, Landing Gear, module or Part, as the case may be, in which such equipment has been fully disassembled; cleaned; thoroughly inspected; and returned to the highest standard specified by the applicable manufacturer's manual. "PART" means the APU, any part, component, appliance, system module, engine module, accessory, material, instrument, communications equipment, furnishing, LESSEE-furnished or LESSOR-purchased equipment or other item of equipment (other than complete Engines or engines) for the time being installed in or attached to the Airframe or any Engine or which, having been removed from the Airframe or any Engine, remains the property of LESSOR. "PERMITTED INSTITUTION" means any Person (other than a commercial air carrier, a commercial aircraft operator, a freight forwarder, or an affiliate of any of the foregoing), with either: (a) a combined capital and surplus or net worth of at least; or (b) have a credit rating on the majority of its unsecured debt which is at least equal to BBB or its equivalent from Standard and Poor's Rating Group, a division of The McGraw-Hill Companies, Inc. or Moody's Investors Service, Inc. "PERMITTED LIEN" means (a) LESSOR's Liens; (b) Security Interests arising in the ordinary course of LESSEE's business for Taxes either not yet due and payable or, if due and payable, being contested in good faith in accordance with Article 15.4; (c) materialmen's, mechanics', workmen's, repairmen's, employees' liens or similar Security Interests arising by operation of Law after the Delivery Date in the ordinary course of LESSEE's business for amounts which are either not yet due or are being contested in good faith by appropriate proceedings (and for which adequate reserves have been made or, when required in order to pursue such proceedings, an adequate bond has been provided) so long as such proceedings do not involve any material danger of sale, forfeiture or loss of the Aircraft; (d) the rights of LESSOR and any LESSOR's Lender and the rights of LESSEE under this Lease and the other Operative Documents; (e) the rights of others under agreements or arrangements to the extent permitted by Articles 10 and 11.5; and (f) any Security Interest against which LESSEE causes to be provided a bond in such amount and under such terms and conditions as are reasonably satisfactory to LESSOR. "PERSON" means any individual, firm, partnership, joint venture, trust, corporation, limited liability company, Government Entity, committee, department, authority or any body, incorporated or unincorporated, whether having distinct legal personality or not. "PRIME RATE" means the rate of interest from time to time announced by Bank of America Illinois in Chicago, Illinois as its prime commercial lending rate. "SECURITY INTEREST" means any encumbrance or security interest, however and wherever created or arising including (without prejudice to the generality of the foregoing) any right of ownership, security, mortgage, pledge, charge, encumbrance, lease, lien, statutory or other right in rem, hypothecation, title retention, attachment, levy, claim or right of possession or detention. "STATE OF REGISTRATION" means the U.S. or such other country or state of registration of the Aircraft as LESSOR may, in its absolute discretion, approve in writing. "U.S." means the United States of America. "U.S. AIR CARRIER" means any U.S. air carrier who is a Citizen of the U.S. holding an air carrier operating certificate issued by the Secretary of Transportation pursuant to chapter 447 of the Act for aircraft capable of carrying 10 or more individuals or 6000 pounds or more of cargo, and as to whom there is in force an air carrier operating certificate issued pursuant to FAR Part 121, or who may operate as an air carrier by certification or otherwise under any successor or substitute provisions therefor or in the absence thereof. 2.2 SPECIFIC DEFINITIONS. The following terms are defined in the Articles referenced below: TERMS ARTICLE Agreed Value 18.1 CRAF Program 19.1 CRAF Program Requisition 19.1 Period Default Interest 5.5 Delivery Location 3.1 Expenses 16.1 Expiration Date 4.3 Indemnities 16.1 Lease Term 4.1 LESSEE Customization 5.3.1 Costs LESSOR's Assignee 24.2.1 LESSOR's Bank 5.4 LESSOR's Lender 24.3 Manufacturer's Escalation 5.3.1 Rate Modifications 12.7.2 Net Total Loss Proceeds 18.1 Operative Documents 20.1.3 Rent 5.3.1 Return Check 23.8.1 Scheduled Delivery Date 3.2 Security Deposit 5.1.1 Taxes 15.1 Termination Date 4.3 Total Loss 18.1 Total Loss Date 18.1 Total Loss Proceeds 18.1 Transaction Fee 5.2 ARTICLE 3 PLACE AND DATE OF DELIVERY 3.1 PLACE OF DELIVERY. LESSOR will deliver the Aircraft to LESSEE at Manufacturer's facility at Seattle, Washington or such other place as may be agreed in writing between the parties (the "DELIVERY LOCATION"). 3.2 SCHEDULED DELIVERY DATE. As of the date of this Lease, delivery of the Aircraft from Manufacturer to LESSOR is scheduled to occur in the month of (CONFIDENTIAL MATERIAL OMITTED). LESSOR will not agree to reschedule such delivery without LESSEE's prior written consent. LESSOR will notify LESSEE from time to time and in a timely manner of the exact date on which LESSOR expects such delivery to take place (the "SCHEDULED DELIVERY DATE"). 3.3 DELIVERY SUBJECT TO MANUFACTURER DELIVERY. LESSOR and LESSEE expressly acknowledge that Delivery of the Aircraft to LESSEE is subject to and conditioned upon, and is to occur simultaneously with, delivery of the Aircraft by Manufacturer to LESSOR. 3.4 NO LESSOR LIABILITY. LESSOR will not be liable for any loss or expense, or any loss of profit, arising from any delay or failure in Delivery to LESSEE unless such delay or failure arises as a consequence of the willful misconduct of LESSOR, and in no event will LESSOR be liable for any delay or failure which is caused by any breach or delay on the part of Manufacturer or any BFE supplier. 3.5 TOTAL LOSS OF AIRCRAFT PRIOR TO DELIVERY. If a Total Loss of the Aircraft occurs prior to Delivery, neither party will have any further liability to the other except that LESSOR will return to LESSEE the Security Deposit in accordance with Article 5.1.3 and any prepaid Rent. 3.6 CANCELLATION FOR DELAY. Promptly after LESSOR becomes aware that in Manufacturer's opinion a delay will cause Delivery to be delayed beyond (CONFIDENTIAL MATERIAL OMITTED) LESSOR will notify LESSEE. By written notice given within ten (10) Business Days after LESSEE's receipt of such LESSOR notice, either party may by written notice to the other party terminate this Lease and this Lease will terminate on the date of receipt of such notice. In the event of such termination, neither party will have any further liability to the other party except that LESSOR will return to LESSEE the Security Deposit in accordance with Article 5.1.3 and any prepaid Rent. If neither party gives notice of termination within such ten (10) Business Days, both parties lose all right to terminate under this Article 3.6 unless otherwise agreed in writing by the parties. ARTICLE 4 LEASE TERM 4.1 LEASE TERM. The term of leasing of the Aircraft will commence on the Delivery Date and continue for a term of fifteen (15) years ("LEASE TERM"). 4.2 "EXPIRATION DATE". "EXPIRATION DATE" means the date on which LESSEE is required to redeliver the Aircraft to LESSOR in the condition required by this Lease on the last day of the Lease Term. 4.3 "TERMINATION DATE". This Lease may in fact terminate on any of the dates set forth below: (a the Expiration Date, provided LESSEE returns the Aircraft to LESSOR on the Expiration Date in the condition required by Article 23; or (b a date earlier than the Expiration Date, if: (i there is a Total Loss of the Aircraft prior to Delivery pursuant to Article 3.5; (ii cancellation of this Lease occurs pursuant to Article 3.6; (iii there is a Total Loss of the Aircraft and payment is made to LESSOR in accordance with Article 18.3; or (iv an Event of Default occurs and LESSOR repossesses the Aircraft or otherwise terminates this Lease pursuant to Article 25.3. (c a date later than the Expiration Date, if: (i an Event of Default occurs hereunder by LESSEE returning the Aircraft in the condition required by this Lease after the Expiration Date; or (ii an Event of Default occurs and LESSOR repossesses the Aircraft or otherwise terminates this Lease pursuant to Article 25.3. The "TERMINATION DATE" is the date on which this Lease terminates because one of the above has occurred. ARTICLE 5 SECURITY DEPOSIT, TRANSACTION FEE, RENT AND OTHER PAYMENTS 5.1 SECURITY DEPOSIT. 5.1.1 (CONFIDENTIAL MATERIAL OMITTED) 5.1.2 The Security Deposit may be commingled with LESSOR's general funds and any interest earned on such Security Deposit will be for LESSOR's account. If the Security Deposit is reduced below the required amount by application to meet LESSEE's unperformed obligations under this Lease, LESSEE will replenish the Security Deposit within ten (10) days after LESSOR's demand therefor. The Security Deposit will serve as security for the performance by LESSEE of its obligations under this Lease and any other agreements between LESSEE and LESSOR relating to aircraft, engines, aircraft equipment or the extension of credit and may be applied by LESSOR upon the occurrence of a Default or Event of Default hereunder or of a default by LESSEE under any such other agreements. 5.1.3 Upon termination of this Lease in accordance with Article 4.3 other than if an Event of Default has occurred and is continuing, LESSOR will return to LESSEE the amount of the Security Deposit then held by LESSOR (so long as no default by LESSEE exists under any other agreement between LESSEE and LESSOR relating to aircraft, engines or aircraft equipment or the extension of credit by LESSOR to LESSEE), without interest, less an amount determined by LESSOR to be a reasonable estimate of the costs, if any, which LESSOR will incur to remedy any unperformed obligations of LESSEE under this Lease, including the correction of any discrepancies from the required condition of the Aircraft on return of the Aircraft. 5.2 TRANSACTION FEE. Within two (2) Business Days after execution of this Lease, LESSEE will pay LESSOR a nonrefundable transaction fee (CONFIDENTIAL MATERIAL OMITTED) 5.3 RENT. 5.3.1 LESSEE will pay LESSOR the following amounts monthly in advance as rent for the Aircraft (the "RENT"): (a The following amounts for the following years of the Lease Term: LEASE PERIOD MONTHLY RENTAL AMOUNT* ------------ --------------------- (CONFIDENTIAL MATERIAL OMITTED) *The above base rent is expressed in January 1999 U.S. dollars and will increase in the following amounts for the following periods (the "MANUFACTURER'S ESCALATION RATE"): PERIOD ESCALATION FACTOR ------------ --------------------- (CONFIDENTIAL MATERIAL OMITTED) Any increases to the above base Rent during the Lease Term will be calculated immediately prior to Delivery. 5.3.2 The first payment of Rent during the Lease Term will be paid prior to the Scheduled Delivery Date. Each subsequent payment of Rent will be due monthly thereafter no later than the same day of the month as the Delivery Date of the Aircraft except that, if such day is not a Business Day, the Rent will be due on the immediately preceding Business Day. If Delivery occurred on the 29th, 30th or 31st of the month and in any given month during the Lease Term there is no such corresponding date, Rent will be payable on the last Business Day of such month. 5.4 LESSOR'S BANK ACCOUNT. The Security Deposit, Transaction Fee, Rent and any other payment due under this Lease will be paid by wire transfer of immediately available U.S. Dollar funds to LESSOR's bank account at: (CONFIDENTIAL MATERIAL OMITTED) or to such other bank account in the U.S. as LESSOR may from time to time designate by written notice ("LESSOR'S BANK"). When it is stated in this Lease that an installment of the Security Deposit, the monthly Rent or any other payment is due or must be paid or made by LESSEE by a specific date, then such payment actually must be received by LESSOR's Bank on or before such specific date, even if, in order for such payment to be received by LESSOR's Bank by such specific date, LESSEE must initiate the wire transfer prior to such specific date. 5.5 DEFAULT INTEREST. If LESSOR's Bank does not receive the Rent or any other amount on or before the specific date when due, LESSOR will suffer loss and damage the exact nature and amount of which are difficult or impossible to ascertain. LESSEE will pay LESSOR as supplemental Rent (by way of agreed compensation and not as a penalty) interest on any due and unpaid amounts payable by LESSEE under this Lease. Interest will be calculated at a per annum rate (based on a 360 day year) which is equal to three percent (3%) plus the Prime Rate in effect on the date on which the amount was originally due for the period from the date the amount originally was due through the date the amount actually is received at LESSOR's Bank or, in the case of LESSOR's performance of LESSEE's obligations hereunder, from the date of payment by LESSOR through the date of LESSEE's repayment to LESSOR ("DEFAULT INTEREST"). Default Interest will accrue on a day-to-day basis and be compounded monthly. 5.6 NO DEDUCTIONS OR WITHHOLDINGS. All payments by LESSEE under this Lease, including the Security Deposit, Transaction Fee, Rent, Default Interest, fees, indemnities or any other item, will be made in full without any deduction or withholding whether in respect of set-off, counterclaim, duties, or Taxes (as defined in Article 15) imposed in the State of Registration or any jurisdiction from which such payments are made unless LESSEE is prohibited by Law from doing so, in which event LESSEE will gross up the payment amount such that the net payment received by LESSOR after any deduction or withholding equals the amounts called for under this Lease. LESSEE's requirement to pay the amounts required by this Article 5.6 is subject to the exceptions provided in Article 15.2. 5.7 VALUE ADDED TAXES. The Rent and other amounts payable by LESSEE under this Lease are exclusive of any value added tax, turnover tax or similar tax or duty. 5.8 NET LEASE. 5.8.1 This Lease is a net lease and LESSEE's obligation to pay Rent and make other payments in accordance with this Lease will be absolute and unconditional under any and all circumstances and regardless of other events, including the following: (a) any right of set-off, counterclaim, recoupment, defense or other right (including any right of reimbursement) which LESSEE may have against LESSOR, Manufacturer, the Engine manufacturer or any other person for any reason, including any claim LESSEE may have for the foregoing; (b) unavailability or interruption in use of the Aircraft for any reason, including a requisition thereof or any prohibition or interference with or other restriction against LESSEE's use, operation or possession of the Aircraft (whether by Law or otherwise), any defect in title, airworthiness, merchantability, fitness for any purpose, condition, design, specification or operation of any kind or nature of the Aircraft, the ineligibility of the Aircraft for any particular use or trade or for registration under the Laws of any jurisdiction or Total Loss of the Aircraft; (c) insolvency, bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, liquidation, receivership, administration or similar proceedings by or against LESSOR, LESSEE, Manufacturer, the Engine manufacturer or any other Person; (d) invalidity or unenforceability or lack of due authorization of or other defect in this Lease; (e) failure or delay on the part of any party to perform its obligations under this Lease; or (f) any other circumstance which but for this provision would or might have the effect of terminating or in any other way affecting any obligation of LESSEE hereunder. 5.8.2 Nothing in Article 5.8 will be construed to limit LESSEE's rights and remedies in the event of LESSOR's breach of its warranty of quiet enjoyment set forth in Article 21.2 or to limit LESSEE's rights and remedies to pursue in a court of law any claim it may have against LESSOR or any other Person. 5.9 LESSOR PERFORMANCE OF LESSEE OBLIGATION. If LESSEE fails to make any payment under this Lease to a third party in connection with the Aircraft or fails to perform any other obligation required under this Lease, LESSOR may (but is not required to) at its election and without waiver of its rights perform such obligation and/or pay such amount. Within five (5) Business Days after written notice to LESSEE of the amount paid by LESSOR on behalf of LESSEE, LESSEE will repay such amount to LESSOR together with Default Interest. Such payment to LESSOR will constitute additional Rent payable by LESSEE to LESSOR hereunder. Any payment, performance or compliance by LESSOR of a LESSEE obligation hereunder will not affect the occurrence or continuance of a Default or Event of Default, as the case may be. 5.10 CONSIDERATION FOR RENT AND OTHER AMOUNTS. The amount of the Rent and other payments contained herein are in consideration of LESSEE's waiver of warranties and indemnities set forth in Articles 8 and 16, respectively, and the other provisions of this Lease. ARTICLE 6 INVOLVEMENT WITH AIRCRAFT MANUFACTURER 6.1 LESSEE SELECTION OF AIRCRAFT. LESSEE ACKNOWLEDGES THAT THE DESCRIPTION OF THE AIRCRAFT SET FORTH IN THIS LEASE IS BASED UPON INFORMATION SUPPLIED BY MANUFACTURER. LESSEE COVENANTS TO LESSOR THAT LESSEE HAS USED ITS OWN JUDGMENT IN SELECTING THE AIRCRAFT AND HAS DONE SO BASED ON ITS SIZE, DESIGN AND TYPE. LESSEE ACKNOWLEDGES THAT LESSOR IS NOT A MANUFACTURER, REPAIRER OR SERVICING AGENT OF THE AIRCRAFT. 6.2 AGENCY AGREEMENT. Certain obligations remain to be performed by LESSOR in connection with the manufacture, fabrication and completion of the Aircraft by Manufacturer which will be performed by LESSEE (as provided in the Agency Agreement). LESSEE will act as LESSOR's agent with respect to some of these matters pursuant to the terms of an Agency Agreement to be entered into between LESSEE and LESSOR in the form set forth in Exhibit B. 6.3 PROCUREMENT OF BFE. LESSEE's and LESSOR's technical representatives will meet and determine which of LESSEE or LESSOR will provide specific items of BFE. Such BFE will then be provided to Manufacturer by LESSEE or LESSOR, as applicable, within the time frames required by Manufacturer. 6.4 ASSIGNMENT OF TRAINING. LESSOR hereby assigns to LESSEE all rights to training to which LESSOR is entitled as a result of LESSOR's purchase of the Aircraft and lease of the Aircraft to LESSEE. If LESSEE fails to take Delivery of the Aircraft when tendered in accordance with Article 6.7, LESSEE will immediately pay to LESSOR an amount equal to the Dollar value of such training based on what the training would have cost LESSEE had LESSEE purchased such training directly from Manufacturer. 6.5 LESSEE INSPECTION OF AIRCRAFT. During the course of final assembly of the Aircraft, and at Delivery, LESSEE will have its own representative present to inspect the Aircraft and to ensure its conformity with LESSEE's needs and the terms of this Lease. LESSEE will have ground inspection and acceptance flight rights with respect to the Aircraft. LESSEE acknowledges that, as between LESSEE and LESSOR, in accepting the Aircraft LESSEE is relying on its own inspection and knowledge of the Aircraft in determining whether the Aircraft meets the requirements of this Lease. 6.6 AIRCRAFT AT DELIVERY. At Delivery, the Aircraft will be as set forth in Exhibit A, as such description may be modified by any change requests agreed to among LESSEE, LESSOR and Manufacturer (which will be reflected in amendment(s) to this Lease). In the event of any discrepancies, LESSEE and LESSOR will cooperate in good faith with one another and with Manufacturer and Engine manufacturer, as applicable, in order to arrive at a mutually acceptable resolution of any such discrepancies. 6.7 DELIVERY OF THE AIRCRAFT TO LESSEE. Subject to LESSEE having performed all of the conditions precedent to Delivery set forth herein, immediately following delivery of the Aircraft from Manufacturer to LESSOR, LESSOR will deliver the Aircraft to LESSEE at the Delivery Location. Provided that the Aircraft is in the condition required by Article 6.6, upon the tender of the Aircraft by LESSOR to LESSEE, LESSEE will accept the Aircraft and the date of tender by LESSOR to LESSEE will be deemed to be the Delivery Date for all purposes under this Lease, including, but not limited to, the commencement of LESSEE's obligation to pay Rent hereunder. 6.8 LESSEE ACCEPTANCE OF AIRCRAFT. If LESSEE fails to (a) comply with its obligations set forth in Article 6.2, (b) comply with the conditions contained in Articles 7.1 and 7.2 so as to allow Delivery to take place immediately following delivery of the Aircraft by Manufacturer to LESSOR or (c) take delivery of the Aircraft when properly tendered for delivery by LESSOR in the condition required hereunder, LESSEE will indemnify LESSOR for all costs and expenses incurred by LESSOR as a result thereof including (but without limitation) any payments other than the purchase price which LESSOR becomes obliged to make to Manufacturer. ARTICLE 7 PRE-DELIVERY, DELIVERY AND POST-DELIVERY DOCUMENTARY AND OTHER REQUIREMENTS 7.1 PRE-DELIVERY REQUIREMENTS. LESSEE will do each of the following prior to the Scheduled Delivery Date of the Aircraft within the time frames set forth below: 7.1.1 Within one (1) month after execution of this Lease, LESSEE will deliver to LESSOR each of the following: (a) copies of resolutions of the Board of Directors of LESSEE or other written evidence of appropriate corporate action, duly certifying and authorizing the lease of the Aircraft hereunder and the execution, delivery and performance of this Lease, together with an incumbency certificate as to the person or persons authorized to execute and deliver documents on behalf of LESSEE hereunder; and (b) an opinion of counsel in the form and substance of Exhibit F. 7.1.2 At least three (3) days prior to the Scheduled Delivery Date, LESSEE will have delivered to LESSOR a Certificate of Insurance and Brokers' Letter of Undertaking in the form and substance of Exhibits C and D, respectively, from LESSEE's insurance brokers evidencing insurance of the Aircraft in accordance with this Lease from the Delivery Date. 7.1.3 At least three (3) Business Days prior to the Scheduled Delivery Date, LESSEE will do each of the following: (a) provide LESSOR with a copy of such Aviation Documents as may be available prior to the Scheduled Delivery Date; (b) provide LESSOR with a power of attorney empowering LESSEE's representative, who may be an officer or employee of LESSEE, to accept the Aircraft on behalf of LESSEE; and (c) provide LESSOR with such other documents as LESSOR may reasonably request. 7.1.4 Prior to the Scheduled Delivery Date, LESSEE will pay LESSOR the first monthly installment of Rent in accordance with Article 5.3.2. 7.2 DELIVERY REQUIREMENTS. On the Delivery Date of the Aircraft, each of the following will occur: 7.2.1 LESSEE will execute and deliver to LESSOR an Estoppel and Acceptance Certificate in the form of Exhibit E covering the Aircraft and effective as of the Delivery Date. 7.2.2 If not previously done, LESSEE and LESSOR will sign an amendment or supplement to Exhibit A evidencing all agreed-to changes to the specification of the Aircraft. 7.2.3 LESSEE will deliver a certificate signed on behalf of LESSEE by an officer of LESSEE stating all of the following: (a) the representations and warranties contained in Article 20 are true and accurate on and as of the Delivery Date as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date); (b) no Default has occurred and is continuing or will result from LESSEE's lease of the Aircraft hereunder; and (c) none of the Creditor Agreements contains terms which provide or contemplate that any Creditor will obtain any right, title or interest in an Engine which is installed on another aircraft (or, if this is not the case, such certificate will identify the parties, the aircraft and the Creditor Agreements for which this statement is untrue). 7.2.4 LESSEE's counsel will deliver opinions confirming the matters set forth in the opinion of counsel described in Article 7.1 and advising that all filing and other requirements have been met or concurrently are being met. 7.2.5 If any Creditor Agreement provides or contemplates that such Creditor will obtain any right, title or interest in an Engine which is installed on such Creditor's aircraft, LESSEE will deliver to LESSOR an engines cooperation agreement in form and substance acceptable to LESSOR which is executed by LESSEE and LESSEE's Creditors (as defined therein). 7.2.6 LESSOR will deliver to LESSEE an assignment of Manufacturer and Engine manufacturer rights in the form and substance of Exhibits G and H, respectively, and concurrently therewith LESSOR, to the extent it has not previously done so, will be deemed to have assigned all training, product assurance and product support applicable to the owner or operator of the Aircraft to LESSEE during the Lease Term. 7.3 POST-DELIVERY REQUIREMENTS. 7.3.1 Promptly after Delivery, LESSEE will do each of the following: (a) provide LESSOR with copies of all Aviation Documents not previously delivered; and (b) provide LESSOR with a follow-up opinion of counsel advising that the Aircraft has been registered in the State of Registration and that all necessary filings have been made. ARTICLE 8 DISCLAIMERS LESSOR HAS COMMITTED TO LESSEE THAT ON THE DELIVERY DATE THE AIRCRAFT WILL BE IN THE CONDITION REQUIRED BY ARTICLE 6. SUCH COMMITMENT OR COVENANT ON THE PART OF LESSOR EXPIRES AND THE DISCLAIMERS SET FORTH IN THIS ARTICLE 8 APPLY UPON LESSEE'S ACCEPTANCE OF THE AIRCRAFT AND EXECUTION OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATE. AFTER SUCH TIME, THEN AS BETWEEN LESSOR AND LESSEE: 8.1 "AS IS, WHERE IS". LESSEE AGREES THAT IT IS LEASING THE AIRCRAFT "AS IS, WHERE IS". LESSEE UNCONDITIONALLY ACKNOWLEDGES AND AGREES THAT NEITHER LESSOR NOR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES OR REPRESENTATIVES HAVE MADE OR WILL BE DEEMED TO HAVE MADE ANY TERM, CONDITION, REPRESENTATION, WARRANTY OR COVENANT EXPRESS OR IMPLIED (WHETHER STATUTORY OR OTHERWISE) AS TO (a) THE CAPACITY, AGE, AIRWORTHINESS, VALUE, QUALITY, DURABILITY, CONFORMITY TO THE PROVISIONS OF THIS LEASE, DESCRIPTION, CONDITION (WHETHER OF THE AIRCRAFT, ANY ENGINE, ANY PART THEREOF OR THE AIRCRAFT DOCUMENTATION), DESIGN, WORKMANSHIP, MATERIALS, MANUFACTURE, CONSTRUCTION, OPERATION, DESCRIPTION, STATE, MERCHANTABILITY, PERFORMANCE, FITNESS FOR ANY PARTICULAR USE OR PURPOSE (INCLUDING THE ABILITY TO OPERATE OR REGISTER THE AIRCRAFT OR USE THE AIRCRAFT DOCUMENTATION IN ANY OR ALL JURISDICTIONS) OR SUITABILITY OF THE AIRCRAFT OR ANY PART THEREOF, OR THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, KNOWN OR UNKNOWN, APPARENT OR CONCEALED, EXTERIOR OR INTERIOR, (b) THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK, COPYRIGHT OR OTHER INTELLECTUAL PROPERTY RIGHTS, (c) ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE OR (d) EXCEPT AS SET FORTH IN ARTICLE 21.1, ANY OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY PART THEREOF, ALL OF WHICH ARE HEREBY EXPRESSLY EXCLUDED AND EXTINGUISHED. 8.2 WAIVER OF WARRANTY OF DESCRIPTION. IN CONSIDERATION OF (a) LESSEE'S RIGHTS HEREUNDER TO INSPECT THE AIRCRAFT AND (b) LESSOR'S ASSIGNMENT TO LESSEE OF ANY EXISTING AND ASSIGNABLE WARRANTIES OF MANUFACTURER AND THE ENGINE MANUFACTURER, LESSEE HEREBY AGREES THAT ITS ACCEPTANCE OF THE AIRCRAFT AT DELIVERY AND ITS EXECUTION AND DELIVERY OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATE CONSTITUTE LESSEE'S WAIVER OF THE WARRANTY OF DESCRIPTION, ANY CLAIMS LESSEE MAY HAVE AGAINST LESSOR BASED UPON THE FAILURE OF THE AIRCRAFT TO CONFORM WITH SUCH DESCRIPTION AND ANY AND ALL RIGHTS IT MAY HAVE TO THE REMEDIES SET FORTH IN SECTIONS 10508 THROUGH 10522 OF THE CALIFORNIA COMMERCIAL CODE. EVEN IF AT ANY TIME THE FAILURE OF THE AIRCRAFT TO CONFORM TO SUCH DESCRIPTION SUBSTANTIALLY IMPAIRS THE VALUE AND UTILITY OF THE AIRCRAFT AND EITHER (i) LESSEE ACCEPTED THE AIRCRAFT BASED ON A REASONABLE ASSUMPTION THAT THE NONCONFORMITY WOULD BE CURED AND IT WAS NOT SEASONABLY CURED OR (ii) LESSEE ACCEPTED THE AIRCRAFT WITHOUT DISCOVERING THE NONCONFORMITY BUT LESSEE'S ACCEPTANCE OF THE AIRCRAFT WAS REASONABLY INDUCED EITHER BY LESSOR'S ASSURANCES OR BY THE DIFFICULTY OF DISCOVERING ANY DEFECT PRIOR TO ACCEPTANCE, LESSEE AGREES NOT TO LOOK TO LESSOR FOR DAMAGES OR RELIEF ARISING OUT OF THE FAILURE OF THE AIRCRAFT TO CONFORM TO SUCH DESCRIPTION. 8.3 LESSEE WAIVER. LESSEE hereby waives as between itself and LESSOR and agrees not to seek to establish or enforce any rights and remedies, express or implied (whether statutory or otherwise) against LESSOR or the Aircraft relating to any of the matters mentioned in Articles 8.1 or 8.2. 8.4 CONCLUSIVE PROOF. DELIVERY BY LESSEE TO LESSOR OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATE WILL BE CONCLUSIVE PROOF AS BETWEEN LESSOR AND LESSEE THAT LESSEE'S TECHNICAL EXPERTS HAVE EXAMINED AND INVESTIGATED THE AIRCRAFT AND ENGINES AND (a) EACH IS AIRWORTHY AND IN GOOD WORKING ORDER AND REPAIR AND (b) THE AIRCRAFT AND ENGINES AND THE AIRCRAFT DOCUMENTATION ARE WITHOUT DEFECT (WHETHER OR NOT DISCOVERABLE AT DELIVERY) AND IN EVERY WAY SATISFACTORY TO LESSEE. 8.5 NO LESSOR LIABILITY FOR LOSSES. LESSEE agrees that LESSOR will not be liable to LESSEE, any sublessee or any Person, whether in contract or tort and however arising, for any cost, loss or damage (consequential or otherwise) arising out of the condition of the Aircraft, whether or not due in whole or in part to an act or omission or the active or passive negligence of LESSOR. 8.6 NO LIABILITY TO REPAIR OR REPLACE. LESSOR will not be liable for any expense in repairing or replacing any item of the Aircraft or be liable to supply another aircraft or any item in lieu of the Aircraft or any Part thereof if the same is lost, confiscated, damaged, destroyed or otherwise rendered unfit for use. 8.7 NO WAIVER. Nothing in this Article 8 or elsewhere in this Lease will be deemed to be a waiver by LESSEE of any rights it may have against Manufacturer, the Engine manufacturer or any other Person. ARTICLE 9 MANUFACTURERS' AND VENDORS' WARRANTIES 9.1 WARRANTIES. As set forth in Article 7.2.6, at Delivery LESSOR will assign to LESSEE for the duration of the Lease Term the benefit of all warranties and indemnities given to LESSOR by Manufacturer and the Engine manufacturer. Effective on the Delivery Date, all other vendor warranties with respect to the Aircraft are hereby assigned by LESSOR to LESSEE. 9.2 REASSIGNMENT. On the Termination Date, the benefit of any warranty assigned by LESSOR to LESSEE pursuant to Article 7.2.6 will be reassigned automatically to LESSOR or its designee. ARTICLE 10 OPERATION OF AIRCRAFT 10.1 COSTS OF OPERATION. As between LESSEE and LESSOR, LESSEE will pay all costs incurred in the operation of the Aircraft during the Lease Term, for profit or otherwise, including the costs of flight crews, cabin personnel, fuel, oil, lubricants, maintenance, insurance, storage, landing and navigation fees, airport charges, passenger service and any and all other expenses of any kind or nature, directly or indirectly, in connection with or related to the use, movement and operation of the Aircraft. The obligations, covenants and liabilities of LESSEE under this paragraph arising prior to return of the Aircraft to LESSOR will continue in full force and effect, notwithstanding the termination of this Lease or expiration of the Lease Term. 10.2 COMPLIANCE WITH LAWS. LESSEE agrees throughout the Lease Term that all use of the Aircraft will be in accordance with applicable Laws of the State of Registration and of any country, state, territory or municipality into or over which LESSEE may operate. LESSEE will not employ, suffer or cause the Aircraft to be used in any business which is forbidden by Law or in any manner which may render it liable to condemnation, destruction, seizure, or confiscation by any authority. LESSEE will not permit the Aircraft to fly to any airport or country if so doing would cause LESSEE to be in violation of any Law applicable to LESSEE or the Aircraft. The foregoing provisions in this Article 10.2 shall not prohibit any violation of Law (a) during a good-faith contest of the validity, application, or alleged violation thereof in any reasonable manner so long as there is no material danger of sale, forfeiture, or loss of the Aircraft (however, this good faith exception shall not apply in the case of a mandatory grounding order, the good faith contest of which does not permit LESSEE to operate the Aircraft during such contest), and which does not extend beyond the end of the Lease Term if the pendency of such contest would adversely affect the Aircraft or the remarketing thereof in any material respect; and (b) for minor or non-recurring violations (with the understanding that minor violations may cease to be minor if recurring) that LESSEE is diligently trying to rectify which do not render the Aircraft liable to any risk of condemnation, destruction, seizure, or confiscation by any Government Entity. 10.3 TRAINING. LESSEE will not use the Aircraft for testing or for training of flight crew members other than LESSEE crew members and will not use the Aircraft for training any more than it utilizes for training the other aircraft in its fleet. 10.4 NO VIOLATION OF INSURANCE POLICIES. LESSEE will not use or permit the Aircraft to be used in any manner or for any purpose which is not covered by the insurance policies LESSEE is required to carry and maintain as set forth in this Lease. LESSEE will not carry any goods of any description that would invalidate or limit such policies or do any other act or permit to be done anything which could reasonably be expected to invalidate or limit any such insurance policy. 10.5 FLIGHT CHARGES. 10.5.1 LESSEE will pay promptly when due all enroute navigation charges, navigation service charges and all other charges payable by LESSEE for the use of or for services provided at any airport, whether in respect of the Aircraft or any other aircraft of LESSEE, and will indemnify and hold LESSOR harmless in respect of the same. This indemnity will continue in full force and effect notwithstanding the termination or expiration of the Lease Term for any reason or the return of the Aircraft. 10.5.2 If requested by LESSOR, LESSEE will provide LESSOR with a list of the airports to which LESSEE regularly operates the Aircraft or its other aircraft. LESSEE hereby authorizes Eurocontrol or another aviation authority or airport or creditor claiming rights on the Aircraft to confirm the status of LESSEE's payments to such creditor for the Aircraft and its other aircraft, as and when requested by LESSOR. ARTICLE 11 SUBLEASES 11.1 NO SUBLEASE WITHOUT LESSOR CONSENT. LESSEE WILL NOT SUBLEASE OR PART WITH POSSESSION OF THE AIRCRAFT (EXCEPT FOR MAINTENANCE AND REPAIR) AT ANY TIME WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR (NOT TO BE UNREASONABLY WITHHELD) AND IN ACCORDANCE WITH SUCH REQUIREMENTS AS MAY FROM TIME TO TIME BE AGREED IN WRITING BETWEEN LESSOR AND LESSEE. The wet leasing of the Aircraft during the Lease Term (in which LESSEE and its crews retain operational control of the Aircraft) will not be considered a sublease of the Aircraft. 11.2 LESSOR COSTS. LESSEE will indemnify LESSOR on demand for all out-of-pocket expenses (including legal fees) incurred in connection with LESSOR's assessment of the subleasing proposal (whether or not LESSOR's consent to such sublease is ultimately given) and implementation of the sublease. 11.3 ANY APPROVED SUBLEASE. Any sublease approved by LESSOR will be for a term no greater than the remaining Lease Term and contain provisions consistent with this Lease protecting LESSOR's title to the Aircraft, providing appropriate LESSOR indemnities, regarding the maintenance and repair standards for the Aircraft, concerning the insurances which will be carried by the sublessee and the circumstances which constitute a Total Loss of the Aircraft. Any such sublease will be subject and subordinate to this Lease. In its sole discretion, LESSOR may require an opinion of counsel in connection with such sublease, including LESSOR's right to repossess the Aircraft in the event of an Event of Default hereunder or under the sublease. LESSEE will not amend the terms of any approved sublease without the prior written consent of LESSOR, which will not be unreasonably withheld. 11.4 ASSIGNMENT OF SUBLEASE. Any approved sublease will be assigned to LESSOR as security. LESSEE will deliver the original counterpart of the sublease to LESSOR and make any filings necessary to protect LESSOR's security interest. 11.5 CONTINUED RESPONSIBILITY OF LESSEE. LESSEE will continue to be responsible for performance of its obligations under this Lease during any period of sublease. ARTICLE 12 MAINTENANCE AND USE OF AIRCRAFT 12.1 GENERAL OBLIGATION. 12.1.1 During the Lease Term and until the Aircraft is returned to LESSOR, LESSEE alone has the obligation, at its expense, to maintain and repair the Aircraft, Engines and all of the Parts (a) in accordance with the Maintenance Program, (b) in accordance with the rules and regulations of the Aviation Authority, (c) in accordance with Manufacturer's type design, (d) in accordance with any other regulations or requirements necessary in order to maintain a valid Certificate of Airworthiness for the Aircraft and meet the requirements at all times during the Lease Term and upon return of the Aircraft to LESSOR for issuance of a Standard Certificate of Airworthiness for transport category aircraft issued by the Aviation Authority (except during those periods when the Aircraft is undergoing maintenance or repairs as required or permitted by this Lease) and (e) in the same manner and with the same care as used by LESSEE or its sublessee with respect to similar aircraft and engines operated by LESSEE or its sublessee and without in any way discriminating against the Aircraft. 12.1.2 LESSEE will maintain and repair the Engines in the same manner and in the equivalent time frame to its other engines and LESSEE will not discriminate against any of the Engines in respect of the repair and maintenance. 12.1.3 LESSEE will not enter into any Engine maintenance cost per flight hour, power-by-the-hour or similar agreement with Engine manufacturer or any other Engine maintenance facility or organization without LESSOR's prior written consent. 12.2 SPECIFIC OBLIGATIONS. Without limiting Article 12.1, LESSEE agrees that such maintenance and repairs will include but will not be limited to each of the following specific items: (a) performance in accordance with the Maintenance Program of all routine and non-routine maintenance work; (b) incorporation in the Aircraft of all Airworthiness Directives; (c) incorporation in the Aircraft of all service bulletins of Manufacturer, the Engine manufacturer and other vendors which LESSEE schedules to adopt within the Lease Term for the rest of its Boeing 737-800 aircraft fleet. It is the intent of the parties that the Aircraft will not be discriminated from the rest of LESSEE's fleet in service bulletin compliance (including method of compliance) or other maintenance matters. LESSEE will not discriminate against the Engines with respect to Overhaul build standards and life-limited part replacements; (d) incorporation in the Maintenance Program for the Aircraft of a corrosion prevention and control program; (e) maintaining in English and keeping in an up-to-date status the records and historical documents set forth in Attachment 1 of Exhibit I; (f) maintaining historical records, in English, for on condition, condition-monitored, hard time and life-limited Parts (including tags from the manufacturer of such Part or a repair facility which evidence that such Part is new or overhauled and establish authenticity, total time in service and time since overhaul for such Part), the hours and cycles the Aircraft and Engines operate and all maintenance and repairs performed on the Aircraft; and (g) properly documenting all repairs, Modifications and alterations and the addition, removal or replacement of equipment, systems or components in accordance with the rules and regulations of the Aviation Authority and reflecting such items in the Aircraft Documentation. In addition, all repairs to the Aircraft will be accomplished in accordance with Manufacturer's Structural Repair Manual (or FAA-approved data supported by FAA Form 8110-3 or equivalent). All Modifications and alterations will also be accomplished in accordance with FAA-approved data supported by FAA Form 8110-3 or equivalent. 12.3 REPLACEMENT OF PARTS. 12.3.1 LESSEE, at its own cost and expense, will promptly replace all Parts which may from time to time become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or rendered unfit or beyond economical repair (BER) for any reason. In the ordinary course of maintenance, service, repair, overhaul or testing, LESSEE may remove any Part provided that LESSEE replaces such Part as promptly as practicable. All replacement Parts will (a) be free and clear of all Security Interests (except Permitted Liens) of any kind or description, (b) be in airworthy condition and of at least equivalent model, service bulletin and modification status and have a value and utility at least equal to the Parts replaced, assuming such replaced Parts were in the condition and repair required to be maintained by the terms hereof and (c) have a current "serviceable tag" of the manufacturer or maintenance facility providing such items to LESSEE, indicating that such Parts are new, serviceable or Overhauled. So long as a substitution meets the requirements of the Maintenance Program and Aviation Authority, LESSEE may substitute for any Part a part that does not meet the requirements of the foregoing sentence if a complying Part cannot be procured or installed within the available groundtime of the Aircraft and as soon as practicable the noncomplying part is removed and replaced by a complying Part. 12.3.2 All Parts removed from the Airframe or any Engine will remain the property of LESSOR and subject to this Lease no matter where located, until such time as such Parts have been replaced by Parts (which have been incorporated or installed in or attached to the Airframe or such Engine) which meet the requirements for replacement Parts specified above and title to such replacement Parts has passed to LESSOR under the Laws of the State of Registration and LEX SITUS. To the extent permitted by the Laws of the State of --- ----- Registration and the LEX SITUS it is the intent of LESSOR and LESSEE that without further --- ----- act and immediately upon any replacement Part becoming incorporated, installed or attached to the Airframe or an Engine as above provided, (a) title to the removed Part will thereupon vest in LESSEE, free and clear of all rights of LESSOR, (b) title to the replacement Part will thereupon vest in LESSOR free and clear of all rights of LESSEE and (c) such replacement Part will become subject to this Lease and be deemed to be a Part hereunder to the same extent as the Parts originally incorporated or installed in or attached to the Airframe or such Engine. 12.4 REMOVAL OF ENGINES. 12.4.1 If an Engine is removed for testing, service, repair, maintenance, Overhaul work, alterations or modifications, title to such Engine will remain vested in LESSOR. 12.4.2 LESSEE will be entitled to remove any of the Engines from the Aircraft and install another engine or engines on the Aircraft, provided that LESSEE complies with each of the following obligations: (a) the insurance requirements set forth in Article 17 and Exhibit C are in place; (b) LESSEE ensures that the identification plates referred to in Article 14 are not removed from any Engine upon such Engine being detached from the Aircraft; and (c) title to the Engine remains with LESSOR free from all Security Interests (except Permitted Liens) regardless of the location of the Engine or its attachment to or detachment from the Aircraft. 12.5 POOLING OF ENGINES AND PARTS. With LESSOR's prior written consent, not to be unreasonably withheld, LESSEE may subject the Engines and Parts to normal interchange or pooling agreements with responsible commercial air carriers customary in the airline industry and entered into by LESSEE in the ordinary course of its business with respect to its Boeing 737-800 fleet generally, so long as (a) in the case of pooling of an Engine, such Engine is returned to LESSEE within two (2) months, (b) no transfer of title to the Engine occurs, (c) all other terms of this Lease continue to be observed with respect to the Engines or Parts, including but not limited to Articles 8, 10, 12, 13, 14, 15, 16, 17 and 18 and (d) LESSEE continues to be fully responsible to LESSOR for the performance of all of its obligations hereunder. 12.6 INSTALLATION OF ENGINES ON OTHER AIRCRAFT. Any Engine removed from the Aircraft may be installed on another airframe in LESSEE's fleet which utilizes engines of the same type as the Engine only if one of the situations described in this Article 12.6 exists: 12.6.1 LESSEE or LESSOR has title to such other aircraft free and clear of all Security Interests (except Permitted Liens). 12.6.2 LESSEE, LESSOR and all of the Creditors of LESSEE of such aircraft enter into an engines cooperation agreement in form and substance acceptable to LESSOR in which each party agrees to recognize one another's rights in the engines. LESSEE will reimburse LESSOR and LESSOR's Lender for their reasonable attorneys' fees and costs in negotiating and finalizing engine cooperation agreement arrangements with LESSEE and its Creditors. 12.6.3 Such other aircraft is subject to a Creditor Agreement (but no other Security Interests except Permitted Liens) which by its terms expressly or effectively states that such Creditor and its successors and assigns will not acquire any right, title or interest in any Engine by reason of such Engine being installed on such aircraft. LESSEE hereby agrees that if LESSOR's title to an Engine is in fact impaired under any such Creditor Agreement, such impairment will be a Total Loss of such Engine and the provisions of Article 18.5 will apply. To the extent another Creditor Agreement contains such provisions, then LESSOR hereby agrees for the benefit of the Creditor of such Creditor Agreement that neither LESSOR nor its successors or assigns will acquire or claim any right, title or interest in any engine in which LESSEE or another Creditor has an interest as a result of such engine being installed on the Airframe. 12.7 MODIFICATIONS. 12.7.1 No modification, alteration, addition or removal to the Aircraft ("MODIFICATION") expected to cost over Five Hundred Thousand U.S. Dollars (US$500,000) or deviation from the Aircraft's original type design or configuration will be made without the prior written consent of LESSOR, which consent will not be unreasonably withheld. "Modifications" do not include Airworthiness Directives or Manufacturer's recommended service bulletins, for which LESSOR's consent is not required. 12.7.2 LESSOR may review LESSEE's proposed designs, plans, engineering drawings and diagrams, and flight and maintenance manual revisions for any proposed Modification. If requested by LESSOR, LESSEE will furnish LESSOR (at LESSEE's expense) with such documents in final form and any other documents required by Law, as a result of such Modification. All Modifications incorporated on the Aircraft will be properly documented in the Aircraft Documentation and be fully approved by the Aviation Authority. 12.7.3 Notwithstanding any other provision of this Lease, no Modification will be made which has the effect of decreasing the utility or value of the Aircraft. 12.7.4 No Modification will be made by LESSEE if an Event of Default exists and is continuing hereunder. 12.7.5 Unless otherwise agreed by LESSOR in writing, all non-severable or structural Modifications will forthwith become a part of the Aircraft and LESSEE relinquishes to LESSOR all rights and title thereto. However, all severable Modifications will remain the property of LESSEE or the third-party owner and, at LESSOR's request and LESSEE's cost, will be removed from the Aircraft prior to return of the Aircraft, with LESSEE restoring the Aircraft to the condition it was in prior to the Modification. Notwithstanding the foregoing, no such removal will be permitted without LESSOR's permission after the occurrence of an Event of Default hereunder and immediately upon the occurrence of an Event of Default hereunder, without the requirement of any further act or notice, all right, title and interest in such Modifications will immediately vest in LESSOR. 12.7.6 LESSOR will bear no liability for the cost of Modifications of the Aircraft whether in the event of grounding or suspensions of certification, or for any other cause. 12.8 PERFORMANCE OF WORK BY THIRD PARTIES. Whenever maintenance and repair work on the Aircraft or Engines will be regularly performed by a Person other than LESSEE, such Person will be an FAA-authorized repair station. 12.9 REPORTING REQUIREMENTS. 12.9.1 Commencing with a report furnished ten (10) days after the end of the calendar month in which Delivery occurs, LESSEE will furnish to LESSOR a Monthly Report in English in the form attached hereto as Exhibit J. Each Monthly Report will be furnished within ten (10) days after the end of each calendar month, except that the Monthly Report pertaining to the last month (or any portion thereof) of the Lease Term will be furnished to LESSOR on the Termination Date. 12.9.2 On each anniversary of the Delivery Date, LESSEE will provide LESSOR with a Technical Evaluation Report for the Aircraft in the form and substance of Exhibit L, as revised. 12.10 INFORMATION REGARDING MAINTENANCE PROGRAM. LESSEE will provide LESSOR with a copy of or information regarding the Maintenance Program for the Aircraft, as requested by LESSOR. 12.11 LESSOR RIGHTS TO INSPECT AIRCRAFT. On reasonable notice, LESSOR and/or its authorized agents or representatives will have the right to inspect the Aircraft and Aircraft Documentation. LESSOR agrees that such requests will be coordinated with LESSEE so as to cause the minimum practical disturbance to LESSEE's operation or its personnel. LESSEE agrees to cooperate with LESSOR in making the Aircraft and Aircraft Documentation available to such authorized technical teams. No such inspection shall include opening panels, bays, or the like (although LESSOR may observe those that are then open), or disassembling any item. LESSOR will have no duty to make any such inspection and will not incur any liability or obligation by reason of (and LESSEE's indemnity obligations pursuant to Article 16 will apply notwithstanding) not making any such inspection or by reason of any reports it receives or any reviews it may make of the Aircraft records. ARTICLE 13 TITLE AND REGISTRATION 13.1 TITLE TO THE AIRCRAFT DURING LEASE TERM. Title to the Aircraft will be and remain vested in LESSOR. LESSOR and LESSEE intend this Lease to be a "true lease". LESSEE will have no right, title or interest in the Aircraft except as provided in this Lease. 13.2 REGISTRATION OF AIRCRAFT. LESSEE at its sole cost and expense will (a) register and maintain registration of the Aircraft in the name of LESSOR at the register of aircraft in the State of Registration and (b) from time to time take all other steps then required by Law (including the Geneva Convention if applicable) or by practice, custom or understanding or as LESSOR may reasonably request to protect and perfect LESSOR's interest in the Aircraft and this Lease in the State of Registration or in any other jurisdictions in or over which LESSEE may operate the Aircraft. 13.3 FILING OF THIS LEASE. To the extent permitted by Law and in accordance with the requirements of the Law from time to time, LESSEE at its sole cost and expense will cause this Lease to be kept, filed, recorded and refiled or rerecorded in the State of Registration and in any other offices necessary to protect LESSOR's rights hereunder. 13.4 EVIDENCE OF REGISTRATION AND FILINGS. As LESSOR may reasonably request from time to time, LESSEE will furnish to LESSOR an opinion of counsel or other evidence reasonably satisfactory to LESSOR of the registrations and filings required hereunder. ARTICLE 14 IDENTIFICATION PLATES LESSOR will affix and LESSEE will at all times maintain on the Airframe and each Engine the identification plates containing the following legends or any other legend reasonably requested by LESSOR in writing: 14.1 AIRFRAME IDENTIFICATION PLATES. Location: One to be affixed to the Aircraft structure above the forward entry door adjacent to and not less prominent than that of Manufacturer's data plate and another in a prominent place on the flight deck. Size: No smaller than 4" x 6". Legend: "THIS AIRCRAFT IS OWNED BY INTERNATIONAL LEASE FINANCE CORPORATION. MANUFACTURER'S SERIAL NO: 30035 OWNER'S ADDRESS: INTERNATIONAL LEASE FINANCE CORPORATION 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States of America Fax: (310) 788-1990" 14.2 ENGINE IDENTIFICATION PLATES. Location: The legend on the plate must be visible. Size: No smaller than 2" x 6". "THIS ENGINE IS OWNED BY INTERNATIONAL LEASE FINANCE CORPORATION, LOS ANGELES, CALIFORNIA, USA." ARTICLE 15 TAXES 15.1 GENERAL OBLIGATION OF LESSEE. Except as set forth in Article 15.2, LESSEE agrees to pay promptly when due, and to indemnify and hold harmless LESSOR on a full indemnity basis from, all license and registration fees and all taxes, fees, levies, imposts, duties, charges or withholdings of any nature whatsoever (including without limitation any value added, franchise, transfer, sales, gross receipts, use, business, occupation, excise, personal property, real property, stamp or other tax) together with any assessments, penalties, fines, additions to tax or interest thereon, however or wherever imposed (whether imposed upon LESSEE, LESSOR, on all or part of the Aircraft, the Engines or otherwise), by any Government Entity or taxing authority in the U.S., any State thereof, or any foreign country or by any international taxing authority, upon or with respect to, based upon or measured by any of the following (collectively, "TAXES"): (a) the Aircraft, the Engines or any Parts. (b) the use, operation or maintenance of the Aircraft or carriage of passengers or freight during the Lease Term. (c) this Lease, the payments due hereunder and the terms and conditions hereof. (d) the return of the Aircraft to LESSOR or other use or disposition of the Aircraft by LESSEE. 15.2 EXCEPTIONS TO INDEMNITY. The indemnity provided in Article 15.1 does not extend to any of the following Taxes: (a) Imposed by the U.S. (including without limitation any taxes collected by withholding) or any state or local government or governmental subdivision or state or local taxing authority in the U.S. (including any possession or territory of the U.S.) or by any foreign government, taxing authority or governmental subdivision of a foreign country which are based on, or measured by, the receipts, gross or net income, capital, net worth, franchises, excess profits, or conduct of business (including minimum taxes, withholding taxes and taxes on or measured by any items of tax preference) of LESSOR, except to the extent that such Tax would not have been imposed on or payable by LESSOR but for the location, use, registration or operation of the Aircraft or any part thereof, or any place of business or any activity of LESSEE in the jurisdiction imposing such Tax. (b) Imposed as a result of LESSOR's transfer, mortgage, pledge, financing or other disposition by LESSOR of all or a portion of its interest in the Aircraft or this Lease except a transfer or sale resulting from an exercise of remedies pursuant to Article 25.3 hereunder or in connection with a termination of the Lease pursuant to Article 18 hereof. (c) Attributable to the period prior to the Delivery Date or after return of the Aircraft to LESSOR in accordance with this Lease. (d) Attributable to LESSOR's gross negligence, willful misconduct or breach of this Lease. 15.3 AFTER-TAX BASIS. The amount which LESSEE is required to pay with respect to any Taxes indemnified against under Article 15.1 is an amount sufficient to restore LESSOR on an after-tax basis to the same position LESSOR would have been in had such Taxes not been incurred. 15.4 CLAIMS AND CONTESTS. If a written claim is received by LESSOR for Taxes, which claim, if sustained, would require the payment of an indemnity by LESSEE pursuant to this Article 15, LESSOR shall notify LESSEE of such claim within thirty (30) days after its receipt, provided that failure to provide such notice within thirty (30) days will not relieve LESSEE of any indemnification obligation pursuant to this Article 15 if such failure does not preclude LESSEE from exercising its contest rights hereunder. Payments due from LESSEE to LESSOR pursuant to this Article 15 shall be made directly to LESSOR within thirty (30) days of written demand by LESSOR to LESSEE. If requested by LESSEE in writing, LESSOR shall upon receipt of indemnity reasonably satisfactory to it and at the expense of LESSEE (including, without limitation, all reasonable costs, expenses, legal and accountants' fees, and disbursements, penalties, interest incurred in contesting such claim, and additions to tax) in good faith, in the name of LESSOR or, if requested by LESSEE, in the name of LESSEE (or permit LESSEE, if desired by LESSEE, to contest in the name of LESSEE) if permissible under applicable laws, the validity, applicability or amount of such Taxes by (i) resisting payment thereof if practicable only if adequate reserves have been made for such Taxes or, if required, an adequate bond has been posted, (ii) paying the same under protest, if protest shall be necessary and proper, (iii) if payment shall be made, using reasonable efforts to obtain a refund thereof in appropriate administrative and judicial proceedings, and (iv) taking such other action as is reasonably requested by LESSEE from time to time including not paying such Taxes only if adequate reserves have been made for such Taxes or, if required, an adequate bond has been posted. LESSOR shall determine the method of any contest and (in good faith consultation with LESSEE) control the conduct thereof. Notwithstanding anything contained in this Article 15.4, LESSOR will not be required to contest, or to continue to contest, the validity, applicability or amount of any Tax (or portion thereof) (x) if such contest would result in any material risk of criminal penalties or any material risk of sale, forfeiture or loss of the Aircraft, (y) if an Event of Default has occurred and is continuing, or (z) in the case of a contest of a Tax reflected on a return of LESSOR with other taxes of LESSOR that are not indemnified by the LESSEE hereunder, if LESSEE shall not have furnished an opinion of independent tax counsel selected by the LESSEE, and reasonably satisfactory to LESSOR, that a reasonable basis exists for such contest. If LESSOR shall obtain a refund of all or any part of such Taxes for which an indemnity was paid by LESSEE, LESSOR shall pay LESSEE the amount of such refund; PROVIDED, HOWEVER, that such amount shall not be payable before such time as LESSEE shall have made all payments or indemnities to LESSOR then due under this Article 15 and under the Lease or while an Event of Default shall have occurred and be continuing. If in addition to such refund LESSOR shall receive an amount representing interest on the amount of such refund, LESSEE shall be paid that proportion of such interest which is fairly attributable to Taxes paid with an indemnity payment by LESSEE prior to the receipt of such refund or interest and increased by any taxes saved by reason of the deductibility of such payment by LESSOR. LESSEE shall not be deemed to be in default under any of the indemnification provisions under this Article 15 so long as it or LESSOR shall diligently prosecute such contest and LESSEE has indemnified LESSOR to LESSOR's reasonable satisfaction. In case any report or return is required to be made with respect to any obligation of LESSEE under this Article 15.4 or arising out of this Article 15.4, LESSEE will either timely make such report or return in such manner as will show the ownership of the Aircraft in LESSOR, and will as soon as possible send a copy of such report or return to LESSOR, or will notify LESSOR of such requirement and prepare and deliver such report or return to LESSOR in such manner as shall be satisfactory to LESSOR. 15.5 REFUNDS. Upon receipt by LESSOR of a refund of all or any part of any Taxes (including any deductions or withholdings referred to in Article 15.1) which LESSEE has paid, LESSOR will pay to LESSEE the net amount of such Taxes refunded. 15.6 COOPERATION IN FILING TAX RETURNS. LESSEE and LESSOR will cooperate with one another in providing information which may be reasonably required to fulfill each party's tax filing requirements and any audit information request arising from such filing. ARTICLE 16 INDEMNITIES 16.1 GENERAL INDEMNITY. Except as set forth in Article 16.2, LESSEE agrees to indemnify and hold harmless LESSOR and its officers, directors, employees, agents and shareholders (individually an "INDEMNITEE" and collectively "INDEMNITEES") from any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs, disbursements and expenses (including legal fees, costs and related expenses) of every kind and nature, whether or not any of the transactions contemplated by this Lease are consummated (collectively "EXPENSES"), which are imposed on, incurred by or asserted against any Indemnitee and which are in any way relating to, based on or arising out of any of the following: (a) this Lease or any transactions contemplated hereby; (b) the operation, possession, use, non-use, control, leasing, subleasing, maintenance, storage, overhaul, testing, inspections or acceptance flights at return of the Aircraft, any Engine or any Part during the Lease Term by LESSEE, any sublessee or any other Person, whether or not the same is in compliance with the terms of this Lease, including without limitation claims for death, personal injury, property damage, other loss or harm to any Person and claims relating to any Laws, including without limitation environmental control, noise and pollution laws, rules or regulations; (c) the manufacture, design, acceptance, rejection, delivery, return, sale in connection with an Event of Default, import, export, condition, repair, modification, servicing, rebuilding, enforcement of warranties whether in LESSOR's or LESSEE's name, customer and product support provided by Manufacturer and other vendors, airworthiness, registration, reregistration, performance, sublease, merchantability, fitness for use, substitution or replacement of the Aircraft, Engine or any Part under this Lease or other transfer of use or possession of the Aircraft, Engine or any Part, including under a pooling or interchange arrangement, including without limitation latent and other defects, whether or not discoverable and patent, trademark or copyright infringement; (d) any non-compliance by LESSEE with any term of this Lease or the falsity or inaccuracy of any representation or warranty of LESSEE set forth herein; (e) the prevention or attempt to prevent the arrest, confiscation, seizure, taking in execution, impounding, forfeiture or detention of the Aircraft, or in securing the release of the Aircraft; or (f) as a consequence of any Default in payment by LESSEE of any sum to be paid by LESSEE when due under this Lease or any other Default by LESSEE in the due and punctual performance of its obligations under this Lease. The foregoing indemnity by LESSEE is intended to include and cover any Expense to which an Indemnitee may be subject (in contract, tort, strict liability or under any other theory) regardless of the negligence, active or passive or any other type, of such Indemnitee, so long as such Expense does not fall within any of the exceptions listed in Article 16.2. 16.2 EXCEPTIONS TO GENERAL INDEMNITIES. The indemnity provided for in Article 16.1 will not extend to Expenses of any Indemnitee to the extent resulting from or arising out of any of the following: (a) Expenses which have resulted from the willful misconduct of such Indemnitee; (b) Expenses which LESSEE and LESSOR mutually agree or, absent mutual agreement, are judicially determined to be attributable to acts or events which occur after the Termination Date and return of the Aircraft to LESSOR in the condition required hereunder, but in any such case only to the extent not attributable to acts or omissions of LESSEE; (c) Expenses representing Taxes, it being acknowledged that the terms of Article 15 apply exclusively to LESSEE's indemnity obligations with respect to Taxes; (d) Expenses due to the breach by LESSOR of its covenant of quiet enjoyment pursuant to Article 21.2 (except to the extent covered by LESSEE's insurances); (e) Expenses which arise in connection with the transfer by LESSOR of any interest in the Aircraft or this Lease, except for any transfer in connection with any Event of Default or a Total Loss of the Aircraft or an Engine. (f) Expenses which are solely attributable to the representation or warranty of LESSOR contained in or made pursuant to any Operative Document being untrue; (g) Expenses which are solely related to the failure of such Indemnitees to perform or observe any agreement, covenant, or condition on its part to be performed or observed in any Operative Document; (h) Expenses which are solely an ordinary and usual internal customary operating expense; or (i) Expenses which are solely related to a breach of Article 21.1.6, or (j) Expenses which are solely related to a LESSOR's Lien. 16.3 AFTER-TAX BASIS. The amount which LESSEE will be required to pay with respect to any Expense indemnified against under Article 16.1 will be an amount sufficient to restore the Indemnitee, on an after-tax basis, to the same position such Indemnitee would have been in had such Expense not been incurred. 16.4 TIMING OF PAYMENT. It is the intent of the parties that each Indemnitee will have the right to indemnification for Expenses hereunder as soon as a claim is made and as soon as an Expense is incurred, whether or not such claim is meritorious and whether or not liability is established (but subject to Articles 16.2 and 16.8). LESSEE will pay an Indemnitee for Expenses pursuant to this Article 16 within ten (10) days after receipt of a written demand therefor from such Indemnitee accompanied by a written statement describing in reasonable detail the basis for such indemnity (but not before payment is due from such Indemnitee). 16.5 SUBROGATION. Upon the payment in full of any indemnity pursuant to this Article 16 by LESSEE, LESSEE will be subrogated to any right of the Indemnitee in respect of the matter against which such indemnity has been made. 16.6 NOTICE. Each Indemnitee and LESSEE will give prompt written notice one to the other of any liability of which such party has knowledge for which LESSEE is, or may be, liable under Article 16.1; provided, however, that failure to give such notice will not terminate any of the rights of Indemnitees under this Article 16 except to the extent that LESSEE has been materially prejudiced by the failure to provide such notice. 16.7 REFUNDS. If any Indemnitee obtains a recovery of all or any part of any amount which LESSEE has paid to such Indemnitee, such Indemnitee will pay to LESSEE the net amount recovered by such Indemnitee. 16.8 DEFENSE OF CLAIMS. (a) LESSEE and its insurers will have the right (in each such case at LESSEE's sole expense) to investigate or, provided that LESSEE or its insurers have not reserved the right to dispute liability with respect to any insurance policies pursuant to which coverage is sought, defend or compromise any claim covered by insurance for which indemnification is sought pursuant to Article 16.1 and each Indemnitee will cooperate with LESSEE or its insurers with respect thereto. If LESSEE or its insurers are retaining attorneys to handle such claim, such counsel must be reasonably satisfactory to the Indemnitees. If not, the Indemnitees will have the right to retain counsel of their choice at LESSEE's expense. (b) Unless LESSOR agrees in writing otherwise, no settlement of any claim hereunder may require LESSOR to agree to any remedy apart from the payment of money damages (for which such payment of money damages LESSEE will in any event indemnify the Indemnitees). (c) In no event shall any Indemnitee enter into a settlement or other compromise with respect to any Expense without LESSEE's prior written consent (which shall not be unreasonably withheld or delayed), unless such Indemnitee waives its right to be indemnified with respect to such Expense under this Article 16. (d) To the extent that any Expense indemnified by LESSEE hereunder may be covered by insurance maintained by LESSEE, at LESSEE's expense, each Indemnitee agrees to cooperate with the insurers in the exercise of their rights to investigate, defend, or compromise that Expense as may be required to retain the benefits of the insurance for that Expense. (e) If an Indemnitee is not a party to this Lease, LESSEE may require that Indemnitee to agree in writing to the terms of this Article 16 before making any payment to such Indemnitee under this Article 16. 16.9 SURVIVAL OF OBLIGATION. Notwithstanding anything in this Lease to the contrary, the provisions of this Article 16 will survive the Termination Date and continue in full force and effect notwithstanding any breach by LESSOR or LESSEE of the terms of this Lease, the termination of the lease of the Aircraft to LESSEE under this Lease or the repudiation by LESSOR or LESSEE of this Lease. ARTICLE 17 INSURANCE 17.1 CATEGORIES OF INSURANCE. Throughout the Lease Term and until the Termination Date LESSEE will, at its own expense, effect and maintain in full force and effect the types of insurance and amounts of insurance (including deductibles) described in Exhibit C through such brokers and with such insurers favorably regarded in the airline industry. 17.2 INSURANCE FOR INDEMNITIES. The insurance referred to in Article 17.1 will in each case include and insure (to the extent of the risks covered by the policies) the indemnity provisions of Article 16 and LESSEE will maintain such insurance of the indemnities for a minimum of two (2) years following the Termination Date. 17.3 INSURANCE REQUIRED BY MANUFACTURER. During the Lease Term, LESSEE will carry the insurance required by Manufacturer in connection with LESSOR's assignment of Manufacturer's warranties and product support to LESSEE. 17.4 RENEWAL. Not less than two (2) Business Days before the expiration or termination date of any insurance required hereunder, LESSEE will provide LESSOR with fax confirmation from LESSEE's insurance brokers that renewed certificates of insurance evidencing the renewal or replacement of such insurance and complying with Exhibit C will be issued on the termination date of the prior certificate. Within seven (7) days after such renewal, LESSEE will furnish its brokers' certificates of insurance to LESSOR. 17.5 ASSIGNMENT OF RIGHTS BY LESSOR. If LESSOR assigns all or any of its rights under this Lease as permitted by this Lease or otherwise disposes of any interest in the Aircraft to any other Person, LESSEE will, upon request, procure that (to the extent of the assignment or disposition) such Person hereunder be added as loss payee and/or additional assured in the policies effected hereunder and enjoy the same rights and insurance enjoyed by LESSOR under such policies. To the extent of its retained interest or as provided in Article 24.2.1, LESSOR will nevertheless continue to be covered by such policies. 17.6 DEDUCTIBLES. If there is a material adverse change in the financial condition of LESSEE which LESSOR reasonably believes will not enable LESSEE to pay the deductible upon the occurrence of a partial loss of the Aircraft or an Engine, then LESSOR may require LESSEE at LESSEE's expense to lower its deductibles on the insurance maintained hereunder to a level which is available on commercially reasonable terms in the insurance market. 17.7 OTHER INSURANCE. LESSOR may from time to time by notice to LESSEE require LESSEE at LESSEE's expense to effect such other insurance or such variations to the terms of the existing insurance as may then be customary in the airline industry for aircraft of the same type as the Aircraft and at the time commonly available in the insurance market. 17.8 INFORMATION. LESSEE will provide LESSOR with any information reasonably requested by LESSOR from time to time concerning the insurance maintained with respect to the Aircraft or in connection with any claim being made or proposed to be made thereunder. 17.9 CURRENCY. All proceeds of insurance pursuant to this Lease will be payable in Dollars except as may be otherwise agreed by LESSOR. 17.10 GROUNDING OF AIRCRAFT. If at any time any of the insurance required pursuant to this Lease will cease to be in full force and effect, LESSEE will forthwith ground the Aircraft and keep the Aircraft grounded until such time as such insurance is in full force and effect again. 17.11 FAILURE TO INSURE. If at any time LESSEE fails to maintain insurance in compliance with this Article 17, LESSOR will be entitled but not bound to do any of the following (without prejudice to any other rights which it may have under this Lease by reason of such failure): (a) to pay any premiums due or to effect or maintain substitute insurance or otherwise remedy such failure in any reasonable manner (and LESSEE will upon demand reimburse LESSOR in full for any amount so expended in that connection); or (b) at any time while such failure is continuing, to require the Aircraft to remain at any airport or (as the case may be), proceed to and remain at any airport designated by LESSOR. 17.12 LIMIT ON HULL IN FAVOR OF LESSEE. LESSEE may carry hull all risks or hull war and allied perils on the Aircraft in excess of the Agreed Value (which Agreed Value is payable to LESSOR) only to the extent such excess insurance which would be payable to LESSEE in the event of a Total Loss does not exceed fifteen percent (15%) of the Agreed Value and only to the extent that such additional insurance will not prejudice the insurances required herein or the recovery by LESSOR thereunder. LESSEE agrees that it will not create or permit to exist any liens or encumbrances over the insurances, or its interest therein, except as constituted by this Lease. 17.13 MARKETPLACE LIMITATIONS. The insurance required by this Lease may be subject to any limitations generally prevailing in the airline insurance marketplace at the time (e.g., AVN67B). ARTICLE 18 LOSS, DAMAGE AND REQUISITION Throughout the Lease Term and until the Termination Date, LESSEE will bear all risk of loss, theft, damage and destruction to the Aircraft. 18.1 DEFINITIONS. In this Article 18: "AGREED VALUE" (CONFIDENTIAL MATERIAL OMITTED) The Agreed Value is set forth in March 2001 U.S. Dollars and will be increased in accordance with Manufacturer's announced escalation rate from March 1, 2001 to the Delivery Date. On each annual renewal date of LESSEE's insurance policy commencing on the renewal date following the first anniversary of the Lease Term, the Agreed Value will decrease by two percent (2.0%) of the then-existing Agreed Value. "NET TOTAL LOSS PROCEEDS" means the Total Loss Proceeds actually received by LESSOR following a Total Loss, less any legal and other out-of-pocket expenses or duties incurred by LESSOR in connection with the collection of such proceeds. "TOTAL LOSS" means any of the following in relation to the Aircraft, Airframe or any Engine and "TOTAL LOSS DATE" means the date set forth in parenthesis after each Total Loss: (a) destruction, damage beyond repair or being rendered permanently unfit for normal use for any reason (the date such event occurs or, if not known, the date on which the Aircraft, Airframe or Engine was last heard of); (b) actual, constructive, compromised, arranged or agreed total loss (the earlier of the date on which the loss is agreed or compromised by the insurers or thirty (30) days after the date of notice to LESSEE's brokers or insurers claiming such total loss); (c) requisition of title, confiscation, forfeiture or any compulsory acquisition of title or other similar event (the date on which the same takes effect); (d) sequestration, detention, seizure or any similar event for more than one hundred eighty (180) consecutive days (the earlier of the date on which insurers make payment on the basis of a total loss or the date of expiration of such period); (e) requisition for use for more than one hundred eighty (180) consecutive days, except as set forth in Article 18.8 (the earlier of the date on which the insurers make payment on the basis of a total loss or the date of expiration of such period); (f) in the case of an Engine, the event described in Article 12.6.3 (the date on which the same takes effect); "TOTAL LOSS PROCEEDS" means the proceeds of any insurance or any compensation or similar payment arising in respect of a Total Loss. 18.2 NOTICE OF TOTAL LOSS. LESSEE will notify LESSOR in writing within two (2) Business Days after a Total Loss Date of the Aircraft, Airframe or any Engine. 18.3 TOTAL LOSS OF AIRCRAFT OR AIRFRAME. If the Total Loss of the Aircraft or Airframe occurs during the Lease Term, the following will occur: 18.3.1 After the Total Loss Date and until receipt by LESSOR of the Agreed Value and all other amounts then due under this Lease, LESSEE will continue to pay Rent and the parties will perform all of their other obligations under this Lease. 18.3.2 On the date which is the earlier of the following dates: (a) the date on which the Total Loss Proceeds of the Aircraft or the Airframe are paid by LESSEE's insurance underwriters or brokers and (b) the date which falls sixty (60) days after the Total Loss Date, LESSEE will pay to LESSOR an amount equal to the sum of: (a) the Agreed Value and (b) all other amounts then due and payable under this Lease, less an amount equal to the Net Total Loss Proceeds received by LESSOR by such date. 18.3.3 LESSOR will apply the Net Total Loss Proceeds and any amounts received from LESSEE pursuant to Article 18.3.2 as follows: (a) first, in discharge of any unpaid Rent and any other amounts accrued and unpaid up to the date of LESSOR's receipt of the Agreed Value; (b) second, in discharge of the Agreed Value; and (c) third, payment of the balance, if any, to LESSEE. 18.3.4 Upon receipt by LESSOR of all monies payable by LESSEE in Article 18.3, provided no Default has occurred and is continuing, this Lease will terminate except for LESSEE's obligations under Articles 10.5, 15 and 16 which survive the Termination Date and the Security Deposit will be returned to LESSEE in accordance with Article 5.3.1. FOR AVOIDANCE OF DOUBT, THE AGREED VALUE OF THE AIRCRAFT WILL BE PAYABLE TO LESSOR PURSUANT TO THIS ARTICLE 18.3 IF A TOTAL LOSS OF THE AIRFRAME OCCURS EVEN IF THERE HAS NOT BEEN A TOTAL LOSS OF AN ENGINE OR ENGINES. 18.4 SURVIVING ENGINE(S). If a Total Loss of the Airframe occurs and there has not been a Total Loss of an Engine or Engines, then provided no Default has occurred and is continuing, at the request of LESSEE (subject to agreement of relevant insurers) and on receipt of all monies due under Article 18.3 and payment by LESSEE of all airport, navigation and other charges on the Aircraft, LESSOR will transfer all of its right, title and interest in the surviving Engine(s) to LESSEE, but without any responsibility, condition or warranty on the part of LESSOR other than as to freedom from any LESSOR's Lien. 18.5 TOTAL LOSS OF ENGINE AND NOT AIRFRAME. 18.5.1 Upon a Total Loss of any Engine not installed on the Airframe or a Total Loss of an Engine installed on the Airframe not involving a Total Loss of the Airframe, LESSEE will replace such Engine as soon as reasonably possible by duly conveying to LESSOR title to another engine (a) free and clear of all Security Interests (except Permitted Liens) of any kind or description, (b) in airworthy condition and of the same or improved model, service bulletin and modification status and having a value and utility at least equal to the Engine which sustained the Total Loss, and (c) not older (by reference to serial number or manufacture date) than three (3) years older than the oldest of the two Engines delivered by LESSOR to LESSEE with the Aircraft on the Delivery Date. Such replacement engine will be an Engine as defined herein and the Engine which sustained such Total Loss will cease to be an Engine. 18.5.2 LESSEE agrees at its own expense to take such action as LESSOR may reasonably request in order that any such replacement Engine becomes the property of LESSOR and is leased hereunder on the same terms as the destroyed Engine. LESSEE's obligation to pay Rent will continue in full force and effect, but an amount equal to the Net Total Loss Proceeds received by LESSOR with respect to such destroyed Engine will, subject to LESSOR's right to deduct therefrom any amounts then due and payable by LESSEE under this Lease, be paid to LESSEE. 18.6 OTHER LOSS OR DAMAGE. 18.6.1 If the Aircraft or any Part thereof suffers loss or damage not constituting a Total Loss of the Aircraft or the Airframe or any Engine, all the obligations of LESSEE under this Lease (including payment of Rent) will continue in full force. 18.6.2 In the event of any loss or damage to the Aircraft or Airframe which does not constitute a Total Loss of the Aircraft or the Airframe, or any loss or damage to an Engine which does not constitute a Total Loss of such Engine, LESSEE will at its sole cost and expense fully repair the Aircraft or Engine in order that the Aircraft or Engine is placed in an airworthy condition and substantially the same condition as it was prior to such loss or damage. All repairs will be performed in accordance with sound airline procedures. LESSEE will notify LESSOR forthwith of any loss, theft or damage to the Aircraft for which the cost of repairs is estimated to exceed Seven Hundred Fifty Thousand U.S. Dollars (US$750,000), together with LESSEE's proposal for carrying out the repair. In the event that LESSOR does not agree with LESSEE's proposals for repair, LESSOR will so notify LESSEE within two (2) Business Days after its receipt of such proposal. LESSEE and LESSOR will then consult with Manufacturer and LESSEE and LESSOR agree to accept as conclusive, and be bound by, Manufacturer's directions or recommendations as to the manner in which to carry out such repairs. If Manufacturer declines to give directions or recommendations, LESSEE will carry out the repairs in accordance with the directions of LESSOR. 18.6.3 To the extent that LESSOR has received insurance proceeds from LESSEE's insurers with respect to any loss or damage, LESSOR will (subject to LESSOR's right to deduct therefrom any amounts then due and payable by LESSEE under this Lease and submission by LESSEE of reasonable documentation confirming the completion of the repairs in accordance with the requirements of this Lease) pay to LESSEE insurance proceeds received by LESSOR as and when such repair work is performed on the Aircraft. 18.7 COPY OF INSURANCE POLICY. Promptly after LESSOR's request following the occurrence of a partial loss or Total Loss of the Aircraft or an Engine, LESSEE will provide LESSOR with a copy of LESSEE's insurance policy. 18.8 GOVERNMENT REQUISITION. If the Aircraft, Airframe or any Engine is requisitioned for use by any Government Entity, LESSEE will promptly notify LESSOR of such requisition. All of LESSEE's obligations hereunder will continue as if such requisition had not occurred. Except if a Default or an Event of Default has occurred and is continuing, all payments received by LESSOR or LESSEE from such Government Entity will be paid over to or retained by LESSEE. 18.9 CONVEYANCE TO LESSEE. Upon compliance by LESSEE with the applicable terms of Article 18.3 or 18.5, LESSOR will transfer to LESSEE the Airframe or Engine(s), as applicable, with respect to which such Total Loss. ARTICLE 19 CRAF PROGRAM 19.1 DEDICATION TO CRAF. LESSEE may transfer possession of the Airframe or any Engine to the United States of America or any instrumentality or agency thereof as part of the Civil Reserve Air Fleet Program authorized under 10 U.S.C. ss. 9511 ET SEQ. (or any substantially similar program) ("CRAF PROGRAM") for a period which includes (collectively, the "CRAF PROGRAM REQUISITION PERIOD") the entire period of requisition under the CRAF Program. If the CRAF Program Requisition Period extends beyond the Expiration Date provided by this Lease, then the Lease will be deemed to continue for six (6) months after the end of the CRAF Program Requisition Period at a monthly rental rate equal to the monthly rental rate during the Lease Term. If such extension extends beyond the Lease Term, then LESSEE will provide LESSOR with written notice of the proposed redelivery by the earlier of six (6) months prior to the proposed redelivery date or five (5) Business Days after the date of receipt of the actual notice given to LESSEE by the government prior to the government's redelivery date and LESSEE will return the Aircraft to LESSOR in the condition required by Article 23 on LESSEE's proposed redelivery date set forth in such notice. 19.2 NOTICE TO LESSOR. LESSEE will promptly notify LESSOR in writing in the event of the requisition for use of the Aircraft under CRAF activation by the U.S. Government. All of LESSEE's obligations under this Lease will continue to the same extent as if such requisition had not occurred. 19.3 REQUISITION OF ENGINE. If there is a requisition for use of any Engine (but not the Airframe) by the U.S. Government in connection with the CRAF Program, LESSEE will replace such Engine by complying with the terms of Article 18.5 hereof. 19.4 GOVERNMENT INDEMNIFICATION. Any provisions of this Lease to the contrary notwithstanding, if there is a requisition for use of the Aircraft pursuant to the CRAF Program and/or CRAF activation, LESSOR agrees that LESSEE's insurances described in Exhibit C may be supplemented by insurances provided under Title XIII of the Act, and/or U.S. Government indemnification (which Title XIII insurances and indemnification will be in amounts not less than those established in Exhibit C); provided, however, that LESSEE will remain responsible for full compliance with all the provisions of this Lease, including Articles 14 and 16, to the extent Title XIII and/or the U.S. Government indemnification do not satisfy LESSEE's obligations under this Lease. 19.5 NO GEOGRAPHIC LIMITS. If there is a requisition for use of the Aircraft pursuant to the CRAF Program and/or CRAF activation, there will be no limitation on the geographic area in which the Aircraft may be operated so long as, taken as a whole, LESSEE's insurance, the Title XIII insurance and/or the indemnification provided by the U.S. Government fully cover (without any geographic exclusions) LESSEE's Exhibit C insurance requirements. 19.6 NOTICE OF DEFAULT. If an Event of Default occurs under this Lease and LESSOR elects to pursue its remedies under Article 25.3(e) to terminate this Lease and repossess the Aircraft, LESSOR will so notify the U.S. Government by sending a written communication as follows: Headquarters Air Mobility Command AMC Contracting Office -- XOKA Scott Air Force Base, Illinois 62225-5007 19.7 RECEIPT OF PAYMENTS. Subject to the following sentence, all payments received by LESSOR or LESSEE from such Government Entity in connection with the requisition of the Aircraft under the CRAF Program will be paid over to or retained by LESSEE. If a Default has occurred and is continuing, all payments received by LESSEE or LESSOR from such Government Entity in connection with the requisition of the Aircraft under the CRAF Program may be used by LESSOR to satisfy any obligations owing by LESSEE. ARTICLE 20 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE 20.1 REPRESENTATIONS AND WARRANTIES. LESSEE represents and warrants the following to LESSOR as of the date of execution of this Lease and as of the Delivery Date: 20.1.1 CORPORATE STATUS. LESSEE is a corporation duly incorporated, validly existing and in good standing under the Laws of Indiana (or, on the Delivery Date, the state of its incorporation). It has the corporate power and authority to carry on its business as presently conducted and to perform its obligations hereunder. 20.1.2 GOVERNMENTAL APPROVALS. No authorization, approval, consent, license or order of, or registration with, or the giving of notice to the Aviation Authority or any other Government Entity is required for the valid authorization, execution, delivery and performance by LESSEE of this Lease, except as will have been duly effected as of the Delivery Date. 20.1.3 BINDING. LESSEE's Board of Directors has authorized LESSEE to enter into this Lease, any Side Letters hereto and any other documentation in connection with the leasing of the Aircraft from LESSOR (collectively, the "OPERATIVE DOCUMENTS") and perform its obligations under the Operative Documents. This Lease and the other Operative Documents have been duly executed and delivered by LESSEE and represent the valid, binding and enforceable obligations of LESSEE except as enforceability may be limited by bankruptcy, insolvency, reorganization or other Laws of general application affecting the enforcement of creditors' rights. When executed by LESSEE at Delivery, the same will apply to the Estoppel and Acceptance Certificate. 20.1.4 NO BREACH. The execution and delivery of the Operative Documents, the consummation by LESSEE of the transactions contemplated herein and compliance by LESSEE with the terms and provisions hereof do not and will not contravene any Law applicable to LESSEE, or result in any breach of or constitute any default under or result in the creation of any Security Interest upon any property of LESSEE, pursuant to any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which LESSEE is a party or by which LESSEE or its properties or assets may be bound or affected. When executed by LESSEE at Delivery, the same will apply to the Estoppel and Acceptance Certificate. 20.1.5 FILINGS. Except for any filing or recording that may be required by the FARs, no filing or recording of any instrument or document (including the filing of any financial statement) is necessary under the Laws of the State of Registration in order for this Lease to constitute a valid and perfected lease of record relating to the Aircraft. 20.1.6 LICENSES. LESSEE holds all licenses, certificates and permits from applicable Government Entities in the U.S. for the conduct of its business as a certificated air carrier and performance of its obligations under this Lease. 20.1.7 NO SUITS. There are no suits, arbitrations or other proceedings pending or threatened before any court or administrative agency against LESSEE which are reasonably likely to be determined adversely and, if adversely determined, would have a material adverse effect on the business, assets or condition (financial or otherwise) of LESSEE or its ability to perform under this Lease, except as described in the filings provided to LESSOR pursuant to Article 22. 20.1.8 GENERAL OBLIGATIONS. The obligations of LESSEE under this Lease are direct, general and unconditional obligations of LESSEE and rank or will rank at least PARI PASSU with all other present and future unsecured and unsubordinated obligations (including contingent obligations) of LESSEE, with the exception of such obligations as are mandatorily preferred by law and not by reason of any encumbrance. 20.1.9 NO SOVEREIGN IMMUNITY. LESSEE, under the Laws of the U.S. or of any other jurisdiction affecting LESSEE, is subject to private commercial law and suit. Neither LESSEE nor its properties or assets is entitled to sovereign immunity under any such Laws. LESSEE's performance of its obligations hereunder constitute commercial acts done for commercial purposes. 20.1.10 TAX RETURNS. All necessary federal and state income tax returns have been delivered by LESSEE to all relevant taxation authorities in the U.S. or any state thereof and LESSEE is not in default in the payment of any taxes due and payable as shown on any such returns or on any assessment received by LESSEE. 20.1.11 NO MATERIAL ADVERSE EFFECT. LESSEE is not in default under any agreement to which it is a party or by which it may be bound which would have a material adverse effect on its business, assets or condition. 20.1.12 NO DEFAULT UNDER THIS LEASE. At the time of execution of this Lease, no Default has occurred and is continuing and the financial statements provided to LESSOR pursuant to Article 22 fairly present the financial condition of LESSEE. 20.2 COVENANTS. LESSEE covenants to LESSOR that it will comply with the following throughout the entire Lease Term: 20.2.1 LICENSING. LESSEE will hold all licenses, certificates and permits from applicable Government Entities in the U.S. for the conduct of its business as a certificated air carrier and performance of its obligations under this Lease. LESSEE will advise LESSOR promptly in the event any such licenses, certificates or permits are cancelled, terminated, revoked or not renewed. 20.2.2 SOVEREIGN IMMUNITY. LESSEE, under the Laws of the U.S. or of any other jurisdiction affecting LESSEE, will continue to be subject to private commercial law and suit. Neither LESSEE nor its properties or assets will be entitled to sovereign immunity under any such Laws. LESSEE's performance of its obligations hereunder will constitute commercial acts done for commercial purposes. LESSEE will advise LESSOR promptly of any change in the foregoing. 20.2.3 INFORMATION ABOUT SUITS. LESSEE will promptly give to LESSOR a notice in writing of any suit, arbitration or proceeding against LESSEE before any court, administrative agency or Government Entity which is reasonably likely to be determined adversely and, if adversely determined, would materially adversely affect LESSEE's financial condition, affairs, operations or its ability to perform under this Lease. 20.2.4 MERGER OF LESSEE. (a) LESSEE shall not consolidate with or merge into any other Person under circumstances in which LESSEE is not the surviving corporation, or convey, transfer, or lease in one or more transactions all or substantially all of its assets to any other Person, unless: (i) such Person is organized, existing, and in good standing under the Laws of the U.S., any state of the U.S., or the District of Columbia, and, upon consummation of such transaction, such Person will be a U.S. Air Carrier; (ii) such Person executes and delivers to LESSOR a duly authorized, legal, valid, binding and enforceable agreement, reasonably satisfactory in form and substance to LESSOR, containing an effective assumption by such Person of the due and punctual performance and observance of each covenant, agreement and condition in the Operative Documents to be performed or observed by LESSEE; (iii) such Person makes such filings and recordings with the FAA pursuant to the Act as shall be necessary to evidence such consolidation or merger; (iv) LESSEE furnishes LESSOR an opinion of counsel reasonably satisfactory to LESSOR to the effect that such consolidation or merger has satisfied at the closing of such consolidation or merger items (i), (ii) and (iii) above; (v) immediately after giving effect to such consolidation or merger, no Default or Event of Default exists; (vi) unless LESSOR otherwise consents, immediately after giving effect to such consolidation or merger, such Person will have a tangible net worth of not less than sixty-five percent (65%) of the LESSEE's tangible net worth immediately prior to such merger; and (vii) upon such merger becoming effective, LESSOR will enjoy the same degree of protection under ss. 1110 of the Bankruptcy Code with respect to the Aircraft as LESSOR enjoyed prior to such merger. (b) Upon any such consolidation or merger of LESSEE with or into, or the conveyance, transfer, or lease by LESSEE of all or substantially all of its assets to, any Person in accordance with this Article 20.2.4, such Person will succeed to, and be substituted for, and may exercise every right and power of, LESSEE under the Operative Documents with the same effect as if such Person had been named as "LESSEE" therein. No such consolidation, merger, conveyance, transfer, or lease shall have the effect of releasing LESSEE or such Person from any of LESSEE's obligations, liabilities, covenants, or undertakings under this Lease. 20.2.5 RESTRICTION ON RELINQUISHMENT OF POSSESSION. LESSEE will not, without the prior consent of LESSOR, deliver, transfer or relinquish possession of the Aircraft except in accordance with Articles 11 and 12. 20.2.6 NO SECURITY INTERESTS. LESSEE will not create or agree to or permit to arise any Security Interest (other than Permitted Liens) on or with respect to the Aircraft, title thereto or any interest therein. LESSEE will forthwith, at its own expense, take all action as may be necessary to discharge or remove any such Security Interest if it exists at any time. LESSEE will within five (5) Business Days after becoming aware of the existence of any such Security Interest give written notice thereof to LESSOR. 20.2.7 REPRESENTATIONS TO OTHER PARTIES. LESSEE will not represent or hold out LESSOR as carrying goods or passengers on the Aircraft or as being in any way connected or associated with any operation of the Aircraft. ARTICLE 21 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSOR 21.1 REPRESENTATIONS AND WARRANTIES. LESSOR represents and warrants the following to LESSEE as of the date of execution of the Lease and as of the Delivery Date and ALL OTHER WARRANTIES, EXPRESS OR IMPLIED HAVE BEEN WAIVED IN ACCORDANCE WITH ARTICLE 8: 21.1.1 CORPORATE STATUS. LESSOR is a corporation duly incorporated, validly existing and in good standing under the Laws of the State of California. It has the corporate power and authority to carry on its business as presently conducted and to perform its obligations hereunder. 21.1.2 GOVERNMENTAL APPROVALS. No authorization, approval, consent, license or order of, or registration with, or the giving of notice to any U.S. Government Entity is required for the valid authorization, execution, delivery and performance by LESSOR of this Lease. 21.1.3 BINDING. This Lease and the other Operative Documents have been duly authorized, executed and delivered by LESSOR and represent the valid, enforceable and binding obligations of LESSOR except as enforceability may be limited by bankruptcy, insolvency, reorganization or other Laws of general application affecting the enforcement of creditors' rights. 21.1.4 NO BREACH. The execution and delivery of the Operative Documents, the consummation by LESSOR of the transactions contemplated herein and compliance by LESSOR with the terms and provisions hereof do not and will not contravene any Law applicable to LESSOR, or result in any breach of or constitute any default under any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which LESSOR is a party or by which LESSOR or its properties or assets may be bound or affected. 21.1.5 TITLE TO AIRCRAFT. On the Delivery Date LESSOR will have good and valid title to the Aircraft. 21.1.6 CITIZENSHIP. LESSOR is a "citizen of the United States" within the meaning of 49 U.S. Code 40102(a)(15). 21.1.7 INVESTMENT BY LESSOR. LESSOR is acquiring its interest in the Aircraft for its own account from its corporate funds, for investment and not with a view to any resale or distribution thereof that would require registration under the Securities Act of 1933; PROVIDED, HOWEVER, that subject to the transfer restrictions in Article 24.2, its disposition of its interest in the Aircraft shall at all times be within its control. 21.2 COVENANT OF QUIET ENJOYMENT. So long as no Event of Default has occurred and is continuing hereunder, LESSOR covenants that neither LESSOR nor any person lawfully claiming through LESSOR will interfere with LESSEE's quiet, peaceful use and enjoyment of the Aircraft. ARTICLE 22 FINANCIAL AND RELATED INFORMATION LESSEE agrees to furnish each of the following to LESSOR: (a) within sixty (60) days after the end of each fiscal quarter of LESSEE, the unaudited consolidated financial statements (including a balance sheet and profit and loss statement) prepared for such quarter in accordance with generally accepted accounting principles in the U.S.; (b) within one hundred twenty (120) days after the end of each fiscal year of LESSEE, the audited consolidated financial statements (including a balance sheet and profit and loss statement) prepared as of the close of such fiscal year in accordance with generally accepted accounting principles in the U.S. LESSEE's chief financial officer will also provide a certificate of LESSEE stating that, to such officer's knowledge, no Default exists under this Lease (or if, to such officer's knowledge, a Default does exist, identifying it); (c) promptly after distribution, all reports and financial statements which Amtran, Inc. sends or makes generally available to its stockholders or creditors; and (d) from time to time, such other reasonable information as LESSOR or LESSOR's Lender may reasonably request concerning the location, condition, use and operation of the Aircraft or the financial condition of LESSEE. ARTICLE 23 RETURN OF AIRCRAFT 23.1 DATE OF RETURN. LESSEE is obligated to return the Aircraft, Engines Parts and Aircraft Documentation to LESSOR on the Expiration Date, unless a Total Loss of the Aircraft occurred prior to the Expiration Date and this Lease was terminated early in accordance with Article 18.3. If LESSEE is in Default hereunder by failing to return the Aircraft on the Expiration Date or if an Event of Default occurs prior to the Expiration Date and LESSOR repossesses the Aircraft, the return requirements set forth in this Article 23 nonetheless must be met on the date the Aircraft is actually returned to LESSOR or repossessed by LESSOR. 23.2 TECHNICAL REPORT. Six (6) months prior to the Expiration Date (and in an updated form at return of the Aircraft), LESSEE will provide LESSOR with a Technical Evaluation Report in the form and substance of Exhibit L, as revised, and, in addition upon LESSOR's request, will make copies available of (a) drawings of the interior configuration of the Aircraft both as it presently exists and as it will exist at return, (b) an Airworthiness Directive status list, (c) a service bulletin incorporation list, (d) rotable tracked, hard-time and life-limited component listings, (e) a list of LESSEE-initiated modifications and alterations, (f) interior material burn certificates, (g) the Aircraft Maintenance Program, (h) the complete workscope for the checks, inspections and other work to be performed prior to return, (i) a list of all no-charge service bulletin kits with respect to the Aircraft which were ordered by LESSEE from Manufacturer or Engine manufacturer, (j) current Engine disk sheets and a description of the last shop visit for each Engine and (k) any other data which is reasonably requested by LESSOR. 23.3 RETURN LOCATION. LESSEE at its expense will return the Aircraft, Engines, Parts and Aircraft Documentation to LESSOR at Indianapolis International Airport, Indianapolis, Indiana or to such other airport as may be mutually agreed to by LESSEE and LESSOR. 23.4 FULL AIRCRAFT DOCUMENTATION REVIEW. For the period commencing at least ten (10) Business Days prior to the proposed redelivery date and continuing until the date on which the Aircraft is returned to LESSOR in the condition required by this Lease, LESSEE will provide for the review of LESSOR and/or its representative all of the Aircraft records and historical documents described in Exhibit K in one central room at the Aircraft return location. 23.5 AIRCRAFT INSPECTION. 23.5.1 During the maintenance checks performed immediately prior to the proposed redelivery and at the actual return of the Aircraft, LESSOR and/or its representatives will have an opportunity to conduct a full systems functional and operational inspection of the Aircraft (and other types of reasonable inspections based upon the Aircraft type, age, use and other known factors with respect to the Aircraft) and a full inspection of the Aircraft Documentation (including records and manuals), all to LESSOR's satisfaction. The inspection will occur during the Return Check when the panels, bays or the like are open and certain Parts are disassembled. LESSOR may inspect such opened panels, bays or the like and the disassembled Parts so long as LESSOR does not disrupt the Return Check or cause such Return Check to be extended beyond the anticipated completion date of such Return Check. Any deficiencies from the Aircraft return condition requirements set forth in this Article 23 will be corrected by LESSEE at its cost prior to the acceptance flight described in Article 23.5.2. 23.5.2 Immediately prior to the proposed redelivery of the Aircraft, LESSEE will carry out for LESSOR and/or LESSOR's representatives an Aircraft acceptance flight in accordance with Manufacturer's standard flight operation check flight procedures or, if agreed to in writing by LESSOR, in accordance with an airline acceptance flight procedure, either of which will be for the duration necessary to perform such check flight procedures but in any event not less than two (2) hours. Flight costs and fuel will be furnished by and at the expense of LESSEE. Any deficiencies from the Aircraft return condition requirements set forth in this Article 23 will be corrected by LESSEE at its cost prior to return of the Aircraft. 23.5.3 To the extent that the ground inspection and acceptance flight extend beyond the Expiration Date, the Lease Term will be deemed to have been automatically extended and the obligations of LESSEE hereunder (including Article 23.11.3) will continue on a day-to-day basis until the Aircraft is accepted by LESSOR executing the Return Acceptance Receipt in the form of Exhibit I. 23.6 CERTIFICATE OF AIRWORTHINESS MATTERS. 23.6.1 The Aircraft will possess a current Certificate of Airworthiness issued by the Aviation Authority (although this Certificate of Airworthiness may later be substituted by the Export Certificate of Airworthiness or equivalent if requested by LESSOR pursuant to Article 23.10). The Aircraft at return must be in the condition required in order to meet the requirements of a U.S. Standard Certificate of Airworthiness for transport category aircraft issued by the FAA in accordance with FAR Part 21 and, in addition, to meet the operating requirements of FAR Part 121. 23.6.2 LESSEE at its cost will demonstrate that the Aircraft meets the requirements for issuance of the U.S. Standard Certificate of Airworthiness for transport category aircraft specified in Article 23.6.1 by delivering to LESSOR an actual U.S. Standard Certificate of Airworthiness. If there is a dispute in regards to the condition of the Aircraft or the Aircraft Documentation, then LESSEE will provide LESSOR with a letter acceptable to LESSOR signed by an FAA Designated Airworthiness Representative (DAR) or another Person acceptable to LESSOR stating that the DAR or such Person has inspected the Aircraft and Aircraft Documentation (including records and manuals) and has found that the Aircraft meets the requirements for issuance of a U.S. Standard Certificate of Airworthiness for transport category aircraft in accordance with FAR Part 21 and, in addition, meets the operating requirements of FAR Part 121. 23.6.3 If the Aircraft is to be registered in a country other than in the U.S. after return from LESSEE, LESSOR may in its sole discretion waive the requirements of Article 23.6.2 and instead require that LESSEE at its expense (to the extent such expense is no greater than that which LESSEE would have incurred pursuant to Articles 23.6.1 and 23.6.2, with any additional expenses being for LESSOR's account) put the Aircraft in a condition to meet the requirements for issuance of a Certificate of Airworthiness of the Aviation Authority of the next country of register. 23.7 GENERAL CONDITION OF AIRCRAFT AT RETURN. 23.7.1 The Aircraft, Engines and Parts will have been maintained and repaired in accordance with the Maintenance Program, the rules and regulations of the Aviation Authority and this Lease. 23.7.2 Aircraft Documentation (including records and manuals) will have been maintained in an up-to-date status, in accordance with the rules and regulations of the Aviation Authority and the FAA and this Lease and in a form necessary in order to meet the requirements of Article 23.6.2. The records and historical documents set forth in Attachment 1 of Exhibit I will be in English. 23.7.3 The Aircraft will be in the same working order and condition as at Delivery (subject to the other provisions of this Article 23, reasonable wear and tear from normal flight operations excepted), with all pilot discrepancies and deferred maintenance items cleared on a terminating action basis. 23.7.4 The Aircraft will be airworthy (conform to type design and be in a condition for safe operation), with all Aircraft equipment, components and systems operating in accordance with their intended use and within limits approved by the Manufacturer, Aviation Authority and FAA. 23.7.5 The Aircraft interior (including cabin and windows) and exterior will be clean and all compartments will be reasonably free of foreign objects, dirt, grease, fluids, stains, grime, cracks, tears and rips (with the exception of normal wear and tear) and ready to be placed into immediate commercial airline operations. 23.7.6 No special or unique Manufacturer, Engine manufacturer or Aviation Authority inspection or check requirements which are specific to the Aircraft or Engines (as opposed to all aircraft or engines of their types) will exist with respect to the Airframe, Engines and Aircraft equipment, components and systems. 23.7.7 All repairs, modifications and alterations to the Aircraft will have been accomplished in accordance with Manufacturer's Structural Repair Manual (or FAA-approved data supported by FAA Form 8110-3) for the Aircraft. 23.7.8 The Aircraft will be returned with LESSOR's Engines installed and with the same equipment as at Delivery, subject only to those replacements, additions and Modifications permitted under this Lease. LESSEE will inform LESSOR of whether LESSEE will be able to redeliver the Engines with the Aircraft and the proposed replacement engines that LESSEE wants to provide LESSOR in place of the Engines. LESSEE will provide LESSOR with whatever data, records and information that LESSOR reasonably requests in order to evaluate the proposed replacement engines. In the event that LESSEE is unable to return either of the Engines in the conditions required by this Article 23, then LESSEE may provide a replacement engine (a "REPLACEMENT ENGINE") for such Engine to LESSOR by duly conveying to LESSOR as owner hereunder title to another engine of the same manufacturer and of the same or an improved model as the Engine being replaced and suitable for installation and use on the Aircraft, which engine shall be free and clear of all Security Interests, and shall be no more than three (3) years older by reference to serial number than the replaced Engine and have a modification status, value and utility at least equal to the Engine which such Replacement Engine is replacing on the Aircraft assuming that such Engine which such Replacement Engine is replacing was then of the value, utility, condition, and airworthiness required to be maintained by the terms of this Lease. Such Replacement Engine, after approval and acceptance by LESSOR, shall be deemed an "Engine" as defined herein for all purposes hereunder. LESSEE agrees to take such action as LESSOR may reasonably request in order that such Replacement Engine shall be duly and properly titled in the name of LESSOR. Prior to or at the time of any such conveyance, LESSEE, at its own expense, will promptly: (a) furnish LESSOR with a warranty bill of sale, in form and substance satisfactory to LESSOR, with respect to such Replacement Engine, (b) furnish LESSOR with such evidence of title to such Replacement Engine as reasonably requested by LESSOR, and (c) furnish LESSOR with an opinion of LESSEE's counsel to the effect that title to such Replacement Engine has been duly conveyed to LESSOR free and clear of all Security Interests of any kind or nature and that such exchange qualifies for tax free treatment under the Internal Revenue Code of 1986, as amended. Upon full compliance with this Article, LESSOR shall transfer to LESSEE all of LESSOR's right, title and interest, on an "AS-IS", "WHERE-IS" basis in and to the Engine being replaced by such Replacement Engine, without recourse or warranty, express or implied, except that LESSOR has good and marketable title to such Engine and such Engine shall be free and clear of LESSOR's Liens. 23.7.9 All Airworthiness Directives which are issued prior to the date of return of the Aircraft and require compliance (either by means of repetitive inspections, modifications or terminating action) prior to return of the Aircraft to LESSOR or within one (1) year after the Termination Date will have been complied with on the Aircraft on a terminating action basis at LESSEE's cost. Airworthiness Directives which do not have a terminating action will be accomplished at the highest level of inspection or modification possible. If, after using best efforts, LESSEE is unable to acquire the material, parts or components necessary to accomplish such Airworthiness Directive, LESSEE will pay to LESSOR upon return of the Aircraft the estimated cost of terminating such Airworthiness Directive. If the estimated cost cannot be mutually agreed upon by LESSEE and LESSOR, LESSEE and LESSOR will each obtain an estimate from a reputable FAA-approved maintenance facility (unaffiliated with LESSEE or LESSOR) and the estimated cost will be the average of the two estimates. 23.7.10 The Aircraft will be in compliance with the Corrosion Prevention and Control Program (CPCP) specified in LESSEE's Maintenance Program. 23.7.11 If any waivers, deviations, dispensations, alternate means of compliance, extensions or carry-overs with respect to maintenance or operating requirements, repairs or Airworthiness Directives are granted by the Aviation Authority or permitted by the Maintenance Program, LESSEE at its sole cost and expense will nonetheless perform such maintenance or operating requirements, repairs or Airworthiness Directives as if such waivers, deviations, dispensations, alternate means of compliance, or extensions or carry-overs did not exist. 23.7.12 The Aircraft will be free from any Security Interest except LESSOR's Liens and no circumstance will have so arisen whereby the Aircraft is or could become subject to any Security Interest or right of detention or sale in favor of the Aviation Authority, any airport authority, or any other authority. 23.7.13 All no-charge vendor and Manufacturer's service bulletin kits received by LESSEE for the Aircraft but not installed thereon will be on board the Aircraft as cargo. At LESSOR's request, any other service bulletin kit which LESSEE paid for will also be delivered to LESSOR on board the Aircraft, but LESSOR will reimburse LESSEE for its actual out-of-pocket costs for such kit, unless LESSEE purchased such kit as part of its implementation of a service bulletin on its fleet of aircraft of the same type as the Aircraft but had not yet installed such kit on the Aircraft, in which case such kit will be furnished free of charge to LESSOR. 23.7.14 The Aircraft will be free of any leaks and any damage resulting therefrom. All repairs will have been performed on a permanent basis in accordance with the applicable manufacturer's instructions. 23.7.15 The Aircraft fluid reservoirs (including oil, oxygen, hydraulic and water) will be serviced to full and the waste tank serviced in accordance with Manufacturer's instructions. (Fuel tanks will be at least as full as at Delivery.) 23.8 CHECKS PRIOR TO RETURN. Immediately prior to return of the Aircraft to LESSOR, LESSEE at its expense will do each of the following: 23.8.1 Have performed, and completed, by an FAA-approved repair station, all maintenance tasks specified in LESSEE's Maintenance Program and the MPD which (a) are necessary to clear the Aircraft of all such tasks for eighteen (18) months, five thousand (5,000) hours, and three thousand (3,000) cycles from the date of return of the Aircraft, and (b) are required to be performed at lesser intervals than eighteen (18) months, five thousand (5,000) hours or three thousand (3,000) cycles (all such work collectively referred to as the "RETURN CHECK"). If a maintenance task is specific to LESSEE's Maintenance Program and not required or recommended to be performed by the MPD, then LESSEE will not be required to perform such maintenance task so long as the Return Check is performed in such a manner that clears the Aircraft of all maintenance tasks in accordance with the requirements of the preceding sentence. As part of the Return Check, all non-routine tasks generated as a result of the performance of the work included in the Return Check and any other discrepancies revealed during the Return Check must also be performed in accordance with the FAA approved procedures. LESSEE will also weigh the Aircraft. LESSEE agrees to perform during the Return Check any other work reasonably required by LESSOR (and not otherwise required under this Lease) and LESSOR will, promptly upon receipt of an invoice from LESSEE, reimburse LESSEE for such work at LESSEE's preferred customer rates. 23.8.2 Have the Aircraft in compliance with Corrosion Prevention and Control Program (CPCP) as specified in the MPD and LESSEE's Maintenance Program. 23.8.3 Remove LESSEE's exterior markings, including all exterior paint, by stripping (or, at LESSOR's option, pneumatically scuff/sanding) the paint from the fuselage, empennage, wings and Engine cowlings, and clean, reseal, refinish, prepare (including application of alodine or another corrosion inhibitor) and prime the surfaces to be painted, all in accordance with Manufacturer's and paint manufacturer's recommendations. LESSEE will then repaint the fuselage, empennage, wings and Engine cowlings in the colors and logo specified by LESSOR ; PROVIDED, HOWEVER, that LESSEE will be responsible for only paying the amount that it would cost to strip or scuff/sand (whichever is performed on the Aircraft at return) and properly paint the Aircraft in LESSEE's colors and logo and LESSOR will be responsible for the excess cost to paint the Aircraft in the next lessee's colors and logo. Such painting will be accomplished in such a manner as to result in a uniformly smooth and cosmetically acceptable aerodynamic surface. All external placards, signs and markings will be properly attached, free from damage, clean and legible. 23.8.4 Clean the exterior and interior of the Aircraft. 23.8.5 If reasonably required by LESSOR, apply touch up to paint to the interior of the Aircraft, including flight deck, and replace any missing or broken placards. 23.8.6 In accordance with Article 23.7.7, permanently repair damage to the Aircraft that exceeds Manufacturer's limits and replace any non-flush structural patch repairs installed on the Aircraft with flush-type repairs, so long as the Manufacturer or the Manufacturer's Structural Repair Manual permits flush-type repairs on the portion of the Aircraft where the non-flush structural repairs were made. 23.8.7 With LESSOR or its representatives present, perform a full and complete hot and cold section videotape borescope on each Engine and its modules in accordance with the Engine manufacturer's maintenance manual. 23.8.8 If the Engine historical and technical records and/or condition trend monitoring data of any Engine (including the APU) indicate an acceleration in the rate of deterioration in the performance of an Engine, LESSEE will correct, to LESSOR's satisfaction, such conditions which are determined to be causing such accelerated rate of deterioration. 23.8.9 With LESSOR or its representatives present, accomplish a maximum power assurance run on the Engines. LESSEE will evaluate the Engine performance and record the Engine maximum power assurance test conditions and results on the Return Acceptance Receipt. 23.8.10 LESSEE will provide evidence to LESSOR's satisfaction that the Engine historical and technical records, borescope inspection, trend monitoring and other checks specified in Article 23.8.9 do not reveal any condition which would cause the Engines or any module to be unserviceable, beyond serviceable limits or serviceable with an increased frequency of inspection or with calendar time, flight hour or flight cycle restrictions under the Engine manufacturer's maintenance manual. LESSEE will correct any discrepancies in accordance with the guidelines set out by the Engine manufacturer which may be discovered during such inspection. 23.8.11 In the event the Engine historical and technical records, borescope inspection, trend monitoring and other checks specified in Article 23.8.9 result in a dispute regarding the conformity of an Engine with the requirements of this Article 23, LESSEE and LESSOR will consult with Engine manufacturer and follow Engine manufacturer's recommendations (including the accomplishment of an Engine test cell operational check) with regard to determining if such Engine complies with the requirements of this Article 23 and the manner in which any discrepancies from the requirements of this Article 23 will be rectified. 23.9 PART LIVES. At return, the condition of the Aircraft will be as follows: (CONFIDENTIAL MATERIAL OMITTED) 23.10 EXPORT AND DEREGISTRATION OF AIRCRAFT. At LESSOR's request, LESSEE at its cost will (a) provide an Export Certificate of Airworthiness or its equivalent from the State of Registration so that the Aircraft can be exported to the country designated by LESSOR, (b) assist with deregistration of the Aircraft from the register of aircraft in the State of Registration, (c) assist with arranging for prompt confirmation of such deregistration to be sent by the registry in the State of Registration to the next country of registration and (d) perform any other acts reasonably required by LESSOR in connection with the foregoing. If any Aircraft work which LESSEE is not otherwise required to perform hereunder, including engineering, is required in order to obtain such Export Certificate of Airworthiness, LESSEE will perform such work and LESSOR will reimburse LESSEE for such work at LESSEE's preferred customer rates. 23.11 LESSEE'S CONTINUING OBLIGATIONS. In the event that LESSEE does not return the Aircraft to LESSOR on the Expiration Date and in the condition required by this Article 23 for any reason (whether or not the reason is within LESSEE's control): 23.11.1 the obligations of LESSEE under this Lease will continue in full force and effect on a day-to-day basis until such return. This will not be considered a waiver of LESSEE's Event of Default or any right of LESSOR hereunder. 23.11.2 Until such return, the Agreed Value will be an amount equal to the Agreed Value on the day the Aircraft should have been returned to LESSOR pursuant to this Lease. 23.11.3 LESSEE will fully indemnify LESSOR on demand for all losses (including consequential damages), liabilities, actions, proceedings, costs and expenses thereby suffered or incurred by LESSOR and, in addition, if a delay in return of the Aircraft was due to reasons within LESSEE's reasonable control, then until such time as the Aircraft is redelivered to LESSOR and put into the condition required by this Article 23, instead of paying the Rent specified in Article 5.3, LESSEE will pay twice the amount of Rent for each day from the scheduled Expiration Date until the Termination Date (the monthly Rent payable under Article 5.3.1 will be prorated based on the actual number of days in the applicable month). Payment will be made upon presentation of LESSOR's invoice. 23.11.4 LESSOR may elect, in its sole and absolute discretion, to accept the return of the Aircraft prior to the Aircraft being put in the condition required by this Article 23 and thereafter have any such non-conformance corrected at such time as LESSOR may deem appropriate (but within ninety (90) days following the return of the Aircraft) and at commercial rates then-charged by the Person selected by LESSOR to perform such correction. Any direct expenses incurred by LESSOR for such correction will become additional Rent payable by LESSEE within fifteen (15) days following the submission of a written statement by LESSOR to LESSEE, identifying the items corrected and setting forth the expense of such corrections. LESSEE's obligation to pay such supplemental Rent will survive the Termination Date. 23.12 AIRPORT AND NAVIGATION CHARGES. LESSEE will ensure that at return of the Aircraft any and all airport, navigation and other charges which give rise or may if unpaid give rise to any lien, right of detention, right of sale or other Security Interest in relation to the Aircraft, Engine or any Part have been paid and discharged in full and will at LESSOR's request produce evidence thereof satisfactory to LESSOR. 23.13 RETURN ACCEPTANCE CERTIFICATE. Upon return of the Aircraft in accordance with the terms of this Lease, LESSEE will prepare and execute two (2) Return Acceptance Certificates in the form and substance of Exhibit I and LESSOR will countersign and return one such Return Acceptance Certificate to LESSEE. In addition, LESSEE and LESSOR will execute a Lease Termination for filing with the FAA evidencing termination of this Lease. 23.14 INDEMNITIES AND INSURANCE. The indemnities and insurance requirements set forth in Articles 16 and 17, respectively, will apply to Indemnitees and LESSOR's representatives during return of the Aircraft, including the ground inspection and acceptance flight. With respect to the acceptance flight, LESSOR's representatives will receive the same protections as LESSOR on LESSEE's Aviation and Airline General Third Party Liability Insurance. ARTICLE 24 ASSIGNMENT 24.1 NO ASSIGNMENT BY LESSEE. EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED BY THE TERMS OF THIS LEASE, NO ASSIGNMENT, NOVATION, TRANSFER, MORTGAGE OR OTHER CHARGE MAY BE MADE BY LESSEE OF ANY OF ITS RIGHTS WITH RESPECT TO THE AIRCRAFT, ENGINE OR PART OF THIS LEASE. 24.2 SALE OR ASSIGNMENT BY LESSOR. 24.2.1 Subject to LESSEE's rights pursuant to this Lease, LESSOR may at any time and without LESSEE's consent sell, assign or transfer its rights, interest and obligations hereunder or with respect to the Aircraft to a third party ("LESSOR'S ASSIGNEE"), but only if: (a) LESSOR's Assignee has full power, authority, and legal right to execute, deliver, and perform the obligations of LESSOR under the Operative Documents and provides reasonably satisfactory evidence of such power and authority to LESSEE; (b) LESSOR's Assignee enters into one or more legal, valid, binding and enforceable agreements effective to confirm that LESSOR's Assignee agrees to be bound by all the terms of, and to undertake all of the obligations arising after such transfer of LESSOR in, the Operative Documents, and in which it makes representations and warranties substantially the same as those in Article 21.1 of this Lease; (c) upon such transfer LESSEE shall not be obligated to pay any greater amount or incur any greater obligation (other than indemnifying additional indemnitees, insuring additional insureds and other minor ministerial matters) than that which it would have been obliged to pay or incur under the Operative Documents if no transfer or assignment had taken place, and upon such transfer the terms and conditions of the Operative Documents insofar as they relate to the rights and obligations of LESSEE are not altered; (d) LESSOR shall cause LESSOR's Assignee to deliver to LESSEE an opinion of counsel reasonably satisfactory to LESSEE to the effect that such agreement or agreements referred to in clause (2) and, if applicable, clause (6) are legal, binding, and enforceable in accordance with its or their terms, subject to the typical exceptions. (e) the transfer shall relate to LESSOR's entire interest as owner or lessor; (f) LESSOR's Assignee is a citizen of the United States under 49 U.S. Code ss.40102(a)(15) (such status to be determined without considering FAR ss.47.9 or any other provision that may restrict LESSEE's use or operation of the Aircraft), or shall use a voting powers trust or similar arrangement in order to hold an interest in the Aircraft such that the Aircraft can be registered in the U.S. (without considering FAR ss.47.9 or any other provision that may restrict LESSEE's use or operation of the Aircraft); (g) LESSOR's Assignee is a single Person and is either (i) a Permitted Institution, or (ii) or an affiliate of a Permitted Institution, if such affiliate's obligations under the Operative Documents are guaranteed by such Permitted Institution pursuant to a written guaranty, in form and substance reasonably satisfactory to LESSEE; and (h) LESSOR shall give written notice to LESSEE at least five (5) days before any such transfer, specifying the name and address of the proposed LESSOR's Assignee, and providing reasonably satisfactory evidence that the proposed LESSOR's Assignee meets the requirements described in Article 24.2.1(g)(i) or (ii). For a period of two (2) years after such sale or assignment and at LESSEE's cost, LESSEE will continue to name LESSOR as an additional insured under the Aviation and Airline General Third Party Liability Insurance required pursuant to Article 17 and Exhibit C. 24.2.2 The term "LESSOR" as used in this Lease means the lessor of the Aircraft at the time in question. In the event of the sale of the Aircraft and transfer of LESSOR's rights and obligations under this Lease, LESSOR's Assignee will become "LESSOR" of the Aircraft under this Lease and the transferring party (the prior "LESSOR") will be relieved of all liability to LESSEE under this Lease for obligations arising on and after the date the Aircraft is sold. LESSEE will acknowledge and accept LESSOR's Assignee as the new "LESSOR" under this Lease and will look solely to LESSOR's Assignee for the performance of all LESSOR obligations and covenants under this Lease arising on and after the Aircraft sale date. 24.3 LESSOR'S LENDER. Subject to LESSEE's rights pursuant to this Lease, LESSOR may at any time and without LESSEE's consent grant security interests over the Aircraft and assign the benefit of this Lease to a lender ("LESSOR'S LENDER") as security for LESSOR's obligations to LESSOR's Lender. Accordingly, if LESSOR's Lender requires, as a condition to providing financing, any nonsubstantive modification of this Lease, LESSEE agrees to enter into an agreement so modifying this Lease. 24.4 LESSEE COOPERATION. On request by LESSOR, LESSOR's Assignee or LESSOR's Lender, LESSEE will execute all such documents (such as a lease assignment agreement) as LESSOR, LESSOR's Assignee or LESSOR's Lender may reasonably require to confirm LESSEE's obligations under this Lease and obtain LESSEE's acknowledgment that to the best of LESSEE's knowledge, LESSOR is not in breach of this Lease. LESSEE will provide all other reasonable assistance and cooperation to LESSOR, LESSOR's Assignee and LESSOR's Lender in connection with any such sale or assignment or the perfection and maintenance of any such security interest, at LESSOR's cost, including making all necessary filings and registrations in the State of Registration and providing all opinions of counsel with respect to matters reasonably requested by LESSOR, LESSOR's Lender or LESSOR's Assignee. LESSOR will reimburse LESSEE for its reasonable out-of-pocket costs in reviewing documents required by LESSOR or LESSOR's Lender. 24.5 PROTECTIONS. 24.5.1 LESSOR will obtain for the benefit of LESSEE an acknowledgment from any LESSOR's Assignee or LESSOR's Lender that, so long as no Event of Default has occurred and is continuing hereunder, such Person will not interfere with LESSEE's quiet, peaceful use and enjoyment of the Aircraft. 24.5.2 Wherever the term "LESSOR" is used in this Lease in relation to any of the provisions relating to disclaimer, title and registration, indemnity and insurance contained in Articles 8, 13, 16 and 17, respectively, or with respect to Article 20.2.7, the term "LESSOR" will be deemed to include LESSOR's Assignee and LESSOR's Lender, if applicable. For avoidance of doubt, in the event of LESSOR's sale or financing of the Aircraft, the disclaimer and indemnity provisions contained in Articles 8 and 16 will continue to be applicable after the sale or assignment to International Lease Finance Corporation, as well as being applicable to LESSOR's Assignee and LESSOR's Lender. ARTICLE 25 DEFAULT OF LESSEE 25.1 LESSEE NOTICE TO LESSOR. LESSEE will promptly notify LESSOR if LESSEE becomes aware of the occurrence of any Default. 25.2 EVENTS OF DEFAULT. The occurrence of any of the following will constitute an Event of Default and material breach of this Lease by LESSEE: (a) LESSEE fails to take delivery of the Aircraft when obligated to do so under the terms of this Lease; (b) LESSEE fails to make a Rent or other payment due hereunder in the manner and by the date provided herein and fails to make such payment within five (5) Business Days after its receipt of notice that such payment is due; (c) LESSEE fails to obtain or maintain the insurance required by Article 17; (d) LESSEE fails to return the Aircraft to LESSOR on the Expiration Date in accordance with Article 23; (e) LESSEE fails to observe or perform any of its other obligations hereunder and fails to cure the same within thirty (30) days after written notice thereof to LESSEE; provided, that LESSEE will have up to a total of sixty (60) days to cure such failure so long as it uses diligent efforts to do so; (f) any representation or warranty of LESSEE herein proves to have been untrue in any material respect when made; provided, that, if the effect of such falsity is curable, LESSEE shall have thirty (30) days after LESSEE has knowledge that the representation or warranty is untrue; (g) the registration of the Aircraft is cancelled other than as a result of an act or omission of LESSOR; (h) LESSEE abandons the Aircraft or Engines; (i) LESSEE or an approved sublessee no longer has unencumbered control (other than Permitted Liens) or possession of the Aircraft or Engines, except as otherwise permitted by this Lease; (j) LESSEE temporarily or permanently discontinues business or (except as permitted by Article 20.2.4) sells or otherwise disposes of all or substantially all of its assets; (k) a material adverse change occurs in the financial condition of LESSEE; (l) LESSEE no longer possesses the licenses, certificates and permits required for the conduct of its business as a certificated air carrier in the U.S.; (m) LESSEE (i) suspends payment on its debts or other obligations generally, (ii) is unable to or admits its inability to pay its debts or other obligations generally as they fall due, (iii) is adjudicated or becomes bankrupt or insolvent or (iv) enters into any composition or other arrangement for the benefit of its creditors generally; (n) any proceedings, resolutions, filings or other steps are instituted with respect to LESSEE relating to the bankruptcy, liquidation, reorganization or protection from creditors of LESSEE or at least half of LESSEE's property. If instituted by LESSEE, the same will be an immediate Event of Default. If instituted by another Person, the same will be an Event of Default if not dismissed, remedied or relinquished within sixty (60) days; (o) any order, judgment or decree is entered by any court of competent jurisdiction appointing a receiver, trustee or liquidator of LESSEE or at least half of its property, or if at least half of LESSEE's property is to be sequestered. If instituted by or done with the consent of LESSEE, the same will be an immediate Event of Default. If instituted by another Person, the same will be an Event of Default if not dismissed, stayed, remedied or relinquished within sixty (60) days; PROVIDED, HOWEVER, that if such proceeding is stayed, then such proceeding will become an immediate Event of Default if such stay is removed or terminates and the proceeding is not dismissed, remedied or relinquished when such stay is removed or terminates. (p) any indebtedness for borrowed moneys or a guarantee or similar obligation owed by LESSEE with an unpaid balance of CONFIDENTIAL MATERIAL OMITTED is declared due before its stated maturity or LESSEE is in default of payment obligations CONFIDENTIAL MATERIAL OMITTED under any other purchase agreement, lease, conditional sale agreement or other agreement pursuant to which LESSEE has possession of any aircraft; (q) Eurocontrol has notified LESSOR that there are unpaid Eurocontrol charges due from LESSEE (unless such charges are being contested in good faith and by appropriate proceedings, an adequate bond has been provided and such proceedings do not involve any danger of the detention, interference with the use or operation, sale, forfeiture or loss of the Aircraft) and such charges remain outstanding for a period of thirty (30) days from the date of Eurocontrol's notice to LESSOR provided that such thirty (30) day grace period will not apply if there is a danger of detention, interference with the use or operation, sale, forfeiture or loss of the Aircraft; or (r) LESSEE is in default under any other lease or agreement between LESSEE and LESSOR and the same is not cured within its specified cure period. 25.3 LESSOR'S GENERAL RIGHTS. Upon the occurrence of any Event of Default, LESSOR may do all or any of the following at its option (in addition to such other rights and remedies which LESSOR may have by statute or otherwise but subject to any requirements of applicable Law): (a) terminate this Lease by giving written notice to LESSEE; (b) require that LESSEE immediately move the Aircraft to an airport or other location designated by LESSOR; (c) for LESSEE's account, do anything that may reasonably be required to cure any default and recover from LESSEE all reasonable costs, including legal fees and expenses incurred in doing so and Default Interest; (d) proceed as appropriate to enforce performance of this Lease and to recover any damages for the breach hereof, including the amounts specified in Article 25.5; (e) terminate this Lease by taking possession of the Aircraft or by serving notice requiring LESSEE to return the Aircraft to LESSOR at the location specified by LESSOR. If LESSOR takes possession of the Aircraft, it may enter upon LESSEE's premises where the Aircraft is located without liability. Upon repossession of the Aircraft, LESSOR will then be entitled to sell, lease or otherwise deal with the Aircraft as if this Lease had never been made. LESSOR will be entitled to the full benefit of its bargain with LESSEE; or (f) apply all or any portion of the Security Deposit and any other security deposits held by LESSOR pursuant to any other agreements between LESSOR and LESSEE to any amounts due. 25.4 DEREGISTRATION AND EXPORT OF AIRCRAFT. If an Event of Default has occurred and is continuing, LESSOR may take all steps necessary to deregister the Aircraft in and export the Aircraft from the State of Registration. 25.5 LESSEE LIABILITY FOR DAMAGES. If an Event of Default occurs, in addition to all other remedies available at law or in equity, LESSOR has the right to recover from LESSEE and LESSEE will pay LESSOR within two (2) Business Days after LESSOR's written demand, all of the following: (a) all amounts which are then due and unpaid hereunder and which become due prior to the earlier of LESSOR's recovery of possession of the Aircraft or LESSEE making an effective tender thereof; (b) any losses suffered by LESSOR because of LESSOR's inability to place the Aircraft on lease with another lessee or to otherwise utilize the Aircraft on financial terms as favorable to LESSOR as the terms hereof or, if LESSOR elects to dispose of the Aircraft, the funds arising from a sale or other disposition of the Aircraft are not as profitable to LESSOR as leasing the Aircraft in accordance with the terms hereof would have been (and LESSOR will be entitled to accelerate any and all Rent which would have been due from the date of LESSOR's recovery or repossession of the Aircraft through the Expiration Date); (c) all costs associated with LESSOR's exercise of its remedies hereunder, including but not limited to repossession costs, legal fees, Aircraft storage costs, Aircraft re-lease or sale costs and LESSOR's internal costs and expenses (including the cost of personnel time calculated based upon the compensation paid to the individuals involved on an annual basis and a general LESSOR overhead allocation); (d) any amount of principal, interest, fees or other sums paid or payable on account of funds borrowed in order to carry any unpaid amount; (e) any loss, premium, penalty or expense which may be incurred in repaying funds raised to finance the Aircraft or in unwinding any financial instrument relating in whole or in part to LESSOR's financing of the Aircraft; (f) any loss, cost, expense or liability sustained by LESSOR due to LESSEE's failure to redeliver the Aircraft in the condition required by this Lease; and (g) any other loss, damage, expense, cost or liability which LESSOR suffers or incurs as a result of the Event of Default and/or termination of this Lease, including an amount sufficient to fully compensate LESSOR for any loss of or damage to LESSOR's residual interest in the Aircraft caused by LESSEE's default. 25.6 WAIVER OF DEFAULT. By written notice to LESSEE, LESSOR may at its election waive any Default or Event of Default and its consequences and rescind and annul any prior notice of termination of this Lease. The respective rights of the parties will then be as they would have been had no Default or Event of Default occurred and no such notice been given. 25.7 PRESENT VALUE OF PAYMENTS. In calculating LESSOR's damages hereunder, upon an Event of Default all Rent and other amounts which would have been due hereunder during the Lease Term if an Event of Default had not occurred will be calculated on a present value basis using a discounting rate of six percent (6%) per annum discounted to the earlier of the date on which LESSOR obtains possession of the Aircraft or LESSEE makes an effective tender thereof. 25.8 USE OF "TERMINATION DATE". For avoidance of doubt, it is agreed that if this Lease terminates and the Aircraft is repossessed by LESSOR due to an Event of Default, then, notwithstanding the use of the term "Termination Date" in this Lease, the period of the Lease Term and the "Expiration Date" will be utilized in calculating the damages to which LESSOR is entitled pursuant to Article 25.5. For example, it is agreed and understood that LESSOR is entitled to receive from LESSEE the Rent and the benefit of LESSEE's insurance and maintenance of the Aircraft until expiration of the Lease Term. ARTICLE 26 NOTICES 26.1 MANNER OF SENDING NOTICES. Any notice, request or information required or permissible under this Lease will be in writing and in English. Notices will be delivered in person or sent by fax, letter (mailed airmail, certified and return receipt requested), or by expedited delivery addressed to the parties as set forth in Article 26.2. In the case of a fax, notice will be deemed received upon actual receipt (and the date of actual receipt will be deemed to be the date set forth on the confirmation of receipt produced by the sender's fax machine immediately after the fax is sent). In the case of a notice sent by expedited delivery, notice will be deemed received on the date of delivery set forth in the records of the Person which accomplished the delivery. If any notice is sent by more than one of the above listed methods, notice will be deemed received on the earliest possible date in accordance with the above provisions. 26.2 NOTICE INFORMATION. Notices will be sent: If to LESSOR: INTERNATIONAL LEASE FINANCE CORPORATION 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067, U.S.A. Attention: Legal Department Fax: 310-788-1990 Telephone: 310-788-1999 If to LESSEE: AMERICAN TRANS AIR, INC. 7337 West Washington Street Indianapolis International Airport Indianapolis, Indiana 46231 United States of America Attention: Ken Wolff Executive Vice President and Chief Financial Officer Fax: 317-240-7091 Telephone: 317-247-4000 or to such other places and numbers as either party directs in writing to the other party. ARTICLE 27 GOVERNING LAW AND JURISDICTION 27.1 CALIFORNIA LAW. This Lease is being delivered in the State of California and will in all respects be governed by and construed in accordance with the Laws of the State of California (notwithstanding the conflict Laws of the State of California). 27.2 NON-EXCLUSIVE JURISDICTION IN CALIFORNIA. As permitted by Section 410.40 of the California Code of Civil Procedure, the parties hereby irrevocably submit to the non-exclusive jurisdiction of the Federal District Court for the Central District of California and the State of California Superior or Municipal Court in Los Angeles, California. Nothing herein will prevent either party from bringing suit in any other appropriate jurisdiction. 27.3 SERVICE OF PROCESS. The parties hereby consent to the service of process (a) out of any of the courts referred to above, (b) in accordance with Section 415.40 of the California Code of Civil Procedure by mailing copies of the summons and complaint to the person to be served by certified or registered mail to the address set forth in Article 26.2, postage prepaid, return receipt requested or (c) in accordance with the Hague Convention, if applicable. 27.4 PREVAILING PARTY IN DISPUTE. If any legal action or other proceeding is brought in connection with or arises out of any provisions in this Lease, the prevailing party will be entitled to recover reasonable attorneys' fees and other costs incurred in such action or proceedings. The prevailing party will also, to the extent permissible by Law, be entitled to receive pre- and post-judgment Default Interest. 27.5 WAIVER. LESSEE AND LESSOR HEREBY WAIVE THE RIGHT TO A TRIAL BY JURY. LESSEE AND LESSOR HEREBY IRREVOCABLY WAIVE ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATED TO THIS LEASE BROUGHT IN ANY OF THE COURTS REFERRED TO IN ARTICLE 27.2, AND HEREBY FURTHER IRREVOCABLY WAIVE ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. ARTICLE 28 MISCELLANEOUS 28.1 PRESS RELEASES. The parties will give copies to one another, in advance if possible, of all news, articles and other releases provided to the public media regarding this Lease. 28.2 LESSOR PERFORMANCE FOR LESSEE. The exercise by LESSOR of its remedy of performing a LESSEE obligation hereunder is not a waiver of and will not relieve LESSEE from the performance of such obligation at any subsequent time or from the performance of any of its other obligations hereunder. 28.3 LESSOR'S PAYMENT OBLIGATIONS. Any obligation of LESSOR under this Lease to pay or release any amount to LESSEE is conditioned upon (a) all amounts then due and payable by LESSEE to LESSOR under this Lease or under any other agreement between LESSOR and LESSEE having been paid in full and (b) no Default or Event of Default having occurred and continuing hereunder at the time such payment or release of payment is payable to LESSEE. 28.4 APPLICATION OF PAYMENTS. Any amounts paid or recovered in respect of LESSEE liabilities hereunder may be applied to Rent, Default Interest, fees or any other amount due hereunder in such proportions, order and manner as LESSOR determines. 28.5 USURY LAWS. The parties intend to contract in strict compliance with the usury Laws of the State of California and, to the extent applicable, the U.S. Notwithstanding anything to the contrary in the Operative Documents, LESSEE will not be obligated to pay Default Interest or other interest in excess of the maximum non-usurious interest rate, as in effect from time to time, which may by applicable Law be charged, contracted for, reserved, received or collected by LESSOR in connection with the Operative Documents. During any period of time in which the then-applicable highest lawful rate is lower than the Default Interest rate, Default Interest will accrue and be payable at such highest lawful rate; however, if at later times such highest lawful rate is greater than the Default Interest rate, then LESSEE will pay Default Interest at the highest lawful rate until the Default Interest which is paid by LESSEE equals the amount of interest that would have been payable in accordance with the interest rate set forth in Article 5.5. 28.6 DELEGATION BY LESSOR. LESSOR may delegate to any Person(s) all or any of the rights, powers or discretion vested in it by this Lease and any such delegation may be made upon such terms and conditions as LESSOR in its absolute discretion thinks fit. 28.7 CONFIDENTIALITY. The Operative Documents and all non-public information obtained by either party about the other are confidential and are between LESSOR and LESSEE only and will not be disclosed by a party to third parties (other than to such party's auditors or legal advisors or as required in connection with any filings of this Lease in accordance with Article 13) without the prior written consent of the other party. If disclosure is required as a result of applicable Law, LESSEE and LESSOR will cooperate with one another to obtain confidential treatment as to the commercial terms and other material provisions of this Lease. 28.8 RIGHTS OF PARTIES. The rights of the parties hereunder are cumulative, not exclusive, may be exercised as often as each party considers appropriate and are in addition to its rights under general Law. The rights of one party against the other party are not capable of being waived or amended except by an express waiver or amendment in writing. Any failure to exercise or any delay in exercising any of such rights will not operate as a waiver or amendment of that or any other such right any defective or partial exercise of any such rights will not preclude any other or further exercise of that or any other such right and no act or course of conduct or negotiation on a party's part or on its behalf will in any way preclude such party from exercising any such right or constitute a suspension or any amendment of any such right. 28.9 FURTHER ASSURANCES. Each party agrees from time to time to do and perform such other and further acts and execute and deliver any and all such other instruments as may be required by Law, reasonably requested by the auditors of the other party or requested by the other party to establish, maintain or protect the rights and remedies of the requesting party or to carry out and effect the intent and purpose of this Lease. 28.10 USE OF WORD "INCLUDING". The term "INCLUDING" is used herein without limitation. 28.11 HEADINGS. All article and paragraph headings and captions are purely for convenience and will not affect the interpretation of this Lease. Any reference to a specific article, paragraph or section will be interpreted as a reference to such article, paragraph or section of this Lease. 28.12 INVALIDITY OF ANY PROVISION. If any of the provisions of this Lease become invalid, illegal or unenforceable in any respect under any Law, the validity, legality and enforceability of the remaining provisions will not in any way be affected or impaired. 28.13 NEGOTIATION. The terms of this Lease are agreed by LESSOR from its principal place of business in Los Angeles, California. 28.14 TIME IS OF THE ESSENCE. Time is of the essence in the performance of all obligations of the parties under this Lease and, consequently, all time limitations set forth in the provisions of this Lease will be strictly observed. 28.15 AMENDMENTS IN WRITING. The provisions of this Lease may only be amended or modified by a writing executed by LESSOR and LESSEE. 28.16 COUNTERPARTS. This Lease may be executed in any number of identical counterparts, each of which will be deemed to be an original, and all of which together will be deemed to be one and the same instrument when each party has signed and delivered one such counterpart to the other party. 28.17 DELIVERY OF DOCUMENTS BY FAX. Delivery of an executed counterpart of this Lease or of any other documents in connection with this Lease by fax will be deemed as effective as delivery of an originally executed counterpart. Any party delivering an executed counterpart of this Lease or other document by fax will also deliver an originally executed counterpart, but the failure of any party to deliver an originally executed counterpart of this Lease or such other document will not affect the validity or effectiveness of this Lease or such other document. 28.18 ENTIRE AGREEMENT. The Operative Documents constitute the entire agreement between the parties in relation to the leasing of the Aircraft by LESSOR to LESSEE and supersede all previous proposals, agreements and other written and oral communications in relation hereto. The parties acknowledge that there have been no representations, warranties, promises, guarantees or agreements, express or implied, except as set forth herein and in the other Operative Documents. IN WITNESS WHEREOF, LESSEE and LESSOR have caused this Lease to be executed by their respective officers as of September 5, 2000. INTERNATIONAL LEASE FINANCE AMERICAN TRANS AIR, INC. CORPORATION By: /s/ Grant Levy By: /s/ Kenneth K. Wolff Its: Vice President Its: Executive Vice President & CFO EXHIBIT A AIRCRAFT DESCRIPTION Aircraft Manufacturer and Model: Boeing 737-800 Specification: Seating Configuration: Manufacturer's Serial Number: 30035 Registration Mark: ____ Engine Manufacturer and Model: CFM56-7B-27 Engine Serial Numbers: _______ and ________ Engine Thrust Rating: 27,300 pounds Maximum Gross Takeoff Weight: 160,000 pounds EXHIBIT B AGENCY AGREEMENT (Limited Authority) Relating to Boeing 737-800 Aircraft THIS AGENCY AGREEMENT ("AGREEMENT") is made and entered into as of ____________________. BETWEEN: AMERICAN TRANS AIR, INC., a Indiana corporation whose address and principal place of business is at 7337 West Washington Street, Indianapolis International Airport, Indianapolis, Indiana 46231, United States of America ("AGENT") and INTERNATIONAL LEASE FINANCE CORPORATION, a California corporation, whose address and principal place of business is at 1999 Avenue of the Stars, 39th Floor, Los Angeles, California 90067, U.S.A. ("BUYER"). RECITAL The Boeing Company ("MANUFACTURER") and Buyer have entered into Purchase Agreement 1830, dated as of June 27, 1995 (such purchase agreement as may be amended in accordance with the provisions thereof is hereinafter referred to as the "PURCHASE AGREEMENT") under which Manufacturer has agreed to manufacture and sell and Buyer has agreed to purchase certain Boeing 737-800 aircraft. Buyer has agreed to lease one (1) of such aircraft bearing manufacturer's serial number 30035 (the "AIRCRAFT") to the Agent pursuant to an Aircraft Lease Agreement between Buyer and Agent dated as of September 5, 2000 (the "LEASE"). The Agent is engaged in business as a commercial air carrier and intends to lease the Aircraft from Buyer, and Buyer is desirous of utilizing the expertise of the Agent as Buyer's agent in all matters to which the Purchase Agreement relates with respect to the Aircraft except certain items as indicated below, and the Agent, as Buyer's agent, is willing to make such expertise available to Buyer. Accordingly, the parties agree as follows: 1. Buyer hereby appoints the Agent as Buyer's sole and exclusive agent with authority to perform the following, on behalf of Buyer, as the Agent may in its discretion determine to be necessary or desirable: (a) monitor Manufacturer's production, testing and delivery of the Aircraft in accordance with the Purchase Agreement and (b) do all such other things permitted by the Purchase Agreement related to the technical and engineering aspects of Manufacturer's production of the Aircraft, except Buyer limits Agent's authority to perform on behalf of Buyer on any defect that occurs during manufacture that is considered significant in nature by Buyer as measured by the criteria set forth below. Buyer retains the sole authority to perform on any defect meeting such criteria. (i) Deviations from the drawing configuration that could affect future modifications, maintenance, repair or overhaul of the Aircraft; (ii) Defects that are obvious appearance items; (iii) Rework that requires stress concurrence to satisfy Manufacturer's Material Review Board (MRB) requirements; (iv) A high quantity of defects normally considered minor on a singular basis; (v) Major rework requiring extensive repair or modification, E.G. replacement of ---- skin panels, extensive use of oversize fasteners, repair of damaged areas and significant structural modifications; (vi) Rework that affects the aerodynamic drag coefficient of the Aircraft; or (vii) Rework that involves areas known to be sensitive to Buyer. 2. Notwithstanding anything in the provisions of paragraph 1, nothing in this Agreement will confer authority upon or otherwise permit the Agent: (a) to exercise any power of termination under the Purchase Agreement or (b) to make any payments due from Buyer to Manufacturer or to receive on behalf of Buyer any payments due from Manufacturer under the Purchase Agreement, or to alter any of the terms and conditions of the Purchase Agreement or the Detail Specifications of the Aircraft. 3. Buyer will not revoke the appointment of and authority granted under this Agreement to the Agent unless a termination of the Purchase Agreement or Lease has occurred with respect to the Aircraft or the Agent has failed to perform a material obligation under this Agreement. Notice of any such revocation will be provided in accordance with the provisions of Article 14 of the Purchase Agreement and given to both Manufacturer and the Agent. 4. Manufacturer acknowledges the appointment of the Agent for the purpose set forth hereunder and Manufacturer and Buyer agree that due performance by Manufacturer or Agent of an obligation under the Purchase Agreement will constitute due satisfaction of such obligation by such party and Buyer agrees to be bound by the acts of the Agent. 5. Buyer and Agent agree to identify the technical organization and/or person(s) with the limited authority to act for Agent during production of the Aircraft. Buyer will, if possible, provide such identification to Manufacturer in writing, along with office space requirements for Agent, if required, prior to or at the time of Manufacturer's acknowledgment of this Agreement. 6. Nothing in this Agreement will subject Manufacturer to any liability under the Purchase Agreement which it would not otherwise be subject to, or modify Manufacturer's rights thereunder, or require Manufacturer to divest itself of title to or possession of Aircraft or any other property which is subject to the Purchase Agreement until payment therefor and delivery thereof in accordance with the Purchase Agreement. 7. None of the parties hereto will be entitled to assign to any third party any of their rights under this Agreement. 8. The Agent will not delegate to any third party the performance of the obligations imposed on it by this Agreement or appoint a sub-agent. 9. References to Manufacturer in this Agreement will include any wholly-owned subsidiary of Manufacturer to which Manufacturer assigns any of its rights and obligations under the Purchase Agreement pursuant to the terms and conditions thereof. 10. This Agreement will be governed by the laws of the State of California; however, the Purchase Agreement shall remain governed by the laws of the State of Washington. This Agreement has been executed by the parties hereto as of the day and year first above written. INTERNATIONAL LEASE FINANCE CORPORATION AMERICAN TRANS AIR, INC. By: By: Its: Its: The Boeing Company acknowledges the appointment of AMERICAN TRANS AIR, INC. as agent of International Lease Finance Corporation in connection with the above referenced Aircraft as set forth in this Agreement. THE BOEING COMPANY By: Its: EXHIBIT C CERTIFICATE OF INSURANCE [Refer to Aircraft Lease Agreement dated as of September 5, 2000 between LESSEE and LESSOR (the "Lease"). If applicable, insurance certificates from both the insurers and reinsurers will be provided. If there is a LESSOR's Lender, include references to it where appropriate after references to LESSOR.] To: INTERNATIONAL LEASE FINANCE CORPORATION ("LESSOR") ------ 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States Re: AMERICAN TRANS AIR, INC. ("LESSEE") Boeing 737-800 Manufacturer's Serial No.: 30035 Registration Mark: ____ (the "AIRCRAFT") The following security has subscribed to the insurance and/or reinsurance policies: [LIST COMPANIES & PERCENTAGES] THIS IS TO CERTIFY THAT, as Insurance Brokers, we have effected Fleet Insurance in respect of aircraft owned or operated by LESSEE (including the Aircraft), and that insurance in respect of the Aircraft is as specified below. AIRCRAFT HULL ALL RISKS COVERING: All risks of physical loss or damage to the Aircraft from any cause (subject only to the exclusions as specified below), for an Agreed Value of Aircraft in the amount of [list amount calculated in accordance with Article 18.1] DEDUCTIBLES: (CONFIDENTIAL MATERIAL OMITTED) each and every loss (or such lesser amount as generally applicable to the rest of LESSEE's 737-800 fleet). Not applicable to Total Loss/Constructive Total Loss or Arranged Total Loss GEOGRAPHICAL COVERAGE: Worldwide [subject to customary exclusions] AVIATION AND AIRLINE GENERAL THIRD PARTY LIABILITY COVERING: Aircraft Third Party, Passenger, Baggage, Cargo and Mail Liability and Airline General Third Party Liability (including Premises, Hangarkeepers and Products Liability) for combined single limit of not less than (CONFIDENTIAL MATERIAL OMITTED) (or such higher amount as LESSEE may carry generally on other 737-800 aircraft in its fleet) any one accident/occurrence (but in the aggregate in relation to Products Liability), extended to cover LESSEE's liability under the Lease to the extent of the risks covered by the policy including war and allied perils under Extended Coverage Endorsement as per AVN 52 subject only to exclusions as specified below GEOGRAPHICAL LIMITS: Worldwide [subject to customary exclusions] HULL WAR AND ALLIED PERILS COVERING: Hull War Risks as per LSW555.B, but including (a) confiscation or requisition (including by State of Registration and state where airline is domiciled), (b) hijacking or other unlawful seizure or wrongful exercise of control of the Aircraft or crew in flight (including any attempt at such seizure or control) and including "All Risks" Continuation Clause and Extortion Risks (including expenses) and covering claims excluded from Hull All Risks Policy while Aircraft outside Assured's control by reason of perils insured under this policy, for an Agreed Value of Aircraft in the amount of [list amount calculated in accordance with Article 18.1] DEDUCTIBLE: No deductible GEOGRAPHICAL LIMITS: Worldwide AIRCRAFT SPARES ALL RISKS INSURANCE COVERING: All risks of physical loss or damage to Aircraft Parts or spares or Engines at all times when removed from the Aircraft from whatever cause, subject only to the exclusions specified below, including the risks set down in AVN 48B other than paragraphs (a) and (b) thereof (but including paragraph (a) in respect of transit risks) for limits of not less than: CONFIDENTIAL MATERIAL OMITTED and covering: With respect to an Engine, an agreed value (CONFIDENTIAL MATERIAL OMITTED) or, with LESSOR's written concurrence, replacement cost With respect to Parts, replacement cost DEDUCTIBLE: (CONFIDENTIAL MATERIAL OMITTED) GEOGRAPHICAL COVERAGE: Worldwide INSURANCE REQUIRED BY MANUFACTURER LESSEE will carry the insurance required by Manufacturer in connection with LESSOR's assignment of Manufacturer's warranties and product support to LESSEE CONTRACTUAL INDEMNITY To the extent of the risks covered by the policies, LESSEE has insurance coverage for the indemnities agreed to by LESSEE pursuant to Article 16 of the Lease, subject to AVN67B or equivalent PERIOD OF COVERAGE (ALL POLICIES) From the Delivery Date of Aircraft to [END OF POLICY PERIOD] It is further certified that LESSOR has an interest in respect of the Aircraft under the Lease. Accordingly, with respect to losses occurring during the period from the Effective Date until the expiry of the Insurance or until the expiry or agreed termination of the Lease or until the obligations under the Lease are terminated by any action of the Insured or LESSOR and in consideration of the Additional Premium it is confirmed that the Insurance afforded by the Policy is in full force and effect and it is further agreed that the following provisions are specifically endorsed to the Policy. 1. UNDER THE HULL (ALL RISKS AND HULL WAR AND ALLIED RISKS) AND AIRCRAFT SPARES INSURANCES (a) In respect of any claim on the Aircraft that becomes payable on the basis of a Total Loss, payment of any settlement will be made to, or to the order of LESSOR as sole loss payee, up to the Agreed Value. With respect to repairable damage to an Aircraft or Engine, LESSOR will receive all insurance proceeds in excess of CONFIDENTIAL MATERIAL OMITTED provided that upon receipt by the insurance broker of written notice of a material default on the part of LESSEE (and until notice that it has been cured), all insurance proceeds which otherwise would be payable to LESSEE will be made directly to LESSOR. In respect of any other claim, payment of any settlement (net of any relevant policy deductible) will be made with such party(ies) as may be necessary to repair the Aircraft unless otherwise agreed after consultation between the Insurers and the Insured and, where necessary under the terms of the Lease, LESSOR. Such payments will only be made provided they are in compliance with all applicable laws and regulations. (b) Insurers agree on a 50/50 settlement in terms of AVS 103. (c) Insurers have no right to replace the Aircraft on a Total Loss (arranged, constructive or otherwise). (d) Insurers confirm that under the insurance policies, if the Insured installs an engine owned by a third party on the Aircraft, either (i) the hull insurance will automatically increase to such higher amount as is necessary in order to satisfy both LESSOR's requirement to receive the Agreed Value in the event of a Total Loss, Constructive Total Loss or Arranged Total Loss and the amount required by the third party engine owner, or (ii) separate additional insurance on such engine will attach in order to satisfy separately the requirements of the Insured to such third party engine owner. 2. UNDER THE LEGAL LIABILITY INSURANCE (a) Subject to the provisions of this Endorsement, the Insurance will operate in all respects as if a separate Policy had been issued covering each party insured hereunder, but this provision will not operate to include any claim arising howsoever in respect of loss or damage to the Aircraft insured under the Hull or Spares Insurance of the Insured. Notwithstanding the foregoing the total liability of Insurers in respect of any and all Insureds will not exceed the limits of liability stated in the Policy. (b) The Insurance provided hereunder will be primary and without right of contribution from any other insurance which may be available to LESSOR. 3. UNDER ALL INSURANCES (a) LESSOR, its successors and assigns, and (with respect to Aviation and Airline General Third Party Liability only) its directors, officers and employees for their respective rights and interests, are included as Additional Insureds. (b) The cover afforded to LESSOR by the Policy in accordance with this Endorsement will 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 Policy. (c) LESSOR will have no responsibility for premium and insurers will waive any right of set-off or counterclaim against LESSOR except in respect of outstanding premium in respect of the Aircraft, provided that Insurer may only set-off for premiums against the proceeds of the hull insurance for outstanding premiums in connection with hull all risks and hull war and allied perils insurance. (d) Upon payment of any loss or claim to or on behalf of LESSOR, Insurers will to the extent and in respect of such payment be thereupon subrogated to all legal and equitable rights of LESSOR indemnified hereby (but not against LESSOR). Insurers will not exercise such rights without the consent of those indemnified, such consent not to be unreasonably withheld. At the expense of Insurers LESSOR will do all things reasonably necessary to assist the Insurers to exercise said rights. (e) Except in respect of any provision for Cancellation or Automatic Termination specified in the Policy or any endorsement thereof, cover provided by this Endorsement may only be cancelled or materially altered in a manner adverse to LESSOR by the giving of not less than thirty (30) days notice in writing to LESSOR. Notice will be deemed to commence from the date such notice is given by the Insurers. Such notice will NOT, however, be given at normal expiry date of the Policy or any endorsement. 4. EXCEPT AS SPECIFICALLY VARIED OR PROVIDED BY THE TERMS OF THIS CERTIFICATE (a) LESSOR IS COVERED BY THE POLICY SUBJECT TO ALL TERMS, CONDITIONS, LIMITATIONS,WARRANTIES, EXCLUSIONS AND CANCELLATION PROVISIONS THEREOF. (b) THE POLICY WILL NOT BE VARIED BY ANY PROVISIONS CONTAINED IN THE LEASE WHICH PURPORT TO SERVE AS AN ENDORSEMENT OR AMENDMENT TO THE POLICY. SUBJECT (save as specifically stated in this Certificate) to policy terms, conditions, limitations and exclusions. Yours faithfully, [BROKERS] EXHIBIT D BROKERS' LETTER OF UNDERTAKING To: INTERNATIONAL LEASE FINANCE CORPORATION 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States Date: Our Ref: Re: AMERICAN TRANS AIR, INC. ("LESSEE") ------ Boeing 737-800 Manufacturer's Serial No.: ____ Registration Mark: ____ (the "AIRCRAFT") Dear Sirs: We confirm that insurance has been effected for the account of [LESSEE] (the "OPERATOR") covering all aircraft owned or operated by them, including the above-referenced aircraft (the "Aircraft"). [Also confirm, if applicable, the amount of any hull all risks or hull war and allied perils on the Aircraft which LESSEE is carrying in excess of the Agreed Value (which excess insurance would be payable to LESSEE). Such excess insurance may not exceed ten percent (10%) of the Agreed Value.] Pursuant to instructions received from the Operator and in consideration of your approving the arrangement of the Operator's "Fleet Policy" (under which the above-referenced Aircraft is insured) through the intermediary of ourselves as Brokers in connection with the insurance (the "INSURANCE") mentioned in our Certificate of Insurance (Reference No. [ ] dated [ ] and attached hereto), we undertake as follows: 1. In relation to the Hull and War Risks Insurance to hold to your order the insurance Slips or Contracts and any Policies which may be issued or any policies substituted (with your consent) therefor (but only insofar as the same relate to the Aircraft only) and the benefit of the Hull and War Risks Insurance thereunder, but subject to our requirements to operate the Fleet Policy insofar as it relates to any other aircraft insured thereunder. 2. To advise you of any of the following: (a) If any insurer cancels or gives notice of cancellation of any of the Insurance at least thirty (30) days (or such lesser period as may be available in the case of War and Allied Perils) before such cancellation is to take effect in respect of the Aircraft. (b) Of any act or omission or of any event (including non-payment of premium) of which we have knowledge or are notified and which might invalidate or render unenforceable in whole or in part any of the Insurance, insofar as the same relate to the Aircraft. (c) If we do not receive instructions to renew all or any of the Insurance at least thirty (30) days prior to their expiration. (d) If any of the Insurance are not renewed on the same terms (save as to premium and period of cover and as you might otherwise have notified us to be acceptable to you) seven (7) days prior to expiry thereof. The above undertakings are given subject to our continuing appointment for the time being as Insurance Brokers to the Operator. We also undertake to advise you if we cease to be Insurance Brokers to the Operator. Yours faithfully, EXHIBIT E ESTOPPEL AND ACCEPTANCE CERTIFICATE AMERICAN TRANS AIR, INC. ("LESSEE"), a corporation organized under the laws of Indiana does hereby represent, acknowledge, warrant and agree as follows: 1. LESSEE and INTERNATIONAL LEASE FINANCE CORPORATION, as LESSOR, have entered into an Aircraft Lease Agreement dated as of September 5, 2000 (hereinafter referred to as the "LEASE"). Words used herein with capital letters and not otherwise defined will have the meanings set forth in the Lease. 2. LESSEE has this ____ day of __________, ____ (Time: __________) at ____________________ received from LESSOR possession of: (a) One (1) Boeing 737-800 aircraft bearing Manufacturer's serial number ____ and U.S. registration mark ____, together with two (2) CFM56-7B-27 engines bearing manufacturer's serial numbers _______ and ________ (each of which has 750 or more rated take-off horsepower), all in airworthy condition. (b) All Aircraft Documentation, including the usual and customary manuals, logbooks, flight records and historical information regarding the Aircraft, Engines and Parts. 3. All of the foregoing has been delivered and accepted on the date set forth above to LESSEE's full satisfaction and pursuant to the terms and provisions of the Lease. 4. The Agreed Value of the Aircraft is US$_______________. 5. The amount of fuel on board at Delivery is __________ (circle one) pounds/kilos (________ gallons). 6. The Aircraft, Engines, Parts and Aircraft Documentation as described in the Lease have been fully examined by LESSEE and have been received in a condition fully satisfactory to LESSEE and in full conformity with the Lease in every respect. 7. The Lease is in full force and effect, LESSEE has no claims, offsets, deductions or set-off of any kind or nature in connection with the Lease, except for any claims against LESSOR set forth on the attached List of Discrepancies. 8. LESSOR's Lender may rely upon all of the foregoing in granting substantial financial accommodations to LESSOR and LESSEE understands and agrees that any funds being advanced by LESSOR's Lender will be made in reliance upon the foregoing. 9. LESSEE has obtained all required permits, authorizations, licenses and fees of the State of Registration or any Government Entity thereof necessary in order for LESSEE to operate the Aircraft as permitted by the terms of the Lease. Dated on the date set forth above AMERICAN TRANS AIR, INC. By: Title: ATTACHMENTS: 1. List of Aircraft Documentation 2. List of Loose Equipment 3. List of Discrepancies ATTACHMENT 1 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE LIST OF AIRCRAFT DOCUMENTATION MANUALS 1. FAA Approved Flight Manual 2. Airplane Flight Operation Manual 3. Aircraft Recover Manual 4. Quick Reference Handbook (QRH) 5. Weight and Balance Manual 6. Aircraft Fueling Manual 7. Aircraft Maintenance Manual (MM) 8. Aircraft Maintenance Manual Supplement 9. Ramp Maintenance Manual (RMM) 10. Cargo Loading Manual 11. Fault Reporting Manual (FRM) 12. Fault Isolation Manual (FIM) 13. Illustrated Parts Catalog (IPC) 14. Life Limited Parts Manual 15. Structural Repair Manual (SRM) 16. Master Minimum Equipment List 17. Wiring Diagram Manual (WD) 18. Wiring Practices Manual 19. System Schematics Manual 20. B.I.T.E. Manual 21. Non-Destructive Test Manual 22. Corrosion Prevention Manual 23. Component Maintenance Manual 24. APU Log Book 25. Engine Maintenance Manual 26. Engine Log Book 27. Engine Illustrated Parts Catalog 28. Engine Data Submittal Book 29. Engine Overhaul Manual 30. Power Plant Build-up Manual AIRCRAFT RECORDS AND HISTORICAL DOCUMENTS 1. Copies of original Certificates delivered by Boeing: a. Airworthiness Certificate for Export b. Radio installation conformity certificate c. Noise limitation certificate 2. Copies of original Documents delivered by Boeing: a. Airworthiness Directive Compliance list b. Aircraft inspection report c. Aircraft Readiness Log d. Weighing report 3. Copies of current Certificates: a. Airworthiness Certificate b. Noise limitation c. Radio license d. Interior material burn certificates e. Certificate of Export f. Aircraft deregistration confirmation e. Aircraft Registration 4. Letters signed and stamped by Quality Assurance: a. Current aircraft hours and cycles b. Current engines hours and cycles c. Accident and Incident report d. Summary of Maintenance Program e. AD compliance during the lease term 5. Aircraft log books and Aircraft readiness log. 6. Aircraft Hard Time (HT) inspection status. 7. One year forecast for HT inspection. 8. Aircraft Modification status, including service bulletins. 9. Last weighing report prior to redelivery. 10. AD compliance report with original signoffs. 11. Routine and non-routine job cards of the last "C" and "D" checks. 12. Past year pilots and maintenance discrepancies. 13. Major and Minor structural repairs with applicable approvals. 14. Compass Swing report of the last three years. 15. Cabin Configuration drawing (LOPA). 16. Emergency equipment location drawing. 17. Last X-RAYs ENGINES RECORDS 1. Last test cell run reports. 2. Life Limited Parts status and traceability. 3. AD compliance report with original signoffs. 4. Engine Modification/service bulletin/inspection report and applicableforms. 5. Last heavy maintenance records for each module. 6. Engine log books. 7. Engine removal history. 8. Past year trend monitoring reports. 9. Historical borescope reports. 10. Engine component report. APU RECORDS 1. APU status (FH, FC, limits). 2. Life limited Part status and traceability. 3. AD compliance with original signoffs. 4. Modification status. 5. Last heavy maintenance documents. 6. APU log books. 7. Last test cell report. COMPONENT RECORDS 1. Aircraft component inventory. 2. Hard time component inventory. 3. All serviceable tags. 4. Landing Gear status with last overhaul and life limited Part status. 5. AD compliance with original signoffs. 6. Modification status. ATTACHMENT 2 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE LIST OF LOOSE EQUIPMENT ATTACHMENT 3 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE LIST OF DISCREPANCIES EXHIBIT F OPINION OF COUNSEL TO BE GIVEN BY INDEPENDENT OUTSIDE COUNSEL OF LESSEE OR OTHER LAWYERS ACCEPTABLE TO LESSOR To: International Lease Finance Corporation 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States Gentlemen: This opinion is furnished to you pursuant to Article 7 of the Aircraft Lease Agreement dated as of September 5, 2000 (the "LEASE") between AMERICAN TRANS AIR, INC. ("LESSEE") and INTERNATIONAL LEASE FINANCE CORPORATION ("LESSOR"). Defined terms in this opinion are used herein as defined in the Lease. I have acted as counsel for LESSEE in connection with the preparation, execution and delivery of the Lease. In that connection I have examined: (a) The Lease and Estoppel and Acceptance Certificate; (b) The charter of LESSEE and all amendments thereto (the "CHARTER"); and (c) Such other documents, agreements and instruments, and such treaties, laws, rules, regulations, decrees and the like, as I have deemed necessary as a basis for the opinions hereinafter expressed. [ (d) All of the agreements and any amendments thereto between LESSEE and all other lessors and lenders of LESSEE covering other aircraft operated by LESSEE on which the Engines can be installed.] Based upon the foregoing and having regard for legal considerations which I deem relevant, I am of the opinion that: 1. LESSEE is a corporation duly incorporated, validly existing and in good standing under the Laws of Indiana. It has the corporate power and authority to carry on its business as presently conducted and to perform its obligations under the Lease. 2. No authorization, approval, consent, license or order of, or registration with, or the giving of notice to the Aviation Authority or any other regulatory body or authority is required for the valid authorization, execution, delivery and performance by LESSEE of the Lease. 3. The Lease and the Estoppel and Acceptance Certificate have each been duly authorized, executed and delivered by LESSEE. Each such instrument is a valid, enforceable and binding obligation of LESSEE except as enforceability may be limited by bankruptcy, insolvency, reorganization or other Laws of general application affecting the enforcement of creditors' rights. 4. The execution and delivery of the Lease and the Estoppel and Acceptance Certificate, the consummation by LESSEE of the transactions contemplated therein and compliance by LESSEE with the terms and provisions thereof do not contravene any Law applicable to LESSEE, or result in any breach of or constitute any default under or result in the creation of any lien, charge or encumbrance upon any property of LESSEE, under any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which LESSEE is a party or by which LESSEE or its properties or assets is bound. 5. Except for any filing or recording that may be required with the [NAME OF AIRCRAFT REGISTER] and except for [DESCRIBE SUCH OTHER FILINGS OR RECORDINGS], no filing or recording of any instrument or document (including the filing of any financial statement) is necessary under the laws of the U.S. in order for the Lease to constitute a valid and perfected lease of record relating to the Aircraft, it being understood that such counsel expresses no opinion as to the nature of LESSOR's title to the Aircraft on the Delivery Date. 6. LESSEE holds all licenses, certificates and permits from applicable governmental authorities in the U.S. necessary for the conduct of its business as a certificated air carrier and performance of its obligations under the Lease. 7. To my knowledge, there are no suits or proceedings pending or threatened against LESSEE before any Government Entity against or affecting LESSEE which are reasonably likely to be adversely determined and, if adversely determined, would have a material adverse effect on the financial condition or business of LESSEE or its ability to perform under the Lease, except as described in the filings provided to LESSOR pursuant to Article 22. 8. The obligations of LESSEE under the Lease are direct, general and unconditional obligations of LESSEE and rank or will rank at least PARI PASSU with all other present and future unsecured and unsubordinated obligations (including contingent obligations) of LESSEE, with the exception of such obligations as are mandatorily preferred by law. 9. LESSEE, under the laws of the U.S. or of any other jurisdiction affecting LESSEE, is subject to private commercial law and suit. Neither LESSEE nor its properties or assets have the right of immunity from suit or execution on the grounds of sovereignty in such jurisdictions and the performance by LESSEE of its obligations under the Lease constitute commercial acts done for commercial purposes. 10. There is no applicable usury or interest limitation Law in Indiana which may restrict the recovery of payments in accordance with the Lease. 11. LESSOR will not violate any Law or become liable to any tax in Indiana or the U.S. by reason of entering into or performing its obligations under the Lease and it is not necessary to establish a place of business in Indiana in order to enforce any provisions of the Lease. Very truly yours, EXHIBIT G ASSIGNMENT OF RIGHTS (AIRFRAME) [DATE] Boeing Commercial Airplane Group P.O. Box 3707 Seattle, Washington 98124-2207 Attention: Vice President-Contracts Mail Code 21-34 Subject: Full Assignment of Rights and Obligations - International Lease Finance Corporation as Lessor and AMERICAN TRANS AIR, INC. as Lessee of Model Boeing 737-800 aircraft bearing manufacturer's serial number 30035 Ladies and Gentlemen: In connection with International Lease Finance Corporation's lease to AMERICAN TRANS AIR, INC. ("Lessee") of a Boeing aircraft (more fully described below), reference is made to the following documents: A. Purchase Agreement 1830, dated as of June 27, 1995, between The Boeing Company ("Boeing") and International Lease Finance Corporation ("ILFC") (the "Boeing Agreement") under which ILFC purchased a certain Boeing Model 737-800 aircraft bearing manufacturer's serial number 30035 (the "Aircraft"). B. Aircraft Lease Agreement (the "Lease") for the Aircraft dated as of September 5, 2000 between ILFC and Lessee. Capitalized terms used herein without definition will have the same meaning as in the Boeing Agreement. In connection with ILFC's lease of the Aircraft under the Lease, ILFC is transferring to Lessee certain rights of ILFC related to the Aircraft under the Boeing Agreement. To accomplish this transfer of rights, as authorized by the provisions of the Boeing Agreement: 1. Lessee acknowledges that it has received copies of the following specific provisions of the Boeing Agreement applicable to the Aircraft and agrees to be bound by and comply with all the terms, conditions, and limitations contained in such provisions, including without limitation the disclaimer and release, exclusion of liabilities, indemnity and insurance provisions thereof: Boeing Agreement Article 6 - Excusable Delay 6.1 General Article 10 - Assignment, Resale or Lease 10.1 Assignment 10.3 Sale by Buyer after Delivery 10.4 Lease by Buyer after Delivery 10.5 No Increase in Boeing Liability 10.6 Exculpatory or Indemnity Clause in Post-delivery Sale or Lease Article 12 - Product Assurance; Disclaimer and Release; Exclusion of Liabilities; Customer Support; Indemnification and Insurance (in its entirety) Article 14 - Contractual Notices and Requests Article 15 - Miscellaneous 15.4 Governing Law Exhibit B - Product Assurance Document Part A Boeing Warrant Part B Warranty Repairs and Modifications by Buyer Part C Boeing Service Life Policy Part D Boeing Indemnity Against Patent Infringement Part D-1 Boeing Indemnity Against Copyright Infringement Part E Supplier Warranties and Patent Indemnities Part G Boeing Interface Commitment Part H General Exhibit C-1 - Customer Support Document Part B Boeing Customer Support Services Part D Technical Data and Documents Part E Buyer's Indemnification of Boeing and Insurance Part F Alleviation or Cessation of Performance Exhibit E - Buyer Furnished Equipment Provisions Document Paragraph 8 Indemnification of Boeing Paragraph 9 Patent Indemnity Paragraph 10 Definitions Letter Agreement No. 1830-3 - Seller Purchased Equipment Paragraph 6 Buyer's Indemnification of Boeing 2. Lessee recognizes that Boeing's obligation to provide training, support and services to Lessee pursuant to Exhibit C of the Boeing Agreement is conditioned on the receipt by Boeing of evidence of compliance by Lessee with the insurance requirements set forth in paragraph 2 of Part E of Exhibit C or in such other form as may be satisfactory to Boeing, prior to the commencement of such training, support and services. 3. ILFC reserves to itself all rights, claims and interests it may have under the Boeing Agreement not expressly assigned to Lessee hereunder. ILFC will remain responsible to Boeing for any amounts with respect to the Aircraft owed to Boeing under the Boeing Agreement prior to the effective date of this letter, including any amounts owed by ILFC to Boeing under the specific articles and paragraphs of the Boeing Agreement referenced in paragraph 1 above based upon events or incidents relating to the Aircraft occurring prior to the effective date of this letter. 4. ILFC hereby assigns to Lessee the sole authority to exercise in Lessee's name all rights and powers of ILFC with respect to the Aircraft under the specific portions of the Boeing Agreement referenced in paragraph 1 above. Such authorization will continue until Boeing receives from ILFC written notice that the Lease has been cancelled or terminated, addressed to Boeing's Vice President, Contracts, P.O. Box 3707, MC 21-34, Seattle, Washington 98124-2207, U.S.A. Until Boeing receives such notice, Boeing will be entitled to deal exclusively with Lessee with respect to the Aircraft under the specific portions of the Boeing Agreement referenced in paragraph 1 above and, with respect to the rights, powers, duties or obligations under such portions of the Boeing Agreement, any and all actions taken by Lessee or agreements entered into by Lessee during the period prior to Boeing's receipt of such notice will be final and binding on ILFC. 5. Lessee hereby accepts the authorization set forth in paragraph 4 above and agrees to be bound by and to comply with all the terms, conditions and limitations of the portion of the Boeing Agreement referenced in paragraph 1 above. 6. This Assignment may be signed by the parties hereto in separate counterparts, each of which when executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. 7. This Assignment shall be governed by, and construed in accordance with,the laws of the State of Washington, including all matters of construction, validity and performance. We request that Boeing, upon receipt of this letter, acknowledge receipt thereof and the transfer of rights set forth above by signing the acknowledgment and forwarding one copy of this letter to each of the undersigned. IN WITNESS WHEREOF, the parties hereto have caused this Assignment Agreement to be duly executed as of the dates written below. INTERNATIONAL LEASE FINANCE AMERICAN TRANS AIR, INC., as Lessee CORPORATION, as Lessor and Buyer By: By: Its: Its: BOEING ACKNOWLEDGMENT AND CONSENT TO ASSIGNMENT Receipt of the above letter is acknowledged and transfer of certain rights as described above under the Boeing Agreement is confirmed, effective as of this date. THE BOEING COMPANY By: Its: Date: EXHIBIT H ASSIGNMENT OF RIGHTS (ENGINES) [DATE] CFM INTERNATIONAL, INC. 1 Neumann Way, F-17 Cincinnati, Ohio 45215 Attention: Commercial Contracts - Warranty Assignment Administrator Dear Warranty Assignment Administrator: Reference is hereby made to that Consent to Assignment made as of April 29, 1988 (the "CONSENT TO ASSIGNMENT"), by and between CFM INTERNATIONAL, INC. ("CFMI") and INTERNATIONAL LEASE FINANCE CORPORATION ("ILFC"). Terms defined in the Consent to Assignment are used herein with the same meaning as in the Consent to Assignment. As of ________________ ___, ______, ILFC has assigned all of its rights and interest in, to and under the Engine Warranties to AMERICAN TRANS AIR, INC. ("ASSIGNEE") in connection with its lease to Assignee of a Boeing 737-800 aircraft (the "AIRCRAFT") together with two (2) CFMI Model CFM56-7B-27 engines bearing Manufacturer's Serial Numbers _______ and ________ (the "ENGINES") as of the date each such Engine was delivered to Assignee. Such assignment shall be effective from such date until ILFC notifies CFMI that the Lease has been cancelled or terminated. The Assignee has accepted such assignment and all the limitations and liabilities pertaining to the Engine Warranties as stated in the provisions of the GTA listed in Schedule 2 to the Consent to Assignment. A copy of the aforesaid assignment is attached hereto. Very truly yours, INTERNATIONAL LEASE FINANCE CORPORATION By: Title: cc: Ruben M. Cabrera Director, Commercial Contracts ASSIGNMENT OF WARRANTIES [DATE] In consideration of AMERICAN TRANS AIR, INC. ("LESSEE") leasing from International Lease Finance Corporation ("ILFC") one (1) Boeing 737-800 aircraft together with two (2) CFMI Model CFM56-7B-27 engines bearing manufacturer's serial numbers _______ and ________, it is hereby agreed as follows: 1. ILFC hereby assigns and transfers to Lessee all of ILFC's respective rights and interest in and to and in and under the Engine Warranties set forth in and subject to the limitations and liabilities set forth in Exhibit B Warranty, Section X (the "ENGINE WARRANTIES") of CFM International, Inc. - ILFC General Terms Agreement No. 6-3987 dated 22 June 1984 (the "GTA") during the term of such leases so long as Lessee is not in default thereunder. 2. Lessee hereby accepts such assignment including all the limitations and liabilities pertaining to said Engine Warranties as stated in the provisions of Exhibit B Warranty, Section X of the GTA. 3. This Agreement shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors and assigns to the extent permitted by the GTA and hereunder. 4. This Agreement shall be governed by and construed in accordance with the laws of the State of California. 5. This Agreement may be executed in any number of counterparts, each of which when executed and delivered is an original but all of which taken together constitute one and the same instrument and any party may execute this Agreement by signing any counterpart. IN WITNESS WHEREOF, the authorized representative of the parties hereto have executed this Agreement as of the day and year first above written. For and on behalf of For and on behalf of INTERNATIONAL LEASE FINANCE AMERICAN TRANS AIR, INC. CORPORATION By: By: Its: Its: EXHIBIT I RETURN ACCEPTANCE RECEIPT Date: _________________ ___, ____ 1. AMERICAN TRANS AIR, INC., as LESSEE, and INTERNATIONAL LEASE FINANCE CORPORATION, as LESSOR, have entered into an Aircraft Lease Agreement dated as of September 5, 2000 (the "LEASE"). Words used herein with capital letters and not otherwise defined will have the meanings set forth in the Lease. 2. LESSOR has this ____ day of __________, ____ (Time: __________) at ____________________ received from LESSEE possession of: (a) One (1) Boeing 737-800 Aircraft bearing Manufacturer's serial number ____, together with two (2) CFM56-7B-27 engines bearing manufacturer's serial numbers _______ and ________, and all Parts attached thereto and thereon in an airworthy condition and (b) All Aircraft Documentation, including the usual and customary manuals, logbooks, flight records and historical information regarding the Aircraft, Engines and Parts, as listed in the Document Receipt attached hereto. 3. The Airframe, Engines and Parts had the following hours/cycles at return: (a) AIRFRAME: Total hours: _______________ Total Landings: _______________ (b) ENGINES: POSITION SERIAL NO. TOTAL HOURS TOTAL CYCLES HRS/CYCLES SINCE LAST SHOP VISIT Time Remaining to Next LIFE LIMITED PART REMOVAL PART NAME HOURS CYCLES MSN MSN (c) APU: MSN __________ Total hours: __________ ______ hours/ ______ cycles since last Overhaul ______ hours/ ______ cycles remaining on APU life-limited Parts (d) LANDING GEARS: POSITION SERIAL NO. Total Hrs/Cycles since Date of last HRS/CYCLES LAST OVERHAUL OVERHAUL Nose Right Main Left Main (e) FUEL ON BOARD AT RETURN: ______ (circle one) pounds/kilos (______ gallons) 4. Other technical information regarding the Aircraft and its components are correctly set forth on the Technical Evaluation Report (in the form of Exhibit L) attached hereto. 5. The above specified aircraft, engines and documentation are hereby accepted by LESSOR subject to correction by LESSEE (or procurement by LESSEE at LESSEE's cost) as soon as reasonably possible of the discrepancies specified in Attachment 2 hereto. 6. Subject to the following paragraph, the leasing of the Aircraft by LESSOR to LESSEE pursuant to the Lease is hereby terminated without prejudice to LESSEE's continuing obligations under the Lease including, without limitation, paragraph 6 above and Articles 10.5, 15 and 16. 7. LESSEE represents and warrants that during the term of the Lease all maintenance and repairs to the Airframe and Engines were performed in accordance with the requirements contained in the Lease. LESSEE further confirms that all of its obligations under the Lease whether accruing prior to the date hereof or which survive the termination of the Lease by their terms and accrue after the date hereof, will remain in full force and effect until all such obligations have been satisfactorily completed. 8. This Return Acceptance Supplement is executed and delivered by the parties in [place]. IN WITNESS WHEREOF, the parties hereto have caused this Return Acceptance Receipt to be executed in their respective corporate names by their duly authorized representatives as of the day and year first above written. INTERNATIONAL LEASE FINANCE CORPORATION AMERICAN TRANS AIR, INC. By: By: Its: Its: ATTACHMENTS: 1. List of Aircraft Documentation 2. List of Loose Equipment 3. List of Discrepancies 4. Engine Maximum Power Assurance Test Conditions and Results 5. Dent and Damage Chart 6. Form of No Accident/Incident Letter 7. Technical Evaluation Report (in the form of Exhibit L) ATTACHMENT 1 TO RETURN ACCEPTANCE RECEIPT LIST OF AIRCRAFT DOCUMENTATION [The (a) manuals and (b) Aircraft records and historical documents set forth below are to be returned with the Aircraft in a current, up-to-date and correct status] MANUALS 1. FAA Approved Flight Manual 2. Airplane Flight Operation Manual 3. Aircraft Recover Manual 4. Quick Reference Handbook (QRH) 5. Weight and Balance Manual 6. Aircraft Fueling Manual 7. Aircraft Maintenance Manual (MM) 8. Aircraft Maintenance Manual Supplement 9. Ramp Maintenance Manual (RMM) 10. Cargo Loading Manual 11. Fault Reporting Manual (FRM) 12. Fault Isolation Manual (FIM) 13. Illustrated Parts Catalog (IPC) 14. Life Limited Parts Manual 15. Structural Repair Manual (SRM) 16. Master Minimum Equipment List 17. Wiring Diagram Manual (WD) 18. Wiring Practices Manual 19. System Schematics Manual 20. B.I.T.E. Manual 21. Non-Destructive Test Manual 22. Corrosion Prevention Manual 23. Component Maintenance Manual 24. APU Log Book 25. Engine Maintenance Manual 26. Engine Log Book 27. Engine Illustrated Parts Catalog 28. Engine Data Submittal Book 29. Engine Overhaul Manual 30. Power Plant Build-up Manual AIRCRAFT RECORDS AND HISTORICAL DOCUMENTS 1. Copies of original Certificates delivered by Boeing: a. Airworthiness Certificate for Export b. Radio installation conformity certificate c. Noise limitation certificate 2. Copies of original Documents delivered by Boeing: a. Airworthiness Directive Compliance list b. Aircraft inspection report c. Aircraft Readiness Log d. Weighing report 3. Copies of current Certificates: a. Airworthiness Certificate b. Noise limitation c. Radio license d. Interior material burn certificates e. Certificate of Export f. Aircraft deregistration confirmation e. Aircraft Registration 4. Letters signed and stamped by Quality Assurance: a. Current aircraft hours and cycles b. Current engines hours and cycles c. Accident and Incident report d. Summary of Maintenance Program e. AD compliance during the lease term 5. Aircraft log books and Aircraft readiness log. 6. Aircraft Hard Time (HT) inspection status. 7. One year forecast for HT inspection. 8. Aircraft Modification status, including service bulletins. 9. Last weighing report prior to redelivery. 10. AD compliance report with original signoffs. 11. Routine and non-routine job cards of the last "C" and "D" checks. 12. Past year pilots and maintenance discrepancies. 13. Major and Minor structural repairs with applicable approvals. 14. Compass Swing report of the last three years. 15. Cabin Configuration drawing (LOPA). 16. Emergency equipment location drawing. 17. Last X-RAYs ENGINES RECORDS 1. Last test cell run reports. 2. Life Limited Parts status and traceability. 3. AD compliance report with original signoffs. 4. Engine Modification/service bulletin/inspection report and applicable forms. 5. Last heavy maintenance records for each module. 6. Engine log books. 7. Engine removal history. 8. Past year trend monitoring reports. 9. Historical borescope reports. 10. Engine component report. APU RECORDS 1. APU status (FH, FC, limits). 2. Life limited Part status and traceability. 3. AD compliance with original signoffs. 4. Modification status. 5. Last heavy maintenance documents. 6. APU log books. 7. Last test cell report. COMPONENT RECORDS 1. Aircraft component inventory. 2. Hard time component inventory. 3. All serviceable tags. 4. Landing Gear status with last overhaul and life limited Part status. 5. AD compliance with original signoffs. 6. Modification status. ATTACHMENT 2 TO RETURN ACCEPTANCE RECEIPT LIST OF LOOSE EQUIPMENT ATTACHMENT 3 TO RETURN ACCEPTANCE RECEIPT LIST OF DISCREPANCIES ATTACHMENT 4 TO RETURN ACCEPTANCE RECEIPT ENGINE MAXIMUM POWER ASSURANCE TEST CONDITIONS AND RESULTS ATTACHMENT 5 TO RETURN ACCEPTANCE RECEIPT DENT AND DAMAGE CHART ATTACHMENT 6 TO RETURN ACCEPTANCE RECEIPT FORM OF NO ACCIDENT/INCIDENT LETTER EXHIBIT J MONTHLY REPORT (SEE FOLLOWING SHEET) MONTHLY AIRCRAFT UTILIZATION AND STATUS REPORT Page 1 of 2 Report Due Date: To: INTERNATIONAL LEASE FINANCE CORPORATION Fax: (310) 788-1990 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067, United States Attn: Finance Department From: AMERICAN TRANS AIR, INC. Contact: Fax: AIRCRAFT TYPE: BOEING 737-800 ENGINE TYPE: CFM56-7B-27 REGISTRATION: ____ SERIAL NUMBER: ____ MONTH OF: NOTE: PLEASE RECORD TIME IN HOURS AND MINUTES NOT DECIMALS. Aircraft Total Time Since New As Of Last Month: Hours: Min: Aircraft Total Time Since New: Hours: Min: Aircraft Total Cycles Since New: Cycles: Airframe Hours Flown During Month: Hours: Min: Airframe Cycles/Landings During Month: Cycles: Time Remaining to "D" or Heavy Maintenance Check: HOURS OR US$ PER CYCLES FLOWN HOUR OR DURING MONTH (AS CYCLE (AS APPLICABLE) X APPLICABLE) = RESERVES TOTAL AIRFRAME: HRS: X = TOTAL LANDING GEAR: HRS: X = TOTAL APU: HRS: X = ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles(for Engine LLP Reserves): x = ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles (for Engine LLP Reserves): x = ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles (for LLP x = Reserves): ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles (for Engine LLP Reserves): x = TOTAL AMOUNT OF RESERVES (US$) PAID THIS MONTH: US$ Monthly Aircraft Utilization and Status Report From: AMERICAN TRANS AIR, INC. PAGE 2 OF 2 ENGINE SERIAL NUMBER: ENGINE SERIAL NUMBER: ORIGINAL POSITION: ORIGINAL POSITION: ACTUAL LOCATION: ACTUAL LOCATION: CURRENT THRUST RATING: CURRENT THRUST RATING: HOURS:/MIN: HOURS:/MIN: Total Time Since New As Of Total Time Since New As Of Last Month: Last Month: Total Time Since New: Total Time Since New: Total Cycles Since New: Total Cycles Since New: Hours Flown During Month: Hours Flown During Month: Cycles During Month: Cycles During Month: IMPORTANT: IF ILFC-OWNED ENGINE IS REMOVED OR INSTALLED ON ANOTHER AIRCRAFT, IT MUST BE REPORTED MONTHLY ON THIS FORM. EXHIBIT K AIRCRAFT DOCUMENTATION AIRCRAFT RECORDS 1. Copies of original Certificates delivered by Boeing: a. Airworthiness Certificate for Export b. Radio installation conformity certificate c. Noise limitation certificate 2. Copies of original Documents delivered by Boeing: a. Airworthiness Directive Compliance list b. Aircraft inspection report c. Aircraft Readiness Log d. Weighing report 3. Copies of current Certificates: a. Airworthiness Certificate b. Noise limitation c. Radio license d. Interior material burn certificates e. Certificate of Export f. Aircraft deregistration confirmation e. Aircraft Registration 4. Letters signed and stamped by Quality Assurance: a. Current aircraft hours and cycles b. Current engines hours and cycles c. Accident and Incident report d. Summary of Maintenance Program e. AD compliance during the lease term 5. Aircraft log books and Aircraft readiness log. 6. Aircraft Hard Time (HT) inspection status. 7. One year forecast for HT inspection. 8. Aircraft Modification status, including service bulletins. 9. Last weighing report prior to redelivery. 10. AD compliance report with original signoffs. 11. Routine and non-routine job cards of the last "C" and "D" checks. 12. Past year pilots and maintenance discrepancies. 13. Major and Minor structural repairs with applicable approvals. 14. Compass Swing report of the last three years. 15. Cabin Configuration drawing (LOPA). 16. Emergency equipment location drawing. 17. Last X-RAYs ENGINES RECORDS 1. Last test cell run reports. 2. Life Limited Parts status and traceability. 3. AD compliance report with original signoffs. 4. Engine Modification/service bulletin/inspection report and applicable forms. 5. Last heavy maintenance records for each module. 6. Engine log books. 7. Engine removal history. 8. Past year trend monitoring reports. 9. Historical borescope reports. 10. Engine component report. APU RECORDS 1. APU status (FH, FC, limits). 2. Life limited Part status and traceability. 3. AD compliance with original signoffs. 4. Modification status. 5. Last heavy maintenance documents. 6. APU log books. 7. Last test cell report. COMPONENT RECORDS 1. Aircraft component inventory. 2. Hard time component inventory. 3. All serviceable tags. 4. Landing Gear status with last overhaul and life limited Part status. 5. AD compliance with original signoffs. 6. Modification status. EXHIBIT L TECHNICAL EVALUATION REPORT (SEE FOLLOWING SHEETS) EX-10.6(M) 28 file074.txt AMTRAN, INC., 2000 10-K, EXHIBIT 10.6(M) AIRCRAFT LEASE AGREEMENT Dated as of September 5, 2000 BETWEEN AMERICAN TRANS AIR, INC. as LESSEE and INTERNATIONAL LEASE FINANCE CORPORATION as LESSOR ------------------------------------------------------------------------------- Aircraft Make and Model: New Boeing 737-800 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Aircraft Manufacturer's Serial Number: 30038 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Aircraft Registration Mark: Per Estoppel and Acceptance Certificate ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Make and Model of Engines: CFM56-7B-27 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Serial Numbers of Engines: Per Estoppel and Acceptance Certificate ------------------------------------------------------------------------------- NEW BOEING 737-800 AIRCRAFT NO. 14 TABLE OF CONTENTS ARTICLE 1 SUMMARY OF TRANSACTION.........................................2 1.1 Description of Aircraft........................................2 1.2 Scheduled Delivery Date and Location...........................2 1.3 Lease Term.....................................................2 1.4 Security Deposit...............................................2 1.5 Transaction Fee................................................2 1.6 Rent During Lease Term.........................................2 1.7 Country of Aircraft Registration...............................4 1.8 Maintenance Program............................................4 1.9 Agreed Value of Aircraft.......................................4 1.10 LESSOR's Bank Account..........................................4 ARTICLE 2 DEFINITIONS....................................................5 2.1 General Definitions............................................5 2.2 Specific Definitions...........................................9 ARTICLE 3 PLACE AND DATE OF DELIVERY....................................11 3.1 Place of Delivery.............................................11 3.2 Scheduled Delivery Date.......................................11 3.3 Delivery subject to Manufacturer Delivery.....................11 3.4 No LESSOR Liability...........................................11 3.5 Total Loss of Aircraft prior to Delivery......................11 3.6 Cancellation for Delay........................................11 ARTICLE 4 LEASE TERM....................................................12 4.1 Lease Term....................................................12 4.2 "Expiration Date".............................................12 4.3 "Termination Date"............................................12 ARTICLE 5 SECURITY DEPOSIT, TRANSACTION FEE, RENT AND OTHER PAYMENTS......................................................13 5.1 Security Deposit..............................................13 5.2 Transaction Fee...............................................14 5.3 Rent..........................................................14 5.4 LESSOR's Bank Account.........................................15 5.5 Default Interest..............................................16 5.6 No Deductions or Withholdings.................................16 5.7 Value Added Taxes.............................................16 5.8 Net Lease.....................................................17 5.9 LESSOR Performance of LESSEE Obligation.......................18 5.10 Consideration for Rent and other Amounts......................18 ARTICLE 6 INVOLVEMENT WITH AIRCRAFT MANUFACTURER........................19 6.1 LESSEE Selection of Aircraft..................................19 6.2 Agency Agreement..............................................19 6.3 Procurement of BFE............................................19 6.4 Assignment of Training........................................19 6.5 LESSEE Inspection of Aircraft.................................19 6.6 Aircraft at Delivery..........................................19 6.7 Delivery of the Aircraft to LESSEE............................20 6.8 LESSEE Acceptance of Aircraft.................................20 ARTICLE 7 PRE-DELIVERY, DELIVERY AND POST-DELIVERY DOCUMENTARY AND OTHER REQUIREMENTS............................21 7.1 Pre-Delivery Requirements.....................................21 7.2 Delivery Requirements.........................................22 7.3 Post-Delivery Requirements....................................23 ARTICLE 8 DISCLAIMERS...................................................24 8.1 "As Is, Where Is".............................................24 8.2 Waiver of Warranty of Description.............................24 8.3 LESSEE Waiver.................................................25 8.4 Conclusive Proof..............................................25 8.5 No LESSOR Liability for Losses................................25 8.6 No Liability to Repair or Replace.............................25 8.7 No Waiver.....................................................26 ARTICLE 9 MANUFACTURERS' AND VENDORS' WARRANTIES........................27 9.1 Warranties....................................................27 9.2 Reassignment..................................................27 ARTICLE 10 OPERATION OF AIRCRAFT.........................................28 10.1 Costs of Operation............................................28 10.2 Compliance with Laws..........................................28 10.3 Training......................................................28 10.4 No Violation of Insurance Policies............................28 10.5 Flight Charges................................................29 ARTICLE 11 SUBLEASES.....................................................30 11.1 No Sublease without LESSOR Consent............................30 11.2 LESSOR Costs..................................................30 11.3 Any Approved Sublease.........................................30 11.4 Assignment of Sublease........................................30 11.5 Continued Responsibility of LESSEE............................30 ARTICLE 12 MAINTENANCE AND USE OF AIRCRAFT...............................31 12.1 General Obligation............................................31 12.2 Specific Obligations..........................................31 12.3 Replacement of Parts..........................................32 12.4 Removal of Engines............................................33 12.5 Pooling of Engines and Parts..................................34 12.6 Installation of Engines on other aircraft.....................34 12.7 Modifications.................................................35 12.8 Performance of Work by Third Parties..........................36 12.9 Reporting Requirements........................................36 12.10 Information Regarding Maintenance Program.....................36 12.11 LESSOR Rights to Inspect Aircraft.............................36 ARTICLE 13 TITLE AND REGISTRATION........................................37 13.1 Title to the Aircraft During Lease Term.......................37 13.2 Registration of Aircraft......................................37 13.3 Filing of this Lease..........................................37 13.4 Evidence of Registration and Filings..........................37 ARTICLE 14 IDENTIFICATION PLATES.........................................38 14.1 Airframe Identification Plates................................38 14.2 Engine Identification Plates..................................38 ARTICLE 15 TAXES.........................................................39 15.1 General Obligation of LESSEE..................................39 15.2 Exceptions to Indemnity.......................................39 15.3 After-Tax Basis...............................................40 15.4 Claims and Contests...........................................40 15.5 Refunds.......................................................41 15.6 Cooperation in Filing Tax Returns.............................41 ARTICLE 16 INDEMNITIES...................................................42 16.1 General Indemnity.............................................42 16.2 Exceptions to General Indemnities.............................43 16.3 After-Tax Basis...............................................44 16.4 Timing of Payment.............................................44 16.5 Subrogation...................................................44 16.6 Notice........................................................44 16.7 Refunds.......................................................44 16.8 Defense of Claims.............................................45 16.9 Survival of Obligation........................................45 ARTICLE 17 INSURANCE.....................................................46 17.1 Categories of Insurance.......................................46 17.2 Insurance for Indemnities.....................................46 17.3 Insurance required by Manufacturer............................46 17.4 Renewal.......................................................46 17.5 Assignment of Rights by LESSOR................................46 17.6 Deductibles...................................................46 17.7 Other Insurance...............................................47 17.8 Information...................................................47 17.9 Currency......................................................47 17.10 Grounding of Aircraft.........................................47 17.11 Failure to Insure.............................................47 17.12 Limit on Hull in favor of LESSEE..............................47 17.13 Marketplace Limitations.......................................48 ARTICLE 18 LOSS, DAMAGE AND REQUISITION..................................49 18.1 Definitions...................................................49 18.2 Notice of Total Loss..........................................50 18.3 Total Loss of Aircraft or Airframe............................50 18.4 Surviving Engine(s)...........................................51 18.5 Total Loss of Engine and not Airframe.........................51 18.6 Other Loss or Damage..........................................52 18.7 Copy of Insurance Policy......................................53 18.8 Government Requisition........................................53 18.9 Conveyance to LESSEE..........................................53 ARTICLE 19 CRAF PROGRAM..................................................54 19.1 Dedication to CRAF............................................54 19.2 Notice to LESSOR..............................................54 19.3 Requisition of Engine.........................................54 19.4 Government Indemnification....................................54 19.5 No Geographic Limits..........................................54 19.6 Notice of Default.............................................55 19.7 Receipt of Payments...........................................55 ARTICLE 20 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE...........56 20.1 Representations and Warranties................................56 20.2 Covenants.....................................................58 ARTICLE 21 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSOR...........61 21.1 Representations and Warranties................................61 21.2 Covenant of Quiet Enjoyment...................................62 ARTICLE 22 FINANCIAL AND RELATED INFORMATION.............................63 ARTICLE 23 RETURN OF AIRCRAFT............................................64 23.1 Date of Return................................................64 23.2 Technical Report..............................................64 23.3 Return Location...............................................64 23.4 Full Aircraft Documentation Review............................64 23.5 Aircraft Inspection...........................................64 23.6 Certificate of Airworthiness Matters..........................65 23.7 General Condition of Aircraft at Return.......................66 23.8 Checks Prior to Return........................................69 23.9 Part Lives....................................................72 23.10 Export and Deregistration of Aircraft.........................74 23.11 LESSEE's Continuing Obligations...............................75 23.12 Airport and Navigation Charges................................75 23.13 Return Acceptance Certificate.................................76 23.14 Indemnities and Insurance.....................................76 ARTICLE 24 ASSIGNMENT....................................................77 24.1 No Assignment by LESSEE.......................................77 24.2 Sale or Assignment by LESSOR..................................77 24.3 LESSOR's Lender...............................................79 24.4 LESSEE Cooperation............................................79 24.5 Protections...................................................79 ARTICLE 25 DEFAULT OF LESSEE.............................................80 25.1 LESSEE Notice to LESSOR.......................................80 25.2 Events of Default.............................................80 25.3 LESSOR's General Rights.......................................82 25.4 Deregistration and Export of Aircraft.........................83 25.5 LESSEE Liability for Damages..................................83 25.6 Waiver of Default.............................................84 25.7 Present Value of Payments.....................................84 25.8 Use of "Termination Date".....................................84 ARTICLE 26 NOTICES.......................................................85 26.1 Manner of Sending Notices.....................................85 26.2 Notice Information............................................85 ARTICLE 27 GOVERNING LAW AND JURISDICTION................................86 27.1 California Law................................................86 27.2 Non-Exclusive Jurisdiction in California......................86 27.3 Service of Process............................................86 27.4 Prevailing Party in Dispute...................................86 27.5 Waiver........................................................86 ARTICLE 28 MISCELLANEOUS.................................................87 28.1 Press Releases................................................87 28.2 LESSOR Performance for LESSEE.................................87 28.3 LESSOR's Payment Obligations..................................87 28.4 Application of Payments.......................................87 28.5 Usury Laws....................................................87 28.6 Delegation by LESSOR..........................................87 28.7 Confidentiality...............................................88 28.8 Rights of Parties.............................................88 28.9 Further Assurances............................................88 28.10 Use of Word "including".......................................88 28.11 Headings......................................................88 28.12 Invalidity of any Provision...................................88 28.13 Negotiation...................................................88 28.14 Time is of the Essence........................................89 28.15 Amendments in Writing.........................................89 28.16 Counterparts..................................................89 28.17 Delivery of Documents by Fax..................................89 28.18 Entire Agreement..............................................89 EXHIBIT A AIRCRAFT DESCRIPTION..........................................91 EXHIBIT B AGENCY AGREEMENT..............................................92 EXHIBIT C CERTIFICATE OF INSURANCE......................................96 EXHIBIT D BROKERS' LETTER OF UNDERTAKING...............................102 EXHIBIT E ESTOPPEL AND ACCEPTANCE CERTIFICATE..........................104 EXHIBIT F OPINION OF COUNSEL...........................................111 EXHIBIT G ASSIGNMENT OF RIGHTS (AIRFRAME)..............................114 EXHIBIT H ASSIGNMENT OF RIGHTS (ENGINES)...............................119 EXHIBIT I RETURN ACCEPTANCE RECEIPT....................................123 EXHIBIT J MONTHLY REPORT...............................................134 EXHIBIT K AIRCRAFT DOCUMENTATION.......................................138 EXHIBIT L TECHNICAL EVALUATION REPORT..................................140 AIRCRAFT LEASE AGREEMENT THIS AIRCRAFT LEASE AGREEMENT is made and entered into as of September 5, 2000. BETWEEN: AMERICAN TRANS AIR, INC., a Indiana corporation whose address and principal place of business is at 7337 West Washington Street, Indianapolis International Airport, Indianapolis, Indiana 46231, United States of America ("LESSEE") and INTERNATIONAL LEASE FINANCE CORPORATION, a California corporation whose address and principal place of business is at 1999 Avenue of the Stars, 39th Floor, Los Angeles, California 90067, United States of America ("LESSOR"). The subject matter of this Lease is one (1) new Boeing 737-800 aircraft. In consideration of and subject to the mutual covenants, terms and conditions contained in this Lease, LESSOR hereby agrees to lease to LESSEE and LESSEE hereby agrees to lease from LESSOR the aircraft and the parties further agree as follows: ARTICLE 1 SUMMARY OF TRANSACTION The information in this Article 1 is a summary of the lease transaction between LESSEE and LESSOR. It is set forth for the convenience of the parties only and will not be deemed in any way to amend, detract from or simplify the other provisions of this Lease. 1.1 DESCRIPTION OF AIRCRAFT One new Boeing 737-800 aircraft 1.2 SCHEDULED DELIVERY DATE AND LOCATION In the month of (CONFIDENTIAL MATERIAL OMITTED) at Seattle, Washington 1.3 LEASE TERM 15 years 1.4 SECURITY DEPOSIT (CONFIDENTIAL MATERIAL OMITTED) 1.5 TRANSACTION FEE (CONFIDENTIAL MATERIAL OMITTED) 1.6 RENT DURING LEASE TERM Payable monthly in advance and equal to the sum of: (a The following amounts for the following years of the Lease Term: LEASE PERIOD MONTHLY RENTAL AMOUNT* (CONFIDENTIAL MATERIAL OMITTED) *The above base rent is expressed in January 1999 U.S.Dollars and will increase in the following amounts for the following periods: PERIOD ESCALATION FACTOR (CONFIDENTIAL MATERIAL OMITTED) 1.7 COUNTRY OF AIRCRAFT REGISTRATION U.S. 1.8 MAINTENANCE PROGRAM LESSEE's Maintenance Program 1.9 AGREED VALUE OF AIRCRAFT (CONFIDENTIAL MATERIAL OMITTED) The Agreed Value is expressed in March 2001 U.S. Dollars and will increase in accordance with Manufacturer's announced escalation rate from March 1, 2001 to the Delivery Date. On each annual renewal date of LESSEE's insurance policy commencing on the renewal date following the first anniversary of the Lease Term, the Agreed Value will decrease by two percent (2.0%) of the then existing Agreed Value. 1.10 LESSOR'S BANK ACCOUNT (Confidential Material Omitted) ARTICLE 2 DEFINITIONS Except where the context otherwise requires, the following words have the following meanings for all purposes of this Lease. The definitions are equally applicable to the singular and plural forms of the words. Any agreement defined below includes each amendment, modification, supplement and waiver thereto in effect from time to time. 2.1 GENERAL DEFINITIONS. "ACT" means the Federal Aviation Act of 1958, as amended from time to time, or any successor act thereto. "AIRCRAFT" means the Airframe, two (2) Engines, Parts and Aircraft Documentation, collectively. As the context requires, "Aircraft" may also mean the Airframe, any Engine, any Part, the Aircraft Documentation or any part thereof individually. For example, in the context of return to LESSOR the term "Aircraft" means the Airframe, Engines, Parts and Aircraft Documentation collectively, yet in the context of LESSEE not creating any Security Interests other than Permitted Liens on the Aircraft, the term "Aircraft" means any of the Airframe, any Engine, any Part or the Aircraft Documentation individually. "AIRCRAFT DOCUMENTATION" means all (a) log books, Aircraft records, manuals and other documents provided to LESSEE in connection with the Aircraft, (b) documents listed in Exhibits E and K and (c) any other documents required to be maintained during the Lease Term by the Aviation Authority, LESSEE's Maintenance Program and this Lease. "AIRFRAME" means the airframe listed in the Estoppel and Acceptance Certificate executed at Delivery together with all Parts relating thereto (except Engines or engines). "AIRWORTHINESS DIRECTIVES" or "ADS" means all airworthiness directives (or equivalent) of the FAA and the Aviation Authority applicable to the Aircraft. "APU" means the auxiliary power unit of the Aircraft. "AVIATION AUTHORITY" means the FAA or any Government Entity which under the Laws of the U.S. from time to time has control over civil aviation or the registration, airworthiness or operation of aircraft in the U.S. If the Aircraft is registered in a country other than the U.S., "Aviation Authority" means the agency which regulates civil aviation in such other country. "AVIATION DOCUMENTS" means any or all of the following which at any time may be obtainable from the Aviation Authority: (a) if required, a temporary certificate of airworthiness from the Aviation Authority allowing the Aircraft to be flown after Delivery to the State of Registration, (b) an application for registration of the Aircraft with the appropriate authority in the State of Registration, (c) the certificate of registration for the Aircraft issued by the State of Registration, (d) a full certificate of airworthiness for the Aircraft specifying transport category (passenger), (e) an air transport license, (f) an air operator's certificate, (g) such recordation of LESSOR's title to the Aircraft and interest in this Lease as may be available in the State of Registration and (h) all such other authorizations, approvals, consents and certificates in the State of Registration as may be required to enable LESSEE lawfully to operate the Aircraft. "BANKRUPTCY CODE" means The Bankruptcy Reform Act of 1978 (11 U.S.C. ss.ss. 101-1330), as amended or supplemented from time to time, and any successor statute, and all of the rules and regulations issued or promulgated in connection therewith. "BASIC ENGINE" means those units and components of the Engine which are used to induce and convert fuel/air mixture into thrust/power; to transmit power to the fan and accessory drives; to supplement the function of other defined systems external to the Engine; and to control and direct the flow of internal lubrication, plus all essential accessories as supplied by the Engine manufacturer. The nacelle, installed components related to the Aircraft systems, thrust reversers, QEC and the primary flight nozzle are excluded. "BFE" means any equipment which is to be provided by the purchaser of the Aircraft (whether actually provided by LESSOR as buyer-furnished equipment or Manufacturer as seller-purchased equipment). "BUSINESS DAY" means a day other than a Saturday or Sunday on which the banks in Indianapolis, Indiana and in the city where LESSOR's Bank is located are open for the transaction of business of the type required by this Lease. "CREDITOR" means any lessor, owner, bank, lender, mortgagee or other Person which is the owner of or has any interest in an aircraft engine or aircraft operated by LESSEE. "CREDITOR AGREEMENT" means the applicable agreement between a Creditor and LESSEE or between Creditors pursuant to which such Creditor owns, leases or has an interest in either an aircraft operated by LESSEE on which an Engine may be installed or in an aircraft engine which may be installed on the Airframe. "DEFAULT" means any event which, upon the giving of notice, the lapse of time and/or a relevant determination, would constitute an Event of Default. "DELIVERY" means the delivery of the Aircraft from LESSOR to LESSEE pursuant to Articles 3 and 6. "DELIVERY DATE" means the date on which Delivery takes place. "DOLLARS" and "$" means the lawful currency of the U.S. "ENGINE" means (a) each of the engines listed on the Estoppel and Acceptance Certificate; or (b) any replacement engine acquired by LESSOR and leased to LESSEE pursuant to Article 18.5 following a Total Loss of an Engine; including in each case all Parts installed in or on any of such engines at Delivery (or substituted, renewed or replacement Parts in accordance with this Lease) so long as title thereto is or remains vested in LESSOR in accordance with the terms of Article 12.3. "EVENT OF DEFAULT" means any of the events referred to in Article 25.2. "FAA" means the Federal Aviation Administration of the Department of Transportation or any successor thereto under the Laws of the U.S. "FARS" means the U.S. Federal Aviation Regulations embodied in Title 14 of the U.S. Code of Federal Regulations, as amended from time to time, or any successor regulations thereto. "GENEVA CONVENTION" means the Convention on the International Recognition of Rights in Aircraft signed in Geneva, Switzerland on June 19, 1948. "GOVERNMENT ENTITY" means any (a) national, state or local government, (b) board, commission, department, division, instrumentality, court, agency or political subdivision thereof and (c) association, organization or institution of which any of the entities listed in (a) or (b) is a member or to whose jurisdiction any such entity is subject. "LANDING GEAR" means the installed main and nose landing gear, components and their associated actuators, side braces and parts. "LAW" means any (a) statute, decree, constitution, regulation, order or any directive of any Government Entity, (b) treaty, pact, compact or other agreement to which any Government Entity is a signatory or party and (c) judicial or administrative interpretation or application of any of the foregoing. "LEASE" means this Aircraft Lease Agreement, together with all Exhibits hereto. "LESSOR'S LIEN" means any Security Interest created by LESSOR, or arising from a claim against LESSOR completely unrelated to this Lease or the other Operative Documents. "MAINTENANCE PROGRAM" means LESSEE's maintenance program as approved by the Aviation Authority or such other maintenance program as LESSOR may, in its discretion, accept in writing. "MANUFACTURER" means The Boeing Company, a Delaware corporation. "MPD" means the Maintenance Planning Document published by Manufacturer and applicable to the Aircraft. "OVERHAUL" means the full reconditioning of the Aircraft, an Engine, APU, Landing Gear, module or Part, as the case may be, in which such equipment has been fully disassembled; cleaned; thoroughly inspected; and returned to the highest standard specified by the applicable manufacturer's manual. "PART" means the APU, any part, component, appliance, system module, engine module, accessory, material, instrument, communications equipment, furnishing, LESSEE-furnished or LESSOR-purchased equipment or other item of equipment (other than complete Engines or engines) for the time being installed in or attached to the Airframe or any Engine or which, having been removed from the Airframe or any Engine, remains the property of LESSOR. "PERMITTED INSTITUTION" means any Person (other than a commercial air carrier, a commercial aircraft operator, a freight forwarder, or an affiliate of any of the foregoing), with either: (a) a combined capital and surplus or net worth of at least; or (b) have a credit rating on the majority of its unsecured debt which is at least equal to BBB or its equivalent from Standard and Poor's Rating Group, a division of The McGraw-Hill Companies, Inc. or Moody's Investors Service, Inc. "PERMITTED LIEN" means (a) LESSOR's Liens; (b) Security Interests arising in the ordinary course of LESSEE's business for Taxes either not yet due and payable or, if due and payable, being contested in good faith in accordance with Article 15.4; (c) materialmen's, mechanics', workmen's, repairmen's, employees' liens or similar Security Interests arising by operation of Law after the Delivery Date in the ordinary course of LESSEE's business for amounts which are either not yet due or are being contested in good faith by appropriate proceedings (and for which adequate reserves have been made or, when required in order to pursue such proceedings, an adequate bond has been provided) so long as such proceedings do not involve any material danger of sale, forfeiture or loss of the Aircraft; (d) the rights of LESSOR and any LESSOR's Lender and the rights of LESSEE under this Lease and the other Operative Documents; (e) the rights of others under agreements or arrangements to the extent permitted by Articles 10 and 11.5; and (f) any Security Interest against which LESSEE causes to be provided a bond in such amount and under such terms and conditions as are reasonably satisfactory to LESSOR. "PERSON" means any individual, firm, partnership, joint venture, trust, corporation, limited liability company, Government Entity, committee, department, authority or any body, incorporated or unincorporated, whether having distinct legal personality or not. "PRIME RATE" means the rate of interest from time to time announced by Bank of America Illinois in Chicago, Illinois as its prime commercial lending rate. "SECURITY INTEREST" means any encumbrance or security interest, however and wherever created or arising including (without prejudice to the generality of the foregoing) any right of ownership, security, mortgage, pledge, charge, encumbrance, lease, lien, statutory or other right in rem, hypothecation, title retention, attachment, levy, claim or right of possession or detention. "STATE OF REGISTRATION" means the U.S. or such other country or state of registration of the Aircraft as LESSOR may, in its absolute discretion, approve in writing. "U.S." means the United States of America. "U.S. AIR CARRIER" means any U.S. air carrier who is a Citizen of the U.S. holding an air carrier operating certificate issued by the Secretary of Transportation pursuant to chapter 447 of the Act for aircraft capable of carrying 10 or more individuals or 6000 pounds or more of cargo, and as to whom there is in force an air carrier operating certificate issued pursuant to FAR Part 121, or who may operate as an air carrier by certification or otherwise under any successor or substitute provisions therefor or in the absence thereof. 2.2 SPECIFIC DEFINITIONS. The following terms are defined in the Articles referenced below: TERMS ARTICLE Agreed Value 18.1 CRAF Program 19.1 CRAF Program Requisition 19.1 Period Default Interest 5.5 Delivery Location 3.1 Expenses 16.1 Expiration Date 4.3 Indemnities 16.1 Lease Term 4.1 LESSEE Customization 5.3.1 Costs LESSOR's Assignee 24.2.1 LESSOR's Bank 5.4 LESSOR's Lender 24.3 Manufacturer's Escalation 5.3.1 Rate Modifications 12.7.2 Net Total Loss Proceeds 18.1 Operative Documents 20.1.3 Rent 5.3.1 Return Check 23.8.1 Scheduled Delivery Date 3.2 Security Deposit 5.1.1 Taxes 15.1 Termination Date 4.3 Total Loss 18.1 Total Loss Date 18.1 Total Loss Proceeds 18.1 Transaction Fee 5.2 ARTICLE 3 PLACE AND DATE OF DELIVERY 3.1 PLACE OF DELIVERY. LESSOR will deliver the Aircraft to LESSEE at Manufacturer's facility at Seattle, Washington or such other place as may be agreed in writing between the parties (the "DELIVERY LOCATION"). 3.2 SCHEDULED DELIVERY DATE. As of the date of this Lease, delivery of the Aircraft from Manufacturer to LESSOR is scheduled to occur in the month of (CONFIDENTIAL MATERIAL OMITTED). LESSOR will not agree to reschedule such delivery without LESSEE's prior written consent. LESSOR will notify LESSEE from time to time and in a timely manner of the exact date on which LESSOR expects such delivery to take place (the "SCHEDULED DELIVERY DATE"). 3.3 DELIVERY SUBJECT TO MANUFACTURER DELIVERY. LESSOR and LESSEE expressly acknowledge that Delivery of the Aircraft to LESSEE is subject to and conditioned upon, and is to occur simultaneously with, delivery of the Aircraft by Manufacturer to LESSOR. 3.4 NO LESSOR LIABILITY. LESSOR will not be liable for any loss or expense, or any loss of profit, arising from any delay or failure in Delivery to LESSEE unless such delay or failure arises as a consequence of the willful misconduct of LESSOR, and in no event will LESSOR be liable for any delay or failure which is caused by any breach or delay on the part of Manufacturer or any BFE supplier. 3.5 TOTAL LOSS OF AIRCRAFT PRIOR TO DELIVERY. If a Total Loss of the Aircraft occurs prior to Delivery, neither party will have any further liability to the other except that LESSOR will return to LESSEE the Security Deposit in accordance with Article 5.1.3 and any prepaid Rent. 3.6 CANCELLATION FOR DELAY. Promptly after LESSOR becomes aware that in Manufacturer's opinion a delay will cause Delivery to be delayed beyond (CONFIDENTIAL MATERIAL OMITTED) LESSOR will notify LESSEE. By written notice given within ten (10) Business Days after LESSEE's receipt of such LESSOR notice, either party may by written notice to the other party terminate this Lease and this Lease will terminate on the date of receipt of such notice. In the event of such termination, neither party will have any further liability to the other party except that LESSOR will return to LESSEE the Security Deposit in accordance with Article 5.1.3 and any prepaid Rent. If neither party gives notice of termination within such ten (10) Business Days, both parties lose all right to terminate under this Article 3.6 unless otherwise agreed in writing by the parties. ARTICLE 4 LEASE TERM 4.1 LEASE TERM. The term of leasing of the Aircraft will commence on the Delivery Date and continue for a term of fifteen (15) years ("LEASE TERM"). 4.2 "EXPIRATION DATE". "EXPIRATION DATE" means the date on which LESSEE is required to redeliver the Aircraft to LESSOR in the condition required by this Lease on the last day of the Lease Term. 4.3 "TERMINATION DATE". This Lease may in fact terminate on any of the dates set forth below: (a the Expiration Date, provided LESSEE returns the Aircraft to LESSOR on the Expiration Date in the condition required by Article 23; or (b a date earlier than the Expiration Date, if: (i there is a Total Loss of the Aircraft prior to Delivery pursuant to Article 3.5; (ii cancellation of this Lease occurs pursuant to Article 3.6; (iii there is a Total Loss of the Aircraft and payment is made to LESSOR in accordance with Article 18.3; or (iv an Event of Default occurs and LESSOR repossesses the Aircraft or otherwise terminates this Lease pursuant to Article 25.3. (c a date later than the Expiration Date, if: (i an Event of Default occurs hereunder by LESSEE returning the Aircraft in the condition required by this Lease after the Expiration Date; or (ii an Event of Default occurs and LESSOR repossesses the Aircraft or otherwise terminates this Lease pursuant to Article 25.3. The "TERMINATION DATE" is the date on which this Lease terminates because one of the above has occurred. ARTICLE 5 SECURITY DEPOSIT, TRANSACTION FEE, RENT AND OTHER PAYMENTS 5.1 SECURITY DEPOSIT. 5.1.1 (CONFIDENTIAL MATERIAL OMITTED) 5.1.2 The Security Deposit may be commingled with LESSOR's general funds and any interest earned on such Security Deposit will be for LESSOR's account. If the Security Deposit is reduced below the required amount by application to meet LESSEE's unperformed obligations under this Lease, LESSEE will replenish the Security Deposit within ten (10) days after LESSOR's demand therefor. The Security Deposit will serve as security for the performance by LESSEE of its obligations under this Lease and any other agreements between LESSEE and LESSOR relating to aircraft, engines, aircraft equipment or the extension of credit and may be applied by LESSOR upon the occurrence of a Default or Event of Default hereunder or of a default by LESSEE under any such other agreements. 5.1.3 Upon termination of this Lease in accordance with Article 4.3 other than if an Event of Default has occurred and is continuing, LESSOR will return to LESSEE the amount of the Security Deposit then held by LESSOR (so long as no default by LESSEE exists under any other agreement between LESSEE and LESSOR relating to aircraft, engines or aircraft equipment or the extension of credit by LESSOR to LESSEE), without interest, less an amount determined by LESSOR to be a reasonable estimate of the costs, if any, which LESSOR will incur to remedy any unperformed obligations of LESSEE under this Lease, including the correction of any discrepancies from the required condition of the Aircraft on return of the Aircraft. 5.2 TRANSACTION FEE. Within two (2) Business Days after execution of this Lease, LESSEE will pay LESSOR a nonrefundable transaction fee (CONFIDENTIAL MATERIAL OMITTED) 5.3 RENT. 5.3.1 LESSEE will pay LESSOR the following amounts monthly in advance as rent for the Aircraft (the "RENT"): (a The following amounts for the following years of the Lease Term: LEASE PERIOD MONTHLY RENTAL AMOUNT* ------------ --------------------- (CONFIDENTIAL MATERIAL OMITTED) *The above base rent is expressed in January 1999 U.S. dollars and will increase in the following amounts for the following periods (the "MANUFACTURER'S ESCALATION RATE"): PERIOD ESCALATION FACTOR ------------ --------------------- (CONFIDENTIAL MATERIAL OMITTED) Any increases to the above base Rent during the Lease Term will be calculated immediately prior to Delivery. 5.3.2 The first payment of Rent during the Lease Term will be paid prior to the Scheduled Delivery Date. Each subsequent payment of Rent will be due monthly thereafter no later than the same day of the month as the Delivery Date of the Aircraft except that, if such day is not a Business Day, the Rent will be due on the immediately preceding Business Day. If Delivery occurred on the 29th, 30th or 31st of the month and in any given month during the Lease Term there is no such corresponding date, Rent will be payable on the last Business Day of such month. 5.4 LESSOR'S BANK ACCOUNT. The Security Deposit, Transaction Fee, Rent and any other payment due under this Lease will be paid by wire transfer of immediately available U.S. Dollar funds to LESSOR's bank account at: (CONFIDENTIAL MATERIAL OMITTED) or to such other bank account in the U.S. as LESSOR may from time to time designate by written notice ("LESSOR'S BANK"). When it is stated in this Lease that an installment of the Security Deposit, the monthly Rent or any other payment is due or must be paid or made by LESSEE by a specific date, then such payment actually must be received by LESSOR's Bank on or before such specific date, even if, in order for such payment to be received by LESSOR's Bank by such specific date, LESSEE must initiate the wire transfer prior to such specific date. 5.5 DEFAULT INTEREST. If LESSOR's Bank does not receive the Rent or any other amount on or before the specific date when due, LESSOR will suffer loss and damage the exact nature and amount of which are difficult or impossible to ascertain. LESSEE will pay LESSOR as supplemental Rent (by way of agreed compensation and not as a penalty) interest on any due and unpaid amounts payable by LESSEE under this Lease. Interest will be calculated at a per annum rate (based on a 360 day year) which is equal to three percent (3%) plus the Prime Rate in effect on the date on which the amount was originally due for the period from the date the amount originally was due through the date the amount actually is received at LESSOR's Bank or, in the case of LESSOR's performance of LESSEE's obligations hereunder, from the date of payment by LESSOR through the date of LESSEE's repayment to LESSOR ("DEFAULT INTEREST"). Default Interest will accrue on a day-to-day basis and be compounded monthly. 5.6 NO DEDUCTIONS OR WITHHOLDINGS. All payments by LESSEE under this Lease, including the Security Deposit, Transaction Fee, Rent, Default Interest, fees, indemnities or any other item, will be made in full without any deduction or withholding whether in respect of set-off, counterclaim, duties, or Taxes (as defined in Article 15) imposed in the State of Registration or any jurisdiction from which such payments are made unless LESSEE is prohibited by Law from doing so, in which event LESSEE will gross up the payment amount such that the net payment received by LESSOR after any deduction or withholding equals the amounts called for under this Lease. LESSEE's requirement to pay the amounts required by this Article 5.6 is subject to the exceptions provided in Article 15.2. 5.7 VALUE ADDED TAXES. The Rent and other amounts payable by LESSEE under this Lease are exclusive of any value added tax, turnover tax or similar tax or duty. 5.8 NET LEASE. 5.8.1 This Lease is a net lease and LESSEE's obligation to pay Rent and make other payments in accordance with this Lease will be absolute and unconditional under any and all circumstances and regardless of other events, including the following: (a) any right of set-off, counterclaim, recoupment, defense or other right (including any right of reimbursement) which LESSEE may have against LESSOR, Manufacturer, the Engine manufacturer or any other person for any reason, including any claim LESSEE may have for the foregoing; (b) unavailability or interruption in use of the Aircraft for any reason, including a requisition thereof or any prohibition or interference with or other restriction against LESSEE's use, operation or possession of the Aircraft (whether by Law or otherwise), any defect in title, airworthiness, merchantability, fitness for any purpose, condition, design, specification or operation of any kind or nature of the Aircraft, the ineligibility of the Aircraft for any particular use or trade or for registration under the Laws of any jurisdiction or Total Loss of the Aircraft; (c) insolvency, bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, liquidation, receivership, administration or similar proceedings by or against LESSOR, LESSEE, Manufacturer, the Engine manufacturer or any other Person; (d) invalidity or unenforceability or lack of due authorization of or other defect in this Lease; (e) failure or delay on the part of any party to perform its obligations under this Lease; or (f) any other circumstance which but for this provision would or might have the effect of terminating or in any other way affecting any obligation of LESSEE hereunder. 5.8.2 Nothing in Article 5.8 will be construed to limit LESSEE's rights and remedies in the event of LESSOR's breach of its warranty of quiet enjoyment set forth in Article 21.2 or to limit LESSEE's rights and remedies to pursue in a court of law any claim it may have against LESSOR or any other Person. 5.9 LESSOR PERFORMANCE OF LESSEE OBLIGATION. If LESSEE fails to make any payment under this Lease to a third party in connection with the Aircraft or fails to perform any other obligation required under this Lease, LESSOR may (but is not required to) at its election and without waiver of its rights perform such obligation and/or pay such amount. Within five (5) Business Days after written notice to LESSEE of the amount paid by LESSOR on behalf of LESSEE, LESSEE will repay such amount to LESSOR together with Default Interest. Such payment to LESSOR will constitute additional Rent payable by LESSEE to LESSOR hereunder. Any payment, performance or compliance by LESSOR of a LESSEE obligation hereunder will not affect the occurrence or continuance of a Default or Event of Default, as the case may be. 5.10 CONSIDERATION FOR RENT AND OTHER AMOUNTS. The amount of the Rent and other payments contained herein are in consideration of LESSEE's waiver of warranties and indemnities set forth in Articles 8 and 16, respectively, and the other provisions of this Lease. ARTICLE 6 INVOLVEMENT WITH AIRCRAFT MANUFACTURER 6.1 LESSEE SELECTION OF AIRCRAFT. LESSEE ACKNOWLEDGES THAT THE DESCRIPTION OF THE AIRCRAFT SET FORTH IN THIS LEASE IS BASED UPON INFORMATION SUPPLIED BY MANUFACTURER. LESSEE COVENANTS TO LESSOR THAT LESSEE HAS USED ITS OWN JUDGMENT IN SELECTING THE AIRCRAFT AND HAS DONE SO BASED ON ITS SIZE, DESIGN AND TYPE. LESSEE ACKNOWLEDGES THAT LESSOR IS NOT A MANUFACTURER, REPAIRER OR SERVICING AGENT OF THE AIRCRAFT. 6.2 AGENCY AGREEMENT. Certain obligations remain to be performed by LESSOR in connection with the manufacture, fabrication and completion of the Aircraft by Manufacturer which will be performed by LESSEE (as provided in the Agency Agreement). LESSEE will act as LESSOR's agent with respect to some of these matters pursuant to the terms of an Agency Agreement to be entered into between LESSEE and LESSOR in the form set forth in Exhibit B. 6.3 PROCUREMENT OF BFE. LESSEE's and LESSOR's technical representatives will meet and determine which of LESSEE or LESSOR will provide specific items of BFE. Such BFE will then be provided to Manufacturer by LESSEE or LESSOR, as applicable, within the time frames required by Manufacturer. 6.4 ASSIGNMENT OF TRAINING. LESSOR hereby assigns to LESSEE all rights to training to which LESSOR is entitled as a result of LESSOR's purchase of the Aircraft and lease of the Aircraft to LESSEE. If LESSEE fails to take Delivery of the Aircraft when tendered in accordance with Article 6.7, LESSEE will immediately pay to LESSOR an amount equal to the Dollar value of such training based on what the training would have cost LESSEE had LESSEE purchased such training directly from Manufacturer. 6.5 LESSEE INSPECTION OF AIRCRAFT. During the course of final assembly of the Aircraft, and at Delivery, LESSEE will have its own representative present to inspect the Aircraft and to ensure its conformity with LESSEE's needs and the terms of this Lease. LESSEE will have ground inspection and acceptance flight rights with respect to the Aircraft. LESSEE acknowledges that, as between LESSEE and LESSOR, in accepting the Aircraft LESSEE is relying on its own inspection and knowledge of the Aircraft in determining whether the Aircraft meets the requirements of this Lease. 6.6 AIRCRAFT AT DELIVERY. At Delivery, the Aircraft will be as set forth in Exhibit A, as such description may be modified by any change requests agreed to among LESSEE, LESSOR and Manufacturer (which will be reflected in amendment(s) to this Lease). In the event of any discrepancies, LESSEE and LESSOR will cooperate in good faith with one another and with Manufacturer and Engine manufacturer, as applicable, in order to arrive at a mutually acceptable resolution of any such discrepancies. 6.7 DELIVERY OF THE AIRCRAFT TO LESSEE. Subject to LESSEE having performed all of the conditions precedent to Delivery set forth herein, immediately following delivery of the Aircraft from Manufacturer to LESSOR, LESSOR will deliver the Aircraft to LESSEE at the Delivery Location. Provided that the Aircraft is in the condition required by Article 6.6, upon the tender of the Aircraft by LESSOR to LESSEE, LESSEE will accept the Aircraft and the date of tender by LESSOR to LESSEE will be deemed to be the Delivery Date for all purposes under this Lease, including, but not limited to, the commencement of LESSEE's obligation to pay Rent hereunder. 6.8 LESSEE ACCEPTANCE OF AIRCRAFT. If LESSEE fails to (a) comply with its obligations set forth in Article 6.2, (b) comply with the conditions contained in Articles 7.1 and 7.2 so as to allow Delivery to take place immediately following delivery of the Aircraft by Manufacturer to LESSOR or (c) take delivery of the Aircraft when properly tendered for delivery by LESSOR in the condition required hereunder, LESSEE will indemnify LESSOR for all costs and expenses incurred by LESSOR as a result thereof including (but without limitation) any payments other than the purchase price which LESSOR becomes obliged to make to Manufacturer. ARTICLE 7 PRE-DELIVERY, DELIVERY AND POST-DELIVERY DOCUMENTARY AND OTHER REQUIREMENTS 7.1 PRE-DELIVERY REQUIREMENTS. LESSEE will do each of the following prior to the Scheduled Delivery Date of the Aircraft within the time frames set forth below: 7.1.1 Within one (1) month after execution of this Lease, LESSEE will deliver to LESSOR each of the following: (a) copies of resolutions of the Board of Directors of LESSEE or other written evidence of appropriate corporate action, duly certifying and authorizing the lease of the Aircraft hereunder and the execution, delivery and performance of this Lease, together with an incumbency certificate as to the person or persons authorized to execute and deliver documents on behalf of LESSEE hereunder; and (b) an opinion of counsel in the form and substance of Exhibit F. 7.1.2 At least three (3) days prior to the Scheduled Delivery Date, LESSEE will have delivered to LESSOR a Certificate of Insurance and Brokers' Letter of Undertaking in the form and substance of Exhibits C and D, respectively, from LESSEE's insurance brokers evidencing insurance of the Aircraft in accordance with this Lease from the Delivery Date. 7.1.3 At least three (3) Business Days prior to the Scheduled Delivery Date, LESSEE will do each of the following: (a) provide LESSOR with a copy of such Aviation Documents as may be available prior to the Scheduled Delivery Date; (b) provide LESSOR with a power of attorney empowering LESSEE's representative, who may be an officer or employee of LESSEE, to accept the Aircraft on behalf of LESSEE; and (c) provide LESSOR with such other documents as LESSOR may reasonably request. 7.1.4 Prior to the Scheduled Delivery Date, LESSEE will pay LESSOR the first monthly installment of Rent in accordance with Article 5.3.2. 7.2 DELIVERY REQUIREMENTS. On the Delivery Date of the Aircraft, each of the following will occur: 7.2.1 LESSEE will execute and deliver to LESSOR an Estoppel and Acceptance Certificate in the form of Exhibit E covering the Aircraft and effective as of the Delivery Date. 7.2.2 If not previously done, LESSEE and LESSOR will sign an amendment or supplement to Exhibit A evidencing all agreed-to changes to the specification of the Aircraft. 7.2.3 LESSEE will deliver a certificate signed on behalf of LESSEE by an officer of LESSEE stating all of the following: (a) the representations and warranties contained in Article 20 are true and accurate on and as of the Delivery Date as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date); (b) no Default has occurred and is continuing or will result from LESSEE's lease of the Aircraft hereunder; and (c) none of the Creditor Agreements contains terms which provide or contemplate that any Creditor will obtain any right, title or interest in an Engine which is installed on another aircraft (or, if this is not the case, such certificate will identify the parties, the aircraft and the Creditor Agreements for which this statement is untrue). 7.2.4 LESSEE's counsel will deliver opinions confirming the matters set forth in the opinion of counsel described in Article 7.1 and advising that all filing and other requirements have been met or concurrently are being met. 7.2.5 If any Creditor Agreement provides or contemplates that such Creditor will obtain any right, title or interest in an Engine which is installed on such Creditor's aircraft, LESSEE will deliver to LESSOR an engines cooperation agreement in form and substance acceptable to LESSOR which is executed by LESSEE and LESSEE's Creditors (as defined therein). 7.2.6 LESSOR will deliver to LESSEE an assignment of Manufacturer and Engine manufacturer rights in the form and substance of Exhibits G and H, respectively, and concurrently therewith LESSOR, to the extent it has not previously done so, will be deemed to have assigned all training, product assurance and product support applicable to the owner or operator of the Aircraft to LESSEE during the Lease Term. 7.3 POST-DELIVERY REQUIREMENTS. 7.3.1 Promptly after Delivery, LESSEE will do each of the following: (a) provide LESSOR with copies of all Aviation Documents not previously delivered; and (b) provide LESSOR with a follow-up opinion of counsel advising that the Aircraft has been registered in the State of Registration and that all necessary filings have been made. ARTICLE 8 DISCLAIMERS LESSOR HAS COMMITTED TO LESSEE THAT ON THE DELIVERY DATE THE AIRCRAFT WILL BE IN THE CONDITION REQUIRED BY ARTICLE 6. SUCH COMMITMENT OR COVENANT ON THE PART OF LESSOR EXPIRES AND THE DISCLAIMERS SET FORTH IN THIS ARTICLE 8 APPLY UPON LESSEE'S ACCEPTANCE OF THE AIRCRAFT AND EXECUTION OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATE. AFTER SUCH TIME, THEN AS BETWEEN LESSOR AND LESSEE: 8.1 "AS IS, WHERE IS". LESSEE AGREES THAT IT IS LEASING THE AIRCRAFT "AS IS, WHERE IS". LESSEE UNCONDITIONALLY ACKNOWLEDGES AND AGREES THAT NEITHER LESSOR NOR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES OR REPRESENTATIVES HAVE MADE OR WILL BE DEEMED TO HAVE MADE ANY TERM, CONDITION, REPRESENTATION, WARRANTY OR COVENANT EXPRESS OR IMPLIED (WHETHER STATUTORY OR OTHERWISE) AS TO (a) THE CAPACITY, AGE, AIRWORTHINESS, VALUE, QUALITY, DURABILITY, CONFORMITY TO THE PROVISIONS OF THIS LEASE, DESCRIPTION, CONDITION (WHETHER OF THE AIRCRAFT, ANY ENGINE, ANY PART THEREOF OR THE AIRCRAFT DOCUMENTATION), DESIGN, WORKMANSHIP, MATERIALS, MANUFACTURE, CONSTRUCTION, OPERATION, DESCRIPTION, STATE, MERCHANTABILITY, PERFORMANCE, FITNESS FOR ANY PARTICULAR USE OR PURPOSE (INCLUDING THE ABILITY TO OPERATE OR REGISTER THE AIRCRAFT OR USE THE AIRCRAFT DOCUMENTATION IN ANY OR ALL JURISDICTIONS) OR SUITABILITY OF THE AIRCRAFT OR ANY PART THEREOF, OR THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, KNOWN OR UNKNOWN, APPARENT OR CONCEALED, EXTERIOR OR INTERIOR, (b) THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK, COPYRIGHT OR OTHER INTELLECTUAL PROPERTY RIGHTS, (c) ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE OR (d) EXCEPT AS SET FORTH IN ARTICLE 21.1, ANY OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY PART THEREOF, ALL OF WHICH ARE HEREBY EXPRESSLY EXCLUDED AND EXTINGUISHED. 8.2 WAIVER OF WARRANTY OF DESCRIPTION. IN CONSIDERATION OF (a) LESSEE'S RIGHTS HEREUNDER TO INSPECT THE AIRCRAFT AND (b) LESSOR'S ASSIGNMENT TO LESSEE OF ANY EXISTING AND ASSIGNABLE WARRANTIES OF MANUFACTURER AND THE ENGINE MANUFACTURER, LESSEE HEREBY AGREES THAT ITS ACCEPTANCE OF THE AIRCRAFT AT DELIVERY AND ITS EXECUTION AND DELIVERY OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATE CONSTITUTE LESSEE'S WAIVER OF THE WARRANTY OF DESCRIPTION, ANY CLAIMS LESSEE MAY HAVE AGAINST LESSOR BASED UPON THE FAILURE OF THE AIRCRAFT TO CONFORM WITH SUCH DESCRIPTION AND ANY AND ALL RIGHTS IT MAY HAVE TO THE REMEDIES SET FORTH IN SECTIONS 10508 THROUGH 10522 OF THE CALIFORNIA COMMERCIAL CODE. EVEN IF AT ANY TIME THE FAILURE OF THE AIRCRAFT TO CONFORM TO SUCH DESCRIPTION SUBSTANTIALLY IMPAIRS THE VALUE AND UTILITY OF THE AIRCRAFT AND EITHER (i) LESSEE ACCEPTED THE AIRCRAFT BASED ON A REASONABLE ASSUMPTION THAT THE NONCONFORMITY WOULD BE CURED AND IT WAS NOT SEASONABLY CURED OR (ii) LESSEE ACCEPTED THE AIRCRAFT WITHOUT DISCOVERING THE NONCONFORMITY BUT LESSEE'S ACCEPTANCE OF THE AIRCRAFT WAS REASONABLY INDUCED EITHER BY LESSOR'S ASSURANCES OR BY THE DIFFICULTY OF DISCOVERING ANY DEFECT PRIOR TO ACCEPTANCE, LESSEE AGREES NOT TO LOOK TO LESSOR FOR DAMAGES OR RELIEF ARISING OUT OF THE FAILURE OF THE AIRCRAFT TO CONFORM TO SUCH DESCRIPTION. 8.3 LESSEE WAIVER. LESSEE hereby waives as between itself and LESSOR and agrees not to seek to establish or enforce any rights and remedies, express or implied (whether statutory or otherwise) against LESSOR or the Aircraft relating to any of the matters mentioned in Articles 8.1 or 8.2. 8.4 CONCLUSIVE PROOF. DELIVERY BY LESSEE TO LESSOR OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATE WILL BE CONCLUSIVE PROOF AS BETWEEN LESSOR AND LESSEE THAT LESSEE'S TECHNICAL EXPERTS HAVE EXAMINED AND INVESTIGATED THE AIRCRAFT AND ENGINES AND (a) EACH IS AIRWORTHY AND IN GOOD WORKING ORDER AND REPAIR AND (b) THE AIRCRAFT AND ENGINES AND THE AIRCRAFT DOCUMENTATION ARE WITHOUT DEFECT (WHETHER OR NOT DISCOVERABLE AT DELIVERY) AND IN EVERY WAY SATISFACTORY TO LESSEE. 8.5 NO LESSOR LIABILITY FOR LOSSES. LESSEE agrees that LESSOR will not be liable to LESSEE, any sublessee or any Person, whether in contract or tort and however arising, for any cost, loss or damage (consequential or otherwise) arising out of the condition of the Aircraft, whether or not due in whole or in part to an act or omission or the active or passive negligence of LESSOR. 8.6 NO LIABILITY TO REPAIR OR REPLACE. LESSOR will not be liable for any expense in repairing or replacing any item of the Aircraft or be liable to supply another aircraft or any item in lieu of the Aircraft or any Part thereof if the same is lost, confiscated, damaged, destroyed or otherwise rendered unfit for use. 8.7 NO WAIVER. Nothing in this Article 8 or elsewhere in this Lease will be deemed to be a waiver by LESSEE of any rights it may have against Manufacturer, the Engine manufacturer or any other Person. ARTICLE 9 MANUFACTURERS' AND VENDORS' WARRANTIES 9.1 WARRANTIES. As set forth in Article 7.2.6, at Delivery LESSOR will assign to LESSEE for the duration of the Lease Term the benefit of all warranties and indemnities given to LESSOR by Manufacturer and the Engine manufacturer. Effective on the Delivery Date, all other vendor warranties with respect to the Aircraft are hereby assigned by LESSOR to LESSEE. 9.2 REASSIGNMENT. On the Termination Date, the benefit of any warranty assigned by LESSOR to LESSEE pursuant to Article 7.2.6 will be reassigned automatically to LESSOR or its designee. ARTICLE 10 OPERATION OF AIRCRAFT 10.1 COSTS OF OPERATION. As between LESSEE and LESSOR, LESSEE will pay all costs incurred in the operation of the Aircraft during the Lease Term, for profit or otherwise, including the costs of flight crews, cabin personnel, fuel, oil, lubricants, maintenance, insurance, storage, landing and navigation fees, airport charges, passenger service and any and all other expenses of any kind or nature, directly or indirectly, in connection with or related to the use, movement and operation of the Aircraft. The obligations, covenants and liabilities of LESSEE under this paragraph arising prior to return of the Aircraft to LESSOR will continue in full force and effect, notwithstanding the termination of this Lease or expiration of the Lease Term. 10.2 COMPLIANCE WITH LAWS. LESSEE agrees throughout the Lease Term that all use of the Aircraft will be in accordance with applicable Laws of the State of Registration and of any country, state, territory or municipality into or over which LESSEE may operate. LESSEE will not employ, suffer or cause the Aircraft to be used in any business which is forbidden by Law or in any manner which may render it liable to condemnation, destruction, seizure, or confiscation by any authority. LESSEE will not permit the Aircraft to fly to any airport or country if so doing would cause LESSEE to be in violation of any Law applicable to LESSEE or the Aircraft. The foregoing provisions in this Article 10.2 shall not prohibit any violation of Law (a) during a good-faith contest of the validity, application, or alleged violation thereof in any reasonable manner so long as there is no material danger of sale, forfeiture, or loss of the Aircraft (however, this good faith exception shall not apply in the case of a mandatory grounding order, the good faith contest of which does not permit LESSEE to operate the Aircraft during such contest), and which does not extend beyond the end of the Lease Term if the pendency of such contest would adversely affect the Aircraft or the remarketing thereof in any material respect; and (b) for minor or non-recurring violations (with the understanding that minor violations may cease to be minor if recurring) that LESSEE is diligently trying to rectify which do not render the Aircraft liable to any risk of condemnation, destruction, seizure, or confiscation by any Government Entity. 10.3 TRAINING. LESSEE will not use the Aircraft for testing or for training of flight crew members other than LESSEE crew members and will not use the Aircraft for training any more than it utilizes for training the other aircraft in its fleet. 10.4 NO VIOLATION OF INSURANCE POLICIES. LESSEE will not use or permit the Aircraft to be used in any manner or for any purpose which is not covered by the insurance policies LESSEE is required to carry and maintain as set forth in this Lease. LESSEE will not carry any goods of any description that would invalidate or limit such policies or do any other act or permit to be done anything which could reasonably be expected to invalidate or limit any such insurance policy. 10.5 FLIGHT CHARGES. 10.5.1 LESSEE will pay promptly when due all enroute navigation charges, navigation service charges and all other charges payable by LESSEE for the use of or for services provided at any airport, whether in respect of the Aircraft or any other aircraft of LESSEE, and will indemnify and hold LESSOR harmless in respect of the same. This indemnity will continue in full force and effect notwithstanding the termination or expiration of the Lease Term for any reason or the return of the Aircraft. 10.5.2 If requested by LESSOR, LESSEE will provide LESSOR with a list of the airports to which LESSEE regularly operates the Aircraft or its other aircraft. LESSEE hereby authorizes Eurocontrol or another aviation authority or airport or creditor claiming rights on the Aircraft to confirm the status of LESSEE's payments to such creditor for the Aircraft and its other aircraft, as and when requested by LESSOR. ARTICLE 11 SUBLEASES 11.1 NO SUBLEASE WITHOUT LESSOR CONSENT. LESSEE WILL NOT SUBLEASE OR PART WITH POSSESSION OF THE AIRCRAFT (EXCEPT FOR MAINTENANCE AND REPAIR) AT ANY TIME WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR (NOT TO BE UNREASONABLY WITHHELD) AND IN ACCORDANCE WITH SUCH REQUIREMENTS AS MAY FROM TIME TO TIME BE AGREED IN WRITING BETWEEN LESSOR AND LESSEE. The wet leasing of the Aircraft during the Lease Term (in which LESSEE and its crews retain operational control of the Aircraft) will not be considered a sublease of the Aircraft. 11.2 LESSOR COSTS. LESSEE will indemnify LESSOR on demand for all out-of-pocket expenses (including legal fees) incurred in connection with LESSOR's assessment of the subleasing proposal (whether or not LESSOR's consent to such sublease is ultimately given) and implementation of the sublease. 11.3 ANY APPROVED SUBLEASE. Any sublease approved by LESSOR will be for a term no greater than the remaining Lease Term and contain provisions consistent with this Lease protecting LESSOR's title to the Aircraft, providing appropriate LESSOR indemnities, regarding the maintenance and repair standards for the Aircraft, concerning the insurances which will be carried by the sublessee and the circumstances which constitute a Total Loss of the Aircraft. Any such sublease will be subject and subordinate to this Lease. In its sole discretion, LESSOR may require an opinion of counsel in connection with such sublease, including LESSOR's right to repossess the Aircraft in the event of an Event of Default hereunder or under the sublease. LESSEE will not amend the terms of any approved sublease without the prior written consent of LESSOR, which will not be unreasonably withheld. 11.4 ASSIGNMENT OF SUBLEASE. Any approved sublease will be assigned to LESSOR as security. LESSEE will deliver the original counterpart of the sublease to LESSOR and make any filings necessary to protect LESSOR's security interest. 11.5 CONTINUED RESPONSIBILITY OF LESSEE. LESSEE will continue to be responsible for performance of its obligations under this Lease during any period of sublease. ARTICLE 12 MAINTENANCE AND USE OF AIRCRAFT 12.1 GENERAL OBLIGATION. 12.1.1 During the Lease Term and until the Aircraft is returned to LESSOR, LESSEE alone has the obligation, at its expense, to maintain and repair the Aircraft, Engines and all of the Parts (a) in accordance with the Maintenance Program, (b) in accordance with the rules and regulations of the Aviation Authority, (c) in accordance with Manufacturer's type design, (d) in accordance with any other regulations or requirements necessary in order to maintain a valid Certificate of Airworthiness for the Aircraft and meet the requirements at all times during the Lease Term and upon return of the Aircraft to LESSOR for issuance of a Standard Certificate of Airworthiness for transport category aircraft issued by the Aviation Authority (except during those periods when the Aircraft is undergoing maintenance or repairs as required or permitted by this Lease) and (e) in the same manner and with the same care as used by LESSEE or its sublessee with respect to similar aircraft and engines operated by LESSEE or its sublessee and without in any way discriminating against the Aircraft. 12.1.2 LESSEE will maintain and repair the Engines in the same manner and in the equivalent time frame to its other engines and LESSEE will not discriminate against any of the Engines in respect of the repair and maintenance. 12.1.3 LESSEE will not enter into any Engine maintenance cost per flight hour, power-by-the-hour or similar agreement with Engine manufacturer or any other Engine maintenance facility or organization without LESSOR's prior written consent. 12.2 SPECIFIC OBLIGATIONS. Without limiting Article 12.1, LESSEE agrees that such maintenance and repairs will include but will not be limited to each of the following specific items: (a) performance in accordance with the Maintenance Program of all routine and non-routine maintenance work; (b) incorporation in the Aircraft of all Airworthiness Directives; (c) incorporation in the Aircraft of all service bulletins of Manufacturer, the Engine manufacturer and other vendors which LESSEE schedules to adopt within the Lease Term for the rest of its Boeing 737-800 aircraft fleet. It is the intent of the parties that the Aircraft will not be discriminated from the rest of LESSEE's fleet in service bulletin compliance (including method of compliance) or other maintenance matters. LESSEE will not discriminate against the Engines with respect to Overhaul build standards and life-limited part replacements; (d) incorporation in the Maintenance Program for the Aircraft of a corrosion prevention and control program; (e) maintaining in English and keeping in an up-to-date status the records and historical documents set forth in Attachment 1 of Exhibit I; (f) maintaining historical records, in English, for on condition, condition-monitored, hard time and life-limited Parts (including tags from the manufacturer of such Part or a repair facility which evidence that such Part is new or overhauled and establish authenticity, total time in service and time since overhaul for such Part), the hours and cycles the Aircraft and Engines operate and all maintenance and repairs performed on the Aircraft; and (g) properly documenting all repairs, Modifications and alterations and the addition, removal or replacement of equipment, systems or components in accordance with the rules and regulations of the Aviation Authority and reflecting such items in the Aircraft Documentation. In addition, all repairs to the Aircraft will be accomplished in accordance with Manufacturer's Structural Repair Manual (or FAA-approved data supported by FAA Form 8110-3 or equivalent). All Modifications and alterations will also be accomplished in accordance with FAA-approved data supported by FAA Form 8110-3 or equivalent. 12.3 REPLACEMENT OF PARTS. 12.3.1 LESSEE, at its own cost and expense, will promptly replace all Parts which may from time to time become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or rendered unfit or beyond economical repair (BER) for any reason. In the ordinary course of maintenance, service, repair, overhaul or testing, LESSEE may remove any Part provided that LESSEE replaces such Part as promptly as practicable. All replacement Parts will (a) be free and clear of all Security Interests (except Permitted Liens) of any kind or description, (b) be in airworthy condition and of at least equivalent model, service bulletin and modification status and have a value and utility at least equal to the Parts replaced, assuming such replaced Parts were in the condition and repair required to be maintained by the terms hereof and (c) have a current "serviceable tag" of the manufacturer or maintenance facility providing such items to LESSEE, indicating that such Parts are new, serviceable or Overhauled. So long as a substitution meets the requirements of the Maintenance Program and Aviation Authority, LESSEE may substitute for any Part a part that does not meet the requirements of the foregoing sentence if a complying Part cannot be procured or installed within the available groundtime of the Aircraft and as soon as practicable the noncomplying part is removed and replaced by a complying Part. 12.3.2 All Parts removed from the Airframe or any Engine will remain the property of LESSOR and subject to this Lease no matter where located, until such time as such Parts have been replaced by Parts (which have been incorporated or installed in or attached to the Airframe or such Engine) which meet the requirements for replacement Parts specified above and title to such replacement Parts has passed to LESSOR under the Laws of the State of Registration and LEX SITUS. To the extent permitted by the Laws of the State of --- ----- Registration and the LEX SITUS it is the intent of LESSOR and LESSEE that without further --- ----- act and immediately upon any replacement Part becoming incorporated, installed or attached to the Airframe or an Engine as above provided, (a) title to the removed Part will thereupon vest in LESSEE, free and clear of all rights of LESSOR, (b) title to the replacement Part will thereupon vest in LESSOR free and clear of all rights of LESSEE and (c) such replacement Part will become subject to this Lease and be deemed to be a Part hereunder to the same extent as the Parts originally incorporated or installed in or attached to the Airframe or such Engine. 12.4 REMOVAL OF ENGINES. 12.4.1 If an Engine is removed for testing, service, repair, maintenance, Overhaul work, alterations or modifications, title to such Engine will remain vested in LESSOR. 12.4.2 LESSEE will be entitled to remove any of the Engines from the Aircraft and install another engine or engines on the Aircraft, provided that LESSEE complies with each of the following obligations: (a) the insurance requirements set forth in Article 17 and Exhibit C are in place; (b) LESSEE ensures that the identification plates referred to in Article 14 are not removed from any Engine upon such Engine being detached from the Aircraft; and (c) title to the Engine remains with LESSOR free from all Security Interests (except Permitted Liens) regardless of the location of the Engine or its attachment to or detachment from the Aircraft. 12.5 POOLING OF ENGINES AND PARTS. With LESSOR's prior written consent, not to be unreasonably withheld, LESSEE may subject the Engines and Parts to normal interchange or pooling agreements with responsible commercial air carriers customary in the airline industry and entered into by LESSEE in the ordinary course of its business with respect to its Boeing 737-800 fleet generally, so long as (a) in the case of pooling of an Engine, such Engine is returned to LESSEE within two (2) months, (b) no transfer of title to the Engine occurs, (c) all other terms of this Lease continue to be observed with respect to the Engines or Parts, including but not limited to Articles 8, 10, 12, 13, 14, 15, 16, 17 and 18 and (d) LESSEE continues to be fully responsible to LESSOR for the performance of all of its obligations hereunder. 12.6 INSTALLATION OF ENGINES ON OTHER AIRCRAFT. Any Engine removed from the Aircraft may be installed on another airframe in LESSEE's fleet which utilizes engines of the same type as the Engine only if one of the situations described in this Article 12.6 exists: 12.6.1 LESSEE or LESSOR has title to such other aircraft free and clear of all Security Interests (except Permitted Liens). 12.6.2 LESSEE, LESSOR and all of the Creditors of LESSEE of such aircraft enter into an engines cooperation agreement in form and substance acceptable to LESSOR in which each party agrees to recognize one another's rights in the engines. LESSEE will reimburse LESSOR and LESSOR's Lender for their reasonable attorneys' fees and costs in negotiating and finalizing engine cooperation agreement arrangements with LESSEE and its Creditors. 12.6.3 Such other aircraft is subject to a Creditor Agreement (but no other Security Interests except Permitted Liens) which by its terms expressly or effectively states that such Creditor and its successors and assigns will not acquire any right, title or interest in any Engine by reason of such Engine being installed on such aircraft. LESSEE hereby agrees that if LESSOR's title to an Engine is in fact impaired under any such Creditor Agreement, such impairment will be a Total Loss of such Engine and the provisions of Article 18.5 will apply. To the extent another Creditor Agreement contains such provisions, then LESSOR hereby agrees for the benefit of the Creditor of such Creditor Agreement that neither LESSOR nor its successors or assigns will acquire or claim any right, title or interest in any engine in which LESSEE or another Creditor has an interest as a result of such engine being installed on the Airframe. 12.7 MODIFICATIONS. 12.7.1 No modification, alteration, addition or removal to the Aircraft ("MODIFICATION") expected to cost over Five Hundred Thousand U.S. Dollars (US$500,000) or deviation from the Aircraft's original type design or configuration will be made without the prior written consent of LESSOR, which consent will not be unreasonably withheld. "Modifications" do not include Airworthiness Directives or Manufacturer's recommended service bulletins, for which LESSOR's consent is not required. 12.7.2 LESSOR may review LESSEE's proposed designs, plans, engineering drawings and diagrams, and flight and maintenance manual revisions for any proposed Modification. If requested by LESSOR, LESSEE will furnish LESSOR (at LESSEE's expense) with such documents in final form and any other documents required by Law, as a result of such Modification. All Modifications incorporated on the Aircraft will be properly documented in the Aircraft Documentation and be fully approved by the Aviation Authority. 12.7.3 Notwithstanding any other provision of this Lease, no Modification will be made which has the effect of decreasing the utility or value of the Aircraft. 12.7.4 No Modification will be made by LESSEE if an Event of Default exists and is continuing hereunder. 12.7.5 Unless otherwise agreed by LESSOR in writing, all non-severable or structural Modifications will forthwith become a part of the Aircraft and LESSEE relinquishes to LESSOR all rights and title thereto. However, all severable Modifications will remain the property of LESSEE or the third-party owner and, at LESSOR's request and LESSEE's cost, will be removed from the Aircraft prior to return of the Aircraft, with LESSEE restoring the Aircraft to the condition it was in prior to the Modification. Notwithstanding the foregoing, no such removal will be permitted without LESSOR's permission after the occurrence of an Event of Default hereunder and immediately upon the occurrence of an Event of Default hereunder, without the requirement of any further act or notice, all right, title and interest in such Modifications will immediately vest in LESSOR. 12.7.6 LESSOR will bear no liability for the cost of Modifications of the Aircraft whether in the event of grounding or suspensions of certification, or for any other cause. 12.8 PERFORMANCE OF WORK BY THIRD PARTIES. Whenever maintenance and repair work on the Aircraft or Engines will be regularly performed by a Person other than LESSEE, such Person will be an FAA-authorized repair station. 12.9 REPORTING REQUIREMENTS. 12.9.1 Commencing with a report furnished ten (10) days after the end of the calendar month in which Delivery occurs, LESSEE will furnish to LESSOR a Monthly Report in English in the form attached hereto as Exhibit J. Each Monthly Report will be furnished within ten (10) days after the end of each calendar month, except that the Monthly Report pertaining to the last month (or any portion thereof) of the Lease Term will be furnished to LESSOR on the Termination Date. 12.9.2 On each anniversary of the Delivery Date, LESSEE will provide LESSOR with a Technical Evaluation Report for the Aircraft in the form and substance of Exhibit L, as revised. 12.10 INFORMATION REGARDING MAINTENANCE PROGRAM. LESSEE will provide LESSOR with a copy of or information regarding the Maintenance Program for the Aircraft, as requested by LESSOR. 12.11 LESSOR RIGHTS TO INSPECT AIRCRAFT. On reasonable notice, LESSOR and/or its authorized agents or representatives will have the right to inspect the Aircraft and Aircraft Documentation. LESSOR agrees that such requests will be coordinated with LESSEE so as to cause the minimum practical disturbance to LESSEE's operation or its personnel. LESSEE agrees to cooperate with LESSOR in making the Aircraft and Aircraft Documentation available to such authorized technical teams. No such inspection shall include opening panels, bays, or the like (although LESSOR may observe those that are then open), or disassembling any item. LESSOR will have no duty to make any such inspection and will not incur any liability or obligation by reason of (and LESSEE's indemnity obligations pursuant to Article 16 will apply notwithstanding) not making any such inspection or by reason of any reports it receives or any reviews it may make of the Aircraft records. ARTICLE 13 TITLE AND REGISTRATION 13.1 TITLE TO THE AIRCRAFT DURING LEASE TERM. Title to the Aircraft will be and remain vested in LESSOR. LESSOR and LESSEE intend this Lease to be a "true lease". LESSEE will have no right, title or interest in the Aircraft except as provided in this Lease. 13.2 REGISTRATION OF AIRCRAFT. LESSEE at its sole cost and expense will (a) register and maintain registration of the Aircraft in the name of LESSOR at the register of aircraft in the State of Registration and (b) from time to time take all other steps then required by Law (including the Geneva Convention if applicable) or by practice, custom or understanding or as LESSOR may reasonably request to protect and perfect LESSOR's interest in the Aircraft and this Lease in the State of Registration or in any other jurisdictions in or over which LESSEE may operate the Aircraft. 13.3 FILING OF THIS LEASE. To the extent permitted by Law and in accordance with the requirements of the Law from time to time, LESSEE at its sole cost and expense will cause this Lease to be kept, filed, recorded and refiled or rerecorded in the State of Registration and in any other offices necessary to protect LESSOR's rights hereunder. 13.4 EVIDENCE OF REGISTRATION AND FILINGS. As LESSOR may reasonably request from time to time, LESSEE will furnish to LESSOR an opinion of counsel or other evidence reasonably satisfactory to LESSOR of the registrations and filings required hereunder. ARTICLE 14 IDENTIFICATION PLATES LESSOR will affix and LESSEE will at all times maintain on the Airframe and each Engine the identification plates containing the following legends or any other legend reasonably requested by LESSOR in writing: 14.1 AIRFRAME IDENTIFICATION PLATES. Location: One to be affixed to the Aircraft structure above the forward entry door adjacent to and not less prominent than that of Manufacturer's data plate and another in a prominent place on the flight deck. Size: No smaller than 4" x 6". Legend: "THIS AIRCRAFT IS OWNED BY INTERNATIONAL LEASE FINANCE CORPORATION. MANUFACTURER'S SERIAL NO: 30038 OWNER'S ADDRESS: INTERNATIONAL LEASE FINANCE CORPORATION 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States of America Fax: (310) 788-1990" 14.2 ENGINE IDENTIFICATION PLATES. Location: The legend on the plate must be visible. Size: No smaller than 2" x 6". "THIS ENGINE IS OWNED BY INTERNATIONAL LEASE FINANCE CORPORATION, LOS ANGELES, CALIFORNIA, USA." ARTICLE 15 TAXES 15.1 GENERAL OBLIGATION OF LESSEE. Except as set forth in Article 15.2, LESSEE agrees to pay promptly when due, and to indemnify and hold harmless LESSOR on a full indemnity basis from, all license and registration fees and all taxes, fees, levies, imposts, duties, charges or withholdings of any nature whatsoever (including without limitation any value added, franchise, transfer, sales, gross receipts, use, business, occupation, excise, personal property, real property, stamp or other tax) together with any assessments, penalties, fines, additions to tax or interest thereon, however or wherever imposed (whether imposed upon LESSEE, LESSOR, on all or part of the Aircraft, the Engines or otherwise), by any Government Entity or taxing authority in the U.S., any State thereof, or any foreign country or by any international taxing authority, upon or with respect to, based upon or measured by any of the following (collectively, "TAXES"): (a) the Aircraft, the Engines or any Parts. (b) the use, operation or maintenance of the Aircraft or carriage of passengers or freight during the Lease Term. (c) this Lease, the payments due hereunder and the terms and conditions hereof. (d) the return of the Aircraft to LESSOR or other use or disposition of the Aircraft by LESSEE. 15.2 EXCEPTIONS TO INDEMNITY. The indemnity provided in Article 15.1 does not extend to any of the following Taxes: (a) Imposed by the U.S. (including without limitation any taxes collected by withholding) or any state or local government or governmental subdivision or state or local taxing authority in the U.S. (including any possession or territory of the U.S.) or by any foreign government, taxing authority or governmental subdivision of a foreign country which are based on, or measured by, the receipts, gross or net income, capital, net worth, franchises, excess profits, or conduct of business (including minimum taxes, withholding taxes and taxes on or measured by any items of tax preference) of LESSOR, except to the extent that such Tax would not have been imposed on or payable by LESSOR but for the location, use, registration or operation of the Aircraft or any part thereof, or any place of business or any activity of LESSEE in the jurisdiction imposing such Tax. (b) Imposed as a result of LESSOR's transfer, mortgage, pledge, financing or other disposition by LESSOR of all or a portion of its interest in the Aircraft or this Lease except a transfer or sale resulting from an exercise of remedies pursuant to Article 25.3 hereunder or in connection with a termination of the Lease pursuant to Article 18 hereof. (c) Attributable to the period prior to the Delivery Date or after return of the Aircraft to LESSOR in accordance with this Lease. (d) Attributable to LESSOR's gross negligence, willful misconduct or breach of this Lease. 15.3 AFTER-TAX BASIS. The amount which LESSEE is required to pay with respect to any Taxes indemnified against under Article 15.1 is an amount sufficient to restore LESSOR on an after-tax basis to the same position LESSOR would have been in had such Taxes not been incurred. 15.4 CLAIMS AND CONTESTS. If a written claim is received by LESSOR for Taxes, which claim, if sustained, would require the payment of an indemnity by LESSEE pursuant to this Article 15, LESSOR shall notify LESSEE of such claim within thirty (30) days after its receipt, provided that failure to provide such notice within thirty (30) days will not relieve LESSEE of any indemnification obligation pursuant to this Article 15 if such failure does not preclude LESSEE from exercising its contest rights hereunder. Payments due from LESSEE to LESSOR pursuant to this Article 15 shall be made directly to LESSOR within thirty (30) days of written demand by LESSOR to LESSEE. If requested by LESSEE in writing, LESSOR shall upon receipt of indemnity reasonably satisfactory to it and at the expense of LESSEE (including, without limitation, all reasonable costs, expenses, legal and accountants' fees, and disbursements, penalties, interest incurred in contesting such claim, and additions to tax) in good faith, in the name of LESSOR or, if requested by LESSEE, in the name of LESSEE (or permit LESSEE, if desired by LESSEE, to contest in the name of LESSEE) if permissible under applicable laws, the validity, applicability or amount of such Taxes by (i) resisting payment thereof if practicable only if adequate reserves have been made for such Taxes or, if required, an adequate bond has been posted, (ii) paying the same under protest, if protest shall be necessary and proper, (iii) if payment shall be made, using reasonable efforts to obtain a refund thereof in appropriate administrative and judicial proceedings, and (iv) taking such other action as is reasonably requested by LESSEE from time to time including not paying such Taxes only if adequate reserves have been made for such Taxes or, if required, an adequate bond has been posted. LESSOR shall determine the method of any contest and (in good faith consultation with LESSEE) control the conduct thereof. Notwithstanding anything contained in this Article 15.4, LESSOR will not be required to contest, or to continue to contest, the validity, applicability or amount of any Tax (or portion thereof) (x) if such contest would result in any material risk of criminal penalties or any material risk of sale, forfeiture or loss of the Aircraft, (y) if an Event of Default has occurred and is continuing, or (z) in the case of a contest of a Tax reflected on a return of LESSOR with other taxes of LESSOR that are not indemnified by the LESSEE hereunder, if LESSEE shall not have furnished an opinion of independent tax counsel selected by the LESSEE, and reasonably satisfactory to LESSOR, that a reasonable basis exists for such contest. If LESSOR shall obtain a refund of all or any part of such Taxes for which an indemnity was paid by LESSEE, LESSOR shall pay LESSEE the amount of such refund; PROVIDED, HOWEVER, that such amount shall not be payable before such time as LESSEE shall have made all payments or indemnities to LESSOR then due under this Article 15 and under the Lease or while an Event of Default shall have occurred and be continuing. If in addition to such refund LESSOR shall receive an amount representing interest on the amount of such refund, LESSEE shall be paid that proportion of such interest which is fairly attributable to Taxes paid with an indemnity payment by LESSEE prior to the receipt of such refund or interest and increased by any taxes saved by reason of the deductibility of such payment by LESSOR. LESSEE shall not be deemed to be in default under any of the indemnification provisions under this Article 15 so long as it or LESSOR shall diligently prosecute such contest and LESSEE has indemnified LESSOR to LESSOR's reasonable satisfaction. In case any report or return is required to be made with respect to any obligation of LESSEE under this Article 15.4 or arising out of this Article 15.4, LESSEE will either timely make such report or return in such manner as will show the ownership of the Aircraft in LESSOR, and will as soon as possible send a copy of such report or return to LESSOR, or will notify LESSOR of such requirement and prepare and deliver such report or return to LESSOR in such manner as shall be satisfactory to LESSOR. 15.5 REFUNDS. Upon receipt by LESSOR of a refund of all or any part of any Taxes (including any deductions or withholdings referred to in Article 15.1) which LESSEE has paid, LESSOR will pay to LESSEE the net amount of such Taxes refunded. 15.6 COOPERATION IN FILING TAX RETURNS. LESSEE and LESSOR will cooperate with one another in providing information which may be reasonably required to fulfill each party's tax filing requirements and any audit information request arising from such filing. ARTICLE 16 INDEMNITIES 16.1 GENERAL INDEMNITY. Except as set forth in Article 16.2, LESSEE agrees to indemnify and hold harmless LESSOR and its officers, directors, employees, agents and shareholders (individually an "INDEMNITEE" and collectively "INDEMNITEES") from any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs, disbursements and expenses (including legal fees, costs and related expenses) of every kind and nature, whether or not any of the transactions contemplated by this Lease are consummated (collectively "EXPENSES"), which are imposed on, incurred by or asserted against any Indemnitee and which are in any way relating to, based on or arising out of any of the following: (a) this Lease or any transactions contemplated hereby; (b) the operation, possession, use, non-use, control, leasing, subleasing, maintenance, storage, overhaul, testing, inspections or acceptance flights at return of the Aircraft, any Engine or any Part during the Lease Term by LESSEE, any sublessee or any other Person, whether or not the same is in compliance with the terms of this Lease, including without limitation claims for death, personal injury, property damage, other loss or harm to any Person and claims relating to any Laws, including without limitation environmental control, noise and pollution laws, rules or regulations; (c) the manufacture, design, acceptance, rejection, delivery, return, sale in connection with an Event of Default, import, export, condition, repair, modification, servicing, rebuilding, enforcement of warranties whether in LESSOR's or LESSEE's name, customer and product support provided by Manufacturer and other vendors, airworthiness, registration, reregistration, performance, sublease, merchantability, fitness for use, substitution or replacement of the Aircraft, Engine or any Part under this Lease or other transfer of use or possession of the Aircraft, Engine or any Part, including under a pooling or interchange arrangement, including without limitation latent and other defects, whether or not discoverable and patent, trademark or copyright infringement; (d) any non-compliance by LESSEE with any term of this Lease or the falsity or inaccuracy of any representation or warranty of LESSEE set forth herein; (e) the prevention or attempt to prevent the arrest, confiscation, seizure, taking in execution, impounding, forfeiture or detention of the Aircraft, or in securing the release of the Aircraft; or (f) as a consequence of any Default in payment by LESSEE of any sum to be paid by LESSEE when due under this Lease or any other Default by LESSEE in the due and punctual performance of its obligations under this Lease. The foregoing indemnity by LESSEE is intended to include and cover any Expense to which an Indemnitee may be subject (in contract, tort, strict liability or under any other theory) regardless of the negligence, active or passive or any other type, of such Indemnitee, so long as such Expense does not fall within any of the exceptions listed in Article 16.2. 16.2 EXCEPTIONS TO GENERAL INDEMNITIES. The indemnity provided for in Article 16.1 will not extend to Expenses of any Indemnitee to the extent resulting from or arising out of any of the following: (a) Expenses which have resulted from the willful misconduct of such Indemnitee; (b) Expenses which LESSEE and LESSOR mutually agree or, absent mutual agreement, are judicially determined to be attributable to acts or events which occur after the Termination Date and return of the Aircraft to LESSOR in the condition required hereunder, but in any such case only to the extent not attributable to acts or omissions of LESSEE; (c) Expenses representing Taxes, it being acknowledged that the terms of Article 15 apply exclusively to LESSEE's indemnity obligations with respect to Taxes; (d) Expenses due to the breach by LESSOR of its covenant of quiet enjoyment pursuant to Article 21.2 (except to the extent covered by LESSEE's insurances); (e) Expenses which arise in connection with the transfer by LESSOR of any interest in the Aircraft or this Lease, except for any transfer in connection with any Event of Default or a Total Loss of the Aircraft or an Engine. (f) Expenses which are solely attributable to the representation or warranty of LESSOR contained in or made pursuant to any Operative Document being untrue; (g) Expenses which are solely related to the failure of such Indemnitees to perform or observe any agreement, covenant, or condition on its part to be performed or observed in any Operative Document; (h) Expenses which are solely an ordinary and usual internal customary operating expense; or (i) Expenses which are solely related to a breach of Article 21.1.6, or (j) Expenses which are solely related to a LESSOR's Lien. 16.3 AFTER-TAX BASIS. The amount which LESSEE will be required to pay with respect to any Expense indemnified against under Article 16.1 will be an amount sufficient to restore the Indemnitee, on an after-tax basis, to the same position such Indemnitee would have been in had such Expense not been incurred. 16.4 TIMING OF PAYMENT. It is the intent of the parties that each Indemnitee will have the right to indemnification for Expenses hereunder as soon as a claim is made and as soon as an Expense is incurred, whether or not such claim is meritorious and whether or not liability is established (but subject to Articles 16.2 and 16.8). LESSEE will pay an Indemnitee for Expenses pursuant to this Article 16 within ten (10) days after receipt of a written demand therefor from such Indemnitee accompanied by a written statement describing in reasonable detail the basis for such indemnity (but not before payment is due from such Indemnitee). 16.5 SUBROGATION. Upon the payment in full of any indemnity pursuant to this Article 16 by LESSEE, LESSEE will be subrogated to any right of the Indemnitee in respect of the matter against which such indemnity has been made. 16.6 NOTICE. Each Indemnitee and LESSEE will give prompt written notice one to the other of any liability of which such party has knowledge for which LESSEE is, or may be, liable under Article 16.1; provided, however, that failure to give such notice will not terminate any of the rights of Indemnitees under this Article 16 except to the extent that LESSEE has been materially prejudiced by the failure to provide such notice. 16.7 REFUNDS. If any Indemnitee obtains a recovery of all or any part of any amount which LESSEE has paid to such Indemnitee, such Indemnitee will pay to LESSEE the net amount recovered by such Indemnitee. 16.8 DEFENSE OF CLAIMS. (a) LESSEE and its insurers will have the right (in each such case at LESSEE's sole expense) to investigate or, provided that LESSEE or its insurers have not reserved the right to dispute liability with respect to any insurance policies pursuant to which coverage is sought, defend or compromise any claim covered by insurance for which indemnification is sought pursuant to Article 16.1 and each Indemnitee will cooperate with LESSEE or its insurers with respect thereto. If LESSEE or its insurers are retaining attorneys to handle such claim, such counsel must be reasonably satisfactory to the Indemnitees. If not, the Indemnitees will have the right to retain counsel of their choice at LESSEE's expense. (b) Unless LESSOR agrees in writing otherwise, no settlement of any claim hereunder may require LESSOR to agree to any remedy apart from the payment of money damages (for which such payment of money damages LESSEE will in any event indemnify the Indemnitees). (c) In no event shall any Indemnitee enter into a settlement or other compromise with respect to any Expense without LESSEE's prior written consent (which shall not be unreasonably withheld or delayed), unless such Indemnitee waives its right to be indemnified with respect to such Expense under this Article 16. (d) To the extent that any Expense indemnified by LESSEE hereunder may be covered by insurance maintained by LESSEE, at LESSEE's expense, each Indemnitee agrees to cooperate with the insurers in the exercise of their rights to investigate, defend, or compromise that Expense as may be required to retain the benefits of the insurance for that Expense. (e) If an Indemnitee is not a party to this Lease, LESSEE may require that Indemnitee to agree in writing to the terms of this Article 16 before making any payment to such Indemnitee under this Article 16. 16.9 SURVIVAL OF OBLIGATION. Notwithstanding anything in this Lease to the contrary, the provisions of this Article 16 will survive the Termination Date and continue in full force and effect notwithstanding any breach by LESSOR or LESSEE of the terms of this Lease, the termination of the lease of the Aircraft to LESSEE under this Lease or the repudiation by LESSOR or LESSEE of this Lease. ARTICLE 17 INSURANCE 17.1 CATEGORIES OF INSURANCE. Throughout the Lease Term and until the Termination Date LESSEE will, at its own expense, effect and maintain in full force and effect the types of insurance and amounts of insurance (including deductibles) described in Exhibit C through such brokers and with such insurers favorably regarded in the airline industry. 17.2 INSURANCE FOR INDEMNITIES. The insurance referred to in Article 17.1 will in each case include and insure (to the extent of the risks covered by the policies) the indemnity provisions of Article 16 and LESSEE will maintain such insurance of the indemnities for a minimum of two (2) years following the Termination Date. 17.3 INSURANCE REQUIRED BY MANUFACTURER. During the Lease Term, LESSEE will carry the insurance required by Manufacturer in connection with LESSOR's assignment of Manufacturer's warranties and product support to LESSEE. 17.4 RENEWAL. Not less than two (2) Business Days before the expiration or termination date of any insurance required hereunder, LESSEE will provide LESSOR with fax confirmation from LESSEE's insurance brokers that renewed certificates of insurance evidencing the renewal or replacement of such insurance and complying with Exhibit C will be issued on the termination date of the prior certificate. Within seven (7) days after such renewal, LESSEE will furnish its brokers' certificates of insurance to LESSOR. 17.5 ASSIGNMENT OF RIGHTS BY LESSOR. If LESSOR assigns all or any of its rights under this Lease as permitted by this Lease or otherwise disposes of any interest in the Aircraft to any other Person, LESSEE will, upon request, procure that (to the extent of the assignment or disposition) such Person hereunder be added as loss payee and/or additional assured in the policies effected hereunder and enjoy the same rights and insurance enjoyed by LESSOR under such policies. To the extent of its retained interest or as provided in Article 24.2.1, LESSOR will nevertheless continue to be covered by such policies. 17.6 DEDUCTIBLES. If there is a material adverse change in the financial condition of LESSEE which LESSOR reasonably believes will not enable LESSEE to pay the deductible upon the occurrence of a partial loss of the Aircraft or an Engine, then LESSOR may require LESSEE at LESSEE's expense to lower its deductibles on the insurance maintained hereunder to a level which is available on commercially reasonable terms in the insurance market. 17.7 OTHER INSURANCE. LESSOR may from time to time by notice to LESSEE require LESSEE at LESSEE's expense to effect such other insurance or such variations to the terms of the existing insurance as may then be customary in the airline industry for aircraft of the same type as the Aircraft and at the time commonly available in the insurance market. 17.8 INFORMATION. LESSEE will provide LESSOR with any information reasonably requested by LESSOR from time to time concerning the insurance maintained with respect to the Aircraft or in connection with any claim being made or proposed to be made thereunder. 17.9 CURRENCY. All proceeds of insurance pursuant to this Lease will be payable in Dollars except as may be otherwise agreed by LESSOR. 17.10 GROUNDING OF AIRCRAFT. If at any time any of the insurance required pursuant to this Lease will cease to be in full force and effect, LESSEE will forthwith ground the Aircraft and keep the Aircraft grounded until such time as such insurance is in full force and effect again. 17.11 FAILURE TO INSURE. If at any time LESSEE fails to maintain insurance in compliance with this Article 17, LESSOR will be entitled but not bound to do any of the following (without prejudice to any other rights which it may have under this Lease by reason of such failure): (a) to pay any premiums due or to effect or maintain substitute insurance or otherwise remedy such failure in any reasonable manner (and LESSEE will upon demand reimburse LESSOR in full for any amount so expended in that connection); or (b) at any time while such failure is continuing, to require the Aircraft to remain at any airport or (as the case may be), proceed to and remain at any airport designated by LESSOR. 17.12 LIMIT ON HULL IN FAVOR OF LESSEE. LESSEE may carry hull all risks or hull war and allied perils on the Aircraft in excess of the Agreed Value (which Agreed Value is payable to LESSOR) only to the extent such excess insurance which would be payable to LESSEE in the event of a Total Loss does not exceed fifteen percent (15%) of the Agreed Value and only to the extent that such additional insurance will not prejudice the insurances required herein or the recovery by LESSOR thereunder. LESSEE agrees that it will not create or permit to exist any liens or encumbrances over the insurances, or its interest therein, except as constituted by this Lease. 17.13 MARKETPLACE LIMITATIONS. The insurance required by this Lease may be subject to any limitations generally prevailing in the airline insurance marketplace at the time (e.g., AVN67B). ARTICLE 18 LOSS, DAMAGE AND REQUISITION Throughout the Lease Term and until the Termination Date, LESSEE will bear all risk of loss, theft, damage and destruction to the Aircraft. 18.1 DEFINITIONS. In this Article 18: "AGREED VALUE" (CONFIDENTIAL MATERIAL OMITTED) The Agreed Value is set forth in March 2001 U.S. Dollars and will be increased in accordance with Manufacturer's announced escalation rate from March 1, 2001 to the Delivery Date. On each annual renewal date of LESSEE's insurance policy commencing on the renewal date following the first anniversary of the Lease Term, the Agreed Value will decrease by two percent (2.0%) of the then-existing Agreed Value. "NET TOTAL LOSS PROCEEDS" means the Total Loss Proceeds actually received by LESSOR following a Total Loss, less any legal and other out-of-pocket expenses or duties incurred by LESSOR in connection with the collection of such proceeds. "TOTAL LOSS" means any of the following in relation to the Aircraft, Airframe or any Engine and "TOTAL LOSS DATE" means the date set forth in parenthesis after each Total Loss: (a) destruction, damage beyond repair or being rendered permanently unfit for normal use for any reason (the date such event occurs or, if not known, the date on which the Aircraft, Airframe or Engine was last heard of); (b) actual, constructive, compromised, arranged or agreed total loss (the earlier of the date on which the loss is agreed or compromised by the insurers or thirty (30) days after the date of notice to LESSEE's brokers or insurers claiming such total loss); (c) requisition of title, confiscation, forfeiture or any compulsory acquisition of title or other similar event (the date on which the same takes effect); (d) sequestration, detention, seizure or any similar event for more than one hundred eighty (180) consecutive days (the earlier of the date on which insurers make payment on the basis of a total loss or the date of expiration of such period); (e) requisition for use for more than one hundred eighty (180) consecutive days, except as set forth in Article 18.8 (the earlier of the date on which the insurers make payment on the basis of a total loss or the date of expiration of such period); (f) in the case of an Engine, the event described in Article 12.6.3 (the date on which the same takes effect); "TOTAL LOSS PROCEEDS" means the proceeds of any insurance or any compensation or similar payment arising in respect of a Total Loss. 18.2 NOTICE OF TOTAL LOSS. LESSEE will notify LESSOR in writing within two (2) Business Days after a Total Loss Date of the Aircraft, Airframe or any Engine. 18.3 TOTAL LOSS OF AIRCRAFT OR AIRFRAME. If the Total Loss of the Aircraft or Airframe occurs during the Lease Term, the following will occur: 18.3.1 After the Total Loss Date and until receipt by LESSOR of the Agreed Value and all other amounts then due under this Lease, LESSEE will continue to pay Rent and the parties will perform all of their other obligations under this Lease. 18.3.2 On the date which is the earlier of the following dates: (a) the date on which the Total Loss Proceeds of the Aircraft or the Airframe are paid by LESSEE's insurance underwriters or brokers and (b) the date which falls sixty (60) days after the Total Loss Date, LESSEE will pay to LESSOR an amount equal to the sum of: (a) the Agreed Value and (b) all other amounts then due and payable under this Lease, less an amount equal to the Net Total Loss Proceeds received by LESSOR by such date. 18.3.3 LESSOR will apply the Net Total Loss Proceeds and any amounts received from LESSEE pursuant to Article 18.3.2 as follows: (a) first, in discharge of any unpaid Rent and any other amounts accrued and unpaid up to the date of LESSOR's receipt of the Agreed Value; (b) second, in discharge of the Agreed Value; and (c) third, payment of the balance, if any, to LESSEE. 18.3.4 Upon receipt by LESSOR of all monies payable by LESSEE in Article 18.3, provided no Default has occurred and is continuing, this Lease will terminate except for LESSEE's obligations under Articles 10.5, 15 and 16 which survive the Termination Date and the Security Deposit will be returned to LESSEE in accordance with Article 5.3.1. FOR AVOIDANCE OF DOUBT, THE AGREED VALUE OF THE AIRCRAFT WILL BE PAYABLE TO LESSOR PURSUANT TO THIS ARTICLE 18.3 IF A TOTAL LOSS OF THE AIRFRAME OCCURS EVEN IF THERE HAS NOT BEEN A TOTAL LOSS OF AN ENGINE OR ENGINES. 18.4 SURVIVING ENGINE(S). If a Total Loss of the Airframe occurs and there has not been a Total Loss of an Engine or Engines, then provided no Default has occurred and is continuing, at the request of LESSEE (subject to agreement of relevant insurers) and on receipt of all monies due under Article 18.3 and payment by LESSEE of all airport, navigation and other charges on the Aircraft, LESSOR will transfer all of its right, title and interest in the surviving Engine(s) to LESSEE, but without any responsibility, condition or warranty on the part of LESSOR other than as to freedom from any LESSOR's Lien. 18.5 TOTAL LOSS OF ENGINE AND NOT AIRFRAME. 18.5.1 Upon a Total Loss of any Engine not installed on the Airframe or a Total Loss of an Engine installed on the Airframe not involving a Total Loss of the Airframe, LESSEE will replace such Engine as soon as reasonably possible by duly conveying to LESSOR title to another engine (a) free and clear of all Security Interests (except Permitted Liens) of any kind or description, (b) in airworthy condition and of the same or improved model, service bulletin and modification status and having a value and utility at least equal to the Engine which sustained the Total Loss, and (c) not older (by reference to serial number or manufacture date) than three (3) years older than the oldest of the two Engines delivered by LESSOR to LESSEE with the Aircraft on the Delivery Date. Such replacement engine will be an Engine as defined herein and the Engine which sustained such Total Loss will cease to be an Engine. 18.5.2 LESSEE agrees at its own expense to take such action as LESSOR may reasonably request in order that any such replacement Engine becomes the property of LESSOR and is leased hereunder on the same terms as the destroyed Engine. LESSEE's obligation to pay Rent will continue in full force and effect, but an amount equal to the Net Total Loss Proceeds received by LESSOR with respect to such destroyed Engine will, subject to LESSOR's right to deduct therefrom any amounts then due and payable by LESSEE under this Lease, be paid to LESSEE. 18.6 OTHER LOSS OR DAMAGE. 18.6.1 If the Aircraft or any Part thereof suffers loss or damage not constituting a Total Loss of the Aircraft or the Airframe or any Engine, all the obligations of LESSEE under this Lease (including payment of Rent) will continue in full force. 18.6.2 In the event of any loss or damage to the Aircraft or Airframe which does not constitute a Total Loss of the Aircraft or the Airframe, or any loss or damage to an Engine which does not constitute a Total Loss of such Engine, LESSEE will at its sole cost and expense fully repair the Aircraft or Engine in order that the Aircraft or Engine is placed in an airworthy condition and substantially the same condition as it was prior to such loss or damage. All repairs will be performed in accordance with sound airline procedures. LESSEE will notify LESSOR forthwith of any loss, theft or damage to the Aircraft for which the cost of repairs is estimated to exceed Seven Hundred Fifty Thousand U.S. Dollars (US$750,000), together with LESSEE's proposal for carrying out the repair. In the event that LESSOR does not agree with LESSEE's proposals for repair, LESSOR will so notify LESSEE within two (2) Business Days after its receipt of such proposal. LESSEE and LESSOR will then consult with Manufacturer and LESSEE and LESSOR agree to accept as conclusive, and be bound by, Manufacturer's directions or recommendations as to the manner in which to carry out such repairs. If Manufacturer declines to give directions or recommendations, LESSEE will carry out the repairs in accordance with the directions of LESSOR. 18.6.3 To the extent that LESSOR has received insurance proceeds from LESSEE's insurers with respect to any loss or damage, LESSOR will (subject to LESSOR's right to deduct therefrom any amounts then due and payable by LESSEE under this Lease and submission by LESSEE of reasonable documentation confirming the completion of the repairs in accordance with the requirements of this Lease) pay to LESSEE insurance proceeds received by LESSOR as and when such repair work is performed on the Aircraft. 18.7 COPY OF INSURANCE POLICY. Promptly after LESSOR's request following the occurrence of a partial loss or Total Loss of the Aircraft or an Engine, LESSEE will provide LESSOR with a copy of LESSEE's insurance policy. 18.8 GOVERNMENT REQUISITION. If the Aircraft, Airframe or any Engine is requisitioned for use by any Government Entity, LESSEE will promptly notify LESSOR of such requisition. All of LESSEE's obligations hereunder will continue as if such requisition had not occurred. Except if a Default or an Event of Default has occurred and is continuing, all payments received by LESSOR or LESSEE from such Government Entity will be paid over to or retained by LESSEE. 18.9 CONVEYANCE TO LESSEE. Upon compliance by LESSEE with the applicable terms of Article 18.3 or 18.5, LESSOR will transfer to LESSEE the Airframe or Engine(s), as applicable, with respect to which such Total Loss. ARTICLE 19 CRAF PROGRAM 19.1 DEDICATION TO CRAF. LESSEE may transfer possession of the Airframe or any Engine to the United States of America or any instrumentality or agency thereof as part of the Civil Reserve Air Fleet Program authorized under 10 U.S.C. ss. 9511 ET SEQ. (or any substantially similar program) ("CRAF PROGRAM") for a period which includes (collectively, the "CRAF PROGRAM REQUISITION PERIOD") the entire period of requisition under the CRAF Program. If the CRAF Program Requisition Period extends beyond the Expiration Date provided by this Lease, then the Lease will be deemed to continue for six (6) months after the end of the CRAF Program Requisition Period at a monthly rental rate equal to the monthly rental rate during the Lease Term. If such extension extends beyond the Lease Term, then LESSEE will provide LESSOR with written notice of the proposed redelivery by the earlier of six (6) months prior to the proposed redelivery date or five (5) Business Days after the date of receipt of the actual notice given to LESSEE by the government prior to the government's redelivery date and LESSEE will return the Aircraft to LESSOR in the condition required by Article 23 on LESSEE's proposed redelivery date set forth in such notice. 19.2 NOTICE TO LESSOR. LESSEE will promptly notify LESSOR in writing in the event of the requisition for use of the Aircraft under CRAF activation by the U.S. Government. All of LESSEE's obligations under this Lease will continue to the same extent as if such requisition had not occurred. 19.3 REQUISITION OF ENGINE. If there is a requisition for use of any Engine (but not the Airframe) by the U.S. Government in connection with the CRAF Program, LESSEE will replace such Engine by complying with the terms of Article 18.5 hereof. 19.4 GOVERNMENT INDEMNIFICATION. Any provisions of this Lease to the contrary notwithstanding, if there is a requisition for use of the Aircraft pursuant to the CRAF Program and/or CRAF activation, LESSOR agrees that LESSEE's insurances described in Exhibit C may be supplemented by insurances provided under Title XIII of the Act, and/or U.S. Government indemnification (which Title XIII insurances and indemnification will be in amounts not less than those established in Exhibit C); provided, however, that LESSEE will remain responsible for full compliance with all the provisions of this Lease, including Articles 14 and 16, to the extent Title XIII and/or the U.S. Government indemnification do not satisfy LESSEE's obligations under this Lease. 19.5 NO GEOGRAPHIC LIMITS. If there is a requisition for use of the Aircraft pursuant to the CRAF Program and/or CRAF activation, there will be no limitation on the geographic area in which the Aircraft may be operated so long as, taken as a whole, LESSEE's insurance, the Title XIII insurance and/or the indemnification provided by the U.S. Government fully cover (without any geographic exclusions) LESSEE's Exhibit C insurance requirements. 19.6 NOTICE OF DEFAULT. If an Event of Default occurs under this Lease and LESSOR elects to pursue its remedies under Article 25.3(e) to terminate this Lease and repossess the Aircraft, LESSOR will so notify the U.S. Government by sending a written communication as follows: Headquarters Air Mobility Command AMC Contracting Office -- XOKA Scott Air Force Base, Illinois 62225-5007 19.7 RECEIPT OF PAYMENTS. Subject to the following sentence, all payments received by LESSOR or LESSEE from such Government Entity in connection with the requisition of the Aircraft under the CRAF Program will be paid over to or retained by LESSEE. If a Default has occurred and is continuing, all payments received by LESSEE or LESSOR from such Government Entity in connection with the requisition of the Aircraft under the CRAF Program may be used by LESSOR to satisfy any obligations owing by LESSEE. ARTICLE 20 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE 20.1 REPRESENTATIONS AND WARRANTIES. LESSEE represents and warrants the following to LESSOR as of the date of execution of this Lease and as of the Delivery Date: 20.1.1 CORPORATE STATUS. LESSEE is a corporation duly incorporated, validly existing and in good standing under the Laws of Indiana (or, on the Delivery Date, the state of its incorporation). It has the corporate power and authority to carry on its business as presently conducted and to perform its obligations hereunder. 20.1.2 GOVERNMENTAL APPROVALS. No authorization, approval, consent, license or order of, or registration with, or the giving of notice to the Aviation Authority or any other Government Entity is required for the valid authorization, execution, delivery and performance by LESSEE of this Lease, except as will have been duly effected as of the Delivery Date. 20.1.3 BINDING. LESSEE's Board of Directors has authorized LESSEE to enter into this Lease, any Side Letters hereto and any other documentation in connection with the leasing of the Aircraft from LESSOR (collectively, the "OPERATIVE DOCUMENTS") and perform its obligations under the Operative Documents. This Lease and the other Operative Documents have been duly executed and delivered by LESSEE and represent the valid, binding and enforceable obligations of LESSEE except as enforceability may be limited by bankruptcy, insolvency, reorganization or other Laws of general application affecting the enforcement of creditors' rights. When executed by LESSEE at Delivery, the same will apply to the Estoppel and Acceptance Certificate. 20.1.4 NO BREACH. The execution and delivery of the Operative Documents, the consummation by LESSEE of the transactions contemplated herein and compliance by LESSEE with the terms and provisions hereof do not and will not contravene any Law applicable to LESSEE, or result in any breach of or constitute any default under or result in the creation of any Security Interest upon any property of LESSEE, pursuant to any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which LESSEE is a party or by which LESSEE or its properties or assets may be bound or affected. When executed by LESSEE at Delivery, the same will apply to the Estoppel and Acceptance Certificate. 20.1.5 FILINGS. Except for any filing or recording that may be required by the FARs, no filing or recording of any instrument or document (including the filing of any financial statement) is necessary under the Laws of the State of Registration in order for this Lease to constitute a valid and perfected lease of record relating to the Aircraft. 20.1.6 LICENSES. LESSEE holds all licenses, certificates and permits from applicable Government Entities in the U.S. for the conduct of its business as a certificated air carrier and performance of its obligations under this Lease. 20.1.7 NO SUITS. There are no suits, arbitrations or other proceedings pending or threatened before any court or administrative agency against LESSEE which are reasonably likely to be determined adversely and, if adversely determined, would have a material adverse effect on the business, assets or condition (financial or otherwise) of LESSEE or its ability to perform under this Lease, except as described in the filings provided to LESSOR pursuant to Article 22. 20.1.8 GENERAL OBLIGATIONS. The obligations of LESSEE under this Lease are direct, general and unconditional obligations of LESSEE and rank or will rank at least PARI PASSU with all other present and future unsecured and unsubordinated obligations (including contingent obligations) of LESSEE, with the exception of such obligations as are mandatorily preferred by law and not by reason of any encumbrance. 20.1.9 NO SOVEREIGN IMMUNITY. LESSEE, under the Laws of the U.S. or of any other jurisdiction affecting LESSEE, is subject to private commercial law and suit. Neither LESSEE nor its properties or assets is entitled to sovereign immunity under any such Laws. LESSEE's performance of its obligations hereunder constitute commercial acts done for commercial purposes. 20.1.10 TAX RETURNS. All necessary federal and state income tax returns have been delivered by LESSEE to all relevant taxation authorities in the U.S. or any state thereof and LESSEE is not in default in the payment of any taxes due and payable as shown on any such returns or on any assessment received by LESSEE. 20.1.11 NO MATERIAL ADVERSE EFFECT. LESSEE is not in default under any agreement to which it is a party or by which it may be bound which would have a material adverse effect on its business, assets or condition. 20.1.12 NO DEFAULT UNDER THIS LEASE. At the time of execution of this Lease, no Default has occurred and is continuing and the financial statements provided to LESSOR pursuant to Article 22 fairly present the financial condition of LESSEE. 20.2 COVENANTS. LESSEE covenants to LESSOR that it will comply with the following throughout the entire Lease Term: 20.2.1 LICENSING. LESSEE will hold all licenses, certificates and permits from applicable Government Entities in the U.S. for the conduct of its business as a certificated air carrier and performance of its obligations under this Lease. LESSEE will advise LESSOR promptly in the event any such licenses, certificates or permits are cancelled, terminated, revoked or not renewed. 20.2.2 SOVEREIGN IMMUNITY. LESSEE, under the Laws of the U.S. or of any other jurisdiction affecting LESSEE, will continue to be subject to private commercial law and suit. Neither LESSEE nor its properties or assets will be entitled to sovereign immunity under any such Laws. LESSEE's performance of its obligations hereunder will constitute commercial acts done for commercial purposes. LESSEE will advise LESSOR promptly of any change in the foregoing. 20.2.3 INFORMATION ABOUT SUITS. LESSEE will promptly give to LESSOR a notice in writing of any suit, arbitration or proceeding against LESSEE before any court, administrative agency or Government Entity which is reasonably likely to be determined adversely and, if adversely determined, would materially adversely affect LESSEE's financial condition, affairs, operations or its ability to perform under this Lease. 20.2.4 MERGER OF LESSEE. (a) LESSEE shall not consolidate with or merge into any other Person under circumstances in which LESSEE is not the surviving corporation, or convey, transfer, or lease in one or more transactions all or substantially all of its assets to any other Person, unless: (i) such Person is organized, existing, and in good standing under the Laws of the U.S., any state of the U.S., or the District of Columbia, and, upon consummation of such transaction, such Person will be a U.S. Air Carrier; (ii) such Person executes and delivers to LESSOR a duly authorized, legal, valid, binding and enforceable agreement, reasonably satisfactory in form and substance to LESSOR, containing an effective assumption by such Person of the due and punctual performance and observance of each covenant, agreement and condition in the Operative Documents to be performed or observed by LESSEE; (iii) such Person makes such filings and recordings with the FAA pursuant to the Act as shall be necessary to evidence such consolidation or merger; (iv) LESSEE furnishes LESSOR an opinion of counsel reasonably satisfactory to LESSOR to the effect that such consolidation or merger has satisfied at the closing of such consolidation or merger items (i), (ii) and (iii) above; (v) immediately after giving effect to such consolidation or merger, no Default or Event of Default exists; (vi) unless LESSOR otherwise consents, immediately after giving effect to such consolidation or merger, such Person will have a tangible net worth of not less than sixty-five percent (65%) of the LESSEE's tangible net worth immediately prior to such merger; and (vii) upon such merger becoming effective, LESSOR will enjoy the same degree of protection under ss. 1110 of the Bankruptcy Code with respect to the Aircraft as LESSOR enjoyed prior to such merger. (b) Upon any such consolidation or merger of LESSEE with or into, or the conveyance, transfer, or lease by LESSEE of all or substantially all of its assets to, any Person in accordance with this Article 20.2.4, such Person will succeed to, and be substituted for, and may exercise every right and power of, LESSEE under the Operative Documents with the same effect as if such Person had been named as "LESSEE" therein. No such consolidation, merger, conveyance, transfer, or lease shall have the effect of releasing LESSEE or such Person from any of LESSEE's obligations, liabilities, covenants, or undertakings under this Lease. 20.2.5 RESTRICTION ON RELINQUISHMENT OF POSSESSION. LESSEE will not, without the prior consent of LESSOR, deliver, transfer or relinquish possession of the Aircraft except in accordance with Articles 11 and 12. 20.2.6 NO SECURITY INTERESTS. LESSEE will not create or agree to or permit to arise any Security Interest (other than Permitted Liens) on or with respect to the Aircraft, title thereto or any interest therein. LESSEE will forthwith, at its own expense, take all action as may be necessary to discharge or remove any such Security Interest if it exists at any time. LESSEE will within five (5) Business Days after becoming aware of the existence of any such Security Interest give written notice thereof to LESSOR. 20.2.7 REPRESENTATIONS TO OTHER PARTIES. LESSEE will not represent or hold out LESSOR as carrying goods or passengers on the Aircraft or as being in any way connected or associated with any operation of the Aircraft. ARTICLE 21 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSOR 21.1 REPRESENTATIONS AND WARRANTIES. LESSOR represents and warrants the following to LESSEE as of the date of execution of the Lease and as of the Delivery Date and ALL OTHER WARRANTIES, EXPRESS OR IMPLIED HAVE BEEN WAIVED IN ACCORDANCE WITH ARTICLE 8: 21.1.1 CORPORATE STATUS. LESSOR is a corporation duly incorporated, validly existing and in good standing under the Laws of the State of California. It has the corporate power and authority to carry on its business as presently conducted and to perform its obligations hereunder. 21.1.2 GOVERNMENTAL APPROVALS. No authorization, approval, consent, license or order of, or registration with, or the giving of notice to any U.S. Government Entity is required for the valid authorization, execution, delivery and performance by LESSOR of this Lease. 21.1.3 BINDING. This Lease and the other Operative Documents have been duly authorized, executed and delivered by LESSOR and represent the valid, enforceable and binding obligations of LESSOR except as enforceability may be limited by bankruptcy, insolvency, reorganization or other Laws of general application affecting the enforcement of creditors' rights. 21.1.4 NO BREACH. The execution and delivery of the Operative Documents, the consummation by LESSOR of the transactions contemplated herein and compliance by LESSOR with the terms and provisions hereof do not and will not contravene any Law applicable to LESSOR, or result in any breach of or constitute any default under any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which LESSOR is a party or by which LESSOR or its properties or assets may be bound or affected. 21.1.5 TITLE TO AIRCRAFT. On the Delivery Date LESSOR will have good and valid title to the Aircraft. 21.1.6 CITIZENSHIP. LESSOR is a "citizen of the United States" within the meaning of 49 U.S. Code 40102(a)(15). 21.1.7 INVESTMENT BY LESSOR. LESSOR is acquiring its interest in the Aircraft for its own account from its corporate funds, for investment and not with a view to any resale or distribution thereof that would require registration under the Securities Act of 1933; PROVIDED, HOWEVER, that subject to the transfer restrictions in Article 24.2, its disposition of its interest in the Aircraft shall at all times be within its control. 21.2 COVENANT OF QUIET ENJOYMENT. So long as no Event of Default has occurred and is continuing hereunder, LESSOR covenants that neither LESSOR nor any person lawfully claiming through LESSOR will interfere with LESSEE's quiet, peaceful use and enjoyment of the Aircraft. ARTICLE 22 FINANCIAL AND RELATED INFORMATION LESSEE agrees to furnish each of the following to LESSOR: (a) within sixty (60) days after the end of each fiscal quarter of LESSEE, the unaudited consolidated financial statements (including a balance sheet and profit and loss statement) prepared for such quarter in accordance with generally accepted accounting principles in the U.S.; (b) within one hundred twenty (120) days after the end of each fiscal year of LESSEE, the audited consolidated financial statements (including a balance sheet and profit and loss statement) prepared as of the close of such fiscal year in accordance with generally accepted accounting principles in the U.S. LESSEE's chief financial officer will also provide a certificate of LESSEE stating that, to such officer's knowledge, no Default exists under this Lease (or if, to such officer's knowledge, a Default does exist, identifying it); (c) promptly after distribution, all reports and financial statements which Amtran, Inc. sends or makes generally available to its stockholders or creditors; and (d) from time to time, such other reasonable information as LESSOR or LESSOR's Lender may reasonably request concerning the location, condition, use and operation of the Aircraft or the financial condition of LESSEE. ARTICLE 23 RETURN OF AIRCRAFT 23.1 DATE OF RETURN. LESSEE is obligated to return the Aircraft, Engines Parts and Aircraft Documentation to LESSOR on the Expiration Date, unless a Total Loss of the Aircraft occurred prior to the Expiration Date and this Lease was terminated early in accordance with Article 18.3. If LESSEE is in Default hereunder by failing to return the Aircraft on the Expiration Date or if an Event of Default occurs prior to the Expiration Date and LESSOR repossesses the Aircraft, the return requirements set forth in this Article 23 nonetheless must be met on the date the Aircraft is actually returned to LESSOR or repossessed by LESSOR. 23.2 TECHNICAL REPORT. Six (6) months prior to the Expiration Date (and in an updated form at return of the Aircraft), LESSEE will provide LESSOR with a Technical Evaluation Report in the form and substance of Exhibit L, as revised, and, in addition upon LESSOR's request, will make copies available of (a) drawings of the interior configuration of the Aircraft both as it presently exists and as it will exist at return, (b) an Airworthiness Directive status list, (c) a service bulletin incorporation list, (d) rotable tracked, hard-time and life-limited component listings, (e) a list of LESSEE-initiated modifications and alterations, (f) interior material burn certificates, (g) the Aircraft Maintenance Program, (h) the complete workscope for the checks, inspections and other work to be performed prior to return, (i) a list of all no-charge service bulletin kits with respect to the Aircraft which were ordered by LESSEE from Manufacturer or Engine manufacturer, (j) current Engine disk sheets and a description of the last shop visit for each Engine and (k) any other data which is reasonably requested by LESSOR. 23.3 RETURN LOCATION. LESSEE at its expense will return the Aircraft, Engines, Parts and Aircraft Documentation to LESSOR at Indianapolis International Airport, Indianapolis, Indiana or to such other airport as may be mutually agreed to by LESSEE and LESSOR. 23.4 FULL AIRCRAFT DOCUMENTATION REVIEW. For the period commencing at least ten (10) Business Days prior to the proposed redelivery date and continuing until the date on which the Aircraft is returned to LESSOR in the condition required by this Lease, LESSEE will provide for the review of LESSOR and/or its representative all of the Aircraft records and historical documents described in Exhibit K in one central room at the Aircraft return location. 23.5 AIRCRAFT INSPECTION. 23.5.1 During the maintenance checks performed immediately prior to the proposed redelivery and at the actual return of the Aircraft, LESSOR and/or its representatives will have an opportunity to conduct a full systems functional and operational inspection of the Aircraft (and other types of reasonable inspections based upon the Aircraft type, age, use and other known factors with respect to the Aircraft) and a full inspection of the Aircraft Documentation (including records and manuals), all to LESSOR's satisfaction. The inspection will occur during the Return Check when the panels, bays or the like are open and certain Parts are disassembled. LESSOR may inspect such opened panels, bays or the like and the disassembled Parts so long as LESSOR does not disrupt the Return Check or cause such Return Check to be extended beyond the anticipated completion date of such Return Check. Any deficiencies from the Aircraft return condition requirements set forth in this Article 23 will be corrected by LESSEE at its cost prior to the acceptance flight described in Article 23.5.2. 23.5.2 Immediately prior to the proposed redelivery of the Aircraft, LESSEE will carry out for LESSOR and/or LESSOR's representatives an Aircraft acceptance flight in accordance with Manufacturer's standard flight operation check flight procedures or, if agreed to in writing by LESSOR, in accordance with an airline acceptance flight procedure, either of which will be for the duration necessary to perform such check flight procedures but in any event not less than two (2) hours. Flight costs and fuel will be furnished by and at the expense of LESSEE. Any deficiencies from the Aircraft return condition requirements set forth in this Article 23 will be corrected by LESSEE at its cost prior to return of the Aircraft. 23.5.3 To the extent that the ground inspection and acceptance flight extend beyond the Expiration Date, the Lease Term will be deemed to have been automatically extended and the obligations of LESSEE hereunder (including Article 23.11.3) will continue on a day-to-day basis until the Aircraft is accepted by LESSOR executing the Return Acceptance Receipt in the form of Exhibit I. 23.6 CERTIFICATE OF AIRWORTHINESS MATTERS. 23.6.1 The Aircraft will possess a current Certificate of Airworthiness issued by the Aviation Authority (although this Certificate of Airworthiness may later be substituted by the Export Certificate of Airworthiness or equivalent if requested by LESSOR pursuant to Article 23.10). The Aircraft at return must be in the condition required in order to meet the requirements of a U.S. Standard Certificate of Airworthiness for transport category aircraft issued by the FAA in accordance with FAR Part 21 and, in addition, to meet the operating requirements of FAR Part 121. 23.6.2 LESSEE at its cost will demonstrate that the Aircraft meets the requirements for issuance of the U.S. Standard Certificate of Airworthiness for transport category aircraft specified in Article 23.6.1 by delivering to LESSOR an actual U.S. Standard Certificate of Airworthiness. If there is a dispute in regards to the condition of the Aircraft or the Aircraft Documentation, then LESSEE will provide LESSOR with a letter acceptable to LESSOR signed by an FAA Designated Airworthiness Representative (DAR) or another Person acceptable to LESSOR stating that the DAR or such Person has inspected the Aircraft and Aircraft Documentation (including records and manuals) and has found that the Aircraft meets the requirements for issuance of a U.S. Standard Certificate of Airworthiness for transport category aircraft in accordance with FAR Part 21 and, in addition, meets the operating requirements of FAR Part 121. 23.6.3 If the Aircraft is to be registered in a country other than in the U.S. after return from LESSEE, LESSOR may in its sole discretion waive the requirements of Article 23.6.2 and instead require that LESSEE at its expense (to the extent such expense is no greater than that which LESSEE would have incurred pursuant to Articles 23.6.1 and 23.6.2, with any additional expenses being for LESSOR's account) put the Aircraft in a condition to meet the requirements for issuance of a Certificate of Airworthiness of the Aviation Authority of the next country of register. 23.7 GENERAL CONDITION OF AIRCRAFT AT RETURN. 23.7.1 The Aircraft, Engines and Parts will have been maintained and repaired in accordance with the Maintenance Program, the rules and regulations of the Aviation Authority and this Lease. 23.7.2 Aircraft Documentation (including records and manuals) will have been maintained in an up-to-date status, in accordance with the rules and regulations of the Aviation Authority and the FAA and this Lease and in a form necessary in order to meet the requirements of Article 23.6.2. The records and historical documents set forth in Attachment 1 of Exhibit I will be in English. 23.7.3 The Aircraft will be in the same working order and condition as at Delivery (subject to the other provisions of this Article 23, reasonable wear and tear from normal flight operations excepted), with all pilot discrepancies and deferred maintenance items cleared on a terminating action basis. 23.7.4 The Aircraft will be airworthy (conform to type design and be in a condition for safe operation), with all Aircraft equipment, components and systems operating in accordance with their intended use and within limits approved by the Manufacturer, Aviation Authority and FAA. 23.7.5 The Aircraft interior (including cabin and windows) and exterior will be clean and all compartments will be reasonably free of foreign objects, dirt, grease, fluids, stains, grime, cracks, tears and rips (with the exception of normal wear and tear) and ready to be placed into immediate commercial airline operations. 23.7.6 No special or unique Manufacturer, Engine manufacturer or Aviation Authority inspection or check requirements which are specific to the Aircraft or Engines (as opposed to all aircraft or engines of their types) will exist with respect to the Airframe, Engines and Aircraft equipment, components and systems. 23.7.7 All repairs, modifications and alterations to the Aircraft will have been accomplished in accordance with Manufacturer's Structural Repair Manual (or FAA-approved data supported by FAA Form 8110-3) for the Aircraft. 23.7.8 The Aircraft will be returned with LESSOR's Engines installed and with the same equipment as at Delivery, subject only to those replacements, additions and Modifications permitted under this Lease. LESSEE will inform LESSOR of whether LESSEE will be able to redeliver the Engines with the Aircraft and the proposed replacement engines that LESSEE wants to provide LESSOR in place of the Engines. LESSEE will provide LESSOR with whatever data, records and information that LESSOR reasonably requests in order to evaluate the proposed replacement engines. In the event that LESSEE is unable to return either of the Engines in the conditions required by this Article 23, then LESSEE may provide a replacement engine (a "REPLACEMENT ENGINE") for such Engine to LESSOR by duly conveying to LESSOR as owner hereunder title to another engine of the same manufacturer and of the same or an improved model as the Engine being replaced and suitable for installation and use on the Aircraft, which engine shall be free and clear of all Security Interests, and shall be no more than three (3) years older by reference to serial number than the replaced Engine and have a modification status, value and utility at least equal to the Engine which such Replacement Engine is replacing on the Aircraft assuming that such Engine which such Replacement Engine is replacing was then of the value, utility, condition, and airworthiness required to be maintained by the terms of this Lease. Such Replacement Engine, after approval and acceptance by LESSOR, shall be deemed an "Engine" as defined herein for all purposes hereunder. LESSEE agrees to take such action as LESSOR may reasonably request in order that such Replacement Engine shall be duly and properly titled in the name of LESSOR. Prior to or at the time of any such conveyance, LESSEE, at its own expense, will promptly: (a) furnish LESSOR with a warranty bill of sale, in form and substance satisfactory to LESSOR, with respect to such Replacement Engine, (b) furnish LESSOR with such evidence of title to such Replacement Engine as reasonably requested by LESSOR, and (c) furnish LESSOR with an opinion of LESSEE's counsel to the effect that title to such Replacement Engine has been duly conveyed to LESSOR free and clear of all Security Interests of any kind or nature and that such exchange qualifies for tax free treatment under the Internal Revenue Code of 1986, as amended. Upon full compliance with this Article, LESSOR shall transfer to LESSEE all of LESSOR's right, title and interest, on an "AS-IS", "WHERE-IS" basis in and to the Engine being replaced by such Replacement Engine, without recourse or warranty, express or implied, except that LESSOR has good and marketable title to such Engine and such Engine shall be free and clear of LESSOR's Liens. 23.7.9 All Airworthiness Directives which are issued prior to the date of return of the Aircraft and require compliance (either by means of repetitive inspections, modifications or terminating action) prior to return of the Aircraft to LESSOR or within one (1) year after the Termination Date will have been complied with on the Aircraft on a terminating action basis at LESSEE's cost. Airworthiness Directives which do not have a terminating action will be accomplished at the highest level of inspection or modification possible. If, after using best efforts, LESSEE is unable to acquire the material, parts or components necessary to accomplish such Airworthiness Directive, LESSEE will pay to LESSOR upon return of the Aircraft the estimated cost of terminating such Airworthiness Directive. If the estimated cost cannot be mutually agreed upon by LESSEE and LESSOR, LESSEE and LESSOR will each obtain an estimate from a reputable FAA-approved maintenance facility (unaffiliated with LESSEE or LESSOR) and the estimated cost will be the average of the two estimates. 23.7.10 The Aircraft will be in compliance with the Corrosion Prevention and Control Program (CPCP) specified in LESSEE's Maintenance Program. 23.7.11 If any waivers, deviations, dispensations, alternate means of compliance, extensions or carry-overs with respect to maintenance or operating requirements, repairs or Airworthiness Directives are granted by the Aviation Authority or permitted by the Maintenance Program, LESSEE at its sole cost and expense will nonetheless perform such maintenance or operating requirements, repairs or Airworthiness Directives as if such waivers, deviations, dispensations, alternate means of compliance, or extensions or carry-overs did not exist. 23.7.12 The Aircraft will be free from any Security Interest except LESSOR's Liens and no circumstance will have so arisen whereby the Aircraft is or could become subject to any Security Interest or right of detention or sale in favor of the Aviation Authority, any airport authority, or any other authority. 23.7.13 All no-charge vendor and Manufacturer's service bulletin kits received by LESSEE for the Aircraft but not installed thereon will be on board the Aircraft as cargo. At LESSOR's request, any other service bulletin kit which LESSEE paid for will also be delivered to LESSOR on board the Aircraft, but LESSOR will reimburse LESSEE for its actual out-of-pocket costs for such kit, unless LESSEE purchased such kit as part of its implementation of a service bulletin on its fleet of aircraft of the same type as the Aircraft but had not yet installed such kit on the Aircraft, in which case such kit will be furnished free of charge to LESSOR. 23.7.14 The Aircraft will be free of any leaks and any damage resulting therefrom. All repairs will have been performed on a permanent basis in accordance with the applicable manufacturer's instructions. 23.7.15 The Aircraft fluid reservoirs (including oil, oxygen, hydraulic and water) will be serviced to full and the waste tank serviced in accordance with Manufacturer's instructions. (Fuel tanks will be at least as full as at Delivery.) 23.8 CHECKS PRIOR TO RETURN. Immediately prior to return of the Aircraft to LESSOR, LESSEE at its expense will do each of the following: 23.8.1 Have performed, and completed, by an FAA-approved repair station, all maintenance tasks specified in LESSEE's Maintenance Program and the MPD which (a) are necessary to clear the Aircraft of all such tasks for eighteen (18) months, five thousand (5,000) hours, and three thousand (3,000) cycles from the date of return of the Aircraft, and (b) are required to be performed at lesser intervals than eighteen (18) months, five thousand (5,000) hours or three thousand (3,000) cycles (all such work collectively referred to as the "RETURN CHECK"). If a maintenance task is specific to LESSEE's Maintenance Program and not required or recommended to be performed by the MPD, then LESSEE will not be required to perform such maintenance task so long as the Return Check is performed in such a manner that clears the Aircraft of all maintenance tasks in accordance with the requirements of the preceding sentence. As part of the Return Check, all non-routine tasks generated as a result of the performance of the work included in the Return Check and any other discrepancies revealed during the Return Check must also be performed in accordance with the FAA approved procedures. LESSEE will also weigh the Aircraft. LESSEE agrees to perform during the Return Check any other work reasonably required by LESSOR (and not otherwise required under this Lease) and LESSOR will, promptly upon receipt of an invoice from LESSEE, reimburse LESSEE for such work at LESSEE's preferred customer rates. 23.8.2 Have the Aircraft in compliance with Corrosion Prevention and Control Program (CPCP) as specified in the MPD and LESSEE's Maintenance Program. 23.8.3 Remove LESSEE's exterior markings, including all exterior paint, by stripping (or, at LESSOR's option, pneumatically scuff/sanding) the paint from the fuselage, empennage, wings and Engine cowlings, and clean, reseal, refinish, prepare (including application of alodine or another corrosion inhibitor) and prime the surfaces to be painted, all in accordance with Manufacturer's and paint manufacturer's recommendations. LESSEE will then repaint the fuselage, empennage, wings and Engine cowlings in the colors and logo specified by LESSOR ; PROVIDED, HOWEVER, that LESSEE will be responsible for only paying the amount that it would cost to strip or scuff/sand (whichever is performed on the Aircraft at return) and properly paint the Aircraft in LESSEE's colors and logo and LESSOR will be responsible for the excess cost to paint the Aircraft in the next lessee's colors and logo. Such painting will be accomplished in such a manner as to result in a uniformly smooth and cosmetically acceptable aerodynamic surface. All external placards, signs and markings will be properly attached, free from damage, clean and legible. 23.8.4 Clean the exterior and interior of the Aircraft. 23.8.5 If reasonably required by LESSOR, apply touch up to paint to the interior of the Aircraft, including flight deck, and replace any missing or broken placards. 23.8.6 In accordance with Article 23.7.7, permanently repair damage to the Aircraft that exceeds Manufacturer's limits and replace any non-flush structural patch repairs installed on the Aircraft with flush-type repairs, so long as the Manufacturer or the Manufacturer's Structural Repair Manual permits flush-type repairs on the portion of the Aircraft where the non-flush structural repairs were made. 23.8.7 With LESSOR or its representatives present, perform a full and complete hot and cold section videotape borescope on each Engine and its modules in accordance with the Engine manufacturer's maintenance manual. 23.8.8 If the Engine historical and technical records and/or condition trend monitoring data of any Engine (including the APU) indicate an acceleration in the rate of deterioration in the performance of an Engine, LESSEE will correct, to LESSOR's satisfaction, such conditions which are determined to be causing such accelerated rate of deterioration. 23.8.9 With LESSOR or its representatives present, accomplish a maximum power assurance run on the Engines. LESSEE will evaluate the Engine performance and record the Engine maximum power assurance test conditions and results on the Return Acceptance Receipt. 23.8.10 LESSEE will provide evidence to LESSOR's satisfaction that the Engine historical and technical records, borescope inspection, trend monitoring and other checks specified in Article 23.8.9 do not reveal any condition which would cause the Engines or any module to be unserviceable, beyond serviceable limits or serviceable with an increased frequency of inspection or with calendar time, flight hour or flight cycle restrictions under the Engine manufacturer's maintenance manual. LESSEE will correct any discrepancies in accordance with the guidelines set out by the Engine manufacturer which may be discovered during such inspection. 23.8.11 In the event the Engine historical and technical records, borescope inspection, trend monitoring and other checks specified in Article 23.8.9 result in a dispute regarding the conformity of an Engine with the requirements of this Article 23, LESSEE and LESSOR will consult with Engine manufacturer and follow Engine manufacturer's recommendations (including the accomplishment of an Engine test cell operational check) with regard to determining if such Engine complies with the requirements of this Article 23 and the manner in which any discrepancies from the requirements of this Article 23 will be rectified. 23.9 PART LIVES. At return, the condition of the Aircraft will be as follows: (CONFIDENTIAL MATERIAL OMITTED) 23.10 EXPORT AND DEREGISTRATION OF AIRCRAFT. At LESSOR's request, LESSEE at its cost will (a) provide an Export Certificate of Airworthiness or its equivalent from the State of Registration so that the Aircraft can be exported to the country designated by LESSOR, (b) assist with deregistration of the Aircraft from the register of aircraft in the State of Registration, (c) assist with arranging for prompt confirmation of such deregistration to be sent by the registry in the State of Registration to the next country of registration and (d) perform any other acts reasonably required by LESSOR in connection with the foregoing. If any Aircraft work which LESSEE is not otherwise required to perform hereunder, including engineering, is required in order to obtain such Export Certificate of Airworthiness, LESSEE will perform such work and LESSOR will reimburse LESSEE for such work at LESSEE's preferred customer rates. 23.11 LESSEE'S CONTINUING OBLIGATIONS. In the event that LESSEE does not return the Aircraft to LESSOR on the Expiration Date and in the condition required by this Article 23 for any reason (whether or not the reason is within LESSEE's control): 23.11.1 the obligations of LESSEE under this Lease will continue in full force and effect on a day-to-day basis until such return. This will not be considered a waiver of LESSEE's Event of Default or any right of LESSOR hereunder. 23.11.2 Until such return, the Agreed Value will be an amount equal to the Agreed Value on the day the Aircraft should have been returned to LESSOR pursuant to this Lease. 23.11.3 LESSEE will fully indemnify LESSOR on demand for all losses (including consequential damages), liabilities, actions, proceedings, costs and expenses thereby suffered or incurred by LESSOR and, in addition, if a delay in return of the Aircraft was due to reasons within LESSEE's reasonable control, then until such time as the Aircraft is redelivered to LESSOR and put into the condition required by this Article 23, instead of paying the Rent specified in Article 5.3, LESSEE will pay twice the amount of Rent for each day from the scheduled Expiration Date until the Termination Date (the monthly Rent payable under Article 5.3.1 will be prorated based on the actual number of days in the applicable month). Payment will be made upon presentation of LESSOR's invoice. 23.11.4 LESSOR may elect, in its sole and absolute discretion, to accept the return of the Aircraft prior to the Aircraft being put in the condition required by this Article 23 and thereafter have any such non-conformance corrected at such time as LESSOR may deem appropriate (but within ninety (90) days following the return of the Aircraft) and at commercial rates then-charged by the Person selected by LESSOR to perform such correction. Any direct expenses incurred by LESSOR for such correction will become additional Rent payable by LESSEE within fifteen (15) days following the submission of a written statement by LESSOR to LESSEE, identifying the items corrected and setting forth the expense of such corrections. LESSEE's obligation to pay such supplemental Rent will survive the Termination Date. 23.12 AIRPORT AND NAVIGATION CHARGES. LESSEE will ensure that at return of the Aircraft any and all airport, navigation and other charges which give rise or may if unpaid give rise to any lien, right of detention, right of sale or other Security Interest in relation to the Aircraft, Engine or any Part have been paid and discharged in full and will at LESSOR's request produce evidence thereof satisfactory to LESSOR. 23.13 RETURN ACCEPTANCE CERTIFICATE. Upon return of the Aircraft in accordance with the terms of this Lease, LESSEE will prepare and execute two (2) Return Acceptance Certificates in the form and substance of Exhibit I and LESSOR will countersign and return one such Return Acceptance Certificate to LESSEE. In addition, LESSEE and LESSOR will execute a Lease Termination for filing with the FAA evidencing termination of this Lease. 23.14 INDEMNITIES AND INSURANCE. The indemnities and insurance requirements set forth in Articles 16 and 17, respectively, will apply to Indemnitees and LESSOR's representatives during return of the Aircraft, including the ground inspection and acceptance flight. With respect to the acceptance flight, LESSOR's representatives will receive the same protections as LESSOR on LESSEE's Aviation and Airline General Third Party Liability Insurance. ARTICLE 24 ASSIGNMENT 24.1 NO ASSIGNMENT BY LESSEE. EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED BY THE TERMS OF THIS LEASE, NO ASSIGNMENT, NOVATION, TRANSFER, MORTGAGE OR OTHER CHARGE MAY BE MADE BY LESSEE OF ANY OF ITS RIGHTS WITH RESPECT TO THE AIRCRAFT, ENGINE OR PART OF THIS LEASE. 24.2 SALE OR ASSIGNMENT BY LESSOR. 24.2.1 Subject to LESSEE's rights pursuant to this Lease, LESSOR may at any time and without LESSEE's consent sell, assign or transfer its rights, interest and obligations hereunder or with respect to the Aircraft to a third party ("LESSOR'S ASSIGNEE"), but only if: (a) LESSOR's Assignee has full power, authority, and legal right to execute, deliver, and perform the obligations of LESSOR under the Operative Documents and provides reasonably satisfactory evidence of such power and authority to LESSEE; (b) LESSOR's Assignee enters into one or more legal, valid, binding and enforceable agreements effective to confirm that LESSOR's Assignee agrees to be bound by all the terms of, and to undertake all of the obligations arising after such transfer of LESSOR in, the Operative Documents, and in which it makes representations and warranties substantially the same as those in Article 21.1 of this Lease; (c) upon such transfer LESSEE shall not be obligated to pay any greater amount or incur any greater obligation (other than indemnifying additional indemnitees, insuring additional insureds and other minor ministerial matters) than that which it would have been obliged to pay or incur under the Operative Documents if no transfer or assignment had taken place, and upon such transfer the terms and conditions of the Operative Documents insofar as they relate to the rights and obligations of LESSEE are not altered; (d) LESSOR shall cause LESSOR's Assignee to deliver to LESSEE an opinion of counsel reasonably satisfactory to LESSEE to the effect that such agreement or agreements referred to in clause (2) and, if applicable, clause (6) are legal, binding, and enforceable in accordance with its or their terms, subject to the typical exceptions. (e) the transfer shall relate to LESSOR's entire interest as owner or lessor; (f) LESSOR's Assignee is a citizen of the United States under 49 U.S. Code ss.40102(a)(15) (such status to be determined without considering FAR ss.47.9 or any other provision that may restrict LESSEE's use or operation of the Aircraft), or shall use a voting powers trust or similar arrangement in order to hold an interest in the Aircraft such that the Aircraft can be registered in the U.S. (without considering FAR ss.47.9 or any other provision that may restrict LESSEE's use or operation of the Aircraft); (g) LESSOR's Assignee is a single Person and is either (i) a Permitted Institution, or (ii) or an affiliate of a Permitted Institution, if such affiliate's obligations under the Operative Documents are guaranteed by such Permitted Institution pursuant to a written guaranty, in form and substance reasonably satisfactory to LESSEE; and (h) LESSOR shall give written notice to LESSEE at least five (5) days before any such transfer, specifying the name and address of the proposed LESSOR's Assignee, and providing reasonably satisfactory evidence that the proposed LESSOR's Assignee meets the requirements described in Article 24.2.1(g)(i) or (ii). For a period of two (2) years after such sale or assignment and at LESSEE's cost, LESSEE will continue to name LESSOR as an additional insured under the Aviation and Airline General Third Party Liability Insurance required pursuant to Article 17 and Exhibit C. 24.2.2 The term "LESSOR" as used in this Lease means the lessor of the Aircraft at the time in question. In the event of the sale of the Aircraft and transfer of LESSOR's rights and obligations under this Lease, LESSOR's Assignee will become "LESSOR" of the Aircraft under this Lease and the transferring party (the prior "LESSOR") will be relieved of all liability to LESSEE under this Lease for obligations arising on and after the date the Aircraft is sold. LESSEE will acknowledge and accept LESSOR's Assignee as the new "LESSOR" under this Lease and will look solely to LESSOR's Assignee for the performance of all LESSOR obligations and covenants under this Lease arising on and after the Aircraft sale date. 24.3 LESSOR'S LENDER. Subject to LESSEE's rights pursuant to this Lease, LESSOR may at any time and without LESSEE's consent grant security interests over the Aircraft and assign the benefit of this Lease to a lender ("LESSOR'S LENDER") as security for LESSOR's obligations to LESSOR's Lender. Accordingly, if LESSOR's Lender requires, as a condition to providing financing, any nonsubstantive modification of this Lease, LESSEE agrees to enter into an agreement so modifying this Lease. 24.4 LESSEE COOPERATION. On request by LESSOR, LESSOR's Assignee or LESSOR's Lender, LESSEE will execute all such documents (such as a lease assignment agreement) as LESSOR, LESSOR's Assignee or LESSOR's Lender may reasonably require to confirm LESSEE's obligations under this Lease and obtain LESSEE's acknowledgment that to the best of LESSEE's knowledge, LESSOR is not in breach of this Lease. LESSEE will provide all other reasonable assistance and cooperation to LESSOR, LESSOR's Assignee and LESSOR's Lender in connection with any such sale or assignment or the perfection and maintenance of any such security interest, at LESSOR's cost, including making all necessary filings and registrations in the State of Registration and providing all opinions of counsel with respect to matters reasonably requested by LESSOR, LESSOR's Lender or LESSOR's Assignee. LESSOR will reimburse LESSEE for its reasonable out-of-pocket costs in reviewing documents required by LESSOR or LESSOR's Lender. 24.5 PROTECTIONS. 24.5.1 LESSOR will obtain for the benefit of LESSEE an acknowledgment from any LESSOR's Assignee or LESSOR's Lender that, so long as no Event of Default has occurred and is continuing hereunder, such Person will not interfere with LESSEE's quiet, peaceful use and enjoyment of the Aircraft. 24.5.2 Wherever the term "LESSOR" is used in this Lease in relation to any of the provisions relating to disclaimer, title and registration, indemnity and insurance contained in Articles 8, 13, 16 and 17, respectively, or with respect to Article 20.2.7, the term "LESSOR" will be deemed to include LESSOR's Assignee and LESSOR's Lender, if applicable. For avoidance of doubt, in the event of LESSOR's sale or financing of the Aircraft, the disclaimer and indemnity provisions contained in Articles 8 and 16 will continue to be applicable after the sale or assignment to International Lease Finance Corporation, as well as being applicable to LESSOR's Assignee and LESSOR's Lender. ARTICLE 25 DEFAULT OF LESSEE 25.1 LESSEE NOTICE TO LESSOR. LESSEE will promptly notify LESSOR if LESSEE becomes aware of the occurrence of any Default. 25.2 EVENTS OF DEFAULT. The occurrence of any of the following will constitute an Event of Default and material breach of this Lease by LESSEE: (a) LESSEE fails to take delivery of the Aircraft when obligated to do so under the terms of this Lease; (b) LESSEE fails to make a Rent or other payment due hereunder in the manner and by the date provided herein and fails to make such payment within five (5) Business Days after its receipt of notice that such payment is due; (c) LESSEE fails to obtain or maintain the insurance required by Article 17; (d) LESSEE fails to return the Aircraft to LESSOR on the Expiration Date in accordance with Article 23; (e) LESSEE fails to observe or perform any of its other obligations hereunder and fails to cure the same within thirty (30) days after written notice thereof to LESSEE; provided, that LESSEE will have up to a total of sixty (60) days to cure such failure so long as it uses diligent efforts to do so; (f) any representation or warranty of LESSEE herein proves to have been untrue in any material respect when made; provided, that, if the effect of such falsity is curable, LESSEE shall have thirty (30) days after LESSEE has knowledge that the representation or warranty is untrue; (g) the registration of the Aircraft is cancelled other than as a result of an act or omission of LESSOR; (h) LESSEE abandons the Aircraft or Engines; (i) LESSEE or an approved sublessee no longer has unencumbered control (other than Permitted Liens) or possession of the Aircraft or Engines, except as otherwise permitted by this Lease; (j) LESSEE temporarily or permanently discontinues business or (except as permitted by Article 20.2.4) sells or otherwise disposes of all or substantially all of its assets; (k) a material adverse change occurs in the financial condition of LESSEE; (l) LESSEE no longer possesses the licenses, certificates and permits required for the conduct of its business as a certificated air carrier in the U.S.; (m) LESSEE (i) suspends payment on its debts or other obligations generally, (ii) is unable to or admits its inability to pay its debts or other obligations generally as they fall due, (iii) is adjudicated or becomes bankrupt or insolvent or (iv) enters into any composition or other arrangement for the benefit of its creditors generally; (n) any proceedings, resolutions, filings or other steps are instituted with respect to LESSEE relating to the bankruptcy, liquidation, reorganization or protection from creditors of LESSEE or at least half of LESSEE's property. If instituted by LESSEE, the same will be an immediate Event of Default. If instituted by another Person, the same will be an Event of Default if not dismissed, remedied or relinquished within sixty (60) days; (o) any order, judgment or decree is entered by any court of competent jurisdiction appointing a receiver, trustee or liquidator of LESSEE or at least half of its property, or if at least half of LESSEE's property is to be sequestered. If instituted by or done with the consent of LESSEE, the same will be an immediate Event of Default. If instituted by another Person, the same will be an Event of Default if not dismissed, stayed, remedied or relinquished within sixty (60) days; PROVIDED, HOWEVER, that if such proceeding is stayed, then such proceeding will become an immediate Event of Default if such stay is removed or terminates and the proceeding is not dismissed, remedied or relinquished when such stay is removed or terminates. (p) any indebtedness for borrowed moneys or a guarantee or similar obligation owed by LESSEE with an unpaid balance of CONFIDENTIAL MATERIAL OMITTED is declared due before its stated maturity or LESSEE is in default of payment obligations CONFIDENTIAL MATERIAL OMITTED under any other purchase agreement, lease, conditional sale agreement or other agreement pursuant to which LESSEE has possession of any aircraft; (q) Eurocontrol has notified LESSOR that there are unpaid Eurocontrol charges due from LESSEE (unless such charges are being contested in good faith and by appropriate proceedings, an adequate bond has been provided and such proceedings do not involve any danger of the detention, interference with the use or operation, sale, forfeiture or loss of the Aircraft) and such charges remain outstanding for a period of thirty (30) days from the date of Eurocontrol's notice to LESSOR provided that such thirty (30) day grace period will not apply if there is a danger of detention, interference with the use or operation, sale, forfeiture or loss of the Aircraft; or (r) LESSEE is in default under any other lease or agreement between LESSEE and LESSOR and the same is not cured within its specified cure period. 25.3 LESSOR'S GENERAL RIGHTS. Upon the occurrence of any Event of Default, LESSOR may do all or any of the following at its option (in addition to such other rights and remedies which LESSOR may have by statute or otherwise but subject to any requirements of applicable Law): (a) terminate this Lease by giving written notice to LESSEE; (b) require that LESSEE immediately move the Aircraft to an airport or other location designated by LESSOR; (c) for LESSEE's account, do anything that may reasonably be required to cure any default and recover from LESSEE all reasonable costs, including legal fees and expenses incurred in doing so and Default Interest; (d) proceed as appropriate to enforce performance of this Lease and to recover any damages for the breach hereof, including the amounts specified in Article 25.5; (e) terminate this Lease by taking possession of the Aircraft or by serving notice requiring LESSEE to return the Aircraft to LESSOR at the location specified by LESSOR. If LESSOR takes possession of the Aircraft, it may enter upon LESSEE's premises where the Aircraft is located without liability. Upon repossession of the Aircraft, LESSOR will then be entitled to sell, lease or otherwise deal with the Aircraft as if this Lease had never been made. LESSOR will be entitled to the full benefit of its bargain with LESSEE; or (f) apply all or any portion of the Security Deposit and any other security deposits held by LESSOR pursuant to any other agreements between LESSOR and LESSEE to any amounts due. 25.4 DEREGISTRATION AND EXPORT OF AIRCRAFT. If an Event of Default has occurred and is continuing, LESSOR may take all steps necessary to deregister the Aircraft in and export the Aircraft from the State of Registration. 25.5 LESSEE LIABILITY FOR DAMAGES. If an Event of Default occurs, in addition to all other remedies available at law or in equity, LESSOR has the right to recover from LESSEE and LESSEE will pay LESSOR within two (2) Business Days after LESSOR's written demand, all of the following: (a) all amounts which are then due and unpaid hereunder and which become due prior to the earlier of LESSOR's recovery of possession of the Aircraft or LESSEE making an effective tender thereof; (b) any losses suffered by LESSOR because of LESSOR's inability to place the Aircraft on lease with another lessee or to otherwise utilize the Aircraft on financial terms as favorable to LESSOR as the terms hereof or, if LESSOR elects to dispose of the Aircraft, the funds arising from a sale or other disposition of the Aircraft are not as profitable to LESSOR as leasing the Aircraft in accordance with the terms hereof would have been (and LESSOR will be entitled to accelerate any and all Rent which would have been due from the date of LESSOR's recovery or repossession of the Aircraft through the Expiration Date); (c) all costs associated with LESSOR's exercise of its remedies hereunder, including but not limited to repossession costs, legal fees, Aircraft storage costs, Aircraft re-lease or sale costs and LESSOR's internal costs and expenses (including the cost of personnel time calculated based upon the compensation paid to the individuals involved on an annual basis and a general LESSOR overhead allocation); (d) any amount of principal, interest, fees or other sums paid or payable on account of funds borrowed in order to carry any unpaid amount; (e) any loss, premium, penalty or expense which may be incurred in repaying funds raised to finance the Aircraft or in unwinding any financial instrument relating in whole or in part to LESSOR's financing of the Aircraft; (f) any loss, cost, expense or liability sustained by LESSOR due to LESSEE's failure to redeliver the Aircraft in the condition required by this Lease; and (g) any other loss, damage, expense, cost or liability which LESSOR suffers or incurs as a result of the Event of Default and/or termination of this Lease, including an amount sufficient to fully compensate LESSOR for any loss of or damage to LESSOR's residual interest in the Aircraft caused by LESSEE's default. 25.6 WAIVER OF DEFAULT. By written notice to LESSEE, LESSOR may at its election waive any Default or Event of Default and its consequences and rescind and annul any prior notice of termination of this Lease. The respective rights of the parties will then be as they would have been had no Default or Event of Default occurred and no such notice been given. 25.7 PRESENT VALUE OF PAYMENTS. In calculating LESSOR's damages hereunder, upon an Event of Default all Rent and other amounts which would have been due hereunder during the Lease Term if an Event of Default had not occurred will be calculated on a present value basis using a discounting rate of six percent (6%) per annum discounted to the earlier of the date on which LESSOR obtains possession of the Aircraft or LESSEE makes an effective tender thereof. 25.8 USE OF "TERMINATION DATE". For avoidance of doubt, it is agreed that if this Lease terminates and the Aircraft is repossessed by LESSOR due to an Event of Default, then, notwithstanding the use of the term "Termination Date" in this Lease, the period of the Lease Term and the "Expiration Date" will be utilized in calculating the damages to which LESSOR is entitled pursuant to Article 25.5. For example, it is agreed and understood that LESSOR is entitled to receive from LESSEE the Rent and the benefit of LESSEE's insurance and maintenance of the Aircraft until expiration of the Lease Term. ARTICLE 26 NOTICES 26.1 MANNER OF SENDING NOTICES. Any notice, request or information required or permissible under this Lease will be in writing and in English. Notices will be delivered in person or sent by fax, letter (mailed airmail, certified and return receipt requested), or by expedited delivery addressed to the parties as set forth in Article 26.2. In the case of a fax, notice will be deemed received upon actual receipt (and the date of actual receipt will be deemed to be the date set forth on the confirmation of receipt produced by the sender's fax machine immediately after the fax is sent). In the case of a notice sent by expedited delivery, notice will be deemed received on the date of delivery set forth in the records of the Person which accomplished the delivery. If any notice is sent by more than one of the above listed methods, notice will be deemed received on the earliest possible date in accordance with the above provisions. 26.2 NOTICE INFORMATION. Notices will be sent: If to LESSOR: INTERNATIONAL LEASE FINANCE CORPORATION 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067, U.S.A. Attention: Legal Department Fax: 310-788-1990 Telephone: 310-788-1999 If to LESSEE: AMERICAN TRANS AIR, INC. 7337 West Washington Street Indianapolis International Airport Indianapolis, Indiana 46231 United States of America Attention: Ken Wolff Executive Vice President and Chief Financial Officer Fax: 317-240-7091 Telephone: 317-247-4000 or to such other places and numbers as either party directs in writing to the other party. ARTICLE 27 GOVERNING LAW AND JURISDICTION 27.1 CALIFORNIA LAW. This Lease is being delivered in the State of California and will in all respects be governed by and construed in accordance with the Laws of the State of California (notwithstanding the conflict Laws of the State of California). 27.2 NON-EXCLUSIVE JURISDICTION IN CALIFORNIA. As permitted by Section 410.40 of the California Code of Civil Procedure, the parties hereby irrevocably submit to the non-exclusive jurisdiction of the Federal District Court for the Central District of California and the State of California Superior or Municipal Court in Los Angeles, California. Nothing herein will prevent either party from bringing suit in any other appropriate jurisdiction. 27.3 SERVICE OF PROCESS. The parties hereby consent to the service of process (a) out of any of the courts referred to above, (b) in accordance with Section 415.40 of the California Code of Civil Procedure by mailing copies of the summons and complaint to the person to be served by certified or registered mail to the address set forth in Article 26.2, postage prepaid, return receipt requested or (c) in accordance with the Hague Convention, if applicable. 27.4 PREVAILING PARTY IN DISPUTE. If any legal action or other proceeding is brought in connection with or arises out of any provisions in this Lease, the prevailing party will be entitled to recover reasonable attorneys' fees and other costs incurred in such action or proceedings. The prevailing party will also, to the extent permissible by Law, be entitled to receive pre- and post-judgment Default Interest. 27.5 WAIVER. LESSEE AND LESSOR HEREBY WAIVE THE RIGHT TO A TRIAL BY JURY. LESSEE AND LESSOR HEREBY IRREVOCABLY WAIVE ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATED TO THIS LEASE BROUGHT IN ANY OF THE COURTS REFERRED TO IN ARTICLE 27.2, AND HEREBY FURTHER IRREVOCABLY WAIVE ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. ARTICLE 28 MISCELLANEOUS 28.1 PRESS RELEASES. The parties will give copies to one another, in advance if possible, of all news, articles and other releases provided to the public media regarding this Lease. 28.2 LESSOR PERFORMANCE FOR LESSEE. The exercise by LESSOR of its remedy of performing a LESSEE obligation hereunder is not a waiver of and will not relieve LESSEE from the performance of such obligation at any subsequent time or from the performance of any of its other obligations hereunder. 28.3 LESSOR'S PAYMENT OBLIGATIONS. Any obligation of LESSOR under this Lease to pay or release any amount to LESSEE is conditioned upon (a) all amounts then due and payable by LESSEE to LESSOR under this Lease or under any other agreement between LESSOR and LESSEE having been paid in full and (b) no Default or Event of Default having occurred and continuing hereunder at the time such payment or release of payment is payable to LESSEE. 28.4 APPLICATION OF PAYMENTS. Any amounts paid or recovered in respect of LESSEE liabilities hereunder may be applied to Rent, Default Interest, fees or any other amount due hereunder in such proportions, order and manner as LESSOR determines. 28.5 USURY LAWS. The parties intend to contract in strict compliance with the usury Laws of the State of California and, to the extent applicable, the U.S. Notwithstanding anything to the contrary in the Operative Documents, LESSEE will not be obligated to pay Default Interest or other interest in excess of the maximum non-usurious interest rate, as in effect from time to time, which may by applicable Law be charged, contracted for, reserved, received or collected by LESSOR in connection with the Operative Documents. During any period of time in which the then-applicable highest lawful rate is lower than the Default Interest rate, Default Interest will accrue and be payable at such highest lawful rate; however, if at later times such highest lawful rate is greater than the Default Interest rate, then LESSEE will pay Default Interest at the highest lawful rate until the Default Interest which is paid by LESSEE equals the amount of interest that would have been payable in accordance with the interest rate set forth in Article 5.5. 28.6 DELEGATION BY LESSOR. LESSOR may delegate to any Person(s) all or any of the rights, powers or discretion vested in it by this Lease and any such delegation may be made upon such terms and conditions as LESSOR in its absolute discretion thinks fit. 28.7 CONFIDENTIALITY. The Operative Documents and all non-public information obtained by either party about the other are confidential and are between LESSOR and LESSEE only and will not be disclosed by a party to third parties (other than to such party's auditors or legal advisors or as required in connection with any filings of this Lease in accordance with Article 13) without the prior written consent of the other party. If disclosure is required as a result of applicable Law, LESSEE and LESSOR will cooperate with one another to obtain confidential treatment as to the commercial terms and other material provisions of this Lease. 28.8 RIGHTS OF PARTIES. The rights of the parties hereunder are cumulative, not exclusive, may be exercised as often as each party considers appropriate and are in addition to its rights under general Law. The rights of one party against the other party are not capable of being waived or amended except by an express waiver or amendment in writing. Any failure to exercise or any delay in exercising any of such rights will not operate as a waiver or amendment of that or any other such right any defective or partial exercise of any such rights will not preclude any other or further exercise of that or any other such right and no act or course of conduct or negotiation on a party's part or on its behalf will in any way preclude such party from exercising any such right or constitute a suspension or any amendment of any such right. 28.9 FURTHER ASSURANCES. Each party agrees from time to time to do and perform such other and further acts and execute and deliver any and all such other instruments as may be required by Law, reasonably requested by the auditors of the other party or requested by the other party to establish, maintain or protect the rights and remedies of the requesting party or to carry out and effect the intent and purpose of this Lease. 28.10 USE OF WORD "INCLUDING". The term "INCLUDING" is used herein without limitation. 28.11 HEADINGS. All article and paragraph headings and captions are purely for convenience and will not affect the interpretation of this Lease. Any reference to a specific article, paragraph or section will be interpreted as a reference to such article, paragraph or section of this Lease. 28.12 INVALIDITY OF ANY PROVISION. If any of the provisions of this Lease become invalid, illegal or unenforceable in any respect under any Law, the validity, legality and enforceability of the remaining provisions will not in any way be affected or impaired. 28.13 NEGOTIATION. The terms of this Lease are agreed by LESSOR from its principal place of business in Los Angeles, California. 28.14 TIME IS OF THE ESSENCE. Time is of the essence in the performance of all obligations of the parties under this Lease and, consequently, all time limitations set forth in the provisions of this Lease will be strictly observed. 28.15 AMENDMENTS IN WRITING. The provisions of this Lease may only be amended or modified by a writing executed by LESSOR and LESSEE. 28.16 COUNTERPARTS. This Lease may be executed in any number of identical counterparts, each of which will be deemed to be an original, and all of which together will be deemed to be one and the same instrument when each party has signed and delivered one such counterpart to the other party. 28.17 DELIVERY OF DOCUMENTS BY FAX. Delivery of an executed counterpart of this Lease or of any other documents in connection with this Lease by fax will be deemed as effective as delivery of an originally executed counterpart. Any party delivering an executed counterpart of this Lease or other document by fax will also deliver an originally executed counterpart, but the failure of any party to deliver an originally executed counterpart of this Lease or such other document will not affect the validity or effectiveness of this Lease or such other document. 28.18 ENTIRE AGREEMENT. The Operative Documents constitute the entire agreement between the parties in relation to the leasing of the Aircraft by LESSOR to LESSEE and supersede all previous proposals, agreements and other written and oral communications in relation hereto. The parties acknowledge that there have been no representations, warranties, promises, guarantees or agreements, express or implied, except as set forth herein and in the other Operative Documents. IN WITNESS WHEREOF, LESSEE and LESSOR have caused this Lease to be executed by their respective officers as of September 5, 2000. INTERNATIONAL LEASE FINANCE AMERICAN TRANS AIR, INC. CORPORATION By: /s/ Grant Levy By: /s/ Kenneth K. Wolff Its: Vice President Its: Executive Vice President & CFO EXHIBIT A AIRCRAFT DESCRIPTION Aircraft Manufacturer and Model: Boeing 737-800 Specification: Seating Configuration: Manufacturer's Serial Number: 30038 Registration Mark: ____ Engine Manufacturer and Model: CFM56-7B-27 Engine Serial Numbers: _______ and ________ Engine Thrust Rating: 27,300 pounds Maximum Gross Takeoff Weight: 160,000 pounds EXHIBIT B AGENCY AGREEMENT (Limited Authority) Relating to Boeing 737-800 Aircraft THIS AGENCY AGREEMENT ("AGREEMENT") is made and entered into as of ____________________. BETWEEN: AMERICAN TRANS AIR, INC., a Indiana corporation whose address and principal place of business is at 7337 West Washington Street, Indianapolis International Airport, Indianapolis, Indiana 46231, United States of America ("AGENT") and INTERNATIONAL LEASE FINANCE CORPORATION, a California corporation, whose address and principal place of business is at 1999 Avenue of the Stars, 39th Floor, Los Angeles, California 90067, U.S.A. ("BUYER"). RECITAL The Boeing Company ("MANUFACTURER") and Buyer have entered into Purchase Agreement 1830, dated as of June 27, 1995 (such purchase agreement as may be amended in accordance with the provisions thereof is hereinafter referred to as the "PURCHASE AGREEMENT") under which Manufacturer has agreed to manufacture and sell and Buyer has agreed to purchase certain Boeing 737-800 aircraft. Buyer has agreed to lease one (1) of such aircraft bearing manufacturer's serial number 30038 (the "AIRCRAFT") to the Agent pursuant to an Aircraft Lease Agreement between Buyer and Agent dated as of September 5, 2000 (the "LEASE"). The Agent is engaged in business as a commercial air carrier and intends to lease the Aircraft from Buyer, and Buyer is desirous of utilizing the expertise of the Agent as Buyer's agent in all matters to which the Purchase Agreement relates with respect to the Aircraft except certain items as indicated below, and the Agent, as Buyer's agent, is willing to make such expertise available to Buyer. Accordingly, the parties agree as follows: 1. Buyer hereby appoints the Agent as Buyer's sole and exclusive agent with authority to perform the following, on behalf of Buyer, as the Agent may in its discretion determine to be necessary or desirable: (a) monitor Manufacturer's production, testing and delivery of the Aircraft in accordance with the Purchase Agreement and (b) do all such other things permitted by the Purchase Agreement related to the technical and engineering aspects of Manufacturer's production of the Aircraft, except Buyer limits Agent's authority to perform on behalf of Buyer on any defect that occurs during manufacture that is considered significant in nature by Buyer as measured by the criteria set forth below. Buyer retains the sole authority to perform on any defect meeting such criteria. (i) Deviations from the drawing configuration that could affect future modifications, maintenance, repair or overhaul of the Aircraft; (ii) Defects that are obvious appearance items; (iii) Rework that requires stress concurrence to satisfy Manufacturer's Material Review Board (MRB) requirements; (iv) A high quantity of defects normally considered minor on a singular basis; (v) Major rework requiring extensive repair or modification, E.G. replacement of ---- skin panels, extensive use of oversize fasteners, repair of damaged areas and significant structural modifications; (vi) Rework that affects the aerodynamic drag coefficient of the Aircraft; or (vii) Rework that involves areas known to be sensitive to Buyer. 2. Notwithstanding anything in the provisions of paragraph 1, nothing in this Agreement will confer authority upon or otherwise permit the Agent: (a) to exercise any power of termination under the Purchase Agreement or (b) to make any payments due from Buyer to Manufacturer or to receive on behalf of Buyer any payments due from Manufacturer under the Purchase Agreement, or to alter any of the terms and conditions of the Purchase Agreement or the Detail Specifications of the Aircraft. 3. Buyer will not revoke the appointment of and authority granted under this Agreement to the Agent unless a termination of the Purchase Agreement or Lease has occurred with respect to the Aircraft or the Agent has failed to perform a material obligation under this Agreement. Notice of any such revocation will be provided in accordance with the provisions of Article 14 of the Purchase Agreement and given to both Manufacturer and the Agent. 4. Manufacturer acknowledges the appointment of the Agent for the purpose set forth hereunder and Manufacturer and Buyer agree that due performance by Manufacturer or Agent of an obligation under the Purchase Agreement will constitute due satisfaction of such obligation by such party and Buyer agrees to be bound by the acts of the Agent. 5. Buyer and Agent agree to identify the technical organization and/or person(s) with the limited authority to act for Agent during production of the Aircraft. Buyer will, if possible, provide such identification to Manufacturer in writing, along with office space requirements for Agent, if required, prior to or at the time of Manufacturer's acknowledgment of this Agreement. 6. Nothing in this Agreement will subject Manufacturer to any liability under the Purchase Agreement which it would not otherwise be subject to, or modify Manufacturer's rights thereunder, or require Manufacturer to divest itself of title to or possession of Aircraft or any other property which is subject to the Purchase Agreement until payment therefor and delivery thereof in accordance with the Purchase Agreement. 7. None of the parties hereto will be entitled to assign to any third party any of their rights under this Agreement. 8. The Agent will not delegate to any third party the performance of the obligations imposed on it by this Agreement or appoint a sub-agent. 9. References to Manufacturer in this Agreement will include any wholly-owned subsidiary of Manufacturer to which Manufacturer assigns any of its rights and obligations under the Purchase Agreement pursuant to the terms and conditions thereof. 10. This Agreement will be governed by the laws of the State of California; however, the Purchase Agreement shall remain governed by the laws of the State of Washington. This Agreement has been executed by the parties hereto as of the day and year first above written. INTERNATIONAL LEASE FINANCE CORPORATION AMERICAN TRANS AIR, INC. By: By: Its: Its: The Boeing Company acknowledges the appointment of AMERICAN TRANS AIR, INC. as agent of International Lease Finance Corporation in connection with the above referenced Aircraft as set forth in this Agreement. THE BOEING COMPANY By: Its: EXHIBIT C CERTIFICATE OF INSURANCE [Refer to Aircraft Lease Agreement dated as of September 5, 2000 between LESSEE and LESSOR (the "Lease"). If applicable, insurance certificates from both the insurers and reinsurers will be provided. If there is a LESSOR's Lender, include references to it where appropriate after references to LESSOR.] To: INTERNATIONAL LEASE FINANCE CORPORATION ("LESSOR") ------ 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States Re: AMERICAN TRANS AIR, INC. ("LESSEE") Boeing 737-800 Manufacturer's Serial No.: 30038 Registration Mark: ____ (the "AIRCRAFT") The following security has subscribed to the insurance and/or reinsurance policies: [LIST COMPANIES & PERCENTAGES] THIS IS TO CERTIFY THAT, as Insurance Brokers, we have effected Fleet Insurance in respect of aircraft owned or operated by LESSEE (including the Aircraft), and that insurance in respect of the Aircraft is as specified below. AIRCRAFT HULL ALL RISKS COVERING: All risks of physical loss or damage to the Aircraft from any cause (subject only to the exclusions as specified below), for an Agreed Value of Aircraft in the amount of [list amount calculated in accordance with Article 18.1] DEDUCTIBLES: (CONFIDENTIAL MATERIAL OMITTED) each and every loss (or such lesser amount as generally applicable to the rest of LESSEE's 737-800 fleet). Not applicable to Total Loss/Constructive Total Loss or Arranged Total Loss GEOGRAPHICAL COVERAGE: Worldwide [subject to customary exclusions] AVIATION AND AIRLINE GENERAL THIRD PARTY LIABILITY COVERING: Aircraft Third Party, Passenger, Baggage, Cargo and Mail Liability and Airline General Third Party Liability (including Premises, Hangarkeepers and Products Liability) for combined single limit of not less than (CONFIDENTIAL MATERIAL OMITTED) (or such higher amount as LESSEE may carry generally on other 737-800 aircraft in its fleet) any one accident/occurrence (but in the aggregate in relation to Products Liability), extended to cover LESSEE's liability under the Lease to the extent of the risks covered by the policy including war and allied perils under Extended Coverage Endorsement as per AVN 52 subject only to exclusions as specified below GEOGRAPHICAL LIMITS: Worldwide [subject to customary exclusions] HULL WAR AND ALLIED PERILS COVERING: Hull War Risks as per LSW555.B, but including (a) confiscation or requisition (including by State of Registration and state where airline is domiciled), (b) hijacking or other unlawful seizure or wrongful exercise of control of the Aircraft or crew in flight (including any attempt at such seizure or control) and including "All Risks" Continuation Clause and Extortion Risks (including expenses) and covering claims excluded from Hull All Risks Policy while Aircraft outside Assured's control by reason of perils insured under this policy, for an Agreed Value of Aircraft in the amount of [list amount calculated in accordance with Article 18.1] DEDUCTIBLE: No deductible GEOGRAPHICAL LIMITS: Worldwide AIRCRAFT SPARES ALL RISKS INSURANCE COVERING: All risks of physical loss or damage to Aircraft Parts or spares or Engines at all times when removed from the Aircraft from whatever cause, subject only to the exclusions specified below, including the risks set down in AVN 48B other than paragraphs (a) and (b) thereof (but including paragraph (a) in respect of transit risks) for limits of not less than: CONFIDENTIAL MATERIAL OMITTED and covering: With respect to an Engine, an agreed value (CONFIDENTIAL MATERIAL OMITTED) or, with LESSOR's written concurrence, replacement cost With respect to Parts, replacement cost DEDUCTIBLE: (CONFIDENTIAL MATERIAL OMITTED) GEOGRAPHICAL COVERAGE: Worldwide INSURANCE REQUIRED BY MANUFACTURER LESSEE will carry the insurance required by Manufacturer in connection with LESSOR's assignment of Manufacturer's warranties and product support to LESSEE CONTRACTUAL INDEMNITY To the extent of the risks covered by the policies, LESSEE has insurance coverage for the indemnities agreed to by LESSEE pursuant to Article 16 of the Lease, subject to AVN67B or equivalent PERIOD OF COVERAGE (ALL POLICIES) From the Delivery Date of Aircraft to [END OF POLICY PERIOD] It is further certified that LESSOR has an interest in respect of the Aircraft under the Lease. Accordingly, with respect to losses occurring during the period from the Effective Date until the expiry of the Insurance or until the expiry or agreed termination of the Lease or until the obligations under the Lease are terminated by any action of the Insured or LESSOR and in consideration of the Additional Premium it is confirmed that the Insurance afforded by the Policy is in full force and effect and it is further agreed that the following provisions are specifically endorsed to the Policy. 1. UNDER THE HULL (ALL RISKS AND HULL WAR AND ALLIED RISKS) AND AIRCRAFT SPARES INSURANCES (a) In respect of any claim on the Aircraft that becomes payable on the basis of a Total Loss, payment of any settlement will be made to, or to the order of LESSOR as sole loss payee, up to the Agreed Value. With respect to repairable damage to an Aircraft or Engine, LESSOR will receive all insurance proceeds in excess of CONFIDENTIAL MATERIAL OMITTED provided that upon receipt by the insurance broker of written notice of a material default on the part of LESSEE (and until notice that it has been cured), all insurance proceeds which otherwise would be payable to LESSEE will be made directly to LESSOR. In respect of any other claim, payment of any settlement (net of any relevant policy deductible) will be made with such party(ies) as may be necessary to repair the Aircraft unless otherwise agreed after consultation between the Insurers and the Insured and, where necessary under the terms of the Lease, LESSOR. Such payments will only be made provided they are in compliance with all applicable laws and regulations. (b) Insurers agree on a 50/50 settlement in terms of AVS 103. (c) Insurers have no right to replace the Aircraft on a Total Loss (arranged, constructive or otherwise). (d) Insurers confirm that under the insurance policies, if the Insured installs an engine owned by a third party on the Aircraft, either (i) the hull insurance will automatically increase to such higher amount as is necessary in order to satisfy both LESSOR's requirement to receive the Agreed Value in the event of a Total Loss, Constructive Total Loss or Arranged Total Loss and the amount required by the third party engine owner, or (ii) separate additional insurance on such engine will attach in order to satisfy separately the requirements of the Insured to such third party engine owner. 2. UNDER THE LEGAL LIABILITY INSURANCE (a) Subject to the provisions of this Endorsement, the Insurance will operate in all respects as if a separate Policy had been issued covering each party insured hereunder, but this provision will not operate to include any claim arising howsoever in respect of loss or damage to the Aircraft insured under the Hull or Spares Insurance of the Insured. Notwithstanding the foregoing the total liability of Insurers in respect of any and all Insureds will not exceed the limits of liability stated in the Policy. (b) The Insurance provided hereunder will be primary and without right of contribution from any other insurance which may be available to LESSOR. 3. UNDER ALL INSURANCES (a) LESSOR, its successors and assigns, and (with respect to Aviation and Airline General Third Party Liability only) its directors, officers and employees for their respective rights and interests, are included as Additional Insureds. (b) The cover afforded to LESSOR by the Policy in accordance with this Endorsement will 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 Policy. (c) LESSOR will have no responsibility for premium and insurers will waive any right of set-off or counterclaim against LESSOR except in respect of outstanding premium in respect of the Aircraft, provided that Insurer may only set-off for premiums against the proceeds of the hull insurance for outstanding premiums in connection with hull all risks and hull war and allied perils insurance. (d) Upon payment of any loss or claim to or on behalf of LESSOR, Insurers will to the extent and in respect of such payment be thereupon subrogated to all legal and equitable rights of LESSOR indemnified hereby (but not against LESSOR). Insurers will not exercise such rights without the consent of those indemnified, such consent not to be unreasonably withheld. At the expense of Insurers LESSOR will do all things reasonably necessary to assist the Insurers to exercise said rights. (e) Except in respect of any provision for Cancellation or Automatic Termination specified in the Policy or any endorsement thereof, cover provided by this Endorsement may only be cancelled or materially altered in a manner adverse to LESSOR by the giving of not less than thirty (30) days notice in writing to LESSOR. Notice will be deemed to commence from the date such notice is given by the Insurers. Such notice will NOT, however, be given at normal expiry date of the Policy or any endorsement. 4. EXCEPT AS SPECIFICALLY VARIED OR PROVIDED BY THE TERMS OF THIS CERTIFICATE (a) LESSOR IS COVERED BY THE POLICY SUBJECT TO ALL TERMS, CONDITIONS, LIMITATIONS,WARRANTIES, EXCLUSIONS AND CANCELLATION PROVISIONS THEREOF. (b) THE POLICY WILL NOT BE VARIED BY ANY PROVISIONS CONTAINED IN THE LEASE WHICH PURPORT TO SERVE AS AN ENDORSEMENT OR AMENDMENT TO THE POLICY. SUBJECT (save as specifically stated in this Certificate) to policy terms, conditions, limitations and exclusions. Yours faithfully, [BROKERS] EXHIBIT D BROKERS' LETTER OF UNDERTAKING To: INTERNATIONAL LEASE FINANCE CORPORATION 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States Date: Our Ref: Re: AMERICAN TRANS AIR, INC. ("LESSEE") ------ Boeing 737-800 Manufacturer's Serial No.: ____ Registration Mark: ____ (the "AIRCRAFT") Dear Sirs: We confirm that insurance has been effected for the account of [LESSEE] (the "OPERATOR") covering all aircraft owned or operated by them, including the above-referenced aircraft (the "Aircraft"). [Also confirm, if applicable, the amount of any hull all risks or hull war and allied perils on the Aircraft which LESSEE is carrying in excess of the Agreed Value (which excess insurance would be payable to LESSEE). Such excess insurance may not exceed ten percent (10%) of the Agreed Value.] Pursuant to instructions received from the Operator and in consideration of your approving the arrangement of the Operator's "Fleet Policy" (under which the above-referenced Aircraft is insured) through the intermediary of ourselves as Brokers in connection with the insurance (the "INSURANCE") mentioned in our Certificate of Insurance (Reference No. [ ] dated [ ] and attached hereto), we undertake as follows: 1. In relation to the Hull and War Risks Insurance to hold to your order the insurance Slips or Contracts and any Policies which may be issued or any policies substituted (with your consent) therefor (but only insofar as the same relate to the Aircraft only) and the benefit of the Hull and War Risks Insurance thereunder, but subject to our requirements to operate the Fleet Policy insofar as it relates to any other aircraft insured thereunder. 2. To advise you of any of the following: (a) If any insurer cancels or gives notice of cancellation of any of the Insurance at least thirty (30) days (or such lesser period as may be available in the case of War and Allied Perils) before such cancellation is to take effect in respect of the Aircraft. (b) Of any act or omission or of any event (including non-payment of premium) of which we have knowledge or are notified and which might invalidate or render unenforceable in whole or in part any of the Insurance, insofar as the same relate to the Aircraft. (c) If we do not receive instructions to renew all or any of the Insurance at least thirty (30) days prior to their expiration. (d) If any of the Insurance are not renewed on the same terms (save as to premium and period of cover and as you might otherwise have notified us to be acceptable to you) seven (7) days prior to expiry thereof. The above undertakings are given subject to our continuing appointment for the time being as Insurance Brokers to the Operator. We also undertake to advise you if we cease to be Insurance Brokers to the Operator. Yours faithfully, EXHIBIT E ESTOPPEL AND ACCEPTANCE CERTIFICATE AMERICAN TRANS AIR, INC. ("LESSEE"), a corporation organized under the laws of Indiana does hereby represent, acknowledge, warrant and agree as follows: 1. LESSEE and INTERNATIONAL LEASE FINANCE CORPORATION, as LESSOR, have entered into an Aircraft Lease Agreement dated as of September 5, 2000 (hereinafter referred to as the "LEASE"). Words used herein with capital letters and not otherwise defined will have the meanings set forth in the Lease. 2. LESSEE has this ____ day of __________, ____ (Time: __________) at ____________________ received from LESSOR possession of: (a) One (1) Boeing 737-800 aircraft bearing Manufacturer's serial number ____ and U.S. registration mark ____, together with two (2) CFM56-7B-27 engines bearing manufacturer's serial numbers _______ and ________ (each of which has 750 or more rated take-off horsepower), all in airworthy condition. (b) All Aircraft Documentation, including the usual and customary manuals, logbooks, flight records and historical information regarding the Aircraft, Engines and Parts. 3. All of the foregoing has been delivered and accepted on the date set forth above to LESSEE's full satisfaction and pursuant to the terms and provisions of the Lease. 4. The Agreed Value of the Aircraft is US$_______________. 5. The amount of fuel on board at Delivery is __________ (circle one) pounds/kilos (________ gallons). 6. The Aircraft, Engines, Parts and Aircraft Documentation as described in the Lease have been fully examined by LESSEE and have been received in a condition fully satisfactory to LESSEE and in full conformity with the Lease in every respect. 7. The Lease is in full force and effect, LESSEE has no claims, offsets, deductions or set-off of any kind or nature in connection with the Lease, except for any claims against LESSOR set forth on the attached List of Discrepancies. 8. LESSOR's Lender may rely upon all of the foregoing in granting substantial financial accommodations to LESSOR and LESSEE understands and agrees that any funds being advanced by LESSOR's Lender will be made in reliance upon the foregoing. 9. LESSEE has obtained all required permits, authorizations, licenses and fees of the State of Registration or any Government Entity thereof necessary in order for LESSEE to operate the Aircraft as permitted by the terms of the Lease. Dated on the date set forth above AMERICAN TRANS AIR, INC. By: Title: ATTACHMENTS: 1. List of Aircraft Documentation 2. List of Loose Equipment 3. List of Discrepancies ATTACHMENT 1 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE LIST OF AIRCRAFT DOCUMENTATION MANUALS 1. FAA Approved Flight Manual 2. Airplane Flight Operation Manual 3. Aircraft Recover Manual 4. Quick Reference Handbook (QRH) 5. Weight and Balance Manual 6. Aircraft Fueling Manual 7. Aircraft Maintenance Manual (MM) 8. Aircraft Maintenance Manual Supplement 9. Ramp Maintenance Manual (RMM) 10. Cargo Loading Manual 11. Fault Reporting Manual (FRM) 12. Fault Isolation Manual (FIM) 13. Illustrated Parts Catalog (IPC) 14. Life Limited Parts Manual 15. Structural Repair Manual (SRM) 16. Master Minimum Equipment List 17. Wiring Diagram Manual (WD) 18. Wiring Practices Manual 19. System Schematics Manual 20. B.I.T.E. Manual 21. Non-Destructive Test Manual 22. Corrosion Prevention Manual 23. Component Maintenance Manual 24. APU Log Book 25. Engine Maintenance Manual 26. Engine Log Book 27. Engine Illustrated Parts Catalog 28. Engine Data Submittal Book 29. Engine Overhaul Manual 30. Power Plant Build-up Manual AIRCRAFT RECORDS AND HISTORICAL DOCUMENTS 1. Copies of original Certificates delivered by Boeing: a. Airworthiness Certificate for Export b. Radio installation conformity certificate c. Noise limitation certificate 2. Copies of original Documents delivered by Boeing: a. Airworthiness Directive Compliance list b. Aircraft inspection report c. Aircraft Readiness Log d. Weighing report 3. Copies of current Certificates: a. Airworthiness Certificate b. Noise limitation c. Radio license d. Interior material burn certificates e. Certificate of Export f. Aircraft deregistration confirmation e. Aircraft Registration 4. Letters signed and stamped by Quality Assurance: a. Current aircraft hours and cycles b. Current engines hours and cycles c. Accident and Incident report d. Summary of Maintenance Program e. AD compliance during the lease term 5. Aircraft log books and Aircraft readiness log. 6. Aircraft Hard Time (HT) inspection status. 7. One year forecast for HT inspection. 8. Aircraft Modification status, including service bulletins. 9. Last weighing report prior to redelivery. 10. AD compliance report with original signoffs. 11. Routine and non-routine job cards of the last "C" and "D" checks. 12. Past year pilots and maintenance discrepancies. 13. Major and Minor structural repairs with applicable approvals. 14. Compass Swing report of the last three years. 15. Cabin Configuration drawing (LOPA). 16. Emergency equipment location drawing. 17. Last X-RAYs ENGINES RECORDS 1. Last test cell run reports. 2. Life Limited Parts status and traceability. 3. AD compliance report with original signoffs. 4. Engine Modification/service bulletin/inspection report and applicableforms. 5. Last heavy maintenance records for each module. 6. Engine log books. 7. Engine removal history. 8. Past year trend monitoring reports. 9. Historical borescope reports. 10. Engine component report. APU RECORDS 1. APU status (FH, FC, limits). 2. Life limited Part status and traceability. 3. AD compliance with original signoffs. 4. Modification status. 5. Last heavy maintenance documents. 6. APU log books. 7. Last test cell report. COMPONENT RECORDS 1. Aircraft component inventory. 2. Hard time component inventory. 3. All serviceable tags. 4. Landing Gear status with last overhaul and life limited Part status. 5. AD compliance with original signoffs. 6. Modification status. ATTACHMENT 2 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE LIST OF LOOSE EQUIPMENT ATTACHMENT 3 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE LIST OF DISCREPANCIES EXHIBIT F OPINION OF COUNSEL TO BE GIVEN BY INDEPENDENT OUTSIDE COUNSEL OF LESSEE OR OTHER LAWYERS ACCEPTABLE TO LESSOR To: International Lease Finance Corporation 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States Gentlemen: This opinion is furnished to you pursuant to Article 7 of the Aircraft Lease Agreement dated as of September 5, 2000 (the "LEASE") between AMERICAN TRANS AIR, INC. ("LESSEE") and INTERNATIONAL LEASE FINANCE CORPORATION ("LESSOR"). Defined terms in this opinion are used herein as defined in the Lease. I have acted as counsel for LESSEE in connection with the preparation, execution and delivery of the Lease. In that connection I have examined: (a) The Lease and Estoppel and Acceptance Certificate; (b) The charter of LESSEE and all amendments thereto (the "CHARTER"); and (c) Such other documents, agreements and instruments, and such treaties, laws, rules, regulations, decrees and the like, as I have deemed necessary as a basis for the opinions hereinafter expressed. [ (d) All of the agreements and any amendments thereto between LESSEE and all other lessors and lenders of LESSEE covering other aircraft operated by LESSEE on which the Engines can be installed.] Based upon the foregoing and having regard for legal considerations which I deem relevant, I am of the opinion that: 1. LESSEE is a corporation duly incorporated, validly existing and in good standing under the Laws of Indiana. It has the corporate power and authority to carry on its business as presently conducted and to perform its obligations under the Lease. 2. No authorization, approval, consent, license or order of, or registration with, or the giving of notice to the Aviation Authority or any other regulatory body or authority is required for the valid authorization, execution, delivery and performance by LESSEE of the Lease. 3. The Lease and the Estoppel and Acceptance Certificate have each been duly authorized, executed and delivered by LESSEE. Each such instrument is a valid, enforceable and binding obligation of LESSEE except as enforceability may be limited by bankruptcy, insolvency, reorganization or other Laws of general application affecting the enforcement of creditors' rights. 4. The execution and delivery of the Lease and the Estoppel and Acceptance Certificate, the consummation by LESSEE of the transactions contemplated therein and compliance by LESSEE with the terms and provisions thereof do not contravene any Law applicable to LESSEE, or result in any breach of or constitute any default under or result in the creation of any lien, charge or encumbrance upon any property of LESSEE, under any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which LESSEE is a party or by which LESSEE or its properties or assets is bound. 5. Except for any filing or recording that may be required with the [NAME OF AIRCRAFT REGISTER] and except for [DESCRIBE SUCH OTHER FILINGS OR RECORDINGS], no filing or recording of any instrument or document (including the filing of any financial statement) is necessary under the laws of the U.S. in order for the Lease to constitute a valid and perfected lease of record relating to the Aircraft, it being understood that such counsel expresses no opinion as to the nature of LESSOR's title to the Aircraft on the Delivery Date. 6. LESSEE holds all licenses, certificates and permits from applicable governmental authorities in the U.S. necessary for the conduct of its business as a certificated air carrier and performance of its obligations under the Lease. 7. To my knowledge, there are no suits or proceedings pending or threatened against LESSEE before any Government Entity against or affecting LESSEE which are reasonably likely to be adversely determined and, if adversely determined, would have a material adverse effect on the financial condition or business of LESSEE or its ability to perform under the Lease, except as described in the filings provided to LESSOR pursuant to Article 22. 8. The obligations of LESSEE under the Lease are direct, general and unconditional obligations of LESSEE and rank or will rank at least PARI PASSU with all other present and future unsecured and unsubordinated obligations (including contingent obligations) of LESSEE, with the exception of such obligations as are mandatorily preferred by law. 9. LESSEE, under the laws of the U.S. or of any other jurisdiction affecting LESSEE, is subject to private commercial law and suit. Neither LESSEE nor its properties or assets have the right of immunity from suit or execution on the grounds of sovereignty in such jurisdictions and the performance by LESSEE of its obligations under the Lease constitute commercial acts done for commercial purposes. 10. There is no applicable usury or interest limitation Law in Indiana which may restrict the recovery of payments in accordance with the Lease. 11. LESSOR will not violate any Law or become liable to any tax in Indiana or the U.S. by reason of entering into or performing its obligations under the Lease and it is not necessary to establish a place of business in Indiana in order to enforce any provisions of the Lease. Very truly yours, EXHIBIT G ASSIGNMENT OF RIGHTS (AIRFRAME) [DATE] Boeing Commercial Airplane Group P.O. Box 3707 Seattle, Washington 98124-2207 Attention: Vice President-Contracts Mail Code 21-34 Subject: Full Assignment of Rights and Obligations - International Lease Finance Corporation as Lessor and AMERICAN TRANS AIR, INC. as Lessee of Model Boeing 737-800 aircraft bearing manufacturer's serial number 30038 Ladies and Gentlemen: In connection with International Lease Finance Corporation's lease to AMERICAN TRANS AIR, INC. ("Lessee") of a Boeing aircraft (more fully described below), reference is made to the following documents: A. Purchase Agreement 1830, dated as of June 27, 1995, between The Boeing Company ("Boeing") and International Lease Finance Corporation ("ILFC") (the "Boeing Agreement") under which ILFC purchased a certain Boeing Model 737-800 aircraft bearing manufacturer's serial number 30038 (the "Aircraft"). B. Aircraft Lease Agreement (the "Lease") for the Aircraft dated as of September 5, 2000 between ILFC and Lessee. Capitalized terms used herein without definition will have the same meaning as in the Boeing Agreement. In connection with ILFC's lease of the Aircraft under the Lease, ILFC is transferring to Lessee certain rights of ILFC related to the Aircraft under the Boeing Agreement. To accomplish this transfer of rights, as authorized by the provisions of the Boeing Agreement: 1. Lessee acknowledges that it has received copies of the following specific provisions of the Boeing Agreement applicable to the Aircraft and agrees to be bound by and comply with all the terms, conditions, and limitations contained in such provisions, including without limitation the disclaimer and release, exclusion of liabilities, indemnity and insurance provisions thereof: Boeing Agreement Article 6 - Excusable Delay 6.1 General Article 10 - Assignment, Resale or Lease 10.1 Assignment 10.3 Sale by Buyer after Delivery 10.4 Lease by Buyer after Delivery 10.5 No Increase in Boeing Liability 10.6 Exculpatory or Indemnity Clause in Post-delivery Sale or Lease Article 12 - Product Assurance; Disclaimer and Release; Exclusion of Liabilities; Customer Support; Indemnification and Insurance (in its entirety) Article 14 - Contractual Notices and Requests Article 15 - Miscellaneous 15.4 Governing Law Exhibit B - Product Assurance Document Part A Boeing Warrant Part B Warranty Repairs and Modifications by Buyer Part C Boeing Service Life Policy Part D Boeing Indemnity Against Patent Infringement Part D-1 Boeing Indemnity Against Copyright Infringement Part E Supplier Warranties and Patent Indemnities Part G Boeing Interface Commitment Part H General Exhibit C-1 - Customer Support Document Part B Boeing Customer Support Services Part D Technical Data and Documents Part E Buyer's Indemnification of Boeing and Insurance Part F Alleviation or Cessation of Performance Exhibit E - Buyer Furnished Equipment Provisions Document Paragraph 8 Indemnification of Boeing Paragraph 9 Patent Indemnity Paragraph 10 Definitions Letter Agreement No. 1830-3 - Seller Purchased Equipment Paragraph 6 Buyer's Indemnification of Boeing 2. Lessee recognizes that Boeing's obligation to provide training, support and services to Lessee pursuant to Exhibit C of the Boeing Agreement is conditioned on the receipt by Boeing of evidence of compliance by Lessee with the insurance requirements set forth in paragraph 2 of Part E of Exhibit C or in such other form as may be satisfactory to Boeing, prior to the commencement of such training, support and services. 3. ILFC reserves to itself all rights, claims and interests it may have under the Boeing Agreement not expressly assigned to Lessee hereunder. ILFC will remain responsible to Boeing for any amounts with respect to the Aircraft owed to Boeing under the Boeing Agreement prior to the effective date of this letter, including any amounts owed by ILFC to Boeing under the specific articles and paragraphs of the Boeing Agreement referenced in paragraph 1 above based upon events or incidents relating to the Aircraft occurring prior to the effective date of this letter. 4. ILFC hereby assigns to Lessee the sole authority to exercise in Lessee's name all rights and powers of ILFC with respect to the Aircraft under the specific portions of the Boeing Agreement referenced in paragraph 1 above. Such authorization will continue until Boeing receives from ILFC written notice that the Lease has been cancelled or terminated, addressed to Boeing's Vice President, Contracts, P.O. Box 3707, MC 21-34, Seattle, Washington 98124-2207, U.S.A. Until Boeing receives such notice, Boeing will be entitled to deal exclusively with Lessee with respect to the Aircraft under the specific portions of the Boeing Agreement referenced in paragraph 1 above and, with respect to the rights, powers, duties or obligations under such portions of the Boeing Agreement, any and all actions taken by Lessee or agreements entered into by Lessee during the period prior to Boeing's receipt of such notice will be final and binding on ILFC. 5. Lessee hereby accepts the authorization set forth in paragraph 4 above and agrees to be bound by and to comply with all the terms, conditions and limitations of the portion of the Boeing Agreement referenced in paragraph 1 above. 6. This Assignment may be signed by the parties hereto in separate counterparts, each of which when executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. 7. This Assignment shall be governed by, and construed in accordance with,the laws of the State of Washington, including all matters of construction, validity and performance. We request that Boeing, upon receipt of this letter, acknowledge receipt thereof and the transfer of rights set forth above by signing the acknowledgment and forwarding one copy of this letter to each of the undersigned. IN WITNESS WHEREOF, the parties hereto have caused this Assignment Agreement to be duly executed as of the dates written below. INTERNATIONAL LEASE FINANCE AMERICAN TRANS AIR, INC., as Lessee CORPORATION, as Lessor and Buyer By: By: Its: Its: BOEING ACKNOWLEDGMENT AND CONSENT TO ASSIGNMENT Receipt of the above letter is acknowledged and transfer of certain rights as described above under the Boeing Agreement is confirmed, effective as of this date. THE BOEING COMPANY By: Its: Date: EXHIBIT H ASSIGNMENT OF RIGHTS (ENGINES) [DATE] CFM INTERNATIONAL, INC. 1 Neumann Way, F-17 Cincinnati, Ohio 45215 Attention: Commercial Contracts - Warranty Assignment Administrator Dear Warranty Assignment Administrator: Reference is hereby made to that Consent to Assignment made as of April 29, 1988 (the "CONSENT TO ASSIGNMENT"), by and between CFM INTERNATIONAL, INC. ("CFMI") and INTERNATIONAL LEASE FINANCE CORPORATION ("ILFC"). Terms defined in the Consent to Assignment are used herein with the same meaning as in the Consent to Assignment. As of ________________ ___, ______, ILFC has assigned all of its rights and interest in, to and under the Engine Warranties to AMERICAN TRANS AIR, INC. ("ASSIGNEE") in connection with its lease to Assignee of a Boeing 737-800 aircraft (the "AIRCRAFT") together with two (2) CFMI Model CFM56-7B-27 engines bearing Manufacturer's Serial Numbers _______ and ________ (the "ENGINES") as of the date each such Engine was delivered to Assignee. Such assignment shall be effective from such date until ILFC notifies CFMI that the Lease has been cancelled or terminated. The Assignee has accepted such assignment and all the limitations and liabilities pertaining to the Engine Warranties as stated in the provisions of the GTA listed in Schedule 2 to the Consent to Assignment. A copy of the aforesaid assignment is attached hereto. Very truly yours, INTERNATIONAL LEASE FINANCE CORPORATION By: Title: cc: Ruben M. Cabrera Director, Commercial Contracts ASSIGNMENT OF WARRANTIES [DATE] In consideration of AMERICAN TRANS AIR, INC. ("LESSEE") leasing from International Lease Finance Corporation ("ILFC") one (1) Boeing 737-800 aircraft together with two (2) CFMI Model CFM56-7B-27 engines bearing manufacturer's serial numbers _______ and ________, it is hereby agreed as follows: 1. ILFC hereby assigns and transfers to Lessee all of ILFC's respective rights and interest in and to and in and under the Engine Warranties set forth in and subject to the limitations and liabilities set forth in Exhibit B Warranty, Section X (the "ENGINE WARRANTIES") of CFM International, Inc. - ILFC General Terms Agreement No. 6-3987 dated 22 June 1984 (the "GTA") during the term of such leases so long as Lessee is not in default thereunder. 2. Lessee hereby accepts such assignment including all the limitations and liabilities pertaining to said Engine Warranties as stated in the provisions of Exhibit B Warranty, Section X of the GTA. 3. This Agreement shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors and assigns to the extent permitted by the GTA and hereunder. 4. This Agreement shall be governed by and construed in accordance with the laws of the State of California. 5. This Agreement may be executed in any number of counterparts, each of which when executed and delivered is an original but all of which taken together constitute one and the same instrument and any party may execute this Agreement by signing any counterpart. IN WITNESS WHEREOF, the authorized representative of the parties hereto have executed this Agreement as of the day and year first above written. For and on behalf of For and on behalf of INTERNATIONAL LEASE FINANCE AMERICAN TRANS AIR, INC. CORPORATION By: By: Its: Its: EXHIBIT I RETURN ACCEPTANCE RECEIPT Date: _________________ ___, ____ 1. AMERICAN TRANS AIR, INC., as LESSEE, and INTERNATIONAL LEASE FINANCE CORPORATION, as LESSOR, have entered into an Aircraft Lease Agreement dated as of September 5, 2000 (the "LEASE"). Words used herein with capital letters and not otherwise defined will have the meanings set forth in the Lease. 2. LESSOR has this ____ day of __________, ____ (Time: __________) at ____________________ received from LESSEE possession of: (a) One (1) Boeing 737-800 Aircraft bearing Manufacturer's serial number ____, together with two (2) CFM56-7B-27 engines bearing manufacturer's serial numbers _______ and ________, and all Parts attached thereto and thereon in an airworthy condition and (b) All Aircraft Documentation, including the usual and customary manuals, logbooks, flight records and historical information regarding the Aircraft, Engines and Parts, as listed in the Document Receipt attached hereto. 3. The Airframe, Engines and Parts had the following hours/cycles at return: (a) AIRFRAME: Total hours: _______________ Total Landings: _______________ (b) ENGINES: POSITION SERIAL NO. TOTAL HOURS TOTAL CYCLES HRS/CYCLES SINCE LAST SHOP VISIT Time Remaining to Next LIFE LIMITED PART REMOVAL PART NAME HOURS CYCLES MSN MSN (c) APU: MSN __________ Total hours: __________ ______ hours/ ______ cycles since last Overhaul ______ hours/ ______ cycles remaining on APU life-limited Parts (d) LANDING GEARS: POSITION SERIAL NO. Total Hrs/Cycles since Date of last HRS/CYCLES LAST OVERHAUL OVERHAUL Nose Right Main Left Main (e) FUEL ON BOARD AT RETURN: ______ (circle one) pounds/kilos (______ gallons) 4. Other technical information regarding the Aircraft and its components are correctly set forth on the Technical Evaluation Report (in the form of Exhibit L) attached hereto. 5. The above specified aircraft, engines and documentation are hereby accepted by LESSOR subject to correction by LESSEE (or procurement by LESSEE at LESSEE's cost) as soon as reasonably possible of the discrepancies specified in Attachment 2 hereto. 6. Subject to the following paragraph, the leasing of the Aircraft by LESSOR to LESSEE pursuant to the Lease is hereby terminated without prejudice to LESSEE's continuing obligations under the Lease including, without limitation, paragraph 6 above and Articles 10.5, 15 and 16. 7. LESSEE represents and warrants that during the term of the Lease all maintenance and repairs to the Airframe and Engines were performed in accordance with the requirements contained in the Lease. LESSEE further confirms that all of its obligations under the Lease whether accruing prior to the date hereof or which survive the termination of the Lease by their terms and accrue after the date hereof, will remain in full force and effect until all such obligations have been satisfactorily completed. 8. This Return Acceptance Supplement is executed and delivered by the parties in [place]. IN WITNESS WHEREOF, the parties hereto have caused this Return Acceptance Receipt to be executed in their respective corporate names by their duly authorized representatives as of the day and year first above written. INTERNATIONAL LEASE FINANCE CORPORATION AMERICAN TRANS AIR, INC. By: By: Its: Its: ATTACHMENTS: 1. List of Aircraft Documentation 2. List of Loose Equipment 3. List of Discrepancies 4. Engine Maximum Power Assurance Test Conditions and Results 5. Dent and Damage Chart 6. Form of No Accident/Incident Letter 7. Technical Evaluation Report (in the form of Exhibit L) ATTACHMENT 1 TO RETURN ACCEPTANCE RECEIPT LIST OF AIRCRAFT DOCUMENTATION [The (a) manuals and (b) Aircraft records and historical documents set forth below are to be returned with the Aircraft in a current, up-to-date and correct status] MANUALS 1. FAA Approved Flight Manual 2. Airplane Flight Operation Manual 3. Aircraft Recover Manual 4. Quick Reference Handbook (QRH) 5. Weight and Balance Manual 6. Aircraft Fueling Manual 7. Aircraft Maintenance Manual (MM) 8. Aircraft Maintenance Manual Supplement 9. Ramp Maintenance Manual (RMM) 10. Cargo Loading Manual 11. Fault Reporting Manual (FRM) 12. Fault Isolation Manual (FIM) 13. Illustrated Parts Catalog (IPC) 14. Life Limited Parts Manual 15. Structural Repair Manual (SRM) 16. Master Minimum Equipment List 17. Wiring Diagram Manual (WD) 18. Wiring Practices Manual 19. System Schematics Manual 20. B.I.T.E. Manual 21. Non-Destructive Test Manual 22. Corrosion Prevention Manual 23. Component Maintenance Manual 24. APU Log Book 25. Engine Maintenance Manual 26. Engine Log Book 27. Engine Illustrated Parts Catalog 28. Engine Data Submittal Book 29. Engine Overhaul Manual 30. Power Plant Build-up Manual AIRCRAFT RECORDS AND HISTORICAL DOCUMENTS 1. Copies of original Certificates delivered by Boeing: a. Airworthiness Certificate for Export b. Radio installation conformity certificate c. Noise limitation certificate 2. Copies of original Documents delivered by Boeing: a. Airworthiness Directive Compliance list b. Aircraft inspection report c. Aircraft Readiness Log d. Weighing report 3. Copies of current Certificates: a. Airworthiness Certificate b. Noise limitation c. Radio license d. Interior material burn certificates e. Certificate of Export f. Aircraft deregistration confirmation e. Aircraft Registration 4. Letters signed and stamped by Quality Assurance: a. Current aircraft hours and cycles b. Current engines hours and cycles c. Accident and Incident report d. Summary of Maintenance Program e. AD compliance during the lease term 5. Aircraft log books and Aircraft readiness log. 6. Aircraft Hard Time (HT) inspection status. 7. One year forecast for HT inspection. 8. Aircraft Modification status, including service bulletins. 9. Last weighing report prior to redelivery. 10. AD compliance report with original signoffs. 11. Routine and non-routine job cards of the last "C" and "D" checks. 12. Past year pilots and maintenance discrepancies. 13. Major and Minor structural repairs with applicable approvals. 14. Compass Swing report of the last three years. 15. Cabin Configuration drawing (LOPA). 16. Emergency equipment location drawing. 17. Last X-RAYs ENGINES RECORDS 1. Last test cell run reports. 2. Life Limited Parts status and traceability. 3. AD compliance report with original signoffs. 4. Engine Modification/service bulletin/inspection report and applicable forms. 5. Last heavy maintenance records for each module. 6. Engine log books. 7. Engine removal history. 8. Past year trend monitoring reports. 9. Historical borescope reports. 10. Engine component report. APU RECORDS 1. APU status (FH, FC, limits). 2. Life limited Part status and traceability. 3. AD compliance with original signoffs. 4. Modification status. 5. Last heavy maintenance documents. 6. APU log books. 7. Last test cell report. COMPONENT RECORDS 1. Aircraft component inventory. 2. Hard time component inventory. 3. All serviceable tags. 4. Landing Gear status with last overhaul and life limited Part status. 5. AD compliance with original signoffs. 6. Modification status. ATTACHMENT 2 TO RETURN ACCEPTANCE RECEIPT LIST OF LOOSE EQUIPMENT ATTACHMENT 3 TO RETURN ACCEPTANCE RECEIPT LIST OF DISCREPANCIES ATTACHMENT 4 TO RETURN ACCEPTANCE RECEIPT ENGINE MAXIMUM POWER ASSURANCE TEST CONDITIONS AND RESULTS ATTACHMENT 5 TO RETURN ACCEPTANCE RECEIPT DENT AND DAMAGE CHART ATTACHMENT 6 TO RETURN ACCEPTANCE RECEIPT FORM OF NO ACCIDENT/INCIDENT LETTER EXHIBIT J MONTHLY REPORT (SEE FOLLOWING SHEET) MONTHLY AIRCRAFT UTILIZATION AND STATUS REPORT Page 1 of 2 Report Due Date: To: INTERNATIONAL LEASE FINANCE CORPORATION Fax: (310) 788-1990 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067, United States Attn: Finance Department From: AMERICAN TRANS AIR, INC. Contact: Fax: AIRCRAFT TYPE: BOEING 737-800 ENGINE TYPE: CFM56-7B-27 REGISTRATION: ____ SERIAL NUMBER: ____ MONTH OF: NOTE: PLEASE RECORD TIME IN HOURS AND MINUTES NOT DECIMALS. Aircraft Total Time Since New As Of Last Month: Hours: Min: Aircraft Total Time Since New: Hours: Min: Aircraft Total Cycles Since New: Cycles: Airframe Hours Flown During Month: Hours: Min: Airframe Cycles/Landings During Month: Cycles: Time Remaining to "D" or Heavy Maintenance Check: HOURS OR US$ PER CYCLES FLOWN HOUR OR DURING MONTH (AS CYCLE (AS APPLICABLE) X APPLICABLE) = RESERVES TOTAL AIRFRAME: HRS: X = TOTAL LANDING GEAR: HRS: X = TOTAL APU: HRS: X = ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles(for Engine LLP Reserves): x = ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles (for Engine LLP Reserves): x = ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles (for LLP x = Reserves): ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles (for Engine LLP Reserves): x = TOTAL AMOUNT OF RESERVES (US$) PAID THIS MONTH: US$ Monthly Aircraft Utilization and Status Report From: AMERICAN TRANS AIR, INC. PAGE 2 OF 2 ENGINE SERIAL NUMBER: ENGINE SERIAL NUMBER: ORIGINAL POSITION: ORIGINAL POSITION: ACTUAL LOCATION: ACTUAL LOCATION: CURRENT THRUST RATING: CURRENT THRUST RATING: HOURS:/MIN: HOURS:/MIN: Total Time Since New As Of Total Time Since New As Of Last Month: Last Month: Total Time Since New: Total Time Since New: Total Cycles Since New: Total Cycles Since New: Hours Flown During Month: Hours Flown During Month: Cycles During Month: Cycles During Month: IMPORTANT: IF ILFC-OWNED ENGINE IS REMOVED OR INSTALLED ON ANOTHER AIRCRAFT, IT MUST BE REPORTED MONTHLY ON THIS FORM. EXHIBIT K AIRCRAFT DOCUMENTATION AIRCRAFT RECORDS 1. Copies of original Certificates delivered by Boeing: a. Airworthiness Certificate for Export b. Radio installation conformity certificate c. Noise limitation certificate 2. Copies of original Documents delivered by Boeing: a. Airworthiness Directive Compliance list b. Aircraft inspection report c. Aircraft Readiness Log d. Weighing report 3. Copies of current Certificates: a. Airworthiness Certificate b. Noise limitation c. Radio license d. Interior material burn certificates e. Certificate of Export f. Aircraft deregistration confirmation e. Aircraft Registration 4. Letters signed and stamped by Quality Assurance: a. Current aircraft hours and cycles b. Current engines hours and cycles c. Accident and Incident report d. Summary of Maintenance Program e. AD compliance during the lease term 5. Aircraft log books and Aircraft readiness log. 6. Aircraft Hard Time (HT) inspection status. 7. One year forecast for HT inspection. 8. Aircraft Modification status, including service bulletins. 9. Last weighing report prior to redelivery. 10. AD compliance report with original signoffs. 11. Routine and non-routine job cards of the last "C" and "D" checks. 12. Past year pilots and maintenance discrepancies. 13. Major and Minor structural repairs with applicable approvals. 14. Compass Swing report of the last three years. 15. Cabin Configuration drawing (LOPA). 16. Emergency equipment location drawing. 17. Last X-RAYs ENGINES RECORDS 1. Last test cell run reports. 2. Life Limited Parts status and traceability. 3. AD compliance report with original signoffs. 4. Engine Modification/service bulletin/inspection report and applicable forms. 5. Last heavy maintenance records for each module. 6. Engine log books. 7. Engine removal history. 8. Past year trend monitoring reports. 9. Historical borescope reports. 10. Engine component report. APU RECORDS 1. APU status (FH, FC, limits). 2. Life limited Part status and traceability. 3. AD compliance with original signoffs. 4. Modification status. 5. Last heavy maintenance documents. 6. APU log books. 7. Last test cell report. COMPONENT RECORDS 1. Aircraft component inventory. 2. Hard time component inventory. 3. All serviceable tags. 4. Landing Gear status with last overhaul and life limited Part status. 5. AD compliance with original signoffs. 6. Modification status. EXHIBIT L TECHNICAL EVALUATION REPORT (SEE FOLLOWING SHEETS) EX-10.6(N) 29 file075.txt AMTRAN, INC., 2000 10-K, EXHIBIT 10.6(N) AIRCRAFT LEASE AGREEMENT Dated as of September 5, 2000 BETWEEN AMERICAN TRANS AIR, INC. as LESSEE and INTERNATIONAL LEASE FINANCE CORPORATION as LESSOR ------------------------------------------------------------------------------- Aircraft Make and Model: New Boeing 737-800 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Aircraft Manufacturer's Serial Number: 28239 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Aircraft Registration Mark: Per Estoppel and Acceptance Certificate ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Make and Model of Engines: CFM56-7B-27 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Serial Numbers of Engines: Per Estoppel and Acceptance Certificate ------------------------------------------------------------------------------- NEW BOEING 737-800 AIRCRAFT NO. 1 TABLE OF CONTENTS ARTICLE 1 SUMMARY OF TRANSACTION.........................................2 1.1 Description of Aircraft........................................2 1.2 Scheduled Delivery Date and Location...........................2 1.3 Lease Term.....................................................2 1.4 Security Deposit...............................................2 1.5 Transaction Fee................................................2 1.6 Rent During Lease Term.........................................2 1.7 Country of Aircraft Registration...............................4 1.8 Maintenance Program............................................4 1.9 Agreed Value of Aircraft.......................................4 1.10 LESSOR's Bank Account..........................................4 ARTICLE 2 DEFINITIONS....................................................5 2.1 General Definitions............................................5 2.2 Specific Definitions...........................................9 ARTICLE 3 PLACE AND DATE OF DELIVERY....................................11 3.1 Place of Delivery.............................................11 3.2 Scheduled Delivery Date.......................................11 3.3 Delivery subject to Manufacturer Delivery.....................11 3.4 No LESSOR Liability...........................................11 3.5 Total Loss of Aircraft prior to Delivery......................11 3.6 Cancellation for Delay........................................11 ARTICLE 4 LEASE TERM....................................................12 4.1 Lease Term....................................................12 4.2 "Expiration Date".............................................12 4.3 "Termination Date"............................................12 ARTICLE 5 SECURITY DEPOSIT, TRANSACTION FEE, RENT AND OTHER PAYMENTS......................................................13 5.1 Security Deposit..............................................13 5.2 Transaction Fee...............................................14 5.3 Rent..........................................................14 5.4 LESSOR's Bank Account.........................................15 5.5 Default Interest..............................................16 5.6 No Deductions or Withholdings.................................16 5.7 Value Added Taxes.............................................16 5.8 Net Lease.....................................................17 5.9 LESSOR Performance of LESSEE Obligation.......................18 5.10 Consideration for Rent and other Amounts......................18 ARTICLE 6 INVOLVEMENT WITH AIRCRAFT MANUFACTURER........................19 6.1 LESSEE Selection of Aircraft..................................19 6.2 Agency Agreement..............................................19 6.3 Procurement of BFE............................................19 6.4 Assignment of Training........................................19 6.5 LESSEE Inspection of Aircraft.................................19 6.6 Aircraft at Delivery..........................................19 6.7 Delivery of the Aircraft to LESSEE............................20 6.8 LESSEE Acceptance of Aircraft.................................20 ARTICLE 7 PRE-DELIVERY, DELIVERY AND POST-DELIVERY DOCUMENTARY AND OTHER REQUIREMENTS............................21 7.1 Pre-Delivery Requirements.....................................21 7.2 Delivery Requirements.........................................22 7.3 Post-Delivery Requirements....................................23 ARTICLE 8 DISCLAIMERS...................................................24 8.1 "As Is, Where Is".............................................24 8.2 Waiver of Warranty of Description.............................24 8.3 LESSEE Waiver.................................................25 8.4 Conclusive Proof..............................................25 8.5 No LESSOR Liability for Losses................................25 8.6 No Liability to Repair or Replace.............................25 8.7 No Waiver.....................................................26 ARTICLE 9 MANUFACTURERS' AND VENDORS' WARRANTIES........................27 9.1 Warranties....................................................27 9.2 Reassignment..................................................27 ARTICLE 10 OPERATION OF AIRCRAFT.........................................28 10.1 Costs of Operation............................................28 10.2 Compliance with Laws..........................................28 10.3 Training......................................................28 10.4 No Violation of Insurance Policies............................28 10.5 Flight Charges................................................29 ARTICLE 11 SUBLEASES.....................................................30 11.1 No Sublease without LESSOR Consent............................30 11.2 LESSOR Costs..................................................30 11.3 Any Approved Sublease.........................................30 11.4 Assignment of Sublease........................................30 11.5 Continued Responsibility of LESSEE............................30 ARTICLE 12 MAINTENANCE AND USE OF AIRCRAFT...............................31 12.1 General Obligation............................................31 12.2 Specific Obligations..........................................31 12.3 Replacement of Parts..........................................32 12.4 Removal of Engines............................................33 12.5 Pooling of Engines and Parts..................................34 12.6 Installation of Engines on other aircraft.....................34 12.7 Modifications.................................................35 12.8 Performance of Work by Third Parties..........................36 12.9 Reporting Requirements........................................36 12.10 Information Regarding Maintenance Program.....................36 12.11 LESSOR Rights to Inspect Aircraft.............................36 ARTICLE 13 TITLE AND REGISTRATION........................................37 13.1 Title to the Aircraft During Lease Term.......................37 13.2 Registration of Aircraft......................................37 13.3 Filing of this Lease..........................................37 13.4 Evidence of Registration and Filings..........................37 ARTICLE 14 IDENTIFICATION PLATES.........................................38 14.1 Airframe Identification Plates................................38 14.2 Engine Identification Plates..................................38 ARTICLE 15 TAXES.........................................................39 15.1 General Obligation of LESSEE..................................39 15.2 Exceptions to Indemnity.......................................39 15.3 After-Tax Basis...............................................40 15.4 Claims and Contests...........................................40 15.5 Refunds.......................................................41 15.6 Cooperation in Filing Tax Returns.............................41 ARTICLE 16 INDEMNITIES...................................................42 16.1 General Indemnity.............................................42 16.2 Exceptions to General Indemnities.............................43 16.3 After-Tax Basis...............................................44 16.4 Timing of Payment.............................................44 16.5 Subrogation...................................................44 16.6 Notice........................................................44 16.7 Refunds.......................................................44 16.8 Defense of Claims.............................................45 16.9 Survival of Obligation........................................45 ARTICLE 17 INSURANCE.....................................................46 17.1 Categories of Insurance.......................................46 17.2 Insurance for Indemnities.....................................46 17.3 Insurance required by Manufacturer............................46 17.4 Renewal.......................................................46 17.5 Assignment of Rights by LESSOR................................46 17.6 Deductibles...................................................46 17.7 Other Insurance...............................................47 17.8 Information...................................................47 17.9 Currency......................................................47 17.10 Grounding of Aircraft.........................................47 17.11 Failure to Insure.............................................47 17.12 Limit on Hull in favor of LESSEE..............................47 17.13 Marketplace Limitations.......................................48 ARTICLE 18 LOSS, DAMAGE AND REQUISITION..................................49 18.1 Definitions...................................................49 18.2 Notice of Total Loss..........................................50 18.3 Total Loss of Aircraft or Airframe............................50 18.4 Surviving Engine(s)...........................................51 18.5 Total Loss of Engine and not Airframe.........................51 18.6 Other Loss or Damage..........................................52 18.7 Copy of Insurance Policy......................................53 18.8 Government Requisition........................................53 18.9 Conveyance to LESSEE..........................................53 ARTICLE 19 CRAF PROGRAM..................................................54 19.1 Dedication to CRAF............................................54 19.2 Notice to LESSOR..............................................54 19.3 Requisition of Engine.........................................54 19.4 Government Indemnification....................................54 19.5 No Geographic Limits..........................................54 19.6 Notice of Default.............................................55 19.7 Receipt of Payments...........................................55 ARTICLE 20 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE...........56 20.1 Representations and Warranties................................56 20.2 Covenants.....................................................58 ARTICLE 21 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSOR...........61 21.1 Representations and Warranties................................61 21.2 Covenant of Quiet Enjoyment...................................62 ARTICLE 22 FINANCIAL AND RELATED INFORMATION.............................63 ARTICLE 23 RETURN OF AIRCRAFT............................................64 23.1 Date of Return................................................64 23.2 Technical Report..............................................64 23.3 Return Location...............................................64 23.4 Full Aircraft Documentation Review............................64 23.5 Aircraft Inspection...........................................64 23.6 Certificate of Airworthiness Matters..........................65 23.7 General Condition of Aircraft at Return.......................66 23.8 Checks Prior to Return........................................69 23.9 Part Lives....................................................72 23.10 Export and Deregistration of Aircraft.........................74 23.11 LESSEE's Continuing Obligations...............................75 23.12 Airport and Navigation Charges................................75 23.13 Return Acceptance Certificate.................................76 23.14 Indemnities and Insurance.....................................76 ARTICLE 24 ASSIGNMENT....................................................77 24.1 No Assignment by LESSEE.......................................77 24.2 Sale or Assignment by LESSOR..................................77 24.3 LESSOR's Lender...............................................79 24.4 LESSEE Cooperation............................................79 24.5 Protections...................................................79 ARTICLE 25 DEFAULT OF LESSEE.............................................80 25.1 LESSEE Notice to LESSOR.......................................80 25.2 Events of Default.............................................80 25.3 LESSOR's General Rights.......................................82 25.4 Deregistration and Export of Aircraft.........................83 25.5 LESSEE Liability for Damages..................................83 25.6 Waiver of Default.............................................84 25.7 Present Value of Payments.....................................84 25.8 Use of "Termination Date".....................................84 ARTICLE 26 NOTICES.......................................................85 26.1 Manner of Sending Notices.....................................85 26.2 Notice Information............................................85 ARTICLE 27 GOVERNING LAW AND JURISDICTION................................86 27.1 California Law................................................86 27.2 Non-Exclusive Jurisdiction in California......................86 27.3 Service of Process............................................86 27.4 Prevailing Party in Dispute...................................86 27.5 Waiver........................................................86 ARTICLE 28 MISCELLANEOUS.................................................87 28.1 Press Releases................................................87 28.2 LESSOR Performance for LESSEE.................................87 28.3 LESSOR's Payment Obligations..................................87 28.4 Application of Payments.......................................87 28.5 Usury Laws....................................................87 28.6 Delegation by LESSOR..........................................87 28.7 Confidentiality...............................................88 28.8 Rights of Parties.............................................88 28.9 Further Assurances............................................88 28.10 Use of Word "including".......................................88 28.11 Headings......................................................88 28.12 Invalidity of any Provision...................................88 28.13 Negotiation...................................................88 28.14 Time is of the Essence........................................89 28.15 Amendments in Writing.........................................89 28.16 Counterparts..................................................89 28.17 Delivery of Documents by Fax..................................89 28.18 Entire Agreement..............................................89 EXHIBIT A AIRCRAFT DESCRIPTION..........................................91 EXHIBIT B AGENCY AGREEMENT..............................................92 EXHIBIT C CERTIFICATE OF INSURANCE......................................96 EXHIBIT D BROKERS' LETTER OF UNDERTAKING...............................102 EXHIBIT E ESTOPPEL AND ACCEPTANCE CERTIFICATE..........................104 EXHIBIT F OPINION OF COUNSEL...........................................111 EXHIBIT G ASSIGNMENT OF RIGHTS (AIRFRAME)..............................114 EXHIBIT H ASSIGNMENT OF RIGHTS (ENGINES)...............................119 EXHIBIT I RETURN ACCEPTANCE RECEIPT....................................123 EXHIBIT J MONTHLY REPORT...............................................134 EXHIBIT K AIRCRAFT DOCUMENTATION.......................................138 EXHIBIT L TECHNICAL EVALUATION REPORT..................................140 AIRCRAFT LEASE AGREEMENT THIS AIRCRAFT LEASE AGREEMENT is made and entered into as of September 5, 2000. BETWEEN: AMERICAN TRANS AIR, INC., a Indiana corporation whose address and principal place of business is at 7337 West Washington Street, Indianapolis International Airport, Indianapolis, Indiana 46231, United States of America ("LESSEE") and INTERNATIONAL LEASE FINANCE CORPORATION, a California corporation whose address and principal place of business is at 1999 Avenue of the Stars, 39th Floor, Los Angeles, California 90067, United States of America ("LESSOR"). The subject matter of this Lease is one (1) new Boeing 737-800 aircraft. In consideration of and subject to the mutual covenants, terms and conditions contained in this Lease, LESSOR hereby agrees to lease to LESSEE and LESSEE hereby agrees to lease from LESSOR the aircraft and the parties further agree as follows: ARTICLE 1 SUMMARY OF TRANSACTION The information in this Article 1 is a summary of the lease transaction between LESSEE and LESSOR. It is set forth for the convenience of the parties only and will not be deemed in any way to amend, detract from or simplify the other provisions of this Lease. 1.1 DESCRIPTION OF AIRCRAFT One new Boeing 737-800 aircraft 1.2 SCHEDULED DELIVERY DATE AND LOCATION In the month of (CONFIDENTIAL MATERIAL OMITTED) at Seattle, Washington 1.3 LEASE TERM 15 years 1.4 SECURITY DEPOSIT (CONFIDENTIAL MATERIAL OMITTED) 1.5 TRANSACTION FEE (CONFIDENTIAL MATERIAL OMITTED) 1.6 RENT DURING LEASE TERM Payable monthly in advance and equal to the sum of: (a The following amounts for the following years of the Lease Term: LEASE PERIOD MONTHLY RENTAL AMOUNT* (CONFIDENTIAL MATERIAL OMITTED) *The above base rent is expressed in January 1999 U.S.Dollars and will increase in the following amounts for the following periods: PERIOD ESCALATION FACTOR (CONFIDENTIAL MATERIAL OMITTED) 1.7 COUNTRY OF AIRCRAFT REGISTRATION U.S. 1.8 MAINTENANCE PROGRAM LESSEE's Maintenance Program 1.9 AGREED VALUE OF AIRCRAFT (CONFIDENTIAL MATERIAL OMITTED) The Agreed Value is expressed in March 2001 U.S. Dollars and will increase in accordance with Manufacturer's announced escalation rate from March 1, 2001 to the Delivery Date. On each annual renewal date of LESSEE's insurance policy commencing on the renewal date following the first anniversary of the Lease Term, the Agreed Value will decrease by two percent (2.0%) of the then existing Agreed Value. 1.10 LESSOR'S BANK ACCOUNT (Confidential Material Omitted) ARTICLE 2 DEFINITIONS Except where the context otherwise requires, the following words have the following meanings for all purposes of this Lease. The definitions are equally applicable to the singular and plural forms of the words. Any agreement defined below includes each amendment, modification, supplement and waiver thereto in effect from time to time. 2.1 GENERAL DEFINITIONS. "ACT" means the Federal Aviation Act of 1958, as amended from time to time, or any successor act thereto. "AIRCRAFT" means the Airframe, two (2) Engines, Parts and Aircraft Documentation, collectively. As the context requires, "Aircraft" may also mean the Airframe, any Engine, any Part, the Aircraft Documentation or any part thereof individually. For example, in the context of return to LESSOR the term "Aircraft" means the Airframe, Engines, Parts and Aircraft Documentation collectively, yet in the context of LESSEE not creating any Security Interests other than Permitted Liens on the Aircraft, the term "Aircraft" means any of the Airframe, any Engine, any Part or the Aircraft Documentation individually. "AIRCRAFT DOCUMENTATION" means all (a) log books, Aircraft records, manuals and other documents provided to LESSEE in connection with the Aircraft, (b) documents listed in Exhibits E and K and (c) any other documents required to be maintained during the Lease Term by the Aviation Authority, LESSEE's Maintenance Program and this Lease. "AIRFRAME" means the airframe listed in the Estoppel and Acceptance Certificate executed at Delivery together with all Parts relating thereto (except Engines or engines). "AIRWORTHINESS DIRECTIVES" or "ADS" means all airworthiness directives (or equivalent) of the FAA and the Aviation Authority applicable to the Aircraft. "APU" means the auxiliary power unit of the Aircraft. "AVIATION AUTHORITY" means the FAA or any Government Entity which under the Laws of the U.S. from time to time has control over civil aviation or the registration, airworthiness or operation of aircraft in the U.S. If the Aircraft is registered in a country other than the U.S., "Aviation Authority" means the agency which regulates civil aviation in such other country. "AVIATION DOCUMENTS" means any or all of the following which at any time may be obtainable from the Aviation Authority: (a) if required, a temporary certificate of airworthiness from the Aviation Authority allowing the Aircraft to be flown after Delivery to the State of Registration, (b) an application for registration of the Aircraft with the appropriate authority in the State of Registration, (c) the certificate of registration for the Aircraft issued by the State of Registration, (d) a full certificate of airworthiness for the Aircraft specifying transport category (passenger), (e) an air transport license, (f) an air operator's certificate, (g) such recordation of LESSOR's title to the Aircraft and interest in this Lease as may be available in the State of Registration and (h) all such other authorizations, approvals, consents and certificates in the State of Registration as may be required to enable LESSEE lawfully to operate the Aircraft. "BANKRUPTCY CODE" means The Bankruptcy Reform Act of 1978 (11 U.S.C. ss.ss. 101-1330), as amended or supplemented from time to time, and any successor statute, and all of the rules and regulations issued or promulgated in connection therewith. "BASIC ENGINE" means those units and components of the Engine which are used to induce and convert fuel/air mixture into thrust/power; to transmit power to the fan and accessory drives; to supplement the function of other defined systems external to the Engine; and to control and direct the flow of internal lubrication, plus all essential accessories as supplied by the Engine manufacturer. The nacelle, installed components related to the Aircraft systems, thrust reversers, QEC and the primary flight nozzle are excluded. "BFE" means any equipment which is to be provided by the purchaser of the Aircraft (whether actually provided by LESSOR as buyer-furnished equipment or Manufacturer as seller-purchased equipment). "BUSINESS DAY" means a day other than a Saturday or Sunday on which the banks in Indianapolis, Indiana and in the city where LESSOR's Bank is located are open for the transaction of business of the type required by this Lease. "CREDITOR" means any lessor, owner, bank, lender, mortgagee or other Person which is the owner of or has any interest in an aircraft engine or aircraft operated by LESSEE. "CREDITOR AGREEMENT" means the applicable agreement between a Creditor and LESSEE or between Creditors pursuant to which such Creditor owns, leases or has an interest in either an aircraft operated by LESSEE on which an Engine may be installed or in an aircraft engine which may be installed on the Airframe. "DEFAULT" means any event which, upon the giving of notice, the lapse of time and/or a relevant determination, would constitute an Event of Default. "DELIVERY" means the delivery of the Aircraft from LESSOR to LESSEE pursuant to Articles 3 and 6. "DELIVERY DATE" means the date on which Delivery takes place. "DOLLARS" and "$" means the lawful currency of the U.S. "ENGINE" means (a) each of the engines listed on the Estoppel and Acceptance Certificate; or (b) any replacement engine acquired by LESSOR and leased to LESSEE pursuant to Article 18.5 following a Total Loss of an Engine; including in each case all Parts installed in or on any of such engines at Delivery (or substituted, renewed or replacement Parts in accordance with this Lease) so long as title thereto is or remains vested in LESSOR in accordance with the terms of Article 12.3. "EVENT OF DEFAULT" means any of the events referred to in Article 25.2. "FAA" means the Federal Aviation Administration of the Department of Transportation or any successor thereto under the Laws of the U.S. "FARS" means the U.S. Federal Aviation Regulations embodied in Title 14 of the U.S. Code of Federal Regulations, as amended from time to time, or any successor regulations thereto. "GENEVA CONVENTION" means the Convention on the International Recognition of Rights in Aircraft signed in Geneva, Switzerland on June 19, 1948. "GOVERNMENT ENTITY" means any (a) national, state or local government, (b) board, commission, department, division, instrumentality, court, agency or political subdivision thereof and (c) association, organization or institution of which any of the entities listed in (a) or (b) is a member or to whose jurisdiction any such entity is subject. "LANDING GEAR" means the installed main and nose landing gear, components and their associated actuators, side braces and parts. "LAW" means any (a) statute, decree, constitution, regulation, order or any directive of any Government Entity, (b) treaty, pact, compact or other agreement to which any Government Entity is a signatory or party and (c) judicial or administrative interpretation or application of any of the foregoing. "LEASE" means this Aircraft Lease Agreement, together with all Exhibits hereto. "LESSOR'S LIEN" means any Security Interest created by LESSOR, or arising from a claim against LESSOR completely unrelated to this Lease or the other Operative Documents. "MAINTENANCE PROGRAM" means LESSEE's maintenance program as approved by the Aviation Authority or such other maintenance program as LESSOR may, in its discretion, accept in writing. "MANUFACTURER" means The Boeing Company, a Delaware corporation. "MPD" means the Maintenance Planning Document published by Manufacturer and applicable to the Aircraft. "OVERHAUL" means the full reconditioning of the Aircraft, an Engine, APU, Landing Gear, module or Part, as the case may be, in which such equipment has been fully disassembled; cleaned; thoroughly inspected; and returned to the highest standard specified by the applicable manufacturer's manual. "PART" means the APU, any part, component, appliance, system module, engine module, accessory, material, instrument, communications equipment, furnishing, LESSEE-furnished or LESSOR-purchased equipment or other item of equipment (other than complete Engines or engines) for the time being installed in or attached to the Airframe or any Engine or which, having been removed from the Airframe or any Engine, remains the property of LESSOR. "PERMITTED INSTITUTION" means any Person (other than a commercial air carrier, a commercial aircraft operator, a freight forwarder, or an affiliate of any of the foregoing), with either: (a) a combined capital and surplus or net worth of at least; or (b) have a credit rating on the majority of its unsecured debt which is at least equal to BBB or its equivalent from Standard and Poor's Rating Group, a division of The McGraw-Hill Companies, Inc. or Moody's Investors Service, Inc. "PERMITTED LIEN" means (a) LESSOR's Liens; (b) Security Interests arising in the ordinary course of LESSEE's business for Taxes either not yet due and payable or, if due and payable, being contested in good faith in accordance with Article 15.4; (c) materialmen's, mechanics', workmen's, repairmen's, employees' liens or similar Security Interests arising by operation of Law after the Delivery Date in the ordinary course of LESSEE's business for amounts which are either not yet due or are being contested in good faith by appropriate proceedings (and for which adequate reserves have been made or, when required in order to pursue such proceedings, an adequate bond has been provided) so long as such proceedings do not involve any material danger of sale, forfeiture or loss of the Aircraft; (d) the rights of LESSOR and any LESSOR's Lender and the rights of LESSEE under this Lease and the other Operative Documents; (e) the rights of others under agreements or arrangements to the extent permitted by Articles 10 and 11.5; and (f) any Security Interest against which LESSEE causes to be provided a bond in such amount and under such terms and conditions as are reasonably satisfactory to LESSOR. "PERSON" means any individual, firm, partnership, joint venture, trust, corporation, limited liability company, Government Entity, committee, department, authority or any body, incorporated or unincorporated, whether having distinct legal personality or not. "PRIME RATE" means the rate of interest from time to time announced by Bank of America Illinois in Chicago, Illinois as its prime commercial lending rate. "SECURITY INTEREST" means any encumbrance or security interest, however and wherever created or arising including (without prejudice to the generality of the foregoing) any right of ownership, security, mortgage, pledge, charge, encumbrance, lease, lien, statutory or other right in rem, hypothecation, title retention, attachment, levy, claim or right of possession or detention. "STATE OF REGISTRATION" means the U.S. or such other country or state of registration of the Aircraft as LESSOR may, in its absolute discretion, approve in writing. "U.S." means the United States of America. "U.S. AIR CARRIER" means any U.S. air carrier who is a Citizen of the U.S. holding an air carrier operating certificate issued by the Secretary of Transportation pursuant to chapter 447 of the Act for aircraft capable of carrying 10 or more individuals or 6000 pounds or more of cargo, and as to whom there is in force an air carrier operating certificate issued pursuant to FAR Part 121, or who may operate as an air carrier by certification or otherwise under any successor or substitute provisions therefor or in the absence thereof. 2.2 SPECIFIC DEFINITIONS. The following terms are defined in the Articles referenced below: TERMS ARTICLE Agreed Value 18.1 CRAF Program 19.1 CRAF Program Requisition 19.1 Period Default Interest 5.5 Delivery Location 3.1 Expenses 16.1 Expiration Date 4.3 Indemnities 16.1 Lease Term 4.1 LESSEE Customization 5.3.1 Costs LESSOR's Assignee 24.2.1 LESSOR's Bank 5.4 LESSOR's Lender 24.3 Manufacturer's Escalation 5.3.1 Rate Modifications 12.7.2 Net Total Loss Proceeds 18.1 Operative Documents 20.1.3 Rent 5.3.1 Return Check 23.8.1 Scheduled Delivery Date 3.2 Security Deposit 5.1.1 Taxes 15.1 Termination Date 4.3 Total Loss 18.1 Total Loss Date 18.1 Total Loss Proceeds 18.1 Transaction Fee 5.2 ARTICLE 3 PLACE AND DATE OF DELIVERY 3.1 PLACE OF DELIVERY. LESSOR will deliver the Aircraft to LESSEE at Manufacturer's facility at Seattle, Washington or such other place as may be agreed in writing between the parties (the "DELIVERY LOCATION"). 3.2 SCHEDULED DELIVERY DATE. As of the date of this Lease, delivery of the Aircraft from Manufacturer to LESSOR is scheduled to occur in the month of (CONFIDENTIAL MATERIAL OMITTED). LESSOR will not agree to reschedule such delivery without LESSEE's prior written consent. LESSOR will notify LESSEE from time to time and in a timely manner of the exact date on which LESSOR expects such delivery to take place (the "SCHEDULED DELIVERY DATE"). 3.3 DELIVERY SUBJECT TO MANUFACTURER DELIVERY. LESSOR and LESSEE expressly acknowledge that Delivery of the Aircraft to LESSEE is subject to and conditioned upon, and is to occur simultaneously with, delivery of the Aircraft by Manufacturer to LESSOR. 3.4 NO LESSOR LIABILITY. LESSOR will not be liable for any loss or expense, or any loss of profit, arising from any delay or failure in Delivery to LESSEE unless such delay or failure arises as a consequence of the willful misconduct of LESSOR, and in no event will LESSOR be liable for any delay or failure which is caused by any breach or delay on the part of Manufacturer or any BFE supplier. 3.5 TOTAL LOSS OF AIRCRAFT PRIOR TO DELIVERY. If a Total Loss of the Aircraft occurs prior to Delivery, neither party will have any further liability to the other except that LESSOR will return to LESSEE the Security Deposit in accordance with Article 5.1.3 and any prepaid Rent. 3.6 CANCELLATION FOR DELAY. Promptly after LESSOR becomes aware that in Manufacturer's opinion a delay will cause Delivery to be delayed beyond (CONFIDENTIAL MATERIAL OMITTED) LESSOR will notify LESSEE. By written notice given within ten (10) Business Days after LESSEE's receipt of such LESSOR notice, either party may by written notice to the other party terminate this Lease and this Lease will terminate on the date of receipt of such notice. In the event of such termination, neither party will have any further liability to the other party except that LESSOR will return to LESSEE the Security Deposit in accordance with Article 5.1.3 and any prepaid Rent. If neither party gives notice of termination within such ten (10) Business Days, both parties lose all right to terminate under this Article 3.6 unless otherwise agreed in writing by the parties. ARTICLE 4 LEASE TERM 4.1 LEASE TERM. The term of leasing of the Aircraft will commence on the Delivery Date and continue for a term of fifteen (15) years ("LEASE TERM"). 4.2 "EXPIRATION DATE". "EXPIRATION DATE" means the date on which LESSEE is required to redeliver the Aircraft to LESSOR in the condition required by this Lease on the last day of the Lease Term. 4.3 "TERMINATION DATE". This Lease may in fact terminate on any of the dates set forth below: (a the Expiration Date, provided LESSEE returns the Aircraft to LESSOR on the Expiration Date in the condition required by Article 23; or (b a date earlier than the Expiration Date, if: (i there is a Total Loss of the Aircraft prior to Delivery pursuant to Article 3.5; (ii cancellation of this Lease occurs pursuant to Article 3.6; (iii there is a Total Loss of the Aircraft and payment is made to LESSOR in accordance with Article 18.3; or (iv an Event of Default occurs and LESSOR repossesses the Aircraft or otherwise terminates this Lease pursuant to Article 25.3. (c a date later than the Expiration Date, if: (i an Event of Default occurs hereunder by LESSEE returning the Aircraft in the condition required by this Lease after the Expiration Date; or (ii an Event of Default occurs and LESSOR repossesses the Aircraft or otherwise terminates this Lease pursuant to Article 25.3. The "TERMINATION DATE" is the date on which this Lease terminates because one of the above has occurred. ARTICLE 5 SECURITY DEPOSIT, TRANSACTION FEE, RENT AND OTHER PAYMENTS 5.1 SECURITY DEPOSIT. 5.1.1 (CONFIDENTIAL MATERIAL OMITTED) 5.1.2 The Security Deposit may be commingled with LESSOR's general funds and any interest earned on such Security Deposit will be for LESSOR's account. If the Security Deposit is reduced below the required amount by application to meet LESSEE's unperformed obligations under this Lease, LESSEE will replenish the Security Deposit within ten (10) days after LESSOR's demand therefor. The Security Deposit will serve as security for the performance by LESSEE of its obligations under this Lease and any other agreements between LESSEE and LESSOR relating to aircraft, engines, aircraft equipment or the extension of credit and may be applied by LESSOR upon the occurrence of a Default or Event of Default hereunder or of a default by LESSEE under any such other agreements. 5.1.3 Upon termination of this Lease in accordance with Article 4.3 other than if an Event of Default has occurred and is continuing, LESSOR will return to LESSEE the amount of the Security Deposit then held by LESSOR (so long as no default by LESSEE exists under any other agreement between LESSEE and LESSOR relating to aircraft, engines or aircraft equipment or the extension of credit by LESSOR to LESSEE), without interest, less an amount determined by LESSOR to be a reasonable estimate of the costs, if any, which LESSOR will incur to remedy any unperformed obligations of LESSEE under this Lease, including the correction of any discrepancies from the required condition of the Aircraft on return of the Aircraft. 5.2 TRANSACTION FEE. Within two (2) Business Days after execution of this Lease, LESSEE will pay LESSOR a nonrefundable transaction fee (CONFIDENTIAL MATERIAL OMITTED) 5.3 RENT. 5.3.1 LESSEE will pay LESSOR the following amounts monthly in advance as rent for the Aircraft (the "RENT"): (a The following amounts for the following years of the Lease Term: LEASE PERIOD MONTHLY RENTAL AMOUNT* ------------ --------------------- (CONFIDENTIAL MATERIAL OMITTED) *The above base rent is expressed in January 1999 U.S. dollars and will increase in the following amounts for the following periods (the "MANUFACTURER'S ESCALATION RATE"): PERIOD ESCALATION FACTOR ------------ --------------------- (CONFIDENTIAL MATERIAL OMITTED) Any increases to the above base Rent during the Lease Term will be calculated immediately prior to Delivery. 5.3.2 The first payment of Rent during the Lease Term will be paid prior to the Scheduled Delivery Date. Each subsequent payment of Rent will be due monthly thereafter no later than the same day of the month as the Delivery Date of the Aircraft except that, if such day is not a Business Day, the Rent will be due on the immediately preceding Business Day. If Delivery occurred on the 29th, 30th or 31st of the month and in any given month during the Lease Term there is no such corresponding date, Rent will be payable on the last Business Day of such month. 5.4 LESSOR'S BANK ACCOUNT. The Security Deposit, Transaction Fee, Rent and any other payment due under this Lease will be paid by wire transfer of immediately available U.S. Dollar funds to LESSOR's bank account at: (CONFIDENTIAL MATERIAL OMITTED) or to such other bank account in the U.S. as LESSOR may from time to time designate by written notice ("LESSOR'S BANK"). When it is stated in this Lease that an installment of the Security Deposit, the monthly Rent or any other payment is due or must be paid or made by LESSEE by a specific date, then such payment actually must be received by LESSOR's Bank on or before such specific date, even if, in order for such payment to be received by LESSOR's Bank by such specific date, LESSEE must initiate the wire transfer prior to such specific date. 5.5 DEFAULT INTEREST. If LESSOR's Bank does not receive the Rent or any other amount on or before the specific date when due, LESSOR will suffer loss and damage the exact nature and amount of which are difficult or impossible to ascertain. LESSEE will pay LESSOR as supplemental Rent (by way of agreed compensation and not as a penalty) interest on any due and unpaid amounts payable by LESSEE under this Lease. Interest will be calculated at a per annum rate (based on a 360 day year) which is equal to three percent (3%) plus the Prime Rate in effect on the date on which the amount was originally due for the period from the date the amount originally was due through the date the amount actually is received at LESSOR's Bank or, in the case of LESSOR's performance of LESSEE's obligations hereunder, from the date of payment by LESSOR through the date of LESSEE's repayment to LESSOR ("DEFAULT INTEREST"). Default Interest will accrue on a day-to-day basis and be compounded monthly. 5.6 NO DEDUCTIONS OR WITHHOLDINGS. All payments by LESSEE under this Lease, including the Security Deposit, Transaction Fee, Rent, Default Interest, fees, indemnities or any other item, will be made in full without any deduction or withholding whether in respect of set-off, counterclaim, duties, or Taxes (as defined in Article 15) imposed in the State of Registration or any jurisdiction from which such payments are made unless LESSEE is prohibited by Law from doing so, in which event LESSEE will gross up the payment amount such that the net payment received by LESSOR after any deduction or withholding equals the amounts called for under this Lease. LESSEE's requirement to pay the amounts required by this Article 5.6 is subject to the exceptions provided in Article 15.2. 5.7 VALUE ADDED TAXES. The Rent and other amounts payable by LESSEE under this Lease are exclusive of any value added tax, turnover tax or similar tax or duty. 5.8 NET LEASE. 5.8.1 This Lease is a net lease and LESSEE's obligation to pay Rent and make other payments in accordance with this Lease will be absolute and unconditional under any and all circumstances and regardless of other events, including the following: (a) any right of set-off, counterclaim, recoupment, defense or other right (including any right of reimbursement) which LESSEE may have against LESSOR, Manufacturer, the Engine manufacturer or any other person for any reason, including any claim LESSEE may have for the foregoing; (b) unavailability or interruption in use of the Aircraft for any reason, including a requisition thereof or any prohibition or interference with or other restriction against LESSEE's use, operation or possession of the Aircraft (whether by Law or otherwise), any defect in title, airworthiness, merchantability, fitness for any purpose, condition, design, specification or operation of any kind or nature of the Aircraft, the ineligibility of the Aircraft for any particular use or trade or for registration under the Laws of any jurisdiction or Total Loss of the Aircraft; (c) insolvency, bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, liquidation, receivership, administration or similar proceedings by or against LESSOR, LESSEE, Manufacturer, the Engine manufacturer or any other Person; (d) invalidity or unenforceability or lack of due authorization of or other defect in this Lease; (e) failure or delay on the part of any party to perform its obligations under this Lease; or (f) any other circumstance which but for this provision would or might have the effect of terminating or in any other way affecting any obligation of LESSEE hereunder. 5.8.2 Nothing in Article 5.8 will be construed to limit LESSEE's rights and remedies in the event of LESSOR's breach of its warranty of quiet enjoyment set forth in Article 21.2 or to limit LESSEE's rights and remedies to pursue in a court of law any claim it may have against LESSOR or any other Person. 5.9 LESSOR PERFORMANCE OF LESSEE OBLIGATION. If LESSEE fails to make any payment under this Lease to a third party in connection with the Aircraft or fails to perform any other obligation required under this Lease, LESSOR may (but is not required to) at its election and without waiver of its rights perform such obligation and/or pay such amount. Within five (5) Business Days after written notice to LESSEE of the amount paid by LESSOR on behalf of LESSEE, LESSEE will repay such amount to LESSOR together with Default Interest. Such payment to LESSOR will constitute additional Rent payable by LESSEE to LESSOR hereunder. Any payment, performance or compliance by LESSOR of a LESSEE obligation hereunder will not affect the occurrence or continuance of a Default or Event of Default, as the case may be. 5.10 CONSIDERATION FOR RENT AND OTHER AMOUNTS. The amount of the Rent and other payments contained herein are in consideration of LESSEE's waiver of warranties and indemnities set forth in Articles 8 and 16, respectively, and the other provisions of this Lease. ARTICLE 6 INVOLVEMENT WITH AIRCRAFT MANUFACTURER 6.1 LESSEE SELECTION OF AIRCRAFT. LESSEE ACKNOWLEDGES THAT THE DESCRIPTION OF THE AIRCRAFT SET FORTH IN THIS LEASE IS BASED UPON INFORMATION SUPPLIED BY MANUFACTURER. LESSEE COVENANTS TO LESSOR THAT LESSEE HAS USED ITS OWN JUDGMENT IN SELECTING THE AIRCRAFT AND HAS DONE SO BASED ON ITS SIZE, DESIGN AND TYPE. LESSEE ACKNOWLEDGES THAT LESSOR IS NOT A MANUFACTURER, REPAIRER OR SERVICING AGENT OF THE AIRCRAFT. 6.2 AGENCY AGREEMENT. Certain obligations remain to be performed by LESSOR in connection with the manufacture, fabrication and completion of the Aircraft by Manufacturer which will be performed by LESSEE (as provided in the Agency Agreement). LESSEE will act as LESSOR's agent with respect to some of these matters pursuant to the terms of an Agency Agreement to be entered into between LESSEE and LESSOR in the form set forth in Exhibit B. 6.3 PROCUREMENT OF BFE. LESSEE's and LESSOR's technical representatives will meet and determine which of LESSEE or LESSOR will provide specific items of BFE. Such BFE will then be provided to Manufacturer by LESSEE or LESSOR, as applicable, within the time frames required by Manufacturer. 6.4 ASSIGNMENT OF TRAINING. LESSOR hereby assigns to LESSEE all rights to training to which LESSOR is entitled as a result of LESSOR's purchase of the Aircraft and lease of the Aircraft to LESSEE. If LESSEE fails to take Delivery of the Aircraft when tendered in accordance with Article 6.7, LESSEE will immediately pay to LESSOR an amount equal to the Dollar value of such training based on what the training would have cost LESSEE had LESSEE purchased such training directly from Manufacturer. 6.5 LESSEE INSPECTION OF AIRCRAFT. During the course of final assembly of the Aircraft, and at Delivery, LESSEE will have its own representative present to inspect the Aircraft and to ensure its conformity with LESSEE's needs and the terms of this Lease. LESSEE will have ground inspection and acceptance flight rights with respect to the Aircraft. LESSEE acknowledges that, as between LESSEE and LESSOR, in accepting the Aircraft LESSEE is relying on its own inspection and knowledge of the Aircraft in determining whether the Aircraft meets the requirements of this Lease. 6.6 AIRCRAFT AT DELIVERY. At Delivery, the Aircraft will be as set forth in Exhibit A, as such description may be modified by any change requests agreed to among LESSEE, LESSOR and Manufacturer (which will be reflected in amendment(s) to this Lease). In the event of any discrepancies, LESSEE and LESSOR will cooperate in good faith with one another and with Manufacturer and Engine manufacturer, as applicable, in order to arrive at a mutually acceptable resolution of any such discrepancies. 6.7 DELIVERY OF THE AIRCRAFT TO LESSEE. Subject to LESSEE having performed all of the conditions precedent to Delivery set forth herein, immediately following delivery of the Aircraft from Manufacturer to LESSOR, LESSOR will deliver the Aircraft to LESSEE at the Delivery Location. Provided that the Aircraft is in the condition required by Article 6.6, upon the tender of the Aircraft by LESSOR to LESSEE, LESSEE will accept the Aircraft and the date of tender by LESSOR to LESSEE will be deemed to be the Delivery Date for all purposes under this Lease, including, but not limited to, the commencement of LESSEE's obligation to pay Rent hereunder. 6.8 LESSEE ACCEPTANCE OF AIRCRAFT. If LESSEE fails to (a) comply with its obligations set forth in Article 6.2, (b) comply with the conditions contained in Articles 7.1 and 7.2 so as to allow Delivery to take place immediately following delivery of the Aircraft by Manufacturer to LESSOR or (c) take delivery of the Aircraft when properly tendered for delivery by LESSOR in the condition required hereunder, LESSEE will indemnify LESSOR for all costs and expenses incurred by LESSOR as a result thereof including (but without limitation) any payments other than the purchase price which LESSOR becomes obliged to make to Manufacturer. ARTICLE 7 PRE-DELIVERY, DELIVERY AND POST-DELIVERY DOCUMENTARY AND OTHER REQUIREMENTS 7.1 PRE-DELIVERY REQUIREMENTS. LESSEE will do each of the following prior to the Scheduled Delivery Date of the Aircraft within the time frames set forth below: 7.1.1 Within one (1) month after execution of this Lease, LESSEE will deliver to LESSOR each of the following: (a) copies of resolutions of the Board of Directors of LESSEE or other written evidence of appropriate corporate action, duly certifying and authorizing the lease of the Aircraft hereunder and the execution, delivery and performance of this Lease, together with an incumbency certificate as to the person or persons authorized to execute and deliver documents on behalf of LESSEE hereunder; and (b) an opinion of counsel in the form and substance of Exhibit F. 7.1.2 At least three (3) days prior to the Scheduled Delivery Date, LESSEE will have delivered to LESSOR a Certificate of Insurance and Brokers' Letter of Undertaking in the form and substance of Exhibits C and D, respectively, from LESSEE's insurance brokers evidencing insurance of the Aircraft in accordance with this Lease from the Delivery Date. 7.1.3 At least three (3) Business Days prior to the Scheduled Delivery Date, LESSEE will do each of the following: (a) provide LESSOR with a copy of such Aviation Documents as may be available prior to the Scheduled Delivery Date; (b) provide LESSOR with a power of attorney empowering LESSEE's representative, who may be an officer or employee of LESSEE, to accept the Aircraft on behalf of LESSEE; and (c) provide LESSOR with such other documents as LESSOR may reasonably request. 7.1.4 Prior to the Scheduled Delivery Date, LESSEE will pay LESSOR the first monthly installment of Rent in accordance with Article 5.3.2. 7.2 DELIVERY REQUIREMENTS. On the Delivery Date of the Aircraft, each of the following will occur: 7.2.1 LESSEE will execute and deliver to LESSOR an Estoppel and Acceptance Certificate in the form of Exhibit E covering the Aircraft and effective as of the Delivery Date. 7.2.2 If not previously done, LESSEE and LESSOR will sign an amendment or supplement to Exhibit A evidencing all agreed-to changes to the specification of the Aircraft. 7.2.3 LESSEE will deliver a certificate signed on behalf of LESSEE by an officer of LESSEE stating all of the following: (a) the representations and warranties contained in Article 20 are true and accurate on and as of the Delivery Date as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date); (b) no Default has occurred and is continuing or will result from LESSEE's lease of the Aircraft hereunder; and (c) none of the Creditor Agreements contains terms which provide or contemplate that any Creditor will obtain any right, title or interest in an Engine which is installed on another aircraft (or, if this is not the case, such certificate will identify the parties, the aircraft and the Creditor Agreements for which this statement is untrue). 7.2.4 LESSEE's counsel will deliver opinions confirming the matters set forth in the opinion of counsel described in Article 7.1 and advising that all filing and other requirements have been met or concurrently are being met. 7.2.5 If any Creditor Agreement provides or contemplates that such Creditor will obtain any right, title or interest in an Engine which is installed on such Creditor's aircraft, LESSEE will deliver to LESSOR an engines cooperation agreement in form and substance acceptable to LESSOR which is executed by LESSEE and LESSEE's Creditors (as defined therein). 7.2.6 LESSOR will deliver to LESSEE an assignment of Manufacturer and Engine manufacturer rights in the form and substance of Exhibits G and H, respectively, and concurrently therewith LESSOR, to the extent it has not previously done so, will be deemed to have assigned all training, product assurance and product support applicable to the owner or operator of the Aircraft to LESSEE during the Lease Term. 7.3 POST-DELIVERY REQUIREMENTS. 7.3.1 Promptly after Delivery, LESSEE will do each of the following: (a) provide LESSOR with copies of all Aviation Documents not previously delivered; and (b) provide LESSOR with a follow-up opinion of counsel advising that the Aircraft has been registered in the State of Registration and that all necessary filings have been made. ARTICLE 8 DISCLAIMERS LESSOR HAS COMMITTED TO LESSEE THAT ON THE DELIVERY DATE THE AIRCRAFT WILL BE IN THE CONDITION REQUIRED BY ARTICLE 6. SUCH COMMITMENT OR COVENANT ON THE PART OF LESSOR EXPIRES AND THE DISCLAIMERS SET FORTH IN THIS ARTICLE 8 APPLY UPON LESSEE'S ACCEPTANCE OF THE AIRCRAFT AND EXECUTION OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATE. AFTER SUCH TIME, THEN AS BETWEEN LESSOR AND LESSEE: 8.1 "AS IS, WHERE IS". LESSEE AGREES THAT IT IS LEASING THE AIRCRAFT "AS IS, WHERE IS". LESSEE UNCONDITIONALLY ACKNOWLEDGES AND AGREES THAT NEITHER LESSOR NOR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES OR REPRESENTATIVES HAVE MADE OR WILL BE DEEMED TO HAVE MADE ANY TERM, CONDITION, REPRESENTATION, WARRANTY OR COVENANT EXPRESS OR IMPLIED (WHETHER STATUTORY OR OTHERWISE) AS TO (a) THE CAPACITY, AGE, AIRWORTHINESS, VALUE, QUALITY, DURABILITY, CONFORMITY TO THE PROVISIONS OF THIS LEASE, DESCRIPTION, CONDITION (WHETHER OF THE AIRCRAFT, ANY ENGINE, ANY PART THEREOF OR THE AIRCRAFT DOCUMENTATION), DESIGN, WORKMANSHIP, MATERIALS, MANUFACTURE, CONSTRUCTION, OPERATION, DESCRIPTION, STATE, MERCHANTABILITY, PERFORMANCE, FITNESS FOR ANY PARTICULAR USE OR PURPOSE (INCLUDING THE ABILITY TO OPERATE OR REGISTER THE AIRCRAFT OR USE THE AIRCRAFT DOCUMENTATION IN ANY OR ALL JURISDICTIONS) OR SUITABILITY OF THE AIRCRAFT OR ANY PART THEREOF, OR THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, KNOWN OR UNKNOWN, APPARENT OR CONCEALED, EXTERIOR OR INTERIOR, (b) THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK, COPYRIGHT OR OTHER INTELLECTUAL PROPERTY RIGHTS, (c) ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE OR (d) EXCEPT AS SET FORTH IN ARTICLE 21.1, ANY OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY PART THEREOF, ALL OF WHICH ARE HEREBY EXPRESSLY EXCLUDED AND EXTINGUISHED. 8.2 WAIVER OF WARRANTY OF DESCRIPTION. IN CONSIDERATION OF (a) LESSEE'S RIGHTS HEREUNDER TO INSPECT THE AIRCRAFT AND (b) LESSOR'S ASSIGNMENT TO LESSEE OF ANY EXISTING AND ASSIGNABLE WARRANTIES OF MANUFACTURER AND THE ENGINE MANUFACTURER, LESSEE HEREBY AGREES THAT ITS ACCEPTANCE OF THE AIRCRAFT AT DELIVERY AND ITS EXECUTION AND DELIVERY OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATE CONSTITUTE LESSEE'S WAIVER OF THE WARRANTY OF DESCRIPTION, ANY CLAIMS LESSEE MAY HAVE AGAINST LESSOR BASED UPON THE FAILURE OF THE AIRCRAFT TO CONFORM WITH SUCH DESCRIPTION AND ANY AND ALL RIGHTS IT MAY HAVE TO THE REMEDIES SET FORTH IN SECTIONS 10508 THROUGH 10522 OF THE CALIFORNIA COMMERCIAL CODE. EVEN IF AT ANY TIME THE FAILURE OF THE AIRCRAFT TO CONFORM TO SUCH DESCRIPTION SUBSTANTIALLY IMPAIRS THE VALUE AND UTILITY OF THE AIRCRAFT AND EITHER (i) LESSEE ACCEPTED THE AIRCRAFT BASED ON A REASONABLE ASSUMPTION THAT THE NONCONFORMITY WOULD BE CURED AND IT WAS NOT SEASONABLY CURED OR (ii) LESSEE ACCEPTED THE AIRCRAFT WITHOUT DISCOVERING THE NONCONFORMITY BUT LESSEE'S ACCEPTANCE OF THE AIRCRAFT WAS REASONABLY INDUCED EITHER BY LESSOR'S ASSURANCES OR BY THE DIFFICULTY OF DISCOVERING ANY DEFECT PRIOR TO ACCEPTANCE, LESSEE AGREES NOT TO LOOK TO LESSOR FOR DAMAGES OR RELIEF ARISING OUT OF THE FAILURE OF THE AIRCRAFT TO CONFORM TO SUCH DESCRIPTION. 8.3 LESSEE WAIVER. LESSEE hereby waives as between itself and LESSOR and agrees not to seek to establish or enforce any rights and remedies, express or implied (whether statutory or otherwise) against LESSOR or the Aircraft relating to any of the matters mentioned in Articles 8.1 or 8.2. 8.4 CONCLUSIVE PROOF. DELIVERY BY LESSEE TO LESSOR OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATE WILL BE CONCLUSIVE PROOF AS BETWEEN LESSOR AND LESSEE THAT LESSEE'S TECHNICAL EXPERTS HAVE EXAMINED AND INVESTIGATED THE AIRCRAFT AND ENGINES AND (a) EACH IS AIRWORTHY AND IN GOOD WORKING ORDER AND REPAIR AND (b) THE AIRCRAFT AND ENGINES AND THE AIRCRAFT DOCUMENTATION ARE WITHOUT DEFECT (WHETHER OR NOT DISCOVERABLE AT DELIVERY) AND IN EVERY WAY SATISFACTORY TO LESSEE. 8.5 NO LESSOR LIABILITY FOR LOSSES. LESSEE agrees that LESSOR will not be liable to LESSEE, any sublessee or any Person, whether in contract or tort and however arising, for any cost, loss or damage (consequential or otherwise) arising out of the condition of the Aircraft, whether or not due in whole or in part to an act or omission or the active or passive negligence of LESSOR. 8.6 NO LIABILITY TO REPAIR OR REPLACE. LESSOR will not be liable for any expense in repairing or replacing any item of the Aircraft or be liable to supply another aircraft or any item in lieu of the Aircraft or any Part thereof if the same is lost, confiscated, damaged, destroyed or otherwise rendered unfit for use. 8.7 NO WAIVER. Nothing in this Article 8 or elsewhere in this Lease will be deemed to be a waiver by LESSEE of any rights it may have against Manufacturer, the Engine manufacturer or any other Person. ARTICLE 9 MANUFACTURERS' AND VENDORS' WARRANTIES 9.1 WARRANTIES. As set forth in Article 7.2.6, at Delivery LESSOR will assign to LESSEE for the duration of the Lease Term the benefit of all warranties and indemnities given to LESSOR by Manufacturer and the Engine manufacturer. Effective on the Delivery Date, all other vendor warranties with respect to the Aircraft are hereby assigned by LESSOR to LESSEE. 9.2 REASSIGNMENT. On the Termination Date, the benefit of any warranty assigned by LESSOR to LESSEE pursuant to Article 7.2.6 will be reassigned automatically to LESSOR or its designee. ARTICLE 10 OPERATION OF AIRCRAFT 10.1 COSTS OF OPERATION. As between LESSEE and LESSOR, LESSEE will pay all costs incurred in the operation of the Aircraft during the Lease Term, for profit or otherwise, including the costs of flight crews, cabin personnel, fuel, oil, lubricants, maintenance, insurance, storage, landing and navigation fees, airport charges, passenger service and any and all other expenses of any kind or nature, directly or indirectly, in connection with or related to the use, movement and operation of the Aircraft. The obligations, covenants and liabilities of LESSEE under this paragraph arising prior to return of the Aircraft to LESSOR will continue in full force and effect, notwithstanding the termination of this Lease or expiration of the Lease Term. 10.2 COMPLIANCE WITH LAWS. LESSEE agrees throughout the Lease Term that all use of the Aircraft will be in accordance with applicable Laws of the State of Registration and of any country, state, territory or municipality into or over which LESSEE may operate. LESSEE will not employ, suffer or cause the Aircraft to be used in any business which is forbidden by Law or in any manner which may render it liable to condemnation, destruction, seizure, or confiscation by any authority. LESSEE will not permit the Aircraft to fly to any airport or country if so doing would cause LESSEE to be in violation of any Law applicable to LESSEE or the Aircraft. The foregoing provisions in this Article 10.2 shall not prohibit any violation of Law (a) during a good-faith contest of the validity, application, or alleged violation thereof in any reasonable manner so long as there is no material danger of sale, forfeiture, or loss of the Aircraft (however, this good faith exception shall not apply in the case of a mandatory grounding order, the good faith contest of which does not permit LESSEE to operate the Aircraft during such contest), and which does not extend beyond the end of the Lease Term if the pendency of such contest would adversely affect the Aircraft or the remarketing thereof in any material respect; and (b) for minor or non-recurring violations (with the understanding that minor violations may cease to be minor if recurring) that LESSEE is diligently trying to rectify which do not render the Aircraft liable to any risk of condemnation, destruction, seizure, or confiscation by any Government Entity. 10.3 TRAINING. LESSEE will not use the Aircraft for testing or for training of flight crew members other than LESSEE crew members and will not use the Aircraft for training any more than it utilizes for training the other aircraft in its fleet. 10.4 NO VIOLATION OF INSURANCE POLICIES. LESSEE will not use or permit the Aircraft to be used in any manner or for any purpose which is not covered by the insurance policies LESSEE is required to carry and maintain as set forth in this Lease. LESSEE will not carry any goods of any description that would invalidate or limit such policies or do any other act or permit to be done anything which could reasonably be expected to invalidate or limit any such insurance policy. 10.5 FLIGHT CHARGES. 10.5.1 LESSEE will pay promptly when due all enroute navigation charges, navigation service charges and all other charges payable by LESSEE for the use of or for services provided at any airport, whether in respect of the Aircraft or any other aircraft of LESSEE, and will indemnify and hold LESSOR harmless in respect of the same. This indemnity will continue in full force and effect notwithstanding the termination or expiration of the Lease Term for any reason or the return of the Aircraft. 10.5.2 If requested by LESSOR, LESSEE will provide LESSOR with a list of the airports to which LESSEE regularly operates the Aircraft or its other aircraft. LESSEE hereby authorizes Eurocontrol or another aviation authority or airport or creditor claiming rights on the Aircraft to confirm the status of LESSEE's payments to such creditor for the Aircraft and its other aircraft, as and when requested by LESSOR. ARTICLE 11 SUBLEASES 11.1 NO SUBLEASE WITHOUT LESSOR CONSENT. LESSEE WILL NOT SUBLEASE OR PART WITH POSSESSION OF THE AIRCRAFT (EXCEPT FOR MAINTENANCE AND REPAIR) AT ANY TIME WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR (NOT TO BE UNREASONABLY WITHHELD) AND IN ACCORDANCE WITH SUCH REQUIREMENTS AS MAY FROM TIME TO TIME BE AGREED IN WRITING BETWEEN LESSOR AND LESSEE. The wet leasing of the Aircraft during the Lease Term (in which LESSEE and its crews retain operational control of the Aircraft) will not be considered a sublease of the Aircraft. 11.2 LESSOR COSTS. LESSEE will indemnify LESSOR on demand for all out-of-pocket expenses (including legal fees) incurred in connection with LESSOR's assessment of the subleasing proposal (whether or not LESSOR's consent to such sublease is ultimately given) and implementation of the sublease. 11.3 ANY APPROVED SUBLEASE. Any sublease approved by LESSOR will be for a term no greater than the remaining Lease Term and contain provisions consistent with this Lease protecting LESSOR's title to the Aircraft, providing appropriate LESSOR indemnities, regarding the maintenance and repair standards for the Aircraft, concerning the insurances which will be carried by the sublessee and the circumstances which constitute a Total Loss of the Aircraft. Any such sublease will be subject and subordinate to this Lease. In its sole discretion, LESSOR may require an opinion of counsel in connection with such sublease, including LESSOR's right to repossess the Aircraft in the event of an Event of Default hereunder or under the sublease. LESSEE will not amend the terms of any approved sublease without the prior written consent of LESSOR, which will not be unreasonably withheld. 11.4 ASSIGNMENT OF SUBLEASE. Any approved sublease will be assigned to LESSOR as security. LESSEE will deliver the original counterpart of the sublease to LESSOR and make any filings necessary to protect LESSOR's security interest. 11.5 CONTINUED RESPONSIBILITY OF LESSEE. LESSEE will continue to be responsible for performance of its obligations under this Lease during any period of sublease. ARTICLE 12 MAINTENANCE AND USE OF AIRCRAFT 12.1 GENERAL OBLIGATION. 12.1.1 During the Lease Term and until the Aircraft is returned to LESSOR, LESSEE alone has the obligation, at its expense, to maintain and repair the Aircraft, Engines and all of the Parts (a) in accordance with the Maintenance Program, (b) in accordance with the rules and regulations of the Aviation Authority, (c) in accordance with Manufacturer's type design, (d) in accordance with any other regulations or requirements necessary in order to maintain a valid Certificate of Airworthiness for the Aircraft and meet the requirements at all times during the Lease Term and upon return of the Aircraft to LESSOR for issuance of a Standard Certificate of Airworthiness for transport category aircraft issued by the Aviation Authority (except during those periods when the Aircraft is undergoing maintenance or repairs as required or permitted by this Lease) and (e) in the same manner and with the same care as used by LESSEE or its sublessee with respect to similar aircraft and engines operated by LESSEE or its sublessee and without in any way discriminating against the Aircraft. 12.1.2 LESSEE will maintain and repair the Engines in the same manner and in the equivalent time frame to its other engines and LESSEE will not discriminate against any of the Engines in respect of the repair and maintenance. 12.1.3 LESSEE will not enter into any Engine maintenance cost per flight hour, power-by-the-hour or similar agreement with Engine manufacturer or any other Engine maintenance facility or organization without LESSOR's prior written consent. 12.2 SPECIFIC OBLIGATIONS. Without limiting Article 12.1, LESSEE agrees that such maintenance and repairs will include but will not be limited to each of the following specific items: (a) performance in accordance with the Maintenance Program of all routine and non-routine maintenance work; (b) incorporation in the Aircraft of all Airworthiness Directives; (c) incorporation in the Aircraft of all service bulletins of Manufacturer, the Engine manufacturer and other vendors which LESSEE schedules to adopt within the Lease Term for the rest of its Boeing 737-800 aircraft fleet. It is the intent of the parties that the Aircraft will not be discriminated from the rest of LESSEE's fleet in service bulletin compliance (including method of compliance) or other maintenance matters. LESSEE will not discriminate against the Engines with respect to Overhaul build standards and life-limited part replacements; (d) incorporation in the Maintenance Program for the Aircraft of a corrosion prevention and control program; (e) maintaining in English and keeping in an up-to-date status the records and historical documents set forth in Attachment 1 of Exhibit I; (f) maintaining historical records, in English, for on condition, condition-monitored, hard time and life-limited Parts (including tags from the manufacturer of such Part or a repair facility which evidence that such Part is new or overhauled and establish authenticity, total time in service and time since overhaul for such Part), the hours and cycles the Aircraft and Engines operate and all maintenance and repairs performed on the Aircraft; and (g) properly documenting all repairs, Modifications and alterations and the addition, removal or replacement of equipment, systems or components in accordance with the rules and regulations of the Aviation Authority and reflecting such items in the Aircraft Documentation. In addition, all repairs to the Aircraft will be accomplished in accordance with Manufacturer's Structural Repair Manual (or FAA-approved data supported by FAA Form 8110-3 or equivalent). All Modifications and alterations will also be accomplished in accordance with FAA-approved data supported by FAA Form 8110-3 or equivalent. 12.3 REPLACEMENT OF PARTS. 12.3.1 LESSEE, at its own cost and expense, will promptly replace all Parts which may from time to time become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or rendered unfit or beyond economical repair (BER) for any reason. In the ordinary course of maintenance, service, repair, overhaul or testing, LESSEE may remove any Part provided that LESSEE replaces such Part as promptly as practicable. All replacement Parts will (a) be free and clear of all Security Interests (except Permitted Liens) of any kind or description, (b) be in airworthy condition and of at least equivalent model, service bulletin and modification status and have a value and utility at least equal to the Parts replaced, assuming such replaced Parts were in the condition and repair required to be maintained by the terms hereof and (c) have a current "serviceable tag" of the manufacturer or maintenance facility providing such items to LESSEE, indicating that such Parts are new, serviceable or Overhauled. So long as a substitution meets the requirements of the Maintenance Program and Aviation Authority, LESSEE may substitute for any Part a part that does not meet the requirements of the foregoing sentence if a complying Part cannot be procured or installed within the available groundtime of the Aircraft and as soon as practicable the noncomplying part is removed and replaced by a complying Part. 12.3.2 All Parts removed from the Airframe or any Engine will remain the property of LESSOR and subject to this Lease no matter where located, until such time as such Parts have been replaced by Parts (which have been incorporated or installed in or attached to the Airframe or such Engine) which meet the requirements for replacement Parts specified above and title to such replacement Parts has passed to LESSOR under the Laws of the State of Registration and LEX SITUS. To the extent permitted by the Laws of the State of --- ----- Registration and the LEX SITUS it is the intent of LESSOR and LESSEE that without further --- ----- act and immediately upon any replacement Part becoming incorporated, installed or attached to the Airframe or an Engine as above provided, (a) title to the removed Part will thereupon vest in LESSEE, free and clear of all rights of LESSOR, (b) title to the replacement Part will thereupon vest in LESSOR free and clear of all rights of LESSEE and (c) such replacement Part will become subject to this Lease and be deemed to be a Part hereunder to the same extent as the Parts originally incorporated or installed in or attached to the Airframe or such Engine. 12.4 REMOVAL OF ENGINES. 12.4.1 If an Engine is removed for testing, service, repair, maintenance, Overhaul work, alterations or modifications, title to such Engine will remain vested in LESSOR. 12.4.2 LESSEE will be entitled to remove any of the Engines from the Aircraft and install another engine or engines on the Aircraft, provided that LESSEE complies with each of the following obligations: (a) the insurance requirements set forth in Article 17 and Exhibit C are in place; (b) LESSEE ensures that the identification plates referred to in Article 14 are not removed from any Engine upon such Engine being detached from the Aircraft; and (c) title to the Engine remains with LESSOR free from all Security Interests (except Permitted Liens) regardless of the location of the Engine or its attachment to or detachment from the Aircraft. 12.5 POOLING OF ENGINES AND PARTS. With LESSOR's prior written consent, not to be unreasonably withheld, LESSEE may subject the Engines and Parts to normal interchange or pooling agreements with responsible commercial air carriers customary in the airline industry and entered into by LESSEE in the ordinary course of its business with respect to its Boeing 737-800 fleet generally, so long as (a) in the case of pooling of an Engine, such Engine is returned to LESSEE within two (2) months, (b) no transfer of title to the Engine occurs, (c) all other terms of this Lease continue to be observed with respect to the Engines or Parts, including but not limited to Articles 8, 10, 12, 13, 14, 15, 16, 17 and 18 and (d) LESSEE continues to be fully responsible to LESSOR for the performance of all of its obligations hereunder. 12.6 INSTALLATION OF ENGINES ON OTHER AIRCRAFT. Any Engine removed from the Aircraft may be installed on another airframe in LESSEE's fleet which utilizes engines of the same type as the Engine only if one of the situations described in this Article 12.6 exists: 12.6.1 LESSEE or LESSOR has title to such other aircraft free and clear of all Security Interests (except Permitted Liens). 12.6.2 LESSEE, LESSOR and all of the Creditors of LESSEE of such aircraft enter into an engines cooperation agreement in form and substance acceptable to LESSOR in which each party agrees to recognize one another's rights in the engines. LESSEE will reimburse LESSOR and LESSOR's Lender for their reasonable attorneys' fees and costs in negotiating and finalizing engine cooperation agreement arrangements with LESSEE and its Creditors. 12.6.3 Such other aircraft is subject to a Creditor Agreement (but no other Security Interests except Permitted Liens) which by its terms expressly or effectively states that such Creditor and its successors and assigns will not acquire any right, title or interest in any Engine by reason of such Engine being installed on such aircraft. LESSEE hereby agrees that if LESSOR's title to an Engine is in fact impaired under any such Creditor Agreement, such impairment will be a Total Loss of such Engine and the provisions of Article 18.5 will apply. To the extent another Creditor Agreement contains such provisions, then LESSOR hereby agrees for the benefit of the Creditor of such Creditor Agreement that neither LESSOR nor its successors or assigns will acquire or claim any right, title or interest in any engine in which LESSEE or another Creditor has an interest as a result of such engine being installed on the Airframe. 12.7 MODIFICATIONS. 12.7.1 No modification, alteration, addition or removal to the Aircraft ("MODIFICATION") expected to cost over Five Hundred Thousand U.S. Dollars (US$500,000) or deviation from the Aircraft's original type design or configuration will be made without the prior written consent of LESSOR, which consent will not be unreasonably withheld. "Modifications" do not include Airworthiness Directives or Manufacturer's recommended service bulletins, for which LESSOR's consent is not required. 12.7.2 LESSOR may review LESSEE's proposed designs, plans, engineering drawings and diagrams, and flight and maintenance manual revisions for any proposed Modification. If requested by LESSOR, LESSEE will furnish LESSOR (at LESSEE's expense) with such documents in final form and any other documents required by Law, as a result of such Modification. All Modifications incorporated on the Aircraft will be properly documented in the Aircraft Documentation and be fully approved by the Aviation Authority. 12.7.3 Notwithstanding any other provision of this Lease, no Modification will be made which has the effect of decreasing the utility or value of the Aircraft. 12.7.4 No Modification will be made by LESSEE if an Event of Default exists and is continuing hereunder. 12.7.5 Unless otherwise agreed by LESSOR in writing, all non-severable or structural Modifications will forthwith become a part of the Aircraft and LESSEE relinquishes to LESSOR all rights and title thereto. However, all severable Modifications will remain the property of LESSEE or the third-party owner and, at LESSOR's request and LESSEE's cost, will be removed from the Aircraft prior to return of the Aircraft, with LESSEE restoring the Aircraft to the condition it was in prior to the Modification. Notwithstanding the foregoing, no such removal will be permitted without LESSOR's permission after the occurrence of an Event of Default hereunder and immediately upon the occurrence of an Event of Default hereunder, without the requirement of any further act or notice, all right, title and interest in such Modifications will immediately vest in LESSOR. 12.7.6 LESSOR will bear no liability for the cost of Modifications of the Aircraft whether in the event of grounding or suspensions of certification, or for any other cause. 12.8 PERFORMANCE OF WORK BY THIRD PARTIES. Whenever maintenance and repair work on the Aircraft or Engines will be regularly performed by a Person other than LESSEE, such Person will be an FAA-authorized repair station. 12.9 REPORTING REQUIREMENTS. 12.9.1 Commencing with a report furnished ten (10) days after the end of the calendar month in which Delivery occurs, LESSEE will furnish to LESSOR a Monthly Report in English in the form attached hereto as Exhibit J. Each Monthly Report will be furnished within ten (10) days after the end of each calendar month, except that the Monthly Report pertaining to the last month (or any portion thereof) of the Lease Term will be furnished to LESSOR on the Termination Date. 12.9.2 On each anniversary of the Delivery Date, LESSEE will provide LESSOR with a Technical Evaluation Report for the Aircraft in the form and substance of Exhibit L, as revised. 12.10 INFORMATION REGARDING MAINTENANCE PROGRAM. LESSEE will provide LESSOR with a copy of or information regarding the Maintenance Program for the Aircraft, as requested by LESSOR. 12.11 LESSOR RIGHTS TO INSPECT AIRCRAFT. On reasonable notice, LESSOR and/or its authorized agents or representatives will have the right to inspect the Aircraft and Aircraft Documentation. LESSOR agrees that such requests will be coordinated with LESSEE so as to cause the minimum practical disturbance to LESSEE's operation or its personnel. LESSEE agrees to cooperate with LESSOR in making the Aircraft and Aircraft Documentation available to such authorized technical teams. No such inspection shall include opening panels, bays, or the like (although LESSOR may observe those that are then open), or disassembling any item. LESSOR will have no duty to make any such inspection and will not incur any liability or obligation by reason of (and LESSEE's indemnity obligations pursuant to Article 16 will apply notwithstanding) not making any such inspection or by reason of any reports it receives or any reviews it may make of the Aircraft records. ARTICLE 13 TITLE AND REGISTRATION 13.1 TITLE TO THE AIRCRAFT DURING LEASE TERM. Title to the Aircraft will be and remain vested in LESSOR. LESSOR and LESSEE intend this Lease to be a "true lease". LESSEE will have no right, title or interest in the Aircraft except as provided in this Lease. 13.2 REGISTRATION OF AIRCRAFT. LESSEE at its sole cost and expense will (a) register and maintain registration of the Aircraft in the name of LESSOR at the register of aircraft in the State of Registration and (b) from time to time take all other steps then required by Law (including the Geneva Convention if applicable) or by practice, custom or understanding or as LESSOR may reasonably request to protect and perfect LESSOR's interest in the Aircraft and this Lease in the State of Registration or in any other jurisdictions in or over which LESSEE may operate the Aircraft. 13.3 FILING OF THIS LEASE. To the extent permitted by Law and in accordance with the requirements of the Law from time to time, LESSEE at its sole cost and expense will cause this Lease to be kept, filed, recorded and refiled or rerecorded in the State of Registration and in any other offices necessary to protect LESSOR's rights hereunder. 13.4 EVIDENCE OF REGISTRATION AND FILINGS. As LESSOR may reasonably request from time to time, LESSEE will furnish to LESSOR an opinion of counsel or other evidence reasonably satisfactory to LESSOR of the registrations and filings required hereunder. ARTICLE 14 IDENTIFICATION PLATES LESSOR will affix and LESSEE will at all times maintain on the Airframe and each Engine the identification plates containing the following legends or any other legend reasonably requested by LESSOR in writing: 14.1 AIRFRAME IDENTIFICATION PLATES. Location: One to be affixed to the Aircraft structure above the forward entry door adjacent to and not less prominent than that of Manufacturer's data plate and another in a prominent place on the flight deck. Size: No smaller than 4" x 6". Legend: "THIS AIRCRAFT IS OWNED BY INTERNATIONAL LEASE FINANCE CORPORATION. MANUFACTURER'S SERIAL NO: 28239 OWNER'S ADDRESS: INTERNATIONAL LEASE FINANCE CORPORATION 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States of America Fax: (310) 788-1990" 14.2 ENGINE IDENTIFICATION PLATES. Location: The legend on the plate must be visible. Size: No smaller than 2" x 6". "THIS ENGINE IS OWNED BY INTERNATIONAL LEASE FINANCE CORPORATION, LOS ANGELES, CALIFORNIA, USA." ARTICLE 15 TAXES 15.1 GENERAL OBLIGATION OF LESSEE. Except as set forth in Article 15.2, LESSEE agrees to pay promptly when due, and to indemnify and hold harmless LESSOR on a full indemnity basis from, all license and registration fees and all taxes, fees, levies, imposts, duties, charges or withholdings of any nature whatsoever (including without limitation any value added, franchise, transfer, sales, gross receipts, use, business, occupation, excise, personal property, real property, stamp or other tax) together with any assessments, penalties, fines, additions to tax or interest thereon, however or wherever imposed (whether imposed upon LESSEE, LESSOR, on all or part of the Aircraft, the Engines or otherwise), by any Government Entity or taxing authority in the U.S., any State thereof, or any foreign country or by any international taxing authority, upon or with respect to, based upon or measured by any of the following (collectively, "TAXES"): (a) the Aircraft, the Engines or any Parts. (b) the use, operation or maintenance of the Aircraft or carriage of passengers or freight during the Lease Term. (c) this Lease, the payments due hereunder and the terms and conditions hereof. (d) the return of the Aircraft to LESSOR or other use or disposition of the Aircraft by LESSEE. 15.2 EXCEPTIONS TO INDEMNITY. The indemnity provided in Article 15.1 does not extend to any of the following Taxes: (a) Imposed by the U.S. (including without limitation any taxes collected by withholding) or any state or local government or governmental subdivision or state or local taxing authority in the U.S. (including any possession or territory of the U.S.) or by any foreign government, taxing authority or governmental subdivision of a foreign country which are based on, or measured by, the receipts, gross or net income, capital, net worth, franchises, excess profits, or conduct of business (including minimum taxes, withholding taxes and taxes on or measured by any items of tax preference) of LESSOR, except to the extent that such Tax would not have been imposed on or payable by LESSOR but for the location, use, registration or operation of the Aircraft or any part thereof, or any place of business or any activity of LESSEE in the jurisdiction imposing such Tax. (b) Imposed as a result of LESSOR's transfer, mortgage, pledge, financing or other disposition by LESSOR of all or a portion of its interest in the Aircraft or this Lease except a transfer or sale resulting from an exercise of remedies pursuant to Article 25.3 hereunder or in connection with a termination of the Lease pursuant to Article 18 hereof. (c) Attributable to the period prior to the Delivery Date or after return of the Aircraft to LESSOR in accordance with this Lease. (d) Attributable to LESSOR's gross negligence, willful misconduct or breach of this Lease. 15.3 AFTER-TAX BASIS. The amount which LESSEE is required to pay with respect to any Taxes indemnified against under Article 15.1 is an amount sufficient to restore LESSOR on an after-tax basis to the same position LESSOR would have been in had such Taxes not been incurred. 15.4 CLAIMS AND CONTESTS. If a written claim is received by LESSOR for Taxes, which claim, if sustained, would require the payment of an indemnity by LESSEE pursuant to this Article 15, LESSOR shall notify LESSEE of such claim within thirty (30) days after its receipt, provided that failure to provide such notice within thirty (30) days will not relieve LESSEE of any indemnification obligation pursuant to this Article 15 if such failure does not preclude LESSEE from exercising its contest rights hereunder. Payments due from LESSEE to LESSOR pursuant to this Article 15 shall be made directly to LESSOR within thirty (30) days of written demand by LESSOR to LESSEE. If requested by LESSEE in writing, LESSOR shall upon receipt of indemnity reasonably satisfactory to it and at the expense of LESSEE (including, without limitation, all reasonable costs, expenses, legal and accountants' fees, and disbursements, penalties, interest incurred in contesting such claim, and additions to tax) in good faith, in the name of LESSOR or, if requested by LESSEE, in the name of LESSEE (or permit LESSEE, if desired by LESSEE, to contest in the name of LESSEE) if permissible under applicable laws, the validity, applicability or amount of such Taxes by (i) resisting payment thereof if practicable only if adequate reserves have been made for such Taxes or, if required, an adequate bond has been posted, (ii) paying the same under protest, if protest shall be necessary and proper, (iii) if payment shall be made, using reasonable efforts to obtain a refund thereof in appropriate administrative and judicial proceedings, and (iv) taking such other action as is reasonably requested by LESSEE from time to time including not paying such Taxes only if adequate reserves have been made for such Taxes or, if required, an adequate bond has been posted. LESSOR shall determine the method of any contest and (in good faith consultation with LESSEE) control the conduct thereof. Notwithstanding anything contained in this Article 15.4, LESSOR will not be required to contest, or to continue to contest, the validity, applicability or amount of any Tax (or portion thereof) (x) if such contest would result in any material risk of criminal penalties or any material risk of sale, forfeiture or loss of the Aircraft, (y) if an Event of Default has occurred and is continuing, or (z) in the case of a contest of a Tax reflected on a return of LESSOR with other taxes of LESSOR that are not indemnified by the LESSEE hereunder, if LESSEE shall not have furnished an opinion of independent tax counsel selected by the LESSEE, and reasonably satisfactory to LESSOR, that a reasonable basis exists for such contest. If LESSOR shall obtain a refund of all or any part of such Taxes for which an indemnity was paid by LESSEE, LESSOR shall pay LESSEE the amount of such refund; PROVIDED, HOWEVER, that such amount shall not be payable before such time as LESSEE shall have made all payments or indemnities to LESSOR then due under this Article 15 and under the Lease or while an Event of Default shall have occurred and be continuing. If in addition to such refund LESSOR shall receive an amount representing interest on the amount of such refund, LESSEE shall be paid that proportion of such interest which is fairly attributable to Taxes paid with an indemnity payment by LESSEE prior to the receipt of such refund or interest and increased by any taxes saved by reason of the deductibility of such payment by LESSOR. LESSEE shall not be deemed to be in default under any of the indemnification provisions under this Article 15 so long as it or LESSOR shall diligently prosecute such contest and LESSEE has indemnified LESSOR to LESSOR's reasonable satisfaction. In case any report or return is required to be made with respect to any obligation of LESSEE under this Article 15.4 or arising out of this Article 15.4, LESSEE will either timely make such report or return in such manner as will show the ownership of the Aircraft in LESSOR, and will as soon as possible send a copy of such report or return to LESSOR, or will notify LESSOR of such requirement and prepare and deliver such report or return to LESSOR in such manner as shall be satisfactory to LESSOR. 15.5 REFUNDS. Upon receipt by LESSOR of a refund of all or any part of any Taxes (including any deductions or withholdings referred to in Article 15.1) which LESSEE has paid, LESSOR will pay to LESSEE the net amount of such Taxes refunded. 15.6 COOPERATION IN FILING TAX RETURNS. LESSEE and LESSOR will cooperate with one another in providing information which may be reasonably required to fulfill each party's tax filing requirements and any audit information request arising from such filing. ARTICLE 16 INDEMNITIES 16.1 GENERAL INDEMNITY. Except as set forth in Article 16.2, LESSEE agrees to indemnify and hold harmless LESSOR and its officers, directors, employees, agents and shareholders (individually an "INDEMNITEE" and collectively "INDEMNITEES") from any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs, disbursements and expenses (including legal fees, costs and related expenses) of every kind and nature, whether or not any of the transactions contemplated by this Lease are consummated (collectively "EXPENSES"), which are imposed on, incurred by or asserted against any Indemnitee and which are in any way relating to, based on or arising out of any of the following: (a) this Lease or any transactions contemplated hereby; (b) the operation, possession, use, non-use, control, leasing, subleasing, maintenance, storage, overhaul, testing, inspections or acceptance flights at return of the Aircraft, any Engine or any Part during the Lease Term by LESSEE, any sublessee or any other Person, whether or not the same is in compliance with the terms of this Lease, including without limitation claims for death, personal injury, property damage, other loss or harm to any Person and claims relating to any Laws, including without limitation environmental control, noise and pollution laws, rules or regulations; (c) the manufacture, design, acceptance, rejection, delivery, return, sale in connection with an Event of Default, import, export, condition, repair, modification, servicing, rebuilding, enforcement of warranties whether in LESSOR's or LESSEE's name, customer and product support provided by Manufacturer and other vendors, airworthiness, registration, reregistration, performance, sublease, merchantability, fitness for use, substitution or replacement of the Aircraft, Engine or any Part under this Lease or other transfer of use or possession of the Aircraft, Engine or any Part, including under a pooling or interchange arrangement, including without limitation latent and other defects, whether or not discoverable and patent, trademark or copyright infringement; (d) any non-compliance by LESSEE with any term of this Lease or the falsity or inaccuracy of any representation or warranty of LESSEE set forth herein; (e) the prevention or attempt to prevent the arrest, confiscation, seizure, taking in execution, impounding, forfeiture or detention of the Aircraft, or in securing the release of the Aircraft; or (f) as a consequence of any Default in payment by LESSEE of any sum to be paid by LESSEE when due under this Lease or any other Default by LESSEE in the due and punctual performance of its obligations under this Lease. The foregoing indemnity by LESSEE is intended to include and cover any Expense to which an Indemnitee may be subject (in contract, tort, strict liability or under any other theory) regardless of the negligence, active or passive or any other type, of such Indemnitee, so long as such Expense does not fall within any of the exceptions listed in Article 16.2. 16.2 EXCEPTIONS TO GENERAL INDEMNITIES. The indemnity provided for in Article 16.1 will not extend to Expenses of any Indemnitee to the extent resulting from or arising out of any of the following: (a) Expenses which have resulted from the willful misconduct of such Indemnitee; (b) Expenses which LESSEE and LESSOR mutually agree or, absent mutual agreement, are judicially determined to be attributable to acts or events which occur after the Termination Date and return of the Aircraft to LESSOR in the condition required hereunder, but in any such case only to the extent not attributable to acts or omissions of LESSEE; (c) Expenses representing Taxes, it being acknowledged that the terms of Article 15 apply exclusively to LESSEE's indemnity obligations with respect to Taxes; (d) Expenses due to the breach by LESSOR of its covenant of quiet enjoyment pursuant to Article 21.2 (except to the extent covered by LESSEE's insurances); (e) Expenses which arise in connection with the transfer by LESSOR of any interest in the Aircraft or this Lease, except for any transfer in connection with any Event of Default or a Total Loss of the Aircraft or an Engine. (f) Expenses which are solely attributable to the representation or warranty of LESSOR contained in or made pursuant to any Operative Document being untrue; (g) Expenses which are solely related to the failure of such Indemnitees to perform or observe any agreement, covenant, or condition on its part to be performed or observed in any Operative Document; (h) Expenses which are solely an ordinary and usual internal customary operating expense; or (i) Expenses which are solely related to a breach of Article 21.1.6, or (j) Expenses which are solely related to a LESSOR's Lien. 16.3 AFTER-TAX BASIS. The amount which LESSEE will be required to pay with respect to any Expense indemnified against under Article 16.1 will be an amount sufficient to restore the Indemnitee, on an after-tax basis, to the same position such Indemnitee would have been in had such Expense not been incurred. 16.4 TIMING OF PAYMENT. It is the intent of the parties that each Indemnitee will have the right to indemnification for Expenses hereunder as soon as a claim is made and as soon as an Expense is incurred, whether or not such claim is meritorious and whether or not liability is established (but subject to Articles 16.2 and 16.8). LESSEE will pay an Indemnitee for Expenses pursuant to this Article 16 within ten (10) days after receipt of a written demand therefor from such Indemnitee accompanied by a written statement describing in reasonable detail the basis for such indemnity (but not before payment is due from such Indemnitee). 16.5 SUBROGATION. Upon the payment in full of any indemnity pursuant to this Article 16 by LESSEE, LESSEE will be subrogated to any right of the Indemnitee in respect of the matter against which such indemnity has been made. 16.6 NOTICE. Each Indemnitee and LESSEE will give prompt written notice one to the other of any liability of which such party has knowledge for which LESSEE is, or may be, liable under Article 16.1; provided, however, that failure to give such notice will not terminate any of the rights of Indemnitees under this Article 16 except to the extent that LESSEE has been materially prejudiced by the failure to provide such notice. 16.7 REFUNDS. If any Indemnitee obtains a recovery of all or any part of any amount which LESSEE has paid to such Indemnitee, such Indemnitee will pay to LESSEE the net amount recovered by such Indemnitee. 16.8 DEFENSE OF CLAIMS. (a) LESSEE and its insurers will have the right (in each such case at LESSEE's sole expense) to investigate or, provided that LESSEE or its insurers have not reserved the right to dispute liability with respect to any insurance policies pursuant to which coverage is sought, defend or compromise any claim covered by insurance for which indemnification is sought pursuant to Article 16.1 and each Indemnitee will cooperate with LESSEE or its insurers with respect thereto. If LESSEE or its insurers are retaining attorneys to handle such claim, such counsel must be reasonably satisfactory to the Indemnitees. If not, the Indemnitees will have the right to retain counsel of their choice at LESSEE's expense. (b) Unless LESSOR agrees in writing otherwise, no settlement of any claim hereunder may require LESSOR to agree to any remedy apart from the payment of money damages (for which such payment of money damages LESSEE will in any event indemnify the Indemnitees). (c) In no event shall any Indemnitee enter into a settlement or other compromise with respect to any Expense without LESSEE's prior written consent (which shall not be unreasonably withheld or delayed), unless such Indemnitee waives its right to be indemnified with respect to such Expense under this Article 16. (d) To the extent that any Expense indemnified by LESSEE hereunder may be covered by insurance maintained by LESSEE, at LESSEE's expense, each Indemnitee agrees to cooperate with the insurers in the exercise of their rights to investigate, defend, or compromise that Expense as may be required to retain the benefits of the insurance for that Expense. (e) If an Indemnitee is not a party to this Lease, LESSEE may require that Indemnitee to agree in writing to the terms of this Article 16 before making any payment to such Indemnitee under this Article 16. 16.9 SURVIVAL OF OBLIGATION. Notwithstanding anything in this Lease to the contrary, the provisions of this Article 16 will survive the Termination Date and continue in full force and effect notwithstanding any breach by LESSOR or LESSEE of the terms of this Lease, the termination of the lease of the Aircraft to LESSEE under this Lease or the repudiation by LESSOR or LESSEE of this Lease. ARTICLE 17 INSURANCE 17.1 CATEGORIES OF INSURANCE. Throughout the Lease Term and until the Termination Date LESSEE will, at its own expense, effect and maintain in full force and effect the types of insurance and amounts of insurance (including deductibles) described in Exhibit C through such brokers and with such insurers favorably regarded in the airline industry. 17.2 INSURANCE FOR INDEMNITIES. The insurance referred to in Article 17.1 will in each case include and insure (to the extent of the risks covered by the policies) the indemnity provisions of Article 16 and LESSEE will maintain such insurance of the indemnities for a minimum of two (2) years following the Termination Date. 17.3 INSURANCE REQUIRED BY MANUFACTURER. During the Lease Term, LESSEE will carry the insurance required by Manufacturer in connection with LESSOR's assignment of Manufacturer's warranties and product support to LESSEE. 17.4 RENEWAL. Not less than two (2) Business Days before the expiration or termination date of any insurance required hereunder, LESSEE will provide LESSOR with fax confirmation from LESSEE's insurance brokers that renewed certificates of insurance evidencing the renewal or replacement of such insurance and complying with Exhibit C will be issued on the termination date of the prior certificate. Within seven (7) days after such renewal, LESSEE will furnish its brokers' certificates of insurance to LESSOR. 17.5 ASSIGNMENT OF RIGHTS BY LESSOR. If LESSOR assigns all or any of its rights under this Lease as permitted by this Lease or otherwise disposes of any interest in the Aircraft to any other Person, LESSEE will, upon request, procure that (to the extent of the assignment or disposition) such Person hereunder be added as loss payee and/or additional assured in the policies effected hereunder and enjoy the same rights and insurance enjoyed by LESSOR under such policies. To the extent of its retained interest or as provided in Article 24.2.1, LESSOR will nevertheless continue to be covered by such policies. 17.6 DEDUCTIBLES. If there is a material adverse change in the financial condition of LESSEE which LESSOR reasonably believes will not enable LESSEE to pay the deductible upon the occurrence of a partial loss of the Aircraft or an Engine, then LESSOR may require LESSEE at LESSEE's expense to lower its deductibles on the insurance maintained hereunder to a level which is available on commercially reasonable terms in the insurance market. 17.7 OTHER INSURANCE. LESSOR may from time to time by notice to LESSEE require LESSEE at LESSEE's expense to effect such other insurance or such variations to the terms of the existing insurance as may then be customary in the airline industry for aircraft of the same type as the Aircraft and at the time commonly available in the insurance market. 17.8 INFORMATION. LESSEE will provide LESSOR with any information reasonably requested by LESSOR from time to time concerning the insurance maintained with respect to the Aircraft or in connection with any claim being made or proposed to be made thereunder. 17.9 CURRENCY. All proceeds of insurance pursuant to this Lease will be payable in Dollars except as may be otherwise agreed by LESSOR. 17.10 GROUNDING OF AIRCRAFT. If at any time any of the insurance required pursuant to this Lease will cease to be in full force and effect, LESSEE will forthwith ground the Aircraft and keep the Aircraft grounded until such time as such insurance is in full force and effect again. 17.11 FAILURE TO INSURE. If at any time LESSEE fails to maintain insurance in compliance with this Article 17, LESSOR will be entitled but not bound to do any of the following (without prejudice to any other rights which it may have under this Lease by reason of such failure): (a) to pay any premiums due or to effect or maintain substitute insurance or otherwise remedy such failure in any reasonable manner (and LESSEE will upon demand reimburse LESSOR in full for any amount so expended in that connection); or (b) at any time while such failure is continuing, to require the Aircraft to remain at any airport or (as the case may be), proceed to and remain at any airport designated by LESSOR. 17.12 LIMIT ON HULL IN FAVOR OF LESSEE. LESSEE may carry hull all risks or hull war and allied perils on the Aircraft in excess of the Agreed Value (which Agreed Value is payable to LESSOR) only to the extent such excess insurance which would be payable to LESSEE in the event of a Total Loss does not exceed fifteen percent (15%) of the Agreed Value and only to the extent that such additional insurance will not prejudice the insurances required herein or the recovery by LESSOR thereunder. LESSEE agrees that it will not create or permit to exist any liens or encumbrances over the insurances, or its interest therein, except as constituted by this Lease. 17.13 MARKETPLACE LIMITATIONS. The insurance required by this Lease may be subject to any limitations generally prevailing in the airline insurance marketplace at the time (e.g., AVN67B). ARTICLE 18 LOSS, DAMAGE AND REQUISITION Throughout the Lease Term and until the Termination Date, LESSEE will bear all risk of loss, theft, damage and destruction to the Aircraft. 18.1 DEFINITIONS. In this Article 18: "AGREED VALUE" (CONFIDENTIAL MATERIAL OMITTED) The Agreed Value is set forth in March 2001 U.S. Dollars and will be increased in accordance with Manufacturer's announced escalation rate from March 1, 2001 to the Delivery Date. On each annual renewal date of LESSEE's insurance policy commencing on the renewal date following the first anniversary of the Lease Term, the Agreed Value will decrease by two percent (2.0%) of the then-existing Agreed Value. "NET TOTAL LOSS PROCEEDS" means the Total Loss Proceeds actually received by LESSOR following a Total Loss, less any legal and other out-of-pocket expenses or duties incurred by LESSOR in connection with the collection of such proceeds. "TOTAL LOSS" means any of the following in relation to the Aircraft, Airframe or any Engine and "TOTAL LOSS DATE" means the date set forth in parenthesis after each Total Loss: (a) destruction, damage beyond repair or being rendered permanently unfit for normal use for any reason (the date such event occurs or, if not known, the date on which the Aircraft, Airframe or Engine was last heard of); (b) actual, constructive, compromised, arranged or agreed total loss (the earlier of the date on which the loss is agreed or compromised by the insurers or thirty (30) days after the date of notice to LESSEE's brokers or insurers claiming such total loss); (c) requisition of title, confiscation, forfeiture or any compulsory acquisition of title or other similar event (the date on which the same takes effect); (d) sequestration, detention, seizure or any similar event for more than one hundred eighty (180) consecutive days (the earlier of the date on which insurers make payment on the basis of a total loss or the date of expiration of such period); (e) requisition for use for more than one hundred eighty (180) consecutive days, except as set forth in Article 18.8 (the earlier of the date on which the insurers make payment on the basis of a total loss or the date of expiration of such period); (f) in the case of an Engine, the event described in Article 12.6.3 (the date on which the same takes effect); "TOTAL LOSS PROCEEDS" means the proceeds of any insurance or any compensation or similar payment arising in respect of a Total Loss. 18.2 NOTICE OF TOTAL LOSS. LESSEE will notify LESSOR in writing within two (2) Business Days after a Total Loss Date of the Aircraft, Airframe or any Engine. 18.3 TOTAL LOSS OF AIRCRAFT OR AIRFRAME. If the Total Loss of the Aircraft or Airframe occurs during the Lease Term, the following will occur: 18.3.1 After the Total Loss Date and until receipt by LESSOR of the Agreed Value and all other amounts then due under this Lease, LESSEE will continue to pay Rent and the parties will perform all of their other obligations under this Lease. 18.3.2 On the date which is the earlier of the following dates: (a) the date on which the Total Loss Proceeds of the Aircraft or the Airframe are paid by LESSEE's insurance underwriters or brokers and (b) the date which falls sixty (60) days after the Total Loss Date, LESSEE will pay to LESSOR an amount equal to the sum of: (a) the Agreed Value and (b) all other amounts then due and payable under this Lease, less an amount equal to the Net Total Loss Proceeds received by LESSOR by such date. 18.3.3 LESSOR will apply the Net Total Loss Proceeds and any amounts received from LESSEE pursuant to Article 18.3.2 as follows: (a) first, in discharge of any unpaid Rent and any other amounts accrued and unpaid up to the date of LESSOR's receipt of the Agreed Value; (b) second, in discharge of the Agreed Value; and (c) third, payment of the balance, if any, to LESSEE. 18.3.4 Upon receipt by LESSOR of all monies payable by LESSEE in Article 18.3, provided no Default has occurred and is continuing, this Lease will terminate except for LESSEE's obligations under Articles 10.5, 15 and 16 which survive the Termination Date and the Security Deposit will be returned to LESSEE in accordance with Article 5.3.1. FOR AVOIDANCE OF DOUBT, THE AGREED VALUE OF THE AIRCRAFT WILL BE PAYABLE TO LESSOR PURSUANT TO THIS ARTICLE 18.3 IF A TOTAL LOSS OF THE AIRFRAME OCCURS EVEN IF THERE HAS NOT BEEN A TOTAL LOSS OF AN ENGINE OR ENGINES. 18.4 SURVIVING ENGINE(S). If a Total Loss of the Airframe occurs and there has not been a Total Loss of an Engine or Engines, then provided no Default has occurred and is continuing, at the request of LESSEE (subject to agreement of relevant insurers) and on receipt of all monies due under Article 18.3 and payment by LESSEE of all airport, navigation and other charges on the Aircraft, LESSOR will transfer all of its right, title and interest in the surviving Engine(s) to LESSEE, but without any responsibility, condition or warranty on the part of LESSOR other than as to freedom from any LESSOR's Lien. 18.5 TOTAL LOSS OF ENGINE AND NOT AIRFRAME. 18.5.1 Upon a Total Loss of any Engine not installed on the Airframe or a Total Loss of an Engine installed on the Airframe not involving a Total Loss of the Airframe, LESSEE will replace such Engine as soon as reasonably possible by duly conveying to LESSOR title to another engine (a) free and clear of all Security Interests (except Permitted Liens) of any kind or description, (b) in airworthy condition and of the same or improved model, service bulletin and modification status and having a value and utility at least equal to the Engine which sustained the Total Loss, and (c) not older (by reference to serial number or manufacture date) than three (3) years older than the oldest of the two Engines delivered by LESSOR to LESSEE with the Aircraft on the Delivery Date. Such replacement engine will be an Engine as defined herein and the Engine which sustained such Total Loss will cease to be an Engine. 18.5.2 LESSEE agrees at its own expense to take such action as LESSOR may reasonably request in order that any such replacement Engine becomes the property of LESSOR and is leased hereunder on the same terms as the destroyed Engine. LESSEE's obligation to pay Rent will continue in full force and effect, but an amount equal to the Net Total Loss Proceeds received by LESSOR with respect to such destroyed Engine will, subject to LESSOR's right to deduct therefrom any amounts then due and payable by LESSEE under this Lease, be paid to LESSEE. 18.6 OTHER LOSS OR DAMAGE. 18.6.1 If the Aircraft or any Part thereof suffers loss or damage not constituting a Total Loss of the Aircraft or the Airframe or any Engine, all the obligations of LESSEE under this Lease (including payment of Rent) will continue in full force. 18.6.2 In the event of any loss or damage to the Aircraft or Airframe which does not constitute a Total Loss of the Aircraft or the Airframe, or any loss or damage to an Engine which does not constitute a Total Loss of such Engine, LESSEE will at its sole cost and expense fully repair the Aircraft or Engine in order that the Aircraft or Engine is placed in an airworthy condition and substantially the same condition as it was prior to such loss or damage. All repairs will be performed in accordance with sound airline procedures. LESSEE will notify LESSOR forthwith of any loss, theft or damage to the Aircraft for which the cost of repairs is estimated to exceed Seven Hundred Fifty Thousand U.S. Dollars (US$750,000), together with LESSEE's proposal for carrying out the repair. In the event that LESSOR does not agree with LESSEE's proposals for repair, LESSOR will so notify LESSEE within two (2) Business Days after its receipt of such proposal. LESSEE and LESSOR will then consult with Manufacturer and LESSEE and LESSOR agree to accept as conclusive, and be bound by, Manufacturer's directions or recommendations as to the manner in which to carry out such repairs. If Manufacturer declines to give directions or recommendations, LESSEE will carry out the repairs in accordance with the directions of LESSOR. 18.6.3 To the extent that LESSOR has received insurance proceeds from LESSEE's insurers with respect to any loss or damage, LESSOR will (subject to LESSOR's right to deduct therefrom any amounts then due and payable by LESSEE under this Lease and submission by LESSEE of reasonable documentation confirming the completion of the repairs in accordance with the requirements of this Lease) pay to LESSEE insurance proceeds received by LESSOR as and when such repair work is performed on the Aircraft. 18.7 COPY OF INSURANCE POLICY. Promptly after LESSOR's request following the occurrence of a partial loss or Total Loss of the Aircraft or an Engine, LESSEE will provide LESSOR with a copy of LESSEE's insurance policy. 18.8 GOVERNMENT REQUISITION. If the Aircraft, Airframe or any Engine is requisitioned for use by any Government Entity, LESSEE will promptly notify LESSOR of such requisition. All of LESSEE's obligations hereunder will continue as if such requisition had not occurred. Except if a Default or an Event of Default has occurred and is continuing, all payments received by LESSOR or LESSEE from such Government Entity will be paid over to or retained by LESSEE. 18.9 CONVEYANCE TO LESSEE. Upon compliance by LESSEE with the applicable terms of Article 18.3 or 18.5, LESSOR will transfer to LESSEE the Airframe or Engine(s), as applicable, with respect to which such Total Loss. ARTICLE 19 CRAF PROGRAM 19.1 DEDICATION TO CRAF. LESSEE may transfer possession of the Airframe or any Engine to the United States of America or any instrumentality or agency thereof as part of the Civil Reserve Air Fleet Program authorized under 10 U.S.C. ss. 9511 ET SEQ. (or any substantially similar program) ("CRAF PROGRAM") for a period which includes (collectively, the "CRAF PROGRAM REQUISITION PERIOD") the entire period of requisition under the CRAF Program. If the CRAF Program Requisition Period extends beyond the Expiration Date provided by this Lease, then the Lease will be deemed to continue for six (6) months after the end of the CRAF Program Requisition Period at a monthly rental rate equal to the monthly rental rate during the Lease Term. If such extension extends beyond the Lease Term, then LESSEE will provide LESSOR with written notice of the proposed redelivery by the earlier of six (6) months prior to the proposed redelivery date or five (5) Business Days after the date of receipt of the actual notice given to LESSEE by the government prior to the government's redelivery date and LESSEE will return the Aircraft to LESSOR in the condition required by Article 23 on LESSEE's proposed redelivery date set forth in such notice. 19.2 NOTICE TO LESSOR. LESSEE will promptly notify LESSOR in writing in the event of the requisition for use of the Aircraft under CRAF activation by the U.S. Government. All of LESSEE's obligations under this Lease will continue to the same extent as if such requisition had not occurred. 19.3 REQUISITION OF ENGINE. If there is a requisition for use of any Engine (but not the Airframe) by the U.S. Government in connection with the CRAF Program, LESSEE will replace such Engine by complying with the terms of Article 18.5 hereof. 19.4 GOVERNMENT INDEMNIFICATION. Any provisions of this Lease to the contrary notwithstanding, if there is a requisition for use of the Aircraft pursuant to the CRAF Program and/or CRAF activation, LESSOR agrees that LESSEE's insurances described in Exhibit C may be supplemented by insurances provided under Title XIII of the Act, and/or U.S. Government indemnification (which Title XIII insurances and indemnification will be in amounts not less than those established in Exhibit C); provided, however, that LESSEE will remain responsible for full compliance with all the provisions of this Lease, including Articles 14 and 16, to the extent Title XIII and/or the U.S. Government indemnification do not satisfy LESSEE's obligations under this Lease. 19.5 NO GEOGRAPHIC LIMITS. If there is a requisition for use of the Aircraft pursuant to the CRAF Program and/or CRAF activation, there will be no limitation on the geographic area in which the Aircraft may be operated so long as, taken as a whole, LESSEE's insurance, the Title XIII insurance and/or the indemnification provided by the U.S. Government fully cover (without any geographic exclusions) LESSEE's Exhibit C insurance requirements. 19.6 NOTICE OF DEFAULT. If an Event of Default occurs under this Lease and LESSOR elects to pursue its remedies under Article 25.3(e) to terminate this Lease and repossess the Aircraft, LESSOR will so notify the U.S. Government by sending a written communication as follows: Headquarters Air Mobility Command AMC Contracting Office -- XOKA Scott Air Force Base, Illinois 62225-5007 19.7 RECEIPT OF PAYMENTS. Subject to the following sentence, all payments received by LESSOR or LESSEE from such Government Entity in connection with the requisition of the Aircraft under the CRAF Program will be paid over to or retained by LESSEE. If a Default has occurred and is continuing, all payments received by LESSEE or LESSOR from such Government Entity in connection with the requisition of the Aircraft under the CRAF Program may be used by LESSOR to satisfy any obligations owing by LESSEE. ARTICLE 20 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE 20.1 REPRESENTATIONS AND WARRANTIES. LESSEE represents and warrants the following to LESSOR as of the date of execution of this Lease and as of the Delivery Date: 20.1.1 CORPORATE STATUS. LESSEE is a corporation duly incorporated, validly existing and in good standing under the Laws of Indiana (or, on the Delivery Date, the state of its incorporation). It has the corporate power and authority to carry on its business as presently conducted and to perform its obligations hereunder. 20.1.2 GOVERNMENTAL APPROVALS. No authorization, approval, consent, license or order of, or registration with, or the giving of notice to the Aviation Authority or any other Government Entity is required for the valid authorization, execution, delivery and performance by LESSEE of this Lease, except as will have been duly effected as of the Delivery Date. 20.1.3 BINDING. LESSEE's Board of Directors has authorized LESSEE to enter into this Lease, any Side Letters hereto and any other documentation in connection with the leasing of the Aircraft from LESSOR (collectively, the "OPERATIVE DOCUMENTS") and perform its obligations under the Operative Documents. This Lease and the other Operative Documents have been duly executed and delivered by LESSEE and represent the valid, binding and enforceable obligations of LESSEE except as enforceability may be limited by bankruptcy, insolvency, reorganization or other Laws of general application affecting the enforcement of creditors' rights. When executed by LESSEE at Delivery, the same will apply to the Estoppel and Acceptance Certificate. 20.1.4 NO BREACH. The execution and delivery of the Operative Documents, the consummation by LESSEE of the transactions contemplated herein and compliance by LESSEE with the terms and provisions hereof do not and will not contravene any Law applicable to LESSEE, or result in any breach of or constitute any default under or result in the creation of any Security Interest upon any property of LESSEE, pursuant to any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which LESSEE is a party or by which LESSEE or its properties or assets may be bound or affected. When executed by LESSEE at Delivery, the same will apply to the Estoppel and Acceptance Certificate. 20.1.5 FILINGS. Except for any filing or recording that may be required by the FARs, no filing or recording of any instrument or document (including the filing of any financial statement) is necessary under the Laws of the State of Registration in order for this Lease to constitute a valid and perfected lease of record relating to the Aircraft. 20.1.6 LICENSES. LESSEE holds all licenses, certificates and permits from applicable Government Entities in the U.S. for the conduct of its business as a certificated air carrier and performance of its obligations under this Lease. 20.1.7 NO SUITS. There are no suits, arbitrations or other proceedings pending or threatened before any court or administrative agency against LESSEE which are reasonably likely to be determined adversely and, if adversely determined, would have a material adverse effect on the business, assets or condition (financial or otherwise) of LESSEE or its ability to perform under this Lease, except as described in the filings provided to LESSOR pursuant to Article 22. 20.1.8 GENERAL OBLIGATIONS. The obligations of LESSEE under this Lease are direct, general and unconditional obligations of LESSEE and rank or will rank at least PARI PASSU with all other present and future unsecured and unsubordinated obligations (including contingent obligations) of LESSEE, with the exception of such obligations as are mandatorily preferred by law and not by reason of any encumbrance. 20.1.9 NO SOVEREIGN IMMUNITY. LESSEE, under the Laws of the U.S. or of any other jurisdiction affecting LESSEE, is subject to private commercial law and suit. Neither LESSEE nor its properties or assets is entitled to sovereign immunity under any such Laws. LESSEE's performance of its obligations hereunder constitute commercial acts done for commercial purposes. 20.1.10 TAX RETURNS. All necessary federal and state income tax returns have been delivered by LESSEE to all relevant taxation authorities in the U.S. or any state thereof and LESSEE is not in default in the payment of any taxes due and payable as shown on any such returns or on any assessment received by LESSEE. 20.1.11 NO MATERIAL ADVERSE EFFECT. LESSEE is not in default under any agreement to which it is a party or by which it may be bound which would have a material adverse effect on its business, assets or condition. 20.1.12 NO DEFAULT UNDER THIS LEASE. At the time of execution of this Lease, no Default has occurred and is continuing and the financial statements provided to LESSOR pursuant to Article 22 fairly present the financial condition of LESSEE. 20.2 COVENANTS. LESSEE covenants to LESSOR that it will comply with the following throughout the entire Lease Term: 20.2.1 LICENSING. LESSEE will hold all licenses, certificates and permits from applicable Government Entities in the U.S. for the conduct of its business as a certificated air carrier and performance of its obligations under this Lease. LESSEE will advise LESSOR promptly in the event any such licenses, certificates or permits are cancelled, terminated, revoked or not renewed. 20.2.2 SOVEREIGN IMMUNITY. LESSEE, under the Laws of the U.S. or of any other jurisdiction affecting LESSEE, will continue to be subject to private commercial law and suit. Neither LESSEE nor its properties or assets will be entitled to sovereign immunity under any such Laws. LESSEE's performance of its obligations hereunder will constitute commercial acts done for commercial purposes. LESSEE will advise LESSOR promptly of any change in the foregoing. 20.2.3 INFORMATION ABOUT SUITS. LESSEE will promptly give to LESSOR a notice in writing of any suit, arbitration or proceeding against LESSEE before any court, administrative agency or Government Entity which is reasonably likely to be determined adversely and, if adversely determined, would materially adversely affect LESSEE's financial condition, affairs, operations or its ability to perform under this Lease. 20.2.4 MERGER OF LESSEE. (a) LESSEE shall not consolidate with or merge into any other Person under circumstances in which LESSEE is not the surviving corporation, or convey, transfer, or lease in one or more transactions all or substantially all of its assets to any other Person, unless: (i) such Person is organized, existing, and in good standing under the Laws of the U.S., any state of the U.S., or the District of Columbia, and, upon consummation of such transaction, such Person will be a U.S. Air Carrier; (ii) such Person executes and delivers to LESSOR a duly authorized, legal, valid, binding and enforceable agreement, reasonably satisfactory in form and substance to LESSOR, containing an effective assumption by such Person of the due and punctual performance and observance of each covenant, agreement and condition in the Operative Documents to be performed or observed by LESSEE; (iii) such Person makes such filings and recordings with the FAA pursuant to the Act as shall be necessary to evidence such consolidation or merger; (iv) LESSEE furnishes LESSOR an opinion of counsel reasonably satisfactory to LESSOR to the effect that such consolidation or merger has satisfied at the closing of such consolidation or merger items (i), (ii) and (iii) above; (v) immediately after giving effect to such consolidation or merger, no Default or Event of Default exists; (vi) unless LESSOR otherwise consents, immediately after giving effect to such consolidation or merger, such Person will have a tangible net worth of not less than sixty-five percent (65%) of the LESSEE's tangible net worth immediately prior to such merger; and (vii) upon such merger becoming effective, LESSOR will enjoy the same degree of protection under ss. 1110 of the Bankruptcy Code with respect to the Aircraft as LESSOR enjoyed prior to such merger. (b) Upon any such consolidation or merger of LESSEE with or into, or the conveyance, transfer, or lease by LESSEE of all or substantially all of its assets to, any Person in accordance with this Article 20.2.4, such Person will succeed to, and be substituted for, and may exercise every right and power of, LESSEE under the Operative Documents with the same effect as if such Person had been named as "LESSEE" therein. No such consolidation, merger, conveyance, transfer, or lease shall have the effect of releasing LESSEE or such Person from any of LESSEE's obligations, liabilities, covenants, or undertakings under this Lease. 20.2.5 RESTRICTION ON RELINQUISHMENT OF POSSESSION. LESSEE will not, without the prior consent of LESSOR, deliver, transfer or relinquish possession of the Aircraft except in accordance with Articles 11 and 12. 20.2.6 NO SECURITY INTERESTS. LESSEE will not create or agree to or permit to arise any Security Interest (other than Permitted Liens) on or with respect to the Aircraft, title thereto or any interest therein. LESSEE will forthwith, at its own expense, take all action as may be necessary to discharge or remove any such Security Interest if it exists at any time. LESSEE will within five (5) Business Days after becoming aware of the existence of any such Security Interest give written notice thereof to LESSOR. 20.2.7 REPRESENTATIONS TO OTHER PARTIES. LESSEE will not represent or hold out LESSOR as carrying goods or passengers on the Aircraft or as being in any way connected or associated with any operation of the Aircraft. ARTICLE 21 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSOR 21.1 REPRESENTATIONS AND WARRANTIES. LESSOR represents and warrants the following to LESSEE as of the date of execution of the Lease and as of the Delivery Date and ALL OTHER WARRANTIES, EXPRESS OR IMPLIED HAVE BEEN WAIVED IN ACCORDANCE WITH ARTICLE 8: 21.1.1 CORPORATE STATUS. LESSOR is a corporation duly incorporated, validly existing and in good standing under the Laws of the State of California. It has the corporate power and authority to carry on its business as presently conducted and to perform its obligations hereunder. 21.1.2 GOVERNMENTAL APPROVALS. No authorization, approval, consent, license or order of, or registration with, or the giving of notice to any U.S. Government Entity is required for the valid authorization, execution, delivery and performance by LESSOR of this Lease. 21.1.3 BINDING. This Lease and the other Operative Documents have been duly authorized, executed and delivered by LESSOR and represent the valid, enforceable and binding obligations of LESSOR except as enforceability may be limited by bankruptcy, insolvency, reorganization or other Laws of general application affecting the enforcement of creditors' rights. 21.1.4 NO BREACH. The execution and delivery of the Operative Documents, the consummation by LESSOR of the transactions contemplated herein and compliance by LESSOR with the terms and provisions hereof do not and will not contravene any Law applicable to LESSOR, or result in any breach of or constitute any default under any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which LESSOR is a party or by which LESSOR or its properties or assets may be bound or affected. 21.1.5 TITLE TO AIRCRAFT. On the Delivery Date LESSOR will have good and valid title to the Aircraft. 21.1.6 CITIZENSHIP. LESSOR is a "citizen of the United States" within the meaning of 49 U.S. Code 40102(a)(15). 21.1.7 INVESTMENT BY LESSOR. LESSOR is acquiring its interest in the Aircraft for its own account from its corporate funds, for investment and not with a view to any resale or distribution thereof that would require registration under the Securities Act of 1933; PROVIDED, HOWEVER, that subject to the transfer restrictions in Article 24.2, its disposition of its interest in the Aircraft shall at all times be within its control. 21.2 COVENANT OF QUIET ENJOYMENT. So long as no Event of Default has occurred and is continuing hereunder, LESSOR covenants that neither LESSOR nor any person lawfully claiming through LESSOR will interfere with LESSEE's quiet, peaceful use and enjoyment of the Aircraft. ARTICLE 22 FINANCIAL AND RELATED INFORMATION LESSEE agrees to furnish each of the following to LESSOR: (a) within sixty (60) days after the end of each fiscal quarter of LESSEE, the unaudited consolidated financial statements (including a balance sheet and profit and loss statement) prepared for such quarter in accordance with generally accepted accounting principles in the U.S.; (b) within one hundred twenty (120) days after the end of each fiscal year of LESSEE, the audited consolidated financial statements (including a balance sheet and profit and loss statement) prepared as of the close of such fiscal year in accordance with generally accepted accounting principles in the U.S. LESSEE's chief financial officer will also provide a certificate of LESSEE stating that, to such officer's knowledge, no Default exists under this Lease (or if, to such officer's knowledge, a Default does exist, identifying it); (c) promptly after distribution, all reports and financial statements which Amtran, Inc. sends or makes generally available to its stockholders or creditors; and (d) from time to time, such other reasonable information as LESSOR or LESSOR's Lender may reasonably request concerning the location, condition, use and operation of the Aircraft or the financial condition of LESSEE. ARTICLE 23 RETURN OF AIRCRAFT 23.1 DATE OF RETURN. LESSEE is obligated to return the Aircraft, Engines Parts and Aircraft Documentation to LESSOR on the Expiration Date, unless a Total Loss of the Aircraft occurred prior to the Expiration Date and this Lease was terminated early in accordance with Article 18.3. If LESSEE is in Default hereunder by failing to return the Aircraft on the Expiration Date or if an Event of Default occurs prior to the Expiration Date and LESSOR repossesses the Aircraft, the return requirements set forth in this Article 23 nonetheless must be met on the date the Aircraft is actually returned to LESSOR or repossessed by LESSOR. 23.2 TECHNICAL REPORT. Six (6) months prior to the Expiration Date (and in an updated form at return of the Aircraft), LESSEE will provide LESSOR with a Technical Evaluation Report in the form and substance of Exhibit L, as revised, and, in addition upon LESSOR's request, will make copies available of (a) drawings of the interior configuration of the Aircraft both as it presently exists and as it will exist at return, (b) an Airworthiness Directive status list, (c) a service bulletin incorporation list, (d) rotable tracked, hard-time and life-limited component listings, (e) a list of LESSEE-initiated modifications and alterations, (f) interior material burn certificates, (g) the Aircraft Maintenance Program, (h) the complete workscope for the checks, inspections and other work to be performed prior to return, (i) a list of all no-charge service bulletin kits with respect to the Aircraft which were ordered by LESSEE from Manufacturer or Engine manufacturer, (j) current Engine disk sheets and a description of the last shop visit for each Engine and (k) any other data which is reasonably requested by LESSOR. 23.3 RETURN LOCATION. LESSEE at its expense will return the Aircraft, Engines, Parts and Aircraft Documentation to LESSOR at Indianapolis International Airport, Indianapolis, Indiana or to such other airport as may be mutually agreed to by LESSEE and LESSOR. 23.4 FULL AIRCRAFT DOCUMENTATION REVIEW. For the period commencing at least ten (10) Business Days prior to the proposed redelivery date and continuing until the date on which the Aircraft is returned to LESSOR in the condition required by this Lease, LESSEE will provide for the review of LESSOR and/or its representative all of the Aircraft records and historical documents described in Exhibit K in one central room at the Aircraft return location. 23.5 AIRCRAFT INSPECTION. 23.5.1 During the maintenance checks performed immediately prior to the proposed redelivery and at the actual return of the Aircraft, LESSOR and/or its representatives will have an opportunity to conduct a full systems functional and operational inspection of the Aircraft (and other types of reasonable inspections based upon the Aircraft type, age, use and other known factors with respect to the Aircraft) and a full inspection of the Aircraft Documentation (including records and manuals), all to LESSOR's satisfaction. The inspection will occur during the Return Check when the panels, bays or the like are open and certain Parts are disassembled. LESSOR may inspect such opened panels, bays or the like and the disassembled Parts so long as LESSOR does not disrupt the Return Check or cause such Return Check to be extended beyond the anticipated completion date of such Return Check. Any deficiencies from the Aircraft return condition requirements set forth in this Article 23 will be corrected by LESSEE at its cost prior to the acceptance flight described in Article 23.5.2. 23.5.2 Immediately prior to the proposed redelivery of the Aircraft, LESSEE will carry out for LESSOR and/or LESSOR's representatives an Aircraft acceptance flight in accordance with Manufacturer's standard flight operation check flight procedures or, if agreed to in writing by LESSOR, in accordance with an airline acceptance flight procedure, either of which will be for the duration necessary to perform such check flight procedures but in any event not less than two (2) hours. Flight costs and fuel will be furnished by and at the expense of LESSEE. Any deficiencies from the Aircraft return condition requirements set forth in this Article 23 will be corrected by LESSEE at its cost prior to return of the Aircraft. 23.5.3 To the extent that the ground inspection and acceptance flight extend beyond the Expiration Date, the Lease Term will be deemed to have been automatically extended and the obligations of LESSEE hereunder (including Article 23.11.3) will continue on a day-to-day basis until the Aircraft is accepted by LESSOR executing the Return Acceptance Receipt in the form of Exhibit I. 23.6 CERTIFICATE OF AIRWORTHINESS MATTERS. 23.6.1 The Aircraft will possess a current Certificate of Airworthiness issued by the Aviation Authority (although this Certificate of Airworthiness may later be substituted by the Export Certificate of Airworthiness or equivalent if requested by LESSOR pursuant to Article 23.10). The Aircraft at return must be in the condition required in order to meet the requirements of a U.S. Standard Certificate of Airworthiness for transport category aircraft issued by the FAA in accordance with FAR Part 21 and, in addition, to meet the operating requirements of FAR Part 121. 23.6.2 LESSEE at its cost will demonstrate that the Aircraft meets the requirements for issuance of the U.S. Standard Certificate of Airworthiness for transport category aircraft specified in Article 23.6.1 by delivering to LESSOR an actual U.S. Standard Certificate of Airworthiness. If there is a dispute in regards to the condition of the Aircraft or the Aircraft Documentation, then LESSEE will provide LESSOR with a letter acceptable to LESSOR signed by an FAA Designated Airworthiness Representative (DAR) or another Person acceptable to LESSOR stating that the DAR or such Person has inspected the Aircraft and Aircraft Documentation (including records and manuals) and has found that the Aircraft meets the requirements for issuance of a U.S. Standard Certificate of Airworthiness for transport category aircraft in accordance with FAR Part 21 and, in addition, meets the operating requirements of FAR Part 121. 23.6.3 If the Aircraft is to be registered in a country other than in the U.S. after return from LESSEE, LESSOR may in its sole discretion waive the requirements of Article 23.6.2 and instead require that LESSEE at its expense (to the extent such expense is no greater than that which LESSEE would have incurred pursuant to Articles 23.6.1 and 23.6.2, with any additional expenses being for LESSOR's account) put the Aircraft in a condition to meet the requirements for issuance of a Certificate of Airworthiness of the Aviation Authority of the next country of register. 23.7 GENERAL CONDITION OF AIRCRAFT AT RETURN. 23.7.1 The Aircraft, Engines and Parts will have been maintained and repaired in accordance with the Maintenance Program, the rules and regulations of the Aviation Authority and this Lease. 23.7.2 Aircraft Documentation (including records and manuals) will have been maintained in an up-to-date status, in accordance with the rules and regulations of the Aviation Authority and the FAA and this Lease and in a form necessary in order to meet the requirements of Article 23.6.2. The records and historical documents set forth in Attachment 1 of Exhibit I will be in English. 23.7.3 The Aircraft will be in the same working order and condition as at Delivery (subject to the other provisions of this Article 23, reasonable wear and tear from normal flight operations excepted), with all pilot discrepancies and deferred maintenance items cleared on a terminating action basis. 23.7.4 The Aircraft will be airworthy (conform to type design and be in a condition for safe operation), with all Aircraft equipment, components and systems operating in accordance with their intended use and within limits approved by the Manufacturer, Aviation Authority and FAA. 23.7.5 The Aircraft interior (including cabin and windows) and exterior will be clean and all compartments will be reasonably free of foreign objects, dirt, grease, fluids, stains, grime, cracks, tears and rips (with the exception of normal wear and tear) and ready to be placed into immediate commercial airline operations. 23.7.6 No special or unique Manufacturer, Engine manufacturer or Aviation Authority inspection or check requirements which are specific to the Aircraft or Engines (as opposed to all aircraft or engines of their types) will exist with respect to the Airframe, Engines and Aircraft equipment, components and systems. 23.7.7 All repairs, modifications and alterations to the Aircraft will have been accomplished in accordance with Manufacturer's Structural Repair Manual (or FAA-approved data supported by FAA Form 8110-3) for the Aircraft. 23.7.8 The Aircraft will be returned with LESSOR's Engines installed and with the same equipment as at Delivery, subject only to those replacements, additions and Modifications permitted under this Lease. LESSEE will inform LESSOR of whether LESSEE will be able to redeliver the Engines with the Aircraft and the proposed replacement engines that LESSEE wants to provide LESSOR in place of the Engines. LESSEE will provide LESSOR with whatever data, records and information that LESSOR reasonably requests in order to evaluate the proposed replacement engines. In the event that LESSEE is unable to return either of the Engines in the conditions required by this Article 23, then LESSEE may provide a replacement engine (a "REPLACEMENT ENGINE") for such Engine to LESSOR by duly conveying to LESSOR as owner hereunder title to another engine of the same manufacturer and of the same or an improved model as the Engine being replaced and suitable for installation and use on the Aircraft, which engine shall be free and clear of all Security Interests, and shall be no more than three (3) years older by reference to serial number than the replaced Engine and have a modification status, value and utility at least equal to the Engine which such Replacement Engine is replacing on the Aircraft assuming that such Engine which such Replacement Engine is replacing was then of the value, utility, condition, and airworthiness required to be maintained by the terms of this Lease. Such Replacement Engine, after approval and acceptance by LESSOR, shall be deemed an "Engine" as defined herein for all purposes hereunder. LESSEE agrees to take such action as LESSOR may reasonably request in order that such Replacement Engine shall be duly and properly titled in the name of LESSOR. Prior to or at the time of any such conveyance, LESSEE, at its own expense, will promptly: (a) furnish LESSOR with a warranty bill of sale, in form and substance satisfactory to LESSOR, with respect to such Replacement Engine, (b) furnish LESSOR with such evidence of title to such Replacement Engine as reasonably requested by LESSOR, and (c) furnish LESSOR with an opinion of LESSEE's counsel to the effect that title to such Replacement Engine has been duly conveyed to LESSOR free and clear of all Security Interests of any kind or nature and that such exchange qualifies for tax free treatment under the Internal Revenue Code of 1986, as amended. Upon full compliance with this Article, LESSOR shall transfer to LESSEE all of LESSOR's right, title and interest, on an "AS-IS", "WHERE-IS" basis in and to the Engine being replaced by such Replacement Engine, without recourse or warranty, express or implied, except that LESSOR has good and marketable title to such Engine and such Engine shall be free and clear of LESSOR's Liens. 23.7.9 All Airworthiness Directives which are issued prior to the date of return of the Aircraft and require compliance (either by means of repetitive inspections, modifications or terminating action) prior to return of the Aircraft to LESSOR or within one (1) year after the Termination Date will have been complied with on the Aircraft on a terminating action basis at LESSEE's cost. Airworthiness Directives which do not have a terminating action will be accomplished at the highest level of inspection or modification possible. If, after using best efforts, LESSEE is unable to acquire the material, parts or components necessary to accomplish such Airworthiness Directive, LESSEE will pay to LESSOR upon return of the Aircraft the estimated cost of terminating such Airworthiness Directive. If the estimated cost cannot be mutually agreed upon by LESSEE and LESSOR, LESSEE and LESSOR will each obtain an estimate from a reputable FAA-approved maintenance facility (unaffiliated with LESSEE or LESSOR) and the estimated cost will be the average of the two estimates. 23.7.10 The Aircraft will be in compliance with the Corrosion Prevention and Control Program (CPCP) specified in LESSEE's Maintenance Program. 23.7.11 If any waivers, deviations, dispensations, alternate means of compliance, extensions or carry-overs with respect to maintenance or operating requirements, repairs or Airworthiness Directives are granted by the Aviation Authority or permitted by the Maintenance Program, LESSEE at its sole cost and expense will nonetheless perform such maintenance or operating requirements, repairs or Airworthiness Directives as if such waivers, deviations, dispensations, alternate means of compliance, or extensions or carry-overs did not exist. 23.7.12 The Aircraft will be free from any Security Interest except LESSOR's Liens and no circumstance will have so arisen whereby the Aircraft is or could become subject to any Security Interest or right of detention or sale in favor of the Aviation Authority, any airport authority, or any other authority. 23.7.13 All no-charge vendor and Manufacturer's service bulletin kits received by LESSEE for the Aircraft but not installed thereon will be on board the Aircraft as cargo. At LESSOR's request, any other service bulletin kit which LESSEE paid for will also be delivered to LESSOR on board the Aircraft, but LESSOR will reimburse LESSEE for its actual out-of-pocket costs for such kit, unless LESSEE purchased such kit as part of its implementation of a service bulletin on its fleet of aircraft of the same type as the Aircraft but had not yet installed such kit on the Aircraft, in which case such kit will be furnished free of charge to LESSOR. 23.7.14 The Aircraft will be free of any leaks and any damage resulting therefrom. All repairs will have been performed on a permanent basis in accordance with the applicable manufacturer's instructions. 23.7.15 The Aircraft fluid reservoirs (including oil, oxygen, hydraulic and water) will be serviced to full and the waste tank serviced in accordance with Manufacturer's instructions. (Fuel tanks will be at least as full as at Delivery.) 23.8 CHECKS PRIOR TO RETURN. Immediately prior to return of the Aircraft to LESSOR, LESSEE at its expense will do each of the following: 23.8.1 Have performed, and completed, by an FAA-approved repair station, all maintenance tasks specified in LESSEE's Maintenance Program and the MPD which (a) are necessary to clear the Aircraft of all such tasks for eighteen (18) months, five thousand (5,000) hours, and three thousand (3,000) cycles from the date of return of the Aircraft, and (b) are required to be performed at lesser intervals than eighteen (18) months, five thousand (5,000) hours or three thousand (3,000) cycles (all such work collectively referred to as the "RETURN CHECK"). If a maintenance task is specific to LESSEE's Maintenance Program and not required or recommended to be performed by the MPD, then LESSEE will not be required to perform such maintenance task so long as the Return Check is performed in such a manner that clears the Aircraft of all maintenance tasks in accordance with the requirements of the preceding sentence. As part of the Return Check, all non-routine tasks generated as a result of the performance of the work included in the Return Check and any other discrepancies revealed during the Return Check must also be performed in accordance with the FAA approved procedures. LESSEE will also weigh the Aircraft. LESSEE agrees to perform during the Return Check any other work reasonably required by LESSOR (and not otherwise required under this Lease) and LESSOR will, promptly upon receipt of an invoice from LESSEE, reimburse LESSEE for such work at LESSEE's preferred customer rates. 23.8.2 Have the Aircraft in compliance with Corrosion Prevention and Control Program (CPCP) as specified in the MPD and LESSEE's Maintenance Program. 23.8.3 Remove LESSEE's exterior markings, including all exterior paint, by stripping (or, at LESSOR's option, pneumatically scuff/sanding) the paint from the fuselage, empennage, wings and Engine cowlings, and clean, reseal, refinish, prepare (including application of alodine or another corrosion inhibitor) and prime the surfaces to be painted, all in accordance with Manufacturer's and paint manufacturer's recommendations. LESSEE will then repaint the fuselage, empennage, wings and Engine cowlings in the colors and logo specified by LESSOR ; PROVIDED, HOWEVER, that LESSEE will be responsible for only paying the amount that it would cost to strip or scuff/sand (whichever is performed on the Aircraft at return) and properly paint the Aircraft in LESSEE's colors and logo and LESSOR will be responsible for the excess cost to paint the Aircraft in the next lessee's colors and logo. Such painting will be accomplished in such a manner as to result in a uniformly smooth and cosmetically acceptable aerodynamic surface. All external placards, signs and markings will be properly attached, free from damage, clean and legible. 23.8.4 Clean the exterior and interior of the Aircraft. 23.8.5 If reasonably required by LESSOR, apply touch up to paint to the interior of the Aircraft, including flight deck, and replace any missing or broken placards. 23.8.6 In accordance with Article 23.7.7, permanently repair damage to the Aircraft that exceeds Manufacturer's limits and replace any non-flush structural patch repairs installed on the Aircraft with flush-type repairs, so long as the Manufacturer or the Manufacturer's Structural Repair Manual permits flush-type repairs on the portion of the Aircraft where the non-flush structural repairs were made. 23.8.7 With LESSOR or its representatives present, perform a full and complete hot and cold section videotape borescope on each Engine and its modules in accordance with the Engine manufacturer's maintenance manual. 23.8.8 If the Engine historical and technical records and/or condition trend monitoring data of any Engine (including the APU) indicate an acceleration in the rate of deterioration in the performance of an Engine, LESSEE will correct, to LESSOR's satisfaction, such conditions which are determined to be causing such accelerated rate of deterioration. 23.8.9 With LESSOR or its representatives present, accomplish a maximum power assurance run on the Engines. LESSEE will evaluate the Engine performance and record the Engine maximum power assurance test conditions and results on the Return Acceptance Receipt. 23.8.10 LESSEE will provide evidence to LESSOR's satisfaction that the Engine historical and technical records, borescope inspection, trend monitoring and other checks specified in Article 23.8.9 do not reveal any condition which would cause the Engines or any module to be unserviceable, beyond serviceable limits or serviceable with an increased frequency of inspection or with calendar time, flight hour or flight cycle restrictions under the Engine manufacturer's maintenance manual. LESSEE will correct any discrepancies in accordance with the guidelines set out by the Engine manufacturer which may be discovered during such inspection. 23.8.11 In the event the Engine historical and technical records, borescope inspection, trend monitoring and other checks specified in Article 23.8.9 result in a dispute regarding the conformity of an Engine with the requirements of this Article 23, LESSEE and LESSOR will consult with Engine manufacturer and follow Engine manufacturer's recommendations (including the accomplishment of an Engine test cell operational check) with regard to determining if such Engine complies with the requirements of this Article 23 and the manner in which any discrepancies from the requirements of this Article 23 will be rectified. 23.9 PART LIVES. At return, the condition of the Aircraft will be as follows: (CONFIDENTIAL MATERIAL OMITTED) 23.10 EXPORT AND DEREGISTRATION OF AIRCRAFT. At LESSOR's request, LESSEE at its cost will (a) provide an Export Certificate of Airworthiness or its equivalent from the State of Registration so that the Aircraft can be exported to the country designated by LESSOR, (b) assist with deregistration of the Aircraft from the register of aircraft in the State of Registration, (c) assist with arranging for prompt confirmation of such deregistration to be sent by the registry in the State of Registration to the next country of registration and (d) perform any other acts reasonably required by LESSOR in connection with the foregoing. If any Aircraft work which LESSEE is not otherwise required to perform hereunder, including engineering, is required in order to obtain such Export Certificate of Airworthiness, LESSEE will perform such work and LESSOR will reimburse LESSEE for such work at LESSEE's preferred customer rates. 23.11 LESSEE'S CONTINUING OBLIGATIONS. In the event that LESSEE does not return the Aircraft to LESSOR on the Expiration Date and in the condition required by this Article 23 for any reason (whether or not the reason is within LESSEE's control): 23.11.1 the obligations of LESSEE under this Lease will continue in full force and effect on a day-to-day basis until such return. This will not be considered a waiver of LESSEE's Event of Default or any right of LESSOR hereunder. 23.11.2 Until such return, the Agreed Value will be an amount equal to the Agreed Value on the day the Aircraft should have been returned to LESSOR pursuant to this Lease. 23.11.3 LESSEE will fully indemnify LESSOR on demand for all losses (including consequential damages), liabilities, actions, proceedings, costs and expenses thereby suffered or incurred by LESSOR and, in addition, if a delay in return of the Aircraft was due to reasons within LESSEE's reasonable control, then until such time as the Aircraft is redelivered to LESSOR and put into the condition required by this Article 23, instead of paying the Rent specified in Article 5.3, LESSEE will pay twice the amount of Rent for each day from the scheduled Expiration Date until the Termination Date (the monthly Rent payable under Article 5.3.1 will be prorated based on the actual number of days in the applicable month). Payment will be made upon presentation of LESSOR's invoice. 23.11.4 LESSOR may elect, in its sole and absolute discretion, to accept the return of the Aircraft prior to the Aircraft being put in the condition required by this Article 23 and thereafter have any such non-conformance corrected at such time as LESSOR may deem appropriate (but within ninety (90) days following the return of the Aircraft) and at commercial rates then-charged by the Person selected by LESSOR to perform such correction. Any direct expenses incurred by LESSOR for such correction will become additional Rent payable by LESSEE within fifteen (15) days following the submission of a written statement by LESSOR to LESSEE, identifying the items corrected and setting forth the expense of such corrections. LESSEE's obligation to pay such supplemental Rent will survive the Termination Date. 23.12 AIRPORT AND NAVIGATION CHARGES. LESSEE will ensure that at return of the Aircraft any and all airport, navigation and other charges which give rise or may if unpaid give rise to any lien, right of detention, right of sale or other Security Interest in relation to the Aircraft, Engine or any Part have been paid and discharged in full and will at LESSOR's request produce evidence thereof satisfactory to LESSOR. 23.13 RETURN ACCEPTANCE CERTIFICATE. Upon return of the Aircraft in accordance with the terms of this Lease, LESSEE will prepare and execute two (2) Return Acceptance Certificates in the form and substance of Exhibit I and LESSOR will countersign and return one such Return Acceptance Certificate to LESSEE. In addition, LESSEE and LESSOR will execute a Lease Termination for filing with the FAA evidencing termination of this Lease. 23.14 INDEMNITIES AND INSURANCE. The indemnities and insurance requirements set forth in Articles 16 and 17, respectively, will apply to Indemnitees and LESSOR's representatives during return of the Aircraft, including the ground inspection and acceptance flight. With respect to the acceptance flight, LESSOR's representatives will receive the same protections as LESSOR on LESSEE's Aviation and Airline General Third Party Liability Insurance. ARTICLE 24 ASSIGNMENT 24.1 NO ASSIGNMENT BY LESSEE. EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED BY THE TERMS OF THIS LEASE, NO ASSIGNMENT, NOVATION, TRANSFER, MORTGAGE OR OTHER CHARGE MAY BE MADE BY LESSEE OF ANY OF ITS RIGHTS WITH RESPECT TO THE AIRCRAFT, ENGINE OR PART OF THIS LEASE. 24.2 SALE OR ASSIGNMENT BY LESSOR. 24.2.1 Subject to LESSEE's rights pursuant to this Lease, LESSOR may at any time and without LESSEE's consent sell, assign or transfer its rights, interest and obligations hereunder or with respect to the Aircraft to a third party ("LESSOR'S ASSIGNEE"), but only if: (a) LESSOR's Assignee has full power, authority, and legal right to execute, deliver, and perform the obligations of LESSOR under the Operative Documents and provides reasonably satisfactory evidence of such power and authority to LESSEE; (b) LESSOR's Assignee enters into one or more legal, valid, binding and enforceable agreements effective to confirm that LESSOR's Assignee agrees to be bound by all the terms of, and to undertake all of the obligations arising after such transfer of LESSOR in, the Operative Documents, and in which it makes representations and warranties substantially the same as those in Article 21.1 of this Lease; (c) upon such transfer LESSEE shall not be obligated to pay any greater amount or incur any greater obligation (other than indemnifying additional indemnitees, insuring additional insureds and other minor ministerial matters) than that which it would have been obliged to pay or incur under the Operative Documents if no transfer or assignment had taken place, and upon such transfer the terms and conditions of the Operative Documents insofar as they relate to the rights and obligations of LESSEE are not altered; (d) LESSOR shall cause LESSOR's Assignee to deliver to LESSEE an opinion of counsel reasonably satisfactory to LESSEE to the effect that such agreement or agreements referred to in clause (2) and, if applicable, clause (6) are legal, binding, and enforceable in accordance with its or their terms, subject to the typical exceptions. (e) the transfer shall relate to LESSOR's entire interest as owner or lessor; (f) LESSOR's Assignee is a citizen of the United States under 49 U.S. Code ss.40102(a)(15) (such status to be determined without considering FAR ss.47.9 or any other provision that may restrict LESSEE's use or operation of the Aircraft), or shall use a voting powers trust or similar arrangement in order to hold an interest in the Aircraft such that the Aircraft can be registered in the U.S. (without considering FAR ss.47.9 or any other provision that may restrict LESSEE's use or operation of the Aircraft); (g) LESSOR's Assignee is a single Person and is either (i) a Permitted Institution, or (ii) or an affiliate of a Permitted Institution, if such affiliate's obligations under the Operative Documents are guaranteed by such Permitted Institution pursuant to a written guaranty, in form and substance reasonably satisfactory to LESSEE; and (h) LESSOR shall give written notice to LESSEE at least five (5) days before any such transfer, specifying the name and address of the proposed LESSOR's Assignee, and providing reasonably satisfactory evidence that the proposed LESSOR's Assignee meets the requirements described in Article 24.2.1(g)(i) or (ii). For a period of two (2) years after such sale or assignment and at LESSEE's cost, LESSEE will continue to name LESSOR as an additional insured under the Aviation and Airline General Third Party Liability Insurance required pursuant to Article 17 and Exhibit C. 24.2.2 The term "LESSOR" as used in this Lease means the lessor of the Aircraft at the time in question. In the event of the sale of the Aircraft and transfer of LESSOR's rights and obligations under this Lease, LESSOR's Assignee will become "LESSOR" of the Aircraft under this Lease and the transferring party (the prior "LESSOR") will be relieved of all liability to LESSEE under this Lease for obligations arising on and after the date the Aircraft is sold. LESSEE will acknowledge and accept LESSOR's Assignee as the new "LESSOR" under this Lease and will look solely to LESSOR's Assignee for the performance of all LESSOR obligations and covenants under this Lease arising on and after the Aircraft sale date. 24.3 LESSOR'S LENDER. Subject to LESSEE's rights pursuant to this Lease, LESSOR may at any time and without LESSEE's consent grant security interests over the Aircraft and assign the benefit of this Lease to a lender ("LESSOR'S LENDER") as security for LESSOR's obligations to LESSOR's Lender. Accordingly, if LESSOR's Lender requires, as a condition to providing financing, any nonsubstantive modification of this Lease, LESSEE agrees to enter into an agreement so modifying this Lease. 24.4 LESSEE COOPERATION. On request by LESSOR, LESSOR's Assignee or LESSOR's Lender, LESSEE will execute all such documents (such as a lease assignment agreement) as LESSOR, LESSOR's Assignee or LESSOR's Lender may reasonably require to confirm LESSEE's obligations under this Lease and obtain LESSEE's acknowledgment that to the best of LESSEE's knowledge, LESSOR is not in breach of this Lease. LESSEE will provide all other reasonable assistance and cooperation to LESSOR, LESSOR's Assignee and LESSOR's Lender in connection with any such sale or assignment or the perfection and maintenance of any such security interest, at LESSOR's cost, including making all necessary filings and registrations in the State of Registration and providing all opinions of counsel with respect to matters reasonably requested by LESSOR, LESSOR's Lender or LESSOR's Assignee. LESSOR will reimburse LESSEE for its reasonable out-of-pocket costs in reviewing documents required by LESSOR or LESSOR's Lender. 24.5 PROTECTIONS. 24.5.1 LESSOR will obtain for the benefit of LESSEE an acknowledgment from any LESSOR's Assignee or LESSOR's Lender that, so long as no Event of Default has occurred and is continuing hereunder, such Person will not interfere with LESSEE's quiet, peaceful use and enjoyment of the Aircraft. 24.5.2 Wherever the term "LESSOR" is used in this Lease in relation to any of the provisions relating to disclaimer, title and registration, indemnity and insurance contained in Articles 8, 13, 16 and 17, respectively, or with respect to Article 20.2.7, the term "LESSOR" will be deemed to include LESSOR's Assignee and LESSOR's Lender, if applicable. For avoidance of doubt, in the event of LESSOR's sale or financing of the Aircraft, the disclaimer and indemnity provisions contained in Articles 8 and 16 will continue to be applicable after the sale or assignment to International Lease Finance Corporation, as well as being applicable to LESSOR's Assignee and LESSOR's Lender. ARTICLE 25 DEFAULT OF LESSEE 25.1 LESSEE NOTICE TO LESSOR. LESSEE will promptly notify LESSOR if LESSEE becomes aware of the occurrence of any Default. 25.2 EVENTS OF DEFAULT. The occurrence of any of the following will constitute an Event of Default and material breach of this Lease by LESSEE: (a) LESSEE fails to take delivery of the Aircraft when obligated to do so under the terms of this Lease; (b) LESSEE fails to make a Rent or other payment due hereunder in the manner and by the date provided herein and fails to make such payment within five (5) Business Days after its receipt of notice that such payment is due; (c) LESSEE fails to obtain or maintain the insurance required by Article 17; (d) LESSEE fails to return the Aircraft to LESSOR on the Expiration Date in accordance with Article 23; (e) LESSEE fails to observe or perform any of its other obligations hereunder and fails to cure the same within thirty (30) days after written notice thereof to LESSEE; provided, that LESSEE will have up to a total of sixty (60) days to cure such failure so long as it uses diligent efforts to do so; (f) any representation or warranty of LESSEE herein proves to have been untrue in any material respect when made; provided, that, if the effect of such falsity is curable, LESSEE shall have thirty (30) days after LESSEE has knowledge that the representation or warranty is untrue; (g) the registration of the Aircraft is cancelled other than as a result of an act or omission of LESSOR; (h) LESSEE abandons the Aircraft or Engines; (i) LESSEE or an approved sublessee no longer has unencumbered control (other than Permitted Liens) or possession of the Aircraft or Engines, except as otherwise permitted by this Lease; (j) LESSEE temporarily or permanently discontinues business or (except as permitted by Article 20.2.4) sells or otherwise disposes of all or substantially all of its assets; (k) a material adverse change occurs in the financial condition of LESSEE; (l) LESSEE no longer possesses the licenses, certificates and permits required for the conduct of its business as a certificated air carrier in the U.S.; (m) LESSEE (i) suspends payment on its debts or other obligations generally, (ii) is unable to or admits its inability to pay its debts or other obligations generally as they fall due, (iii) is adjudicated or becomes bankrupt or insolvent or (iv) enters into any composition or other arrangement for the benefit of its creditors generally; (n) any proceedings, resolutions, filings or other steps are instituted with respect to LESSEE relating to the bankruptcy, liquidation, reorganization or protection from creditors of LESSEE or at least half of LESSEE's property. If instituted by LESSEE, the same will be an immediate Event of Default. If instituted by another Person, the same will be an Event of Default if not dismissed, remedied or relinquished within sixty (60) days; (o) any order, judgment or decree is entered by any court of competent jurisdiction appointing a receiver, trustee or liquidator of LESSEE or at least half of its property, or if at least half of LESSEE's property is to be sequestered. If instituted by or done with the consent of LESSEE, the same will be an immediate Event of Default. If instituted by another Person, the same will be an Event of Default if not dismissed, stayed, remedied or relinquished within sixty (60) days; PROVIDED, HOWEVER, that if such proceeding is stayed, then such proceeding will become an immediate Event of Default if such stay is removed or terminates and the proceeding is not dismissed, remedied or relinquished when such stay is removed or terminates. (p) any indebtedness for borrowed moneys or a guarantee or similar obligation owed by LESSEE with an unpaid balance of CONFIDENTIAL MATERIAL OMITTED is declared due before its stated maturity or LESSEE is in default of payment obligations CONFIDENTIAL MATERIAL OMITTED under any other purchase agreement, lease, conditional sale agreement or other agreement pursuant to which LESSEE has possession of any aircraft; (q) Eurocontrol has notified LESSOR that there are unpaid Eurocontrol charges due from LESSEE (unless such charges are being contested in good faith and by appropriate proceedings, an adequate bond has been provided and such proceedings do not involve any danger of the detention, interference with the use or operation, sale, forfeiture or loss of the Aircraft) and such charges remain outstanding for a period of thirty (30) days from the date of Eurocontrol's notice to LESSOR provided that such thirty (30) day grace period will not apply if there is a danger of detention, interference with the use or operation, sale, forfeiture or loss of the Aircraft; or (r) LESSEE is in default under any other lease or agreement between LESSEE and LESSOR and the same is not cured within its specified cure period. 25.3 LESSOR'S GENERAL RIGHTS. Upon the occurrence of any Event of Default, LESSOR may do all or any of the following at its option (in addition to such other rights and remedies which LESSOR may have by statute or otherwise but subject to any requirements of applicable Law): (a) terminate this Lease by giving written notice to LESSEE; (b) require that LESSEE immediately move the Aircraft to an airport or other location designated by LESSOR; (c) for LESSEE's account, do anything that may reasonably be required to cure any default and recover from LESSEE all reasonable costs, including legal fees and expenses incurred in doing so and Default Interest; (d) proceed as appropriate to enforce performance of this Lease and to recover any damages for the breach hereof, including the amounts specified in Article 25.5; (e) terminate this Lease by taking possession of the Aircraft or by serving notice requiring LESSEE to return the Aircraft to LESSOR at the location specified by LESSOR. If LESSOR takes possession of the Aircraft, it may enter upon LESSEE's premises where the Aircraft is located without liability. Upon repossession of the Aircraft, LESSOR will then be entitled to sell, lease or otherwise deal with the Aircraft as if this Lease had never been made. LESSOR will be entitled to the full benefit of its bargain with LESSEE; or (f) apply all or any portion of the Security Deposit and any other security deposits held by LESSOR pursuant to any other agreements between LESSOR and LESSEE to any amounts due. 25.4 DEREGISTRATION AND EXPORT OF AIRCRAFT. If an Event of Default has occurred and is continuing, LESSOR may take all steps necessary to deregister the Aircraft in and export the Aircraft from the State of Registration. 25.5 LESSEE LIABILITY FOR DAMAGES. If an Event of Default occurs, in addition to all other remedies available at law or in equity, LESSOR has the right to recover from LESSEE and LESSEE will pay LESSOR within two (2) Business Days after LESSOR's written demand, all of the following: (a) all amounts which are then due and unpaid hereunder and which become due prior to the earlier of LESSOR's recovery of possession of the Aircraft or LESSEE making an effective tender thereof; (b) any losses suffered by LESSOR because of LESSOR's inability to place the Aircraft on lease with another lessee or to otherwise utilize the Aircraft on financial terms as favorable to LESSOR as the terms hereof or, if LESSOR elects to dispose of the Aircraft, the funds arising from a sale or other disposition of the Aircraft are not as profitable to LESSOR as leasing the Aircraft in accordance with the terms hereof would have been (and LESSOR will be entitled to accelerate any and all Rent which would have been due from the date of LESSOR's recovery or repossession of the Aircraft through the Expiration Date); (c) all costs associated with LESSOR's exercise of its remedies hereunder, including but not limited to repossession costs, legal fees, Aircraft storage costs, Aircraft re-lease or sale costs and LESSOR's internal costs and expenses (including the cost of personnel time calculated based upon the compensation paid to the individuals involved on an annual basis and a general LESSOR overhead allocation); (d) any amount of principal, interest, fees or other sums paid or payable on account of funds borrowed in order to carry any unpaid amount; (e) any loss, premium, penalty or expense which may be incurred in repaying funds raised to finance the Aircraft or in unwinding any financial instrument relating in whole or in part to LESSOR's financing of the Aircraft; (f) any loss, cost, expense or liability sustained by LESSOR due to LESSEE's failure to redeliver the Aircraft in the condition required by this Lease; and (g) any other loss, damage, expense, cost or liability which LESSOR suffers or incurs as a result of the Event of Default and/or termination of this Lease, including an amount sufficient to fully compensate LESSOR for any loss of or damage to LESSOR's residual interest in the Aircraft caused by LESSEE's default. 25.6 WAIVER OF DEFAULT. By written notice to LESSEE, LESSOR may at its election waive any Default or Event of Default and its consequences and rescind and annul any prior notice of termination of this Lease. The respective rights of the parties will then be as they would have been had no Default or Event of Default occurred and no such notice been given. 25.7 PRESENT VALUE OF PAYMENTS. In calculating LESSOR's damages hereunder, upon an Event of Default all Rent and other amounts which would have been due hereunder during the Lease Term if an Event of Default had not occurred will be calculated on a present value basis using a discounting rate of six percent (6%) per annum discounted to the earlier of the date on which LESSOR obtains possession of the Aircraft or LESSEE makes an effective tender thereof. 25.8 USE OF "TERMINATION DATE". For avoidance of doubt, it is agreed that if this Lease terminates and the Aircraft is repossessed by LESSOR due to an Event of Default, then, notwithstanding the use of the term "Termination Date" in this Lease, the period of the Lease Term and the "Expiration Date" will be utilized in calculating the damages to which LESSOR is entitled pursuant to Article 25.5. For example, it is agreed and understood that LESSOR is entitled to receive from LESSEE the Rent and the benefit of LESSEE's insurance and maintenance of the Aircraft until expiration of the Lease Term. ARTICLE 26 NOTICES 26.1 MANNER OF SENDING NOTICES. Any notice, request or information required or permissible under this Lease will be in writing and in English. Notices will be delivered in person or sent by fax, letter (mailed airmail, certified and return receipt requested), or by expedited delivery addressed to the parties as set forth in Article 26.2. In the case of a fax, notice will be deemed received upon actual receipt (and the date of actual receipt will be deemed to be the date set forth on the confirmation of receipt produced by the sender's fax machine immediately after the fax is sent). In the case of a notice sent by expedited delivery, notice will be deemed received on the date of delivery set forth in the records of the Person which accomplished the delivery. If any notice is sent by more than one of the above listed methods, notice will be deemed received on the earliest possible date in accordance with the above provisions. 26.2 NOTICE INFORMATION. Notices will be sent: If to LESSOR: INTERNATIONAL LEASE FINANCE CORPORATION 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067, U.S.A. Attention: Legal Department Fax: 310-788-1990 Telephone: 310-788-1999 If to LESSEE: AMERICAN TRANS AIR, INC. 7337 West Washington Street Indianapolis International Airport Indianapolis, Indiana 46231 United States of America Attention: Ken Wolff Executive Vice President and Chief Financial Officer Fax: 317-240-7091 Telephone: 317-247-4000 or to such other places and numbers as either party directs in writing to the other party. ARTICLE 27 GOVERNING LAW AND JURISDICTION 27.1 CALIFORNIA LAW. This Lease is being delivered in the State of California and will in all respects be governed by and construed in accordance with the Laws of the State of California (notwithstanding the conflict Laws of the State of California). 27.2 NON-EXCLUSIVE JURISDICTION IN CALIFORNIA. As permitted by Section 410.40 of the California Code of Civil Procedure, the parties hereby irrevocably submit to the non-exclusive jurisdiction of the Federal District Court for the Central District of California and the State of California Superior or Municipal Court in Los Angeles, California. Nothing herein will prevent either party from bringing suit in any other appropriate jurisdiction. 27.3 SERVICE OF PROCESS. The parties hereby consent to the service of process (a) out of any of the courts referred to above, (b) in accordance with Section 415.40 of the California Code of Civil Procedure by mailing copies of the summons and complaint to the person to be served by certified or registered mail to the address set forth in Article 26.2, postage prepaid, return receipt requested or (c) in accordance with the Hague Convention, if applicable. 27.4 PREVAILING PARTY IN DISPUTE. If any legal action or other proceeding is brought in connection with or arises out of any provisions in this Lease, the prevailing party will be entitled to recover reasonable attorneys' fees and other costs incurred in such action or proceedings. The prevailing party will also, to the extent permissible by Law, be entitled to receive pre- and post-judgment Default Interest. 27.5 WAIVER. LESSEE AND LESSOR HEREBY WAIVE THE RIGHT TO A TRIAL BY JURY. LESSEE AND LESSOR HEREBY IRREVOCABLY WAIVE ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATED TO THIS LEASE BROUGHT IN ANY OF THE COURTS REFERRED TO IN ARTICLE 27.2, AND HEREBY FURTHER IRREVOCABLY WAIVE ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. ARTICLE 28 MISCELLANEOUS 28.1 PRESS RELEASES. The parties will give copies to one another, in advance if possible, of all news, articles and other releases provided to the public media regarding this Lease. 28.2 LESSOR PERFORMANCE FOR LESSEE. The exercise by LESSOR of its remedy of performing a LESSEE obligation hereunder is not a waiver of and will not relieve LESSEE from the performance of such obligation at any subsequent time or from the performance of any of its other obligations hereunder. 28.3 LESSOR'S PAYMENT OBLIGATIONS. Any obligation of LESSOR under this Lease to pay or release any amount to LESSEE is conditioned upon (a) all amounts then due and payable by LESSEE to LESSOR under this Lease or under any other agreement between LESSOR and LESSEE having been paid in full and (b) no Default or Event of Default having occurred and continuing hereunder at the time such payment or release of payment is payable to LESSEE. 28.4 APPLICATION OF PAYMENTS. Any amounts paid or recovered in respect of LESSEE liabilities hereunder may be applied to Rent, Default Interest, fees or any other amount due hereunder in such proportions, order and manner as LESSOR determines. 28.5 USURY LAWS. The parties intend to contract in strict compliance with the usury Laws of the State of California and, to the extent applicable, the U.S. Notwithstanding anything to the contrary in the Operative Documents, LESSEE will not be obligated to pay Default Interest or other interest in excess of the maximum non-usurious interest rate, as in effect from time to time, which may by applicable Law be charged, contracted for, reserved, received or collected by LESSOR in connection with the Operative Documents. During any period of time in which the then-applicable highest lawful rate is lower than the Default Interest rate, Default Interest will accrue and be payable at such highest lawful rate; however, if at later times such highest lawful rate is greater than the Default Interest rate, then LESSEE will pay Default Interest at the highest lawful rate until the Default Interest which is paid by LESSEE equals the amount of interest that would have been payable in accordance with the interest rate set forth in Article 5.5. 28.6 DELEGATION BY LESSOR. LESSOR may delegate to any Person(s) all or any of the rights, powers or discretion vested in it by this Lease and any such delegation may be made upon such terms and conditions as LESSOR in its absolute discretion thinks fit. 28.7 CONFIDENTIALITY. The Operative Documents and all non-public information obtained by either party about the other are confidential and are between LESSOR and LESSEE only and will not be disclosed by a party to third parties (other than to such party's auditors or legal advisors or as required in connection with any filings of this Lease in accordance with Article 13) without the prior written consent of the other party. If disclosure is required as a result of applicable Law, LESSEE and LESSOR will cooperate with one another to obtain confidential treatment as to the commercial terms and other material provisions of this Lease. 28.8 RIGHTS OF PARTIES. The rights of the parties hereunder are cumulative, not exclusive, may be exercised as often as each party considers appropriate and are in addition to its rights under general Law. The rights of one party against the other party are not capable of being waived or amended except by an express waiver or amendment in writing. Any failure to exercise or any delay in exercising any of such rights will not operate as a waiver or amendment of that or any other such right any defective or partial exercise of any such rights will not preclude any other or further exercise of that or any other such right and no act or course of conduct or negotiation on a party's part or on its behalf will in any way preclude such party from exercising any such right or constitute a suspension or any amendment of any such right. 28.9 FURTHER ASSURANCES. Each party agrees from time to time to do and perform such other and further acts and execute and deliver any and all such other instruments as may be required by Law, reasonably requested by the auditors of the other party or requested by the other party to establish, maintain or protect the rights and remedies of the requesting party or to carry out and effect the intent and purpose of this Lease. 28.10 USE OF WORD "INCLUDING". The term "INCLUDING" is used herein without limitation. 28.11 HEADINGS. All article and paragraph headings and captions are purely for convenience and will not affect the interpretation of this Lease. Any reference to a specific article, paragraph or section will be interpreted as a reference to such article, paragraph or section of this Lease. 28.12 INVALIDITY OF ANY PROVISION. If any of the provisions of this Lease become invalid, illegal or unenforceable in any respect under any Law, the validity, legality and enforceability of the remaining provisions will not in any way be affected or impaired. 28.13 NEGOTIATION. The terms of this Lease are agreed by LESSOR from its principal place of business in Los Angeles, California. 28.14 TIME IS OF THE ESSENCE. Time is of the essence in the performance of all obligations of the parties under this Lease and, consequently, all time limitations set forth in the provisions of this Lease will be strictly observed. 28.15 AMENDMENTS IN WRITING. The provisions of this Lease may only be amended or modified by a writing executed by LESSOR and LESSEE. 28.16 COUNTERPARTS. This Lease may be executed in any number of identical counterparts, each of which will be deemed to be an original, and all of which together will be deemed to be one and the same instrument when each party has signed and delivered one such counterpart to the other party. 28.17 DELIVERY OF DOCUMENTS BY FAX. Delivery of an executed counterpart of this Lease or of any other documents in connection with this Lease by fax will be deemed as effective as delivery of an originally executed counterpart. Any party delivering an executed counterpart of this Lease or other document by fax will also deliver an originally executed counterpart, but the failure of any party to deliver an originally executed counterpart of this Lease or such other document will not affect the validity or effectiveness of this Lease or such other document. 28.18 ENTIRE AGREEMENT. The Operative Documents constitute the entire agreement between the parties in relation to the leasing of the Aircraft by LESSOR to LESSEE and supersede all previous proposals, agreements and other written and oral communications in relation hereto. The parties acknowledge that there have been no representations, warranties, promises, guarantees or agreements, express or implied, except as set forth herein and in the other Operative Documents. IN WITNESS WHEREOF, LESSEE and LESSOR have caused this Lease to be executed by their respective officers as of September 5, 2000. INTERNATIONAL LEASE FINANCE AMERICAN TRANS AIR, INC. CORPORATION By: /s/ Grant Levy By: /s/ Kenneth K. Wolff Its: Vice President Its: Executive Vice President & CFO EXHIBIT A AIRCRAFT DESCRIPTION Aircraft Manufacturer and Model: Boeing 737-800 Specification: Seating Configuration: Manufacturer's Serial Number: 28239 Registration Mark: ____ Engine Manufacturer and Model: CFM56-7B-27 Engine Serial Numbers: _______ and ________ Engine Thrust Rating: 27,300 pounds Maximum Gross Takeoff Weight: 160,000 pounds EXHIBIT B AGENCY AGREEMENT (Limited Authority) Relating to Boeing 737-800 Aircraft THIS AGENCY AGREEMENT ("AGREEMENT") is made and entered into as of ____________________. BETWEEN: AMERICAN TRANS AIR, INC., a Indiana corporation whose address and principal place of business is at 7337 West Washington Street, Indianapolis International Airport, Indianapolis, Indiana 46231, United States of America ("AGENT") and INTERNATIONAL LEASE FINANCE CORPORATION, a California corporation, whose address and principal place of business is at 1999 Avenue of the Stars, 39th Floor, Los Angeles, California 90067, U.S.A. ("BUYER"). RECITAL The Boeing Company ("MANUFACTURER") and Buyer have entered into Purchase Agreement 1830, dated as of June 27, 1995 (such purchase agreement as may be amended in accordance with the provisions thereof is hereinafter referred to as the "PURCHASE AGREEMENT") under which Manufacturer has agreed to manufacture and sell and Buyer has agreed to purchase certain Boeing 737-800 aircraft. Buyer has agreed to lease one (1) of such aircraft bearing manufacturer's serial number 28239 (the "AIRCRAFT") to the Agent pursuant to an Aircraft Lease Agreement between Buyer and Agent dated as of September 5, 2000 (the "LEASE"). The Agent is engaged in business as a commercial air carrier and intends to lease the Aircraft from Buyer, and Buyer is desirous of utilizing the expertise of the Agent as Buyer's agent in all matters to which the Purchase Agreement relates with respect to the Aircraft except certain items as indicated below, and the Agent, as Buyer's agent, is willing to make such expertise available to Buyer. Accordingly, the parties agree as follows: 1. Buyer hereby appoints the Agent as Buyer's sole and exclusive agent with authority to perform the following, on behalf of Buyer, as the Agent may in its discretion determine to be necessary or desirable: (a) monitor Manufacturer's production, testing and delivery of the Aircraft in accordance with the Purchase Agreement and (b) do all such other things permitted by the Purchase Agreement related to the technical and engineering aspects of Manufacturer's production of the Aircraft, except Buyer limits Agent's authority to perform on behalf of Buyer on any defect that occurs during manufacture that is considered significant in nature by Buyer as measured by the criteria set forth below. Buyer retains the sole authority to perform on any defect meeting such criteria. (i) Deviations from the drawing configuration that could affect future modifications, maintenance, repair or overhaul of the Aircraft; (ii) Defects that are obvious appearance items; (iii) Rework that requires stress concurrence to satisfy Manufacturer's Material Review Board (MRB) requirements; (iv) A high quantity of defects normally considered minor on a singular basis; (v) Major rework requiring extensive repair or modification, E.G. replacement of ---- skin panels, extensive use of oversize fasteners, repair of damaged areas and significant structural modifications; (vi) Rework that affects the aerodynamic drag coefficient of the Aircraft; or (vii) Rework that involves areas known to be sensitive to Buyer. 2. Notwithstanding anything in the provisions of paragraph 1, nothing in this Agreement will confer authority upon or otherwise permit the Agent: (a) to exercise any power of termination under the Purchase Agreement or (b) to make any payments due from Buyer to Manufacturer or to receive on behalf of Buyer any payments due from Manufacturer under the Purchase Agreement, or to alter any of the terms and conditions of the Purchase Agreement or the Detail Specifications of the Aircraft. 3. Buyer will not revoke the appointment of and authority granted under this Agreement to the Agent unless a termination of the Purchase Agreement or Lease has occurred with respect to the Aircraft or the Agent has failed to perform a material obligation under this Agreement. Notice of any such revocation will be provided in accordance with the provisions of Article 14 of the Purchase Agreement and given to both Manufacturer and the Agent. 4. Manufacturer acknowledges the appointment of the Agent for the purpose set forth hereunder and Manufacturer and Buyer agree that due performance by Manufacturer or Agent of an obligation under the Purchase Agreement will constitute due satisfaction of such obligation by such party and Buyer agrees to be bound by the acts of the Agent. 5. Buyer and Agent agree to identify the technical organization and/or person(s) with the limited authority to act for Agent during production of the Aircraft. Buyer will, if possible, provide such identification to Manufacturer in writing, along with office space requirements for Agent, if required, prior to or at the time of Manufacturer's acknowledgment of this Agreement. 6. Nothing in this Agreement will subject Manufacturer to any liability under the Purchase Agreement which it would not otherwise be subject to, or modify Manufacturer's rights thereunder, or require Manufacturer to divest itself of title to or possession of Aircraft or any other property which is subject to the Purchase Agreement until payment therefor and delivery thereof in accordance with the Purchase Agreement. 7. None of the parties hereto will be entitled to assign to any third party any of their rights under this Agreement. 8. The Agent will not delegate to any third party the performance of the obligations imposed on it by this Agreement or appoint a sub-agent. 9. References to Manufacturer in this Agreement will include any wholly-owned subsidiary of Manufacturer to which Manufacturer assigns any of its rights and obligations under the Purchase Agreement pursuant to the terms and conditions thereof. 10. This Agreement will be governed by the laws of the State of California; however, the Purchase Agreement shall remain governed by the laws of the State of Washington. This Agreement has been executed by the parties hereto as of the day and year first above written. INTERNATIONAL LEASE FINANCE CORPORATION AMERICAN TRANS AIR, INC. By: By: Its: Its: The Boeing Company acknowledges the appointment of AMERICAN TRANS AIR, INC. as agent of International Lease Finance Corporation in connection with the above referenced Aircraft as set forth in this Agreement. THE BOEING COMPANY By: Its: EXHIBIT C CERTIFICATE OF INSURANCE [Refer to Aircraft Lease Agreement dated as of September 5, 2000 between LESSEE and LESSOR (the "Lease"). If applicable, insurance certificates from both the insurers and reinsurers will be provided. If there is a LESSOR's Lender, include references to it where appropriate after references to LESSOR.] To: INTERNATIONAL LEASE FINANCE CORPORATION ("LESSOR") ------ 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States Re: AMERICAN TRANS AIR, INC. ("LESSEE") Boeing 737-800 Manufacturer's Serial No.: 28239 Registration Mark: ____ (the "AIRCRAFT") The following security has subscribed to the insurance and/or reinsurance policies: [LIST COMPANIES & PERCENTAGES] THIS IS TO CERTIFY THAT, as Insurance Brokers, we have effected Fleet Insurance in respect of aircraft owned or operated by LESSEE (including the Aircraft), and that insurance in respect of the Aircraft is as specified below. AIRCRAFT HULL ALL RISKS COVERING: All risks of physical loss or damage to the Aircraft from any cause (subject only to the exclusions as specified below), for an Agreed Value of Aircraft in the amount of [list amount calculated in accordance with Article 18.1] DEDUCTIBLES: (CONFIDENTIAL MATERIAL OMITTED) each and every loss (or such lesser amount as generally applicable to the rest of LESSEE's 737-800 fleet). Not applicable to Total Loss/Constructive Total Loss or Arranged Total Loss GEOGRAPHICAL COVERAGE: Worldwide [subject to customary exclusions] AVIATION AND AIRLINE GENERAL THIRD PARTY LIABILITY COVERING: Aircraft Third Party, Passenger, Baggage, Cargo and Mail Liability and Airline General Third Party Liability (including Premises, Hangarkeepers and Products Liability) for combined single limit of not less than (CONFIDENTIAL MATERIAL OMITTED) (or such higher amount as LESSEE may carry generally on other 737-800 aircraft in its fleet) any one accident/occurrence (but in the aggregate in relation to Products Liability), extended to cover LESSEE's liability under the Lease to the extent of the risks covered by the policy including war and allied perils under Extended Coverage Endorsement as per AVN 52 subject only to exclusions as specified below GEOGRAPHICAL LIMITS: Worldwide [subject to customary exclusions] HULL WAR AND ALLIED PERILS COVERING: Hull War Risks as per LSW555.B, but including (a) confiscation or requisition (including by State of Registration and state where airline is domiciled), (b) hijacking or other unlawful seizure or wrongful exercise of control of the Aircraft or crew in flight (including any attempt at such seizure or control) and including "All Risks" Continuation Clause and Extortion Risks (including expenses) and covering claims excluded from Hull All Risks Policy while Aircraft outside Assured's control by reason of perils insured under this policy, for an Agreed Value of Aircraft in the amount of [list amount calculated in accordance with Article 18.1] DEDUCTIBLE: No deductible GEOGRAPHICAL LIMITS: Worldwide AIRCRAFT SPARES ALL RISKS INSURANCE COVERING: All risks of physical loss or damage to Aircraft Parts or spares or Engines at all times when removed from the Aircraft from whatever cause, subject only to the exclusions specified below, including the risks set down in AVN 48B other than paragraphs (a) and (b) thereof (but including paragraph (a) in respect of transit risks) for limits of not less than: CONFIDENTIAL MATERIAL OMITTED and covering: With respect to an Engine, an agreed value (CONFIDENTIAL MATERIAL OMITTED) or, with LESSOR's written concurrence, replacement cost With respect to Parts, replacement cost DEDUCTIBLE: (CONFIDENTIAL MATERIAL OMITTED) GEOGRAPHICAL COVERAGE: Worldwide INSURANCE REQUIRED BY MANUFACTURER LESSEE will carry the insurance required by Manufacturer in connection with LESSOR's assignment of Manufacturer's warranties and product support to LESSEE CONTRACTUAL INDEMNITY To the extent of the risks covered by the policies, LESSEE has insurance coverage for the indemnities agreed to by LESSEE pursuant to Article 16 of the Lease, subject to AVN67B or equivalent PERIOD OF COVERAGE (ALL POLICIES) From the Delivery Date of Aircraft to [END OF POLICY PERIOD] It is further certified that LESSOR has an interest in respect of the Aircraft under the Lease. Accordingly, with respect to losses occurring during the period from the Effective Date until the expiry of the Insurance or until the expiry or agreed termination of the Lease or until the obligations under the Lease are terminated by any action of the Insured or LESSOR and in consideration of the Additional Premium it is confirmed that the Insurance afforded by the Policy is in full force and effect and it is further agreed that the following provisions are specifically endorsed to the Policy. 1. UNDER THE HULL (ALL RISKS AND HULL WAR AND ALLIED RISKS) AND AIRCRAFT SPARES INSURANCES (a) In respect of any claim on the Aircraft that becomes payable on the basis of a Total Loss, payment of any settlement will be made to, or to the order of LESSOR as sole loss payee, up to the Agreed Value. With respect to repairable damage to an Aircraft or Engine, LESSOR will receive all insurance proceeds in excess of CONFIDENTIAL MATERIAL OMITTED provided that upon receipt by the insurance broker of written notice of a material default on the part of LESSEE (and until notice that it has been cured), all insurance proceeds which otherwise would be payable to LESSEE will be made directly to LESSOR. In respect of any other claim, payment of any settlement (net of any relevant policy deductible) will be made with such party(ies) as may be necessary to repair the Aircraft unless otherwise agreed after consultation between the Insurers and the Insured and, where necessary under the terms of the Lease, LESSOR. Such payments will only be made provided they are in compliance with all applicable laws and regulations. (b) Insurers agree on a 50/50 settlement in terms of AVS 103. (c) Insurers have no right to replace the Aircraft on a Total Loss (arranged, constructive or otherwise). (d) Insurers confirm that under the insurance policies, if the Insured installs an engine owned by a third party on the Aircraft, either (i) the hull insurance will automatically increase to such higher amount as is necessary in order to satisfy both LESSOR's requirement to receive the Agreed Value in the event of a Total Loss, Constructive Total Loss or Arranged Total Loss and the amount required by the third party engine owner, or (ii) separate additional insurance on such engine will attach in order to satisfy separately the requirements of the Insured to such third party engine owner. 2. UNDER THE LEGAL LIABILITY INSURANCE (a) Subject to the provisions of this Endorsement, the Insurance will operate in all respects as if a separate Policy had been issued covering each party insured hereunder, but this provision will not operate to include any claim arising howsoever in respect of loss or damage to the Aircraft insured under the Hull or Spares Insurance of the Insured. Notwithstanding the foregoing the total liability of Insurers in respect of any and all Insureds will not exceed the limits of liability stated in the Policy. (b) The Insurance provided hereunder will be primary and without right of contribution from any other insurance which may be available to LESSOR. 3. UNDER ALL INSURANCES (a) LESSOR, its successors and assigns, and (with respect to Aviation and Airline General Third Party Liability only) its directors, officers and employees for their respective rights and interests, are included as Additional Insureds. (b) The cover afforded to LESSOR by the Policy in accordance with this Endorsement will 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 Policy. (c) LESSOR will have no responsibility for premium and insurers will waive any right of set-off or counterclaim against LESSOR except in respect of outstanding premium in respect of the Aircraft, provided that Insurer may only set-off for premiums against the proceeds of the hull insurance for outstanding premiums in connection with hull all risks and hull war and allied perils insurance. (d) Upon payment of any loss or claim to or on behalf of LESSOR, Insurers will to the extent and in respect of such payment be thereupon subrogated to all legal and equitable rights of LESSOR indemnified hereby (but not against LESSOR). Insurers will not exercise such rights without the consent of those indemnified, such consent not to be unreasonably withheld. At the expense of Insurers LESSOR will do all things reasonably necessary to assist the Insurers to exercise said rights. (e) Except in respect of any provision for Cancellation or Automatic Termination specified in the Policy or any endorsement thereof, cover provided by this Endorsement may only be cancelled or materially altered in a manner adverse to LESSOR by the giving of not less than thirty (30) days notice in writing to LESSOR. Notice will be deemed to commence from the date such notice is given by the Insurers. Such notice will NOT, however, be given at normal expiry date of the Policy or any endorsement. 4. EXCEPT AS SPECIFICALLY VARIED OR PROVIDED BY THE TERMS OF THIS CERTIFICATE (a) LESSOR IS COVERED BY THE POLICY SUBJECT TO ALL TERMS, CONDITIONS, LIMITATIONS,WARRANTIES, EXCLUSIONS AND CANCELLATION PROVISIONS THEREOF. (b) THE POLICY WILL NOT BE VARIED BY ANY PROVISIONS CONTAINED IN THE LEASE WHICH PURPORT TO SERVE AS AN ENDORSEMENT OR AMENDMENT TO THE POLICY. SUBJECT (save as specifically stated in this Certificate) to policy terms, conditions, limitations and exclusions. Yours faithfully, [BROKERS] EXHIBIT D BROKERS' LETTER OF UNDERTAKING To: INTERNATIONAL LEASE FINANCE CORPORATION 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States Date: Our Ref: Re: AMERICAN TRANS AIR, INC. ("LESSEE") ------ Boeing 737-800 Manufacturer's Serial No.: ____ Registration Mark: ____ (the "AIRCRAFT") Dear Sirs: We confirm that insurance has been effected for the account of [LESSEE] (the "OPERATOR") covering all aircraft owned or operated by them, including the above-referenced aircraft (the "Aircraft"). [Also confirm, if applicable, the amount of any hull all risks or hull war and allied perils on the Aircraft which LESSEE is carrying in excess of the Agreed Value (which excess insurance would be payable to LESSEE). Such excess insurance may not exceed ten percent (10%) of the Agreed Value.] Pursuant to instructions received from the Operator and in consideration of your approving the arrangement of the Operator's "Fleet Policy" (under which the above-referenced Aircraft is insured) through the intermediary of ourselves as Brokers in connection with the insurance (the "INSURANCE") mentioned in our Certificate of Insurance (Reference No. [ ] dated [ ] and attached hereto), we undertake as follows: 1. In relation to the Hull and War Risks Insurance to hold to your order the insurance Slips or Contracts and any Policies which may be issued or any policies substituted (with your consent) therefor (but only insofar as the same relate to the Aircraft only) and the benefit of the Hull and War Risks Insurance thereunder, but subject to our requirements to operate the Fleet Policy insofar as it relates to any other aircraft insured thereunder. 2. To advise you of any of the following: (a) If any insurer cancels or gives notice of cancellation of any of the Insurance at least thirty (30) days (or such lesser period as may be available in the case of War and Allied Perils) before such cancellation is to take effect in respect of the Aircraft. (b) Of any act or omission or of any event (including non-payment of premium) of which we have knowledge or are notified and which might invalidate or render unenforceable in whole or in part any of the Insurance, insofar as the same relate to the Aircraft. (c) If we do not receive instructions to renew all or any of the Insurance at least thirty (30) days prior to their expiration. (d) If any of the Insurance are not renewed on the same terms (save as to premium and period of cover and as you might otherwise have notified us to be acceptable to you) seven (7) days prior to expiry thereof. The above undertakings are given subject to our continuing appointment for the time being as Insurance Brokers to the Operator. We also undertake to advise you if we cease to be Insurance Brokers to the Operator. Yours faithfully, EXHIBIT E ESTOPPEL AND ACCEPTANCE CERTIFICATE AMERICAN TRANS AIR, INC. ("LESSEE"), a corporation organized under the laws of Indiana does hereby represent, acknowledge, warrant and agree as follows: 1. LESSEE and INTERNATIONAL LEASE FINANCE CORPORATION, as LESSOR, have entered into an Aircraft Lease Agreement dated as of September 5, 2000 (hereinafter referred to as the "LEASE"). Words used herein with capital letters and not otherwise defined will have the meanings set forth in the Lease. 2. LESSEE has this ____ day of __________, ____ (Time: __________) at ____________________ received from LESSOR possession of: (a) One (1) Boeing 737-800 aircraft bearing Manufacturer's serial number ____ and U.S. registration mark ____, together with two (2) CFM56-7B-27 engines bearing manufacturer's serial numbers _______ and ________ (each of which has 750 or more rated take-off horsepower), all in airworthy condition. (b) All Aircraft Documentation, including the usual and customary manuals, logbooks, flight records and historical information regarding the Aircraft, Engines and Parts. 3. All of the foregoing has been delivered and accepted on the date set forth above to LESSEE's full satisfaction and pursuant to the terms and provisions of the Lease. 4. The Agreed Value of the Aircraft is US$_______________. 5. The amount of fuel on board at Delivery is __________ (circle one) pounds/kilos (________ gallons). 6. The Aircraft, Engines, Parts and Aircraft Documentation as described in the Lease have been fully examined by LESSEE and have been received in a condition fully satisfactory to LESSEE and in full conformity with the Lease in every respect. 7. The Lease is in full force and effect, LESSEE has no claims, offsets, deductions or set-off of any kind or nature in connection with the Lease, except for any claims against LESSOR set forth on the attached List of Discrepancies. 8. LESSOR's Lender may rely upon all of the foregoing in granting substantial financial accommodations to LESSOR and LESSEE understands and agrees that any funds being advanced by LESSOR's Lender will be made in reliance upon the foregoing. 9. LESSEE has obtained all required permits, authorizations, licenses and fees of the State of Registration or any Government Entity thereof necessary in order for LESSEE to operate the Aircraft as permitted by the terms of the Lease. Dated on the date set forth above AMERICAN TRANS AIR, INC. By: Title: ATTACHMENTS: 1. List of Aircraft Documentation 2. List of Loose Equipment 3. List of Discrepancies ATTACHMENT 1 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE LIST OF AIRCRAFT DOCUMENTATION MANUALS 1. FAA Approved Flight Manual 2. Airplane Flight Operation Manual 3. Aircraft Recover Manual 4. Quick Reference Handbook (QRH) 5. Weight and Balance Manual 6. Aircraft Fueling Manual 7. Aircraft Maintenance Manual (MM) 8. Aircraft Maintenance Manual Supplement 9. Ramp Maintenance Manual (RMM) 10. Cargo Loading Manual 11. Fault Reporting Manual (FRM) 12. Fault Isolation Manual (FIM) 13. Illustrated Parts Catalog (IPC) 14. Life Limited Parts Manual 15. Structural Repair Manual (SRM) 16. Master Minimum Equipment List 17. Wiring Diagram Manual (WD) 18. Wiring Practices Manual 19. System Schematics Manual 20. B.I.T.E. Manual 21. Non-Destructive Test Manual 22. Corrosion Prevention Manual 23. Component Maintenance Manual 24. APU Log Book 25. Engine Maintenance Manual 26. Engine Log Book 27. Engine Illustrated Parts Catalog 28. Engine Data Submittal Book 29. Engine Overhaul Manual 30. Power Plant Build-up Manual AIRCRAFT RECORDS AND HISTORICAL DOCUMENTS 1. Copies of original Certificates delivered by Boeing: a. Airworthiness Certificate for Export b. Radio installation conformity certificate c. Noise limitation certificate 2. Copies of original Documents delivered by Boeing: a. Airworthiness Directive Compliance list b. Aircraft inspection report c. Aircraft Readiness Log d. Weighing report 3. Copies of current Certificates: a. Airworthiness Certificate b. Noise limitation c. Radio license d. Interior material burn certificates e. Certificate of Export f. Aircraft deregistration confirmation e. Aircraft Registration 4. Letters signed and stamped by Quality Assurance: a. Current aircraft hours and cycles b. Current engines hours and cycles c. Accident and Incident report d. Summary of Maintenance Program e. AD compliance during the lease term 5. Aircraft log books and Aircraft readiness log. 6. Aircraft Hard Time (HT) inspection status. 7. One year forecast for HT inspection. 8. Aircraft Modification status, including service bulletins. 9. Last weighing report prior to redelivery. 10. AD compliance report with original signoffs. 11. Routine and non-routine job cards of the last "C" and "D" checks. 12. Past year pilots and maintenance discrepancies. 13. Major and Minor structural repairs with applicable approvals. 14. Compass Swing report of the last three years. 15. Cabin Configuration drawing (LOPA). 16. Emergency equipment location drawing. 17. Last X-RAYs ENGINES RECORDS 1. Last test cell run reports. 2. Life Limited Parts status and traceability. 3. AD compliance report with original signoffs. 4. Engine Modification/service bulletin/inspection report and applicableforms. 5. Last heavy maintenance records for each module. 6. Engine log books. 7. Engine removal history. 8. Past year trend monitoring reports. 9. Historical borescope reports. 10. Engine component report. APU RECORDS 1. APU status (FH, FC, limits). 2. Life limited Part status and traceability. 3. AD compliance with original signoffs. 4. Modification status. 5. Last heavy maintenance documents. 6. APU log books. 7. Last test cell report. COMPONENT RECORDS 1. Aircraft component inventory. 2. Hard time component inventory. 3. All serviceable tags. 4. Landing Gear status with last overhaul and life limited Part status. 5. AD compliance with original signoffs. 6. Modification status. ATTACHMENT 2 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE LIST OF LOOSE EQUIPMENT ATTACHMENT 3 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE LIST OF DISCREPANCIES EXHIBIT F OPINION OF COUNSEL TO BE GIVEN BY INDEPENDENT OUTSIDE COUNSEL OF LESSEE OR OTHER LAWYERS ACCEPTABLE TO LESSOR To: International Lease Finance Corporation 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067 United States Gentlemen: This opinion is furnished to you pursuant to Article 7 of the Aircraft Lease Agreement dated as of September 5, 2000 (the "LEASE") between AMERICAN TRANS AIR, INC. ("LESSEE") and INTERNATIONAL LEASE FINANCE CORPORATION ("LESSOR"). Defined terms in this opinion are used herein as defined in the Lease. I have acted as counsel for LESSEE in connection with the preparation, execution and delivery of the Lease. In that connection I have examined: (a) The Lease and Estoppel and Acceptance Certificate; (b) The charter of LESSEE and all amendments thereto (the "CHARTER"); and (c) Such other documents, agreements and instruments, and such treaties, laws, rules, regulations, decrees and the like, as I have deemed necessary as a basis for the opinions hereinafter expressed. [ (d) All of the agreements and any amendments thereto between LESSEE and all other lessors and lenders of LESSEE covering other aircraft operated by LESSEE on which the Engines can be installed.] Based upon the foregoing and having regard for legal considerations which I deem relevant, I am of the opinion that: 1. LESSEE is a corporation duly incorporated, validly existing and in good standing under the Laws of Indiana. It has the corporate power and authority to carry on its business as presently conducted and to perform its obligations under the Lease. 2. No authorization, approval, consent, license or order of, or registration with, or the giving of notice to the Aviation Authority or any other regulatory body or authority is required for the valid authorization, execution, delivery and performance by LESSEE of the Lease. 3. The Lease and the Estoppel and Acceptance Certificate have each been duly authorized, executed and delivered by LESSEE. Each such instrument is a valid, enforceable and binding obligation of LESSEE except as enforceability may be limited by bankruptcy, insolvency, reorganization or other Laws of general application affecting the enforcement of creditors' rights. 4. The execution and delivery of the Lease and the Estoppel and Acceptance Certificate, the consummation by LESSEE of the transactions contemplated therein and compliance by LESSEE with the terms and provisions thereof do not contravene any Law applicable to LESSEE, or result in any breach of or constitute any default under or result in the creation of any lien, charge or encumbrance upon any property of LESSEE, under any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which LESSEE is a party or by which LESSEE or its properties or assets is bound. 5. Except for any filing or recording that may be required with the [NAME OF AIRCRAFT REGISTER] and except for [DESCRIBE SUCH OTHER FILINGS OR RECORDINGS], no filing or recording of any instrument or document (including the filing of any financial statement) is necessary under the laws of the U.S. in order for the Lease to constitute a valid and perfected lease of record relating to the Aircraft, it being understood that such counsel expresses no opinion as to the nature of LESSOR's title to the Aircraft on the Delivery Date. 6. LESSEE holds all licenses, certificates and permits from applicable governmental authorities in the U.S. necessary for the conduct of its business as a certificated air carrier and performance of its obligations under the Lease. 7. To my knowledge, there are no suits or proceedings pending or threatened against LESSEE before any Government Entity against or affecting LESSEE which are reasonably likely to be adversely determined and, if adversely determined, would have a material adverse effect on the financial condition or business of LESSEE or its ability to perform under the Lease, except as described in the filings provided to LESSOR pursuant to Article 22. 8. The obligations of LESSEE under the Lease are direct, general and unconditional obligations of LESSEE and rank or will rank at least PARI PASSU with all other present and future unsecured and unsubordinated obligations (including contingent obligations) of LESSEE, with the exception of such obligations as are mandatorily preferred by law. 9. LESSEE, under the laws of the U.S. or of any other jurisdiction affecting LESSEE, is subject to private commercial law and suit. Neither LESSEE nor its properties or assets have the right of immunity from suit or execution on the grounds of sovereignty in such jurisdictions and the performance by LESSEE of its obligations under the Lease constitute commercial acts done for commercial purposes. 10. There is no applicable usury or interest limitation Law in Indiana which may restrict the recovery of payments in accordance with the Lease. 11. LESSOR will not violate any Law or become liable to any tax in Indiana or the U.S. by reason of entering into or performing its obligations under the Lease and it is not necessary to establish a place of business in Indiana in order to enforce any provisions of the Lease. Very truly yours, EXHIBIT G ASSIGNMENT OF RIGHTS (AIRFRAME) [DATE] Boeing Commercial Airplane Group P.O. Box 3707 Seattle, Washington 98124-2207 Attention: Vice President-Contracts Mail Code 21-34 Subject: Full Assignment of Rights and Obligations - International Lease Finance Corporation as Lessor and AMERICAN TRANS AIR, INC. as Lessee of Model Boeing 737-800 aircraft bearing manufacturer's serial number 28239 Ladies and Gentlemen: In connection with International Lease Finance Corporation's lease to AMERICAN TRANS AIR, INC. ("Lessee") of a Boeing aircraft (more fully described below), reference is made to the following documents: A. Purchase Agreement 1830, dated as of June 27, 1995, between The Boeing Company ("Boeing") and International Lease Finance Corporation ("ILFC") (the "Boeing Agreement") under which ILFC purchased a certain Boeing Model 737-800 aircraft bearing manufacturer's serial number 28239 (the "Aircraft"). B. Aircraft Lease Agreement (the "Lease") for the Aircraft dated as of September 5, 2000 between ILFC and Lessee. Capitalized terms used herein without definition will have the same meaning as in the Boeing Agreement. In connection with ILFC's lease of the Aircraft under the Lease, ILFC is transferring to Lessee certain rights of ILFC related to the Aircraft under the Boeing Agreement. To accomplish this transfer of rights, as authorized by the provisions of the Boeing Agreement: 1. Lessee acknowledges that it has received copies of the following specific provisions of the Boeing Agreement applicable to the Aircraft and agrees to be bound by and comply with all the terms, conditions, and limitations contained in such provisions, including without limitation the disclaimer and release, exclusion of liabilities, indemnity and insurance provisions thereof: Boeing Agreement Article 6 - Excusable Delay 6.1 General Article 10 - Assignment, Resale or Lease 10.1 Assignment 10.3 Sale by Buyer after Delivery 10.4 Lease by Buyer after Delivery 10.5 No Increase in Boeing Liability 10.6 Exculpatory or Indemnity Clause in Post-delivery Sale or Lease Article 12 - Product Assurance; Disclaimer and Release; Exclusion of Liabilities; Customer Support; Indemnification and Insurance (in its entirety) Article 14 - Contractual Notices and Requests Article 15 - Miscellaneous 15.4 Governing Law Exhibit B - Product Assurance Document Part A Boeing Warrant Part B Warranty Repairs and Modifications by Buyer Part C Boeing Service Life Policy Part D Boeing Indemnity Against Patent Infringement Part D-1 Boeing Indemnity Against Copyright Infringement Part E Supplier Warranties and Patent Indemnities Part G Boeing Interface Commitment Part H General Exhibit C-1 - Customer Support Document Part B Boeing Customer Support Services Part D Technical Data and Documents Part E Buyer's Indemnification of Boeing and Insurance Part F Alleviation or Cessation of Performance Exhibit E - Buyer Furnished Equipment Provisions Document Paragraph 8 Indemnification of Boeing Paragraph 9 Patent Indemnity Paragraph 10 Definitions Letter Agreement No. 1830-3 - Seller Purchased Equipment Paragraph 6 Buyer's Indemnification of Boeing 2. Lessee recognizes that Boeing's obligation to provide training, support and services to Lessee pursuant to Exhibit C of the Boeing Agreement is conditioned on the receipt by Boeing of evidence of compliance by Lessee with the insurance requirements set forth in paragraph 2 of Part E of Exhibit C or in such other form as may be satisfactory to Boeing, prior to the commencement of such training, support and services. 3. ILFC reserves to itself all rights, claims and interests it may have under the Boeing Agreement not expressly assigned to Lessee hereunder. ILFC will remain responsible to Boeing for any amounts with respect to the Aircraft owed to Boeing under the Boeing Agreement prior to the effective date of this letter, including any amounts owed by ILFC to Boeing under the specific articles and paragraphs of the Boeing Agreement referenced in paragraph 1 above based upon events or incidents relating to the Aircraft occurring prior to the effective date of this letter. 4. ILFC hereby assigns to Lessee the sole authority to exercise in Lessee's name all rights and powers of ILFC with respect to the Aircraft under the specific portions of the Boeing Agreement referenced in paragraph 1 above. Such authorization will continue until Boeing receives from ILFC written notice that the Lease has been cancelled or terminated, addressed to Boeing's Vice President, Contracts, P.O. Box 3707, MC 21-34, Seattle, Washington 98124-2207, U.S.A. Until Boeing receives such notice, Boeing will be entitled to deal exclusively with Lessee with respect to the Aircraft under the specific portions of the Boeing Agreement referenced in paragraph 1 above and, with respect to the rights, powers, duties or obligations under such portions of the Boeing Agreement, any and all actions taken by Lessee or agreements entered into by Lessee during the period prior to Boeing's receipt of such notice will be final and binding on ILFC. 5. Lessee hereby accepts the authorization set forth in paragraph 4 above and agrees to be bound by and to comply with all the terms, conditions and limitations of the portion of the Boeing Agreement referenced in paragraph 1 above. 6. This Assignment may be signed by the parties hereto in separate counterparts, each of which when executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. 7. This Assignment shall be governed by, and construed in accordance with,the laws of the State of Washington, including all matters of construction, validity and performance. We request that Boeing, upon receipt of this letter, acknowledge receipt thereof and the transfer of rights set forth above by signing the acknowledgment and forwarding one copy of this letter to each of the undersigned. IN WITNESS WHEREOF, the parties hereto have caused this Assignment Agreement to be duly executed as of the dates written below. INTERNATIONAL LEASE FINANCE AMERICAN TRANS AIR, INC., as Lessee CORPORATION, as Lessor and Buyer By: By: Its: Its: BOEING ACKNOWLEDGMENT AND CONSENT TO ASSIGNMENT Receipt of the above letter is acknowledged and transfer of certain rights as described above under the Boeing Agreement is confirmed, effective as of this date. THE BOEING COMPANY By: Its: Date: EXHIBIT H ASSIGNMENT OF RIGHTS (ENGINES) [DATE] CFM INTERNATIONAL, INC. 1 Neumann Way, F-17 Cincinnati, Ohio 45215 Attention: Commercial Contracts - Warranty Assignment Administrator Dear Warranty Assignment Administrator: Reference is hereby made to that Consent to Assignment made as of April 29, 1988 (the "CONSENT TO ASSIGNMENT"), by and between CFM INTERNATIONAL, INC. ("CFMI") and INTERNATIONAL LEASE FINANCE CORPORATION ("ILFC"). Terms defined in the Consent to Assignment are used herein with the same meaning as in the Consent to Assignment. As of ________________ ___, ______, ILFC has assigned all of its rights and interest in, to and under the Engine Warranties to AMERICAN TRANS AIR, INC. ("ASSIGNEE") in connection with its lease to Assignee of a Boeing 737-800 aircraft (the "AIRCRAFT") together with two (2) CFMI Model CFM56-7B-27 engines bearing Manufacturer's Serial Numbers _______ and ________ (the "ENGINES") as of the date each such Engine was delivered to Assignee. Such assignment shall be effective from such date until ILFC notifies CFMI that the Lease has been cancelled or terminated. The Assignee has accepted such assignment and all the limitations and liabilities pertaining to the Engine Warranties as stated in the provisions of the GTA listed in Schedule 2 to the Consent to Assignment. A copy of the aforesaid assignment is attached hereto. Very truly yours, INTERNATIONAL LEASE FINANCE CORPORATION By: Title: cc: Ruben M. Cabrera Director, Commercial Contracts ASSIGNMENT OF WARRANTIES [DATE] In consideration of AMERICAN TRANS AIR, INC. ("LESSEE") leasing from International Lease Finance Corporation ("ILFC") one (1) Boeing 737-800 aircraft together with two (2) CFMI Model CFM56-7B-27 engines bearing manufacturer's serial numbers _______ and ________, it is hereby agreed as follows: 1. ILFC hereby assigns and transfers to Lessee all of ILFC's respective rights and interest in and to and in and under the Engine Warranties set forth in and subject to the limitations and liabilities set forth in Exhibit B Warranty, Section X (the "ENGINE WARRANTIES") of CFM International, Inc. - ILFC General Terms Agreement No. 6-3987 dated 22 June 1984 (the "GTA") during the term of such leases so long as Lessee is not in default thereunder. 2. Lessee hereby accepts such assignment including all the limitations and liabilities pertaining to said Engine Warranties as stated in the provisions of Exhibit B Warranty, Section X of the GTA. 3. This Agreement shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors and assigns to the extent permitted by the GTA and hereunder. 4. This Agreement shall be governed by and construed in accordance with the laws of the State of California. 5. This Agreement may be executed in any number of counterparts, each of which when executed and delivered is an original but all of which taken together constitute one and the same instrument and any party may execute this Agreement by signing any counterpart. IN WITNESS WHEREOF, the authorized representative of the parties hereto have executed this Agreement as of the day and year first above written. For and on behalf of For and on behalf of INTERNATIONAL LEASE FINANCE AMERICAN TRANS AIR, INC. CORPORATION By: By: Its: Its: EXHIBIT I RETURN ACCEPTANCE RECEIPT Date: _________________ ___, ____ 1. AMERICAN TRANS AIR, INC., as LESSEE, and INTERNATIONAL LEASE FINANCE CORPORATION, as LESSOR, have entered into an Aircraft Lease Agreement dated as of September 5, 2000 (the "LEASE"). Words used herein with capital letters and not otherwise defined will have the meanings set forth in the Lease. 2. LESSOR has this ____ day of __________, ____ (Time: __________) at ____________________ received from LESSEE possession of: (a) One (1) Boeing 737-800 Aircraft bearing Manufacturer's serial number ____, together with two (2) CFM56-7B-27 engines bearing manufacturer's serial numbers _______ and ________, and all Parts attached thereto and thereon in an airworthy condition and (b) All Aircraft Documentation, including the usual and customary manuals, logbooks, flight records and historical information regarding the Aircraft, Engines and Parts, as listed in the Document Receipt attached hereto. 3. The Airframe, Engines and Parts had the following hours/cycles at return: (a) AIRFRAME: Total hours: _______________ Total Landings: _______________ (b) ENGINES: POSITION SERIAL NO. TOTAL HOURS TOTAL CYCLES HRS/CYCLES SINCE LAST SHOP VISIT Time Remaining to Next LIFE LIMITED PART REMOVAL PART NAME HOURS CYCLES MSN MSN (c) APU: MSN __________ Total hours: __________ ______ hours/ ______ cycles since last Overhaul ______ hours/ ______ cycles remaining on APU life-limited Parts (d) LANDING GEARS: POSITION SERIAL NO. Total Hrs/Cycles since Date of last HRS/CYCLES LAST OVERHAUL OVERHAUL Nose Right Main Left Main (e) FUEL ON BOARD AT RETURN: ______ (circle one) pounds/kilos (______ gallons) 4. Other technical information regarding the Aircraft and its components are correctly set forth on the Technical Evaluation Report (in the form of Exhibit L) attached hereto. 5. The above specified aircraft, engines and documentation are hereby accepted by LESSOR subject to correction by LESSEE (or procurement by LESSEE at LESSEE's cost) as soon as reasonably possible of the discrepancies specified in Attachment 2 hereto. 6. Subject to the following paragraph, the leasing of the Aircraft by LESSOR to LESSEE pursuant to the Lease is hereby terminated without prejudice to LESSEE's continuing obligations under the Lease including, without limitation, paragraph 6 above and Articles 10.5, 15 and 16. 7. LESSEE represents and warrants that during the term of the Lease all maintenance and repairs to the Airframe and Engines were performed in accordance with the requirements contained in the Lease. LESSEE further confirms that all of its obligations under the Lease whether accruing prior to the date hereof or which survive the termination of the Lease by their terms and accrue after the date hereof, will remain in full force and effect until all such obligations have been satisfactorily completed. 8. This Return Acceptance Supplement is executed and delivered by the parties in [place]. IN WITNESS WHEREOF, the parties hereto have caused this Return Acceptance Receipt to be executed in their respective corporate names by their duly authorized representatives as of the day and year first above written. INTERNATIONAL LEASE FINANCE CORPORATION AMERICAN TRANS AIR, INC. By: By: Its: Its: ATTACHMENTS: 1. List of Aircraft Documentation 2. List of Loose Equipment 3. List of Discrepancies 4. Engine Maximum Power Assurance Test Conditions and Results 5. Dent and Damage Chart 6. Form of No Accident/Incident Letter 7. Technical Evaluation Report (in the form of Exhibit L) ATTACHMENT 1 TO RETURN ACCEPTANCE RECEIPT LIST OF AIRCRAFT DOCUMENTATION [The (a) manuals and (b) Aircraft records and historical documents set forth below are to be returned with the Aircraft in a current, up-to-date and correct status] MANUALS 1. FAA Approved Flight Manual 2. Airplane Flight Operation Manual 3. Aircraft Recover Manual 4. Quick Reference Handbook (QRH) 5. Weight and Balance Manual 6. Aircraft Fueling Manual 7. Aircraft Maintenance Manual (MM) 8. Aircraft Maintenance Manual Supplement 9. Ramp Maintenance Manual (RMM) 10. Cargo Loading Manual 11. Fault Reporting Manual (FRM) 12. Fault Isolation Manual (FIM) 13. Illustrated Parts Catalog (IPC) 14. Life Limited Parts Manual 15. Structural Repair Manual (SRM) 16. Master Minimum Equipment List 17. Wiring Diagram Manual (WD) 18. Wiring Practices Manual 19. System Schematics Manual 20. B.I.T.E. Manual 21. Non-Destructive Test Manual 22. Corrosion Prevention Manual 23. Component Maintenance Manual 24. APU Log Book 25. Engine Maintenance Manual 26. Engine Log Book 27. Engine Illustrated Parts Catalog 28. Engine Data Submittal Book 29. Engine Overhaul Manual 30. Power Plant Build-up Manual AIRCRAFT RECORDS AND HISTORICAL DOCUMENTS 1. Copies of original Certificates delivered by Boeing: a. Airworthiness Certificate for Export b. Radio installation conformity certificate c. Noise limitation certificate 2. Copies of original Documents delivered by Boeing: a. Airworthiness Directive Compliance list b. Aircraft inspection report c. Aircraft Readiness Log d. Weighing report 3. Copies of current Certificates: a. Airworthiness Certificate b. Noise limitation c. Radio license d. Interior material burn certificates e. Certificate of Export f. Aircraft deregistration confirmation e. Aircraft Registration 4. Letters signed and stamped by Quality Assurance: a. Current aircraft hours and cycles b. Current engines hours and cycles c. Accident and Incident report d. Summary of Maintenance Program e. AD compliance during the lease term 5. Aircraft log books and Aircraft readiness log. 6. Aircraft Hard Time (HT) inspection status. 7. One year forecast for HT inspection. 8. Aircraft Modification status, including service bulletins. 9. Last weighing report prior to redelivery. 10. AD compliance report with original signoffs. 11. Routine and non-routine job cards of the last "C" and "D" checks. 12. Past year pilots and maintenance discrepancies. 13. Major and Minor structural repairs with applicable approvals. 14. Compass Swing report of the last three years. 15. Cabin Configuration drawing (LOPA). 16. Emergency equipment location drawing. 17. Last X-RAYs ENGINES RECORDS 1. Last test cell run reports. 2. Life Limited Parts status and traceability. 3. AD compliance report with original signoffs. 4. Engine Modification/service bulletin/inspection report and applicable forms. 5. Last heavy maintenance records for each module. 6. Engine log books. 7. Engine removal history. 8. Past year trend monitoring reports. 9. Historical borescope reports. 10. Engine component report. APU RECORDS 1. APU status (FH, FC, limits). 2. Life limited Part status and traceability. 3. AD compliance with original signoffs. 4. Modification status. 5. Last heavy maintenance documents. 6. APU log books. 7. Last test cell report. COMPONENT RECORDS 1. Aircraft component inventory. 2. Hard time component inventory. 3. All serviceable tags. 4. Landing Gear status with last overhaul and life limited Part status. 5. AD compliance with original signoffs. 6. Modification status. ATTACHMENT 2 TO RETURN ACCEPTANCE RECEIPT LIST OF LOOSE EQUIPMENT ATTACHMENT 3 TO RETURN ACCEPTANCE RECEIPT LIST OF DISCREPANCIES ATTACHMENT 4 TO RETURN ACCEPTANCE RECEIPT ENGINE MAXIMUM POWER ASSURANCE TEST CONDITIONS AND RESULTS ATTACHMENT 5 TO RETURN ACCEPTANCE RECEIPT DENT AND DAMAGE CHART ATTACHMENT 6 TO RETURN ACCEPTANCE RECEIPT FORM OF NO ACCIDENT/INCIDENT LETTER EXHIBIT J MONTHLY REPORT (SEE FOLLOWING SHEET) MONTHLY AIRCRAFT UTILIZATION AND STATUS REPORT Page 1 of 2 Report Due Date: To: INTERNATIONAL LEASE FINANCE CORPORATION Fax: (310) 788-1990 1999 Avenue of the Stars, 39th Floor Los Angeles, California 90067, United States Attn: Finance Department From: AMERICAN TRANS AIR, INC. Contact: Fax: AIRCRAFT TYPE: BOEING 737-800 ENGINE TYPE: CFM56-7B-27 REGISTRATION: ____ SERIAL NUMBER: ____ MONTH OF: NOTE: PLEASE RECORD TIME IN HOURS AND MINUTES NOT DECIMALS. Aircraft Total Time Since New As Of Last Month: Hours: Min: Aircraft Total Time Since New: Hours: Min: Aircraft Total Cycles Since New: Cycles: Airframe Hours Flown During Month: Hours: Min: Airframe Cycles/Landings During Month: Cycles: Time Remaining to "D" or Heavy Maintenance Check: HOURS OR US$ PER CYCLES FLOWN HOUR OR DURING MONTH (AS CYCLE (AS APPLICABLE) X APPLICABLE) = RESERVES TOTAL AIRFRAME: HRS: X = TOTAL LANDING GEAR: HRS: X = TOTAL APU: HRS: X = ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles(for Engine LLP Reserves): x = ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles (for Engine LLP Reserves): x = ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles (for LLP x = Reserves): ORIGINAL ENGINE SERIAL NUMBER: Hrs: Min: x = Cycles (for Engine LLP Reserves): x = TOTAL AMOUNT OF RESERVES (US$) PAID THIS MONTH: US$ Monthly Aircraft Utilization and Status Report From: AMERICAN TRANS AIR, INC. PAGE 2 OF 2 ENGINE SERIAL NUMBER: ENGINE SERIAL NUMBER: ORIGINAL POSITION: ORIGINAL POSITION: ACTUAL LOCATION: ACTUAL LOCATION: CURRENT THRUST RATING: CURRENT THRUST RATING: HOURS:/MIN: HOURS:/MIN: Total Time Since New As Of Total Time Since New As Of Last Month: Last Month: Total Time Since New: Total Time Since New: Total Cycles Since New: Total Cycles Since New: Hours Flown During Month: Hours Flown During Month: Cycles During Month: Cycles During Month: IMPORTANT: IF ILFC-OWNED ENGINE IS REMOVED OR INSTALLED ON ANOTHER AIRCRAFT, IT MUST BE REPORTED MONTHLY ON THIS FORM. EXHIBIT K AIRCRAFT DOCUMENTATION AIRCRAFT RECORDS 1. Copies of original Certificates delivered by Boeing: a. Airworthiness Certificate for Export b. Radio installation conformity certificate c. Noise limitation certificate 2. Copies of original Documents delivered by Boeing: a. Airworthiness Directive Compliance list b. Aircraft inspection report c. Aircraft Readiness Log d. Weighing report 3. Copies of current Certificates: a. Airworthiness Certificate b. Noise limitation c. Radio license d. Interior material burn certificates e. Certificate of Export f. Aircraft deregistration confirmation e. Aircraft Registration 4. Letters signed and stamped by Quality Assurance: a. Current aircraft hours and cycles b. Current engines hours and cycles c. Accident and Incident report d. Summary of Maintenance Program e. AD compliance during the lease term 5. Aircraft log books and Aircraft readiness log. 6. Aircraft Hard Time (HT) inspection status. 7. One year forecast for HT inspection. 8. Aircraft Modification status, including service bulletins. 9. Last weighing report prior to redelivery. 10. AD compliance report with original signoffs. 11. Routine and non-routine job cards of the last "C" and "D" checks. 12. Past year pilots and maintenance discrepancies. 13. Major and Minor structural repairs with applicable approvals. 14. Compass Swing report of the last three years. 15. Cabin Configuration drawing (LOPA). 16. Emergency equipment location drawing. 17. Last X-RAYs ENGINES RECORDS 1. Last test cell run reports. 2. Life Limited Parts status and traceability. 3. AD compliance report with original signoffs. 4. Engine Modification/service bulletin/inspection report and applicable forms. 5. Last heavy maintenance records for each module. 6. Engine log books. 7. Engine removal history. 8. Past year trend monitoring reports. 9. Historical borescope reports. 10. Engine component report. APU RECORDS 1. APU status (FH, FC, limits). 2. Life limited Part status and traceability. 3. AD compliance with original signoffs. 4. Modification status. 5. Last heavy maintenance documents. 6. APU log books. 7. Last test cell report. COMPONENT RECORDS 1. Aircraft component inventory. 2. Hard time component inventory. 3. All serviceable tags. 4. Landing Gear status with last overhaul and life limited Part status. 5. AD compliance with original signoffs. 6. Modification status. EXHIBIT L TECHNICAL EVALUATION REPORT (SEE FOLLOWING SHEETS) EX-10.7 30 file076.txt AMTRAN, INC., 2000 10-K, EXHIBIT 10-7 FN> FINANCING AGREEMENT This FINANCING AGREEMENT (this "Agreement"), dated as of December 13, 2000, is entered into by and between AMERICAN TRANS AIR, INC. ("ATA"), an Indiana corporation, and GENERAL ELECTRIC CAPITAL CORPORATION ("GECC"), a New York corporation. WHEREAS, ATA and GECC wish to set forth their understanding regarding the leveraged lease financings or single investor lease financings of (Confidential Material Omitted) new Boeing B737-800 aircraft, each equipped with two CFM56-7 engines (collectively, the "Aircraft") to be delivered pursuant to the Purchase Agreement No. 2262 dated as of June 30, 2000, as amended, between ATA and The Boeing Company (the "ATA Purchase Contract") or pursuant to the Purchase Agreement No. 1905 dated as of April 25, 1996, as amended, between GECC and The Boeing Company (the "GE Purchase Contract" and, together with the ATA Purchase Contract, the "Purchase Contracts"); and WHEREAS, in furtherance thereof, ATA and GECC wish to commit to execute and deliver certain agreed documents relating to such financing of each Aircraft on or before the date (the "Tender Date") that such Aircraft is tendered for delivery by The Boeing Company under the applicable Purchase Contract (which date will, if the closing of the applicable financing transaction as described herein occurs on such date, be the Delivery Date for such Aircraft). NOW, THEREFORE, the parties hereto agree as follows: 1. Leveraged Transactions. (a) ATA and GECC agree to enter into a leveraged lease financing transaction, on and subject to the terms and conditions described herein (a "Leveraged Transaction"), with respect to each of the (Confidential Material Omitted) Aircraft identified on Exhibit A (the "Firm Aircraft"). (b) (Confidential Material Omitted). (c) Each of the Firm Aircraft. (Confidential Material Omitted) is referred to herein as a "Leveraged Aircraft". - 7 - 2. Single-Investor Transactions. ATA and GECC agree to enter into a single investor lease financing transaction, on and subject to the terms and conditions described herein (a "SIL Transaction"), with respect to each of the (Confidential Material Omitted) Aircraft identified on Exhibit B (the "SIL Aircraft"). The SIL Transactions and the Leveraged Transactions are referred to collectively as the "Transactions". 3. Leveraged Documents. Attached as Exhibit C are the forms of the agreements and other documents (collectively, the "Leveraged Documents") which the parties have negotiated and agreed to utilize to effect each of the Leveraged Transactions. Capitalized terms used in this Agreement without definition in relation to the Leveraged Transactions shall have the meanings set forth in the Leveraged Documents. Subject to the terms and conditions of this Agreement, ATA agrees that, on or before the Tender Date of each Leveraged Aircraft, it shall, with respect to such Aircraft, (a) execute and deliver, as Lessee, each of the Leveraged Documents to which Lessee is to be a party as provided therein and (b) procure that the parties identified therein as Owner Trustee and as Mortgagee and Loan Participant, respectively (or other institutions reasonably acceptable to GECC) execute and deliver the applicable Leveraged Documents in such capacities. GECC agrees that, on the Tender Date of each Leveraged Aircraft, it shall (or shall cause an Affiliate that is a Permitted Institution to), with respect to such Aircraft, execute and deliver, as Owner Participant, each of the Leveraged Documents to which Owner Participant is to be party as provided therein. The parties agree that the Leveraged Documents for each Leveraged Aircraft shall be in the form set forth in Exhibit C, except as modified only to incorporate (a) the Delivery Date (and other dates measured with reference thereto), serial numbers and registration number applicable to such Aircraft; (b) the actual Lessor's Cost, as determined in accordance with Section 5 below; (c) the Actual Pricing, as determined in accordance with Section 6 below; (d) changes to reflect the terms of the Debt Financing, to the extent agreed by the parties, as contemplated in Section 7 below; (e) changes, if requested by GECC, to effect a like kind exchange as described in Exhibit E; and (f) the actual Payment Dates (which will correspond to the interest payment dates under the Debt Financing). 4. SIL Documents. Attached as Exhibit D are the forms of agreements and other documents (collectively, the "SIL Documents") which the parties have negotiated and agreed to utilize to effect each of the SIL Transactions. Capitalized terms used in this Agreement without definition in relation to the SIL Transactions shall have the meanings set forth in the SIL Documents. Subject to the terms and conditions of this Agreement, ATA agrees that, on the Tender Date of each SIL Aircraft, it shall (a) execute, deliver and perform, as Lessee, each of the SIL Documents to which Lessee is to be a party as provided therein and (b) procure that the party identified therein as Owner Trustee (or another institution reasonably acceptable to GECC) execute and deliver the applicable SIL Documents in such capacity. GECC agrees that, on the Tender Date of each SIL Aircraft, it shall (or shall cause a Permitted Institution to), with respect to such Aircraft, execute, deliver and perform, as Owner Participant, each of the SIL Documents to which Owner Participant is to be a party as provided therein. The parties agree that the SIL Documents for each SIL Aircraft shall be in the form set forth in Exhibit D, except as modified only to incorporate (a) the Delivery Date (and other dates measured with reference thereto), serial numbers and registration number applicable to such Aircraft; (b) the actual Lessor's Cost, as determined in accordance with Section 5 below; (c) the Actual Pricing, as determined in accordance with Section 6 below; (d) changes, if requested by GECC, to effect a like kind exchange as described in Exhibit E; and (e) the actual Payment Dates; provided that with respect to the Aircraft identified on Exhibit B as "GE Purchase Contract" aircraft, the additional changes described in Exhibit F shall be made. 5. Lessor's Cost. In the Pricing Assumptions, Lessor's Cost has been assumed to be (Confidential Material Omitted) for each Aircraft to be delivered under the ATA Purchase Contract and (Confidential Material Omitted) for each Aircraft to be delivered under the GE Purchase Contract. Lessor's Cost for each Aircraft shall be adjusted to be equal to the sum of (a) the actual purchase price of such Aircraft under the applicable Purchase Contract (including any price escalation provided for therein) and (b) capitalized interest. 6. Pricing. (a) The Basic Rent payments and allocations, Stipulated Loss Values, Termination Values and EBO Price (collectively, the "Pricing") for each Aircraft, based on the pricing assumptions set forth in Exhibit G (the "Pricing Assumptions"), are set forth in Exhibit H (the "Assumed Pricing") for the Leveraged Aircraft and the SIL Aircraft respectively. The actual Pricing ("Actual Pricing") for each Aircraft will be the Assumed Pricing adjusted as provided in the following provisions of this Section 6. (b) The Net Economic Return shall be adjusted by changing the net after-tax book yield component thereof to reflect any difference between (1) (Confidential Material Omitted) as quoted on the (Confidential Material Omitted) page (ask side based on a 30/360 day convention) as of the second Business Day prior to the Delivery Date and (2) (Confidential Material Omitted). (c) The Assumed Pricing shall be recalculated (upwards or downwards) as of the Delivery Date by GECC, in order to (i) maintain the Net Economic Return (adjusted as provided in Secton 6(b) above) and (ii) to the extent possible consistent with clause (i), to minimize the Net Present Value of Rents to Lessee, to reflect (A) any change in: (1) the Delivery Date; (2) the amount of Lessor's Cost; (3) the amount of Transaction Expenses; or (4) in respect of the Leveraged Transactions, the original principal amount, interest rate or amortization schedule of the Debt Financing from that set forth in the Pricing Assumptions; (Confidential Material Omitted)and (C) any Change in Tax Law enacted, adopted, issued or (to the extent described as a "proposed change" in the following definition of a "Change in Tax Law") proposed on or prior to the Delivery Date. "Change in Tax Law" means (i) any change, or any proposed change that has a proposed effective date that is on or prior to the Delivery Date, in the Code (provided that, in the case of a proposed change in the Code, such change must have been "reported favorably" by the House Ways and Means Committee or the Senate Finance Committee) or the Treasury Regulations (provided that, in the case of a proposed change in the Treasury Regulations, such change must have been issued by the Department of the Treasury) or (ii) any change in the interpretation of the Code or Treasury Regulations in a decision by the United States Supreme Court, the United States Tax Court, the United States Court of Claims or any of the United States Courts of Appeal or District Courts, or any issuance of a revenue ruling, revenue procedure or any pronouncement by the Internal Revenue Service or the Department of the Treasury (other than a change in the alternative minimum tax or other change that results in Owner Participant's being subject to alternative minimum tax or unable to use all tax benefits because of its particular tax situation). Subject to the following paragraph, in the event of any such proposed change, the parties hereto shall cooperate in order to determine the methodology for taking into account in such recalculation the effect of such proposed change. Any such recalculation shall be prepared by GECC, in compliance with the provisions of ss. 3.2.1(e) of the Lease and subject to verification in the manner provided in ss. 3.2.1(d) of the Lease, on the basis of the same methodology and assumptions used by GECC in determining the Assumed Pricing, except as such assumptions have been modified to reflect the events giving rise to such recalculation and taking into account the law applicable at the time of such recalculation (and, in respect of the EBO Price, subject to the constraints set forth in ss. 3.2.1(b)(3) of the Lease). All recalculations (1) shall be made so as to avoid characterization of the Lease as a "disqualified leaseback or long-term agreement" within the meaning of Code ss. 467 and Treasury Regulations thereunder and (2) shall be in compliance with the requirements of ss.4(1) and ss. 4(6) of Revenue Procedure 75-21 and ss.ss. 4.02(5), 4.07(1) and 4.07(2) of Revenue Procedure 75-28. In connection with any such recalculations to payments and allocations of Basic Rent, appropriate corresponding adjustments shall be made to the percentages set forth on the Schedules of Stipulated Loss Values and Termination Values in the columns headed "Deferred Basic Rent Amount" and "Prepaid Basic Rent Amount." (d) In the event that any adjustment to the Pricing for an Aircraft occasioned by a Change In Tax Law pursuant to clause (B) of Section 6(c) would cause the Net Present Value of Rents (as defined in the applicable Lease) to increase by more than (Confidential Material Omitted) in the case of an Aircraft delivered under the GE Purchase Contract or (Confidential Material Omitted) in the case of an Aircraft delivered under the ATA Purchase Contract, ATA may terminate this Agreement with respect to such Aircraft by written notice to GECC, unless GECC, in its sole discretion, by written notice to ATA given within four Business Days after ATA gives such termination notice, agrees to revise such adjustment so that such present value increase shall be (Confidential Material Omitted) or (Confidential Material Omitted), respectively, or less. If ATA terminates this Agreement with respect to any Aircraft pursuant to this Section 6(d), ATA shall not effect any lease or other financing of such Aircraft that would reflect a Net Present Value of Rents (or the equivalent) equal to or greater than the Net Present Value of Rents that would have applied in the transaction contemplated by this Agreement with respect to such Aircraft. (e) In the event that any recalculation pursuant to Section 6(c) results in a "back-ended rent profile" for purposes of ss. 467 of the Code and the Treasury Regulations thereunder, (i) the (Confidential Material Omitted) requirement set forth in clause (A) of the definition of "Applicable Percentage" shall apply to the first two Renewal Terms, and (ii) the provisions of Section 17 of the Lease shall be modified accordingly. (Confidentail Material Omitted) 8. Dates. ATA shall give to GECC not less than five Business Days' prior notice of the scheduled Delivery Date of each Aircraft, provided that ATA shall be entitled to postpone the scheduled Delivery Date for an Aircraft by written notice to GECC given at any time prior to 2:00 PM (New York time) on the scheduled Delivery Date for such Aircraft, which notice may specify a new scheduled Delivery Date on a subsequent Business Day. If notice of a postponement does not specify a new scheduled Delivery Date, ATA shall give GECC not less than two Business Days' notice of the new scheduled Delivery Date with respect to such Aircraft. 9. Return of Funds. If the closing of a Transaction with respect to an Aircraft fails to occur on the scheduled Delivery Date and GECC shall have made funds available for such closing, ATA shall cause such funds to be returned to GECC in immediately available funds by 3:30 p.m. (New York time) on such scheduled Delivery Date, unless GECC shall have agreed otherwise in writing. 10. Expenses. If the applicable Transaction with respect to an Aircraft fails to close for any reason prior to the termination of this Agreement, pursuant to Section 12 below, ATA will pay all fees and expenses (including the reasonable legal fees and expenses of GECC's counsel) incurred in connection with such Transaction; provided that if the Transaction fails to close by reason of a breach by GECC of its obligations under this Agreement or by the Owner Participant of any of its obligations under the applicable Participation Agreement, GECC shall pay all reasonable fees and expenses incurred in connection with such Transaction (including the reasonable legal fees and expenses of ATA's counsel) but excluding in any event any fees and expenses related to the Debt Financing. 11. Conditions. (a) The obligation of GECC to participate in the Transactions with respect to each Aircraft as contemplated by this Agreement shall be subject to the fulfillment or the waiver by GECC, on or before the Delivery Date of such Aircraft, of the conditions set forth in ss. 5.1 (except subsections 5.1.15 and 5.1.16 thereof) of the applicable Participation Agreement with respect to such Transaction and the further conditions that (Confidential Material Omitted) (ii) the Delivery Date for such Aircraft shall have occurred on or before the date contemplated by clause (ii) of Section 12 hereof and (Confidential Material Omitted). (b) The obligations of ATA to participate in the Transaction with respect to each Aircraft as contemplated by this Agreement shall be subject to (i) the satisfaction, or waiver by ATA, on or before the Delivery Date of such Aircraft, of the conditions set forth in ss. 5.4 of the applicable Participation Agreement and (ii) with respect to the Leveraged Transactions, the agreement of GECC and the debt providers on debt/equity matters (to the extent different from those reflected in the form of Mortgage included in Exhibit C) by the date set contemplated by clause (ii) of Section 12 hereof. 12. Termination. The obligations of ATA and GECC under this Agreement with respect to any Aircraft shall terminate and be of no further force or effect on the earlier of (i) the consummation of the Transactions with respect to all of the Aircraft and (ii) the Outside Date (as defined below) applicable to such Aircraft, provided that the obligations of ATA and GECC under Section 10 hereof shall survive, and remain in full force and effect following, the termination of this Agreement. For purposes of this Section 12, "Outside Date" means December 31, 2002 with respect to the Firm Aircraft and the SIL (Confidential Material Omitted) (such date, in each case, the "Expiry Date"), provided that if a labor strike or similar event occurs at The Boeing Company prior to the applicable Expiry Date and such strike or event causes the date of delivery under the Purchase Agreement in respect of any of the Aircraft to be delayed, the "Outside Date" shall be deemed to mean the earlier of (x) the date which follows the applicable Expiry Date by the number of days that such strike or event has continued in effect and (y) the date which is six months after the applicable Expiry Date. 13. Related Matters. (a) Upon execution and delivery of this Agreement by ATA, GECC shall return to ATA the letter of credit provided by ATA in connection with leveraged lease transaction [ATA 1996 B] covering the Boeing 757-23N aircraft having manufacturer's serial number 27974 and shall execute and deliver an appropriate amendment to the Participation Agreement dated as of December 16, 1996 in such transaction releasing ATA from the provisions of Section 8(ee) thereof that require such letter of credit. (Confidential Material Omitted) 14. GE Purchase Contract. GECC confirms that the purchase price for each Aircraft to be delivered under the GE Purchase Contract (with the specifications set forth in Boeing Detail Specification Ref. (Confidential Material Omitted) GECC agrees that it will not, in respect of any Aircraft that is subject to this Agreement, further amend the price, specifications or other terms of the GE Purchase Contract without ATA's written consent. GECC also agrees that it will agree to reasonable change orders and amendments to the GE Purchase Contract, with respect to any Aircraft that is subject to this Agreement, that are requested by ATA and accepted by the Boeing Company. 15. Entire Agreement. This Agreement, as of the date hereof, constitutes the entire agreement of the parties hereto with respect to the subject matter hereof, and all prior understandings, written or oral (including without limitation the letter of intent dated May 3, 2000 insofar as it relates to the Aircraft), between the parties hereto with respect to such subject matter are hereby superseded in their entireties. 16. Notices. All notices and other communications contemplated hereby shall be in writing and shall be effective when delivered addressed to a party at its address or facsimile number set forth under its signature hereto, or to such other address or facsimile number as any such party shall specify. 17. Miscellaneous. This Agreement may be executed in any number of counterparts, and each fully-executed counterpart of this Agreement shall be an original and all of such counterparts together shall constitute one instrument. Neither this Agreement nor any of the terms hereof may be amended, supplemented, waived or modified orally, but only by an instrument in writing signed by the party against which the enforcement of the amendment, supplement, waiver or modification is sought. The parties intend that this Agreement shall be a binding agreement with respect to matters set forth herein. The rights and obligations of the parties hereto shall not be assignable, and any purported assignment shall be voided. 18. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York applicable to contracts made and to be performed wholly within such State. IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the date first written above. AMERICAN TRANS AIR, INC. By: /s/ Charles T. Cleaver __________________________________ Name: Charles T. Cleaver Title: Treasurer Address: 7337 West Washington Street Indianapolis, IN 46231 Attention: Treasurer Facsimile: 317-240-7091 GENERAL ELECTRIC CAPITAL CORPORATION By: /s/ Norman Liu _________________________________ Name: Norman Liu Title: Vice President Address: 201 High Ridge Road Stamford, CT 06927 Attention: Contracts Leader Facsimile: 203-357-3201 Exhibit A Leveraged Aircraft Aircraft Under ATA Purchase Contract Month of Scheduled Delivery (Confidential Material Omitted) Exhibit B Single-Investor Lease Aircraft Aircraft Under ATA Purchase Contract Month of Scheduled Delivery (Confidential Material Omitted) Aircraft Under GE Purchase Contract (Confidential Material Omitted) Exhibit B-1 (Confidential Material Omitted) Exhibit C Leveraged Lease Documents Attached are forms of the following Leveraged Documents: 1. Participation Agreement (including Annex A - Definitions) 2. Lease 3. Trust Agreement 4. Tax Indemnity Agreement 5. Guarantee 6. Purchase Agreement Assignment 7. Consent and Agreement 8. Mortgage and Equipment Notes Exhibit D Single-Investor Lease Documents Attached are forms of the following Single Investor Lease Documents: 1. Participation Agreement (including Annex A - Definitions) 2. Lease 3. Trust Agreement 4. Tax Indemnity Agreement 5. Guarantee 6. Purchase Agreement Assignment 7. Consent and Agreement Exhibit E Like Kind Exchange The Owner Participant may elect, with respect to any of the Aircraft, to fund its equity investment pursuant to a like kind exchange arranged by the Owner Participant with a qualified intermediary. If such an election is made, the following new ss. 10.3 will be added to the applicable Participation Agreement: "10.3 Like Kind Exchange Notwithstanding anything to the contrary contained in any of the Operative Agreements, upon notice to Lessee, each of Owner Trustee's and Owner Participant's rights (but not any of its obligations other than the obligation to pay Owner Participant's Commitment for the Aircraft) under this Agreement to acquire the Aircraft may be assigned to [the Intermediary] in connection with a like kind exchange under Section 1031 of the Code and pursuant to the Like Kind Exchange Documents (as defined in Schedule 3 to this Agreement). Notwithstanding the first sentence of this Section 10.3, Owner Participant shall be responsible to make its Commitment available in accordance with the provisions of this Agreement if the Intermediary fails to make such Commitment available, and any such assignment shall not release Owner Participant or Owner Trustee from any of their respective obligations hereunder or under any other Operative Agreement. Any Lessor Lien attributable to the Intermediary shall be deemed attributable to Owner Participant for purposes of the Operative Agreements." The Like Kind Exchange Documents will consist of the following: 1. Assignment and Acceptance Replacement Property Contract, dated the Delivery Date, among Owner Participant, Owner Trustee and Intermediary. 2. Notice of Assignment to Qualified Intermediary of Certain Rights in Participation Agreement and Purchase Agreement, dated the Delivery Date, from Owner Participant and Owner Trustee, with acknowledgment of receipt by Lessee, Manufacturer, Mortgagee and Loan Participant. 3. Direction of Title Transfer dated the Delivery Date from the Intermediary and acknowledged and agreed by Lessee and Manufacturer. 4. Reassignment and Reacceptance Replacement Property Contract dated the Delivery Date among the Intermediary, Owner Participant and Owner Trustee, acknowledged by Lessee and Manufacturer. The Owner Participant shall indemnify Lessee, on a net after-tax basis, against any obligation, liability, loss or expense (including legal fees) of any kind that Lessee pays or incurs as a result of any like-kind exchange described in this Exhibit E, and such like-kind exchange shall be excluded from the indemnity obligations of Lessee under the applicable transaction documents. ATA shall not be required to adjust the timing of delivery of any Aircraft in order to permit GECC to effect any such like-kind exchange. Exhibit F GE PURCHASE CONTRACT AIRCRAFT The Purchase Agreement Assignment and the Consent and Agreement, as set forth in Exhibit D, with respect to the SIL Aircraft identified on Exhibit B as Aircraft under the GE Purchase Contract, shall be modified to reflect the fact that GECC, rather than ATA, is the purchaser under the GE Purchase Contract and will be the party assigning rights under that contract to the Owner Trustee, and references thereto in the Participation Agreement shall be modified accordingly. Exhibit G Pricing Assumptions SIL Transactions Leveraged ATA GE Assumptions Transactions Purchase Contract Purchase Contract 1. Delivery Date (Confidential Material Omitted) 2. Lessor's Cost ($ million) 3. Transaction Expenses (% of Lessor's Cost) 4. Basic Lease Term 5. Tax Rate (Confidential Material Omitted) 7. Foreign Source Usage 8. Pricing Files Exhibit H Assumed Pricing The Assumed Pricing consists of the following: For the Leveraged Aircraft: 1. Basic Rent Payments: As set forth in Exhibit H-1 2. Basic Rent Allocations: As set forth in Exhibit H-2 (Confidential Material Omitted) 5. Termination Values: As set forth in Exhibit H-5 6. Stipulated Loss Values: Identical to Termination Values as set forth in Exhibit H-5 7. EBO: As set forth in Exhibit H-6 For the SIL Aircraft (GE Contract): 1. Basic Rent Payments: As set forth in Exhibit H-7 2. Basic Rent Allocations: As set forth in Exhibit H-8 3. Termination Values: As set forth in Exhibit H-9 4. Stipulated Loss Values: Identical to Termination Values as set forth in Exhibit H-9 5. EBO: As set forth in Exhibit H-10 For the SIL Aircraft (ATA Contract): 1. Basic Rent Payments: As set forth in Exhibit H-11 2. Basic Rent Allocations: As set forth in Exhibit H-12 3. Termination Values: As set forth in Exhibit H-13 4. Stipulated Loss Values: Identical to Termination Values as set forth in Exhibit H-13 5. EBO: As set forth in Exhibit H-14 Exhibit H-1 Rent Schedule in Percentages of Total Cost Rental Date Total Rent (Confidential Material Omitted) Jun 15 2001 Jul 15 2001 Oct 15 2001 Jan 15 2002 Apr 15 2002 Jul 15 2002 Oct 15 2002 Jan 15 2003 Apr 15 2003 Jul 15 2003 Oct 15 2003 Jan 15 2004 Apr 15 2004 Jul 15 2004 Oct 15 2004 Jan 15 2005 Apr 15 2005 Jul 15 2005 Oct 15 2005 Jan 15 2006 Apr 15 2006 Jul 15 2006 Oct 15 2006 Jan 15 2007 Apr 15 2007 Jul 15 2007 Oct 15 2007 Jan 15 2008 Apr 15 2008 Jul 15 2008 Oct 15 2008 Jan 15 2009 Apr 15 2009 Jul 15 2009 Oct 15 2009 Jan 15 2010 Apr 15 2010 Jul 15 2010 Oct 15 2010 Jan 15 2011 Apr 15 2011 Jul 15 2011 Oct 15 2011 Jan 15 2012 Apr 15 2012 Jul 15 2012 Oct 15 2012 Jan 15 2013 Apr 15 2013 Jul 15 2013 Oct 15 2013 Jan 15 2014 Apr 15 2014 Jul 15 2014 Oct 15 2014 Jan 15 2015 Apr 15 2015 Jul 15 2015 Oct 15 2015 Jan 15 2016 Apr 15 2016 Jul 15 2016 Oct 15 2016 Jan 15 2017 Apr 15 2017 Jul 15 2017 Oct 15 2017 Jan 15 2018 Apr 15 2018 Jul 15 2018 Oct 15 2018 Jan 15 2019 Apr 15 2019 Jul 15 2019 Oct 15 2019 Jan 15 2020 Apr 15 2020 Jul 15 2020 Oct 15 2020 Jan 15 2021 Apr 15 2021 Jun 15 2021 Exhibit H-2 Allocation to Cash Rent Report Allocation Year Allocation Cash Rent Cash Rent Date 2001 (Confidential Material Omitted) 15-Jul-01 15-Oct-01 2002 15-Oct-01 15-Jan-02 15-Apr-02 2003 15-Apr-02 15-Jul-02 15-Oct-02 15-Jan-03 2004 15-Jan-03 15-Apr-03 15-Jul-03 15-Oct-03 15-Jan-04 2005 15-Jan-04 15-Apr-04 15-Jul-04 15-Oct-04 2006 15-Jan-05 15-Apr-05 15-Jul-05 15-Oct-05 2007 15-Jan-06 15-Apr-06 15-Jul-06 15-Oct-06 2008 15-Jan-07 15-Apr-07 15-Jul-07 15-Oct-07 2009 15-Jan-08 15-Apr-08 15-Jul-08 15-Oct-08 2010 15-Jan-09 15-Apr-09 15-Jul-09 15-Oct-09 2011 15-Jan-10 15-Apr-10 15-Jul-10 15-Oct-10 2012 15-Jan-11 15-Apr-11 15-Jul-11 15-Oct-11 2013 15-Jan-12 15-Apr-12 15-Jul-12 15-Oct-12 2014 15-Jan-13 15-Apr-13 15-Jul-13 15-Oct-13 2015 15-Jan-14 15-Apr-14 15-Jul-14 15-Oct-14 2016 15-Jan-15 15-Apr-15 15-Jul-15 15-Oct-15 2017 15-Jan-16 15-Apr-16 15-Jul-16 15-Oct-16 2018 15-Jan-17 15-Apr-17 15-Jul-17 15-Oct-17 2019 15-Jan-18 15-Apr-18 15-Jul-18 15-Oct-18 2020 15-Jan-19 15-Apr-19 15-Jul-19 15-Oct-19 2021 15-Jan-20 15-Apr-20 15-Jul-20 15-Oct-20 15-Jan-21 15-Apr-21 Exhibit H-3 (Confidential Material Omitted) Exhibt H-4 (Confidential Material Omitted Exhibit H-5 Termination Values Date TV Rent Adjustment Net TV Jun 15 2001 (Confidential Material Omitted) Jul 15 2001 Oct 15 2001 Jan 15 2002 Apr 15 2002 Jul 15 2002 Oct 15 2002 Jan 15 2003 Apr 15 2003 Jul 15 2003 Oct 15 2003 Jan 15 2004 Apr 15 2004 Jul 15 2004 Oct 15 2004 Jan 15 2005 Apr 15 2005 Jul 15 2005 Oct 15 2005 Jan 15 2006 Apr 15 2006 Jul 15 2006 Oct 15 2006 Jan 15 2007 Apr 15 2007 Jul 15 2007 Oct 15 2007 Jan 15 2008 Apr 15 2008 Jul 15 2008 Oct 15 2008 Jan 15 2009 Apr 15 2009 Jul 15 2009 Oct 15 2009 Jan 15 2010 Apr 15 2010 Jul 15 2010 Oct 15 2010 Jan 15 2011 Apr 15 2011 Jul 15 2011 Oct 15 2011 Jan 15 2012 Apr 15 2012 Jul 15 2012 Oct 15 2012 Jan 15 2013 Apr 15 2013 Jul 15 2013 Oct 15 2013 Jan 15 2014 Apr 15 2014 Jul 15 2014 Oct 15 2014 Jan 15 2015 Apr 15 2015 Jul 15 2015 Oct 15 2015 Jan 15 2016 Apr 15 2016 Jul 15 2016 Oct 15 2016 Jan 15 2017 Apr 15 2017 Jul 15 2017 Oct 15 2017 Jan 15 2018 Apr 15 2018 Jul 15 2018 Oct 15 2018 Jan 15 2019 Apr 15 2019 Jul 15 2019 Oct 15 2019 Jan 15 2020 Apr 15 2020 Jul 15 2020 Oct 15 2020 Jan 15 2021 Apr 15 2021 Jun 15 2021 Exhibit H-6 EBO Amount EBO EBO Price Rent Adjustment EBO Amount* Payment Date (Percentage of (Percentage of (Percentage of Lessor's Cost) Lessor's Cost) Lessor's Cost) (Confidential Material Omitted) Exhibit H-7 Rent Schedule in Percentages of Total Cost Rental Date Total Rent Jun 15 2001 (Confidential Material Omitted) Jul 15 2001 Oct 15 2001 Jan 15 2002 Apr 15 2002 Jul 15 2002 Oct 15 2002 Jan 15 2003 Apr 15 2003 Jul 15 2003 Oct 15 2003 Jan 15 2004 Apr 15 2004 Jul 15 2004 Oct 15 2004 Jan 15 2005 Apr 15 2005 Jul 15 2005 Oct 15 2005 Jan 15 2006 Apr 15 2006 Jul 15 2006 Oct 15 2006 Jan 15 2007 Apr 15 2007 Jul 15 2007 Oct 15 2007 Jan 15 2008 Apr 15 2008 Jul 15 2008 Oct 15 2008 Jan 15 2009 Apr 15 2009 Jul 15 2009 Oct 15 2009 Jan 15 2010 Apr 15 2010 Jul 15 2010 Oct 15 2010 Jan 15 2011 Apr 15 2011 Jul 15 2011 Oct 15 2011 Jan 15 2012 Apr 15 2012 Jul 15 2012 Oct 15 2012 Jan 15 2013 Apr 15 2013 Jul 15 2013 Oct 15 2013 Jan 15 2014 Apr 15 2014 Jul 15 2014 Oct 15 2014 Jan 15 2015 Apr 15 2015 Jul 15 2015 Oct 15 2015 Jan 15 2016 Apr 15 2016 Jul 15 2016 Oct 15 2016 Jan 15 2017 Apr 15 2017 Jul 15 2017 Oct 15 2017 Jan 15 2018 Apr 15 2018 Jul 15 2018 Oct 15 2018 Jan 15 2019 Apr 15 2019 Jul 15 2019 Oct 15 2019 Jan 15 2020 Apr 15 2020 Jul 15 2020 Oct 15 2020 Jan 15 2021 Apr 15 2021 Jun 15 2021 Exhibit H-8 Allocation to Cash Rent Report Allocation Allocation Cash Rent Cash Rent Date Year (Confidential Material Omitted) 2001 15-Jul-01 15-Oct-01 2002 15-Oct-01 15-Jan-02 2003 15-Jan-02 15-Apr-02 15-Jul-02 15-Oct-02 15-Jan-03 2004 15-Jan-03 15-Apr-03 15-Jul-03 15-Oct-03 15-Jan-04 2005 15-Jan-04 15-Apr-04 15-Jul-04 15-Oct-04 15-Jan-05 2006 15-Jan-05 15-Apr-05 15-Jul-05 15-Oct-05 15-Jan-06 2007 15-Jan-06 15-Apr-06 15-Jul-06 15-Oct-06 2008 15-Jan-07 15-Apr-07 15-Jul-07 15-Oct-07 2009 15-Jan-08 15-Apr-08 15-Jul-08 15-Oct-08 2010 15-Jan-09 15-Apr-09 15-Jul-09 15-Oct-09 2011 15-Jan-10 15-Apr-10 15-Jul-10 15-Oct-10 2012 15-Jan-11 15-Apr-11 15-Jul-11 15-Oct-11 2013 15-Jan-12 15-Apr-12 15-Jul-12 15-Oct-12 2014 15-Jan-13 15-Apr-13 15-Jul-13 15-Oct-13 2015 15-Jan-14 15-Apr-14 15-Jul-14 15-Oct-14 2016 15-Jan-15 15-Apr-15 15-Jul-15 15-Oct-15 2017 15-Jan-16 15-Apr-16 15-Jul-16 15-Oct-16 2018 15-Jan-17 15-Apr-17 15-Jul-17 15-Oct-17 2019 15-Jan-18 15-Apr-18 15-Jul-18 15-Oct-18 2020 15-Jan-19 15-Apr-19 15-Jul-19 15-Oct-19 2021 15-Jan-20 15-Apr-20 15-Jul-20 15-Oct-20 15-Jan-21 15-Apr-21 Exhibit 9 Termination Values Date TV Rent Adjustment Net TV Jun 15 2001 (Confidential Material Omitted) Jul 15 2001 Oct 15 2001 Jan 15 2002 Apr 15 2002 Jul 15 2002 Oct 15 2002 Jan 15 2003 Apr 15 2003 Jul 15 2003 Oct 15 2003 Jan 15 2004 Apr 15 2004 Jul 15 2004 Oct 15 2004 Jan 15 2005 Apr 15 2005 Jul 15 2005 Oct 15 2005 Jan 15 2006 Apr 15 2006 Jul 15 2006 Oct 15 2006 Jan 15 2007 Apr 15 2007 Jul 15 2007 Oct 15 2007 Jan 15 2008 Apr 15 2008 Jul 15 2008 Oct 15 2008 Jan 15 2009 Apr 15 2009 Jul 15 2009 Oct 15 2009 Jan 15 2010 Apr 15 2010 Jul 15 2010 Oct 15 2010 Jan 15 2011 Apr 15 2011 Jul 15 2011 Oct 15 2011 Jan 15 2012 Apr 15 2012 Jul 15 2012 Oct 15 2012 Jan 15 2013 Apr 15 2013 Jul 15 2013 Oct 15 2013 Jan 15 2014 Apr 15 2014 Jul 15 2014 Oct 15 2014 Jan 15 2015 Apr 15 2015 Jul 15 2015 Oct 15 2015 Jan 15 2016 Apr 15 2016 Jul 15 2016 Oct 15 2016 Jan 15 2017 Apr 15 2017 Jul 15 2017 Oct 15 2017 Jan 15 2018 Apr 15 2018 Jul 15 2018 Oct 15 2018 Jan 15 2019 Apr 15 2019 Jul 15 2019 Oct 15 2019 Jan 15 2020 Apr 15 2020 Jul 15 2020 Oct 15 2020 Jan 15 2021 Apr 15 2021 Jun 15 2021 Exhibit H-10 EBO Amount EBO EBO Price Rent Adjustment EBO Amount* Payment Date (Percentage of (Percentage of (Percentage of Lessor's Cost) Lessor's Cost) Lessor's Cost) (Confidential Material Omitted) Exhibit H-11 Rent Schedule in Percentages of Total Cost Rental Date Total Rent Jun 15 2001 (Confidential Material Omitted) Jul 15 2001 Oct 15 2001 Jan 15 2002 Apr 15 2002 Jul 15 2002 Oct 15 2002 Jan 15 2003 Apr 15 2003 Jul 15 2003 Oct 15 2003 Jan 15 2004 Apr 15 2004 Jul 15 2004 Oct 15 2004 Jan 15 2005 Apr 15 2005 Jul 15 2005 Oct 15 2005 Jan 15 2006 Apr 15 2006 Jul 15 2006 Oct 15 2006 Jan 15 2007 Apr 15 2007 Jul 15 2007 Oct 15 2007 Jan 15 2008 Apr 15 2008 Jul 15 2008 Oct 15 2008 Jan 15 2009 Apr 15 2009 Jul 15 2009 Oct 15 2009 Jan 15 2010 Apr 15 2010 Jul 15 2010 Oct 15 2010 Jan 15 2011 Apr 15 2011 Jul 15 2011 Oct 15 2011 Jan 15 2012 Apr 15 2012 Jul 15 2012 Oct 15 2012 Jan 15 2013 Apr 15 2013 Jul 15 2013 Oct 15 2013 Jan 15 2014 Apr 15 2014 Jul 15 2014 Oct 15 2014 Jan 15 2015 Apr 15 2015 Jul 15 2015 Oct 15 2015 Jan 15 2016 Apr 15 2016 Jul 15 2016 Oct 15 2016 Jan 15 2017 Apr 15 2017 Jul 15 2017 Oct 15 2017 Jan 15 2018 Apr 15 2018 Jul 15 2018 Oct 15 2018 Jan 15 2019 Apr 15 2019 Jul 15 2019 Oct 15 2019 Jan 15 2020 Apr 15 2020 Jul 15 2020 Oct 15 2020 Jan 15 2021 Apr 15 2021 Jun 15 2021 Exhibit H-12 Allocation to Cash Rent Report Allocation Year Allocation Cash Rent Cash Rent Date (Confidential Material Omitted) 2001 15-Jul-01 15-Oct-01 2002 15-Oct-01 15-Jan-02 2003 15-Jan-02 15-Apr-02 15-Jul-02 15-Oct-02 15-Jan-03 2004 15-Jan-03 15-Apr-03 15-Jul-03 15-Oct-03 15-Jan-04 2005 15-Jan-04 15-Apr-04 15-Jul-04 15-Oct-04 15-Jan-05 2006 15-Jan-05 15-Apr-05 15-Jul-05 15-Oct-05 ) 15-Jan-06 2007 15-Jan-06 15-Apr-06 15-Jul-06 15-Oct-06 2008 15-Jan-07 15-Apr-07 15-Jul-07 15-Oct-07 2009 15-Jan-08 15-Apr-08 15-Jul-08 15-Oct-08 2010 15-Jan-09 15-Apr-09 15-Jul-09 15-Oct-09 2011 15-Jan-10 15-Apr-10 15-Jul-10 15-Oct-10 2012 15-Jan-11 15-Apr-11 15-Jul-11 15-Oct-11 2013 15-Jan-12 15-Apr-12 15-Jul-12 15-Oct-12 2014 15-Jan-13 15-Apr-13 15-Jul-13 15-Oct-13 2015 15-Jan-14 15-Apr-14 15-Jul-14 15-Oct-14 2016 15-Jan-15 15-Apr-15 15-Jul-15 15-Oct-15 2017 15-Jan-16 15-Apr-16 15-Jul-16 15-Oct-16 2018 15-Jan-17 15-Apr-17 15-Jul-17 15-Oct-17 2019 15-Jan-18 15-Apr-18 15-Jul-18 15-Oct-18 2020 15-Jan-19 15-Apr-19 15-Jul-19 15-Oct-19 2021 15-Jan-20 15-Apr-20 15-Jul-20 15-Oct-20 15-Jan-21 15-Apr-21 Exhibit H-13 Termination Values Date TV Rent Adjustment Net TV Jun 15 2001 (Confidential Material Omitted) Jul 15 2001 Oct 15 2001 Jan 15 2002 Apr 15 2002 Jul 15 2002 Oct 15 2002 Jan 15 2003 Apr 15 2003 Jul 15 2003 Oct 15 2003 Jan 15 2004 Apr 15 2004 Jul 15 2004 Oct 15 2004 Jan 15 2005 Apr 15 2005 Jul 15 2005 Oct 15 2005 Jan 15 2006 Apr 15 2006 Jul 15 2006 Oct 15 2006 Jan 15 2007 Apr 15 2007 Jul 15 2007 Oct 15 2007 Jan 15 2008 Apr 15 2008 Jul 15 2008 Oct 15 2008 Jan 15 2009 Apr 15 2009 Jul 15 2009 Oct 15 2009 Jan 15 2010 Apr 15 2010 Jul 15 2010 Oct 15 2010 Jan 15 2011 Apr 15 2011 Jul 15 2011 Oct 15 2011 Jan 15 2012 Apr 15 2012 Jul 15 2012 Oct 15 2012 Jan 15 2013 Apr 15 2013 Jul 15 2013 Oct 15 2013 Jan 15 2014 Apr 15 2014 Jul 15 2014 Oct 15 2014 Jan 15 2015 Apr 15 2015 Jul 15 2015 Oct 15 2015 Jan 15 2016 Apr 15 2016 Jul 15 2016 Oct 15 2016 Jan 15 2017 Apr 15 2017 Jul 15 2017 Oct 15 2017 Jan 15 2018 Apr 15 2018 Jul 15 2018 Oct 15 2018 Jan 15 2019 Apr 15 2019 Jul 15 2019 Oct 15 2019 Jan 15 2020 Apr 15 2020 Jul 15 2020 Oct 15 2020 Jan 15 2021 Apr 15 2021 Jun 15 2021 Exhibit H-14 EBO Amount EBO EBO Price Rent Adjustment EBO Amount* Payment Date (Percentage of (Percentage of (Percentage of Lessor's Cost) Lessor's Cost) Lessor's Cost) (Confidential Material Omitted) PARTICIPATION AGREEMENT N___AT dated as of __________, 200_ among AMERICAN TRANS AIR, INC., Lessee, GENERAL ELECTRIC CAPITAL CORPORATION, Owner Participant, FIRST SECURITY BANK, NATIONAL ASSOCIATION, NOT IN ITS INDIVIDUAL CAPACITY EXCEPT AS EXPRESSLY PROVIDED HEREIN, BUT SOLELY AS OWNER TRUSTEE, Owner Trustee, and WILMINGTON TRUST COMPANY, NOT IN ITS INDIVIDUAL CAPACITY EXCEPT AS EXPRESSLY PROVIDED HEREIN, BUT SOLELY AS MORTGAGEE, SUBORDINATION AGENT UNDER THE INTERCREDITOR AGREEMENT, AND PASS-THROUGH TRUSTEE UNDER EACH OF THE PASS-THROUGH TRUST AGREEMENTS, Mortgagee and Loan Participant One Boeing model 737-800 aircraft bearing manufacturer's serial no. _____ and U.S. registration no. N___AT CONTENTS 1. DEFINITIONS AND CONSTRUCTION......................................2 2. PARTICIPATION IN LESSOR'S COST; ISSUANCE OF EQUIPMENT NOTES; .....2 TERMINATION OF OBLIGATION TOPARTICIPATE 2.1 Participation in Lessor's Cost...................................2 2.2 Nature of Obligations of Participants..........................3 2.3 Termination of Obligation to Participate.......................3 3. LEASE OF AIRCRAFT.................................................3 4. PROCEDURE FOR PARTICIPATION IN PAYMENT OF LESSOR'S COST; POSTPONEMENT OF SCHEDULED DELIVERY DATE..............................4 4.1 Notices of Scheduled Delivery Date.............................4 4.2 Payment of Lessor's Cost.......................................4 4.3 Postponement of Scheduled Delivery Date........................5 4.4 Closing........................................................5 5. CLOSING CONDITIONS................................................5 5.1 Conditions to Participants'Obligations.........................6 5.2 Conditions to Owner Trustee's Obligations.....................11 5.3 Conditions to Mortgagee's Obligations.........................12 5.4 Conditions to Lessee's Obligations............................12 5.5 Post-Registration Opinion.....................................13 6. REPRESENTATIONS AND WARRANTIES............... ...................13 6.1 Lessee's Representations and Warranties.......................13 6.2 Owner Participant's Representations and Warranties............17 6.3 FSB's Representations and Warranties..........................20 6.4 WTC's Representations and Warranties..........................22 7. COVENANTS........................................................25 7.1 Lessee's Covenants............................................25 7.2 Owner Participant's Covenants.................................27 7.3 FSB's and Owner Trustee's Covenants...........................30 7.4 WTC's Covenants...............................................32 7.5 Note Holders'Covenants........................................33 7.6 Other Agreements..............................................34 8. CONFIDENTIALITY..................................................41 9. INDEMNIFICATION AND EXPENSES....................................42 9.1 General Indemnity.............................................42 9.2 Expenses......................................................49 9.3 General Tax Indemnity.........................................50 9.4 Payments......................................................61 9.5 Interest......................................................62 9.6 Benefit of Indemnities........................................62 10. ASSIGNMENT OR TRANSFER OF INTERESTS.............................62 10.1 Participants, Owner Trustee, and Note Holders....... ........62 10.2 Effect of Transfer...........................................64 11. RE-FUNDING AND CERTAIN OTHER MATTERS............................65 11.1 Re-Funding Generally.........................................65 11.2 Limitations on Obligation to Refund..........................67 11.3 Execution of Facilitating Documents..........................68 11.4 ERISA........................................................68 11.5 Consent to Optional Redemptions..............................68 11.6 Lessee's Assumption of Equipment Notes.......................68 12. SECTION 1110....................................................72 13. CHANGE OF CITIZENSHIP...........................................72 13.1 Generally....................................................72 13.2 Owner Participant............................................72 13.3 Owner Trustee................................................73 13.4 Mortgagee....................................................73 14. CONCERNING OWNER TRUSTEE........................................73 15. MISCELLANEOUS...................................................74 15.1 Amendments...................................................74 15.2 Severability.................................................74 15.3 Survival.....................................................74 15.4 Reproduction of Documents....................................74 15.5 Counterparts.................................................75 15.6 No Waiver....................................................75 15.7 Notices......................................................75 15.8 Governing Law; Submission to Jurisdiction; Venue... .........76 15.9 Third-Party Beneficiary......................................77 15.10 Entire Agreement............................................77 15.11 Further Assurances..........................................77 ANNEX A Definitions SCHEDULE 1 Accounts; Addresses SCHEDULE 2 Commitments SCHEDULE 3 Certain Terms EXHIBIT A Opinion of special counsel to Lessee EXHIBIT B Opinion of corporate counsel to Lessee EXHIBIT C Opinion of corporate counsel to Airframe Manufacturer Trustee EXHIBIT D Opinion of special counsel to Owner EXHIBIT E Opinion of special counsel to Mortgagee and Loan Participants EXHIBIT F Opinion of special counsel to Owner Participant EXHIBIT G Opinion of FAA Counsel EXHIBIT H Opinion of corporate counsel to Owner Participant EXHIBIT I Form of Assignment and Assumption Agreement EXHIBIT J Form of Owner Participant Guaranty PARTICIPATION AGREEMENT N___AT This Participation Agreement N___AT (this "AGREEMENT"), dated as of __________, 200_, is entered into by and among (1) American Trans Air, Inc. ("LESSEE"), an Indiana corporation, (2) General Electric Capital Corporation ("OWNER PARTICIPANT"), a New York corporation, (3) First Security Bank, National Association, a national banking association, not in its individual capacity (except as expressly provided herein), but solely as Owner Trustee (in its capacity as Owner Trustee, "OWNER TRUSTEE" or "LESSOR", and in its individual capacity, "FSB"), (4) Wilmington Trust Company, a Delaware banking corporation, not in its individual capacity (except as expressly provided herein), but solely as mortgagee (in its capacity as Mortgagee, "MORTGAGEE", and in its individual capacity, "WTC"), (5) Wilmington Trust Company, not in its individual capacity (except as expressly provided herein) but solely as trustee under each of the Pass-Through Trust Agreements (each, a "PASS-THROUGH TRUSTEE"), and (6) Wilmington Trust Company, not in its individual capacity (except as expressly provided herein), but solely as subordination agent under the Intercreditor Agreement ("SUBORDINATION AGENT"). RECITALS A...........Owner Participant and FSB are entering into the Trust Agreement, pursuant to which Owner Trustee agrees to hold the Trust Estate for the use and benefit of Owner Participant. B...........Lessee and Airframe Manufacturer entered into the Purchase Agreement, pursuant to which Airframe Manufacturer agreed to manufacture certain aircraft (including the Aircraft) and sell them to Lessee, and Lessee agreed to buy certain aircraft (including the Aircraft) from Airframe Manufacturer. C...........Seller will sell the Aircraft to Owner Trustee pursuant to the terms of this Participation Agreement. D...........Lessee and Owner Trustee are entering into the Purchase Agreement Assignment and the Engine Manufacturer Warranty Agreement, pursuant to which Lessee assigns to Owner Trustee certain of Lessee's rights under the Purchase Agreement and the Engine Manufacturer Warranty Agreement. E...........Pursuant to each of the Pass-Through Trust Agreements, on the Issuance Date, the Pass-Through Trusts were created and the Pass-Through Certificates were issued and sold. F...........Pursuant to the Note Purchase Agreement, each Pass-Through Trustee agreed to use a portion of the proceeds from the issuance and sale of the Pass-Through Certificates issued by each Pass-Through Trust to purchase from Owner Trustee, on behalf of the related Pass-Through Trust, the Equipment Note bearing the same interest rate as the Pass-Through Certificates issued by such Pass-Through Trust. G...........Owner Trustee and Mortgagee are entering into the Mortgage for the benefit of the Note Holders, pursuant to which Owner Trustee agrees (1) to issue Equipment Notes, in the amounts and otherwise as provided in the Mortgage, the proceeds of which will be used to pay a portion of Lessor's Cost, and (2) to mortgage, pledge, and assign to Mortgagee all of Owner Trustee's right, title, and interest in the Collateral to secure the Secured Obligations, including Owner Trustee's obligations under the Equipment Notes. H...........Lessor and Lessee are entering into the Lease, pursuant to which Lessor is leasing the Aircraft to Lessee and Lessee is leasing the Aircraft from Lessor. I...........The parties to this Agreement want to set forth in this Agreement the terms and conditions upon and subject to which the foregoing transactions shall be effected. The parties hereto agree as follows: 1. DEFINITIONS AND CONSTRUCTION The terms defined in Annex A, when capitalized as in Annex A, have the same meanings when used in this Agreement. Annex A also contains rules of usage that control construction in this Agreement. 2. PARTICIPATION IN LESSOR'S COST; ISSUANCE OF EQUIPMENT NOTES; TERMINATION OF OBLIGATION TO PARTICIPATE 2.1 PARTICIPATION IN LESSOR'S COST Subject to the terms and conditions of this Agreement, on the Delivery Date, Owner Participant and each Pass-Through Trustee shall participate in the payment of Lessor's Cost as follows: (a) Owner Participant shall finance, in part, Owner Trustee's payment of Lessor's Cost for the Aircraft by making an equity investment in the beneficial ownership of the Aircraft in the amount in Dollars equal to Owner Participant's Percentage multiplied by Lessor's Cost; and (b) each Pass-Through Trustee shall make a non-recourse secured loan to Owner Trustee to finance, in part, Owner Trustee's payment of Lessor's Cost in the amount in Dollars equal to such Pass-Through Trustee's PTT Percentage multiplied by Lessor's Cost, such loan to be evidenced by one or more Equipment Notes, dated the Delivery Date, issued to Subordination Agent as the registered holder on behalf of each such Pass-Through Trustee for the related Pass-Through Trust by Owner Trustee in accordance with this Agreement and the Mortgage, in an aggregate principal amount equal to the Commitment of each such Pass-Through Trustee. 2.2 NATURE OF OBLIGATIONS OF PARTICIPANTS The obligations hereunder of each Participant are several, and not joint, and a Participant shall have no obligation to make available to Owner Trustee any portion of any amount not paid hereunder by any other Participant. The failure by any Participant to perform its obligations hereunder shall not affect the obligations of Lessee toward any other Participant, except to the extent provided in ss. 5.4. 2.3 TERMINATION OF OBLIGATION TO PARTICIPATE NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, IF THE CLOSING DOES NOT OCCUR ON OR BEFORE THE COMMITMENT TERMINATION DATE, THE COMMITMENT OF EACH PARTICIPANT AND ITS OBLIGATION TO PARTICIPATE IN THE PAYMENT OF LESSOR'S COST SHALL EXPIRE AND BE OF NO FURTHER FORCE AND EFFECT; PROVIDED, THAT THE LIABILITY OF ANY PARTICIPANT THAT HAS DEFAULTED IN THE PAYMENT OF ITS COMMITMENT SHALL NOT BE RELEASED. 3. LEASE OF AIRCRAFT Subject to the terms and conditions of this Agreement, concurrently with the issuance of the Equipment Notes on the Delivery Date, Owner Trustee shall purchase and accept delivery of the Aircraft from Seller under and pursuant to the Purchase Agreement and the Purchase Agreement Assignment, and thereupon Owner Trustee shall lease the Aircraft to Lessee, and Lessee shall lease the Aircraft from Owner Trustee, under the Lease. 4. PROCEDURE FOR PARTICIPATION IN PAYMENT OF LESSOR'S COST; POSTPONEMENT OF SCHEDULED DELIVERY DATE 4.1 NOTICES OF SCHEDULED DELIVERY DATE Without limiting its obligations to the Loan Participant under ss. 1(b) of the Note Purchase Agreement, Lessee agrees to give Participants, Owner Trustee, and Mortgagee at least one Business Day's written notice of the Scheduled Delivery Date, which notice shall set forth Lessor's Cost and the amount of each Participant's Commitment. Each Participant agrees that making its Commitment available shall constitute a waiver of such notice. Owner Trustee and Mortgagee shall be deemed to have waived such notice if WTC receives from each Participant funds in the full amount of its respective Commitment. 4.2 PAYMENT OF LESSOR'S COST (a).........Each Participant agrees, subject to the terms and conditions of this Agreement, to make the Dollar amount of its respective Commitment available, by wire transfer of immediately available funds to WTC's account at Wilmington Trust Company, ABA No. __________, account no. __________, reference American Trans Air, Inc. Lease N5__AT, at or before 12:00 noon, New York City time, on the Scheduled Delivery Date. All such funds made available by each Participant to WTC shall, until payment thereof to Seller as provided in ss. 4.2(b)(2) or return thereof to the respective Participant as provided in ss. 4.3.2, be held by WTC in trust for the benefit of the respective Participant, as the sole and exclusive property of the respective Participant and not as part of the Trust Estate or the Collateral. (b).........Subject to the satisfaction, or waiver by the applicable party, of the conditions precedent set forth in ss. 5, and simultaneously with the receipt by the parties hereto of all amounts to be paid to them on the Delivery Date pursuant to this ss. 4.2, Owner Trustee shall: (1) purchase, take title to, and accept delivery of the Aircraft; (2) in consideration of the transfer of title to the Aircraft to Owner Trustee, direct WTC to pay, from the funds made available to WTC hereunder by the Participants, all of the Commitments of the Participants to Seller, which payments in the aggregate shall be equal to Lessor's Cost, by wire transfer of immediately available funds to Seller's account set forth in Schedule 1 or as otherwise directed by Seller; (3) execute an application for registration of the Aircraft with the FAA; (4) execute the Mortgage and issue the Equipment Notes to Subordination Agent in accordance withss. 2.1(b); (5) lease the Aircraft to Lessee pursuant to the Lease; and (6) take such other action as may be required to be taken by Owner Trustee on the Delivery Date by the terms of any Operative Agreement. 4.3 POSTPONEMENT OF SCHEDULED DELIVERY DATE 4.3.1 POSTPONEMENT If for any reason whatsoever the Closing is not consummated on the Scheduled Delivery Date, Lessee may, subject to the provisions of 1(e) of the Note Purchase Agreement, by telephonic notice, given by 5:00 p.m. New York City time (such telephonic notice to be promptly confirmed in writing by personal delivery or facsimile) on the Scheduled Delivery Date, to each Participant, Owner Trustee, and Mortgagee, designate a Delayed Delivery Date, in which case Owner Participant will keep its funds available, and each Loan Participant shall comply with its obligations under ss. 5.01 of each applicable Pass-Through Trust Agreement. 4.3.2 RETURN OF FUNDS WTC shall promptly return to each Participant that makes funds available to it in accordance with ss. 4.2(a) such funds, together with interest or income earned thereon, if the Closing fails to occur on the Scheduled Delivery Date, PROVIDED, that any such funds made available by the Loan Participant shall be returned on such Scheduled Delivery Date. 4.4 CLOSING The Closing shall occur at the offices of Troutman Sanders LLP, 5200 Bank of America Plaza, Atlanta, GA (with a set of Operative Agreements also being delivered in New York City), or such other place as the parties shall agree. 5. CLOSING CONDITIONS 5.1 CONDITIONS TO PARTICIPANTS' OBLIGATIONS Each Participant's obligation to make the Dollar amount of its Commitment available for payment as directed by Owner Trustee on the Delivery Date is subject to the satisfaction or such Participant's waiver, on or before the Delivery Date, of the conditions in this ss. 5.1; PROVIDED, that it shall not be a condition to the obligation of any Participant that any document be produced or action taken that is to be produced or taken by such Participant or by a Person within such Participant's control; PROVIDED, FURTHER, that ss. 5.1.2 (a), (m), and (u)(8) shall not be conditions to the Loan Participants' obligations and ss. 5.1.15 and ss. 5.1.16 shall not be conditions to Owner Participant's obligations. 5.1.1 NOTICE Such Participant received the notice described in ss. 4.1 or, in the case of a Delayed Delivery Date, ss. 4.3, when and as required thereby. 5.1.2 DELIVERY OF DOCUMENTS Except as otherwise provided in this ss. 5.1.2, such Participant receives executed counterparts of the following documents, and such counterparts (x) have been duly authorized, executed, and delivered by the party or parties thereto, (y) are reasonably satisfactory in form and substance to such Participant, and (z) are in full force and effect: (a) the Lease (Mortgagee to receive the sole executed chattel paper original thereof); (b) the Tax Indemnity Agreement; PROVIDED, that only Owner Participant and Lessee shall receive copies of the Tax Indemnity Agreement; (c) the Trust Agreement; (d) the Mortgage; (e) the Purchase Agreement Assignment; (f) the Consent and Agreement and the Engine Manufacturer Warranty Agreement; (g) the Equipment Notes dated the Delivery Date; PROVIDED, that only the Subordination Agent shall receive the authenticated Equipment Notes; (h) an excerpted copy of the Purchase Agreement to the extent relating to Airframe Manufacturer's or Engine Manufacturer's warranties or related obligations or any right in the Purchase Agreement assigned to Owner Trustee pursuant to the Purchase Agreement Assignment; PROVIDED, that only Owner Trustee and Mortgagee shall receive copies of such agreement (copies of which may be inspected by Participants and their respective special counsel on the Delivery Date, but after the Delivery Date such copies shall be retained by Owner Trustee and Mortgagee and may be inspected and reviewed by Owner Participant or Loan Participant or their counsel if and only if a Lease Default exists); (i) the Bills of Sale; (j) the Guarantee; (k) an invoice from Seller specifying the amount due to Seller in respect of the Aircraft, which amount shall equal Lessor's Cost of the Aircraft; (l) the broker's report and insurance certificates required byss. 11 of the Lease; (m) an appraisal or appraisals from an Appraiser, which appraisal or appraisals shall be reasonably satisfactory in form and substance to Owner Participant; PROVIDED, that only Owner Participant shall receive copies of such appraisal(s); (n) (1) a copy of Lessee's articles of incorporation, by-laws, and resolutions, in each case certified as of the Delivery Date by the Secretary or an Assistant Secretary of Lessee, duly authorizing Lessee's execution, delivery, and performance of the Lessee Operative Agreements required to be executed and delivered by Lessee on or before the Delivery Date in accordance with the provisions hereof and thereof; (2) a copy of Guarantor's articles of incorporation, by-laws, and resolutions, in each case certified as of the Delivery Date by the Secretary or an Assistant Secretary of Guarantor, duly authorizing Guarantor's execution, delivery, and performance of the Guarantee; (3) incumbency certificates of Lessee, Guarantor, Owner Participant, FSB, and WTC as to the person(s) authorized to execute and deliver the relevant Operative Agreements on behalf of such party; and (4) copies of the certificate or articles of incorporation, by-laws, and general authorizing resolutions of the boards of directors (or executive committees) or other satisfactory evidence of authorization of Owner Participant, FSB, and WTC, certified as of the Delivery Date by the Secretary or an Assistant or Attesting Secretary of Owner Participant, FSB, and WTC, respectively, which authorize the execution, delivery and performance by Owner Participant, FSB, and WTC, respectively, of each of the Operative Agreements to which it is a party, together with such other documents and evidence with respect to it as Lessee or any Participant reasonably requests in order to establish the consummation of the transactions contemplated by this Agreement and the taking of all corporate proceedings in connection therewith; (o) an Officer's Certificate of Lessee, dated the Delivery Date, stating that its representations and warranties in this Agreement are true and correct as of the Delivery Date (or, to the extent that any such representation and warranty expressly relates to an earlier date, true and correct as of such earlier date); (p) an Officer's Certificate of FSB, dated the Delivery Date, stating that its representations and warranties, in its individual capacity and as Owner Trustee, in this Agreement are true and correct as of the Delivery Date (or, to the extent that any such representation and warranty expressly relates to an earlier date, true and correct as of such earlier date); (q) an Officer's Certificate of Owner Participant, dated the Delivery Date, stating that its representations and warranties in this Agreement are true and correct as of the Delivery Date (or, to the extent that any such representation and warranty expressly relates to an earlier date, true and correct as of such earlier date); (r) an Officer's Certificate of WTC, dated the Delivery Date, stating that its representations and warranties, in its individual capacity, or as Mortgagee, a Pass-Through Trustee, or Subordination Agent (as applicable) in this Agreement are true and correct as of the Delivery Date (or, to the extent that any such representation and warranty expressly relates to an earlier date, true and correct as of such earlier date); (s) an application for registration of the Aircraft with the FAA in the name of Owner Trustee (FAA Counsel to receive the sole executed copy thereof, for filing with the FAA); (t) the Financing Statements; (u) the following opinions of counsel, in each case dated the Delivery Date: (1) an opinion of Troutman Sanders LLP, special counsel to Lessee and Guarantor, substantially in the form of Exhibit A; (2) an opinion of Lessee's and Guarantor's Legal Department, substantially in the form of Exhibit B; (3) an opinion of corporate counsel to Airframe Manufacturer, substantially in the form of Exhibit C; (4) an opinion of Ray, Quinney & Nebeker, special counsel to Owner Trustee, substantially in the form of Exhibit D; (5) an opinion of Richards, Layton & Finger, special counsel to Mortgagee and the Loan Participants, substantially in the form of Exhibit E; (6) an opinion of Dewey Ballantine LLP, special counsel to Owner Participant, substantially in the form of Exhibit F; (7) an opinion of FAA Counsel, substantially in the form of Exhibit G; (8) an opinion of Dewey Ballantine LLP, special tax counsel to Owner Participant, with respect to certain tax consequences of the transactions contemplated hereby; PROVIDED, that only Owner Participant shall receive such opinion; and (9) an opinion of corporate counsel of Owner Participant, substantially in the form of Exhibit H, and (v) each Participant receives copies of such other documents as it reasonably requests, except as provided in clauses (b), (h), (m), and (u)(8) of this ss. 5.1.2. 5.1.3 OTHER COMMITMENTS Each other Participant makes available the Dollar amount of its Commitment in accordance with ss. 4. 5.1.4 VIOLATION OF LAW No change occurs after the date of this Agreement in any applicable Law that makes it a violation of Law for (a) Lessee, any Participant, Subordination Agent, Owner Trustee, or Mortgagee to execute, deliver, and perform the Operative Agreements to which it is a party or to be a party subject to the obligations of the Operative Agreements to which such Participant is bound, or (b) any Participant to make the Dollar amount of its Commitment available or, in the case of any Loan Participant, to acquire an Equipment Note, or to realize the benefits of the security afforded by the Mortgage. 5.1.5 PERFECTED SECURITY INTEREST After giving effect to the filing of the FAA-Filed Documents and the Financing Statements, Mortgagee shall have a duly-perfected first-priority security interest in all of Owner Trustee's right, title, and interest in the Aircraft and the Lease, subject only to Permitted Liens. 5.1.6 REPRESENTATIONS, WARRANTIES, AND COVENANTS The representations and warranties of each other party to this Agreement made, in each case, in any Operative Agreement to which it is a party, are true and accurate in all material respects as of the Delivery Date (unless any such representation and warranty was made with reference to a specified date, in which case such representation and warranty was true and accurate as of such specified date), and each other party to this Agreement has performed and observed, in all material respects, all of its covenants, obligations, and agreements in each Operative Agreement to which it is a party to be observed or performed by it as of the Delivery Date. 5.1.7 NO DEFAULT On the Delivery Date, no Lease Default or Mortgage Default exists or would result from the sale, mortgage, or lease of the Aircraft. 5.1.8 NO EVENT OF LOSS No Event of Loss with respect to the Airframe or any Engine has occurred, and no circumstance, condition, act, or event has occurred that, with the giving of notice or lapse of time, would give rise to or constitute an Event of Loss with respect to the Airframe or any Engine. 5.1.9 TITLE Owner Trustee has good title (subject to filing and recordation of the FAA Bill of Sale with the FAA) to the Aircraft, free and clear of Liens, except (a) the rights of Lessee under the Lease, (b) the Lien created by the Mortgage, (c) the beneficial interest of Owner Participant created by the Trust Agreement, (d) Liens permitted by clause (d) (solely for taxes not yet due) of ss. 6 of the Lease, and (e) Liens permitted by clause (e) of ss. 6 of the Lease. 5.1.10 CERTIFICATION The Aircraft has been duly certificated by the FAA as to type, and upon registration in Owner Trustee's name will be eligible for an FAA airworthiness certificate. 5.1.11 SECTION 1110 Owner Trustee, as lessor under the Lease (and Mortgagee, as assignee of Owner Trustee under the Mortgage), is entitled to the benefits of Section 1110 (as currently in effect) with respect to the right to take possession of the Airframe and Engines as provided in the Lease in the event of a case under Chapter 11 of the Bankruptcy Code in which Lessee is a debtor. 5.1.12 FILING The FAA-Filed Documents are on the Delivery Date duly filed for recordation with the FAA in accordance with the Transportation Code, and each Financing Statement has been duly filed or is in the process of being duly filed in the appropriate jurisdiction. 5.1.13 NO PROCEEDINGS No action or proceeding has been instituted, nor is any action threatened in writing, before any Government Entity, nor has any order, judgment, or decree been issued or proposed to be issued by any Government Entity, to set aside, restrain, enjoin, or prevent the completion and consummation of any Operative Agreement or the Transactions. 5.1.14 GOVERNMENTAL ACTION All appropriate action required to have been taken before the Delivery Date by the FAA, or any other Government Entity of the United States, in connection with the Transactions has been taken, and all orders, permits, waivers, authorizations, exemptions, and approvals of such entities required to be in effect on the Delivery Date in connection with the Transactions have been issued. 5.1.15 NOTE PURCHASE AGREEMENT The conditions precedent to the obligations of the Loan Participants and the other requirements relating to the Aircraft and the Equipment Notes in the Note Purchase Agreement have been satisfied. 5.2 CONDITIONS TO OWNER TRUSTEE'S OBLIGATIONS Owner Trustee's obligation to direct WTC to apply the Commitments to pay Lessor's Cost on the Delivery Date is subject to the satisfaction or Owner Trustee's waiver, on or before the Delivery Date, of the conditions in this ss. 5.2. 5.2.1 NOTICE Owner Trustee receives the notice described in ss. 4.1 or, in the case of a Delayed Delivery Date, ss. 4.3, when and as required thereby. 5.2.2 DOCUMENTS Owner Trustee receives executed originals of the documents described in ss. 5.1.2, except as otherwise provided therein, unless the failure to receive any such document is the result of any action or inaction by Owner Trustee. 5.2.3 OTHER CONDITIONS PRECEDENT Each of the conditions in ss.ss. 5.1.4, 5.1.6, 5.1.7, and 5.1.11 is satisfied, unless the failure of any such condition to be satisfied is the result of any action or inaction by Owner Trustee. 5.3 CONDITIONS TO MORTGAGEE'S OBLIGATIONS Mortgagee's obligation to authenticate the Equipment Notes on the Delivery Date is subject to the satisfaction or Mortgagee's waiver, on or before the Delivery Date, of the conditions in this ss. 5.3. 5.3.1 NOTICE Mortgagee receives the notice described in ss. 4.1 or, in the case of a Delayed Delivery Date, ss. 4.3, when and as required thereby. 5.3.2 DOCUMENTS Mortgagee receives executed originals of the documents described in ss. 5.1.2, except as otherwise provided therein, unless the failure to receive any such document is the result of any action or inaction by Mortgagee. 5.3.3 OTHER CONDITIONS PRECEDENT Each of the conditions in ss.ss. 5.1.4, 5.1.6, 5.1.7, and 5.1.11 has been satisfied, unless the failure of any such condition to be satisfied is the result of any action or inaction by Mortgagee. 5.4 CONDITIONS TO LESSEE'S OBLIGATIONS Lessee's obligation to lease the Aircraft on the Delivery Date is subject to the satisfaction or Lessee's waiver, on or before the Delivery Date, of the conditions in this ss. 5.4. 5.4.1 DOCUMENTS Lessee receives executed originals of the documents described in ss. 5.1.2, except as otherwise provided therein, and they are satisfactory to Lessee, unless the failure to receive any such document is the result of any action or inaction by Lessee. 5.4.2 TAXES Lessee is satisfied that no sales, use, value-added, goods-and-services, or like tax, and no stamp tax duty, is payable with respect to the delivery of the Aircraft on the Delivery Date (to the extent that Lessee could be liable therefor under ss. 9.3). 5.4.3 OTHER CONDITIONS Each of the conditions in ss.ss. 5.1.3 (as to all Participants), 5.1.4, 5.1.6, 5.1.7 (as to Mortgage Defaults' not constituting Lease Defaults), 5.1.8, 5.1.9, 5.1.10, 5.1.11, 5.1.12, 5.1.13, and 5.1.14 has been satisfied or waived by Lessee, unless the failure of any such condition to be satisfied is the result of any action or inaction by Lessee. 5.5 POST-REGISTRATION OPINION Promptly after the registration of the Aircraft and the recordation of the FAA-Filed Documents pursuant to the Transportation Code, Lessee will cause FAA Counsel to deliver to Lessee, each Participant, Subordination Agent, Owner Trustee, and Mortgagee a favorable opinion or opinions addressed to each of them with respect to such recordation. 6. REPRESENTATIONS AND WARRANTIES 6.1 LESSEE'S REPRESENTATIONS AND WARRANTIES Lessee represents and warrants to each Participant, Owner Trustee, Subordination Agent, and Mortgagee that: 6.1.1 ORGANIZATION; QUALIFICATION Lessee is a corporation duly incorporated, validly existing, and in good standing under the Laws of Indiana, and has the corporate power and authority to conduct the business in which it is currently engaged and to own or hold under lease its properties and to enter into and perform its obligations under the Lessee Operative Agreements. Lessee is duly qualified to do business as a foreign corporation in good standing in each jurisdiction in which the nature and extent of the business conducted by it, or the ownership of its properties, requires such qualification, except where the failure to be so qualified would not give rise to a Materially Adverse Change to Lessee. 6.1.2 CORPORATE AUTHORIZATION Lessee has taken, or caused to be taken, all necessary corporate action (including obtaining any consent or approval of stockholders required by its articles of incorporation or by-laws) to authorize its execution, delivery, and performance of its obligations under each of the Lessee Operative Agreements. 6.1.3 NO VIOLATION Lessee's execution, delivery, and performance of its obligations under the Lessee Operative Agreements do not and will not (a) violate any provision of Lessee's articles of incorporation or by-laws, (b) violate any Law applicable to or binding on Lessee, or (c) violate or constitute any default under (other than any violation or default that would not result in a Materially Adverse Change to Lessee), or result in the creation of any Lien (other than as permitted under the Lease) upon the Aircraft under, any lease, loan, or other material agreement to which Lessee is a party or by which Lessee or any of its properties is bound. 6.1.4 APPROVALS Lessee's execution and delivery of, and performance of its obligations under, the Lessee Operative Agreements do not and will not require the consent or approval of, the giving of notice to, the registration with, the recording or filing of any documents with, or the taking of any other action in respect of (a) any trustee or other holder of any Debt of Lessee, (b) any Government Entity, or (c) any other Person, other than (x) the FAA-Filed Documents and the Financing Statements (and continuation statements periodically), and (y) filings, recordings, notices, corporate approvals of Lessee (which have been duly obtained) or other ministerial actions pursuant to any routine recording, contractual, or regulatory requirements. 6.1.5 VALID AND BINDING AGREEMENTS The Lessee Operative Agreements have been duly authorized, executed, and delivered by Lessee, and (assuming their due authorization, execution, and delivery by the other parties thereto) constitute legal, valid, and binding obligations of Lessee and are enforceable against Lessee in accordance with their terms, except as such enforceability may be limited by bankruptcy, insolvency, and other similar Laws affecting the rights of creditors generally and general principles of equity. 6.1.6 LITIGATION Except as set forth in Guarantor's most recent Annual Report on Form 10-K, filed by Lessee with the SEC on or before the Delivery Date, or in any Quarterly Report on Form 10-Q or Current Report on Form 8-K filed by Guarantor with the SEC subsequent to such Form 10-K and on or before the Delivery Date, no action, claim, or proceeding is now pending or, to Lessee's Actual Knowledge, threatened, against Lessee, Guarantor, or any of their Affiliates, before any Government Entity or any arbitrator, that is reasonably likely to be determined adversely to Lessee and if determined adversely to Lessee would result in a Materially Adverse Change. 6.1.7 FINANCIAL CONDITION Guarantor's audited consolidated balance sheet for its most-recent fiscal year, included in Guarantor's Annual Report on Form 10-K filed by Guarantor with the SEC for such fiscal year, and the related consolidated statements of operations and cash flows for the period then ended, have been prepared in accordance with GAAP and fairly present in all material respects the financial condition of Guarantor and its consolidated subsidiaries as of such date and the results of its operations and cash flows for such period, and since the date of such balance sheet, there has been no Materially Adverse Change in such financial condition or operations, except for matters disclosed in (a) the financial statements referred to above, or (b) any subsequent Quarterly Report on Form 10-Q or Current Report on Form 8-K filed by Guarantor with the SEC on or before the Delivery Date. 6.1.8 REGISTRATION AND RECORDATION Except for (a) registering the Aircraft with the FAA pursuant to the Transportation Code in the name of Owner Trustee, (b) filing for recordation (and recording) the FAA-Filed Documents, (c) filing the Financing Statements (and continuation statements relating thereto at periodic intervals), (d) Mortgagee's taking possession and retaining the chattel paper original counterpart of the Lease, and (e) affixing the placards referred to in ss. 7.1.3 of the Lease, no further action, including filing or recording any document (including any financing statement under UCC Article 9) is necessary in order to establish and perfect Owner Trustee's right, title, and interest, and Mortgagee's security interest, in the Aircraft and the Lease, as against Lessee and any other Person, in any applicable jurisdiction in the United States. 6.1.9 CHIEF EXECUTIVE OFFICE Lessee's chief executive office (as defined in UCC Article 9) is located at 7337 West Washington Street, Indianapolis, Indiana, 46231. 6.1.10 NO DEFAULT No Lease Default exists. 6.1.11 NO EVENT OF LOSS No Event of Loss has occurred with respect to the Airframe or any Engine, and, to Lessee's Actual Knowledge, no circumstance, condition, act, or event has occurred that, with the giving of notice or lapse of time, gives or would give rise to or constitutes or would constitute an Event of Loss to the Airframe or any Engine. 6.1.12 COMPLIANCE WITH LAWS (a) Lessee is a Citizen of the United States and a U.S. Air Carrier. (b) Lessee holds all licenses, permits, and franchises from the appropriate Government Entities necessary to authorize Lessee lawfully to engage in air transportation and to carry on scheduled commercial passenger service as currently conducted, except to the extent that the failure to hold any such license, permit, or franchise would not give rise to a Materially Adverse Change to Lessee. (c) Lessee is not an "investment ompany" or a company controlled by an "investment company" within the meaning of the Investment Company Act of 1940. 6.1.13 SECURITIES LAWS Neither Lessee nor any Person authorized to act on its behalf has directly or indirectly offered any beneficial interest or Security relating to the ownership of the Aircraft or the Lease or any interest in the Trust Estate and the Trust Agreement, or any of the Equipment Notes or any other interest in or security under the Mortgage, for sale to, or solicited any offer to acquire any such interest or security from, or has sold any such interest or security to, any Person in violation of the Securities Act. 6.1.14 BROKER'S FEES No Person acting on behalf of Lessee is or will be entitled to any broker's fee, commission, or finder's fee in connection with the Transactions, except for fees payable to Lessee's Advisor(s), if any. 6.1.15 SECTION 1110 Owner Trustee, as lessor under the Lease (and Mortgagee, as assignee under the Mortgage), will be entitled to the benefits of Section 1110 (as currently in effect), with respect to the right to take possession of the Airframe and Engines as provided in the Lease, in the event of a case under Chapter 11 of the Bankruptcy Code in which Lessee is a debtor. 6.1.16 NO GOVERNMENT CONSENTS Neither Lessee's execution and delivery of any of the Lessee Operative Agreements nor Lessee's performance of its obligations hereunder requires the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action in respect of any Government Entity, except for (a) the orders, permits, waivers, exemptions, authorizations and approvals of the regulatory authorities having jurisdiction over the operation of the Aircraft by Lessee, which orders, permits, waivers, exemptions, authorizations and approvals have been duly obtained and are, or will on the Delivery Date be, in full force and effect, and the registration and filings referred to herein and (b) any normal periodic and other reporting requirements under the applicable rules of the FAA to the extent required to be given or obtained only on or after the Delivery Date. 6.1.17 PAYMENT OF TAXES Lessee and its Affiliates have filed or caused to be filed all federal, state, and material local and non-U.S. tax returns that are required to be filed and have paid or caused to be paid all taxes shown to be due on such returns or on any assessment received by Lessee or its Affiliates, except any that are being contested diligently and in good faith by appropriate proceedings and for which adequate provision for payment has been made in accordance with GAAP. There is no ongoing audit or, to the knowledge of Lessee, other investigation by any Government Entity of the tax liability of Lessee or its Affiliates and there is no unresolved claim by a taxing authority concerning Lessee's or any Affiliate's tax liability, for any period for which returns have been filed or were due, that, in either case, reasonably may be expected to result in liability of Lessee which could have a materially adverse effect on the business, operations or financial condition of Lessee or the ability of Lessee to perform its obligations under the Operative Agreements. 6.2 OWNER PARTICIPANT'S REPRESENTATIONS AND WARRANTIES Owner Participant represents and warrants to Lessee, the Loan Participants, Subordination Agent, Owner Trustee, and Mortgagee that: 6.2.1 ORGANIZATION, ETC. Owner Participant (a) is a corporation duly incorporated, validly existing and in good standing under the Laws of the OP Jurisdiction, (b) has the corporate power and authority to conduct the business in which it is currently engaged, to own or hold under lease its properties, and to enter into and perform its obligations under the Owner Participant Agreements, and (c) has a tangible net worth (exclusive of goodwill) greater than $50 million. 6.2.2 CORPORATE AUTHORIZATION Owner Participant has taken (or caused to be taken) all necessary corporate action (including obtaining any consent or approval of stockholders required by its certificate of incorporation or by-laws) to authorize its execution, delivery, and performance of its obligations under each of the Owner Participant Agreements. 6.2.3 NO VIOLATION Owner Participant's execution, delivery, and performance of its obligations under each of the Owner Participant Agreements do not and will not (a) violate any provision of Owner Participant's certificate of incorporation or by-laws, (b) violate any Law applicable to or binding on Owner Participant (no representation or warranty is made with respect to ERISA, other than as set forth in ss. 6.2.9) or (c) violate or constitute any default under (other than any violation or default that would not result in a Materially Adverse Change to Owner Participant), or result in the creation of any Lien (other than as provided for or otherwise permitted in the Operative Agreements) upon the Trust Estate under, any lease, loan, or other material agreement to which Owner Participant is a party or by which Owner Participant or any of its properties is bound. 6.2.4 APPROVALS Owner Participant's execution, delivery, and performance of its obligations under each of the Owner Participant Agreements do not and will not require the consent or approval of, the giving of notice to, the registration with, the recording or filing of any documents with, or the taking of any other action in respect of (a) any trustee or other holder of any Debt of Owner Participant, and (b) any Government Entity, other than filing the FAA-Filed Documents and the Financing Statements and routine regulatory filings. 6.2.5 VALID AND BINDING AGREEMENTS The Owner Participant Agreements have been duly authorized, executed, and delivered by Owner Participant, and (assuming the due authorization, execution, and delivery by the other parties thereto) constitute legal, valid, and binding obligations of Owner Participant and are enforceable against Owner Participant in accordance with their terms, except as such enforceability may be limited by bankruptcy, insolvency, and other similar Laws affecting the rights of creditors generally and general principles of equity. 6.2.6 CITIZENSHIP Owner Participant is a Citizen of the United States. 6.2.7 NO LIENS There are no Lessor Liens attributable to Owner Participant on all or any part of the Trust Estate. 6.2.8 INVESTMENT BY OWNER PARTICIPANT Owner Participant is acquiring its beneficial interest in the Trust Estate for its own account, for investment and not with a view to any resale or distribution thereof; PROVIDED, that, subject to the transfer restrictions in ss. 10, its disposition of its beneficial interest in the Trust Estate shall at all times be within its control. 6.2.9 ERISA No part of the funds to be used by Owner Participant to acquire or hold its interests in the Trust Estate directly or indirectly constitutes assets of a Plan. 6.2.10 LITIGATION There are no pending or, to Owner Participant's Actual Knowledge, threatened actions or proceedings against Owner Participant before any Government Entity that, if determined adversely to Owner Participant, would materially adversely affect Owner Participant's ability to perform its obligations under the Owner Participant Agreements. 6.2.11 SECURITIES LAWS Neither Owner Participant nor any Person Owner Participant has authorized to act on its behalf has directly or indirectly offered any beneficial interest in or Security relating to the ownership of the Aircraft or any interest in the Trust Estate, or any of the Equipment Notes or any other interest in or Security under the Mortgage, for sale to, or solicited any offer to acquire any of the same from, any Person in violation of the Securities Act or applicable state securities Laws (with the understanding that Owner Participant shall not be deemed to have authorized Lessee's Advisor(s) to act on Owner Participant's behalf). 6.2.12 BROKER'S FEES No Person acting on behalf of Owner Participant is or will be entitled to any broker's fee, commission, or finder's fee in connection with the Transactions. 6.3 FSB'S REPRESENTATIONS AND WARRANTIES FSB represents and warrants to Lessee, Owner Participant, the Loan Participants, Subordination Agent, and Mortgagee that: 6.3.1 ORGANIZATION, ETC. FSB is a national banking association duly organized, validly existing and in good standing under the Laws of the United States, holding a valid certificate to do business as a national banking association with banking authority to execute, deliver, and perform its obligations under the Owner Trustee Agreements. 6.3.2 CORPORATE AUTHORIZATION FSB has taken (or caused to be taken) all necessary corporate action (including obtaining any consent or approval of stockholders required by Law or by its articles of association or by-laws) to authorize the execution and delivery by FSB or Owner Trustee, of each of the Owner Trustee Agreements, and the performance of its obligations thereunder. 6.3.3 NO VIOLATION FSB's and Owner Trustee's execution, delivery, and performance of their respective obligations under the Owner Trustee Agreements do not and will not (a) violate any provision of FSB's articles of association or by-laws, (b) violate any Utah Law or federal banking Law applicable to or binding on Owner Trustee or FSB, or (c) violate or constitute any default under (other than any violation or default that would not result in a Materially Adverse Change to FSB or Owner Trustee), or result in the creation of any Lien (other than the Lien of the Mortgage) upon any property of FSB, Owner Trustee, or any of FSB's subsidiaries under, any lease, loan, or other material agreement to which FSB or Owner Trustee is a party or by which FSB, Owner Trustee, or any of their properties is or may be bound or affected. 6.3.4 APPROVALS FSB's and Owner Trustee's execution, delivery, and performance of their respective obligations under the Owner Trustee Agreements do not and will not require the consent, approval, or authorization of, the giving of notice to, the registration with, the recording or filing of any documents with, or the taking of any other action in respect of, (a) any trustee or other holder of any Debt of FSB, or (b) any Government Entity governing banking and trust powers, other than filing the FAA-Filed Documents and the Financing Statements. 6.3.5 VALID AND BINDING AGREEMENTS The Owner Trustee Agreements have been duly authorized, executed, and delivered by FSB and Owner Trustee, and (assuming the due authorization, execution, and delivery thereof by the other parties thereto) constitute legal, valid, and binding obligations of FSB and Owner Trustee and are enforceable against FSB and Owner Trustee in accordance with their terms, except as such enforceability may be limited by bankruptcy, insolvency, and other similar Laws affecting the rights of creditors generally and general principles of equity. 6.3.6 CITIZENSHIP FSB is a Citizen of the United States. 6.3.7 CHIEF EXECUTIVE OFFICE The chief executive office (as defined in UCC Article 9) of Owner Trustee is located at 79 South Main Street, Salt Lake City, Utah 84111. 6.3.8 TITLE On the Delivery Date, Owner Trustee shall have received whatever title to the Aircraft as was conveyed to it by Seller. 6.3.9 NO LIENS; FINANCING STATEMENTS There are no Lessor Liens attributable to FSB or Owner Trustee in respect of all or any part of the Aircraft, Trust Estate, or the Collateral. Except for the Financing Statements, neither FSB nor Owner Trustee has executed any UCC financing statement relating to the Aircraft or the Lease. 6.3.10 LITIGATION There are no pending or, to FSB's Actual Knowledge, threatened actions or proceedings against FSB or Owner Trustee before any Government Entity that, if determined adversely to FSB, would materially adversely affect the ability of FSB or Owner Trustee to perform its obligations under the Owner Trustee Agreements. 6.3.11 SECURITIES LAWS Neither FSB, nor any Person authorized to act on its behalf, has directly or indirectly offered any beneficial interest or Security relating to the ownership of the Aircraft or any interest in the Trust Estate or any of the Equipment Notes or any other interest in or security under the Mortgage for sale to, or solicited any offer to acquire any such interest or security from, or has sold any such interest or security to, any Person other than the Participants, except for the offering and sale of the Pass-Through Certificates. 6.3.12 EXPENSES AND TAXES There are no Expenses or Taxes that may be imposed on or asserted against the Trust, the Trust Estate, or any part thereof or any interest therein, the Collateral, Lessee, Owner Participant, any Pass-Through Trustee, Subordination Agent, Owner Trustee, or Mortgagee (except as to Owner Trustee, Taxes imposed on the fees payable to Owner Trustee) under the laws of Utah in connection with Owner Trustee's execution, delivery, or performance of any Operative Agreement or in connection with the issuance of the Equipment Notes, which Expenses or Taxes would not have been imposed if Owner Trustee had not (x) had its principal place of business in Utah, (y) performed (in its individual capacity or as Owner Trustee) any or all of its duties under the Operative Agreements in Utah, or (z) engaged in any activities unrelated to the transactions contemplated by the Operative Agreements in Utah. 6.4 WTC'S REPRESENTATIONS AND WARRANTIES WTC, Mortgagee, Pass-Through Trustee and Subordination Agent, each as to itself, represent and warrant (with respect to ss. 6.4.10, solely in its capacity as Subordination Agent) to Lessee, Owner Participant, and Owner Trustee that: 6.4.1 ORGANIZATION, ETC. WTC is a Delaware banking corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware, and authorized to do business as a Delaware banking corporation with banking authority to execute, deliver, and perform its obligations under the Mortgagee Agreements, the Pass-Through Trustee Agreements, and the Subordination Agent Agreements. 6.4.2 CORPORATE AUTHORIZATION WTC has taken (or caused to be taken) all necessary corporate action (including obtaining any consent or approval of stockholders required by Law or by its certificate of incorporation or by-laws) to authorize the execution and delivery by WTC, Mortgagee, each Pass-Through Trustee, and Subordination Agent (as applicable) of the Mortgagee Agreements, the Pass-Through Trustee Agreements, and the Subordination Agent Agreements and the performance by WTC, Mortgagee, each Pass-Through Trustee, and Subordination Agent (as applicable) of its obligations thereunder. 6.4.3 NO VIOLATION The execution and delivery by WTC, Mortgagee, each Pass-Through Trustee, and Subordination Agent (as applicable) of the Mortgagee Agreements, the Pass-Through Trustee Agreements, and the Subordination Agent Agreements, and the performance by WTC, Mortgagee, each Pass-Through Trustee, and Subordination Agent (as applicable) of its obligations thereunder, do not and will not (a) violate any provision of WTC's certificate of incorporation or by-laws, (b) violate any Law of the United States or of Delaware applicable to or binding on WTC or (except in the case of any Law relating to any Plan) Mortgagee, any Pass-Through Trustee, or Subordination Agent, or (c) violate or constitute any default under (other than any violation or default that would not result in a Materially Adverse Change to WTC, Mortgagee, any Pass-Through Trustee, or Subordination Agent), or result in the creation of any Lien (other than the Lien of the Mortgage) upon any property of WTC, Mortgagee, any Pass-Through Trustee, Subordination Agent, or any of WTC's subsidiaries under any lease, loan, or other agreement to which WTC, Mortgagee, any Pass-Through Trustee, or Subordination Agent is a party or by which WTC, Mortgagee, any Pass-Through Trustee, Subordination Agent, or any of their properties is bound. 6.4.4 APPROVALS The execution and delivery by WTC, Mortgagee, each Pass-Through Trustee, and Subordination Agent (as applicable) of the Mortgagee Agreements, the Pass-Through Trustee Agreements, and the Subordination Agent Agreements to which it is a party, and the performance by WTC, Mortgagee, each Pass-Through Trustee, and Subordination Agent (as applicable) of its obligations thereunder, do not and will not require the consent, approval, or authorization of, the giving of notice to, the registration with, the recording or filing of any document with, or the taking of any other action in respect of (a) any trustee or other holder of any Debt of WTC, or (b) any Government Entity of the United States or of Delaware, other than filing the FAA-Filed Documents and the Financing Statements. 6.4.5 VALID AND BINDING AGREEMENTS The Mortgagee Agreements, the Pass-Through Trustee Agreements, and the Subordination Agent Agreements have been duly authorized, executed, and delivered by WTC, Mortgagee, each Pass-Through Trustee, and Subordination Agent (as applicable), and (assuming the due authorization, execution, and delivery by the other parties thereto) constitute legal, valid, and binding obligations of WTC, Mortgagee, each Pass-Through Trustee, and Subordination Agent (as applicable) and are enforceable against WTC, Mortgagee, each Pass-Through Trustee, and Subordination Agent (as applicable) in accordance with their terms, except as such enforceability may be limited by bankruptcy, insolvency, or other similar Laws affecting the rights of creditors generally and general principles of equity. 6.4.6 CITIZENSHIP WTC is a Citizen of the United States. 6.4.7 NO LIENS There are no Lessor Liens attributable to WTC in respect of all or any part of the Trust Estate or the Collateral. 6.4.8 LITIGATION There are no pending or, to WTC's Actual Knowledge, threatened actions or proceedings against WTC, Mortgagee, any Pass-Through Trustee, or Subordination Agent (as applicable) before any Government Entity that, if determined adversely to WTC, Mortgagee, any Pass-Through Trustee, and Subordination Agent (as applicable), would materially adversely affect the ability of WTC, Mortgagee, any Pass-Through Trustee, or Subordination Agent to perform its obligations under any of the Mortgagee Agreements, the Pass-Through Trustee Agreements, or the Subordination Agent Agreements. 6.4.9 SECURITIES LAWS Other than as contemplated herein and in the Operative Agreements, neither WTC nor any Person authorized to act on its behalf has directly or indirectly offered any beneficial interest or Security relating to the ownership of the Aircraft or any interest in the Collateral or any of the Equipment Notes or any other interest in or security under the Mortgage for sale to, or solicited any offer to acquire any such interest or security from, or has sold any such interest or security to, any Person other than the Participants, except for the offering and sale of the Pass-Through Certificates. 6.4.10 INVESTMENT THE EQUIPMENT NOTES TO BE ACQUIRED BY SUBORDINATION AGENT ARE BEING ACQUIRED BY IT FOR THE ACCOUNT OF THE PASS-THROUGH TRUSTEES, FOR INVESTMENT AND NOT WITH A VIEW TO ANY RESALE OR DISTRIBUTION THEREOF; PROVIDED THAT, SUBJECT TO THE TRANSFER RESTRICTIONS IN SS. 10.1.3, ITS DISPOSITION OF ITS EQUIPMENT NOTES SHALL AT ALL TIMES BE WITHIN ITS CONTROL. 6.4.11 TAXES There are no Taxes payable by any Pass-Through Trustee or WTC imposed by Delaware or any political subdivision or taxing authority thereof in connection with such Pass-Through Trustee's or WTC's execution, delivery, and performance of this Agreement or any Pass-Through Trustee Agreement (other than franchise or other taxes based on or measured by any fees or compensation received by any such Pass-Through Trustee or WTC for services rendered in connection with the transactions contemplated by any of the Pass-Through Trust Agreements), and there are no Taxes payable by any Pass-Through Trustee or WTC imposed by Delaware or any political subdivision thereof in connection with the acquisition, possession, or ownership by any such Pass-Through Trustee of any of the Equipment Notes (other than franchise or other taxes based on or measured by any fees or compensation received by any such Pass-Through Trustee or WTC for services rendered in connection with the transactions contemplated by any of the Pass-Through Trust Agreements), and, assuming that the trusts created by the Pass-Through Trust Agreements will not be taxable as corporations, but, rather, that each will be characterized as a grantor trust under Part I, subpart E of Subchapter J of the Code or as a partnership under Subchapter K of the Code, such trusts will not be subject to any Taxes imposed by Delaware or any political subdivision thereof. 6.4.12 CONTROL WTC is not an Affiliate of Owner Participant or Owner Trustee. 6.4.13 BROKER'S FEES No Person acting on behalf of WTC, Mortgagee, any Pass-Through Trustee, or Subordination Agent is or will be entitled to any broker's fee, commission, or finder's fee in connection with the Transactions. 7. COVENANTS 7.1 LESSEE'S COVENANTS Lessee agrees for the benefit of Owner Participant, the Loan Participants, Owner Trustee, and Mortgagee as follows: 7.1.1 CORPORATE EXISTENCE; U.S. AIR CARRIER Lessee shall at all times maintain its corporate existence, except as permitted byss. 13.2 of the Lease, and shall at all times remain a U.S. Air Carrier. 7.1.2 NOTICE OF CHANGE OF CHIEF EXECUTIVE OFFICE Lessee will give to Owner Participant, Owner Trustee, and Mortgagee timely written notice of (but in any event within 90 days after) any relocation of its chief executive office (as defined in UCC Article 9), and will promptly take any action required by ss. 7.1.3(c) as a result of sucH relocation. 7.1.3 CERTAIN ASSURANCES (a) Lessee shall duly execute, acknowledge, and deliver (or cause to be executed, acknowledged, and delivered) all such further documents, and shall do and cause to be done such further things, as Owner Participant, Owner Trustee, or Mortgagee reasonably requests to accomplish the purposes of the Operative Agreements, provided that no document so executed by Lessee will expand any obligations or limit any rights of Lessee in respect of the Transactions. (b) Lessee shall promptly take such action with respect to the recording, filing, re-recording, and refiling of the Lease, the Trust Agreement, and the Mortgage, and any supplements thereto, as shall be necessary to establish, perfect, and protect Owner Trustee's interests and rights in and to the Aircraft and under the Lease and the perfection and priority of the Lien created by the Mortgage. Lessee shall furnish to Owner Participant or Owner Trustee such information (other than with respect to the citizenship of Owner Participant and Owner Trustee) in Lessee's possession or otherwise reasonably available to Lessee and required to enable Owner Participant or Owner Trustee to apply to register the Aircraft under the Transportation Code (subject to Lessee's rights under ss. 7.1.2 of the Lease), and shall pay or cause to be paid all out-of-pocket costs and expenses thereof (includinG reasonable attorneys' fees and disbursements). (c) Lessee will cause the FAA-Filed Documents, the Financing Statements, and all continuation statements (and any amendments necessitated by any combination, consolidation, or merger pursuant to ss. 13.2 of the Lease, or any relocation of its chief executive office) in respect oF the Financing Statements to be prepared and, subject only to the execution and delivery thereof by Owner Trustee or Mortgagee (as applicable), duly and timely filed and recorded, or filed for recordation, to the extent permitted under the Transportation Code (with respect to the FAA-Filed Documents) or the UCC or similar law of any other applicable jurisdiction (with respect to such other documents). (d) If the Aircraft is registered in a country other than the United States pursuant to ss. 7.1.2 of the Lease, Lessee will furnish tO Owner Trustee, Mortgagee, and each Participant annually while the Aircraft is not U.S.-registered (starting with the calendar year after such registration is effected) an opinion of special counsel reasonably satisfactory to Owner Participant and Mortgagee stating that, in the opinion of such counsel, either (1) such action has been taken with respect to the recording, filing, re-recording, and re-filing of the Operative Agreements and any supplements and amendments thereto as is necessary to establish, perfect, and protect Owner Trustee's and Mortgagee's right, title and interest in and to the Aircraft and the Operative Agreements, reciting the details of such actions, or (2) no such action is necessary to maintain the perfection of such right, title, and interest. 7.1.4 SECURITIES LAWS Neither Lessee nor any Person authorized to act on its behalf will directly or indirectly offer any beneficial interest or Security relating to the ownership of the Aircraft or the Lease or any interest in the Trust Estate and Trust Agreement or any of the Equipment Notes or any other interest in or security under the Mortgage for sale to, or solicit any offer to acquire any such interest or security from, or sell any such interest or security to, any Person in violation of the Securities Act or applicable state or foreign securities Laws. 7.1.5 CERTIFICATION Lessee shall cause the Aircraft to be duly certified by the FAA as to airworthiness and shall, immediately upon registration of the Aircraft in Owner Trustee's name, obtain an FAA airworthiness certificate for the Aircraft. 7.2 OWNER PARTICIPANT'S COVENANTS Owner Participant agrees for the benefit of Lessee, and (except with respect to ss. 7.2.4) Loan Participants, Owner Trustee, and Mortgagee, aS follows: 7.2.1 LIENS Owner Participant (a) (1) will not directly or indirectly create, incur, assume, or suffer to exist any Lessor Lien attributable to it on or with respect to all or any part of the Trust Estate, the Collateral, or the Aircraft, and (2) will, at its own cost and expense, promptly take such action as is necessary to discharge any Lessor Lien attributable to Owner Participant on all or any part of the Trust Estate, the Collateral or the Aircraft; PROVIDED, that Owner Participant shall not be required to comply with the foregoing provisions of this clause (a) if it shall in good faith by appropriate proceedings contest claims or charges resulting in any such Lien as long as such contest does not involve any material danger of the sale, forfeiture, loss, or loss of use of the Aircraft or the interest of Lessor, Mortgagee, or any Participant therein; and (b) will hold harmless and indemnify Lessee, Owner Trustee, each Note Holder, Mortgagee, each of their respective Affiliates, successors, and permitted assigns, the Trust Estate, and the Collateral from and against (1) any and all Expenses, (2) any reduction in the amount payable out of the Trust Estate or the Collateral, and (3) any interference with the possession, operation, or other use of all or any part of the Aircraft, in each case imposed on, incurred by, or asserted against any of the foregoing as a consequence of any such Lessor Lien (without regard to the proviso to the foregoing clause (a)). 7.2.2 REVOCATION OF TRUST AGREEMENT (a) Owner Participant will comply with the provisions of the Trust Agreement applicable to it, will not terminate or revoke the Trust Agreement or the trusts created thereunder without the prior written consent of Lessee and Mortgagee, and will not amend, modify, or supplement the Trust Agreement, or waive any of the provisions thereof, if such amendment, modification, supplement, or waiver would have any adverse effect (1) on Lessee, without the consent of Lessee, or (2) on Mortgagee or any Note Holder, without the consent of Mortgagee. (b) Notwithstanding ss. 7.2.2(a), Owner Participant may at any time remove Owner Trustee pursuant to ss. 9.1 of the Trust Agreement or terminate the Trust Agreement pursuant to ss. 11.2 of the Trust Agreement. 7.2.3 CHANGE OF SITUS OF OWNER TRUST If, at any time, any Tax Indemnitee or the Trust Estate becomes subject to any Taxes for which it is indemnified pursuant to ss. 9.3 of thiS Agreement and if, as a consequence thereof, Lessee requests that the situs of the Trust be moved to another state in the United States from the state in which it is then located, the situs of the Trust may be moved with the written consent of Owner Participant (which consent shall not be unreasonably withheld) and Owner Participant will take whatever action is reasonably necessary to accomplish such removal; PROVIDED, that, in any event, (a) Lessee shall provide such additional tax indemnification as Owner Participant and the Note Holders or the Pass-Through Trustees reasonably request to cover any additional unindemnified Taxes or loss of Tax benefits described in the assumptions in the Tax Indemnity Agreement resulting from such change in situs, (b) the rights and obligations under the Operative Agreements of Owner Participant, the Note Holders, Pass-Through Trustees, and Mortgagee shall not be adversely affected as a result of the taking of such action, (c) the Lien of the Mortgage, on the Collateral shall not be adversely affected by such action, and Lessee and Owner Trustee shall execute and deliver such documents as Mortgagee reasonably requests to protect and maintain the perfection and priority of such Lien, (d) Owner Participant, the Pass-Through Trustees, and Mortgagee shall receive an opinion or opinions of counsel (which counsel is reasonably satisfactory to Owner Participant, the Pass-Through Trustees, and Mortgagee), in scope, form, and substance reasonably satisfactory to Owner Participant, the Pass-Through Trustees, and Mortgagee, to the effect that (1) the Trust, as thus removed, remains a validly-established trust, (2) any amendments to the Trust Agreement necessitated by such removal have been duly authorized, executed, and delivered and constitute valid and binding obligations of such parties, enforceable in accordance with their terms, (3) covering such other matters as Owner Participant, the Pass-Through Trustees, or Mortgagee reasonably request, (e) if such removal involves the replacement of Owner Trustee, then Owner Participant, the Pass-Through Trustees, and Mortgagee shall receive an opinion of counsel to such successor Owner Trustee, in form and substance reasonably satisfactory to Owner Participant, the Pass-Through Trustees, and Mortgagee, covering the matters described in the opinion delivered pursuant to ss. 5.1.2(u)(4), and (f) Lessee shall indemnify anD hold harmless Owner Participant, the Note Holders, Pass-Through Trustees, FSB, and Owner Trustee, on a net after-tax basis, against any and all reasonable out-of-pocket costs and expenses (including attorneys' fees and disbursements), fees and expenses of any new owner trustee, registration, recording, or filing fees, and taxes incurred by Owner Participant, the Note Holders, Pass-Through Trustees, or Owner Trustee in connection with such change of situs. Owner Participant agrees, for Lessee's benefit, that Owner Participant will not consent to or direct a change in the situs of the Trust Estate without Lessee's prior written consent. 7.2.4 COMPLIANCE WITH LEASE PROVISIONS Owner Participant agrees, solely for Lessee's benefit, to comply with the express provisions applicable to Owner Participant in the Lease. 7.2.5 SECURITIES ACT Owner Participant will not directly or indirectly offer any beneficial interest or security relating to the ownership of the Aircraft or any interest in the Trust Estate or any of the Equipment Notes or any other interest in or security under the Mortgage for sale to, or solicit any offer to acquire any such interest or security from, or sell any such interest or security to, any Person in violation of the Securities Act or applicable state or foreign securities Laws, PROVIDED, that this ss. 7.2.5 shall not impose on Owner Participant any responsibility with respect to any such offer, sale, oR solicitation by any other party hereto. 7.2.6 REGARDING OWNER TRUSTEE Owner Participant will direct Owner Trustee to perform its obligations under each Owner Trustee Agreement. 7.3 FSB'S AND OWNER TRUSTEE'S COVENANTS FSB and Owner Trustee agree for the benefit of Lessee, Owner Participant, each Note Holder, and Mortgagee as follows: 7.3.1 LIENS FSB (a) will not directly or indirectly create, incur, assume, or suffer to exist any Lessor Lien attributable to it or Owner Trustee on all or any part of the Trust Estate, the Collateral, or the Aircraft, (b) will, at its own cost and expense, promptly take such action as is necessary to discharge any Lessor Lien attributable to FSB or Owner Trustee on all or any part of the Trust Estate, the Collateral, or the Aircraft, and (c) will personally hold harmless and indemnify Lessee, Owner Participant, each Note Holder, Mortgagee, each of their Affiliates, successors, and permitted assigns, the Trust Estate, and the Collateral from and against (1) any and all Expenses, (2) any reduction in the amount payable out of the Trust Estate or the Collateral, and (3) any interference with the possession, operation, or other use of all or any part of the Aircraft imposed on, incurred by, or asserted against any of the foregoing as a consequence of any such Lessor Lien. 7.3.2 OTHER BUSINESS Owner Trustee will not enter into any business or other activity except as contemplated by the Operative Agreements. 7.3.3 NOTICE OF CHANGE OF CHIEF EXECUTIVE OFFICE FSB and Owner Trustee will give to Lessee, each Participant, and Mortgagee 30 days' prior written notice of any relocation of its chief executive office (as defined in UCC Article 9), and will promptly take any action required by ss. 7.3.8 as a result of such relocation. 7.3.4 SECURITIES ACT Neither FSB nor Owner Trustee will directly or indirectly offer any beneficial interest or Security relating to the ownership of the Aircraft or any interest in the Trust Estate or any of the Equipment Notes or any other interest in or security under the Mortgage for sale to, or solicit any offer to acquire any such interest or security from, or sell any such interest or security to, any Person in violation of the Securities Act or applicable state or foreign securities Laws, PROVIDED, that the foregoing shall not impose on FSB or Owner Trustee any responsibility with respect to any such offer, sale, or solicitation by any other party hereto. 7.3.5 PERFORMANCE OF AGREEMENTS Owner Trustee shall perform its obligations under the Owner Trustee Agreements in accordance with the terms thereof. 7.3.6 RELEASE OF LIEN OF MORTGAGE In each instance referred to in the Lease in which a transfer of any property is required to be made by Owner Trustee to Lessee or any other Person (other than Mortgagee or Owner Participant), Owner Trustee shall, at Lessee's request and expense, use reasonable efforts to procure from Mortgagee the prompt release of the Lien of the Mortgage with respect to such property. 7.3.7 NOTICES; DOCUMENTS If any claim with respect to any liabilities is filed against Owner Trustee and Owner Trustee has Actual Knowledge thereof, then Owner Trustee shall promptly notify Lessee in writing thereof. Owner Trustee further agrees to provide to Lessee promptly any documents (including the certificate of aircraft registration) that it receives from the FAA with respect to the Aircraft. 7.3.8 FILINGS After the Delivery Date, Owner Trustee shall duly execute and deliver to Lessee all filings and recordings (including all filings and UCC financing statements under the Transportation Code and the UCC and any amendments to UCC financing statements necessitated by any relocation of its chief executive office), prepared and delivered to it by Lessee, required to perfect Owner Trustee's title to the Aircraft and the liens of and security interests granted by the Mortgage (or to maintain such perfection) and to make such title, liens, and security interests valid and enforceable. 7.3.9 TRUST AGREEMENT FSB and Owner Trustee hereby (a) agree for the benefit of Lessee, Loan Participants, and Mortgagee not to amend, supplement, terminate, or otherwise modify any provision of the Trust Agreement in a manner that adversely affects the rights of any such party without the prior written consent of such party, and (b) agree for the benefit of Lessee, Loan Participant, and Mortgagee not to revoke the trust created by the Trust Agreement so long as the Mortgage remains undischarged or if such revocation would have an adverse effect on Lessee. Nothing in this Agreement shall impair any right under the Trust Agreement of FSB to resign as Owner Trustee in accordance with the provisions of the Trust Agreement. 7.4 WTC'S COVENANTS WTC, Mortgagee, each Pass-Through Trustee, and Subordination Agent, each as to itself, agree for the benefit of Lessee, Owner Participant, and Owner Trustee as follows: 7.4.1 LIENS Other than Liens arising in connection with the transactions contemplated in the Operative Agreements, WTC (a) will not directly or indirectly create, incur, assume, or suffer to exist any Lessor Lien attributable to it on or with respect to all or any part of the Trust Estate, the Collateral, or the Aircraft, (b) will, at its own cost and expense, promptly take such action as is necessary to discharge any Lessor Lien attributable to WTC on all or any part of the Trust Estate, the Collateral, or the Aircraft, and (c) will personally hold harmless and indemnify Lessee, Owner Participant, each Note Holder, Owner Trustee, each of their respective Affiliates, successors, and permitted assigns, the Trust Estate, and the Collateral from and against (1) any and all Expenses, (2) any reduction in the amount payable out of the Trust Estate or the Collateral, and (3) any interference with the possession, operation, or other use of all or any part of the Aircraft, imposed on, incurred by, or asserted against any of the foregoing as a consequence of any such Lessor Lien. 7.4.2 SECURITIES ACT WTC, Mortgagee, each Pass-Through Trustee, and Subordination Agent (respectively) will not offer any beneficial interest or Security relating to the ownership of the Aircraft or any interest in the Collateral or any of the Equipment Notes or any other interest in or security under the Mortgage for sale to, or solicit any offer to acquire any such interest or security from, or sell any such interest or security to, any Person in violation of the Securities Act or applicable state or foreign securities Laws, PROVIDED, that the foregoing shall not impose on WTC any responsibility with respect to any such offer, sale, or solicitation by any other party hereto. 7.4.3 PERFORMANCE OF AGREEMENTS WTC, Mortgagee, each Pass-Through Trustee, and Subordination Agent (respectively) shall perform its obligations under the Mortgage Agreements, the Pass-Through Trustee Agreements, and the Subordination Agent Agreements in accordance with their terms. 7.4.4 WITHHOLDING TAXES WTC shall indemnify (on an after-tax basis) and hold harmless Lessee, Lessor, and Owner Participant against any United States withholding taxes (and related interest, penalties, and additions to tax) as a result of WTC's failure to withhold on payments to any Note Holder who does not provide to Mortgagee necessary certificates or forms to substantiate the right to exemption from such withholding tax. 7.5 NOTE HOLDERS' COVENANTS Each Note Holder (including Subordination Agent), as to itself only, agrees for the benefit of Lessee, Owner Participant, Owner Trustee, and Mortgagee as follows: 7.5.1 WITHHOLDING TAXES Such Note Holder (if it is a Non-U.S. Person) agrees to indemnify (on an after-tax basis) and hold harmless Lessee, Lessor, Owner Participant, and Mortgagee against any United States withholding taxes (and related interest, penalties, and additions to tax) as a result of the inaccuracy or invalidity of any certificate or form provided by such Note Holder to Mortgagee in connection with such withholding taxes. Any amount payable under this ss. 7.5.1 shall be paid within 30 days after the pertinent Note Holder receives a written demand therefor. 7.5.2 TRANSFER; COMPLIANCE (a) Such Note Holder will (1) not transfer any Equipment Note or interest therein in violation of the Securities Act or applicable state or foreign securities Law; PROVIDED, that the foregoing provisions of this ss. 7.5.2(a) shall not impose on such Note Holder any responsibility for any such offer, sale, or solicitation by any other party hereto, and (2) perform and comply with the obligations specified to be imposed on it (as a Note Holder) under the Mortgage and the Equipment Note. (b) Except as otherwise required by the terms of ss. 2.13 of the Mortgage or ss. 11 hereof, such Note Holder will not sell, assign, convEy, exchange, or otherwise transfer any Equipment Note or any interest in, or represented by, any Equipment Note (this provision not being applicable to the Pass-Through Certificates) unless the proposed transferee thereof first provides Lessee and Owner Participant with both of the following: (1) a written representation and covenant that either (aa) no portion of the funds it uses to purchase, acquire, and hold such Equipment Note or interest directly or indirectly constitutes, or may be deemed under the Code or ERISA or any rulings, regulations, or court decisions thereunder to constitute, the assets of any Plan, or (bb) the transfer, and subsequent holding, of such Equipment Note or interest shall not involve or give rise to a transaction that constitutes a prohibited transaction within the meaning of ERISA ss. 406 or CodE ss. 4975(c)(1) involving Lessee, Owner Participant, a Pass-Through Trustee, Subordination Agent, or the proposed transferee (other than A transaction that is exempted from the prohibitions of such sections by applicable provisions of ERISA or the Code or administrative exemptions or regulations issued thereunder); and (2) a written covenant that it will not transfer any Equipment Note or any interest in, or represented by, any Equipment Note unless the subsequent transferee also makes the representation described in clause (1) of this ss. 7.5.2(b) and agrees to comply with thiS clause (2). 7.6 OTHER AGREEMENTS 7.6.1 OWNER TRUSTEE IS OWNER FOR ALL PURPOSES Lessee, Owner Participant, and Owner Trustee agree that for all purposes, after the Closing, Owner Trustee will be the owner of the Aircraft (except that Owner Participant will be the owner for income tax purposes) and Lessee will be the lessee thereof. No transfer, by operation of Law or otherwise, of Owner Participant's beneficial interest in and to the Trust Estate shall operate to transfer legal title to any part of the Trust Estate to any transferee thereof. 7.6.2 COMMENCEMENT OF BANKRUPTCY PROCEEDINGS Lessee, each Participant, each Note Holder, FSB, Owner Trustee, WTC, and Mortgagee agree for the benefit of each of the others that it will not commence or join in any proceeding under the Bankruptcy Code to commence a case under ss. 303 of the Bankruptcy Code against the Trust Estate. NothinG contained herein shall be deemed to preclude any Participant, any Note Holder, FSB, Owner Trustee, WTC, or Mortgagee from filing any claim against the Trust Estate in any case commenced against the Trust Estate. 7.6.3 CERTAIN BANKRUPTCY MATTERS If (a) all or any part of the Trust Estate becomes the property of, or Owner Trustee or Owner Participant becomes, a debtor subject to the reorganization provisions of the Bankruptcy Code, (b) pursuant to such reorganization provisions (including Bankruptcy Code ss. 1111(b)), FSB or OwneR Participant is required, by reason of FSB's or Owner Participant's being held to have recourse liability to any Note Holder or Mortgagee directly or indirectly (other than the recourse liability of FSB or Owner Participant under this Agreement or the Mortgage or by separate agreement), to make payment on account of any amount payable as principal, Make-Whole Amount (if any), interest, or other amounts on the Equipment Notes, and (c) any Note Holder or Mortgagee actually receives any Excess Amount (as defined below) which reflects any payment by FSB or Owner Participant on account of clause (b) of this paragraph, then such Note Holder or Mortgagee shall promptly refund to FSB or Owner Participant (whichever shall have made such payment) such Excess Amount. For purposes of this ss. 7.6.3, "EXCESS AMOUNT" means the amount by which such payment exceeds the amount that would have been received by a NotE Holder or Mortgagee if FSB or Owner Participant had not become subject to the recourse liability referred to in clause (b) of the preceding paragraph. Nothing in this ss. 7.6.3 shall prevent a Note Holder or Mortgagee from enforcing any personal recourse obligation (and retaining the proceeds thereof) oF FSB or Owner Participant under this Agreement (other than as referred to in clause (b) of the preceding paragraph) or the Mortgage (including any exhibits or annexes thereto) or from retaining any amount paid by Owner Participant under ss. 2.13 or ss. 4.03 of the Mortgage. 7.6.4 QUIET ENJOYMENT; SALE BY OWNER TRUSTEE BINDING (a) Each of Owner Participant, each Pass-Through Trustee, Subordination Agent, each Note Holder, Owner Trustee, and Mortgagee agrees (as to itself) for the benefit of Lessee that, unless a Lease Event of Default exists, such Person shall not interfere (and shall not permit any Affiliate or other Person claiming by, through, or under it to interfere) with Lessee's rights in accordance with the Lease to the quiet enjoyment, possession, and use of the Aircraft during the Term. (b) Any assignment, sale, transfer, or other conveyance of the Aircraft by Owner Trustee made pursuant to the terms of this Agreement or the Lease shall bind Owner Participant, and shall be effective to transfer or convey all right, title, and interest of Owner Trustee and Owner Participant in and to the Aircraft. No purchaser or other grantee shall be required to inquire as to the authorization, necessity, expediency, or regularity of such assignment, sale, transfer, or conveyance, or as to the application of any sale or other proceeds with respect thereto by Owner Trustee, as regards Owner Participant. 7.6.5 RELEASE OF LIEN OF MORTGAGE Each of Lessee, Lessor, and Mortgagee agrees that in each instance referred to in the Lease in which a transfer of any property is required to be made by Lessor to Lessee or any other Person (other than Mortgagee), Mortgagee shall, upon request of Lessor and compliance with the applicable provisions of the Lease and the Mortgage (including payment of all amounts then due and payable to each Liquidity Provider and the Policy Provider as Supplemental Rent), promptly execute (at Lessee's cost and expense) such instruments as Lessor or Lessee reasonably requests to evidence the release of the Lien of the Mortgage on such property. 7.6.6 NON-RECOURSE Loan Participant and Mortgagee agree that (a) obligations of Owner Trustee under the Mortgage or any other Operative Agreement and with respect to the Equipment Notes shall be non-recourse to Owner Participant and to FSB, and (b) they will look solely to the income and proceeds from the Trust Estate and the Collateral to the extent available for distribution to Note Holder or Mortgagee as provided in the Mortgage, and neither Owner Participant nor FSB will be personally liable to Loan Participant or Mortgagee for any amounts payable by Owner Trustee under the Mortgage or any other Operative Agreement; PROVIDED, that the foregoing is not intended nor shall it be construed to limit any recourse liability of Owner Participant or FSB to the extent that such liability is expressly set forth in this Agreement or in any of the Operative Agreements or arises by reason of the breach of any representation or warranty or covenant given by such Person (in the case of FSB, in its individual capacity). 7.6.7 OTHER DOCUMENTS; AMENDMENT (a) Each of Owner Participant and Owner Trustee hereby agrees for the benefit of Lessee, the Loan Participants, and Mortgagee not to amend, supplement, or otherwise modify any provision of the Trust Agreement in a manner that could adversely affect such party, without the prior written consent of such party. Notwithstanding the foregoing, so long as the Lease has not been terminated or expired, each Participant, Mortgagee, and Owner Trustee hereby agree for the benefit of Lessee that, without Lessee's consent, they will not amend, supplement, or otherwise modify (1) ss. 3, ss. 9, or ss. 2.05 of the Mortgage, (2) any provision of any Operative Agreement that will affect the stated principal amount of or premium or interest on the Equipment Notes, or (3) any other provision of the Mortgage or Equipment Notes in a manner that could adversely affect Lessee. Mortgagee and Owner Trustee agree to furnish promptly to Lessee copies of any supplement, amendment, waiver, or modification of any of the Operative Agreements to which Lessee is not a party. Each Loan Participant agrees that it will not take any action in respect of the Collateral except through Mortgagee pursuant to the Mortgage or as otherwise permitted by Mortgage. (b) Owner Trustee agrees to join with Lessee to the extent that action on its part is necessary or appropriate (1) to cause the following to be duly accomplished in accordance with applicable United States federal Law by the time the Aircraft is delivered under this Agreement and the Lease: (aa) to apply to register the Aircraft in Owner Trustee's name, and (bb) all related action necessary in order for Lessee to have temporary or permanent authority to operate the Aircraft as contemplated by the Lease, and (2) forthwith upon delivery of the Aircraft under this Agreement and the Lease, to cause all necessary documents to be duly filed for recording in accordance with applicable United States federal Law. 7.6.8 CONSENTS Each of each Participant, each Pass-Through Trustee, Subordination Agent, Owner Trustee, and Mortgagee covenants and agrees, for Lessee's benefit, that it shall not unreasonably withhold its consent to any consent or approval requested of it or of Owner Trustee or Mortgagee under the terms of any of the Operative Agreements which by its terms is not to be unreasonably withheld. 7.6.9 INSURANCE Each of Owner Participant, the Pass-Through Trustees, Subordination Agent, and Owner Trustee agrees not to obtain or maintain insurance for its own account as permitted by ss. 11.2 of the Lease if such insurance would limit, increase the cost of, or otherwise adversely affect the coverage of anY insurance required to be obtained or maintained by Lessee pursuant to ss. 11 and Annex D of the Lease. 7.6.10 EXTENT OF NOTE HOLDER'S INTEREST A Note Holder shall not, as such, have any further interest in, or other right with respect to, the Trust Estate or the Collateral when and if the principal and Make-Whole Amount (if any) of and interest on the Equipment Note held by such Note Holder, and all other sums, then due and payable to such Note Holder under any Operative Agreement, have been paid in full. 7.6.11 FOREIGN REGISTRATION (a) Each Participant, Owner Trustee, and Mortgagee hereby agree for Lessee's benefit that, subject to ss. 7.1.2 of the Lease, LesseE shall be entitled to register the Aircraft or cause the Aircraft to be registered in a country other than the United States, if: (1) such registration is made only after the Tax Attribute Period, unless Lessee prepays on a lump-sum basis any liability that would be due under the Tax Indemnity Agreement as a result of such registration based upon the assumption that such registration would continue for the remainder of the term of the Permitted Sublease described in clause (3) below; (2) no Special Default or Lease Event of Default exists at the time of such registration; (3) such proposed change of registration is made in connection with a Permitted Sublease to a Permitted Air Carrier, and such country is such Permitted Air Carrier's domicile; (4) such country is a country with which the United States then maintains normal diplomatic relations (or, if Taiwan, the United States then maintains diplomatic relations at least as good as those in effect on the Delivery Date, PROVIDED that Lessee may not effect such registration in Taiwan unless it has obtained the prior written consent of Owner Participant, which Owner Participant may withhold in its sole and absolute discretion); and (5) Owner Participant, Owner Trustee, and Mortgagee receive an opinion of counsel (subject to customary exceptions) reasonably satisfactory to Owner Participant (and, while the Policy is in effect, the Policy Provider), addressed to each such party, to the effect that: (aa) such country recognizes Owner Trustee's ownership interest in the Aircraft; (bb) Lessee's obligations, and Owner Trustee's rights and remedies, under the Lease are valid, binding, and enforceable under the laws of such jurisdiction; (cc) after giving effect to such change in registration, (x) Owner Trustee's title continues as a valid and protected interest, (y) the Lien of the Mortgage on Owner Trustee's right, title, and interest in and to the Aircraft and the Lease continue as a valid and duly-perfected first-priority security interest, and (z) all filing, recording, or other action necessary to protect those matters addressed in (x) and (y) above have been accomplished (or, if such opinion cannot be given at the time of such proposed change in registration because such change in registration is not yet effective, (1) the opinion shall detail what filing, recording, or other action is necessary, and (2) Owner Participant, Owner Trustee and Mortgagee shall receive a certificate from Lessee that all possible preparations to accomplish such filing, recording, and other action are done, and such filing, recording, and other action are accomplished, and a supplemental opinion to that effect shall be delivered to Owner Participant, Owner Trustee and Mortgagee promptly after the effective date of such change in registration; (dd) it is not necessary, solely as a consequence of such change in registration and without giving effect to any other activity of Owner Trustee, Owner Participant, or Mortgagee (or any Affiliate thereof), for Owner Trustee, Owner Participant, or Mortgagee (respectively) to qualify to do business in such jurisdiction as a result of such reregistration or in order to exercise any rights or remedies with respect to the Aircraft pursuant to the Lease; (ee) there is no tort liability of the owner or lessor of an aircraft not in possession thereof under the laws of such jurisdiction (it being agreed that, if such latter opinion cannot be given in a form satisfactory to Owner Participant, such opinion shall be waived if insurance reasonably satisfactory to Owner Participant is provided to cover such risk); and (ff) unless Lessee agrees to provide insurance covering the risk of requisition of use of the Aircraft by the government of such country (so long as the Aircraft is registered under the laws of such country), the laws of such country require fair compensation by the government of such country payable in currency freely convertible into Dollars and freely removable from such country (without license or permit, unless Lessee before such proposed reregistration has obtained such license or permit) for the taking or requisition by such government of such use. (b) In addition, as a condition precedent to any change in registration, Lessee shall give to Owner Participant and Mortgagee assurances reasonably satisfactory to each of them: (1) that the provisions ofss. 11 of the Lease have been complied with after giving effect to such change of registration; (2) of Lessee's payment, on an after-tax basis, of all reasonable out-of-pocket expenses of Lessor, each Participant, and Mortgagee in connection with such change of registry, including (aa) the reasonable fees and disbursements of counsel to Lessee, Lessor, and Mortgagee, (bb) any filing or recording fees, Taxes, or similar payments incurred in connection with the change of registration of the Aircraft and the creation and perfection of the security interest therein in favor of Mortgagee for the benefit of Note Holders, and (cc) all costs and expenses incurred in connection with any filings necessary to continue in the United States the perfection of the security interest in the Aircraft and the Lease in favor of Mortgagee for the benefit of Note Holders; and (3) that the tax and other indemnities in favor of each Person named as an indemnitee under any other Operative Agreement afford to each such Person substantially the same protection as provided before such change of registration (or Lessee agrees to provide, or cause to be provided, additional indemnities that, together with such original indemnities, in the reasonable judgment of Owner Participant, Lessor, and Mortgagee, afford such protection). 7.6.12 OTHER COMMERCIAL RELATIONS UNAFFECTED Notwithstanding anything to the contrary set forth in any Operative Agreement: (a) except as set forth in the Purchase Agreement Assignment, nothing in the Operative Agreements shall constitute or be deemed to be a waiver by Lessee of any rights, remedies, or claims it may have against Airframe Manufacturer or Engine Manufacturer or any subcontractor or supplier of either; and the Operative Agreements do not and shall not be construed or deemed to create any rights, waivers, immunities, or indemnities in favor of Airframe Manufacturer, Engine Manufacturer, or any subcontractor or supplier of either with respect to any such rights, remedies, or claims of Lessee; and (b) neither Airframe Manufacturer, by its execution and delivery of the Consent and Agreement, nor Engine Manufacturer, by its execution and delivery of the Engine Manufacturer Warranty Agreement, shall be deemed to have waived any rights, remedies, or claims which Airframe Manufacturer or Engine Manufacturer (or any subcontractor or supplier of either) has against Lessee; and the Operative Agreements do not and shall not be construed or deemed to create any rights, waivers, immunities, or indemnities in favor of Lessee with respect to any such rights, remedies, or claims of Airframe Manufacturer or Engine Manufacturer (or any subcontractor or supplier of either). 7.6.13 INTEREST IN CERTAIN ENGINES Each Participant, Owner Trustee, and Mortgagee agree, for the benefit of each lessor, conditional seller, or secured party of any airframe or engine leased to, purchased by, or owned by Lessee or any Permitted Sublessee subject to a lease, conditional sale, or other security agreement that it will not acquire or claim, as against such lessor, conditional seller, or secured party, any right, title, or interest in any engine as the result of the installation of such engine on the Airframe at any time while such engine is subject to such lease, conditional sale, or other security agreement and owned by such lessor or conditional seller or subject to a security interest in favor of such secured party. 8. CONFIDENTIALITY Lessee, Owner Participant, Note Holders, Owner Trustee, and Mortgagee shall keep Annexes B, C, and D and Schedules 1, 2, 3, and 4 to the Lease, the Participation Agreement, the Purchase Agreement Assignment, and the Tax Indemnity Agreement confidential, and shall not disclose them, or cause them to be disclosed, to any Person, except (a) to prospective and permitted transferees of Lessee's, Owner Participant's, a Note Holder's, each Liquidity Provider's, Policy Provider's, Owner Trustee's, Mortgagee's, or other Mortgage Indemnitee's interest or their counsel, independent insurance brokers, auditors, or other agents who agree to hold such information confidential, (b) to Lessee's, Owner Participant's, a Note Holder's, each Liquidity Provider's, Policy Provider's, a Pass-Through Trustee's, Owner Trustee's, Mortgagee's, or other Mortgage Indemnitee's counsel, independent insurance brokers, auditors, or other agents, Affiliates, or investors who agree to hold such information confidential, (c) as may be required by any statute, court, or administrative order or decree, legal process, or governmental ruling or regulation, including those of any applicable insurance regulatory bodies (including the National Association of Insurance Commissioners), federal or state banking examiners, Internal Revenue Service auditors, or any stock exchange, (d) with respect to Lessee and Owner Participant, by mutual agreement of such parties, (e) with respect to a Note Holder or any Pass-Through Trustee, to a nationally-recognized rating agency for the purpose of obtaining a rating on the Equipment Notes or the Pass-Through Trust Certificates or to support an NAIC rating for the Equipment Notes, or (f) to such other Persons as are reasonably deemed necessary by the disclosing party in order to protect the interests of such party or for the purposes of enforcing such documents by such party; PROVIDED, that any and all disclosures permitted by clauses (c), (d), (e), and (f) above shall be made only to the extent necessary to meet the specific requirements or needs of the Persons making such disclosures. 9. INDEMNIFICATION AND EXPENSES 9.1 GENERAL INDEMNITY 9.1.1 INDEMNITY Whether or not any of the Transactions are consummated, Lessee shall indemnify, protect, defend, and hold harmless each Indemnitee from, against, and in respect of, and shall pay on a net after-tax basis, any and all Expenses of any kind or nature whatsoever, including those imposed on, incurred or suffered by, or asserted against any Indemnitee, relating to, based on, resulting from, or arising out of or in connection with, in each case directly or indirectly, any one or more of the following: (a) the Operative Agreements, the Pass-Through Agreements, or the enforcement of any of the terms of any of the Operative Agreements or the Pass-Through Agreements; (b) the Aircraft, the Airframe, any Engine, or any Part, including, with respect thereto, (1) the manufacture, design, purchase, acceptance, nonacceptance, rejection, ownership, registration, reregistration, deregistration, delivery, nondelivery, lease, sublease, assignment, possession, use, non-use, operation, maintenance, testing, repair, overhaul, condition, alteration, modification, addition, improvement, storage, airworthiness, replacement, repair, sale, substitution, return, abandonment, redelivery, or other disposition of the Aircraft, any Engine, or any Part, (2) any claim or penalty arising out of violations of applicable Laws, (3) tort liability, whether or not arising out of the negligence of any Indemnitee (whether active, passive, or imputed, and including strict liability and liability without fault), (4) death or property damage of passengers, shippers, or others, (5) environmental control, noise, or pollution, (6) any claim for patent, trademark, or copyright infringement and (7) any Liens in respect of the Aircraft, any Engine, or any Part; (c) the offer, sale, or delivery of any Equipment Notes, Pass-Through Certificates, or any interest therein or represented thereby; and (d) any breach of or failure to perform or observe, or any other noncompliance with, any covenant, agreement, or other obligation to be performed by Lessee under any Lessee Operative Agreement, or any Pass-Through Agreement, or the falsity of any representation or warranty of Lessee in any Lessee Operative Agreement or any Pass-Through Agreement, other than in the Tax Indemnity Agreement. 9.1.2 EXCEPTIONS Notwithstanding anything in ss. 9.1.1, Lessee shall not be required to indemnify, protect, defend, and hold harmless any Indemnitee pursuant tO ss. 9.1.1 against any Expense of such Indemnitee: (a) for any Taxes or a loss of Tax benefit, whether or not Lessee is required to indemnify therefor pursuant to ss. 9.3 or the TaX Indemnity Agreement (other than amounts required to be paid to render the payment of any Expense payable under ss. 9.1.1 on aN after-tax basis); (b) except to the extent attributable to acts or events occurring prior thereto, acts or events (other than acts or events related to Lessee's performance of its obligations pursuant to the terms of the Lessee Operative Agreements) that occur after: (1) with respect to the Airframe, any Engine, or any Part, the return of possession (which, if the Aircraft is placed in storage as provided inss. 5 of the Lease, is the date that the Aircraft is placed in storage) of such Airframe, Engine, or Part pursuant to the Lease (other than pursuant toss. 15 thereof, in which case Lessee's liability under thisss. 9.1 shall survive for so long as Lessor iS entitled to exercise remedies under suchss. 15 or in connection with Lessee in the event of exercise of its early termination option underss. 9 of the Lease or its purchase options underss. 17.3 of the Lease), and (2) the termination of the Term in accordance witH the Lease; (c) to the extent attributable to any Transfer (voluntary or involuntary) by or on behalf of such Indemnitee of any Equipment Note or interest therein, except (1) for out-of-pocket costs and expenses incurred as a result of any such Transfer pursuant to the exercise of remedies under any Operative Agreement resulting from a Lease Event of Default, and (2) as otherwise required by the terms of ss. 2.15 of the Mortgage or ss. 11 hereof; (d) to the extent attributable to any Transfer (voluntary or involuntary) by or on behalf of Owner Participant of any interest in the Aircraft or the Trust Estate, except for out-of-pocket costs and expenses incurred as a result of such Transfer during the existence of a Lease Event of Default (or in connection with Lessee in the event of exercise of its early termination option under ss. 9 of the Lease or its purchase options under ss. 17.3 of the Lease); (e) to the extent attributable to the gross negligence or willful misconduct of such Indemnitee or any related Indemnitee (as defined below) (other than gross negligence or willful misconduct imputed to such Person by reason of its interest in the Aircraft or any Operative Agreement); (f) in the case of FSB, to the extent attributable to matters enumerated in the proviso toss. 14; (g) to the extent attributable to the incorrectness or breach of any representation or warranty of such Indemnitee or any related Indemnitee contained in or made pursuant to any Operative Agreement or any Pass-Through Agreement; (h) to the extent attributable to the failure, by such Indemnitee or any related Indemnitee, to perform or observe any agreement, covenant, or condition on its part to be performed or observed in any Operative Agreement or any Pass-Through Agreement; (i) to the extent attributable to the offer or sale by such Indemnitee or any related Indemnitee of any interest in the Aircraft, the Equipment Notes, the Pass-Through Trust Certificates, the Trust Estate, or the Trust Agreement, or any similar interest, in violation of the Securities Act or other applicable federal, state, or foreign securities Laws (other than any thereof caused by the acts or omissions of Lessee or any person acting on behalf of Lessee); (j) (1) with respect to Mortgagee, to the extent attributable to its negligence or willful misconduct in the distribution of funds received and distributable by it in accordance with the Mortgage, (2) with respect to Owner Trustee, to the extent attributable to its negligence or willful misconduct in the distribution of funds received and distributable by it in accordance with the Trust Agreement, (3) with respect to Subordination Agent, to the extent attributable to its negligence or willful misconduct in the distribution of funds received and distributable by it in accordance with the Intercreditor Agreement, (4) with respect to the Pass-Through Trustees, to the extent attributable to its negligence or willful misconduct in the distribution of funds received and distributable by it in accordance with the Pass-Through Trust Agreements, (5) with respect to Escrow Agent, to the extent attributable to its negligence or willful misconduct in the payment of funds received and payable by it in accordance with any Escrow Agreement, (6) with respect to Depository, to the extent attributable to Depository's failure to pay funds payable by it in accordance with any Deposit Agreement, and (7) with respect to Paying Agent, to the extent attributable to its negligence or willful misconduct in the distribution of funds received and distributable by it in accordance with any Escrow Agreement, (k) other than during the existence of a Lease Event of Default, to the extent attributable to the authorization or giving or withholding of any future amendments, supplements, waivers, or consents with respect to any Operative Agreement or Pass-Through Agreement, other than any requested by Lessee or required by or made pursuant to the terms of the Operative Agreements or Pass-Through Agreements (unless such requirement results from the actions of an Indemnitee not required by or made pursuant to the Operative Agreements or the Pass-Through Agreements); (l) to the extent attributable to any amount which any Indemnitee expressly agrees to pay or such Indemnitee expressly agrees shall not be paid by or be reimbursed by Lessee; (m) to the extent that it is an ordinary and usual operating or overhead expense of such Indemnitee; (n) with respect to Owner Participant or Owner Trustee, or any related Indemnitee, to the extent attributable to the deregistration of the Aircraft under the Transportation Code as a result of the failure of such Person (or any related Indemnitee of such Person) to be a Citizen of the United States as a result of any act (other than reregistration of the Aircraft pursuant to ss. 7.1.2 of thE Lease) of Owner Participant or Owner Trustee or any related Indemnitee of such Person (not taken at the request of Lessee); (o) for any Lessor Lien attributable to such Indemnitee or any related Indemnitee; (p) to the extent constituting principal, Make-Whole Amount, or interest on the Equipment Notes attributable solely to a Mortgage Event of Default not constituting a Lease Event of Default; or (q) to the extent incurred by or asserted against an Indemnitee other than Owner Participant (but without limiting the other provisions of this ss. 9.1.2, including clauses (g) and (h), as to Owner Participant) as a result of any "prohibited transaction", within thE meaning of ERISA ss. 406 or Code ss. 4975(c)(1). With respect to the Pass-Through Indemnitees, Lessee's obligations under this ss. 9.1 shall be limited to the same extent that Lessee'S obligations are limited in clause (5) of the definition of Supplemental Rent. In addition, "Expenses" payable by Lessee pursuant to this ss. 9.1 shall bE deemed not to include amounts payable under clauses (2), (3), (4), and (5) of the definition of Supplemental Rent in the Lease, the "Lease" for any other "Leased Aircraft", or the third paragraph of ss. 2.02 of any "Owned Aircraft Indenture" (each as defined in the Note Purchase Agreement), in each case, assuming each such definition or third paragraph is in the form attached as Exhibit A-1 or C-2, as the case may be, to the Note Purchase Agreement as originally in effect (which amounts shall be payable as Supplemental Rent or "Supplemental Rent" under a "Lease", or pursuant to ss. 2.02 of the Mortgage, aS applicable). For purposes of this ss. 9.1, a Person shall be considered a "related Indemnitee" of an Indemnitee if that Person is an Affiliate or employer oF such Indemnitee, a director, officer, employee, or agent of such Indemnitee or any such Affiliate, or a successor or permitted assignee of any of the foregoing; PROVIDED, that Owner Trustee and FSB shall not be deemed to be related Indemnitees of Owner Participant merely because of their trust or fiduciary relationships. 9.1.3 SEPARATE AGREEMENT This Agreement constitutes a separate agreement with respect to each Indemnitee, and is enforceable directly by each such Indemnitee. 9.1.4 NOTICE If an Indemnitee makes a claim for any Expense indemnifiable under this ss. 9.1, such Indemnitee shall give prompt written notice thereof tO Lessee. Notwithstanding the foregoing, any Indemnitee's failure to notify Lessee as provided in this ss. 9.1.4, or in ss. 9.1.5, shall not release Lessee fRom any of its obligations to indemnify such Indemnitee hereunder, except to the extent that such failure results in an additional Expense to Lessee (in which event Lessee shall not be responsible for such additional expense) or materially impairs Lessee's ability to contest such claim. 9.1.5 NOTICE OF PROCEEDINGS; DEFENSE OF CLAIMS; LIMITATIONS (a) If any action, suit, or proceeding for which Lessee is responsible under this ss. 9.1 is brought against any Indemnitee, such Indemnitee shall notify Lessee of the commencement thereof, and Lessee may, at its expense, participate in and, to the extent that it so desires (subject to the provisions of the following paragraph), assume and control its defense and, subject to ss. 9.1.5(c), settle or compromise it. Unless OwneR Participant agrees in writing otherwise, no settlement of any claim hereunder may require Owner Participant to agree to any remedy apart from the payment of money damages (for which such payment of money damages Lessee will in any event indemnify the Indemnitees). (b) Lessee or its insurer(s) shall have the right, at its or their expense, to investigate or, if Lessee or its insurer(s) agree not to dispute liability to the Indemnitee giving notice of such action, suit, or proceeding under this ss. 9.1.5 for indemnification hereunder or under anY insurance policies pursuant to which coverage is sought, control the defense of, any action, suit, or proceeding, relating to any Expense for which indemnification is sought pursuant to this ss. 9.1, and each Indemnitee shall cooperate with Lessee or its insurer(s) with respect thereto; PROVIDED, thaT Lessee shall not be entitled to control the defense of any such action, suit, or proceeding, or to settle or compromise any such Expense, (i) while any Special Default or Lease Event of Default under ss. 14.1 of the Lease exists, or (ii) if such action, suit, or proceeding will involve a material risk of thE sale, forfeiture, or loss of, or the creation of any Lien (other than a Permitted Lien) on the Aircraft, the Trust Estate, or any part thereof, unless Lessee shall have posted a bond or other security or collateral satisfactory to Owner Participant and Mortgagee in respect to such risk, or (iii) if such action, suit, or proceeding could in the good faith opinion of such Indemnitee entail any risk of criminal liability or material civil liability or present a conflict of interest making separate representation necessary. In connection with any such Lessee-controlled action, suit, or proceeding, such Indemnitee shall have the right to participate therein, at its sole cost and expense, with counsel reasonably satisfactory to Lessee, provided that such Indemnitee's participation does not, in the reasonable opinion of the independent counsel appointed by Lessee or its insurers to conduct such proceedings, interfere with the defense of such case. (c) In no event shall any Indemnitee enter into a settlement or other compromise with respect to any Expense without Lessee's prior written consent (which shall not be unreasonably withheld or delayed), unless such Indemnitee waives its right to be indemnified with respect to such Expense under this ss. 9.1. (d) To the extent that any Expense indemnified by Lessee hereunder may be covered by insurance maintained by Lessee, at Lessee's expense, each Indemnitee agrees to cooperate with the insurers in the exercise of their rights to investigate, defend, or compromise that Expense as may be required to retain the benefits of the insurance for that Expense. (e) If an Indemnitee is not a party to this Agreement, Lessee may require that Indemnitee to agree in writing to the terms of this ss. 9 and ss. 15.8 before making any payment to such Indemnitee under this ss. 9. (f) Nothing herein shall be deemed to be an assumption by Lessee of obligations of Owner Trustee with respect to, or a guarantee by Lessee of, any amounts payable by Owner Trustee upon Equipment Notes or a guarantee of any residual value of the Aircraft. (g) Nothing in this ss. 9.1.5 shall require an Indemnitee to contest any Expense or to assume responsibility for or control of any judicial proceeding with respect thereto. 9.1.6 INFORMATION Lessee will provide the relevant Indemnitee with such information not within the control of such Indemnitee (but in Lessee's control or reasonably available to Lessee) which such Indemnitee reasonably requests, and will otherwise cooperate with such Indemnitee so as to enable such Indemnitee to fulfill its obligations under ss. 9.1.5 and to control or participate in any proceeding to the extent permitted by ss. 9.1.5. The IndemniTee shall supply Lessee with such information not within the control of Lessee (but in such Indemnitee's control or reasonably available to such Indemnitee) which Lessee reasonably requests to control or participate in any proceeding to the extent permitted by ss. 9.1.5. 9.1.7 EFFECT OF OTHER INDEMNITIES; SUBROGATION; FURTHER ASSURANCES Upon payment in full by or on behalf of Lessee of any indemnity provided for under this Agreement, without any further action and to the full extent permitted by Law, Lessee will be subrogated to all rights and remedies of the Person indemnified (other than with respect to any of such Indemnitee's insurance policies or in connection with any indemnity claim of such Indemnitee under ss. 5.03 or ss. 7 of the Mortgage or ss. 5.3 or ss. 7 of the Trust Agreement) in respect of the matter as to which such indemnity was paid. Each Indemnitee will give such further assurances or agreements and cooperate with Lessee to permit Lessee to pursue any such claims, to the extent reasonably requested by Lessee and at Lessee's expense. 9.1.8 REFUNDS If an Indemnitee receives any refund, in whole or in part, with respect to any Expense paid by or on behalf of Lessee hereunder, that Indemnitee will promptly pay the amount refunded (but not an amount in excess of the amount Lessee or any of its insurers has paid in respect of such Expense) over to Lessee unless a Lease Event of Default exists, in which case such amount shall be paid over to Owner Trustee (or, if the Mortgage has not been discharged, to Mortgagee) to hold as security for Lessee's obligations under the Lessee Operative Agreements or, if requested by Lessee, applied to satisfy those obligations. Any subsequent loss of such recovery or tax benefit or refund shall be subject to the provisions of ss. 9.1 and ss. 9.3. 9.2 EXPENSES 9.2.1 INVOICES AND PAYMENT Each of Owner Trustee, Mortgagee, Owner Participant, the Pass-Through Trustees, and Subordination Agent shall promptly submit to Lessee for its prompt approval (which shall not be unreasonably withheld) copies of invoices in reasonable detail of the Transaction Expenses for which it is responsible for providing information as they are received (and not later than the 90th day after the Delivery Date). If so submitted and approved, Owner Participant agrees promptly (and not later than the later of (i) the 105th day after the Delivery Date and (ii) the tenth Business Day following such approval) to pay such Transaction Expenses . Notwithstanding the foregoing, Lessee at its sole option shall have the right to pay directly any and all Transaction Expenses payable to Lessee Advisor or Lessee's counsel or (if such payment does not result in adverse tax consequences to Owner Participant) to any other Person. If Owner Participant fails to pay any Transaction Expense that it is obligated to pay hereunder, Lessee shall pay such Transaction Expense. Any such payment by Lessee shall not affect Owner Participant's obligations or Lessee's rights against Owner Participant for its failure to make any such payment. 9.2.2 PAYMENT OF OTHER EXPENSES Lessee shall pay (a) the ongoing fees and expenses of Owner Trustee and Mortgagee, and (b) all reasonable out-of-pocket costs and expenses (including the reasonable fees and disbursements of counsel) incurred by any Participant attributable to (1) any transfer of title to the Aircraft or any Engine contemplated by ss. 4.5 of the Lease, or (2) any waiver, amendment, or modification of any Operative Agreement to the extent requested by Lessee. 9.2.3 INDEMNIFICATION INTEREST Lessee will pay to each Indemnitee upon demand, to the extent permitted by applicable Law, interest at the Past Due Rate on any amount of indemnity not paid when due pursuant to this ss. 9 until the same shall be paid. 9.3 GENERAL TAX INDEMNITY 9.3.1 GENERAL Except as provided in ss. 9.3.2, Lessee agrees that each payment of Rent paid by Lessee pursuant to the Lease, and any other payment or indemnitY paid by Lessee to a Tax Indemnitee under any Operative Agreement, shall be free of all withholdings or deductions with respect to Taxes of any nature, and if Lessee is required by applicable law to make any such withholding or deduction for any such payment, (a) Lessee shall make all such withholdings or deductions, (b) the amount payable by Lessee shall be increased so that, after making all required withholdings or deductions, such Tax Indemnitee receives the same amount that it would have received had no such withholdings or deductions been made, and (c) Lessee shall pay the full amount withheld or deducted to the relevant Taxing Authority in accordance with applicable law. Lessee further agrees that, if it is required to withhold from any payment of Basic Rent, Stipulated Loss Value (and amounts determined by reference thereto), and amounts payable upon exercise of Lessee's purchase option pursuant to ss. 17.3 of the Lease, any Tax imposed upon Owner Participant or Owner Trustee (including any withholding Tax based on income or receipts of Owner Participant or Owner Trustee), and such Tax is excluded from indemnification pursuant to ss. 9.3.2, Lessee shall pay such additional amount (if any) required so that thE total amount paid by Lessee (after making all required withholdings) is equal to (assuming timely payment of the Equipment Notes before the relevant Payment Date) the aggregate principal amount of scheduled installments due on the Equipment Notes outstanding on the relevant Payment Date, together with accrued and unpaid interest, due on the Equipment Notes; and Owner Participant or Owner Trustee (as applicable) shall reimburse Lessee for any such additional amounts within two Business Days after demand therefor. Except as provided in ss. 9.3.2, and whether or not any of the Transactions arE consummated, Lessee shall pay, indemnify, protect, defend, and hold harmless on an after-tax basis each Tax Indemnitee from all Taxes imposed by any Taxing Authority imposed on or asserted against any Tax Indemnitee or the Aircraft, the Airframe, any Engine, or any Part, or any interest in any of the foregoing (whether or not indemnified against by any other Person), upon or with respect to the Operative Agreements and the Pass-Through Agreements, their execution, or the transactions or payments contemplated thereby, including any Tax imposed upon or with respect to (w) the Aircraft, the Airframe, any Engine, any Part, any Operative Agreement (including any Equipment Notes, their issuance, acquisition, transfer or refinancing or the payment of principal, interest, premium or other amounts with respect thereto), any Pass-Through Agreement, any data, or any other thing delivered or to be delivered under an Operative Agreement, (x) the purchase, manufacture, acceptance, rejection, sale, transfer of title, return, ownership, mortgaging, delivery, transport, charter, rental, lease, re-lease, sublease, assignment, possession, repossession, presence, use, condition, storage, preparation, maintenance, modification, alteration, improvement, operation, registration, transfer or change of registration, reregistration, repair, replacement, overhaul, location, control, imposition of any Lien (other than a Lessor Lien), financing, refinancing requested by Lessee, abandonment, or other disposition of the Aircraft, the Airframe, any Engine, any Part, any data, or any other thing delivered or to be delivered under an Operative Agreement, (y) rent, interest, fees, or other income, proceeds, receipts, or earnings, whether actual or deemed, arising upon, in connection with, or in respect of any of the Operative Agreements (including the property or income or other proceeds with respect to property held as part of the Trust Estate) or the transactions contemplated thereby, or (z) the Pass-Through Certificates, their issuance or acquisition, or the payment of any amounts thereof. 9.3.2 CERTAIN EXCEPTIONS The provisions of ss. 9.3.1 shall not apply to, and Lessee shall have no liability hereunder for, Taxes: (a) imposed on a Tax Indemnitee by the federal government of the United States or any Taxing Authority or governmental subdivision of the United States or any state or local Taxing Authority (1) on, based on, or measured by gross or net income or gross or net receipts, including capital gains taxes, excess profits taxes, minimum taxes from tax preferences, alternative minimum taxes, branch profits taxes, accumulated earnings taxes, personal holding company taxes, succession taxes and estate taxes, and any withholding taxes on, based on, or measured by gross or net income or receipts, or (2) on, or with respect to, or measured by capital or net worth or in the nature of a franchise tax or a tax for the privilege of doing business (other than, in the case of clause (1) or (2), Taxes in the nature of sales, use, license, value added (to the extent not imposed as a substitute for an income tax), transfer, stamp, ad valorem, or property Taxes); (b) imposed on a Tax Indemnitee by any Taxing Authority or governmental subdivision thereof or therein outside of the United States (including any Taxing Authority in or of a territory, possession, or commonwealth of the United States) (1) on, based on, or measured by gross or net income or receipts, including capital gains taxes, excess profits taxes, minimum taxes from tax preferences, alternative minimum taxes, branch profits taxes, accumulated earnings taxes, personal holding company taxes, succession taxes and estate taxes, and any withholding taxes on, based on, or measured by gross or net income or receipts, or (2) on, or with respect to, or measured by capital or net worth or in the nature of a franchise tax or a tax for the privilege of doing business (other than, in the case of clause (1) or (2), Taxes in the nature of (aa) sales, use, license, value added (to the extent not imposed as a substitute for an income tax), transfer, stamp, ad valorem, or property Taxes, or (bb) any Taxes imposed by any Taxing Authority (other than a Taxing Authority within whose jurisdiction such Tax Indemnitee is incorporated or organized or maintains its principal place of business) if such Tax Indemnitee would not have been subject to such Taxes by such jurisdiction but for (i) the location, registration, use, or operation of the Aircraft, the Airframe, any Engine, or any Part thereof by a Lessee Person within the jurisdiction of the Taxing Authority imposing such Tax, or (ii) the activities of any Lessee Person (except for activities of a Lessee Person who is not an Affiliate, successor, or assign of Lessee acting in its capacity other than as a Lessee Person, which activities are unrelated to the transactions contemplated by the Operative Agreements) in such jurisdiction, including use of any other aircraft by Lessee in such jurisdiction, (iii) the status of any Lessee Person as a foreign entity or as an entity owned in whole or in part by foreign persons, (iv) Lessee's having made (or having been deemed to have made) payments to such Tax Indemnitee from the relevant jurisdiction, or (v) in the case of the Pass-Through Trustees, any Participant, or any related Tax Indemnitee, Lessee's being incorporated, organized, or maintaining a place of business in such jurisdiction); (c) on, with respect to, or measured by any trustee fees, commissions, premiums, or compensation received by Owner Trustee, Pass-Through Trustee, Subordination Agent, Policy Provider or Mortgagee; (d) on the Trust or the Trust Estate that result from treatment of the Trust or the Trust Estate as an entity, such as a corporation, separate and apart from Owner Participant; (e) that are being contested as provided inss. 9.3.4 during the pendency of such contest; (f) imposed on any Tax Indemnitee to the extent that such Taxes result from the gross negligence or willful misconduct of such Tax Indemnitee or any Affiliate thereof (other than the gross negligence or willful misconduct imputed to such Tax Indemnitee by reason of such Tax Indemnitee's participation in the transactions contemplated by the Operative Agreements); (g) imposed on or with respect to a Tax Indemnitee (including the transferee in those cases in which the Tax on transfer is imposed on, or is collected from, the transferee) as a result of a transfer or other disposition (including a deemed transfer or disposition) by such Tax Indemnitee or a related Tax Indemnitee (or, in the case of Owner Participant, by Owner Trustee, or, in the case of Taxes imposed on a transferee, by the transferor) of any interest in the Aircraft, the Airframe, any Engine, or any Part, the Rent (other than the assignment of Rent to Mortgagee pursuant to the Mortgage), the Trust, the Trust Estate, the Collateral, the Lease, or any interest arising under the Operative Agreements or any Equipment Note or a transfer or disposition (including a deemed transfer or disposition) of any interest in a Tax Indemnitee (other than (1) a substitution, replacement, modification, pooling, or improvement of the Aircraft, the Airframe, any Engine or any Part by a Lessee Person that is treated for Tax purposes as a transfer or disposition, (2) a transfer pursuant to an exercise of remedies upon a then-existing Lease Event of Default, (3) a transfer pursuant toss. 17.3 orss. 9 of the Lease, or (4) a transfer pursuant to an Event of Loss); (h) in excess of those that would have been imposed had there not been a transfer or other disposition by or to such Tax Indemnitee or a related Tax Indemnitee described in clause (g) of this ss. 9.3.2; (i) imposed on Owner Participant and indemnified by Lessee pursuant to the Tax Indemnity Agreement; (j) imposed with respect to any period after the expiration or earlier termination of the Term and, if required pursuant to the terms of the Lease, the return of possession of the Aircraft to Lessor or placement in storage at the request of Lessor in accordance with the Lease (PROVIDED, that this clause (j) shall not apply to Taxes imposed after such period arising as a result of payments by Lessee under the Operative Agreements after such period or are attributable to events occurring prior to or coincident with such expiration or earlier termination of the Term); (k) consisting of any interest, penalties, or additions to tax imposed on a Tax Indemnitee as a result (in whole or in part) of a failure of such Tax Indemnitee or a related Tax Indemnitee to file any return properly and timely, unless such failure is caused by Lessee's failure to fulfill its obligations, if any, under ss. 9.3.6 with respect to such return; (l) resulting from, or that would not have been imposed but for, any Lessor Liens arising as a result of claims against, or acts or omissions of, or otherwise attributable to such Tax Indemnitee or a related Tax Indemnitee; (m) imposed on any Tax Indemnitee as a result of the breach by such Tax Indemnitee or a related Tax Indemnitee of any covenant of such Tax Indemnitee or any Affiliate thereof contained in any Operative Agreement or the inaccuracy of any representation or warranty by such Tax Indemnitee or any Affiliate thereof in any Operative Agreement; (n) in the nature of an intangible or similar Tax (1) upon or with respect to the value or principal amount of the interest of any Loan Participant or any Note Holder in any Equipment Note or the loan evidenced thereby, or (2) upon or with respect to the value of the interest of Owner Participant in the Trust Estate or the Trust, in each case only if such Taxes are in the nature of franchise Taxes or result from the conduct of business by such Tax Indemnitee in the taxing jurisdiction and are imposed because of the place of incorporation or the activities unrelated to the Transactions in the taxing jurisdiction of such Tax Indemnitee; (o) that is included in Lessor's Cost and paid to the appropriate Taxing Authority; (p) other than any Tax described in ss. 9.3.2(b) hereof, imposed on a Tax Indemnitee by a Taxing Authority of a jurisdiction outside thE United States, to the extent that such Taxes would not have been imposed but for a connection between the Tax Indemnitee or a related Tax Indemnitee and such jurisdiction imposing such Tax unrelated to the Transactions; or (q) relating to ERISA or to Codess. 4975. For purposes hereof, a Tax Indemnitee and any other Tax Indemnitees who are successors, assigns, agents, or Affiliates of such Tax Indemnitee shall be related Tax Indemnitees; PROVIDED, that neither Mortgagee nor any Loan Participant shall be deemed a related Tax Indemnitee as to Lessor or Owner Participant merely because of the assignment made in the Mortgage. 9.3.3 PAYMENT (a) Without regard to ss. 9.3.2(a), (b), or (h) hereof, Lessee's indemnity obligation to a Tax Indemnitee under this ss. 9.3 shall be The amount which, after taking into account any Tax imposed upon the receipt or accrual of the amounts payable under this ss. 9.3 and any tax benefits actuallY recognized by such Tax Indemnitee as a result of the indemnifiable Tax (including any benefits recognized as a result of such Tax Indemnitee's use of an indemnifiable Tax as a credit against Taxes not indemnifiable under this ss. 9.3), equals the amount of the Tax indemnifiable under this ss. 9.3. (b) At Lessee's request, the computation of the amount of any indemnity payment owed by Lessee or any amount owed by a Tax Indemnitee to Lessee pursuant to this ss. 9.3 shall be verified and certified by an independent public accounting firm selected by such Tax Indemnitee and reasonablY satisfactory to Lessee. Such verification shall be binding. The costs of such verification (including the fee of such public accounting firm) shall be borne by Lessee unless such verification results in an adjustment in Lessee's favor of 5% or more of the net present value of the payment as computed by such Tax Indemnitee, in which case such Tax Indemnitee shall pay those costs. (c) Each Tax Indemnitee shall provide Lessee with such certifications, and such information and documentation in such Tax Indemnitee's possession, as Lessee reasonably requests to minimize any indemnity payment pursuant to this ss. 9.3; PROVIDED, that notwithstanding anything to the contrarY in this ss. 9.3.3(c), no Tax Indemnitee shall be required to provide Lessee with any Tax returns. (d) Each Tax Indemnitee shall promptly forward to Lessee any written notice, bill, or advice that such Tax Indemnitee receives from any Taxing Authority concerning any Tax for which it seeks indemnification under this ss. 9.3. Lessee shall pay any amount for which it is liable pursuant tO this ss. 9.3 directly to the appropriate Taxing Authority if legally permissible, or upon demand of a Tax Indemnitee, to such Tax Indemnitee within 30 dayS of such demand (or, if a contest occurs in accordance with ss. 9.3.4, within 30 days after a Final Determination (as defined below)), but in no event morE than one Business Day before the related Tax is due. If requested by a Tax Indemnitee in writing, Lessee shall furnish to the appropriate Tax Indemnitee the original or a certified copy of a receipt for Lessee's payment of any Tax paid by Lessee, or such other evidence of payment of such Tax as is acceptable to such Tax Indemnitee. Lessee shall also furnish promptly upon written request such data as any Tax Indemnitee reasonably requires to enable such Tax Indemnitee to comply with the requirements of any taxing jurisdiction, unless such data are not reasonably available to Lessee or (unless such data are specifically requested by a Taxing Authority) are not customarily furnished by domestic air carriers under similar circumstances. For purposes of this ss. 9.3, a "FINAL DETERMINATION" is (1) a decision, judgment, decree, or other order by any court of competent jurisdiction that occurs pursuant to thE provisions of ss. 9.3.4, which decision, judgment, decree, or other order has become final and unappealable, (2) a closing agreement or settlement agreemenT entered into in accordance with ss. 9.3.4 that has become binding and is not subject to further review or appeal (absent fraud, misrepresentation, etc.), oR (3) the termination of administrative proceedings and the expiration of the time for instituting a claim in a court proceeding. (e) If any Tax Indemnitee actually realizes a tax savings by reason of any Tax paid or indemnified by Lessee pursuant to this ss. 9.3 (whether such tax savings arise by means of a foreign tax credit, depreciation or cost recovery deduction, or otherwise), and such savings are not otherwise taken into account in computing such payment or indemnity, such Tax Indemnitee shall pay to Lessee an amount equal to the lesser of (1) the amount of such tax savings, plus any additional net tax savings recognized as the result of any payment made pursuant to this sentence, when, as, if, and to the extent realized, and (2) the amount of all payments pursuant to this ss. 9.3 by Lessee to such Tax Indemnitee (less any payments previously made bY such Tax Indemnitee to Lessee pursuant to this ss. 9.3.3(e)) (and the excess, if any, of the amount described in clause (1) over the amount described iN clause (2) shall be carried forward and applied to reduce PRO TANTO any subsequent obligations of Lessee to make payments to such Tax Indemnitee pursuant to this ss. 9.3); PROVIDED, that such Tax Indemnitee shall not be required to make any payment pursuant to this sentence so long as a Special Default or A Lease Event of Default of a monetary nature exists. If a tax benefit is later disallowed or denied, the disallowance or denial shall be treated as a Tax indemnifiable under ss. 9.3.1 without regard to the provisions of ss. 9.3.2 (other than ss. 9.3.2(f)). Each such Tax Indemnitee shall in good faitH use reasonable efforts in filing its tax returns and in dealing with Taxing Authorities to seek and claim any such tax benefit. 9.3.4 CONTEST (a) If a written claim is made against a Tax Indemnitee for Taxes that Lessee could be liable to pay or indemnify for hereunder, or if a Tax Indemnitee determines that a Tax is due and that Lessee could have an indemnity obligation for that Tax hereunder, such Tax Indemnitee shall promptly notify Lessee in writing of such claim (PROVIDED, that failure so to notify Lessee shall not relieve Lessee of its indemnity obligations hereunder unless the failure to notify effectively forecloses Lessee's rights to require a contest of such claim), and shall take no action with respect to such claim without Lessee's prior written consent for 30 days following Lessee's receipt of such notice; PROVIDED, that, if applicable Law requires such Tax Indemnitee to take action before the end of such 30-day period, such Tax Indemnitee shall, in such notice to Lessee, so inform Lessee, and such Tax Indemnitee shall take no action for as long as it is legally able to avoid taking action (and a Tax Indemnitee shall be entitled to pay the Tax claimed and sue for a refund before the end of such 30-day period if (1)(aa) the failure to pay the Tax would result in substantial penalties (unless immediately reimbursed by Lessee) and the act of paying the Tax would not materially prejudice the right to contest, or (bb) the failure to pay would result in criminal penalties, and (2) such Tax Indemnitee shall take any action so required in connection with so paying the Tax in a manner that is the least prejudicial to the pursuit of the contest). In addition, such Tax Indemnitee shall (provided that Lessee shall have agreed to keep such information confidential other than to the extent necessary in order to contest the claim) furnish Lessee with copies of any requests for information from any Taxing Authority relating to such Taxes with respect to which Lessee may be required to indemnify hereunder. If requested by Lessee in writing within 30 days after its receipt of such notice, such Tax Indemnitee shall, at Lessee's expense (including all reasonable costs, expenses, and reasonable attorneys' and accountants' fees and disbursements), in good faith contest (or, if permitted by applicable law, allow Lessee to contest) through appropriate administrative and judicial proceedings the validity, applicability, or amount of such Taxes by (x) resisting payment thereof, (y) not paying the Taxes except under protest if protest is necessary and proper, or (z) if the payment is made, using reasonable efforts to obtain a refund thereof in an appropriate administrative or judicial proceeding. If requested to do so by Lessee, the Tax Indemnitee shall appeal any adverse administrative or judicial decision, except that the Tax Indemnitee shall not be required to pursue any appeals to the United States Supreme Court. If and to the extent that the Tax Indemnitee is able to separate the contested issue(s) from other issues arising in the same administrative or judicial proceeding that are unrelated to the Transactions without (in such Tax Indemnitee's good faith judgment) adversely affecting such Tax Indemnitee, such Tax Indemnitee shall permit Lessee to control the conduct of any such proceeding and shall provide to Lessee (at Lessee's cost and expense) with such information or data in such Tax Indemnitee's control or possession and reasonably necessary to conduct such contest (other than such Tax Indemnitee's federal income Tax returns) in which case Lessee shall keep such Tax Indemnitee reasonably informed concerning the progress of such contest. If the contest is being controlled by a Tax Indemnitee, such Tax Indemnitee shall consult with Lessee in good faith regarding the manner of contesting such claim and shall keep Lessee reasonably informed regarding the progress of such contest. A Tax Indemnitee shall not fail to take any action expressly required by this ss. 9.3.4 (including anY action regarding any appeal of an adverse determination with respect to any claim) or settle or compromise any claim without Lessee's prior written consent (except as contemplated by ss. 9.3.4(b) or (c)). (b) Notwithstanding the foregoing, in no event shall a Tax Indemnitee be required to pursue any contest (or to permit Lessee to pursue any contest) unless (1) Lessee agrees to pay to such Tax Indemnitee on demand and on an after-tax basis all reasonable costs and expenses that such Tax Indemnitee incurs in connection with contesting such Taxes, including all reasonable out-of-pocket costs and expenses and reasonable attorneys' and accountants' fees and disbursements, (2) if such contest involves the payment of the claim, Lessee advances the amount thereof (to the extent indemnified hereunder) plus interest, penalties, and additions to tax with respect thereto that are required to be paid before commencing the contest on an interest-free net after-Tax basis to such Tax Indemnitee, (3) such Tax Indemnitee does not reasonably determine that the action to be taken will result in any material risk of forfeiture, sale, or loss of the Aircraft (unless Lessee makes provisions to protect the interests of any such Tax Indemnitee in a manner reasonably satisfactory to such Tax Indemnitee) (PROVIDED, that such Tax Indemnitee shall notify Lessee in writing promptly after it becomes aware of any such risk), (4) no Lease Event of Default exists, unless Lessee has provided security for its obligations hereunder by advancing to such Tax Indemnitee, before proceeding or continuing with such contest, the amount of the Tax being contested, plus any interest and penalties and an amount estimated in good faith by such Tax Indemnitee for expenses, (5) before commencing any judicial action controlled by Lessee, Lessee acknowledges its liability for such claim hereunder in writing, PROVIDED, that Lessee shall not be bound by its acknowledgment if the Final Determination articulates conclusions of law and fact that demonstrate that Lessee has no liability for the contested amounts hereunder, (6) such Tax Indemnitee shall have received at Lessee's sole expense, an opinion independent tax counsel, such counsel to be selected by Lessee and reasonably satisfactory to such Tax Indemnitee ("Tax Counsel"), to the effect that a reasonable basis, within the meaning of ABA Formal Opinion No. 85-352, exists for contesting such claim, (7) the amount of payments or indemnification that would be required as a result of such adjustment, when aggregated with further potential payments or adjustments where the subject matter of the proposed adjustment is of a continuing nature, as to the Aircraft and all other aircraft operated by Lessee, shall be at least $10,000, and (8) the issue shall not be substantially identical as an issue previously contested hereunder and decided adversely, unless such Tax Indemnitee shall have received, at Lessee's sole expense, a written opinion, in form and substance reasonably satisfactory to such Tax Indemnitee, of Tax Counsel to the effect that the applicable circumstances or law have changed and in light thereof, there is reasonable basis under ABA Formal Opinion No. 85-352 that the tax treatment of the item which is the subject of the claim will be upheld in litigation if the claimed tax treatment is challenged by a Taxing Authority. Notwithstanding the foregoing, if any Tax Indemnitee releases, waives, compromises, or settles any claim that may be indemnifiable by Lessee pursuant to this ss. 9.3 and which such Tax Indemnitee is otherwise obligated to contest under this ss. 9.3.4 without Lessee's written permissiOn, Lessee's obligation to indemnify such Tax Indemnitee with respect to such claim (and all directly-related claims, and claims based on the outcome of such claim) shall terminate, subject to ss. 9.3.4(c), and subject to ss. 9.3.4(c), such Tax Indemnitee shall repay to Lessee any amount previously paid or advanCed to such Tax Indemnitee with respect to such claim, plus interest at the rate that would have been payable by the relevant Taxing Authority on a refund of such Tax. (c) Notwithstanding anything in this ss. 9.3, a Tax Indemnitee will not be required to contest the imposition of any Tax, and shall bE permitted to settle or compromise any claim without Lessee's consent, if such Tax Indemnitee (1) waives its right to indemnity under this ss. 9.3 witH respect to such Tax (and any directly-related claim, and any claim the outcome of which is determined based upon the outcome of such claim), (2) pays to Lessee any amount previously paid or advanced by Lessee pursuant to this ss. 9.3 with respect to such Tax, plus interest at the rate that would have beeN payable by the relevant Taxing Authority on a refund of such Tax, and (3) agrees to discuss with Lessee the views or positions of any relevant Taxing Authority with respect to the imposition of such Tax PROVIDED, that if Lessee has agreed in writing to settle a claim for a stated amount and the relevant Tax Indemnitee settles the claim on more favorable terms, such Tax Indemnitee shall not be required to waive the indemnity for such claim to the extent of the amount agreed to by Lessee. 9.3.5 REFUND If any Tax Indemnitee receives a refund of, or becomes entitled to a credit against other liability for, all or any part of any Taxes paid, reimbursed, or advanced by Lessee, such Tax Indemnitee shall pay to Lessee within 30 days of such receipt an amount equal to the lesser of (a) the amount of such refund or credit plus any net tax benefit (taking into account any Taxes incurred by such Tax Indemnitee by reason of the receipt of such refund or realization of such credit) actually realized by such Tax Indemnitee as a result of any payment by such Tax Indemnitee made pursuant to this sentence (including this clause (a)), and (b) such tax payment, reimbursement, or advance by Lessee to such Tax Indemnitee theretofore made pursuant to this ss. 9.3 (and the excess, if any, of the amount described in clause (a) over the amount described in clause (b) shall be carried forward and applied to reduce PRO TANTO any subsequent obligation of Lessee to make payments to such Tax Indemnitee pursuant to this ss. 9.3). If, in addition to such refund or credit, sucH Tax Indemnitee receives (or is credited with) an amount representing interest on the amount of such refund or credit, such Tax Indemnitee shall pay to Lessee within 30 days after receiving or realizing such credit the portion of such interest fairly attributable to Taxes paid, reimbursed, or advanced by Lessee before the receipt of such refund or realization of such credit. Notwithstanding the foregoing, a Tax Indemnitee shall not be obligated to make any payment to Lessee pursuant to this ss. 9.3.5 if a Special Default or a Lease Event of Default has occurred and is continuing. If it is later determined thaT such Tax Indemnitee was not entitled to such refund or credit, the portion of the refund or credit repaid, recaptured or disallowed (and any interest and tax savings paid by such Tax Indemnitee to Lessee with respect thereto) shall be treated as Taxes for which Lessee must indemnify such Tax Indemnitee pursuant to this ss. 9.3 without regard to ss. 9.3.2 hereof other than ss. 9.3.2(f). 9.3.6 TAX FILING Lessee shall timely file any report, return, or statement that is required to be filed with respect to any Tax which is subject to indemnification under this ss. 9.3 (except for any such report, return, or statement which a Tax Indemnitee has timely notified Lessee in writing that sucH Tax Indemnitee intends to file, or for which such Tax Indemnitee is required by law to file, in its own name); PROVIDED, that the relevant Tax Indemnitee shall furnish Lessee with any information in such Tax Indemnitee's possession or control that is reasonably necessary to file any such return, report, or statement and that Lessee reasonably requests in writing (but the Tax Indemnitee shall not be required to furnish copies of its actual tax returns, although it may be required to furnish relevant information contained therein). Lessee shall either file such report, return, or statement and send a copy to such Tax Indemnitee (and to Owner Trustee, if the Tax Indemnitee is not Owner Trustee), or, if Lessee is not permitted to file such report, return, or statement, it shall notify such Tax Indemnitee of such requirement and prepare and deliver such report, return, or statement to such Tax Indemnitee in a manner reasonably satisfactory to such Tax Indemnitee within a reasonable time before the time such report, return, or statement is to be filed. 9.3.7 FORMS Each Tax Indemnitee agrees to furnish from time to time to Lessee, Mortgagee, or such other Person as Lessee or Mortgagee shall designate, at Lessee's or Mortgagee's request, such duly-executed and properly-completed forms as may be necessary or appropriate in order to claim any reduction of or exemption from any withholding or other Tax imposed by any Taxing Authority, if (a) such reduction or exemption is available to such Tax Indemnitee, and (b) Lessee has provided such Tax Indemnitee with any information necessary to complete such form not otherwise reasonably available to such Tax Indemnitee. 9.3.8 NON-PARTIES If a Tax Indemnitee is not a party to this Agreement, Lessee may require the Tax Indemnitee to agree in writing, in a form reasonably acceptable to Lessee, to the terms of this ss. 9.3 and ss. 15.8 before making any payment to such Tax Indemnitee under this ss. 9.3. 9.3.9 FOREIGN TAX ON LOAN PAYMENTS If an Owner Participant is incorporated or organized, or maintains a place of business in a country other than the United States or in a territory, possession, or commonwealth of the United States (within the meaning of the tax law of that foreign jurisdiction), and if as a result thereof any foreign Taxes (including withholding Taxes) are imposed on the Pass-Through Trustees, Pass-Through Trusts, or Note Holders, then such Owner Participant shall reimburse Lessee for any payments that Lessee is required to make to or on behalf of any Pass-Through Trustee, Pass-Through Trust, or Note Holder under this ss. 9.3 as a result of the imposition of such Taxes. The amount payable by Owner Participant to Lessee shall be an amount which, after takinG into account any such Taxes, any Tax imposed upon the receipt or accrual by Lessee of such payment by such Owner Participant, and any tax benefits or tax savings realized by Lessee with respect to the payment of such withholding Tax or the payment hereunder, shall equal the amount of Lessee's payment to or on behalf of such Pass-Through Trustee or Note Holder. 9.4 PAYMENTS Any payments made pursuant to ss. 9.1 or ss. 9.3 shall be due on the 30th day after demand, and shall be made directly to the relevant IndemniTee or Tax Indemnitee or to Lessee, in immediately available funds at such bank or to such account as specified by such Indemnitee or Tax Indemnitee or Lessee (as applicable) in written directives to the payor, or, if no such direction has been given, by check of the payor payable to the order of, and mailed to, such Indemnitee or Tax Indemnitee or Lessee (as applicable) by certified mail, postage prepaid, at its address as set forth in this Agreement. 9.5 INTEREST If any amount, payable by Lessee, any Indemnitee, or any Tax Indemnitee under ss. 9.1 or ss. 9.3 is not paid when due, the Person obligated to mAke such payment shall pay on demand, to the extent permitted by Law, to the Person entitled thereto, interest on any such amount for the period from and including the due date for such amount to but excluding the date the amount is paid, at the Past-Due Rate. Such interest shall be paid in the same manner as the unpaid amount in respect of which such interest is due. 9.6 BENEFIT OF INDEMNITIES Lessee's obligations for indemnities, obligations, adjustments, and payments in ss. 9.1 or ss. 9.3 are expressly made for the benefit of, and shAll be enforceable by, the Indemnitee or Tax Indemnitee entitled thereto, without declaring the Lease to be in default or taking other action thereunder, and notwithstanding any provision of the Mortgage. 10. ASSIGNMENT OR TRANSFER OF INTERESTS 10.1 PARTICIPANTS, OWNER TRUSTEE, AND NOTE HOLDERS 10.1.1 OWNER PARTICIPANT (a) During the Term, Owner Participant shall not Transfer any or all of its right, title, or interest in the Trust Estate or the Trust Agreement or to this Agreement unless: (1) the Transferee has full power, authority, and legal right to execute, deliver, and perform the obligations of Owner Participant under the Owner Participant Agreements and provides reasonably satisfactory evidence of such power and authority to Lessee, Owner Trustee, and Mortgagee; (2) the Transferee enters into a legal, valid, binding, and enforceable agreement, substantially in the form of Exhibit I hereto (or otherwise in form and substance reasonably satisfactory to Lessee and Mortgagee), effective to confirm that such Transferee agrees to be bound by all the terms of, and to undertake all of the obligations arising after such transfer of, the transferring Owner Participant in the Owner Participant Agreements, and in which it makes representations and warranties substantially the same as those in ss. 6.2 of thiS Agreement; (3) upon such Transfer Lessee shall not be obligated to pay any greater amount or incur any greater obligation than that which it would have been obliged to pay or incur under the Lease or other Lessee Operative Agreement if no transfer or assignment had taken place, and upon such Transfer the terms and conditions of the Lessee Operative Agreements insofar as they relate to the rights and obligations of Lessee or the Loan Participant are not altered; (4) Owner Participant shall deliver to Lessee, Owner Trustee, and Mortgagee an opinion of counsel reasonably satisfactory to each of them to the effect that such agreement or agreements referred to in ss. 10.1.1(a)(2) and, if applicable, ss. 10.1.1(a)(6) or (a)(7) Are legal, binding, and enforceable in accordance with its or their terms and that such transfer will not violate the Transportation Code, the registration provisions of the Securities Act, or any other applicable Federal law; (5) the Transfer shall relate to Owner Participant's entire interest as Owner Participant; or, if it relates to less than its entire interest as Owner Participant, then (aa) Lessee shall have given its prior written consent to the partial Transfer, and (bb) all amendments to the Operative Agreements, reasonably requested by Lessee or Owner Participant, that are necessary or appropriate to accommodate the existence of multiple Owner Participants, shall be agreed to and executed by the parties thereto, all at the expense of the Owner Participants under ss. 10.1.1(c); (6) the Transferee is a Citizen of the United States (such status to be determined without considering FAR ss. 47.9 or anY other provision that may restrict Lessee's use or operation of the Aircraft), or shall use a voting powers trust or similar arrangement in order to hold an interest in the Trust Estate such that the Aircraft can be registered in the United States (without considering FAR ss. 47.9 oR any other provision that may restrict Lessee's use or operation of the Aircraft); and (7) the Transferee is a single Person and is either (aa) a Permitted Institution, (bb) or an Affiliate of a Permitted Institution, if such Affiliate's obligations under the Owner Participant Agreements are guaranteed by such Permitted Institution pursuant to a written guaranty, substantially in the form of Exhibit J hereto (or otherwise in form and substance reasonably satisfactory to Lessee, Owner Trustee and Mortgagee), or (cc) with Lessee's prior written consent, any other Person the obligations of whom under the Owner Participant Agreements are guaranteed by a Permitted Institution pursuant to a written guaranty, in form and substance reasonably satisfactory to Lessee, Owner Trustee, and Mortgagee. (b) Owner Participant shall give written notice to Lessee, Mortgagee, and Owner Trustee at least 10 days before any such Transfer, specifying the name and address of the proposed Transferee, and providing financial statements of the proposed Transferee or guarantor evidencing satisfaction of the requirements described in ss. 10.1.1(a)(7)(aa) or (bb). (c) Any reasonable fees, charges, and expenses, including the reasonable legal fees, charges, and expenses incurred by Lessee, Owner Participant, Mortgagee, any Note Holder, or Owner Trustee in connection with any Transfer by Owner Participant permitted by this ss. 10.1.1, or by thE Transferee in any such case, will be paid for by Owner Participant. 10.1.2 OWNER TRUSTEE Owner Trustee may transfer its interests in the Trust Agreement pursuant to ss. 9 thereof. 10.1.3 NOTE HOLDERS Subject to ss. 7.5.2 hereof and ss. 2.07 of the Mortgage, any Note Holder may, at any time, Transfer or grant participations in all or any portIon of the Equipment Notes or all or any portion of its beneficial interest in its Equipment Notes and the Collateral to any Person (the sale or issuance of Pass-Through Certificates by a Pass-Through Trustee not being considered a Transfer or participation); PROVIDED, that any participant in any such participations shall not have any direct rights under the Operative Agreements or any Lien on all or any part of the Aircraft or Collateral, and Lessee shall not have any increased liability or obligations as a result of any such participation. In the case of any such Transfer, the Transferee, by acceptance of Equipment Notes in connection with such Transfer, shall be bound by all of the covenants of Note Holders in the Operative Agreements. 10.2 EFFECT OF TRANSFER Upon any Transfer in accordance with ss. 10.1.1, ss. 10.1.2, or ss. 10.1.3 (other than any Transfer by any Note Holder, to the extent it only gRants participations in Equipment Notes or in its beneficial interest therein), the Transferee shall be deemed "Owner Participant", "Owner Trustee", or a "Note Holder", respectively, for all purposes of the Operative Agreements and, in the case of a Transferee of Owner Participant or any Note Holder, shall be deemed to have paid its ratable portion of Lessor's Cost previously made by Owner Participant or Loan Participant, respectively, making such conveyance and represented by the interest being conveyed, and each reference herein to Owner Participant, Owner Trustee, or Note Holder, respectively, shall thereafter be deemed a reference to such Transferee for all purposes, and the transferring Owner Participant, Owner Trustee, Loan Participant, or Note Holder shall be released (including, in the case of Owner Participant, any Guarantor with respect to any guaranty provided by it under ss. 10.1.1(a)(7)) from all of itS liabilities and obligations under the Operative Agreements to the extent such liabilities and obligations arise after such Transfer and, in each case, to the extent such liabilities and obligations are assumed by the Transferee; PROVIDED, that such transferring Owner Participant, Owner Trustee, or Note Holder (and its Affiliates, successors, assigns, agents, representatives, directors, and officers) will continue to have the benefit of any rights or indemnities under any Operative Agreement vested or relating to circumstances, conditions, acts, or events before such Transfer. 11. RE-FUNDING AND CERTAIN OTHER MATTERS 11.1 RE-FUNDING GENERALLY Subject to ss. 11.2 and ss. 11.4, if at any time Lessee notifies Owner Participant, Owner Trustee, and Mortgagee that Lessee requests that OwNer Trustee voluntary redeem all (but not less than all) of the outstanding Equipment Notes (in compliance with ss. 2.11 and ss. 2.12 of the Mortgage) as part oF a re-funding transaction, Owner Participant will negotiate in good faith and promptly conclude an agreement with Lessee as to the terms of such re-funding transaction (including the terms of any debt to be issued in connection with such re-funding transaction and the documentation to be executed in connection therewith), and after Lessee and Owner Participant shall have concluded such an agreement: 11.1.1 RE-FUNDING CERTIFICATE Within 10 Business Days after reaching such agreement, Owner Participant will deliver a Re-Funding Certificate to Lessee. Within 10 Business Days after receiving the Re-Funding Certificate, Lessee may demand a verification (pursuant to ss. 3.2.1(d) of the Lease) of the information in thE Re-Funding Certificate. Upon Lessee's acceptance of the accuracy of the information in the Re-Funding Certificate or the determination pursuant to such verification procedures of the Re-Funding Information, the appropriate parties will take the actions specified in ss. 11.1.2 through ss. 11.1.7. 11.1.2 FINANCING AGREEMENTS The appropriate parties will enter into appropriate documentation (which may include an underwriting agreement or similar private placement agreement) with the institution or institutions to be named therein providing for (a) Owner Trustee's issuance and sale of the New Debt to such institution(s) on the Re-Funding Date, and (b) the application of the proceeds of the sale of the New Debt to the redemption of all such Equipment Notes on the Re-Funding Date. Lessee, acting on behalf of Owner Trustee, shall give Mortgagee at least 30 days' revocable prior written notice of the proposed date of the optional redemption. 11.1.3 LEASE AMENDMENTS As a condition to the closing of the re-funding transaction, Lessee and Owner Trustee will amend the Lease, as contemplated by ss. 3.2.1(b) oF the Lease, to provide that (a) Basic Rent payments and allocations for the period from and after the Re-Funding Date shall be as provided in the Re-Funding Information, and (b) Stipulated Loss Values, Termination Values, and the EBO Price, from and after the Re-Funding Date, shall be as provided in the Re-Funding Information. 11.1.4 SECURITY AGREEMENTS Owner Trustee will enter into an agreement to provide for securing the New Debt similarly to the Equipment Notes, and will enter into such amendments and supplements to the Mortgage (or such new indenture or other security agreement) and the other Operative Agreements as are appropriate to effect such re-funding. 11.1.5 EXPENSES Whether or not such re-funding transaction is consummated, Lessee shall pay or reimburse on a net after tax basis all of the reasonable out-of-pocket expenses of all parties to such re-funding transaction, including any underwriting or placement fees and the reasonable fees and expenses of such parties' counsel and any related loan or commitment fees. 11.1.6 MAKE WHOLE AMOUNT At the closing of such re-funding, Owner Trustee shall pay to Mortgagee (for the account of each Note Holder), upon receipt of the same from Lessee (which Lessee shall pay as Supplemental Rent, as a condition to the closing to the re-funding transaction, at no after-tax cost to Owner Trustee or Owner Participant), any Make-Whole Amount payable to such Note Holder under ss. 2.11 of the Mortgage. 11.1.7 RETURN OF EQUIPMENT NOTES Subject to Owner Trustee's and Lessee's compliance with all applicable terms and conditions for voluntary prepayment under the Mortgage and this Agreement, each Note Holder will transfer to Owner Trustee the Equipment Notes held by such Note Holder for cancellation (and Owner Trustee shall cancel them), against receipt by such Note Holder of the then-outstanding principal amount of such Equipment Notes, accrued and unpaid interest and any Make-Whole Amount thereon, and all other amounts then payable to such Note Holder and Mortgagee hereunder or under the Mortgage. 11.2 LIMITATIONS ON OBLIGATION TO REFUND Notwithstanding the foregoing, Owner Participant shall have no obligation to proceed with any re-funding transaction as contemplated by this ss. 11: (a) if such transaction would have, or creates a risk of, an adverse tax consequence to Owner Participant (as determined by Owner Participant in good faith), unless Lessee agrees to indemnify Owner Participant, or to cause Owner Participant to be indemnified, against such adverse tax consequence by a written agreement in form and substance and from a Person (if not Lessee) reasonably satisfactory to Owner Participant, and such indemnification would not give rise to a Materially Adverse Change with respect to Lessee; (b) unless Lessee indemnifies Owner Participant for any liability, obligation (other than the obligation to pay principal and interest and related payments in respect of the New Debt), cost, or expense (including reasonable attorneys' fees) related to or arising out of any such re-funding, and such indemnification would not give rise to a Materially Adverse Change with respect to Lessee; (c) if a Special Default or Lease Event of Default exists; (d) if two re-funding transactions have previously been consummated at Lessee's request pursuant to thisss. 11; (e) if such re-funding would cause (i) the principal amount of the New Debt to exceed the then-outstanding principal amount of the Equipment Notes, or (ii) the Weighted Average Life to Maturity of the New Debt to exceed the Weighted Average Life to Maturity of the Equipment Notes, or (iii) the final maturity to the New Debt to be later than the final maturity of the Equipment Notes; or (f) if the structure or documentation for such re-funding results in greater obligations or liabilities, or lesser rights, of Owner Trustee or Owner Participant, compared to those contained in the structure and documentation for the original Equipment Notes. 11.3 EXECUTION OF FACILITATING DOCUMENTS Lessee, Owner Participant, Owner Trustee, and Mortgagee will execute any document necessary or advisable to implement this ss. 11 (includinG executing, delivering, or providing any appropriate additional or modified amendment, representation, warranty, certificate, opinion, or other document that Lessee or any other Person reasonably requests). 11.4 ERISA Owner Participant shall not be obligated to conclude the proposed re-funding transaction unless the agreements used to effect it contain an agreement by the initial holders of the New Debt substantially the same as ss. 7.5.2(b) of this Agreement (unless the New Debt is sold in a public offerinG under the Securities Act or a private placement intended for resale pursuant to Rule 144A under the Securities Act, in which case the holders of the New Debt shall be subject to the restrictions relating to ERISA substantially the same as those generally applicable to purchasers of pass-through certificates issued by U.S. airlines and sold to the public in SEC-registered form). 11.5 CONSENT TO OPTIONAL REDEMPTIONS Each of Owner Participant, Owner Trustee, and Mortgagee agrees for Lessee's benefit not to cause an optional redemption of the Equipment Notes without Lessee's consent except as set forth in ss. 2.13 of the Mortgage or elsewhere herein. 11.6 LESSEE'S ASSUMPTION OF EQUIPMENT NOTES 11.6.1 LESSEE'S ELECTION; DOCUMENTATION If no Special Default exists, upon exercising a purchase option under ss. 17.3 of the Lease, Lessee may elect to assume and apply as part of thE Purchase Price the debt evidenced by all of the outstanding Equipment Notes, subject to this ss. 11.6 and ss. 2.15 of the Mortgage. Lessee shall notify OwNer Trustee, each Participant, and Mortgagee of such election no later than 30 days before the effective date of such assumption. Subject to this ss. 11.6 anD ss. 2.15 of the Mortgage, the parties agree to cooperate and to enter into such amendments or supplemental agreements as may be necessary to effectuate thE transaction contemplated by this ss. 11.6. If Lessee so elects, then, upon compliance with ss. 17.3 of the Lease, Owner Trustee will transfer to Lessee, without recourse or warrantY (except as to the absence of Lessor Liens) but subject to the Lien of the Mortgage, all of Owner Trustee's right, title, and interest in and to the Aircraft, and each of the parties hereto shall execute and deliver appropriate documentation permitting Lessee to assume such obligations on the basis of full recourse to Lessee, maintaining for the benefit of the Note Holders the security interest in the Aircraft created by the Mortgage, and upon compliance with this ss. 11.6 and ss. 2.15 of the Mortgage, such documentation shall become effective and Owner Participant and Owner Trustee shall be released from All future obligations in respect of the Equipment Notes, the Mortgage, and all other Operative Agreements, except any obligations arising (or with respect to events occurring) before such assumption, and take all such other actions as are reasonably necessary to permit such assumption by Lessee. 11.6.2 CLOSING CONDITIONS In connection with such assumption: (1) Lessee shall execute and deliver an instrument, reasonably satisfactory in form and substance to Mortgagee and Owner Trustee, (aa) pursuant to which Lessee irrevocably and unconditionally assumes and undertakes, with full recourse to Lessee, to pay when due (at the stated maturity thereof, by acceleration, or otherwise) the principal of, and any Make-Whole Amount, interest, and other Secured Obligations owing on, all Equipment Notes then outstanding in accordance with their terms and punctually to perform and observe all of the covenants and obligations (monetary or otherwise) hereunder and under the Mortgage and the Equipment Notes (as amended in connection with such assumption) to be performed or observed by Owner Trustee, which obligations shall be secured by a first-priority lien under the Mortgage, and (bb) which contains amendments to the Mortgage, in form and substance reasonably satisfactory to Mortgagee and Owner Trustee, that incorporate therein such provisions from the Lease and this Agreement as are appropriate, including events of default substantially identical in scope and effect to those in the Lease but including any such additional defaults as Mortgagee reasonably requests to provide the same level of protection as in the Mortgage and covenants substantially identical to the covenants of Lessee hereunder and under the Lease. (2) The instrument referred to in clause (1), any Uniform Commercial Code financing statements relating thereto, and any other documents that are necessary (or reasonably requested by Mortgagee) to establish Lessee's title to and interest in the Aircraft or to reflect the substitution of Lessee for Owner Trustee under the Operative Agreements or to continue the perfection of the security interests in the Aircraft and the other rights and interests of the registered owners of the Equipment Notes (or Lessee's substituted obligations) shall be filed in such form, manner, and places as are necessary or, in Mortgagee's or Owner Trustee's reasonable opinion, advisable for such purpose. (3) Mortgagee and Owner Trustee shall receive an insurance report, dated the effective date of such assumption, of an independent insurance broker, and certificates of insurance, each in form and substance reasonably satisfactory to such Person, as to the due compliance as of the effective date of such assumption with ss. 11 of the Lease (as incorporated into the instrument referred to in (1) of this ss. 11.6.2) as it relates to the Note Holders, each Certificate Holder, and Mortgagee relating to the insurance with respect to the Aircraft. (4) Mortgagee and Owner Trustee shall receive evidence that, as of the effectiveness of such assumption, the Aircraft is free and clear of all Liens other than the Lien of the Mortgage and other Permitted Liens (other than Lessor Liens). (5) Mortgagee and Owner Trustee shall receive a certificate from Lessee that no Special Default exists on the effective date of such assumption. (6) Mortgagee receives (aa) a Guarantor Confirmation under which Holdings expressly acknowledges and agrees that each of the Assumed Obligations constitute Guaranteed Obligations (as defined in the Guarantee) for all purposes of the Guarantee, and (bb) restated Equipment Notes showing Lessee as issuer (which Mortgagee shall also authenticate) evidencing such assumption and the full recourse nature of Lessee's obligations thereunder. (7) Mortgagee receives such other documentation or evidence reasonably requested by Mortgagee to establish the authority of Lessee, Owner Trustee, and Owner Participant to consummate the transactions contemplated by the assumption and the taking of all corporate proceedings in connection therewith. (8) Each Loan Participant and Pass-Through Certificate holder ("HOLDER") shall receive (by delivery to its Pass-Though Trustee, in the case of each Holder) (aa) an opinion of Troutman Sanders LLP, or other independent tax counsel chosen by Lessee and reasonably acceptable to each Loan Participant (Troutman Sanders LLP or such other counsel being the "TAX COUNSEL"), to the effect that the Pass-Through Trusts will not be subject to U.S. federal income tax as a result of Lessee's assumption of the Equipment Notes, and (bb) either (i) an opinion of Tax Counsel to the effect that the Loan Participants and Holders will not recognize income, gain, or loss for federal income tax purposes as a result of Lessee's assumption of the Equipment Notes, and will be subject to federal income tax in the same amounts, in the same manner, and at the same time as would have been the case if such assumption had not occurred, or (ii) (x) an opinion of Tax Counsel to the effect that the Loan Participants and Holders should not recognize income, gain, or loss for federal income tax purposes as a result of Lessee's assumption of the Equipment Notes, and should be subject to federal income tax in the same amounts, in the same manner, and at the same time as would have been the case if such assumption had not occurred, and (y) an indemnity on an After-Tax Basis from Lessee for any adverse tax consequences to each Loan Participant and Holder resulting from such assumption, such indemnity to be in form and substance reasonably acceptable to each Loan Participant. (9) Each Note Holder, each Pass-Through Certificate holder, Mortgagee, and Owner Trustee shall receive (by delivery to its Pass-Though Trustee, in the case of each Holder): (aa) a legal opinion from counsel for Lessee (which may be in-house counsel), in form and substance reasonably satisfactory to each Note Holder, Mortgagee, and Owner Trustee, to the effect that the assumption contemplated by this ss. 11.6 does noT contravene Lessee's certificate of incorporation or by-laws, or any agreement or instrument known to such counsel to which Lessee is a party or by which it is bound, and as to (x) the compliance of the assumption contemplated by this ss. 11.6 with the terms and conditions of this ss. 11.6 and ss. 2.15 oF the Mortgage, (y) the due authorization, execution, delivery, validity, and enforceability of the instruments referred to in clauses (1) and (6), and (z) the continued perfection of the first-priority Lien on the Aircraft for the benefit of the registered owners of the Equipment Notes, and the due filing of the Uniform Commercial Code financing statements and the other documents referred to in clause (2), (bb) from counsel to Mortgagee, counsel to Lessee and Guarantor, counsel to Owner Trustee, and special aviation counsel, a legal opinion comparable to the respective opinions delivered on the Delivery Date (including, in the case of Lessee's counsel, a favorable opinion regarding the availability of the protections available under Section 1110 of the Bankruptcy Code), with such changes therein as may be appropriate in light of such assumption, and (cc) in the case of each opinion described in subclause (aa) or (bb) of this clause (9), covering such additional matters as Mortgagee, Owner Trustee, or any Note Holder reasonably requests. (10) Each Note Holder and Mortgagee receive a copy of the Application for Aircraft Registration filed with the FAA (or any other registration application filed with the applicable Aviation Authority) in connection with such assumption. 12. SECTION 1110 Lessee, Owner Participant, Loan Participants, the Note Holders (such intention being evidenced by each of their acceptance of an Equipment Note), Owner Trustee, and Mortgagee intend that Owner Trustee, as lessor under the Lease (and Mortgagee as assignee of Owner Trustee under the Mortgage), shall be entitled to the benefits of Section 1110 in the event of a case under Chapter 11 of the Bankruptcy Code in which Lessee is a debtor. 13. CHANGE OF CITIZENSHIP 13.1 GENERALLY Without prejudice to the representations, warranties, or covenants as to any party's status as a Citizen of the United States: (a) Each of Lessee, FSB, WTC, and Mortgagee agrees that, immediately upon obtaining knowledge of any facts that would cast doubt upon its continuing status as a Citizen of the United States, and promptly upon public disclosure of negotiations in respect of any transaction which would or might adversely affect such status, it will notify all parties hereto of all relevant matters in connection therewith; and (b) Owner Participant agrees that, if its status is to change or has changed as a Citizen of the United States, or it makes public disclosure of circumstances as a result of which it believes that such status is likely to change, it will notify all the other parties to this Participation Agreement of (1) such change in status promptly after obtaining Actual Knowledge thereof, and (2) such belief as soon as practicable after such public disclosure (but in any event within 10 Business Days after such public disclosure). 13.2 OWNER PARTICIPANT Owner Participant agrees, solely for the benefit of Lessee and the Note Holders, that if, when the Aircraft is registered in the United States, (a) Owner Participant is not be a Citizen of the United States, and (b) the Aircraft shall be, or would therefore become, ineligible for registration in the name of Owner Trustee under the Transportation Code and regulations then applicable thereunder (without considering FAR ss. 47.9 or any other provisioN that may restrict Lessee's or any Permitted Sublessee's use or operation of the Aircraft), then Owner Participant shall as soon as is reasonably practicable (but in any event within 30 days after obtaining Actual Knowledge of such ineligibility and of such loss of citizenship), (y) effect voting trust or other similar arrangements (in which case any provisions contained in the Operative Agreements restricting Owner Participant's or Owner Trustee's ability to amend the Trust Agreement shall not apply to the extent necessary to permit the use of such a voting trust or other similar arrangement) or take any other action necessary to prevent any deregistration or maintain the United States registration of the Aircraft, or (z) transfer in accordance with the terms of this Agreement all its right, title, and interest in and to this Agreement, the Trust Estate, and the Trust Agreement in accordance with ss. 10.1. 13.3 OWNER TRUSTEE Upon FSB's giving any notice in accordance with ss. 13.1(a), Owner Trustee shall, subject to ss. 9.1.1 of the Trust Agreement, resign as OwNer Trustee. Upon its receipt of such notice, Owner Participant shall as promptly as practicable appoint a Citizen of the United States as successor Owner Trustee pursuant to ss. 9.1 of the Trust Agreement. 13.4 MORTGAGEE If WTC gives any notice under ss. 13.1(a), WTC shall (if such citizenship is necessary under the Transportation Code or, if it is not necessary, if Mortgagee's citizenship could have any adverse effect on Lessee, any Participant, or any Note Holder), subject to ss. 8.02 of the Mortgage, resign aS Mortgagee promptly upon its ceasing to be such a citizen. 14. CONCERNING OWNER TRUSTEE Except as otherwise expressly provided herein, in the Trust Agreement, or in the Mortgage, Owner Trustee is entering into this Agreement solely in its capacity as trustee as provided in the Trust Agreement and not in its individual capacity, and in no case whatsoever will it be liable or accountable in its individual capacity for any of the statements, representations, warranties, agreements, or obligations of Owner Trustee hereunder, or for any loss in respect thereof, as to all of which the parties agree to look solely to the Trust Estate; PROVIDED, that nothing in this ss. 14 shall limiT in scope or substance the personal liability of FSB (a) to Owner Participant as expressly set forth in the Trust Agreement, (b) in respect of the representations, warranties, and agreements of FSB expressly made as such herein or in any other Operative Agreement to which it is a party, and (c) for the consequences of its own gross negligence, willful misconduct, and, in receiving, handling or remitting of funds only, its willful misconduct or simple negligence as a trustee. 15. MISCELLANEOUS 15.1 AMENDMENTS No provision of this Agreement may be amended, supplemented, waived, modified, discharged, terminated, or otherwise varied orally, but only by an instrument in writing that specifically identifies the provision of this Agreement that it purports to amend, supplement, waive, modify, discharge, terminate, or otherwise vary and is signed by the party against whom the enforcement of the amendment, supplement, waiver, modification, discharge, termination, or variance is sought. Each such amendment, supplement, waiver, modification, discharge, termination, or variance shall be effective only in the specific instance and for the specific purpose for which it is given. No provision of this Agreement shall be varied or contradicted by oral communication, course of dealing or performance, or other manner not set forth in writing and signed by the party against whom enforcement of the same is sought. 15.2 SEVERABILITY If any provision of this Agreement is held invalid, illegal, or unenforceable in any respect in any jurisdiction, then, to the extent permitted by Law, (a) all other provisions hereof shall remain in full force and effect in such jurisdiction, and (b) such invalidity, illegality, or unenforceability shall not affect the validity, legality, or enforceability of such provision in any other jurisdiction. If, however, any Law pursuant to which such provisions are held invalid, illegal, or unenforceable may be waived, the parties hereto hereby waive that Law to the full extent permitted, to the end that this Agreement shall be a valid and binding agreement in all respects, enforceable in accordance with its terms. 15.3 SURVIVAL The indemnities in this Agreement shall survive the delivery or return of the Aircraft, the Transfer of any interest of Owner Participant in this Agreement, the Trust Estate, and the Trust Agreement, the Transfer of any interest by any Note Holder of its Equipment Note, and the expiration or other termination of any Operative Agreement, except to the extent otherwise provided therein. 15.4 REPRODUCTION OF DOCUMENTS This Agreement (including all annexes, schedules, and exhibits hereto) and all documents relating hereto, including (a) future consents, waivers, and modifications, and (b) past and future financial statements, certificates, and other information furnished to any party hereto, may be reproduced by any photographic, photostatic, microfilm, micro-card, miniature photographic, or other similar process, and any party may destroy any original documents so reproduced. Any such reproduction shall be as admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original exists and whether or not such party made the reproduction in the regular course of business), and any enlargement, facsimile, or further reproduction of such reproduction also shall be so admissible in evidence. 15.5 COUNTERPARTS This Agreement and any amendments, waivers, consents, or supplements hereto may be executed in any number of counterparts (or upon separate signature pages bound together into one or more counterparts), each fully-executed set of which shall be deemed to be an original. 15.6 NO WAIVER No failure on the part of any party hereto to exercise, and no delay by any party hereto in exercising, any of its rights, powers, remedies, or privileges under this Agreement or otherwise available shall impair, prejudice, or waive any such right, power, remedy, or privilege or be construed as a waiver of any breach hereof or default hereunder or as an acquiescence therein, nor shall any single or partial exercise of any such right, power, remedy, or privilege preclude any other or further exercise thereof by it or the exercise of any other right, power, remedy, or privilege by it. No notice to or demand on any party hereto in any case shall, unless otherwise required under this Agreement, entitle such party to any other or further notice or demand in similar or other circumstances, or waive the rights of any party hereto to any other or further action in any circumstances without notice or demand. 15.7 NOTICES Unless otherwise expressly permitted by the terms hereof, all notices, requests, demands, authorizations, directions, consents, waivers, and other communications required or permitted to be made, given, furnished, or filed hereunder shall be in writing (and the specification of a writing in certain instances and not in others does not imply an intention that a writing is not required as to the latter), shall refer specifically to this Agreement, and shall be personally delivered, sent by fax or telecommunication transmission (which in either case provides written confirmation to the sender of its delivery), sent by registered mail or certified mail, return receipt requested, or sent by next-business-day courier service, in each case to the address or fax number set forth for such party in Schedule 1, or to such other address or number as such party hereafter specifies by notice to the other parties hereto. Each such notice, request, demand, authorization, direction, consent, waiver, or other communication shall be effective when received or, if made, given, furnished, or filed by fax or telecommunication transmission, when confirmed. 15.8 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE (A) THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY, AND PERFORMANCE. (B) EACH PARTY HERETO HEREBY IRREVOCABLY AGREES, ACCEPTS, AND SUBMITS ITSELF TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN THE CITY AND COUNTY OF NEW YORK AND OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, IN CONNECTION WITH ANY LEGAL ACTION, SUIT, OR PROCEEDING WITH RESPECT TO ANY MATTER RELATING TO OR ARISING OUT OF OR IN CONNECTION WITH THE OPERATIVE AGREEMENTS. (C) EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS AND AGREES TO THE SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES, AND DOCUMENTS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH SUIT, ACTION, OR PROCEEDING MAY BE MADE BY DELIVERING COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, AT THE ADDRESS SET FORTH PURSUANT TO SS. 15.7. EACH PARTY HERETO HEREBY AGREES THAT SERVICE UPON IT, OR ANY OF ITS AGENTS, IN EACH CASE IN ACCORDANCE WITH THIS SS. 15.8(C), SHALL CONSTITUTE VALID AND EFFECTIVE PERSONAL SERVICE UPON SUCH PARTY, AND EACH PARTY HERETO HEREBY AGREES THAT THE FAILURE OF ANY OF ITS AGENTS TO GIVE ANY NOTICE OF SUCH SERVICE TO ANY SUCH PARTY SHALL NOT IMPAIR OR AFFECT IN ANY WAY THE VALIDITY OF SUCH SERVICE ON SUCH PARTY OR ANY JUDGMENT RENDERED IN ANY ACTION OR PROCEEDING BASED THEREON. (D) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE, OR OTHERWISE, IN ANY LEGAL ACTION OR PROCEEDING BROUGHT HEREUNDER IN ANY OF THE ABOVE-NAMED COURTS, THAT SUCH ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT VENUE FOR THE ACTION OR PROCEEDING IS IMPROPER, OR THAT ANY OPERATIVE AGREEMENT MAY NOT BE ENFORCED IN OR BY SUCH COURTS. (E) EACH PARTY HERETO HEREBY WAIVES ITS RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION IN ANY COURT IN ANY JURISDICTION BASED UPON OR ARISING OUT OF OR RELATING TO THE OPERATIVE AGREEMENTS. 15.9 THIRD-PARTY BENEFICIARY This Agreement is not intended to provide (and shall not provide) any Person not a party hereto (other than each Liquidity Provider, Policy Provider, Escrow Agent, and Paying Agent, each of which is an intended third-party beneficiary with respect to the provisions of ss. 9.1 (and any otheR provision hereunder pursuant to which any such party is expressly granted rights hereunder) with any rights of any nature whatsoever against any of the parties hereto, and no Person not a party hereto (other than each Liquidity Provider, Policy Provider, Escrow Agent, and Paying Agent, with respect to the provisions of ss. 9.1 (and any other provision hereunder pursuant to which any such party is expressly granted rights hereunder) shall have any right, power, or privilege in respect of any party hereto, or have any benefit or interest, arising out of this Agreement. 15.10 ENTIRE AGREEMENT This Agreement, together with the other Operative Agreements, on and as of the date hereof, constitutes the entire agreement of the parties hereto with respect to the subject matter hereof, and all prior understandings or agreements, whether written or oral, among any of the parties hereto with respect to such subject matter are hereby superseded in their entireties. 15.11 FURTHER ASSURANCES Each party hereto shall execute, acknowledge, and deliver (or cause to be executed, acknowledged, and delivered) all such further agreements, instruments, certificates, or other documents, and shall do and cause to be done such further things, as any other party hereto reasonably requests in connection with the administration of, or to carry out more effectively the purposes of, or to assure and confirm better to such other party the rights and benefits to be provided under, this Agreement and the other Operative Agreements. [THIS REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the parties have executed this Participation Agreement N___AT. AMERICAN TRANS AIR, INC., Lessee By: ____________________________ Name: Title: GENERAL ELECTRIC CAPITAL CORPORATION, Owner Participant By: ____________________________ Name: Title: FIRST SECURITY BANK, NATIONAL ASSOCIATION, NOT IN ITS INDIVIDUAL CAPACITY (EXCEPT AS EXPRESSLY PROVIDED HEREIN), e BUT SOLELY AS TRUSTEE, Owner Truste By: _____________________________ Name: Title: FIRST SECURITY BANK, NATIONAL ASSOCIATION, IN ITS INDIVIDUAL CAPACITY (AS EXPRESSLY PROVIDED HEREIN) By: _________________________________ Name: Title: WILMINGTON TRUST COMPANY, NOT IN ITS INDIVIDUAL CAPACITY (EXCEPT AS EXPRESSLY PROVIDED HEREIN), BUT SOLELY AS TRUSTEE, Mortgagee By: _________________________________ Name: Title: WILMINGTON TRUST COMPANY, NOT IN ITS INDIVIDUAL CAPACITY (EXCEPT AS EXPRESSLY PROVIDED HEREIN), BUT SOLELY AS TRUSTEE, Pass-Through Trustee under the Pass-Through Trust Agreement for the American Trans Air, Inc. Pass-Through Trust, 200_-1G By: _________________________________ Name: Title: WILMINGTON TRUST COMPANY, NOT IN ITS INDIVIDUAL CAPACITY (EXCEPT AS EXPRESSLY PROVIDED HEREIN), BUT SOLELY AS TRUSTEE, Pass-Through Trustee under the Pass-Through Trust Agreement for the American Trans Air, Inc. Pass-Through Trust, 200_-1C ` By: ________________________________ Name: Title: WILMINGTON TRUST COMPANY, NOT IN ITS INDIVIDUAL CAPACITY (EXCEPT AS EXPRESSLY PROVIDED HEREIN), BUT SOLELY AS SUBORDINATION AGENT By: _________________________________________ Name: Title: ACCOUNTS; ADDRESSES Account for Payments Address for Notices AMERICAN (Confidential Material American Trans Air, Inc. TRANS AIR, INC Omitted) 7337 West Washington Street Indianapolis, Indiana 46231 Attention: Exec. VP and CFO fax: (317) 240-7091 OWNER General Electric Capital PARTICIPANT Corp. _______________________ Attention: _________________ fax: (____) __________ THE BOEING The Boeing Company COMPANY P.O. Box 3707 Seattle, WA 98124-3707 Attention: Treasurer M/S 68-34 fax: (206) 237-8746 FIRST SECURITY First Security Bank, N.A. BANK,NATIONAL 79 South Main Street ASSOCIATION Salt Lake City, UT 84111 Attention: Corporate Trust Department fax: (801) 246-5053 WILMINGTON Wilmington Trust Company TRUST COMPANY, Rodney Square North AS MORTGAGEE 1100 North Market Street Wilmington, DE 19890-0001 Attention:Corporate Trust Administration fax: (302)651-8882 WILMINGTON TRUST Wilmington Trust Company COMPANY, AS Rodney Square North SUBORDINATION AGENT 1100 North Market Street Wilmington, DE 19890-0001 Attention: Corporate Trust Administration fax: (302) 651-8882 WILMINGTON TRUST Wilmington Trust Company COMPANY, AS Rodney Square North PASS-THROUGH TRUSTEE 1100 North Market Street FOR THE 200_-1G Wilmington, DE 19890-0001 PASS-THROUGH TRUST Attention: Corporate Trust Administration fax: (302) 651-8882 WILMINGTON TRUST Wilmington Trust Company COMPANY, AS Rodney Square North PASS-THROUGH TRUSTEE 1100 North Market Street FOR THE 200_-1c Wilmington, DE 19890-0001 PASS-THROUGH TRUST Attention: Corporate Trust Administration fax: (302) 651-8882 AMBAC ASSURANCE Ambac Assurance Corporation CORPORATION 1 State Street Plaza New York, NY 10004 Attention: David Nemschoff fax: (212) 208-3113 COMMITMENTS PARTICIPANT PERCENTAGE OF LESSOR'S COST DOLLAR AMOUNT OWNER PARTICIPANT OWNER PARTICIPANT'S PERCENTAGE PERCENTAGE General Electric Capital __________% $__________ Corporation PASS-THROUGH TRUSTEE LOAN PARTICIPANT'S PTT PERCENTAGE 200_-1G Pass-Through Trustee __________% $__________ 200_-1C Pass-Through Trustee __________% $__________ TOTAL 100% $__________ CERTAIN TERMS DEFINED TERM DEFINITION Commitment Termination Date __________, 200_ Lessee's Advisor(s) Capstar Partners, LLC Lessor's Cost $_______________ OP Jurisdiction New York Owner Participant's Special Counsel Dewey Ballantine LLP Trust Company Jurisdiction Utah PARTICIPATION AGREEMENT N___AT dated as of __________, 200_ among AMERICAN TRANS AIR, INC., Lessee, GENERAL ELECTRIC CAPITAL CORPORATION, Owner Participant, and FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity except as expressly provided herein, but solely as Owner Trustee, Owner Trustee One Boeing model 737-800 aircraft bearing manufacturer's serial no. _____ and U.S. registration no. N___AT CONTENTS 1. DEFINITIONS AND CONSTRUCTION................................................1 2. PARTICIPATION IN LESSOR'S COST; ............................................2 ISSUANCE OF EQUIPMENT NOTES; TERMINATION OF OBLIGATION TO PARTICIPATE 2.1 Participation in Lessor's Cost....................................2 2.2 Termination of Obligation to Participate..........................2 3. LEASE OF AIRCRAFT...........................................................2 4. PROCEDURE FOR PARTICIPATION IN PAYMENT OF LESSOR'S COST; ...................3 POSTPONEMENT OF SCHEDULED DELIVERY DATE 4.1 Notices of Scheduled Delivery Date................................3 4.2 Payment of Lessor's Cost..........................................3 4.3 Postponement of Scheduled Delivery Date...........................4 4.4 Closing...........................................................4 5. CLOSING CONDITIONS..........................................................4 5.1 Conditions to Participants' Obligations...........................4 5.2 Conditions to Owner Trustee's Obligations.........................9 5.4 Conditions to Lessee's Obligations...............................10 5.5 Post-Registration Opinion........................................10 6. REPRESENTATIONS AND WARRANTIES.............................................11 6.1 Lessee's Representations and Warranties..........................11 6.2 Owner Participant's Representations and Warranties...............15 6.3 FSB's Representations and Warranties.............................17 7. COVENANTS..................................................................19 7.1 Lessee's Covenants...............................................19 7.2 Owner Participant's Covenants....................................21 7.3 FSB's and Owner Trustee's Covenants..............................23 7.6 Other Agreements.................................................25 8. CONFIDENTIALITY............................................................30 9. INDEMNIFICATION AND EXPENSES...............................................30 9.1 General Indemnity................................................30 9.2 Expenses.........................................................36 9.3 General Tax Indemnity............................................37 9.4 Payments.........................................................48 9.5 Interest.........................................................48 9.6 Benefit of Indemnities...........................................48 10. ASSIGNMENT OR TRANSFER OF INTERESTS.......................................49 10.1 Participants, Owner Trustee, and Note Holders...................49 10.2 Effect of Transfer..............................................50 11. RE-FUNDING AND CERTAIN OTHER MATTERS......................................51 12. SECTION 1110..............................................................51 13. CHANGE OF CITIZENSHIP.....................................................51 13.1 Generally.......................................................51 13.2 Owner Participant...............................................52 13.3 Owner Trustee...................................................52 14. CONCERNING OWNER TRUSTEE..................................................52 15. MISCELLANEOUS 53 15.1 Amendments......................................................53 15.2 Severability....................................................53 15.3 Survival........................................................53 15.4 Reproduction of Documents.......................................53 15.5 Counterparts....................................................54 15.6 No Waiver.......................................................54 15.7 Notices.........................................................54 15.8 Governing Law; Submission to Jurisdiction; Venue................55 15.9 Third-Party Beneficiary.........................................56 15.10 Entire Agreement...............................................56 15.11 Further Assurances.............................................56 ANNEX A Definitions SCHEDULE 1 Accounts; Addresses SCHEDULE 2 Commitments SCHEDULE 3 Certain Terms EXHIBIT A Opinion of special counsel to Lessee EXHIBIT B Opinion of corporate counsel to Lessee EXHIBIT C Opinion of corporate counsel to Airframe Manufacturer EXHIBIT D Opinion of special counsel to Owner Trustee EXHIBIT E Opinion of special counsel to Owner Participant EXHIBIT F Opinion of FAA Counsel EXHIBIT G Opinion of corporate counsel to Owner Participant EXHIBIT H Form of Assignment and Assumption Agreement EXHIBIT I Form of Owner Participant Guaranty PARTICIPATION AGREEMENT N___AT This Participation Agreement N___AT (this "Agreement"), dated as of __________, 200_, is entered into by and among (1) American Trans Air, Inc. ("Lessee"), an Indiana corporation, (2) General Electric Capital Corporation ("Owner Participant"), a New York corporation, and (3) First Security Bank, National Association, a national banking association, not in its individual capacity (except as expressly provided herein), but solely as Owner Trustee (in its capacity as Owner Trustee, "Owner Trustee" or "Lessor", and in its individual capacity, "FSB"). RECITALS A........Owner Participant and FSB are entering into the Trust Agreement, pursuant to which Owner Trustee agrees to hold the Trust Estate for the use and benefit of Owner Participant. B........Lessee and Airframe Manufacturer entered into the Purchase Agreement, pursuant to which Airframe Manufacturer agreed to manufacture certain aircraft (including the Aircraft) and sell them to Lessee, and Lessee agreed to buy certain aircraft (including the Aircraft) from Airframe Manufacturer. C........Seller will sell the Aircraft to Owner Trustee pursuant to the terms of this Participation Agreement. D........Lessee and Owner Trustee are entering into the Purchase Agreement Assignment and the Engine Manufacturer Warranty Agreement, pursuant to which Lessee assigns to Owner Trustee certain of Lessee's rights under the Purchase Agreement and the Engine Manufacturer Warranty Agreement. E........Lessor and Lessee are entering into the Lease, pursuant to which Lessor is leasing the Aircraft to Lessee and Lessee is leasing the Aircraft from Lessor. F........The parties to this Agreement want to set forth in this Agreement the terms and conditions upon and subject to which the foregoing transactions shall be effected. The parties hereto agree as follows: 1. DEFINITIONS AND CONSTRUCTION The terms defined in Annex A, when capitalized as in Annex A, have the same meanings when used in this Agreement. Annex A also contains rules of usage that control construction in this Agreement. 2. PARTICIPATION IN LESSOR'S COST; TERMINATION OF OBLIGATION TO PARTICIPATE 2.1 Participation in Lessor's Cost Subject to the terms and conditions of this Agreement, on the Delivery Date, Owner Participant shall participate in the payment of Lessor's Cost as follows: Owner Participant shall finance Owner Trustee's payment of Lessor's Cost for the Aircraft by making an equity investment in the beneficial ownership of the Aircraft in the amount in Dollars equal to Lessor's Cost. 2.2 Termination of Obligation to Participate Notwithstanding any other provision of this Agreement, if the Closing does not occur on or before the Commitment Termination Date, the Commitment of Owner Participant and its obligation to participate in the payment of Lessor's Cost shall expire and be of no further force and effect; provided, that the liability of Owner Participant if it has defaulted in the payment of its Commitment shall not be released. 3. LEASE OF AIRCRAFT Subject to the terms and conditions of this Agreement, on the Delivery Date, Owner Trustee shall purchase and accept delivery of the Aircraft from Seller under and pursuant to the Purchase Agreement and the Purchase Agreement Assignment, and thereupon Owner Trustee shall lease the Aircraft to Lessee, and Lessee shall lease the Aircraft from Owner Trustee, under the Lease. 4. PROCEDURE FOR PARTICIPATION IN PAYMENT OF LESSOR'S COST; POSTPONEMENT OF SCHEDULED DELIVERY DATE 4.1 Notices of Scheduled Delivery Date Lessee agrees to give Owner Participant and Owner Trustee at least one Business Day's written notice of the Scheduled Delivery Date, which notice shall set forth Lessor's Cost and the amount of Owner Participant's Commitment. Owner Participant agrees that making its Commitment available shall constitute a waiver of such notice. 4.2 Payment of Lessor's Cost (a) Owner Participant agrees, subject to the terms and conditions of this Agreement, to make the Dollar amount of its Commitment available, by wire transfer of immediately available funds to FSB's account at First Security Bank, National Association, ABA No. _______, account no. ______, reference American Trans Air, Inc. Lease N___AT, at or before 12:00 noon, New York City time, on the Scheduled Delivery Date. All such funds made available by Owner Participant to FSB shall, until payment thereof to Seller as provided in ss. 4.2(b)(2) or return thereof to Owner Participant as provided in ss. 4.3.2, be held by FSB in trust for the benefit of the Owner Participant as the sole and exclusive property of the Owner Participant and not as part of the Trust Estate. (b) Subject to the satisfaction, or waiver by the applicable party, of the conditions precedent set forth in ss. 5, and simultaneously with the receipt by the parties hereto of all amounts to be paid to them on the Delivery Date pursuant to this ss. 4.2, Owner Trustee shall: (1) purchase, take title to, and accept delivery of the Aircraft; (2) in consideration of the transfer of title to the Aircraft to Owner Trustee, direct FSB to pay, from the funds made available to FSB hereunder by Owner Participant, all such funds, which payments in the aggregate shall be equal to Lessor's Cost, by wire transfer of immediately available funds to Seller's account set forth in Schedule 1 or as otherwise directed by Seller; (3) execute an application for registration of the Aircraft with the FAA; (4) lease the Aircraft to Lessee pursuant to the Lease; and (5) take such other action as may be required to be taken by Owner Trustee on the Delivery Date by the terms of any Operative Agreement. 4.3 Postponement of Scheduled Delivery Date 4.3.1 Postponement If for any reason whatsoever the Closing is not consummated on the Scheduled Delivery Date, Lessee may, subject to the provisions of 1(e) of the Note Purchase Agreement, by telephonic notice, given by 5:00 p.m. New York City time (such telephonic notice to be promptly confirmed in writing by personal delivery or facsimile) on the Scheduled Delivery Date, to Owner Participant and Owner Trustee, designate a Delayed Delivery Date, in which case Owner Participant will keep its funds available. FSB shall promptly return to Owner Participant all funds made available to FSB in accordance with ss. 4.2(a), together with interest or income earned thereon, if the Closing fails to occur on the Scheduled Delivery Date. 4.4 Closing The Closing shall occur at the offices of Troutman Sanders LLP, 5200 Bank of America Plaza, Atlanta, GA (with a set of Operative Agreements also being delivered in New York City), or such other place as the parties shall agree. 5. CLOSING CONDITIONS 5.1 Conditions to Owner Participant's Obligations Owner Participant's obligation to make the Dollar amount of its Commitment available for payment as directed by Owner Trustee on the Delivery Date is subject to the satisfaction or such Owner Participant's waiver, on or before the Delivery Date, of the conditions in this ss. 5.1; provided, that it shall not be a condition to the obligation of Owner Participant that any document be produced or action taken that is to be produced or taken by such Owner Participant or by a Person within Owner Participant's control. 5.1.1 Notice Owner Participant received the notice described in ss. 4.1 or, in the case of a Delayed Delivery Date, ss. 4.3, when and as required thereby. 5.1.2 Delivery of Documents Except as otherwise provided in this ss. 5.1.2, Owner Participant receives executed counterparts of the following documents, and such counterparts (x) have been duly authorized, executed, and delivered by the party or parties thereto, (y) are reasonably satisfactory in form and substance to Owner Participant, and (z) are in full force and effect: (a) the Lease (Lessor to receive the sole executed chattel paper original thereof); (b) the Tax Indemnity Agreement; provided, that only Owner Participant and Lessee shall receive copies of the Tax Indemnity Agreement; (c) the Trust Agreement; (d) the Purchase Agreement Assignment; (e) the Consent and Agreement and the Engine Manufacturer Warranty Agreement; (f) an excerpted copy of the Purchase Agreement to the extent relating to Airframe Manufacturer's or Engine Manufacturer's warranties or related obligations or any right in the Purchase Agreement assigned to Owner Trustee pursuant to the Purchase Agreement Assignment; provided, that only Owner Trustee shall receive copies of such agreement (copies of which may be inspected by Owner Participant and its special counsel on the Delivery Date, but after the Delivery Date such copies shall be retained by Owner Trustee and may be inspected and reviewed by Owner Participant or its counsel if and only if a Default exists); (g) the Bills of Sale; (h) the Guarantee; (i) an invoice from Seller specifying the amount due to Seller in respect of the Aircraft, which amount shall equal Lessor's Cost of the Aircraft; (j) the broker's report and insurance certificates required byss. 11 of the Lease; (k) an appraisal or appraisals from an Appraiser, which appraisal or appraisals shall be reasonably satisfactory in form and substance to Owner Participant; provided, that only Owner Participant shall receive copies of such appraisal(s); (l) (1) a copy of Lessee's articles of incorporation, by-laws, and resolutions, in each case certified as of the Delivery Date by the Secretary or an Assistant Secretary of Lessee, duly authorizing Lessee's execution, delivery, and performance of the Lessee Operative Agreements required to be executed and delivered by Lessee on or before the Delivery Date in accordance with the provisions hereof and thereof; (2) a copy of Guarantor's articles of incorporation, by-laws, and resolutions, in each case certified as of the Delivery Date by the Secretary or an Assistant Secretary of Guarantor, duly authorizing Guarantor's execution, delivery, and performance of the Guarantee; (3) incumbency certificates of Lessee, Guarantor, Owner Participant, and FSB as to the person(s) authorized to execute and deliver the relevant Operative Agreements on behalf of such party; and (4) copies of the certificate or articles of incorporation, by-laws, and general authorizing resolutions of the boards of directors (or executive committees) or other satisfactory evidence of authorization of Owner Participant and FSB, certified as of the Delivery Date by the Secretary or an Assistant or Attesting Secretary of Owner Participant and FSB, which authorize the execution, delivery and performance by Owner Participant and FSB, respectively, of each of the Operative Agreements to which it is a party, together with such other documents and evidence with respect to it as Lessee or Owner Participant reasonably requests in order to establish the consummation of the transactions contemplated by this Agreement and the taking of all corporate proceedings in connection therewith; (m) an Officer's Certificate of Lessee, dated the Delivery Date, stating that its representations and warranties in this Agreement are true and correct as of the Delivery Date (or, to the extent that any such representation and warranty expressly relates to an earlier date, true and correct as of such earlier date); (n) an Officer's Certificate of FSB, dated the Delivery Date, stating that its representations and warranties, in its individual capacity and as Owner Trustee, in this Agreement are true and correct as of the Delivery Date (or, to the extent that any such representation and warranty expressly relates to an earlier date, true and correct as of such earlier date); (o) an Officer's Certificate of Owner Participant, dated the Delivery Date, stating that its representations and warranties in this Agreement are true and correct as of the Delivery Date (or, to the extent that any such representation and warranty expressly relates to an earlier date, true and correct as of such earlier date); (p) an application for registration of the Aircraft with the FAA in the name of Owner Trustee (FAA Counsel to receive the sole executed copy thereof, for filing with the FAA); (q) the Financing Statements; (r) the following opinions of counsel, in each case dated the Delivery Date: (1) an opinion of Troutman Sanders LLP, special counsel to Lessee and Guarantor, substantially in the form of Exhibit A; (2) an opinion of Lessee's and Guarantor's Legal Department, substantially in the form of Exhibit B; (3) an opinion of corporate counsel to Airframe Manufacturer, substantially in the form of Exhibit C; (4) an opinion of Ray, Quinney & Nebeker, special counsel to Owner Trustee, substantially in the form of Exhibit D; (5) an opinion of Dewey Ballantine LLP, special counsel to Owner Participant, substantially in the form of Exhibit E; (6) an opinion of FAA Counsel, substantially in the form of Exhibit F; (7) an opinion of Dewey Ballantine LLP, special tax counsel to Owner Participant, with respect to certain tax consequences of the transactions contemplated hereby; provided, that only Owner Participant shall receive such opinion; and (8) an opinion of corporate counsel of Owner Participant, substantially in the form of Exhibit G, and (s) Owner Participant receives copies of such other documents as it reasonably requests, except as provided in clause (f) of this ss. 5.1.2. 5.1.3 Violation of Law No change occurs after the date of this Agreement in any applicable Law that makes it a violation of Law for (a) Lessee, Owner Participant, or Owner Trustee to execute, deliver, and perform the Operative Agreements to which it is a party or to be a party subject to the obligations of the Operative Agreements to which Owner Participant is bound, or (b) Owner Participant to make the Dollar amount of its Commitment available. 5.1.4 Representations, Warranties, and Covenants The representations and warranties of each other party to this Agreement made, in each case, in any Operative Agreement to which it is a party, are true and accurate in all material respects as of the Delivery Date (unless any such representation and warranty was made with reference to a specified date, in which case such representation and warranty was true and accurate as of such specified date), and each other party to this Agreement has performed and observed, in all material respects, all of its covenants, obligations, and agreements in each Operative Agreement to which it is a party to be observed or performed by it as of the Delivery Date. 5.1.5 No Default On the Delivery Date, no Default exists or would result from the sale or lease of the Aircraft. 5.1.6 No Event of Loss No Event of Loss with respect to the Airframe or any Engine has occurred, and no circumstance, condition, act, or event has occurred that, with the giving of notice or lapse of time, would give rise to or constitute an Event of Loss with respect to the Airframe or any Engine. 5.1.7 Title Owner Trustee has good title (subject to filing and recordation of the FAA Bill of Sale with the FAA) to the Aircraft, free and clear of Liens, except (a) the rights of Lessee under the Lease, (b) the beneficial interest of Owner Participant created by the Trust Agreement, (c) Liens permitted by clause (d) (solely for taxes not yet due) of ss. 6 of the Lease, and (d) Liens permitted by clause (e) of ss. 6 of the Lease. 5.1.8 Certification The Aircraft has been duly certificated by the FAA as to type, and upon registration in Owner Trustee's name will be eligible for an FAA airworthiness certificate. 5.1.9 Section 1110 Owner Trustee, as lessor under the Lease, is entitled to the benefits of Section 1110 (as currently in effect) with respect to the right to take possession of the Airframe and Engines as provided in the Lease in the event of a case under Chapter 11 of the Bankruptcy Code in which Lessee is a debtor. 5.1.10 Filing The FAA-Filed Documents are on the Delivery Date duly filed for recordation with the FAA in accordance with the Transportation Code, and each Financing Statement has been duly filed or is in the process of being duly filed in the appropriate jurisdiction. 5.1.11 No Proceedings No action or proceeding has been instituted, nor is any action threatened in writing, before any Government Entity, nor has any order, judgment, or decree been issued or proposed to be issued by any Government Entity, to set aside, restrain, enjoin, or prevent the completion and consummation of any Operative Agreement or the Transactions. 5.1.12 Governmental Action All appropriate action required to have been taken before the Delivery Date by the FAA, or any other Government Entity of the United States, in connection with the Transactions has been taken, and all orders, permits, waivers, authorizations, exemptions, and approvals of such entities required to be in effect on the Delivery Date in connection with the Transactions have been issued. 5.2 Conditions to Owner Trustee's Obligations Owner Trustee's obligation to apply the Commitments to pay Lessor's Cost on the Delivery Date is subject to the satisfaction or Owner Trustee's waiver, on or before the Delivery Date, of the conditions in this ss. 5.2. 5.2.1 Notice Owner Trustee receives the notice described in ss. 4.1 or, in the case of a Delayed Delivery Date, ss. 4.3, when and as required thereby. 5.2.2 Documents Owner Trustee receives executed originals of the documents described in ss. 5.1.2, except as otherwise provided therein, unless the failure to receive any such document is the result of any action or inaction by Owner Trustee. 5.2.3 Other Conditions Precedent Each of the conditions in ss.ss. 5.1.3, 5.1.4, 5.1.5, and 5.1.9 is satisfied, unless the failure of any such condition to be satisfied is the result of any action or inaction by Owner Trustee. 5.3 Conditions to Lessee's Obligations Lessee's obligation to lease the Aircraft on the Delivery Date is subject to the satisfaction or Lessee's waiver, on or before the Delivery Date, of the conditions in this ss. 5.3. 5.3.1 Documents Lessee receives executed originals of the documents described in ss. 5.1.2, except as otherwise provided therein, and they are satisfactory to Lessee, unless the failure to receive any such document is the result of any action or inaction by Lessee. 5.3.2 Taxes Lessee is satisfied that no sales, use, value-added, goods-and-services, or like tax, and no stamp tax duty, is payable with respect to the delivery of the Aircraft on the Delivery Date (to the extent that Lessee could be liable therefor under ss. 9.3). 5.3.3 Other Conditions Each of the conditions in ss.ss. 5.1.3, 5.1.4, 5.1.5, 5.1.6, 5.1.7, 5.1.8, 5.1.9, 5.1.10, 5.1.11, and 5.1.12 has been satisfied or waived by Lessee, unless the failure of any such condition to be satisfied is the result of any action or inaction by Lessee. 5.4 Post-Registration Opinion Promptly after the registration of the Aircraft and the recordation of the FAA-Filed Documents pursuant to the Transportation Code, Lessee will cause FAA Counsel to deliver to Lessee, Owner Participant, and Owner Trustee a favorable opinion or opinions addressed to each of them with respect to such recordation. 6. REPRESENTATIONS AND WARRANTIES 6.1 Lessee's Representations and Warranties Lessee represents and warrants to Owner Participant and Owner Trustee that: 6.1.1 Organization; Qualification Lessee is a corporation duly incorporated, validly existing, and in good standing under the Laws of Indiana, and has the corporate power and authority to conduct the business in which it is currently engaged and to own or hold under lease its properties and to enter into and perform its obligations under the Lessee Operative Agreements. Lessee is duly qualified to do business as a foreign corporation in good standing in each jurisdiction in which the nature and extent of the business conducted by it, or the ownership of its properties, requires such qualification, except where the failure to be so qualified would not give rise to a Materially Adverse Change to Lessee. 6.1.2 Corporate Authorization Lessee has taken, or caused to be taken, all necessary corporate action (including obtaining any consent or approval of stockholders required by its articles of incorporation or by-laws) to authorize its execution, delivery, and performance of its obligations under each of the Lessee Operative Agreements. 6.1.3 No Violation Lessee's execution, delivery, and performance of its obligations under the Lessee Operative Agreements do not and will not (a) violate any provision of Lessee's articles of incorporation or by-laws, (b) violate any Law applicable to or binding on Lessee, or (c) violate or constitute any default under (other than any violation or default that would not result in a Materially Adverse Change to Lessee), or result in the creation of any Lien (other than as permitted under the Lease) upon the Aircraft under, any lease, loan, or other material agreement to which Lessee is a party or by which Lessee or any of its properties is bound. 6.1.4 Approvals Lessee's execution and delivery of, and performance of its obligations under, the Lessee Operative Agreements do not and will not require the consent or approval of, the giving of notice to, the registration with, the recording or filing of any documents with, or the taking of any other action in respect of (a) any trustee or other holder of any Debt of Lessee, (b) any Government Entity, or (c) any other Person, other than (x) the FAA-Filed Documents and the Financing Statements (and continuation statements periodically), and (y) filings, recordings, notices, corporate approvals of Lessee (which have been duly obtained) or other ministerial actions pursuant to any routine recording, contractual, or regulatory requirements. 6.1.5 Valid and Binding Agreements The Lessee Operative Agreements have been duly authorized, executed, and delivered by Lessee, and (assuming their due authorization, execution, and delivery by the other parties thereto) constitute legal, valid, and binding obligations of Lessee and are enforceable against Lessee in accordance with their terms, except as such enforceability may be limited by bankruptcy, insolvency, and other similar Laws affecting the rights of creditors generally and general principles of equity. 6.1.6 Litigation Except as set forth in Guarantor's most recent Annual Report on Form 10-K, filed by Lessee with the SEC on or before the Delivery Date, or in any Quarterly Report on Form 10-Q or Current Report on Form 8-K filed by Guarantor with the SEC subsequent to such Form 10-K and on or before the Delivery Date, no action, claim, or proceeding is now pending or, to Lessee's Actual Knowledge, threatened, against Lessee, Guarantor, or any of their Affiliates, before any Government Entity or any arbitrator, that is reasonably likely to be determined adversely to Lessee and if determined adversely to Lessee would result in a Materially Adverse Change. 6.1.7 Financial Condition Guarantor's audited consolidated balance sheet for its most-recent fiscal year, included in Guarantor's Annual Report on Form 10-K filed by Guarantor with the SEC for such fiscal year, and the related consolidated statements of operations and cash flows for the period then ended, have been prepared in accordance with GAAP and fairly present in all material respects the financial condition of Guarantor and its consolidated subsidiaries as of such date and the results of its operations and cash flows for such period, and since the date of such balance sheet, there has been no Materially Adverse Change in such financial condition or operations, except for matters disclosed in (a) the financial statements referred to above, or (b) any subsequent Quarterly Report on Form 10-Q or Current Report on Form 8-K filed by Guarantor with the SEC on or before the Delivery Date. 6.1.8 Registration and Recordation Except for (a) registering the Aircraft with the FAA pursuant to the Transportation Code in the name of Owner Trustee, (b) filing for recordation (and recording) the FAA-Filed Documents, (c) filing the Financing Statements (and continuation statements relating thereto at periodic intervals), (d) Lessor's taking possession and retaining the chattel paper original counterpart of the Lease, and (e) affixing the placards referred to in ss. 7.1.3 of the Lease, no further action, including filing or recording any document (including any financing statement under UCC Article 9) is necessary in order to establish and perfect Owner Trustee's right, title, and interest, in the Aircraft and the Lease, as against Lessee and any other Person, in any applicable jurisdiction in the United States. 6.1.9 Chief Executive Office Lessee's chief executive office (as defined in UCC Article 9) is located at 7337 West Washington Street, Indianapolis, Indiana, 46231. 6.1.10 No Default No Default exists. 6.1.11 No Event of Loss No Event of Loss has occurred with respect to the Airframe or any Engine, and, to Lessee's Actual Knowledge, no circumstance, condition, act, or event has occurred that, with the giving of notice or lapse of time, gives or would give rise to or constitutes or would constitute an Event of Loss to the Airframe or any Engine. 6.1.12 Compliance With Laws (a) Lessee is a Citizen of the United States and a U.S. Air Carrier. (b) Lessee holds all licenses, permits, and franchises from the appropriate Government Entities necessary to authorize Lessee lawfully to engage in air transportation and to carry on scheduled commercial passenger service as currently conducted, except to the extent that the failure to hold any such license, permit, or franchise would not give rise to a Materially Adverse Change to Lessee. (c) Lessee is not an "investment company" or a company controlled by an "investment company" within the meaning of the Investment Company Act of 1940. 6.1.13 Securities Laws Neither Lessee nor any Person authorized to act on its behalf has directly or indirectly offered any beneficial interest or Security relating to the ownership of the Aircraft or the Lease or any interest in the Trust Estate and the Trust Agreement for sale to, or solicited any offer to acquire any such interest or security from, or has sold any such interest or security to, any Person in violation of the Securities Act. 6.1.14 Broker's Fees No Person acting on behalf of Lessee is or will be entitled to any broker's fee, commission, or finder's fee in connection with the Transactions, except for fees payable to Lessee's Advisor(s), if any. 6.1.15 Section 1110 Owner Trustee, as lessor under the Lease, will be entitled to the benefits of Section 1110 (as currently in effect), with respect to the right to take possession of the Airframe and Engines as provided in the Lease, in the event of a case under Chapter 11 of the Bankruptcy Code in which Lessee is a debtor. 6.1.16 No Government Consents Neither Lessee's execution and delivery of any of the Lessee Operative Agreements nor Lessee's performance of its obligations hereunder requires the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action in respect of any Government Entity, except for (a) the orders, permits, waivers, exemptions, authorizations and approvals of the regulatory authorities having jurisdiction over the operation of the Aircraft by Lessee, which orders, permits, waivers, exemptions, authorizations and approvals have been duly obtained and are, or will on the Delivery Date be, in full force and effect, and the registration and filings referred to herein and (b) any normal periodic and other reporting requirements under the applicable rules of the FAA to the extent required to be given or obtained only on or after the Delivery Date. 6.1.17 Payment of Taxes Lessee and its Affiliates have filed or caused to be filed all federal, state, and material local and non-U.S. tax returns that are required to be filed and have paid or caused to be paid all taxes shown to be due on such returns or on any assessment received by Lessee or its Affiliates, except any that are being contested diligently and in good faith by appropriate proceedings and for which adequate provision for payment has been made in accordance with GAAP. There is no ongoing audit or, to the knowledge of Lessee, other investigation by any Government Entity of the tax liability of Lessee or its Affiliates and there is no unresolved claim by a taxing authority concerning Lessee's or any Affiliate's tax liability, for any period for which returns have been filed or were due, that, in either case, reasonably may be expected to result in liability of Lessee which could have a materially adverse effect on the business, operations or financial condition of Lessee or the ability of Lessee to perform its obligations under the Operative Agreements. 6.2 Owner Participant's Representations and Warranties Owner Participant represents and warrants to Lessee and Owner Trustee that: 6.2.1 Organization, etc. Owner Participant (a) is a corporation duly incorporated, validly existing and in good standing under the Laws of the OP Jurisdiction, (b) has the corporate power and authority to conduct the business in which it is currently engaged, to own or hold under lease its properties, and to enter into and perform its obligations under the Owner Participant Agreements, and (c) has a tangible net worth (exclusive of goodwill) greater than $50 million. 6.2.2 Corporate Authorization Owner Participant has taken (or caused to be taken) all necessary corporate action (including obtaining any consent or approval of stockholders required by its certificate of incorporation or by-laws) to authorize its execution, delivery, and performance of its obligations under each of the Owner Participant Agreements. 6.2.3 No Violation Owner Participant's execution, delivery, and performance of its obligations under each of the Owner Participant Agreements do not and will not (a) violate any provision of Owner Participant's certificate of incorporation or by-laws, (b) violate any Law applicable to or binding on Owner Participant (no representation or warranty is made with respect to ERISA, other than as set forth in ss. 6.2.9) or (c) violate or constitute any default under (other than any violation or default that would not result in a Materially Adverse Change to Owner Participant), or result in the creation of any Lien (other than as provided for or otherwise permitted in the Operative Agreements) upon the Trust Estate under, any lease, loan, or other material agreement to which Owner Participant is a party or by which Owner Participant or any of its properties is bound. 6.2.4 Approvals Owner Participant's execution, delivery, and performance of its obligations under each of the Owner Participant Agreements do not and will not require the consent or approval of, the giving of notice to, the registration with, the recording or filing of any documents with, or the taking of any other action in respect of (a) any trustee or other holder of any Debt of Owner Participant, and (b) any Government Entity, other than filing the FAA-Filed Documents and the Financing Statements and routine regulatory filings. 6.2.5 Valid and Binding Agreements The Owner Participant Agreements have been duly authorized, executed, and delivered by Owner Participant, and (assuming the due authorization, execution, and delivery by the other parties thereto) constitute legal, valid, and binding obligations of Owner Participant and are enforceable against Owner Participant in accordance with their terms, except as such enforceability may be limited by bankruptcy, insolvency, and other similar Laws affecting the rights of creditors generally and general principles of equity. 6.2.6 Citizenship Owner Participant is a Citizen of the United States. 6.2.7 No Liens There are no Lessor Liens attributable to Owner Participant on all or any part of the Trust Estate. 6.2.8 Investment by Owner Participant Owner Participant is acquiring its beneficial interest in the Trust Estate for its own account, for investment and not with a view to any resale or distribution thereof; provided, that, subject to the transfer restrictions in ss. 10, its disposition of its beneficial interest in the Trust Estate shall at all times be within its control. 6.2.9 ERISA No part of the funds to be used by Owner Participant to acquire or hold its interests in the Trust Estate directly or indirectly constitutes assets of a Plan. 6.2.10 Litigation There are no pending or, to Owner Participant's Actual Knowledge, threatened actions or proceedings against Owner Participant before any Government Entity that, if determined adversely to Owner Participant, would materially adversely affect Owner Participant's ability to perform its obligations under the Owner Participant Agreements. 6.2.11 Securities Laws Neither Owner Participant nor any Person Owner Participant has authorized to act on its behalf has directly or indirectly offered any beneficial interest in or Security relating to the ownership of the Aircraft or any interest in the Trust Estate for sale to, or solicited any offer to acquire any of the same from, any Person in violation of the Securities Act or applicable state securities Laws (with the understanding that Owner Participant shall not be deemed to have authorized Lessee's Advisor(s) to act on Owner Participant's behalf). 6.2.12 Broker's Fees No Person acting on behalf of Owner Participant is or will be entitled to any broker's fee, commission, or finder's fee in connection with the Transactions. 6.3 FSB's Representations and Warranties FSB represents and warrants to Lessee and Owner Participant that: 6.3.1 Organization, etc. FSB is a national banking association duly organized, validly existing and in good standing under the Laws of the United States, holding a valid certificate to do business as a national banking association with banking authority to execute, deliver, and perform its obligations under the Owner Trustee Agreements. 6.3.2 Corporate Authorization FSB has taken (or caused to be taken) all necessary corporate action (including obtaining any consent or approval of stockholders required by Law or by its articles of association or by-laws) to authorize the execution and delivery by FSB or Owner Trustee, of each of the Owner Trustee Agreements, and the performance of its obligations thereunder. 6.3.3 No Violation FSB's and Owner Trustee's execution, delivery, and performance of their respective obligations under the Owner Trustee Agreements do not and will not (a) violate any provision of FSB's articles of association or by-laws, (b) violate any Utah Law or federal banking Law applicable to or binding on Owner Trustee or FSB, or (c) violate or constitute any default under (other than any violation or default that would not result in a Materially Adverse Change to FSB or Owner Trustee), or result in the creation of any Lien upon any property of FSB, Owner Trustee, or any of FSB's subsidiaries under, any lease, loan, or other material agreement to which FSB or Owner Trustee is a party or by which FSB, Owner Trustee, or any of their properties is or may be bound or affected. 6.3.4 Approvals FSB's and Owner Trustee's execution, delivery, and performance of their respective obligations under the Owner Trustee Agreements do not and will not require the consent, approval, or authorization of, the giving of notice to, the registration with, the recording or filing of any documents with, or the taking of any other action in respect of, (a) any trustee or other holder of any Debt of FSB, or (b) any Government Entity governing banking and trust powers, other than filing the FAA-Filed Documents and the Financing Statements. 6.3.5 Valid and Binding Agreements The Owner Trustee Agreements have been duly authorized, executed, and delivered by FSB and Owner Trustee, and (assuming the due authorization, execution, and delivery thereof by the other parties thereto) constitute legal, valid, and binding obligations of FSB and Owner Trustee and are enforceable against FSB and Owner Trustee in accordance with their terms, except as such enforceability may be limited by bankruptcy, insolvency, and other similar Laws affecting the rights of creditors generally and general principles of equity. 6.3.6 Citizenship FSB is a Citizen of the United States. 6.3.7 Chief Executive Office The chief executive office (as defined in UCC Article 9) of Owner Trustee is located at 79 South Main Street, Salt Lake City, Utah 84111. 6.3.8 Title On the Delivery Date, Owner Trustee shall have received whatever title to the Aircraft as was conveyed to it by Seller. 6.3.9 No Liens; Financing Statements There are no Lessor Liens attributable to FSB or Owner Trustee in respect of all or any part of the Aircraft, or the Trust Estate. Except for the Financing Statements, neither FSB nor Owner Trustee has executed any UCC financing statement relating to the Aircraft or the Lease. 6.3.10 Litigation There are no pending or, to FSB's Actual Knowledge, threatened actions or proceedings against FSB or Owner Trustee before any Government Entity that, if determined adversely to FSB, would materially adversely affect the ability of FSB or Owner Trustee to perform its obligations under the Owner Trustee Agreements. 6.3.11 Securities Laws Neither FSB, nor any Person authorized to act on its behalf, has directly or indirectly offered any beneficial interest or Security relating to the ownership of the Aircraft or any interest in the Trust Estate, for sale to, or solicited any offer to acquire any such interest or security from, or has sold any such interest or security to, any Person other than Owner Participant. 6.3.12 Expenses and Taxes There are no Expenses or Taxes that may be imposed on or asserted against the Trust, the Trust Estate, or any part thereof or any interest therein, Lessee or Owner Participant (except as to Owner Trustee, Taxes imposed on the fees payable to Owner Trustee) under the laws of Utah in connection with Owner Trustee's execution, delivery, or performance of any Operative Agreement, which Expenses or Taxes would not have been imposed if Owner Trustee had not (x) had its principal place of business in Utah, (y) performed (in its individual capacity or as Owner Trustee) any or all of its duties under the Operative Agreements in Utah, or (z) engaged in any activities unrelated to the transactions contemplated by the Operative Agreements in Utah. 7. COVENANTS 7.1 Lessee's Covenants Lessee agrees for the benefit of Owner Participant and Owner Trustee as follows: 7.1.1 Corporate Existence; U.S. Air Carrier Lessee shall at all times maintain its corporate existence, except as permitted byss. 13.2 of the Lease, and shall at all times remain a U.S. Air Carrier. 7.1.2 Notice of Change of Chief Executive Office Lessee will give to Owner Participant and Owner Trustee timely written notice of (but in any event within 90 days after) any relocation of its chief executive office (as defined in UCC Article 9), and will promptly take any action required by ss. 7.1.3(c) as a result of such relocation. 7.1.3 Certain Assurances (a) Lessee shall duly execute, acknowledge, and deliver (or cause to be executed, acknowledged, and delivered) all such further documents, and shall do and cause to be done such further things, as Owner Participant or Owner Trustee reasonably requests to accomplish the purposes of the Operative Agreements, provided that no document so executed by Lessee will expand any obligations or limit any rights of Lessee in respect of the Transactions. (b) Lessee shall promptly take such action with respect to the recording, filing, re-recording, and refiling of the Lease and the Trust Agreement, and any supplements thereto, as shall be necessary to establish, perfect, and protect Owner Trustee's interests and rights in and to the Aircraft and under the Lease. Lessee shall furnish to Owner Participant or Owner Trustee such information (other than with respect to the citizenship of Owner Participant and Owner Trustee) in Lessee's possession or otherwise reasonably available to Lessee and required to enable Owner Participant or Owner Trustee to apply to register the Aircraft under the Transportation Code (subject to Lessee's rights under ss. 7.1.2 of the Lease), and shall pay or cause to be paid all out-of-pocket costs and expenses thereof (including reasonable attorneys' fees and disbursements). (c) Lessee will cause the FAA-Filed Documents, the Financing Statements, and all continuation statements (and any amendments necessitated by any combination, consolidation, or merger pursuant to ss. 13.2 of the Lease, or any relocation of its chief executive office) in respect of the Financing Statements to be prepared and, subject only to the execution and delivery thereof by Owner Trustee, duly and timely filed and recorded, or filed for recordation, to the extent permitted under the Transportation Code (with respect to the FAA-Filed Documents) or the UCC or similar law of any other applicable jurisdiction (with respect to such other documents). (d) If the Aircraft is registered in a country other than the United States pursuant to ss. 7.1.2 of the Lease, Lessee will furnish to Owner Trustee and Owner Participant annually while the Aircraft is not U.S.-registered (starting with the calendar year after such registration is effected) an opinion of special counsel reasonably satisfactory to Owner Participant stating that, in the opinion of such counsel, either (1) such action has been taken with respect to the recording, filing, re-recording, and re-filing of the Operative Agreements and any supplements and amendments thereto as is necessary to establish, perfect, and protect Owner Trustee's right, title and interest in and to the Aircraft and the Operative Agreements, reciting the details of such actions, or (2) no such action is necessary to maintain the perfection of such right, title, and interest. 7.1.4 Securities Laws Neither Lessee nor any Person authorized to act on its behalf will directly or indirectly offer any beneficial interest or Security relating to the ownership of the Aircraft or the Lease or any interest in the Trust Estate and Trust Agreement for sale to, or solicit any offer to acquire any such interest or security from, or sell any such interest or security to, any Person in violation of the Securities Act or applicable state or foreign securities Laws. 7.1.5 Certification Lessee shall cause the Aircraft to be duly certified by the FAA as to airworthiness and shall, immediately upon registration of the Aircraft in Owner Trustee's name, obtain an FAA airworthiness certificate for the Aircraft. 7.2 Owner Participant's Covenants Owner Participant agrees for the benefit of Lessee and Owner Trustee as follows: 7.2.1 Liens Owner Participant (a) (1) will not directly or indirectly create, incur, assume, or suffer to exist any Lessor Lien attributable to it on or with respect to all or any part of the Trust Estate or the Aircraft, and (2) will, at its own cost and expense, promptly take such action as is necessary to discharge any Lessor Lien attributable to Owner Participant on all or any part of the Trust Estate or the Aircraft; provided, that Owner Participant shall not be required to comply with the foregoing provisions of this clause (a) if it shall in good faith by appropriate proceedings contest claims or charges resulting in any such Lien as long as such contest does not involve any material danger of the sale, forfeiture, loss, or loss of use of the Aircraft or the interest of Lessor or Owner Participant therein; and (b) will hold harmless and indemnify Lessee, Owner Trustee, each of their respective Affiliates, successors, and permitted assigns, and the Trust Estate from and against (1) any and all Expenses, (2) any reduction in the amount payable out of the Trust Estate, and (3) any interference with the possession, operation, or other use of all or any part of the Aircraft, in each case imposed on, incurred by, or asserted against any of the foregoing as a consequence of any such Lessor Lien (without regard to the proviso to the foregoing clause (a)). 7.2.2 Revocation of Trust Agreement (a) Owner Participant will comply with the provisions of the Trust Agreement applicable to it, will not terminate or revoke the Trust Agreement or the trusts created thereunder without the prior written consent of Lessee, and will not amend, modify, or supplement the Trust Agreement, or waive any of the provisions thereof, if such amendment, modification, supplement, or waiver would have any adverse effect on Lessee, without the consent of Lessee. (b) Notwithstanding ss. 7.2.2(a), Owner Participant may at any time remove Owner Trustee pursuant to ss. 9.1 of the Trust Agreement or terminate the Trust Agreement pursuant to ss. 11.2 of the Trust Agreement. 7.2.3 Change of Situs of Owner Trust If, at any time, any Tax Indemnitee or the Trust Estate becomes subject to any Taxes for which it is indemnified pursuant to ss. 9.3 of this Agreement and if, as a consequence thereof, Lessee requests that the situs of the Trust be moved to another state in the United States from the state in which it is then located, the situs of the Trust may be moved with the written consent of Owner Participant (which consent shall not be unreasonably withheld) and Owner Participant will take whatever action is reasonably necessary to accomplish such removal; provided, that, in any event, (a) Lessee shall provide such additional tax indemnification as Owner Participant reasonably requests to cover any additional unindemnified Taxes or loss of Tax benefits described in the assumptions in the Tax Indemnity Agreement resulting from such change in situs, (b) the rights and obligations under the Operative Agreements of Owner Participant shall not be adversely affected as a result of the taking of such action, (c) Owner Participant shall receive an opinion or opinions of counsel (which counsel is reasonably satisfactory to Owner Participant), in scope, form, and substance reasonably satisfactory to Owner Participant, to the effect that (1) the Trust, as thus removed, remains a validly-established trust, (2) any amendments to the Trust Agreement necessitated by such removal have been duly authorized, executed, and delivered and constitute valid and binding obligations of such parties, enforceable in accordance with their terms, (3) covering such other matters as Owner Participant reasonably requests, (d)if such removal involves the replacement of Owner Trustee, then Owner Participant shall receive an opinion of counsel to such successor Owner Trustee, in form and substance reasonably satisfactory to Owner Participant, covering the matters described in the opinion delivered pursuant to ss. 5.1.2(r)(4), and (e) Lessee shall indemnify and hold harmless Owner Participant, FSB, and Owner Trustee, on a net after-tax basis, against any and all reasonable out-of-pocket costs and expenses (including attorneys' fees and disbursements), fees and expenses of any new owner trustee, registration, recording, or filing fees, and taxes incurred by Owner Participant or Owner Trustee in connection with such change of situs. Owner Participant agrees, for Lessee's benefit, that Owner Participant will not consent to or direct a change in the situs of the Trust Estate without Lessee's prior written consent. 7.2.4 Compliance with Lease Provisions Owner Participant agrees, solely for Lessee's benefit, to comply with the express provisions applicable to Owner Participant in the Lease. 7.2.5 Securities Act Owner Participant will not directly or indirectly offer any beneficial interest or security relating to the ownership of the Aircraft or any interest in the Trust Estate for sale to, or solicit any offer to acquire any such interest or security from, or sell any such interest or security to, any Person in violation of the Securities Act or applicable state or foreign securities Laws, provided, that this ss. 7.2.5 shall not impose on Owner Participant any responsibility with respect to any such offer, sale, or solicitation by any other party hereto. 7.2.6 Regarding Owner Trustee Owner Participant will direct Owner Trustee to perform its obligations under each Owner Trustee Agreement. 7.3 FSB's and Owner Trustee's Covenants FSB and Owner Trustee agree for the benefit of Lessee and Owner Participant as follows: 7.3.1 Liens FSB (a) will not directly or indirectly create, incur, assume, or suffer to exist any Lessor Lien attributable to it or Owner Trustee on all or any part of the Trust Estate or the Aircraft, (b) will, at its own cost and expense, promptly take such action as is necessary to discharge any Lessor Lien attributable to FSB or Owner Trustee on all or any part of the Trust Estate or the Aircraft, and (c) will personally hold harmless and indemnify Lessee, Owner Participant, each of their Affiliates, successors, and permitted assigns, and the Trust Estate from and against (1) any and all Expenses, (2) any reduction in the amount payable out of the Trust Estate, and (3) any interference with the possession, operation, or other use of all or any part of the Aircraft imposed on, incurred by, or asserted against any of the foregoing as a consequence of any such Lessor Lien. 7.3.2 Other Business Owner Trustee will not enter into any business or other activity except as contemplated by the Operative Agreements. 7.3.3 Notice of Change of Chief Executive Office FSB and Owner Trustee will give to Lessee and Owner Participant 30 days' prior written notice of any relocation of its chief executive office (as defined in UCC Article 9), and will promptly take any action required by ss. 7.3.7 as a result of such relocation. 7.3.4 Securities Act Neither FSB nor Owner Trustee will directly or indirectly offer any beneficial interest or Security relating to the ownership of the Aircraft or any interest in the Trust Estate for sale to, or solicit any offer to acquire any such interest or security from, or sell any such interest or security to, any Person in violation of the Securities Act or applicable state or foreign securities Laws, provided, that the foregoing shall not impose on FSB or Owner Trustee any responsibility with respect to any such offer, sale, or solicitation by any other party hereto. 7.3.5 Performance of Agreements Owner Trustee shall perform its obligations under the Owner Trustee Agreements in accordance with the terms thereof. 7.3.6 Notices; Documents If any claim with respect to any liabilities is filed against Owner Trustee and Owner Trustee has Actual Knowledge thereof, then Owner Trustee shall promptly notify Lessee in writing thereof. Owner Trustee further agrees to provide to Lessee promptly any documents (including the certificate of aircraft registration) that it receives from the FAA with respect to the Aircraft. 7.3.7 Filings After the Delivery Date, Owner Trustee shall duly execute and deliver to Lessee all filings and recordings (including all filings and UCC financing statements under the Transportation Code and the UCC and any amendments to UCC financing statements necessitated by any relocation of its chief executive office), prepared and delivered to it by Lessee, required to perfect Owner Trustee's title to the Aircraft and to make such title, liens, and security interests valid and enforceable. 7.3.8 Trust Agreement FSB and Owner Trustee hereby (a) agree for the benefit of Lessee not to amend, supplement, terminate, or otherwise modify any provision of the Trust Agreement in a manner that adversely affects the rights of any such party without the prior written consent of such party, and (b) agree for the benefit of Lessee not to revoke the trust created by the Trust Agreement if such revocation would have an adverse effect on Lessee. Nothing in this Agreement shall impair any right under the Trust Agreement of FSB to resign as Owner Trustee in accordance with the provisions of the Trust Agreement. 7.4 Other Agreements 7.4.1 Owner Trustee Is Owner for All Purposes Lessee, Owner Participant, and Owner Trustee agree that for all purposes, after the Closing, Owner Trustee will be the owner of the Aircraft (except that Owner Participant will be the owner for income tax purposes) and Lessee will be the lessee thereof. No transfer, by operation of Law or otherwise, of Owner Participant's beneficial interest in and to the Trust Estate shall operate to transfer legal title to any part of the Trust Estate to any transferee thereof. 7.4.2 Commencement of Bankruptcy Proceedings Lessee, Owner Participant, FSB, and Owner Trustee agree for the benefit of each of the others that it will not commence or join in any proceeding under the Bankruptcy Code to commence a case under ss. 303 of the Bankruptcy Code against the Trust Estate. Nothing contained herein shall be deemed to preclude Owner Participant, FSB, or Owner Trustee from filing any claim against the Trust Estate in any case commenced against the Trust Estate. 7.4.3 Quiet Enjoyment; Sale by Owner Trustee Binding (a) Owner Participant and Owner Trustee agree for the benefit of Lessee that, unless an Event of Default exists, such Person shall not interfere (and shall not permit any Affiliate or other Person claiming by, through, or under it to interfere) with Lessee's rights in accordance with the Lease to the quiet enjoyment, possession, and use of the Aircraft during the Term. (b) Any assignment, sale, transfer, or other conveyance of the Aircraft by Owner Trustee made pursuant to the terms of this Agreement or the Lease shall bind Owner Participant, and shall be effective to transfer or convey all right, title, and interest of Owner Trustee and Owner Participant in and to the Aircraft. No purchaser or other grantee shall be required to inquire as to the authorization, necessity, expediency, or regularity of such assignment, sale, transfer, or conveyance, or as to the application of any sale or other proceeds with respect thereto by Owner Trustee, as regards Owner Participant. 7.4.4 Other Documents; Amendment (a) Each of Owner Participant and Owner Trustee hereby agrees for the benefit of Lessee not to amend, supplement, or otherwise modify any provision of the Trust Agreement in a manner that could adversely affect such party, without the prior written consent of such party. Owner Trustee agrees to furnish promptly to Lessee copies of any supplement, amendment, waiver, or modification of any of the Operative Agreements to which Lessee is not a party. (b) Owner Trustee agrees to join with Lessee to the extent that action on its part is necessary or appropriate (1) to cause the following to be duly accomplished in accordance with applicable United States federal Law by the time the Aircraft is delivered under this Agreement and the Lease: (aa) to apply to register the Aircraft in Owner Trustee's name, and (bb) all related action necessary in order for Lessee to have temporary or permanent authority to operate the Aircraft as contemplated by the Lease, and (2) forthwith upon delivery of the Aircraft under this Agreement and the Lease, to cause all necessary documents to be duly filed for recording in accordance with applicable United States federal Law. 7.4.5 Consents Each of Owner Participant and Owner Trustee covenants and agrees, for Lessee's benefit, that it shall not unreasonably withhold its consent to any consent or approval requested of it or of Owner Trustee under the terms of any of the Operative Agreements which by its terms is not to be unreasonably withheld. 7.4.6 Insurance Each of Owner Participant and Owner Trustee agrees not to obtain or maintain insurance for its own account as permitted by ss. 11.2 of the Lease if such insurance would limit, increase the cost of, or otherwise adversely affect the coverage of any insurance required to be obtained or maintained by Lessee pursuant to ss. 11 and Annex D of the Lease. 7.4.7 Foreign Registration (a) Owner Participant and Owner Trustee hereby agree for Lessee's benefit that, subject to ss. 7.1.2 of the Lease, Lessee shall be entitled to register the Aircraft or cause the Aircraft to be registered in a country other than the United States, if: (1) such registration is made only after the Tax Attribute Period, unless Lessee prepays on a lump-sum basis any liability that would be due under the Tax Indemnity Agreement as a result of such registration based upon the assumption that such registration would continue for the remainder of the term of the Permitted Sublease described in clause (3) below; (2) no Special Default or Event of Default exists at the time of such registration; (3) such proposed change of registration is made in connection with a Permitted Sublease to a Permitted Air Carrier, and such country is such Permitted Air Carrier's domicile; (4) such country is a country with which the United States then maintains normal diplomatic relations (or, if Taiwan, the United States then maintains diplomatic relations at least as good as those in effect on the Delivery Date, provided that Lessee may not effect such registration in Taiwan unless it has obtained the prior written consent of Owner Participant, which Owner Participant may withhold in its sole and absolute discretion); and (5) Owner Participant and Owner Trustee receive an opinion of counsel (subject to customary exceptions) reasonably satisfactory to Owner Participant, addressed to each such party, to the effect that: (aa) such country recognizes Owner Trustee's ownership interest in the Aircraft; (bb) Lessee's obligations, and Owner Trustee's rights and remedies, under the Lease are valid, binding, and enforceable under the laws of such jurisdiction; (cc) after giving effect to such change in registration, Owner Trustee's title continues as a valid and protected interest, and all filing, recording, or other action necessary to protect Owner Trustee's interest have been accomplished (or, if such opinion cannot be given at the time of such proposed change in registration because such change in registration is not yet effective, (1) the opinion shall detail what filing, recording, or other action is necessary, and (2) Owner Participant and Owner Trustee shall receive a certificate from Lessee that all possible preparations to accomplish such filing, recording, and other action are done, and such filing, recording, and other action are accomplished, and a supplemental opinion to that effect shall be delivered to Owner Participant and Owner Trustee promptly after the effective date of such change in registration; (dd) it is not necessary, solely as a consequence of such change in registration and without giving effect to any other activity of Owner Trustee or Owner Participant, for Owner Trustee or Owner Participant to qualify to do business in such jurisdiction as a result of such reregistration or in order to exercise any rights or remedies with respect to the Aircraft pursuant to the Lease; (ee) there is no tort liability of the owner or lessor of an aircraft not in possession thereof under the laws of such jurisdiction (it being agreed that, if such latter opinion cannot be given in a form satisfactory to Owner Participant, such opinion shall be waived if insurance reasonably satisfactory to Owner Participant is provided to cover such risk); and (ff) unless Lessee agrees to provide insurance covering the risk of requisition of use of the Aircraft by the government of such country (so long as the Aircraft is registered under the laws of such country), the laws of such country require fair compensation by the government of such country payable in currency freely convertible into Dollars and freely removable from such country (without license or permit, unless Lessee before such proposed reregistration has obtained such license or permit) for the taking or requisition by such government of such use. (b) In addition, as a condition precedent to any change in registration, Lessee shall give to Owner Participant assurances reasonably satisfactory to each of them: (1) that the provisions ofss. 11 of the Lease have been complied with after giving effect to such change of registration; (2) of Lessee's payment, on an after-tax basis, of all reasonable out-of-pocket expenses of Lessor and Owner Participant in connection with such change of registry, including (aa) the reasonable fees and disbursements of counsel to Lessee and Lessor, (bb) any filing or recording fees, Taxes, or similar payments incurred in connection with the change of registration of the Aircraft; and (3) that the tax and other indemnities in favor of each Person named as an indemnitee under any other Operative Agreement afford to each such Person substantially the same protection as provided before such change of registration (or Lessee agrees to provide, or cause to be provided, additional indemnities that, together with such original indemnities, in the reasonable judgment of Owner Participant and Lessor, afford such protection). 7.4.8 Other Commercial Relations Unaffected Notwithstanding anything to the contrary set forth in any Operative Agreement: (a) except as set forth in the Purchase Agreement Assignment, nothing in the Operative Agreements shall constitute or be deemed to be a waiver by Lessee of any rights, remedies, or claims it may have against Airframe Manufacturer or Engine Manufacturer or any subcontractor or supplier of either; and the Operative Agreements do not and shall not be construed or deemed to create any rights, waivers, immunities, or indemnities in favor of Airframe Manufacturer, Engine Manufacturer, or any subcontractor or supplier of either with respect to any such rights, remedies, or claims of Lessee; and (b) neither Airframe Manufacturer, by its execution and delivery of the Consent and Agreement, nor Engine Manufacturer, by its execution and delivery of the Engine Manufacturer Warranty Agreement, shall be deemed to have waived any rights, remedies, or claims which Airframe Manufacturer or Engine Manufacturer (or any subcontractor or supplier of either) has against Lessee; and the Operative Agreements do not and shall not be construed or deemed to create any rights, waivers, immunities, or indemnities in favor of Lessee with respect to any such rights, remedies, or claims of Airframe Manufacturer or Engine Manufacturer (or any subcontractor or supplier of either). 7.4.9 Interest in Certain Engines Owner Participant and Owner Trustee agree, for the benefit of each lessor, conditional seller, or secured party of any airframe or engine leased to, purchased by, or owned by Lessee or any Permitted Sublessee subject to a lease, conditional sale, or other security agreement that it will not acquire or claim, as against such lessor, conditional seller, or secured party, any right, title, or interest in any engine as the result of the installation of such engine on the Airframe at any time while such engine is subject to such lease, conditional sale, or other security agreement and owned by such lessor or conditional seller or subject to a security interest in favor of such secured party. 8. CONFIDENTIALITY Lessee, Owner Participant, and Owner Trustee shall keep Annexes B, C, and D and Schedules 1, 2, 3, and 4 to the Lease, the Participation Agreement, the Purchase Agreement Assignment, and the Tax Indemnity Agreement confidential, and shall not disclose them, or cause them to be disclosed, to any Person, except (a) to prospective and permitted transferees of Lessee's, Owner Participant's, or Owner Trustee's interest or their counsel, independent insurance brokers, auditors, or other agents who agree to hold such information confidential, (b) to Lessee's, Owner Participant's, or Owner Trustee's counsel, independent insurance brokers, auditors, or other agents, Affiliates, or investors who agree to hold such information confidential, (c) as may be required by any statute, court, or administrative order or decree, legal process, or governmental ruling or regulation, including those of any applicable insurance regulatory bodies (including the National Association of Insurance Commissioners), federal or state banking examiners, Internal Revenue Service auditors, or any stock exchange, (d) with respect to Lessee and Owner Participant, by mutual agreement of such parties, or (e) to such other Persons as are reasonably deemed necessary by the disclosing party in order to protect the interests of such party or for the purposes of enforcing such documents by such party; provided, that any and all disclosures permitted by clauses (c), (d), and (e) above shall be made only to the extent necessary to meet the specific requirements or needs of the Persons making such disclosures. 9. INDEMNIFICATION AND EXPENSES 9.1 General Indemnity 9.1.1 Indemnity Whether or not any of the Transactions are consummated, Lessee shall indemnify, protect, defend, and hold harmless each Indemnitee from, against, and in respect of, and shall pay on a net after-tax basis, any and all Expenses of any kind or nature whatsoever, including those imposed on, incurred or suffered by, or asserted against any Indemnitee, relating to, based on, resulting from, or arising out of or in connection with, in each case directly or indirectly, any one or more of the following: (a) the Operative Agreements, or the enforcement of any of the terms of any of the Operative Agreements; (b) the Aircraft, the Airframe, any Engine, or any Part, including, with respect thereto, (1) the manufacture, design, purchase, acceptance, nonacceptance, rejection, ownership, registration, reregistration, deregistration, delivery, nondelivery, lease, sublease, assignment, possession, use, non-use, operation, maintenance, testing, repair, overhaul, condition, alteration, modification, addition, improvement, storage, airworthiness, replacement, repair, sale, substitution, return, abandonment, redelivery, or other disposition of the Aircraft, any Engine, or any Part, (2) any claim or penalty arising out of violations of applicable Laws, (3) tort liability, whether or not arising out of the negligence of any Indemnitee (whether active, passive, or imputed, and including strict liability and liability without fault), (4) death or property damage of passengers, shippers, or others, (5) environmental control, noise, or pollution, (6) any claim for patent, trademark, or copyright infringement and (7) any Liens in respect of the Aircraft, any Engine, or any Part; and (c) any breach of or failure to perform or observe, or any other noncompliance with, any covenant, agreement, or other obligation to be performed by Lessee under any Lessee Operative Agreement, or the falsity of any representation or warranty of Lessee in any Lessee Operative Agreement, other than in the Tax Indemnity Agreement. 9.1.2 Exceptions Notwithstanding anything in ss. 9.1.1, Lessee shall not be required to indemnify, protect, defend, and hold harmless any Indemnitee pursuant to ss. 9.1.1 against any Expense of such Indemnitee: (a) for any Taxes or a loss of Tax benefit, whether or not Lessee is required to indemnify therefor pursuant to ss. 9.3 or the Tax Indemnity Agreement (other than amounts required to be paid to render the payment of any Expense payable under ss. 9.1.1 on an after-tax basis); (b) except to the extent attributable to acts or events occurring prior thereto, acts or events (other than acts or events related to Lessee's performance of its obligations pursuant to the terms of the Lessee Operative Agreements) that occur after: (1) with respect to the Airframe, any Engine, or any Part, the return of possession (which, if the Aircraft is placed in storage as provided inss. 5 of the Lease, is the date that the Aircraft is placed in storage) of such Airframe, Engine, or Part pursuant to the Lease (other than pursuant toss. 15 thereof, in which case Lessee's liability under thisss. 9.1 shall survive for so long as Lessor is entitled to exercise remedies under suchss. 15 or in connection with Lessee in the event of exercise of its early termination option underss. 9 of the Lease or its purchase options underss. 17.3 of the Lease), and (2) the termination of the Term in accordance with the Lease; (c) to the extent attributable to any Transfer (voluntary or involuntary) by or on behalf of Owner Participant of any interest in the Aircraft or the Trust Estate, except for out-of-pocket costs and expenses incurred as a result of such Transfer during the existence of an Event of Default (or in connection with Lessee in the event of exercise of its early termination option under ss. 9 of the Lease or its purchase options under ss. 17.3 of the Lease); (d) to the extent attributable to the gross negligence or willful misconduct of such Indemnitee or any related Indemnitee (as defined below) (other than gross negligence or willful misconduct imputed to such Person by reason of its interest in the Aircraft or any Operative Agreement); (e) in the case of FSB, to the extent attributable to matters enumerated in the proviso toss. 13; (f) to the extent attributable to the incorrectness or breach of any representation or warranty of such Indemnitee or any related Indemnitee contained in or made pursuant to any Operative Agreement; (g) to the extent attributable to the failure, by such Indemnitee or any related Indemnitee, to perform or observe any agreement, covenant, or condition on its part to be performed or observed in any Operative Agreement; (h) to the extent attributable to the offer or sale by such Indemnitee or any related Indemnitee of any interest in the Aircraft, the Trust Estate, or the Trust Agreement, or any similar interest, in violation of the Securities Act or other applicable federal, state, or foreign securities Laws (other than any thereof caused by the acts or omissions of Lessee or any person acting on behalf of Lessee); (i) with respect to Owner Trustee, to the extent attributable to its negligence or willful misconduct in the distribution of funds received and distributable by it in accordance with the Trust Agreement, (j) other than during the existence of an Event of Default, to the extent attributable to the authorization or giving or withholding of any future amendments, supplements, waivers, or consents with respect to any Operative Agreement, other than any requested by Lessee or required by or made pursuant to the terms of the Operative Agreements (unless such requirement results from the actions of an Indemnitee not required by or made pursuant to the Operative Agreements); (k) to the extent attributable to any amount which any Indemnitee expressly agrees to pay or such Indemnitee expressly agrees shall not be paid by or be reimbursed by Lessee; (l) to the extent that it is an ordinary and usual operating or overhead expense of such Indemnitee; (m) with respect to Owner Participant or Owner Trustee, or any related Indemnitee, to the extent attributable to the deregistration of the Aircraft under the Transportation Code as a result of the failure of such Person (or any related Indemnitee of such Person) to be a Citizen of the United States as a result of any act (other than reregistration of the Aircraft pursuant to ss. 7.1.2 of the Lease) of Owner Participant or Owner Trustee or any related Indemnitee of such Person (not taken at the request of Lessee); (n) for any Lessor Lien attributable to such Indemnitee or any related Indemnitee; or (o) to the extent incurred by or asserted against an Indemnitee other than Owner Participant (but without limiting the other provisions of this ss. 9.1.2, including clauses (f) and (g), as to Owner Participant) as a result of any "prohibited transaction", within the meaning of ERISA ss. 406 or Code ss. 4975(c)(1). For purposes of this ss. 9.1, a Person shall be considered a "related Indemnitee" of an Indemnitee if that Person is an Affiliate or employer of such Indemnitee, a director, officer, employee, or agent of such Indemnitee or any such Affiliate, or a successor or permitted assignee of any of the foregoing; provided, that Owner Trustee and FSB shall not be deemed to be related Indemnitees of Owner Participant merely because of their trust or fiduciary relationships. 9.1.3 Separate Agreement This Agreement constitutes a separate agreement with respect to each Indemnitee, and is enforceable directly by each such Indemnitee. 9.1.4 Notice If an Indemnitee makes a claim for any Expense indemnifiable under this ss. 9.1, such Indemnitee shall give prompt written notice thereof to Lessee. Notwithstanding the foregoing, any Indemnitee's failure to notify Lessee as provided in this ss. 9.1.4, or in ss. 9.1.5, shall not release Lessee from any of its obligations to indemnify such Indemnitee hereunder, except to the extent that such failure results in an additional Expense to Lessee (in which event Lessee shall not be responsible for such additional expense) or materially impairs Lessee's ability to contest such claim. 9.1.5 Notice of Proceedings; Defense of Claims; Limitations (a) If any action, suit, or proceeding for which Lessee is responsible under this ss. 9.1 is brought against any Indemnitee, such Indemnitee shall notify Lessee of the commencement thereof, and Lessee may, at its expense, participate in and, to the extent that it so desires (subject to the provisions of the following paragraph), assume and control its defense and, subject to ss. 9.1.5(c), settle or compromise it. Unless Owner Participant agrees in writing otherwise, no settlement of any claim hereunder may require Owner Participant to agree to any remedy apart from the payment of money damages (for which such payment of money damages Lessee will in any event indemnify the Indemnitees). (b) Lessee or its insurer(s) shall have the right, at its or their expense, to investigate or, if Lessee or its insurer(s) agree not to dispute liability to the Indemnitee giving notice of such action, suit, or proceeding under this ss. 9.1.5 for indemnification hereunder or under any insurance policies pursuant to which coverage is sought, control the defense of, any action, suit, or proceeding, relating to any Expense for which indemnification is sought pursuant to this ss. 9.1, and each Indemnitee shall cooperate with Lessee or its insurer(s) with respect thereto; provided, that Lessee shall not be entitled to control the defense of any such action, suit, or proceeding, or to settle or compromise any such Expense, (i) while any Special Default or Event of Default under ss. 14.1 of the Lease exists, or (ii) if such action, suit, or proceeding will involve a material risk of the sale, forfeiture, or loss of, or the creation of any Lien (other than a Permitted Lien) on the Aircraft, the Trust Estate, or any part thereof, unless Lessee shall have posted a bond or other security or collateral satisfactory to Owner Participant in respect to such risk, or (iii) if such action, suit, or proceeding could in the good faith opinion of such Indemnitee entail any risk of criminal liability or material civil liability or present a conflict of interest making separate representation necessary. In connection with any such Lessee-controlled action, suit, or proceeding, such Indemnitee shall have the right to participate therein, at its sole cost and expense, with counsel reasonably satisfactory to Lessee, provided that such Indemnitee's participation does not, in the reasonable opinion of the independent counsel appointed by Lessee or its insurers to conduct such proceedings, interfere with the defense of such case. (c) In no event shall any Indemnitee enter into a settlement or other compromise with respect to any Expense without Lessee's prior written consent (which shall not be unreasonably withheld or delayed), unless such Indemnitee waives its right to be indemnified with respect to such Expense under this ss. 9.1. (d) To the extent that any Expense indemnified by Lessee hereunder may be covered by insurance maintained by Lessee, at Lessee's expense, each Indemnitee agrees to cooperate with the insurers in the exercise of their rights to investigate, defend, or compromise that Expense as may be required to retain the benefits of the insurance for that Expense. (e) If an Indemnitee is not a party to this Agreement, Lessee may require that Indemnitee to agree in writing to the terms of this ss. 9 and ss. 15.8 before making any payment to such Indemnitee under this ss. 9. (f) Nothing herein shall be deemed to be a guarantee of any residual value of the Aircraft. (g) Nothing in this ss. 9.1.5 shall require an Indemnitee to contest any Expense or to assume responsibility for or control of any judicial proceeding with respect thereto. 9.1.6 Information Lessee will provide the relevant Indemnitee with such information not within the control of such Indemnitee (but in Lessee's control or reasonably available to Lessee) which such Indemnitee reasonably requests, and will otherwise cooperate with such Indemnitee so as to enable such Indemnitee to fulfill its obligations under ss. 9.1.5 and to control or participate in any proceeding to the extent permitted by ss. 9.1.5. The Indemnitee shall supply Lessee with such information not within the control of Lessee (but in such Indemnitee's control or reasonably available to such Indemnitee) which Lessee reasonably requests to control or participate in any proceeding to the extent permitted by ss. 9.1.5. 9.1.7 Effect of Other Indemnities; Subrogation; Further Assurances Upon payment in full by or on behalf of Lessee of any indemnity provided for under this Agreement, without any further action and to the full extent permitted by Law, Lessee will be subrogated to all rights and remedies of the Person indemnified (other than with respect to any of such Indemnitee's insurance policies or in connection with any indemnity claim of such Indemnitee under ss. 5.3 or ss. 7 of the Trust Agreement) in respect of the matter as to which such indemnity was paid. Each Indemnitee will give such further assurances or agreements and cooperate with Lessee to permit Lessee to pursue any such claims, to the extent reasonably requested by Lessee and at Lessee's expense. 9.1.8 Refunds If an Indemnitee receives any refund, in whole or in part, with respect to any Expense paid by or on behalf of Lessee hereunder, that Indemnitee will promptly pay the amount refunded (but not an amount in excess of the amount Lessee or any of its insurers has paid in respect of such Expense) over to Lessee unless an Event of Default exists, in which case such amount shall be paid over to Owner Trustee to hold as security for Lessee's obligations under the Lessee Operative Agreements or, if requested by Lessee, applied to satisfy those obligations. Any subsequent loss of such recovery or tax benefit or refund shall be subject to the provisions of ss. 9.1 and ss. 9.3. 9.2 Expenses 9.2.1 Invoices and Payment Owner Trustee and Owner Participant shall promptly submit to Lessee for its prompt approval (which shall not be unreasonably withheld) copies of invoices in reasonable detail of the Transaction Expenses for which it is responsible for providing information as they are received (and not later than the 90th day after the Delivery Date). If so submitted and approved, Owner Participant agrees promptly (and not later than the later of (i) the 105th day after the Delivery Date and (ii) the tenth Business Day following such approval) to pay such Transaction Expenses . Notwithstanding the foregoing, Lessee at its sole option shall have the right to pay directly any and all Transaction Expenses payable to Lessee Advisor or Lessee's counsel or (if such payment does not result in adverse tax consequences to Owner Participant) to any other Person. If Owner Participant fails to pay any Transaction Expense that it is obligated to pay hereunder, Lessee shall pay such Transaction Expense. Any such payment by Lessee shall not affect Owner Participant's obligations or Lessee's rights against Owner Participant for its failure to make any such payment. 9.2.2 Payment of Other Expenses Lessee shall pay (a) the ongoing fees and expenses of Owner Trustee, and (b) all reasonable out-of-pocket costs and expenses (including the reasonable fees and disbursements of counsel) incurred by Owner Participant attributable to (1) any transfer of title to the Aircraft or any Engine contemplated by ss. 4.5 of the Lease, or (2) any waiver, amendment, or modification of any Operative Agreement to the extent requested by Lessee. 9.2.3 Indemnification Interest Lessee will pay to each Indemnitee upon demand, to the extent permitted by applicable Law, interest at the Past Due Rate on any amount of indemnity not paid when due pursuant to this ss. 9 until the same shall be paid. 9.3 General Tax Indemnity 9.3.1 General Except as provided in ss. 9.3.2, Lessee agrees that each payment of Rent paid by Lessee pursuant to the Lease, and any other payment or indemnity paid by Lessee to a Tax Indemnitee under any Operative Agreement, shall be free of all withholdings or deductions with respect to Taxes of any nature, and if Lessee is required by applicable law to make any such withholding or deduction for any such payment, (a) Lessee shall make all such withholdings or deductions, (b) the amount payable by Lessee shall be increased so that, after making all required withholdings or deductions, such Tax Indemnitee receives the same amount that it would have received had no such withholdings or deductions been made, and (c) Lessee shall pay the full amount withheld or deducted to the relevant Taxing Authority in accordance with applicable law. Except as provided in ss. 9.3.2, and whether or not any of the Transactions are consummated, Lessee shall pay, indemnify, protect, defend, and hold harmless on an after-tax basis each Tax Indemnitee from all Taxes imposed by any Taxing Authority imposed on or asserted against any Tax Indemnitee or the Aircraft, the Airframe, any Engine, or any Part, or any interest in any of the foregoing (whether or not indemnified against by any other Person), upon or with respect to the Operative Agreements, their execution, or the transactions or payments contemplated thereby, including any Tax imposed upon or with respect to (w) the Aircraft, the Airframe, any Engine, any Part, any Operative Agreement, any data, or any other thing delivered or to be delivered under an Operative Agreement, (x) the purchase, manufacture, acceptance, rejection, sale, transfer of title, return, ownership, delivery, transport, charter, rental, lease, re-lease, sublease, assignment, possession, repossession, presence, use, condition, storage, preparation, maintenance, modification, alteration, improvement, operation, registration, transfer or change of registration, reregistration, repair, replacement, overhaul, location, control, imposition of any Lien (other than a Lessor Lien), financing, refinancing requested by Lessee, abandonment, or other disposition of the Aircraft, the Airframe, any Engine, any Part, any data, or any other thing delivered or to be delivered under an Operative Agreement, or (y) rent, interest, fees, or other income, proceeds, receipts, or earnings, whether actual or deemed, arising upon, in connection with, or in respect of any of the Operative Agreements (including the property or income or other proceeds with respect to property held as part of the Trust Estate) or the transactions contemplated thereby. 9.3.2 Certain Exceptions The provisions of ss. 9.3.1 shall not apply to, and Lessee shall have no liability hereunder for, Taxes: (a) imposed on a Tax Indemnitee by the federal government of the United States or any Taxing Authority or governmental subdivision of the United States or any state or local Taxing Authority (1) on, based on, or measured by gross or net income or gross or net receipts, including capital gains taxes, excess profits taxes, minimum taxes from tax preferences, alternative minimum taxes, branch profits taxes, accumulated earnings taxes, personal holding company taxes, succession taxes and estate taxes, and any withholding taxes on, based on, or measured by gross or net income or receipts, or (2) on, or with respect to, or measured by capital or net worth or in the nature of a franchise tax or a tax for the privilege of doing business (other than, in the case of clause (1) or (2), Taxes in the nature of sales, use, license, value added (to the extent not imposed as a substitute for an income tax), transfer, stamp, ad valorem, or property Taxes); (b) imposed on a Tax Indemnitee by any Taxing Authority or governmental subdivision thereof or therein outside of the United States (including any Taxing Authority in or of a territory, possession, or commonwealth of the United States) (1) on, based on, or measured by gross or net income or receipts, including capital gains taxes, excess profits taxes, minimum taxes from tax preferences, alternative minimum taxes, branch profits taxes, accumulated earnings taxes, personal holding company taxes, succession taxes and estate taxes, and any withholding taxes on, based on, or measured by gross or net income or receipts, or (2) on, or with respect to, or measured by capital or net worth or in the nature of a franchise tax or a tax for the privilege of doing business (other than, in the case of clause (1) or (2), Taxes in the nature of (aa) sales, use, license, value added (to the extent not imposed as a substitute for an income tax), transfer, stamp, ad valorem, or property Taxes, or (bb) any Taxes imposed by any Taxing Authority (other than a Taxing Authority within whose jurisdiction such Tax Indemnitee is incorporated or organized or maintains its principal place of business) if such Tax Indemnitee would not have been subject to such Taxes by such jurisdiction but for (i) the location, registration, use, or operation of the Aircraft, the Airframe, any Engine, or any Part thereof by a Lessee Person within the jurisdiction of the Taxing Authority imposing such Tax, or (ii) the activities of any Lessee Person (except for activities of a Lessee Person who is not an Affiliate, successor, or assign of Lessee acting in its capacity other than as a Lessee Person, which activities are unrelated to the transactions contemplated by the Operative Agreements) in such jurisdiction, including use of any other aircraft by Lessee in such jurisdiction, (iii) the status of any Lessee Person as a foreign entity or as an entity owned in whole or in part by foreign persons, (iv) Lessee's having made (or having been deemed to have made) payments to such Tax Indemnitee from the relevant jurisdiction, or (v) in the case of Owner Participant, or any related Tax Indemnitee, Lessee's being incorporated, organized, or maintaining a place of business in such jurisdiction); (c) on, with respect to, or measured by any trustee fees, commissions, premiums, or compensation received by Owner Trustee; (d) on the Trust or the Trust Estate that result from treatment of the Trust or the Trust Estate as an entity, such as a corporation, separate and apart from Owner Participant; (e) that are being contested as provided inss. 9.3.4 during the pendency of such contest; (f) imposed on any Tax Indemnitee to the extent that such Taxes result from the gross negligence or willful misconduct of such Tax Indemnitee or any Affiliate thereof (other than the gross negligence or willful misconduct imputed to such Tax Indemnitee by reason of such Tax Indemnitee's participation in the transactions contemplated by the Operative Agreements); (g) imposed on or with respect to a Tax Indemnitee (including the transferee in those cases in which the Tax on transfer is imposed on, or is collected from, the transferee) as a result of a transfer or other disposition (including a deemed transfer or disposition) by such Tax Indemnitee or a related Tax Indemnitee (or, in the case of Owner Participant, by Owner Trustee, or, in the case of Taxes imposed on a transferee, by the transferor) of any interest in the Aircraft, the Airframe, any Engine, or any Part, the Rent, the Trust, the Trust Estate, the Lease, or any interest arising under the Operative Agreements or a transfer or disposition (including a deemed transfer or disposition) of any interest in a Tax Indemnitee (other than (1) a substitution, replacement, modification, pooling, or improvement of the Aircraft, the Airframe, any Engine or any Part by a Lessee Person that is treated for Tax purposes as a transfer or disposition, (2) a transfer pursuant to an exercise of remedies upon a then-existing Event of Default, (3) a transfer pursuant toss. 17.3 orss. 9 of the Lease, or (4) a transfer pursuant to an Event of Loss); (h) in excess of those that would have been imposed had there not been a transfer or other disposition by or to such Tax Indemnitee or a related Tax Indemnitee described in clause (g) of this ss. 9.3.2; (i) imposed on Owner Participant and indemnified by Lessee pursuant to the Tax Indemnity Agreement; (j) imposed with respect to any period after the expiration or earlier termination of the Term and, if required pursuant to the terms of the Lease, the return of possession of the Aircraft to Lessor or placement in storage at the request of Lessor in accordance with the Lease (provided, that this clause (j) shall not apply to Taxes imposed after such period arising as a result of payments by Lessee under the Operative Agreements after such period or are attributable to events occurring prior to or coincident with such expiration or earlier termination of the Term); (k) consisting of any interest, penalties, or additions to tax imposed on a Tax Indemnitee as a result (in whole or in part) of a failure of such Tax Indemnitee or a related Tax Indemnitee to file any return properly and timely, unless such failure is caused by Lessee's failure to fulfill its obligations, if any, under ss. 9.3.6 with respect to such return; (l) resulting from, or that would not have been imposed but for, any Lessor Liens arising as a result of claims against, or acts or omissions of, or otherwise attributable to such Tax Indemnitee or a related Tax Indemnitee; (m) imposed on any Tax Indemnitee as a result of the breach by such Tax Indemnitee or a related Tax Indemnitee of any covenant of such Tax Indemnitee or any Affiliate thereof contained in any Operative Agreement or the inaccuracy of any representation or warranty by such Tax Indemnitee or any Affiliate thereof in any Operative Agreement; (n) in the nature of an intangible or similar Tax upon or with respect to the value of the interest of Owner Participant in the Trust Estate or the Trust, only if such Taxes are in the nature of franchise Taxes or result from the conduct of business by such Tax Indemnitee in the taxing jurisdiction and are imposed because of the place of incorporation or the activities unrelated to the Transactions in the taxing jurisdiction of such Tax Indemnitee; (o) that is included in Lessor's Cost and paid to the appropriate Taxing Authority; (p) other than any Tax described in ss. 9.3.2(b) hereof, imposed on a Tax Indemnitee by a Taxing Authority of a jurisdiction outside the United States, to the extent that such Taxes would not have been imposed but for a connection between the Tax Indemnitee or a related Tax Indemnitee and such jurisdiction imposing such Tax unrelated to the Transactions; or (q) relating to ERISA or to Codess. 4975. For purposes hereof, a Tax Indemnitee and any other Tax Indemnitees who are successors, assigns, agents, or Affiliates of such Tax Indemnitee shall be related Tax Indemnitees. 9.3.3 Payment (a) Without regard to ss. 9.3.2(a), (b), or (h) hereof, Lessee's indemnity obligation to a Tax Indemnitee under this ss. 9.3 shall be the amount which, after taking into account any Tax imposed upon the receipt or accrual of the amounts payable under this ss. 9.3 and any tax benefits actually recognized by such Tax Indemnitee as a result of the indemnifiable Tax (including any benefits recognized as a result of such Tax Indemnitee's use of an indemnifiable Tax as a credit against Taxes not indemnifiable under this ss. 9.3), equals the amount of the Tax indemnifiable under this ss. 9.3. (b) At Lessee's request, the computation of the amount of any indemnity payment owed by Lessee or any amount owed by a Tax Indemnitee to Lessee pursuant to this ss. 9.3 shall be verified and certified by an independent public accounting firm selected by such Tax Indemnitee and reasonably satisfactory to Lessee. Such verification shall be binding. The costs of such verification (including the fee of such public accounting firm) shall be borne by Lessee unless such verification results in an adjustment in Lessee's favor of 5% or more of the net present value of the payment as computed by such Tax Indemnitee, in which case such Tax Indemnitee shall pay those costs. (c) Each Tax Indemnitee shall provide Lessee with such certifications, and such information and documentation in such Tax Indemnitee's possession, as Lessee reasonably requests to minimize any indemnity payment pursuant to this ss. 9.3; provided, that notwithstanding anything to the contrary in this ss. 9.3.3(c), no Tax Indemnitee shall be required to provide Lessee with any Tax returns. (d) Each Tax Indemnitee shall promptly forward to Lessee any written notice, bill, or advice that such Tax Indemnitee receives from any Taxing Authority concerning any Tax for which it seeks indemnification under this ss. 9.3. Lessee shall pay any amount for which it is liable pursuant to this ss. 9.3 directly to the appropriate Taxing Authority if legally permissible, or upon demand of a Tax Indemnitee, to such Tax Indemnitee within 30 days of such demand (or, if a contest occurs in accordance with ss. 9.3.4, within 30 days after a Final Determination (as defined below)), but in no event more than one Business Day before the related Tax is due. If requested by a Tax Indemnitee in writing, Lessee shall furnish to the appropriate Tax Indemnitee the original or a certified copy of a receipt for Lessee's payment of any Tax paid by Lessee, or such other evidence of payment of such Tax as is acceptable to such Tax Indemnitee. Lessee shall also furnish promptly upon written request such data as any Tax Indemnitee reasonably requires to enable such Tax Indemnitee to comply with the requirements of any taxing jurisdiction, unless such data are not reasonably available to Lessee or (unless such data are specifically requested by a Taxing Authority) are not customarily furnished by domestic air carriers under similar circumstances. For purposes of this ss. 9.3, a "Final Determination" is (1) a decision, judgment, decree, or other order by any court of competent jurisdiction that occurs pursuant to the provisions of ss. 9.3.4, which decision, judgment, decree, or other order has become final and unappealable, (2) a closing agreement or settlement agreement entered into in accordance with ss. 9.3.4 that has become binding and is not subject to further review or appeal (absent fraud, misrepresentation, etc.), or (3) the termination of administrative proceedings and the expiration of the time for instituting a claim in a court proceeding. (e) If any Tax Indemnitee actually realizes a tax savings by reason of any Tax paid or indemnified by Lessee pursuant to this ss. 9.3 (whether such tax savings arise by means of a foreign tax credit, depreciation or cost recovery deduction, or otherwise), and such savings are not otherwise taken into account in computing such payment or indemnity, such Tax Indemnitee shall pay to Lessee an amount equal to the lesser of (1) the amount of such tax savings, plus any additional net tax savings recognized as the result of any payment made pursuant to this sentence, when, as, if, and to the extent realized, and (2) the amount of all payments pursuant to this ss. 9.3 by Lessee to such Tax Indemnitee (less any payments previously made by such Tax Indemnitee to Lessee pursuant to this ss. 9.3.3(e)) (and the excess, if any, of the amount described in clause (1) over the amount described in clause (2) shall be carried forward and applied to reduce pro tanto any subsequent obligations of Lessee to make payments to such Tax Indemnitee pursuant to this ss. 9.3); provided, that such Tax Indemnitee shall not be required to make any payment pursuant to this sentence so long as a Special Default or an Event of Default of a monetary nature exists. If a tax benefit is later disallowed or denied, the disallowance or denial shall be treated as a Tax indemnifiable under ss. 9.3.1 without regard to the provisions of ss. 9.3.2 (other than ss. 9.3.2(f)). Each such Tax Indemnitee shall in good faith use reasonable efforts in filing its tax returns and in dealing with Taxing Authorities to seek and claim any such tax benefit. 9.3.4 Contest (a) If a written claim is made against a Tax Indemnitee for Taxes that Lessee could be liable to pay or indemnify for hereunder, or if a Tax Indemnitee determines that a Tax is due and that Lessee could have an indemnity obligation for that Tax hereunder, such Tax Indemnitee shall promptly notify Lessee in writing of such claim (provided, that failure so to notify Lessee shall not relieve Lessee of its indemnity obligations hereunder unless the failure to notify effectively forecloses Lessee's rights to require a contest of such claim), and shall take no action with respect to such claim without Lessee's prior written consent for 30 days following Lessee's receipt of such notice; provided, that, if applicable Law requires such Tax Indemnitee to take action before the end of such 30-day period, such Tax Indemnitee shall, in such notice to Lessee, so inform Lessee, and such Tax Indemnitee shall take no action for as long as it is legally able to avoid taking action (and a Tax Indemnitee shall be entitled to pay the Tax claimed and sue for a refund before the end of such 30-day period if (1)(aa) the failure to pay the Tax would result in substantial penalties (unless immediately reimbursed by Lessee) and the act of paying the Tax would not materially prejudice the right to contest, or (bb) the failure to pay would result in criminal penalties, and (2) such Tax Indemnitee shall take any action so required in connection with so paying the Tax in a manner that is the least prejudicial to the pursuit of the contest). In addition, such Tax Indemnitee shall (provided that Lessee shall have agreed to keep such information confidential other than to the extent necessary in order to contest the claim) furnish Lessee with copies of any requests for information from any Taxing Authority relating to such Taxes with respect to which Lessee may be required to indemnify hereunder. If requested by Lessee in writing within 30 days after its receipt of such notice, such Tax Indemnitee shall, at Lessee's expense (including all reasonable costs, expenses, and reasonable attorneys' and accountants' fees and disbursements), in good faith contest (or, if permitted by applicable law, allow Lessee to contest) through appropriate administrative and judicial proceedings the validity, applicability, or amount of such Taxes by (x) resisting payment thereof, (y) not paying the Taxes except under protest if protest is necessary and proper, or (z) if the payment is made, using reasonable efforts to obtain a refund thereof in an appropriate administrative or judicial proceeding. If requested to do so by Lessee, the Tax Indemnitee shall appeal any adverse administrative or judicial decision, except that the Tax Indemnitee shall not be required to pursue any appeals to the United States Supreme Court. If and to the extent that the Tax Indemnitee is able to separate the contested issue(s) from other issues arising in the same administrative or judicial proceeding that are unrelated to the Transactions without (in such Tax Indemnitee's good faith judgment) adversely affecting such Tax Indemnitee, such Tax Indemnitee shall permit Lessee to control the conduct of any such proceeding and shall provide to Lessee (at Lessee's cost and expense) with such information or data in such Tax Indemnitee's control or possession and reasonably necessary to conduct such contest (other than such Tax Indemnitee's federal income Tax returns) in which case Lessee shall keep such Tax Indemnitee reasonably informed concerning the progress of such contest. If the contest is being controlled by a Tax Indemnitee, such Tax Indemnitee shall consult with Lessee in good faith regarding the manner of contesting such claim and shall keep Lessee reasonably informed regarding the progress of such contest. A Tax Indemnitee shall not fail to take any action expressly required by this ss. 9.3.4 (including any action regarding any appeal of an adverse determination with respect to any claim) or settle or compromise any claim without Lessee's prior written consent (except as contemplated by ss. 9.3.4(b) or (c)). (b) Notwithstanding the foregoing, in no event shall a Tax Indemnitee be required to pursue any contest (or to permit Lessee to pursue any contest) unless (1) Lessee agrees to pay to such Tax Indemnitee on demand and on an after-tax basis all reasonable costs and expenses that such Tax Indemnitee incurs in connection with contesting such Taxes, including all reasonable out-of-pocket costs and expenses and reasonable attorneys' and accountants' fees and disbursements, (2) if such contest involves the payment of the claim, Lessee advances the amount thereof (to the extent indemnified hereunder) plus interest, penalties, and additions to tax with respect thereto that are required to be paid before commencing the contest on an interest-free net after-Tax basis to such Tax Indemnitee, (3) such Tax Indemnitee does not reasonably determine that the action to be taken will result in any material risk of forfeiture, sale, or loss of the Aircraft (unless Lessee makes provisions to protect the interests of any such Tax Indemnitee in a manner reasonably satisfactory to such Tax Indemnitee) (provided, that such Tax Indemnitee shall notify Lessee in writing promptly after it becomes aware of any such risk), (4) no Event of Default exists, unless Lessee has provided security for its obligations hereunder by advancing to such Tax Indemnitee, before proceeding or continuing with such contest, the amount of the Tax being contested, plus any interest and penalties and an amount estimated in good faith by such Tax Indemnitee for expenses, (5) before commencing any judicial action controlled by Lessee, Lessee acknowledges its liability for such claim hereunder in writing, provided, that Lessee shall not be bound by its acknowledgment if the Final Determination articulates conclusions of law and fact that demonstrate that Lessee has no liability for the contested amounts hereunder, (6) such Tax Indemnitee shall have received at Lessee's sole expense, an opinion independent tax counsel, such counsel to be selected by Lessee and reasonably satisfactory to such Tax Indemnitee ("Tax Counsel"), to the effect that a reasonable basis, within the meaning of ABA Formal Opinion No. 85-352, exists for contesting such claim, (7) the amount of payments or indemnification that would be required as a result of such adjustment, when aggregated with further potential payments or adjustments where the subject matter of the proposed adjustment is of a continuing nature, as to the Aircraft and all other aircraft operated by Lessee, shall be at least $10,000, and (8) the issue shall not be substantially identical as an issue previously contested hereunder and decided adversely, unless such Tax Indemnitee shall have received, at Lessee's sole expense, a written opinion, in form and substance reasonably satisfactory to such Tax Indemnitee, of Tax Counsel to the effect that the applicable circumstances or law have changed and in light thereof, there is reasonable basis under ABA Formal Opinion No. 85-352 that the tax treatment of the item which is the subject of the claim will be upheld in litigation if the claimed tax treatment is challenged by a Taxing Authority. Notwithstanding the foregoing, if any Tax Indemnitee releases, waives, compromises, or settles any claim that may be indemnifiable by Lessee pursuant to this ss. 9.3 and which such Tax Indemnitee is otherwise obligated to contest under this ss. 9.3.4 without Lessee's written permission, Lessee's obligation to indemnify such Tax Indemnitee with respect to such claim (and all directly-related claims, and claims based on the outcome of such claim) shall terminate, subject to ss. 9.3.4(c), and subject to ss. 9.3.4(c), such Tax Indemnitee shall repay to Lessee any amount previously paid or advanced to such Tax Indemnitee with respect to such claim, plus interest at the rate that would have been payable by the relevant Taxing Authority on a refund of such Tax. (c) Notwithstanding anything in this ss. 9.3, a Tax Indemnitee will not be required to contest the imposition of any Tax, and shall be permitted to settle or compromise any claim without Lessee's consent, if such Tax Indemnitee (1) waives its right to indemnity under this ss. 9.3 with respect to such Tax (and any directly-related claim, and any claim the outcome of which is determined based upon the outcome of such claim), (2) pays to Lessee any amount previously paid or advanced by Lessee pursuant to this ss. 9.3 with respect to such Tax, plus interest at the rate that would have been payable by the relevant Taxing Authority on a refund of such Tax, and (3) agrees to discuss with Lessee the views or positions of any relevant Taxing Authority with respect to the imposition of such Tax provided, that if Lessee has agreed in writing to settle a claim for a stated amount and the relevant Tax Indemnitee settles the claim on more favorable terms, such Tax Indemnitee shall not be required to waive the indemnity for such claim to the extent of the amount agreed to by Lessee. 9.3.5 Refund If any Tax Indemnitee receives a refund of, or becomes entitled to a credit against other liability for, all or any part of any Taxes paid, reimbursed, or advanced by Lessee, such Tax Indemnitee shall pay to Lessee within 30 days of such receipt an amount equal to the lesser of (a) the amount of such refund or credit plus any net tax benefit (taking into account any Taxes incurred by such Tax Indemnitee by reason of the receipt of such refund or realization of such credit) actually realized by such Tax Indemnitee as a result of any payment by such Tax Indemnitee made pursuant to this sentence (including this clause (a)), and (b) such tax payment, reimbursement, or advance by Lessee to such Tax Indemnitee theretofore made pursuant to this ss. 9.3 (and the excess, if any, of the amount described in clause (a) over the amount described in clause (b) shall be carried forward and applied to reduce pro tanto any subsequent obligation of Lessee to make payments to such Tax Indemnitee pursuant to this ss. 9.3). If, in addition to such refund or credit, such Tax Indemnitee receives (or is credited with) an amount representing interest on the amount of such refund or credit, such Tax Indemnitee shall pay to Lessee within 30 days after receiving or realizing such credit the portion of such interest fairly attributable to Taxes paid, reimbursed, or advanced by Lessee before the receipt of such refund or realization of such credit. Notwithstanding the foregoing, a Tax Indemnitee shall not be obligated to make any payment to Lessee pursuant to this ss. 9.3.5 if a Special Default or an Event of Default has occurred and is continuing. If it is later determined that such Tax Indemnitee was not entitled to such refund or credit, the portion of the refund or credit repaid, recaptured or disallowed (and any interest and tax savings paid by such Tax Indemnitee to Lessee with respect thereto) shall be treated as Taxes for which Lessee must indemnify such Tax Indemnitee pursuant to this ss. 9.3 without regard to ss. 9.3.2 hereof other than ss. 9.3.2(f). 9.3.6 Tax Filing Lessee shall timely file any report, return, or statement that is required to be filed with respect to any Tax which is subject to indemnification under this ss. 9.3 (except for any such report, return, or statement which a Tax Indemnitee has timely notified Lessee in writing that such Tax Indemnitee intends to file, or for which such Tax Indemnitee is required by law to file, in its own name); provided, that the relevant Tax Indemnitee shall furnish Lessee with any information in such Tax Indemnitee's possession or control that is reasonably necessary to file any such return, report, or statement and that Lessee reasonably requests in writing (but the Tax Indemnitee shall not be required to furnish copies of its actual tax returns, although it may be required to furnish relevant information contained therein). Lessee shall either file such report, return, or statement and send a copy to such Tax Indemnitee (and to Owner Trustee, if the Tax Indemnitee is not Owner Trustee), or, if Lessee is not permitted to file such report, return, or statement, it shall notify such Tax Indemnitee of such requirement and prepare and deliver such report, return, or statement to such Tax Indemnitee in a manner reasonably satisfactory to such Tax Indemnitee within a reasonable time before the time such report, return, or statement is to be filed. 9.3.7 Forms Each Tax Indemnitee agrees to furnish from time to time to Lessee, or such other Person as Lessee shall designate, at Lessee's request, such duly-executed and properly-completed forms as may be necessary or appropriate in order to claim any reduction of or exemption from any withholding or other Tax imposed by any Taxing Authority, if (a) such reduction or exemption is available to such Tax Indemnitee, and (b) Lessee has provided such Tax Indemnitee with any information necessary to complete such form not otherwise reasonably available to such Tax Indemnitee. 9.3.8 Non-Parties If a Tax Indemnitee is not a party to this Agreement, Lessee may require the Tax Indemnitee to agree in writing, in a form reasonably acceptable to Lessee, to the terms of this ss. 9.3 and ss. 15.8 before making any payment to such Tax Indemnitee under this ss. 9.3. 9.4 Payments Any payments made pursuant to ss. 9.1 or ss. 9.3 shall be due on the 30th day after demand, and shall be made directly to the relevant Indemnitee or Tax Indemnitee or to Lessee, in immediately available funds at such bank or to such account as specified by such Indemnitee or Tax Indemnitee or Lessee (as applicable) in written directives to the payor, or, if no such direction has been given, by check of the payor payable to the order of, and mailed to, such Indemnitee or Tax Indemnitee or Lessee (as applicable) by certified mail, postage prepaid, at its address as set forth in this Agreement. 9.5 Interest If any amount, payable by Lessee, any Indemnitee, or any Tax Indemnitee under ss. 9.1 or ss. 9.3 is not paid when due, the Person obligated to make such payment shall pay on demand, to the extent permitted by Law, to the Person entitled thereto, interest on any such amount for the period from and including the due date for such amount to but excluding the date the amount is paid, at the Past-Due Rate. Such interest shall be paid in the same manner as the unpaid amount in respect of which such interest is due. 9.6 Benefit of Indemnities Lessee's obligations for indemnities, obligations, adjustments, and payments in ss. 9.1 or ss. 9.3 are expressly made for the benefit of, and shall be enforceable by, the Indemnitee or Tax Indemnitee entitled thereto, without declaring the Lease to be in default or taking other action thereunder. 10. ASSIGNMENT OR TRANSFER OF INTERESTS 10.1 Owner Participant and Owner Trustee 10.1.1 Owner Participant (a) During the Term, Owner Participant shall not Transfer any or all of its right, title, or interest in the Trust Estate or the Trust Agreement or to this Agreement unless: (1) the Transferee has full power, authority, and legal right to execute, deliver, and perform the obligations of Owner Participant under the Owner Participant Agreements and provides reasonably satisfactory evidence of such power and authority to Lessee and Owner Trustee; (2) the Transferee enters into a legal, valid, binding, and enforceable agreement, substantially in the form of Exhibit I hereto (or otherwise in form and substance reasonably satisfactory to Lessee), effective to confirm that such Transferee agrees to be bound by all the terms of, and to undertake all of the obligations arising after such transfer of, the transferring Owner Participant in the Owner Participant Agreements, and in which it makes representations and warranties substantially the same as those in ss. 6.2 of this Agreement; (3) upon such Transfer Lessee shall not be obligated to pay any greater amount or incur any greater obligation than that which it would have been obliged to pay or incur under the Lease or other Lessee Operative Agreement if no transfer or assignment had taken place, and upon such Transfer the terms and conditions of the Lessee Operative Agreements insofar as they relate to the rights and obligations of Lessee are not altered; (4) Owner Participant shall deliver to Lessee and Owner Trustee an opinion of counsel reasonably satisfactory to each of them to the effect that such agreement or agreements referred to in ss. 10.1.1(a)(2) and, if applicable, ss. 10.1.1(a)(6) or (a)(7) are legal, binding, and enforceable in accordance with its or their terms and that such transfer will not violate the Transportation Code, the registration provisions of the Securities Act, or any other applicable Federal law; (5) the Transfer shall relate to Owner Participant's entire interest as Owner Participant; or, if it relates to less than its entire interest as Owner Participant, then (aa) Lessee shall have given its prior written consent to the partial Transfer, and (bb) all amendments to the Operative Agreements, reasonably requested by Lessee or Owner Participant, that are necessary or appropriate to accommodate the existence of multiple Owner Participants, shall be agreed to and executed by the parties thereto, all at the expense of the Owner Participants under ss. 10.1.1(c); (6) the Transferee is a Citizen of the United States (such status to be determined without considering FAR ss. 47.9 or any other provision that may restrict Lessee's use or operation of the Aircraft), or shall use a voting powers trust or similar arrangement in order to hold an interest in the Trust Estate such that the Aircraft can be registered in the United States (without considering FAR ss. 47.9 or any other provision that may restrict Lessee's use or operation of the Aircraft); and (7) the Transferee is a single Person and is either (aa) a Permitted Institution, (bb) or an Affiliate of a Permitted Institution, if such Affiliate's obligations under the Owner Participant Agreements are guaranteed by such Permitted Institution pursuant to a written guaranty, substantially in the form of Exhibit J hereto (or otherwise in form and substance reasonably satisfactory to Lessee and Owner Trustee), or (cc) with Lessee's prior written consent, any other Person the obligations of whom under the Owner Participant Agreements are guaranteed by a Permitted Institution pursuant to a written guaranty, in form and substance reasonably satisfactory to Lessee and Owner Trustee. (b) Owner Participant shall give written notice to Lessee and Owner Trustee at least 10 days before any such Transfer, specifying the name and address of the proposed Transferee, and providing financial statements of the proposed Transferee or guarantor evidencing satisfaction of the requirements described in ss. 10.1.1(a)(7)(aa) or (bb). (c) Any reasonable fees, charges, and expenses, including the reasonable legal fees, charges, and expenses incurred by Lessee, Owner Participant, or Owner Trustee in connection with any Transfer by Owner Participant permitted by this ss. 10.1.1, or by the Transferee in any such case, will be paid for by Owner Participant. 10.1.2 Owner Trustee Owner Trustee may transfer its interests in the Trust Agreement pursuant to ss. 9 thereof. 10.2 Effect of Transfer Upon any Transfer in accordance with ss. 10.1.1 or ss. 10.1.2, the Transferee shall be deemed "Owner Participant" or "Owner Trustee", respectively, for all purposes of the Operative Agreements and, in the case of a Transferee of Owner Participant, shall be deemed to have paid its ratable portion of Lessor's Cost previously made by Owner Participant, making such conveyance and represented by the interest being conveyed, and each reference herein to Owner Participant or Owner Trustee shall thereafter be deemed a reference to such Transferee for all purposes, and the transferring Owner Participant or Owner Trustee shall be released (including, in the case of Owner Participant, any Guarantor with respect to any guaranty provided by it under ss. 10.1.1(a)(7)) from all of its liabilities and obligations under the Operative Agreements to the extent such liabilities and obligations arise after such Transfer and, in each case, to the extent such liabilities and obligations are assumed by the Transferee; provided, that such transferring Owner Participant, or Owner Trustee will continue to have the benefit of any rights or indemnities under any Operative Agreement vested or relating to circumstances, conditions, acts, or events before such Transfer. 11. SECTION 1110 Lessee, Owner Participant, and Owner Trustee intend that Owner Trustee, as lessor under the Lease, shall be entitled to the benefits of Section 1110 in the event of a case under Chapter 11 of the Bankruptcy Code in which Lessee is a debtor. 12. CHANGE OF CITIZENSHIP 12.1 Generally Without prejudice to the representations, warranties, or covenants as to any party's status as a Citizen of the United States: (a) Lessee and FSB agree that, immediately upon obtaining knowledge of any facts that would cast doubt upon its continuing status as a Citizen of the United States, and promptly upon public disclosure of negotiations in respect of any transaction which would or might adversely affect such status, it will notify all parties hereto of all relevant matters in connection therewith; and (b) Owner Participant agrees that, if its status is to change or has changed as a Citizen of the United States, or it makes public disclosure of circumstances as a result of which it believes that such status is likely to change, it will notify all the other parties to this Participation Agreement of (1) such change in status promptly after obtaining Actual Knowledge thereof, and (2) such belief as soon as practicable after such public disclosure (but in any event within 10 Business Days after such public disclosure). 12.2 Owner Participant Owner Participant agrees, solely for the benefit of Lessee, that if, when the Aircraft is registered in the United States, (a) Owner Participant is not be a Citizen of the United States, and (b) the Aircraft shall be, or would therefore become, ineligible for registration in the name of Owner Trustee under the Transportation Code and regulations then applicable thereunder (without considering FAR ss. 47.9 or any other provision that may restrict Lessee's or any Permitted Sublessee's use or operation of the Aircraft), then Owner Participant shall as soon as is reasonably practicable (but in any event within 30 days after obtaining Actual Knowledge of such ineligibility and of such loss of citizenship), (y) effect voting trust or other similar arrangements (in which case any provisions contained in the Operative Agreements restricting Owner Participant's or Owner Trustee's ability to amend the Trust Agreement shall not apply to the extent necessary to permit the use of such a voting trust or other similar arrangement) or take any other action necessary to prevent any deregistration or maintain the United States registration of the Aircraft, or (z) transfer in accordance with the terms of this Agreement all its right, title, and interest in and to this Agreement, the Trust Estate, and the Trust Agreement in accordance with ss. 10.1. 12.3 Owner Trustee Upon FSB's giving any notice in accordance with ss. 12.1(a), Owner Trustee shall, subject to ss. 9.1.1 of the Trust Agreement, resign as Owner Trustee. Upon its receipt of such notice, Owner Participant shall as promptly as practicable appoint a Citizen of the United States as successor Owner Trustee pursuant to ss. 9.1 of the Trust Agreement. 13. CONCERNING OWNER TRUSTEE Except as otherwise expressly provided herein, or in the Trust Agreement, Owner Trustee is entering into this Agreement solely in its capacity as trustee as provided in the Trust Agreement and not in its individual capacity, and in no case whatsoever will it be liable or accountable in its individual capacity for any of the statements, representations, warranties, agreements, or obligations of Owner Trustee hereunder, or for any loss in respect thereof, as to all of which the parties agree to look solely to the Trust Estate; provided, that nothing in this ss. 13 shall limit in scope or substance the personal liability of FSB (a) to Owner Participant as expressly set forth in the Trust Agreement, (b) in respect of the representations, warranties, and agreements of FSB expressly made as such herein or in any other Operative Agreement to which it is a party, and (c) for the consequences of its own gross negligence, willful misconduct, and, in receiving, handling or remitting of funds only, its willful misconduct or simple negligence as a trustee. 14. MISCELLANEOUS 14.1 Amendments No provision of this Agreement may be amended, supplemented, waived, modified, discharged, terminated, or otherwise varied orally, but only by an instrument in writing that specifically identifies the provision of this Agreement that it purports to amend, supplement, waive, modify, discharge, terminate, or otherwise vary and is signed by the party against whom the enforcement of the amendment, supplement, waiver, modification, discharge, termination, or variance is sought. Each such amendment, supplement, waiver, modification, discharge, termination, or variance shall be effective only in the specific instance and for the specific purpose for which it is given. No provision of this Agreement shall be varied or contradicted by oral communication, course of dealing or performance, or other manner not set forth in writing and signed by the party against whom enforcement of the same is sought. 14.2 Severability If any provision of this Agreement is held invalid, illegal, or unenforceable in any respect in any jurisdiction, then, to the extent permitted by Law, (a) all other provisions hereof shall remain in full force and effect in such jurisdiction, and (b) such invalidity, illegality, or unenforceability shall not affect the validity, legality, or enforceability of such provision in any other jurisdiction. If, however, any Law pursuant to which such provisions are held invalid, illegal, or unenforceable may be waived, the parties hereto hereby waive that Law to the full extent permitted, to the end that this Agreement shall be a valid and binding agreement in all respects, enforceable in accordance with its terms. 14.3 Survival The indemnities in this Agreement shall survive the delivery or return of the Aircraft, the Transfer of any interest of Owner Participant in this Agreement, the Trust Estate, and the Trust Agreement, and the expiration or other termination of any Operative Agreement, except to the extent otherwise provided therein. 14.4 Reproduction of Documents This Agreement (including all annexes, schedules, and exhibits hereto) and all documents relating hereto, including (a) future consents, waivers, and modifications, and (b) past and future financial statements, certificates, and other information furnished to any party hereto, may be reproduced by any photographic, photostatic, microfilm, micro-card, miniature photographic, or other similar process, and any party may destroy any original documents so reproduced. Any such reproduction shall be as admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original exists and whether or not such party made the reproduction in the regular course of business), and any enlargement, facsimile, or further reproduction of such reproduction also shall be so admissible in evidence. 14.5 Counterparts This Agreement and any amendments, waivers, consents, or supplements hereto may be executed in any number of counterparts (or upon separate signature pages bound together into one or more counterparts), each fully-executed set of which shall be deemed to be an original. 14.6 No Waiver No failure on the part of any party hereto to exercise, and no delay by any party hereto in exercising, any of its rights, powers, remedies, or privileges under this Agreement or otherwise available shall impair, prejudice, or waive any such right, power, remedy, or privilege or be construed as a waiver of any breach hereof or default hereunder or as an acquiescence therein, nor shall any single or partial exercise of any such right, power, remedy, or privilege preclude any other or further exercise thereof by it or the exercise of any other right, power, remedy, or privilege by it. No notice to or demand on any party hereto in any case shall, unless otherwise required under this Agreement, entitle such party to any other or further notice or demand in similar or other circumstances, or waive the rights of any party hereto to any other or further action in any circumstances without notice or demand. 14.7 Notices Unless otherwise expressly permitted by the terms hereof, all notices, requests, demands, authorizations, directions, consents, waivers, and other communications required or permitted to be made, given, furnished, or filed hereunder shall be in writing (and the specification of a writing in certain instances and not in others does not imply an intention that a writing is not required as to the latter), shall refer specifically to this Agreement, and shall be personally delivered, sent by fax or telecommunication transmission (which in either case provides written confirmation to the sender of its delivery), sent by registered mail or certified mail, return receipt requested, or sent by next-business-day courier service, in each case to the address or fax number set forth for such party in Schedule 1, or to such other address or number as such party hereafter specifies by notice to the other parties hereto. Each such notice, request, demand, authorization, direction, consent, waiver, or other communication shall be effective when received or, if made, given, furnished, or filed by fax or telecommunication transmission, when confirmed. 14.8 Governing Law; Submission to Jurisdiction; Venue (a) This Agreement shall in all respects be governed by and interpreted in accordance with the laws of the state of New York, including all matters of construction, validity, and performance. (b) Each party hereto hereby irrevocably agrees, accepts, and submits itself to the non-exclusive jurisdiction of the courts of the state of New York in the city and county of New York and of the United States for the Southern District of New York, in connection with any legal action, suit, or proceeding with respect to any matter relating to or arising out of or in connection with the Operative Agreements. (c) Each party hereto hereby irrevocably consents and agrees to the service of any and all legal process, summons, notices, and documents of any of the aforementioned courts in any such suit, action, or proceeding may be made by delivering copies thereof by registered or certified mail, postage prepaid, at the address set forth pursuant to ss. 14.7. Each party hereto hereby agrees that service upon it, or any of its agents, in each case in accordance with this ss. 14.8(c), shall constitute valid and effective personal service upon such party, and each party hereto hereby agrees that the failure of any of its agents to give any notice of such service to any such party shall not impair or affect in any way the validity of such service on such party or any judgment rendered in any action or proceeding based thereon. (d) Each party hereto hereby irrevocably waives, to the extent permitted by applicable law, and agrees not to assert, by way of motion, as a defense, or otherwise, in any legal action or proceeding brought hereunder in any of the above-named courts, that such action or proceeding is brought in an inconvenient forum, that venue for the action or proceeding is improper, or that any Operative Agreement may not be enforced in or by such courts. (e) Each party hereto hereby waives its right to a jury trial of any claim or cause of action in any court in any jurisdiction based upon or arising out of or relating to the Operative Agreements. 14.9 Third-Party Beneficiary This Agreement is not intended to provide (and shall not provide) any Person not a party hereto with any rights of any nature whatsoever against any of the parties hereto, and no Person not a party hereto shall have any right, power, or privilege in respect of any party hereto, or have any benefit or interest, arising out of this Agreement. 14.10 Entire Agreement This Agreement, together with the other Operative Agreements, on and as of the date hereof, constitutes the entire agreement of the parties hereto with respect to the subject matter hereof, and all prior understandings or agreements, whether written or oral, among any of the parties hereto with respect to such subject matter are hereby superseded in their entireties. 14.11 Further Assurances Each party hereto shall execute, acknowledge, and deliver (or cause to be executed, acknowledged, and delivered) all such further agreements, instruments, certificates, or other documents, and shall do and cause to be done such further things, as any other party hereto reasonably requests in connection with the administration of, or to carry out more effectively the purposes of, or to assure and confirm better to such other party the rights and benefits to be provided under, this Agreement and the other Operative Agreements. [This rest of this page is intentionally left blank] IN WITNESS WHEREOF, the parties have executed this Participation Agreement N___AT. AMERICAN TRANS AIR, INC., Lessee By: ___________________________________________________ Name: Title: GENERAL ELECTRIC CAPITAL CORPORATION, Owner Participant By: ___________________________________________________ Name: Title: FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity (except as expressly provided herein), but solely as trustee, Owner Trustee By: ___________________________________________________ Name: Title: FIRST SECURITY BANK, NATIONAL ASSOCIATION,(as in its individual capacity expressly provided herein) By: ___________________________________________________ Name: Title: ACCOUNTS; ADDRESSES Account for Payments Address for Notices American American Trans Air, Inc. Trans Air, Inc. 7337 West Washington Street Indianapolis, Indiana 46231 Attention: Exec. VP and CFO fax: (317) 240-7091 Owner Participant General Electric Capital Corp. Attention: _________________ Fax: (____) __________ The Boeing The Boeing Company Company P.O. Box 3707 Seattle, WA 98124-3707 Attention: Treasurer M/S 68-34 fax: (206) 237-8746 First Security First Security Bank, N.A. Bank,National 79 South Main Street Association Salt Lake City, UT 84111 Attention: Corporate Trust Department fax: (801) 246-5053 COMMITMENTS Participant Percentage of Lessor's Cost Dollar Amount Owner Participant Owner Participant's Percentage General Electric Capital 100% $__________ Corporation CERTAIN TERMS Defined Term Definition Commitment Termination Date __________, 200_ Lessee's Advisor(s) Capstar Partners, LLC Lessor's Cost $_______________ OP Jurisdiction New York Owner Participant's Special Counsel Dewey Ballantine LLP Trust Company Jurisdiction Utah LEASE AGREEMENT N___AT dated as of __________, 200_ between FIRST SECURITY BANK, NATIONAL ASSOCIATION, NOT IN ITS INDIVIDUAL CAPACITY, EXCEPT AS EXPRESSLY PROVIDED HEREIN, BUT SOLELY AS OWNER TRUSTEE, Lessor and AMERICAN TRANS AIR, INC., Lessee -------------------------------------------------------- One Boeing model 737-800 aircraft bearing United States registration no. N___AT and manufacturer's serial no. _____, including two CFM International model CFM56-7 engines bearing manufacturer's serial nos. _____ and _____ - ------------------------------------------------------------- CERTAIN OF LESSOR'S RIGHTS UNDER THIS LEASE AND IN THE AIRCRAFT COVERED HEREBY HAVE BEEN ASSIGNED TO, AND ARE SUBJECT TO A SECURITY INTEREST IN FAVOR OF, WILMINGTON TRUST COMPANY, AS MORTGAGEE UNDER TRUST INDENTURE AND MORTGAGE N___AT, DATED AS OF THE DATE OF THIS LEASE. THIS LEASE HAS BEEN EXECUTED IN COUNTERPARTS; SEE SS. 18.5 FOR INFORMATION CONCERNING THE RIGHTS OF HOLDERS OF THE VARIOUS COUNTERPARTS. CONTENTS 1. DEFINITIONS AND CONSTRUCTION................................................1 2. DELIVERY AND ACCEPTANCE.....................................................1 2.1 Delivery and Lease of Aircraft...........................................1 2.2 Acceptance by Lessee.....................................................1 3. TERM AND RENT...............................................................1 3.1 Term 1 3.2 Rent 1 3.3 Payments.................................................................4 4. DISCLAIMER; CERTAIN AGREEMENTS OF LESSOR; SECTION 1110 MATTERS..............5 4.1 Disclaimer of Warranties.................................................5 4.2 Certain Agreements of Lessor.............................................6 4.3 Quiet Enjoyment..........................................................6 4.4 Investment of Funds Held as Security.....................................6 4.5 Title Transfers by Lessor................................................7 4.6 Lessor's Interest in Certain Engines.....................................8 4.7 Lease For U.S. Federal Income Tax Law Purposes; Section 1110 of Bankruptcy Code.......................................................8 5. RETURN OF AIRCRAFT..........................................................8 5.1 Compliance with Annex B..................................................8 5.2 Parking and Related Matters..............................................9 5.3 Return of Other Engines..................................................9 5.4 Fuel 9 6. LIENS 10 7. REGISTRATION; OPERATION; POSSESSION AND SUBLEASING.........................10 7.1 Registration and Operation..............................................10 7.2 Possession..............................................................12 7.3 Certain Limitations on Subleasing or Other Relinquishment of Possession.17 8. MAINTENANCE; REPLACEMENT AND POOLING OF PARTS; ALTERATIONS, MODIFICATIONS, AND ADDITIONS; OTHER LESSEE COVENANTS.............18 8.1 Maintenance; Replacement and Pooling of Parts; Alterations, Modifications, and Additions............................................18 8.2 Information, Certificates, Notices, and Reports.........................18 9. VOLUNTARY TERMINATION UPON OBSOLESCENCE....................................20 9.1 Right of Termination....................................................20 9.2 Election by Lessor to Sell..............................................20 9.3 Retention of Aircraft by Lessor.........................................23 10. LOSS, DESTRUCTION, REQUISITION, ETC.......................................24 10.1 Event of Loss to the Aircraft..........................................24 10.2 Event of Loss to an Engine; Engine Exchanges...........................27 10.3 Conditions to any Replacement..........................................28 10.4 Conveyance to Lessee...................................................30 10.5 Application of Payments................................................30 10.6 Requisition of Aircraft for Use........................................31 10.7 Requisition of an Engine for Use.......................................32 10.8 Application of Payments................................................32 10.9 Application of Payments During Default.................................32 11. INSURANCE.................................................................32 11.1 Lessee's Obligation to Insure..........................................33 11.2 Insurance for Own Account..............................................33 11.3 Indemnification by Government in Lieu of Insurance.....................33 11.4 Application of Insurance Proceeds......................................33 11.5 Application of Payments During Default.................................34 12. INSPECTION................................................................34 13. ASSIGNMENT; MERGER; SUCCESSOR OWNER TRUSTEE...............................35 13.1 In General.............................................................35 13.2 Merger of Lessee.......................................................35 13.3 Assignment as Security for Lessor's Obligations........................36 13.4 Successor Owner Trustee................................................37 14. LEASE EVENTS OF DEFAULT...................................................37 14.1 Payments...............................................................37 14.2 Insurance..............................................................38 14.3 Other Covenants........................................................38 14.4 Representations and Warranties.........................................38 14.5 Bankruptcy and Insolvency..............................................38 14.6 Repudiation or Invalidity of Guarantee.................................39 15. REMEDIES AND WAIVERS......................................................39 15.1 Remedies...............................................................39 15.2 Limitations Under CRAF.................................................43 15.3 Right to Perform for Lessee............................................43 15.4 Determination of Fair Market Rental Value and Fair Market Sales Value..44 15.5 Remedies Cumulative....................................................44 16. LESSEE'S OBLIGATIONS; NO SETOFF, COUNTERCLAIM, ETC........................44 17. RENEWAL AND PURCHASE OPTIONS..............................................45 17.1 Notices Generally......................................................45 17.2 Renewal Options........................................................45 17.3 Purchase Option........................................................47 17.4 Appraisals.............................................................50 18. MISCELLANEOUS.............................................................51 18.1 Amendments.............................................................51 18.2 Severability...........................................................51 18.3 Third-Party Beneficiary................................................51 18.4 Reproduction of Documents..............................................51 18.5 Counterparts...........................................................52 18.6 Notices................................................................52 18.7 Governing Law..........................................................52 18.8 No Waiver..............................................................52 18.9 Entire Agreement.......................................................53 ANNEXES, EXHIBITS, AND SCHEDULES ANNEX A Definitions ANNEX B Return Conditions ANNEX C Maintenance ANNEX D Insurance EXHIBIT A Aircraft Description EXHIBIT B Form of Return Acceptance Supplement SCHEDULE 1 Certain Terms SCHEDULE 2 Basic Rent Payments SCHEDULE 2A Basic Rent Allocations SCHEDULE 3 Stipulated Loss Value Schedule SCHEDULE 4 Termination Value Schedule SCHEDULE 5 EBO Price Schedule SCHEDULE 6 Permitted Countries SCHEDULE 7 Placards LEASE AGREEMENT N___AT This Lease Agreement N___AT (this "LEASE") dated as of __________, 200_, between (1) First Security Bank, National Association, a national banking association, not in its individual capacity (except as expressly provided herein) but solely as Owner Trustee ("LESSOR"), and (2) American Trans Air, Inc. ("LESSEE"), an Indiana corporation. Lessor and Lessee agree as follows: 1. DEFINITIONS AND CONSTRUCTION The terms defined in Annex A, when capitalized as in Annex A, have the same meanings when used in this Lease. Annex A also contains rules of usage that control construction in this Lease. 2. DELIVERY AND ACCEPTANCE 2.1 DELIVERY AND LEASE OF AIRCRAFT Lessor hereby leases the Aircraft to Lessee for the Term, and Lessee hereby leases the Aircraft from Lessor for the Term. 2.2 ACCEPTANCE BY LESSEE Lessee hereby confirms to Lessor that Lessee has duly and irrevocably accepted delivery of the Aircraft for all purposes of this Lease. 3. TERM AND RENT 3.1 TERM The Aircraft shall be leased hereunder for the Term, unless this Lease or the leasing of the Aircraft is earlier terminated in accordance with any provision of this Lease. 3.2 RENT 3.2.1 BASIC RENT; ADJUSTMENTS TO BASIC RENT AND CERTAIN OTHER AMOUNTS (a)......During the Base Term, Lessee shall pay to Lessor, on each Payment Date, Basic Rent in the amount equal to the percentage of Lessor's Cost specified in Schedule 2 for such Payment Date. The amounts and periods of Lessee's liability for Basic Rent shall be as allocated in accordance with Schedule 2A. Such Basic Rent payments and such allocations shall be (i) adjusted pursuant to ss. 3.2.1(b), or (ii) increased in an amounT equal to any increase in the amount of interest due on the Equipment Notes on the relevant Payment Date pursuant to ss. 2(e) of the Registration Rights Agreement (or, subsequent to any such increase, decreased by the amount oF such increase pursuant to ss. 2(e) of the Registration Rights Agreement). During any Renewal Term, Lessee shall paY to Lessor, on each Payment Date, Basic Rent equal to the Renewal Rent for that Renewal Term, determined pursuant to ss. 17.2.2. (b)......Basic Rent, Basic Rent allocations, Stipulated Loss Values, Termination Values, and EBO Price shall be subject to adjustment as follows: (1) If Transaction Expenses paid by Lessor pursuant to ss. 9.2 of the ParticipatioN Agreement are determined to be other than 2.0% of Lessor's Cost, then the Basic Rent percentages in Schedule 2, the Basic Rent allocations in Schedule 2A, the Stipulated Loss Value percentages in Schedule 3, the Termination Value percentages in Schedule 4, and the EBO Price shall be recalculated (upwards or downwards) by Owner Participant, on or before the 120th day after the Delivery Date using the same methods and assumptions used to calculate original Basic Rent, EBO Price, Stipulated Loss Value, and Termination Value percentages, in order (aa) to maintain Owner Participant's Net Economic Return, and (bb) to the extent possible consistent with clause (aa) of this ss. 3.2.1(b)(1), to minimizE the Net Present Value of Rents to Lessee. (2) In the event of a refinancing as contemplated by ss. 11 of the ParticipatioN Agreement, then the Basic Rent percentages in Schedule 2, the Basic Rent allocations in Schedule 2A, the Stipulated Loss Value percentages in Schedule 3, the Termination Value percentages in Schedule 4, and the EBO Price shall be adjusted (upwards or downwards) by Owner Participant as contemplated by such ss. 11 to reflect the change, if any, in interest rate resulting from such refinancing, in order (aa) to maintain Owner Participant's Net Economic Return, and (bb) to the extent possible consistent with clause (aa) of this ss. 3.2.1(b)(2), to minimize the Net Present Value of Rents to Lessee. (3) Notwithstanding the foregoing, in no event shall any adjustment to the EBO Price be made such that the EBO Price is less than the greatest of (aa) the adjusted Stipulated Loss Value as of the EBO Date, (bb) the estimated fair market value of the Aircraft on the EBO Date as set forth in the Appraisal referred to in ss. 5.1.2(m) of the Participation Agreement, and (cc) the sum of the presenT values of (i) Basic Rent payable, as adjusted, during the Base Term after the EBO Date, and (ii) the appraised fair market value of the Aircraft at the end of the Base Term as estimated in the Appraisal referred to in ss. 5.1.2(m) of the Participation Agreement, each discounted back to the EBO Date (using A discount rate of 16.5%). (c) All adjustments pursuant to ss. 3.2.1(b) shall be made as promptly as practicable after eitheR Owner Participant or Lessee gives notice to the other that an event has occurred that requires an adjustment. Owner Participant and Lessee shall give prompt notice to the other of any event requiring an adjustment. Any recalculation of the percentages of Basic Rent payments, Basic Rent allocations, Stipulated Loss Value, Termination Value, and EBO Price shall be prepared by Owner Participant, subject to verification at the request of Lessee in accordance with this ss. 3.2.1(c), on the basis of the same methodology and assumptions used by OwneR Participant in determining the percentages of Basic Rent, Stipulated Loss Value, Termination Value, and EBO Price as of the Delivery Date, except as such assumptions have been modified to reflect the events giving rise to adjustments hereunder and taking into account the law applicable at the time of such adjustment. Promptly after an adjustment is made hereunder, Owner Participant shall deliver to Lessee a description of such adjustment, setting forth in reasonable detail the calculation thereof. All adjustments (1) shall be made so as to avoid characterization of the Lease as a "disqualified leaseback or long-term agreement" within the meaning of Code ss. 467 and Treasury Regulations thereunder, and (2) shall be in compliance with the requirements of ss. 4(1) And ss. 4(6) of Revenue Procedure 75-21 and ss.ss. 4.02(5), 4.07(l), and 4.07(2) of Revenue Procedure 75-28, except tO the extent that on the Delivery Date the Lease constituted a "disqualified leaseback or long-term agreement" or was not in compliance with the Revenue Procedure sections referred to in clause (2). In connection with any such adjustments to payments and allocations of Basic Rent, appropriate corresponding adjustments shall be made to the percentages set forth on Schedules 3 and 4 in the columns headed "Deferred Basic Rent Amount" and "Prepaid Basic Rent Amount". All of the foregoing adjustments shall be set forth in an amendment to this Lease, and promptly after execution thereof by Lessor and Lessee, Lessee shall give a copy thereof to Mortgagee. (d) If Lessee believes that any calculations by Owner Participant pursuant to ss. 3.2.1(c) are iN error, and if, after consultation, Lessee and Owner Participant do not agree on an adjustment, then a nationally-recognized firm of accountants selected by Lessee and reasonably satisfactory to Owner Participant shall verify such calculations. Owner Participant will make available to such firm (but not to Lessee or any representative of Lessee) the methodology and assumptions referred to in ss. 3.2.1(c) and any modifications theretO made to reflect the events giving rise to adjustments hereunder (subject to the execution by such firm of a confidentiality agreement, reasonably acceptable to Owner Participant, prohibiting disclosure of such methodology and assumptions to any third party). The determination by such firm of accountants shall be final. Lessee will pay the reasonable costs and expenses of such verification by such accountants, except that if it results in (1) a decrease in Basic Rent which decreases the remaining Net Present Value of Rents by ten or more basis points from the remaining Net Present Value of Rents as recalculated by Owner Participant, or (2) a material reduction in Stipulated Loss Values, Termination Values, or the EBO Price, then Owner Participant will pay such costs and expenses. (e) Notwithstanding anything to the contrary in any Operative Agreement, the amount of the payment of Basic Rent due and payable on each Payment Date shall be at least sufficient to pay in full, as of such Payment Date (assuming timely payment of the Equipment Notes before such Date), the aggregate principal amount of scheduled installments due on the Equipment Notes outstanding on such Payment Date, together with the accrued and unpaid interest thereon, due on such Payment Date in respect of the Equipment Notes; PROVIDED, that no installment of Basic Rent shall be increased to the extent such increase would be based upon (1) any attachment or diversion of Basic Rent on account of Lessor Liens, (2) any modification of the payment terms of the Equipment Notes, other than as required or permitted by any Operative Agreement (including as permitted upon the occurrence of a Lease Event of Default), or (3) the acceleration of any Equipment Note(s) due solely to the existence of a Mortgage Event of Default that does not constitute a Lease Event of Default. 3.2.2 SUPPLEMENTAL RENT Lessee shall pay to Lessor, or to whomever is entitled to it, any and all Supplemental Rent when and as it becomes due and owing. Lessee will also pay to Lessor, or to whomever is entitled to it, as Supplemental Rent, to the extent permitted by applicable Law, interest at the Past-Due Rate on any part of any amount of Rent (including Supplemental Rent) not paid by 11:00 a.m., New York time, on the date when due (so long as, in the case of any Person not a party to the Participation Agreement, Lessee had received timely notice of the account to which such payment was required to be made), for the period from and including the date on which the same was due to (but excluding) the date of payment in full. 3.3 PAYMENTS (a) Payments of Rent by Lessee shall be paid by wire transfer of immediately available Dollars, not later than 11:00 a.m., New York City time, on the date when due, to the account of Lessor specified in Schedule 1 to the Participation Agreement (or to such other account in the United States as Lessor specifies to Lessee in writing at least 10 Business Days before such payment of Rent is due), or, in the case of any payment of Supplemental Rent expressly payable to a Person other than Lessor, to the Person that shall be entitled thereto, to such account in the United States as such Person specifies from time to time to Lessee at least 10 Business Days before such payment of Rent is due. (b) Except as otherwise expressly provided herein, whenever any payment of Rent shall be due on a day that is not a Business Day, such payment shall be made on the next day that is a Business Day, and, if such payment is made on such next Business Day, no interest shall accrue on the amount of such payment during such extension. (c) So long as Lessee has not received written notice from the Mortgagee that the Lien of the Mortgage has been discharged, and notwithstanding ss. 3.3(a), Lessor hereby directs, and Lessee agrees, that alL payments of Rent payable by Lessee, other than Excluded Payments, shall be paid directly to Mortgagee on behalf of Lessor by wire transfer of immediately available Dollars to the account of Mortgagee specified in Schedule 1 to the Participation Agreement (or to such other account in the United States as Mortgagee specifies by written notice to Lessor and Lessee at least 10 Business Days before such payment of Rent is due). (d) Excluded Payments payable to any Person shall be paid by wire transfer of immediately available Dollars to the account of such Person specified in the Participation Agreement or, if not so specified, to such account in the United States such Person specifies by written notice to Lessor and Lessee from time to time at least 10 Business Days before such payment is required to be made. (e) All computations of interest under this Lease shall be made on the basis of a year of 360 days composed of twelve 30-day months. 4. DISCLAIMER; CERTAIN AGREEMENTS OF LESSOR; SECTION 1110 MATTERS 4.1 DISCLAIMER OF WARRANTIES LESSOR LEASES AND LESSEE TAKES THE AIRCRAFT "AS-IS, WHERE-IS." LESSEE ACKNOWLEDGES AND AGREES THAT, AS BETWEEN LESSEE AND EACH OF LESSOR, MORTGAGEE, AND ANY PARTICIPANT, (A) LESSEE HAS SELECTED THE AIRCRAFT AND MANUFACTURER THEREOF, AND (B) NEITHER LESSOR NOR MORTGAGEE NOR ANY PARTICIPANT MAKES, HAS MADE, OR SHALL BE DEEMED TO HAVE MADE, AND EACH WILL BE DEEMED TO HAVE EXPRESSLY DISCLAIMED, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO: (1) THE AIRWORTHINESS, VALUE, CONDITION, DESIGN, OPERATION, MERCHANTABILITY, OR FITNESS FOR USE OR FOR ANY PARTICULAR PURPOSE OF THE AIRFRAME, ANY ENGINE, OR ANY PART THEREOF; (2) THE QUALITY OF THE MATERIAL OR WORKMANSHIP WITH RESPECT TO THE AIRFRAME, ANY ENGINE, OR ANY PART THEREOF; (3) THE ABSENCE OF LATENT OR ANY OTHER DEFECT IN THE AIRFRAME, ANY ENGINE, OR ANY PART THEREOF, WHETHER OR NOT DISCOVERABLE; (4) THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK, OR COPYRIGHT, OR THE LIKE; OR (5) THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, OR ANY OTHER IMPLIED REPRESENTATION OR WARRANTY WHATSOEVER WITH RESPECT TO THE AIRFRAME, ANY ENGINE, OR ANY PART THEREOF. 4.2 CERTAIN AGREEMENTS OF LESSOR Unless a Lease Event of Default exists, Lessor agrees to make available to Lessee such rights as Lessor may have under any warranty with respect to the Aircraft made, or made available, by Airframe Manufacturer or Engine Manufacturer, or any of their subcontractors or suppliers, pursuant to and in accordance with the terms of the Purchase Agreement Assignment. 4.3 QUIET ENJOYMENT So long as no Lease Event of Default exists, Lessor shall not interfere with Lessee's rights hereunder to continued possession, use, and operation of, and quiet enjoyment of, the Aircraft during the Term. 4.4 INVESTMENT OF FUNDS HELD AS SECURITY 4.4.1 INVESTMENT Any money required to be paid to or retained by Lessor that is required to be paid to Lessee or applied as provided herein shall, until paid to Lessee as provided herein or applied as provided herein, be invested by Lessor from time to time as directed in writing by Lessee (or, if Lessee does not so direct, by or as directed by Lessor in its sole discretion) and at Lessee's risk and expense in Cash Equivalents so long as such Cash Equivalents specified by Lessee or Lessor (as applicable) can be acquired by Lessor using its reasonable best efforts; PROVIDED, that so long as the Lien of the Mortgage has not been discharged, such money shall be invested and held by Mortgagee, as assignee of Lessor, in accordance with this Lease, and upon discharge of such Lien, Mortgagee shall pay any such money held by it to Lessor to be held and invested in accordance with this ss. 4.4.1. 4.4.2 PAYMENT OF GAIN OR LOSS Any net gain (including interest received) realized as the result of investments pursuant to ss. 4.4.1 (net of any fees, commissions, and other reasonable expenses incurred in connection with such investment) shall be held and applied in the same manner as the principal amount is to be held and applied hereunder. Lessee will promptly pay to Lessor, on demand, the amount of any loss realized as the result of any such investment (together with any fees, commissions, and other reasonable expenses incurred in connection with such investment), such amount so paid to be held and applied by Lessor as contemplated in ss. 4.4.1. 4.4.3 LIMITATION OF LIABILITY All investments under this ss. 4.4 shall be at Lessee's risk and expense, and Lessor and Mortgagee shalL not be liable for any loss resulting from any investment made under this ss. 4.4 other than by reason of itS willful misconduct or gross negligence. Any such investment may be sold (without regard to its maturity) by Lessor without instructions whenever such sale is necessary to make a distribution required by this Lease. 4.5 TITLE TRANSFERS BY LESSOR If Lessor shall be required to transfer title to the Aircraft, the Airframe, or any Engine to Lessee or any other Person pursuant to this Lease, then (a) Lessor shall (1) transfer to Lessee or such other Person (as applicable) all of Lessor's right, title and interest in and to the Aircraft, the Airframe, or such Engine (as applicable), free and clear of all Lessor Liens attributable to Lessor, FSB, or Owner Participant, (2) so long as the Lien of the Mortgage has not been discharged, comply with the Mortgage relating to the release of the Aircraft, the Airframe, or such Engine, (3) assign to Lessee or such other Person (as applicable), if and to the extent permitted under the Purchase Agreement, all warranties of Airframe Manufacturer and Engine Manufacturer with respect to the Aircraft, the Airframe, or such Engine, and (4) assign to Lessee or such other Person (as applicable), if and to the extent permitted, all claims, if any, for damage to the Aircraft, the Airframe, or such Engine, in each case free of Lessor Liens attributable to Lessor, FSB, or Owner Participant, and without recourse or warranty of any kind whatsoever (except as to the transfer described in clause (1) above and as to the absence of such Lessor Liens), and (b) Lessor shall promptly deliver to Lessee or such other Person (as applicable), a bill of sale and agreements of assignment, evidencing such transfer and assignment, and such other instruments of transfer, all in form and substance reasonably satisfactory to Lessee (or such other Person, as applicable), as Lessee (or such other Person, as applicable) may reasonably request and furnish to Lessor. 4.6 LESSOR'S INTEREST IN CERTAIN ENGINES Lessor hereby agrees for the benefit of each lessor, conditional seller, or secured party of any engine (other than an Engine) leased, purchased, or owned by Lessee or any Permitted Sublessee subject to a lease, conditional sale, or other security agreement that Lessor will not acquire or claim, as against such lessor, conditional seller, or secured party, any right, title, or interest in such engine as the result of the installation of such engine on the Airframe at any time while such engine is subject to such lease, conditional sale, or other security agreement and owned by such lessor or conditional seller or subject to a security interest in favor of such secured party. 4.7 LEASE FOR U.S. FEDERAL INCOME TAX LAW PURPOSES; SECTION 1110 OF BANKRUPTCY CODE (a) Lessee and Lessor agree that this Lease is, and shall be treated as, a lease for U.S. federal income tax purposes of the Aircraft, Airframe, Engines, and Parts. (b) Lessee and Lessor intend that Lessor (and Mortgagee as assignee of Lessor under the Mortgage) shall be entitled to the benefits of Section 1110 with respect to the right to take possession of the Aircraft, Airframe, Engines, and Parts as provided in this Lease. 5. RETURN OF AIRCRAFT 5.1 COMPLIANCE WITH ANNEX B Lessee shall comply with each of the provisions of Annex B, which provisions are hereby incorporated by this reference as if set forth in full herein. 5.2 PARKING AND RELATED MATTERS If Lessor gives written notice to Lessee, not less than 10 days nor more than 120 days before the end of the Term, requesting parking of the Aircraft upon its return hereunder, Lessee will assist Lessor in procuring (or cause Lessor to be provided with) outdoor parking facilities for the Aircraft for a storage period up to 30 days, starting on the date of such return, and upon Lessor's request to Lessee made at least 10 days before the end of such initial 30-day period, for an additional 90-day period commencing upon expiration of such initial period, at such storage facility in the 48 contiguous states of the United States as Lessee selects. Such storage shall be at Lessor's risk, and Lessor shall pay all applicable storage fees, except that Lessee shall pay the parking fees for the initial 30-day storage period; PROVIDED FURTHER that Lessee's obligation to provide parking shall be subject to Lessor's entering into an agreement with the storage facility, before the storage period begins, providing that Lessor shall bear all maintenance charges and other costs incurred, and that Lessee's obligations hereunder will be solely for the payment of parking fees for the initial 30-day period pursuant to the terms of this ss. 5.2. Unless Lessor and Lessee otherwise agree, the location of such parking wilL also constitute the return location for the Aircraft. 5.3 RETURN OF OTHER ENGINES If any Engine owned by Lessor is not installed on the Airframe at the time of return hereunder, Lessee shall return the Airframe hereunder with a Replacement Engine meeting the requirements of, and in accordance with, ss. 10 and Annex B. Thereupon, Lessor will transfer to Lessee the Engine constituting part of such AircrafT but not installed on such Airframe at the time of the return of the Airframe. 5.4 FUEL Upon the return of the Airframe upon any termination of this Lease, Lessor shall pay Lessee, as compensation for any fuel or oil contained in the fuel or oil tanks of such Airframe, the value of such fuel or oil at the price paid by Lessee for such fuel or oil. However, if the Aircraft is being returned in connection with the exercise of remedies pursuant to ss. 15, Lessor shall have no obligation to make such payment to LesseE until Lessor shall have been paid all amounts due to it pursuant to ss. 15. 6. LIENS Lessee shall not, directly or indirectly, create, incur, assume, or suffer to exist any Lien on or with respect to the Aircraft, the Airframe, any Engine, or any Part, title to any of the foregoing, or any interest therein, or Lessee's rights in and to this Lease or any Permitted Sublease, except (a) the rights of Lessor, Mortgagee, the Participants, and Lessee under the Operative Agreements, and of any Permitted Sublessee under any Permitted Sublease; (b) Lessor Liens; (c) the rights of others under agreements or arrangements to the extent permitted by ss. 7.2, ss. 7.3, or Annex C; (d) Liens for Taxes either not yet due or being contested in good faith by appropriate proceedings if such Liens and such proceedings do not involve more than a DE MINIMIS risk of the sale, forfeiture, or loss of the Aircraft, the Airframe, any Engine, or the interest of any Participant therein, or impair the Lien of the Mortgage; (e) materialmen's, mechanics', workers', repairers', employees', or other like Liens arising in the ordinary course of business for amounts the payment of which either is not yet delinquent for more than 60 days or is being contested in good faith by appropriate proceedings, if such Liens and such proceedings do not involve any more than a DE MINIMIS risk of the sale, forfeiture, or loss of the Aircraft, the Airframe, any Engine, or the interest of any Participant therein, or impair the Lien of the Mortgage; (f) Liens arising out of any judgment or award against Lessee, if, within 60 days after the entry thereof, that judgment or award is discharged or vacated, or has its execution stayed pending appeal, or is discharged, vacated, or reversed within 60 days after the expiration of such stay, and if during any such 60-day period there is not, or any such judgment or award does not involve, more than a DE MINIMIS risk of the sale, forfeiture, or loss of the Aircraft, the Airframe, any Engine, or the interest of any Participant therein, or impairment of the Lien of the Mortgage; and (g) any other Lien with respect to which Lessee or any Permitted Sublessee provides a bond, cash collateral, or other security adequate in the reasonable opinion of Lessor. Lessee shall promptly take or cause to be taken such action as may be necessary duly to discharge (by bonding or otherwise) any Lien not excepted above that arises in respect of the Aircraft, the Airframe, any Engine, or any Part during the Term. 7. REGISTRATION; OPERATION; POSSESSION AND SUBLEASING 7.1 REGISTRATION AND OPERATION 7.1.1 REGISTRATION AND RECORDATION Subject to Lessor's and Owner Participant's compliance with their obligations under ss. 13 of thE Participation Agreement, Lessee shall cause the Aircraft to be, and at all times during the Term to remain, duly registered with the FAA under the Transportation Code or with such other country of registry as shall be permitted under ss. 7.1.2 hereof, in the name of Lessor as owner and lessor (except to the extent that sucH registration under the Transportation Code is prevented or lost because of Lessor's or Owner Participant's failure to comply with the citizenship requirements for registration of the Aircraft under the Transportation Code). Lessor shall execute and deliver all such documents as Lessee or any Permitted Sublessee reasonably requests for the purpose of effecting and continuing such registration. Unless Mortgagee has given Lessee notice that the Mortgage has been discharged, Lessee shall also cause the Mortgage to be duly recorded and at all times maintained of record as a first-priority perfected mortgage (subject to Permitted Liens) on the Aircraft, the Airframe, and each of the Engines (except to the extent such perfection or priority cannot be maintained solely as a result of the failure by Lessor or Mortgagee to execute and deliver any necessary documents). Each of the registrations and recordations referenced in this ss. 7.1.1 will be at Lessee's cost and expense, except aS otherwise provided in this Lease. 7.1.2 REREGISTRATION After the Tax Attribute Period (or before such date, provided Lessee pre-pays on a lump-sum basis any liability due under the Tax Indemnity Agreement as a result of such registration on the assumption that such registration would continue for the remainder of the term of the Permitted Sublease described in ss. 7.6.11(a)(3) of the Participation Agreement, if no Special Default or Lease Event of Default exists, Lessee may, by written notice to Lessor (with a copy of such notice to Owner Participant), request to change the country of registration of the Aircraft. Any such change in registration shall be effected only in compliance with, and subject to all of the conditions set forth in, ss. 7.6.11 of the Participation Agreement. 7.1.3 MARKINGS If permitted by applicable Law, on or reasonably promptly after the Delivery Date, Lessee will cause to be affixed to, and maintained in, the cockpit of the Airframe and on each Engine, in each case in a clearly visible location, a placard of a reasonable size and shape bearing the legend set forth in Schedule 6. Such placards may be removed temporarily, if necessary, in the course of maintenance of the Airframe or Engines. If any such placard is damaged or becomes illegible, Lessee shall promptly replace it with a placard complying with the requirements of this ss. 7.1.3. 7.1.4 COMPLIANCE WITH LAWS Lessee shall not, and shall not allow any other Person to, operate, use, maintain, service, repair, overhaul, improve, or modify the Aircraft (a) in violation of any Law binding on or applicable to the Aircraft, the Airframe, or any Engine, or (b) in violation of any airworthiness certificate, license, or registration of any Government Entity relating to the Aircraft, the Airframe, or any Engine, except (1) immaterial or non-recurring violations with respect to which corrective measures are taken promptly by Lessee or a Permitted Sublessee (as applicable) upon discovery thereof, and (2) to the extent Lessee or any Permitted Sublessee is contesting the validity or application of any such Law or requirement relating to any such certificate, license, or registration in good faith in any reasonable manner which does not involve more than a DE MINIMIS risk of the sale, forfeiture, or loss of the Aircraft, the Airframe, any Engine or the interest of any Participant therein, any risk of criminal liability or of material civil penalty against Lessor, Mortgagee, or any Participant or impair the lien of the Mortgage. 7.1.5 OPERATION Lessee agrees not to operate, use, or locate the Aircraft, the Airframe, or any Engine, or allow the Aircraft, the Airframe, or any Engine to be operated, used, or located, (a) in any area excluded from coverage by any insurance required by the terms of ss. 11, except in the case of a requisition by the U.S. Government where thE U.S. Government provides an indemnity in lieu of such insurance, or insurance from the U.S. Government, covering such area, in accordance with ss. 11.3, or (b) in any recognized area of hostilities unless fully covered iN accordance with Annex D by war-risk insurance as required by the terms of ss. 11 (including ss. 11.3), unless in Any case referred to in this ss. 7.1.5 the Aircraft is only temporarily operated, used, or located in such area as A result of an emergency, equipment malfunction, navigational error, hijacking, weather condition, or other similar unforeseen circumstances, so long as Lessee diligently and in good faith proceeds to remove the Aircraft from such area. 7.2 POSSESSION Lessee will not, without the prior written consent of Lessor and Owner Participant, sublease or otherwise in any manner deliver, transfer, or relinquish possession of the Aircraft, the Airframe, or any Engine, or install any Engine, or permit any Engine to be installed, on any airframe other than the Airframe; PROVIDED, that, subject to the provisions of ss. 7.3, Lessee may, without such prior written consent: 7.2.1 INTERCHANGE AND POOLING Subject or permit any Permitted Sublessee to subject (a) the Airframe to normal interchange agreements (provided that (1) any such interchange agreement does not contemplate that Lessee (or a Permitted Sublessee) will be out of possession of the Airframe for more than five consecutive days at a time (absent weather, maintenance, or other exigencies), and (2) the party to such interchange agreement is a Permitted Air Carrier, not in bankruptcy, organized and having its principal place of business in a country with which the United States then maintains normal diplomatic relations and which recognizes and gives effect to the rights, title, and interests of Lessor in the Airframe), or (b) any Engine (but only if such Engine is then installed upon an aircraft) to normal interchange agreements or pooling agreements or arrangements, in each case customary in the commercial airline industry and entered into by Lessee or such Permitted Sublessee in the ordinary course of business; PROVIDED, that (1) no such agreement or arrangement shall require any transfer of Lessor's title to the Airframe or such Engine, and (2) if Lessor's title to any such Engine is nevertheless divested under any such agreement or arrangement, then such Engine shall be deemed to have suffered an Event of Loss as of the date of such divestiture, and Lessee shall be required to replace such Engine with a Replacement Engine meeting the requirements of, and in accordance with, ss. 10. 7.2.2 TESTING AND SERVICE Deliver or permit any Permitted Sublessee to deliver possession of the Aircraft, the Airframe, any Engine, or any Part (a) to the manufacturer thereof or to any third-party maintenance provider, for testing, service, repair, maintenance, or overhaul work on the Aircraft, Airframe, any Engine, or any Part, or, to the extent required or permitted by the terms of Annex C, for alterations or modifications in or additions to the Aircraft, the Airframe, or any Engine, or (b) to any Person for the purpose of transport to a Person referred to in the preceding clause (a). 7.2.3 TRANSFER TO U.S. GOVERNMENT Transfer or permit any Permitted Sublessee to transfer possession of the Aircraft, the Airframe, or any Engine to the U.S. Government pursuant to CRAF or otherwise, in which event Lessee shall promptly notify Lessor and Mortgagee in writing of any such transfer of possession (and, in the case of any transfer pursuant to CRAF, in such notification shall identify by name, address, and telephone numbers the Contracting Office Representative(s) for the Military Airlift Command of the United States Air Force to whom notices must be given and to whom requests or claims must be made to the extent applicable under CRAF). 7.2.4 INSTALLATION OF ENGINES ON OWNED AIRCRAFT Install or permit any Permitted Sublessee to install an Engine on an airframe owned by Lessee or such Permitted Sublessee free and clear of all Liens except (a) Permitted Liens, (b) Liens that do not apply to the Engines, and (c) the rights of third parties under normal interchange or pooling agreements and arrangements of the type permitted under ss. 7.2.1. 7.2.5 INSTALLATION OF ENGINES ON OTHER AIRFRAMES Install or permit any Permitted Sublessee to install an Engine on an airframe leased to Lessee or such Permitted Sublessee, or purchased or owned by Lessee or such Permitted Sublessee subject to a security agreement, conditional sale, or other secured financing arrangement, but only if (a) such airframe is free and clear of all Liens except (1) the rights of the parties to such lease or secured financing arrangement, covering such airframe, and (2) Liens of the type permitted by clauses (a) and (b) of ss. 7.2.4, and (b) Lessee or such Permitted Sublessee has received from the lessor, secured party, oR conditional seller, in respect of such airframe, a written agreement (which may be a copy of the lease, security agreement, conditional sale agreement, or other agreement covering such airframe), whereby such Person agrees that it will not acquire or claim any right, title, or interest in, or Lien on, such Engine by reason of the installation of such Engine on such airframe at any time while such Engine is subject to this Lease or is owned by Lessor. 7.2.6 INSTALLATIONS OF ENGINES ON FINANCED AIRCRAFT Install or permit any Permitted Sublessee to install an Engine on an airframe owned by Lessee or such Permitted Sublessee, leased to Lessee or such Permitted Sublessee, or purchased or owned by Lessee or such Permitted Sublessee subject to a conditional sale or other security agreement under circumstances where neither ss. 7.2.4 nor ss. 7.2.5 applies; PROVIDED, that any such installation shall be deemed an EvEnt of Loss with respect to such Engine, and Lessee shall comply with ss. 10.2 in respect thereof. UntiL ss. 10.2 has been fully complied with, Lessor's interest in such Engine shall continue in full force anD effect. 7.2.7 SUBLEASING With respect to the Aircraft, the Airframe, or any Engine, if no Special Default or Lease Event of Default exists, enter into a sublease with any Permitted Air Carrier, but only if: (a) Lessee provides written notice to Lessor (with a copy to Owner Participant) and Mortgagee (such notice in the event of a sublease to a U.S. Air Carrier to be given promptly after entering into any such sublease, and, in the case of a sublease to any other Permitted Air Carrier, 10 Business Days in advance of entering into such sublease); (b) at the time that Lessee enters into such sublease, such Permitted Air Carrier shall not be subject to any bankruptcy, insolvency, liquidation, reorganization, dissolution, or similar proceeding, and shall not have substantially all of its property in the possession of any liquidator, trustee, receiver, or similar Person; (c) any such sublease (1) shall not extend beyond the expiration of the Base Term or any Renewal Term then in effect or irrevocably committed to by Lessee, or contain a purchase option, unless expressly subject to Lessee's exercise of its renewal or purchase options in accordance with the terms of ss. 17, and in any event subject to the requirements of clause (4) of this ss. 7.2.7(c), (2) shall Not contain any purchase option exercisable at a date earlier than such date permitted under ss. 17.3, (3) shall explicitly require that sublessee or sublessor (or both with specified allocations) will fully comply with the Lease's maintenance, operation, possession, inspection, and insurance requirements, and (4) shall be expressly subject and subordinate to all the terms of this Lease and to Lessor's rights, powers, and remedies hereunder, including Lessor's rights under ss. 15 to repossess the Aircraft and tO terminate such sublease if a Lease Event of Default exists; (d) in connection with a sublease to a Permitted Foreign Air Carrier, (1) the United States maintains diplomatic relations with the country of domicile of such Permitted Foreign Air Carrier, and (2) Lessee furnishes to Lessor, Owner Participant and Mortgagee a favorable opinion of counsel, reasonably satisfactory to Lessor and Owner Participant (and, so long as the Policy is in effect, to Mortgagee), located in the country of domicile of such Permitted Foreign Air Carrier, that (aa) the terms of such sublease are legal, valid, and binding obligations of the parties thereto, enforceable under the laws of such jurisdiction, (bb) it is not necessary for Owner Participant, Lessor, or Mortgagee to register or qualify to do business in such jurisdiction, if not already so registered or qualified, as a result of the proposed sublease, (cc) Lessor's title to, and Mortgagee's first-priority Lien in respect of, the Aircraft, Airframe, and Engines will be recognized in such jurisdiction, (dd) the Laws of such jurisdiction of domicile require fair compensation by the government of such jurisdiction, payable in a currency freely convertible into Dollars, for the loss of title to the Aircraft, Airframe, or Engines in the event of the requisition by such government of such title (unless Lessee provides insurance in the amounts required with respect to hull insurance under ss. 11 covering thE requisition of title to the Aircraft, Airframe, or Engines by the government of such jurisdiction so long as the Aircraft, Airframe, or Engines are subject to such sublease), (ee) such Permitted Air Carrier's agreement that its rights under the sublease are subject and subordinate to all the terms of this Lease is enforceable against such Permitted Air Carrier under applicable Law, and (ff) such sublease will subject Lessor, Mortgagee, and Owner Participant to no greater tort liability than in the United States of America, OR, if such sublease will subject Lessor, Mortgagee, or Owner Participant to greater tort liability than in the United States of America, Lessee (or Permitted Sublessee) has provided insurance to insure against such additional liability; (e) Lessee furnishes to Lessor, Mortgagee, and Owner Participant evidence reasonably satisfactory to Lessor that the insurance required byss. 11 remains in effect; (f) all necessary documents are duly filed, registered, or recorded in such public offices as are required fully to preserve the title of Lessor, and the first-priority security interest (subject to Permitted Liens) of Mortgagee, in the Aircraft, Airframe, and Engines; (g) Lessee shall reimburse Lessor, Mortgagee, and Owner Participant for all of their reasonable out-of-pocket fees and expenses (including reasonable fees and disbursements of counsel) incurred in connection with any such sublease; (h) no such sublease shall be made to a "tax exempt entity" as defined in ss. 168(h)(2) oF the Code, including a Permitted Foreign Air Carrier, before the end of the Tax Attribute Period unless Lessee prepays on a lump-sum basis any liability due under the Tax Indemnity Agreement as a result of such sublease based upon the assumption that such sublease were to continue for the remainder of the term of such sublease; (i) no such sublease will adversely affect Lessor's or Mortgagee's protection under Section 1110; (j) no such sublease shall permit the Permitted Sublessee thereunder to sub-sublease or transfer the Airframe or any Engine, except for transfers by a Permitted sublessee permitted by the foregoing provisions of this ss. 7.2, and except that a Permitted Sublessee who is a manufacturer maY sub-sublease to any Person to whom a sublease would be permitted under this ss. 7.2.7; PROVIDED, that (1) such sub-sublease shall not permit any sub-sub-subleasing of the Aircraft, the Airframe, or any Engine, and (2) such sub-sublease must meet the requirement of a Permitted Sublease; (k) if the term of such Sublease is greater than one year, Lessee will assign such Sublease to Lessor as security for Lessee's obligations hereunder. 7.3 CERTAIN LIMITATIONS ON SUBLEASING OR OTHER RELINQUISHMENT OF POSSESSION Notwithstanding anything to the contrary in ss. 7.2: (a) The rights of any Person who receives possession of the Aircraft in accordance with ss. 7.2 shalL be subject and subordinate to all the terms of this Lease, and to Lessor's rights, powers, and remedies hereunder, including (1) Lessor's right to repossess the Aircraft pursuant to ss. 15, (2) Lessor's right tO terminate and avoid such sublease, delivery, transfer, or relinquishment of possession if a Lease Event of Default exists, and (3) the right to require such Person to deliver the Aircraft, Airframe, and Engines forthwith if a Lease Event of Default exists. (b) Lessee shall remain primarily liable hereunder for the performance of all the terms of this Lease to the same extent as if such transfer had not occurred, and no transfer of possession of the Aircraft, the Airframe, any Engine, or any Part shall in any way discharge or diminish any of Lessee's obligations to Lessor hereunder or under any other Operative Agreement. (c) Lessee shall ensure that no sublease, delivery, transfer, or relinquishment permitted under ss. 7.2 shall affect the United States registration of the Aircraft, unless also made in accordance with thE provisions of ss. 7.1.2. (d) Any event that constitutes or would, with the passage of time, constitute an Event of Loss under clause (3), (4), or (5) of the definition of such term (as set forth in Annex A) shall not be deemed to violate the provisions of ss. 7.2. (e) No Wet Lease shall constitute a delivery, transfer, or relinquishment of possession for purposes of ss. 7.2, nor shall it be prohibited by the terms hereof. 8. MAINTENANCE; REPLACEMENT AND POOLING OF PARTS; ALTERATIONS, MODIFICATIONS, AND ADDITIONS; OTHER LESSEE COVENANTS 8.1 MAINTENANCE; REPLACEMENT AND POOLING OF PARTS; ALTERATIONS, MODIFICATIONS, AND ADDITIONS At all times during the Term, Lessee shall comply with (or cause to be complied with) each of the provisions of Annex C, which provisions are hereby incorporated by this reference as if set forth in full herein. 8.2 INFORMATION, CERTIFICATES, NOTICES, AND REPORTS 8.2.1 FINANCIAL INFORMATION Lessee will furnish to Lessor and Owner Participant: (a) within 90 days after the end of each of the first three fiscal quarters in each fiscal year of Lessee, a consolidated balance sheet of Lessee and Guarantor as of the end of such quarter, and related statements of income and cash flows for the period commencing at the end of the previous fiscal year and ending with the end of such quarter, setting forth in each case in comparative form the corresponding figures for the corresponding period in the preceding fiscal year, prepared in accordance with GAAP; PROVIDED, that while Lessee or Guarantor is subject to the reporting requirements of the Securities Exchange Act of 1934, a copy of Lessee's or Guarantor's report on Form 10-Q for such fiscal quarter (excluding exhibits) will satisfy this clause (a). (b) within 120 days after the end of each fiscal year of Lessee, a consolidated balance sheet of Lessee and Guarantor as of the end of such fiscal year and related statements of income and cash flows of Lessee and Guarantor for such fiscal year, in comparative form with the preceding fiscal year, prepared in accordance with GAAP, together with a report of Lessee's and Guarantor's independent certified public accountants with respect to their audit of such financial statements; PROVIDED, that while Lessee or Guarantor is subject to the reporting requirements of the Securities Exchange Act of 1934, a copy of Lessee's or Guarantor's report on Form 10-K for such fiscal year (excluding exhibits) will satisfy this clause (b). 8.2.2 ANNUAL CERTIFICATE Within 120 days after the close of each fiscal year of Lessee, Lessee shall deliver to Lessor, Owner Participant, and Mortgagee an Officer's Certificate of Lessee to the effect that such officer is familiar with or has reviewed or caused to be reviewed the relevant terms of this Lease and the other Lessee Operative Agreements, and that such officer does not have knowledge of the existence as at the date of such certificate of any Lease Event of Default (or, if any Lease Event of Default exists, specifying the nature and period of existence thereof and the action Lessee has taken or is taking or proposes to take with respect thereto). 8.2.3 INFORMATION FOR FILINGS Lessee shall promptly furnish to Owner Participant or Lessor such information (other than with respect to the citizenship of Owner Participant and Lessor) within Lessee's or any Permitted Sublessee's possession, or reasonably available to or obtainable by Lessee or such Permitted Sublessee, as may be required to enable Lessor to file in a timely manner any reports required to be filed by it as lessor under the Lease or to enable Owner Participant to file in a timely manner any reports required to be filed by it as the beneficiary of the Trust Estate, in either case, with any Government Entity because of, or in connection with, the interest of Owner Participant or Lessor in the Aircraft, this Lease, or any other part of the Trust Estate; PROVIDED, that, with respect to any such information which Lessee reasonably deems commercially sensitive or confidential, Owner Participant or Lessor (as applicable) shall afford Lessee a reasonable opportunity (to the extent reasonably obtainable) to seek from any such Government Entity a waiver of the obligation of Owner Participant or Lessor to file any such information, or shall consent to the filing of such information directly by Lessee in lieu of filing by Owner Participant or Lessor, and if any such waiver or consent is evidenced to the reasonable satisfaction of Owner Participant or Lessor (as applicable), then Lessee shall not be required to furnish such information to Owner Participant or Lessor. 8.2.4 OTHER INFORMATION Lessee shall provide to Owner Participant from time to time such other information or data as Owner Participant reasonably requests concerning the Aircraft, Lessee's financial condition, or otherwise relating to the transactions or matters contemplated in the Operative Agreements, in each case to the extent within Lessee's or any Permitted Sublessee's possession, or reasonably available to or obtainable by Lessee or such Permitted Sublessee. 9. VOLUNTARY TERMINATION UPON OBSOLESCENCE 9.1 RIGHT OF TERMINATION (a) Provided there is then no Special Default or Lease Event of Default, Lessee shall have the right at its option to terminate this Lease during the Base Term, effective only on a Termination Date occurring on or after the seventh anniversary of the Delivery Date, if: (1) Lessee makes a good faith determination that the Aircraft either has become economically obsolete or is surplus to Lessee's requirements, and Lessee's Chief Financial Officer or Treasurer so certifies in writing to Lessor; and (2) Lessee provides Lessor (with a copy to Owner Participant) with written notice of Lessee's exercise of such termination option not less than 180 days and not more than 360 days before the Termination Date specified in such notice. (b) Lessor shall notify Lessee and Mortgagee of Lessor's intention to sell or retain the Aircraft, as provided in this ss. 9, not less than 120 days before the Termination Date specified in the written noticE pursuant to ss. 9.1(a)(2). Any failure by Lessor to give such notice of its election shall be deemed to be aN election to sell the Aircraft, as provided in this ss. 9. (c) In the event of any termination pursuant to this ss. 9, Lessee shall not acquire additionaL 737-800 aircraft during the 24 months following such termination, except to replace any lost or damaged aircraft or under short-term operating leases, and Lessee shall notify Lessor in the event Lessee plans to enter into such an operating lease to discuss the possible re-lease of the Aircraft from Lessor to Lessee under such short-term operating lease. 9.2 ELECTION BY LESSOR TO SELL 9.2.1 BIDS; CLOSING OF SALE Unless Lessor has notified Lessee of Lessor's election to retain the Aircraft, Lessee, as agent for Lessor, shall, until the date ten Business Days before the Termination Date, use commercially reasonable efforts to obtain bids for a cash purchase of the Aircraft, and Lessor may, if it desires to do so, also seek to obtain such bids. If Lessee receives any bid, Lessee shall promptly, and in any event at least ten Business Days before the Termination Date, certify to Lessor in writing the amount and terms of such bid, and the name and address of the Person (who shall not be Lessee or any Affiliate of Lessee or any Person with whom Lessee or any such Affiliate has an arrangement for the future use of the Aircraft by Lessee or any such Affiliate) submitting such bid. If Lessor receives any bid on or before the date ten Business Days before the Termination Date, Lessor shall, at least ten Business Days before the Termination Date, certify to Lessee in writing the amount and terms of such bid, and the name and address of the Person submitting such bid. 9.2.2 CLOSING OF SALE (a) On the Termination Date (1) Lessee shall deliver the Airframe and Engines or engines constituting part of the Aircraft to the bidder (if any) who shall have submitted the highest cash bid on or before the date ten Business Days before such Termination Date, in the same manner as if delivery were made to Lessor pursuant to ss. 5 and Annex B and in full compliance with the terms thereof, and shall duly transfer tO Lessor title to any such engines not owned by Lessor, all in accordance with the terms of ss. 5 and Annex B, anD (2) Lessor shall simultaneously therewith transfer the Airframe and Engines or engines to such bidder, in the manner described in ss. 4.5, against cash paid to Lessor in the amount of such highest bid and in the manner and iN funds of the type specified in ss. 3.3. (b) All proceeds of any sale described in ss. 9.2.2(a) shall be paid to and retained by Lessor and, on such Termination Date, and as a condition precedent to such sale and the delivery of the Aircraft and Engines or engines to such bidder, Lessee shall pay to Lessor, in the manner and in funds of the type specified in ss. 3.3: (1) all unpaid Basic Rent due at any time before such Termination Date; plus (2) the excess (if any) of the Termination Value for the Aircraft, computed as of such Termination Date, over the proceeds of such sale; plus (3) as provided in ss. 3.2.2, interest on the amounts specified in the foregoing clausE (1) at the Past-Due Rate from and including the date on which any such amount was due to the date of payment of such amount in full. As a further condition precedent to such sale and delivery, Lessee shall pay all Supplemental Rent due by Lessee to Lessor, Mortgagee, or the Participants under this Lease (including (aa) Supplemental Rent in respect of Make-Whole Amount (if any) payable pursuant to ss. 2.11(b) of the Mortgage in connection with a prepayment oF the Equipment Notes upon such sale, (bb) all interest charges provided for hereunder or under any other Lessee Operative Agreement with respect to the late payment of any amounts so payable, (cc) all reasonable and previously-invoiced out-of-pocket fees and expenses (including reasonable fees and expenses of counsel, but excluding brokerage commissions payable to any Person not retained by Lessee) incurred by Lessor, Mortgagee, and Owner Participant in connection with such sale and the related termination of this Lease), (dd) all previously-invoiced commissions payable to any Person retained by Lessee in connection with such sale, and (ee) all sales, transfer, or similar Taxes then due with respect to such sale). To the extent not invoiced or due on the Termination Date, Lessee shall pay in due course the obligations described in the foregoing clauses (cc), (dd), and (ee). (c) Upon and subject to any such sale and receipt of proceeds by Lessor, and full and final payment of all amounts described in ss. 9.2.2(b), and compliance by Lessee with all the other provisions of this ss. 9.2, (1) Lessor will transfer to Lessee, in accordance with ss. 4.5, any Engines constitutinG part of the Aircraft but which were not then installed on the Airframe and sold therewith; and (2) the obligation of Lessee to pay Basic Rent, on or after the Payment Date with reference to which Termination Value is computed, shall cease, and the Term shall end effective as of the date of such sale. (d) A sale of the Aircraft pursuant to this ss. 9.2.2 shall take place only on a Termination Date. Subject to ss. 9.3, if no sale shall have occurred on or as of the proposed Termination Date, this Lease shalL continue in full force and effect, and all of Lessee's obligations shall continue, including its obligation to pay Rent, in each case, as if the notice under ss. 9.1 shall not have been given and, subject to ss. 9.2.3(a), LesSee may give another notice pursuant to ss. 9.1. (e) Lessor shall be under no duty to solicit bids, to inquire into the efforts of Lessee to obtain bids, or otherwise to take any action in connection with any such sale other than to transfer to the purchaser named in the highest bid referred to above (or to such purchaser and, in the case of Engines described in ss. 9.2.2(c), to Lessee) the Airframe and Engines or engines against receipt of the payments described in ss. 9.2.2(B) 9.2.3 WITHDRAWAL OF NOTICE OF TERMINATION (a) So long as Lessor has not elected to retain the Aircraft pursuant to ss. 9.1, Lessee may withdraW any notice given pursuant to ss. 9.1 at any time on or before the date five Business Days before the proposeD Termination Date, whereupon this Lease shall continue in full force and effect and all of Lessee's obligations shall continue, including its obligation to pay Rent, in each case as if the notice under ss. 9.1 were not given, and Lessee may give another notice pursuant to ss. 9.1; PROVIDED, that Lessee shall not be entitled to give morE than three termination notices pursuant to ss. 9.1 during the Term. (b) Lessee shall pay, on an after-tax basis, all reasonable out-of-pocket fees and expenses of Lessor (including reasonable fees and expenses of counsel), Mortgagee, and Owner Participant in connection with any notice of termination withdrawn by Lessee or in connection with any notice of termination pursuant to which a sale of the Aircraft fails to occur. 9.3 RETENTION OF AIRCRAFT BY LESSOR (a) If Lessor elects to retain the Aircraft in accordance withss. 9.1, on the Termination Date: (1) (aa) Lessor shall pay or cause to be paid, in the manner and in funds of the type specified in ss. 3.3, to the Mortgagee, an amount sufficient to prepay all outstanding Equipment NoteS pursuant to ss. 2.11(b) of the Mortgage, and (bb) Lessee shall pay any Make-Whole Amount then due; (2) subject to Mortgagee's receipt of the funds described in clause (1)(aa) of this ss. 9.3(a), Lessee shall deliver the Airframe and Engines or engines constituting part of the Aircraft tO Lessor pursuant to ss. 5 and Annex B and in full compliance with the terms thereof, and shall dulY transfer to Lessor title to any such engines not owned by Lessor, all in accordance with the terms of ss. 5 and Annex B; (3) Lessee shall pay to Lessor, in the manner and in funds of the type specified inss. 3.3: (aa) all unpaid Basic Rent due at any time before such Termination Date; plus (bb) any Make-Whole Amount due as a result of the prepayment of all outstanding Equipment Notes pursuant toss. 2.11(b) of the Mortgage; plus (cc) as provided in ss. 3.2.2, interest on the amounts specified in the foregoinG clauses (aa) and (bb) at the Past-Due Rate from and including the date on which any such amount was due to the date of payment of such amount in full; and (4) Lessee shall also pay all Supplemental Rent due and payable by Lessee to Lessor, Mortgagee, or any Participant under this Lease, including all interest charges provided for hereunder or under any other Lessee Operative Agreement with respect to the late payment of any amounts so payable, and the reasonable out-of-pocket fees and expenses incurred by Lessor, Mortgagee, and Owner Participant in connection with such termination and delivery of the Airframe and Engine or engines (excluding brokerage commissions and similar expenses payable to any Person(s) not retained by Lessee). (b) Upon full and final payment to Lessor, Mortgagee, and the Participants of the amounts described in ss. 9.3(a)(1), and (3) and (4), and compliance by Lessee with all the applicable provisions of ss. 9.3(a)(2), (1) Lessor will transfer to Lessee, in accordance with ss. 4.5, any Engines constitutinG part of the Aircraft but which were not then installed on the Airframe and sold therewith; and (2) Lessee's obligation to pay Basic Rent otherwise due on or after the Termination Date shall cease, and the Term for the Aircraft shall end effective as of such Termination Date. 10. LOSS, DESTRUCTION, REQUISITION, ETC. 10.1 EVENT OF LOSS TO THE AIRCRAFT 10.1.1 NOTICE AND ELECTION (a) If an Event of Loss to the Airframe (and any Engine(s) installed thereon) occurs, Lessee shall promptly (and in any event within 15 days after such occurrence) notify Lessor, Owner Participant and Mortgagee of such Event of Loss. Within 60 days after such occurrence, Lessee shall give to Lessor (with a copy to Owner Participant) and Mortgagee written notice of Lessee's election to make payment in respect of such Event of Loss, as provided in ss. 10.1.2, or to replace the Airframe and any such Engine(s) as provided in ss. 10.1.3. (b) Lessee's failure to give the notice of election described in ss. 10.1.1(a) shall be deemed to bE an election of the option set forth in ss. 10.1.2. In addition, Lessee shall not be entitled to elect the optioN set forth in ss. 10.1.3 if, at the time Lessor receives such notice from Lessee or on the replacement date, A Special Default or a Lease Event of Default exists. (c) For purposes of ss. 10.1.2, an Event of Loss to the Airframe shall be deemed to constitute aN Event of Loss to the Aircraft. For purposes of ss. 10.1.3, any Engine not actually suffering an Event of LosS shall not be required to be replaced. 10.1.2 PAYMENT OF LOSS AND TERMINATION OF LEASE (a) If Lessee elects, in accordance with ss. 10.1.1, to make payment in respect of any such Event oF Loss, then Lessee shall pay, in the manner and in funds of the type specified in ss. 3.3, the following amounts: (1) on the date (the "LOSS PAYMENT DATE") that is the earlier of (x) the Stipulated Loss Value Date first following the 75th day following the date of the occurrence of such Event of Loss, and (y) the Stipulated Loss Value Date first following the fourth Business Day following the receipt of the insurance proceeds with respect to such occurrence (but in any event not earlier than the date of Lessee's election under ss. 10.1.1 to make payment under this ss. 10.1.2), Lessee shall pay to Lessor: (aa) all unpaid Basic Rent due at any time before the Loss Payment Date; plus [(bb) all Basic Rent due on the Loss Payment Date; plus] (cc) the Stipulated Loss Value computed as of the Stipulated Loss Value Date immediately preceding the Loss Payment Date (or, if the Loss Payment Date is a Stipulated Loss Value Date, the Loss Payment Date), plus (dd) if the Loss Payment Date is not a Stipulated Loss Value Date, an additional amount equal to interest, at the rate per annum equal to the SLV Rate, on the amount of the excess referred to in clause (cc) above for each day from and including the Stipulated Loss Value Date referred to in clause [(cc)] to but excluding the Loss Payment Date; plus (ee) as provided in ss. 3.2.2, interest on the amount specified in the foregoing clause (aa) at the Past-Due Rate from and including the date on which any such amount was due to the date of payment of such amount in full; and (2) on or before the date required for payment of the amounts specified in clause 10.1.2(a)(1), Lessee shall also pay to Lessor, Mortgagee, and the Participants all other amounts due and payable by Lessee to Lessor, Mortgagee, and the Participants under this Lease, the Participation Agreement, or any other Lessee Operative Agreement and, on an after-tax basis, all out-of-pocket fees and expenses (including reasonable fees and expenses of counsel) incurred by Lessor, each Participant, and Mortgagee in connection with such Event of Loss. (b) Upon payment in full of all amounts described in the foregoing ss. 10.1.2(a)(1), (1) Lessee'S liability for use of the Aircraft and obligation to pay Basic Rent hereunder with respect to the Aircraft shall terminate, (2) the Term for the Aircraft shall end, and (3) Lessor will transfer the Aircraft to Lessee, as-is and where-is, and subject to any insurer's salvage rights, but otherwise in the manner described in ss. 4.5. 10.1.3 REPLACEMENT OF AIRFRAME AND ENGINES (a) If Lessee elects, in accordance with ss. 10.1.1, to replace the Airframe and any Engine(s) suffering the Event of Loss, then Lessee shall, as promptly as possible and in any event within 120 days after the occurrence of such Event of Loss, convey or cause to be conveyed to Lessor, in compliance with ss. 10.3 and aS replacement for the Airframe and any such Engine(s), title to a Replacement Airframe (which shall comply with ss. 10.1.3(b)), and for each such Engine a Replacement Engine, in each case free and clear of all Liens other thaN Permitted Liens (PROVIDED, that if such conveyance occurs after the end of the Term, Lessee shall pay rent for the Aircraft from the end of the Term until return thereof pursuant to ss. 5 at a daily rate equal to the averagE daily Basic Rent or Renewal Rent, as applicable, over the Base Term or then-expiring Renewal Term, as applicable). If Lessee makes such election, but for any reason does not effect such replacement within such time period and in compliance with the requirements set forth in ss. 10.3, then Lessee shall be deemed to have initiallY made the election set forth in ss. 10.1.2 with the effect that Lessee shall pay, in the manner and in funds of thE type specified in ss. 3.3, the amounts required under, and in accordance with, ss. 10.1.2 (except that the tIme period for payment referenced in ss. 10.1.2(a)(1) shall, for the purposes of this ss. 10.1.3(a), in all cases be on the Stipulated Loss Value Date first following the 120th day following the date of the occurrence of such Event of Loss). (b) Any such Replacement Airframe shall be an airframe manufactured by the Airframe Manufacturer that is the same model as the Airframe to be replaced thereby, or an improved model, and that has a current value, estimated residual value, utility, and remaining economic useful life (without regard to hours or cycles remaining until the next regular maintenance check, provided no Special Default or Lease Event of Default then exists) at least equal to the Airframe to be replaced thereby (assuming that such Airframe had been maintained in accordance with this Lease), immediately prior to such Event of Loss and that has a year of manufacture no earlier than that of the Airframe to be replaced. Any such Replacement Engine shall meet the requirements of, and be conveyed by Lessee to Lessor in accordance with, ss. 10.2 (other than the notice requirement set forth iN ss. 10.2.1). 10.2 EVENT OF LOSS TO AN ENGINE; ENGINE EXCHANGES 10.2.1 NOTICE If an Event of Loss to an Engine occurs under circumstances in which no Event of Loss to the Airframe occurs, Lessee shall promptly (and in any event within 15 days after such occurrence) notify Lessor of such Event of Loss. 10.2.2 REPLACEMENT OF ENGINE Lessee shall, promptly and in any event within 60 days after the occurrence of such Event of Loss, convey or cause to be conveyed to Lessor, in compliance with ss. 10.3 and as replacement for the Engine witH respect to which any Event of Loss occurred, title to a Replacement Engine, free and clear of all Liens other than Permitted Liens. Such Replacement Engine shall be an engine manufactured by Engine Manufacturer that is the same model as the Engine to be replaced thereby, or an improved model, and that is suitable for installation and use on the Airframe, and that has a current value, estimated residual value, utility, and remaining economic useful life (without regard to hours and cycles remaining until overhaul, provided no Special Default or Lease Event of Default then exists) at least equal to the Engine to be replaced thereby (assuming that such Engine had been maintained in accordance with the Lease) immediately prior to such Event of Loss. 10.2.3 ENGINE EXCHANGE Upon not less than five Business Days' prior written notice to Lessor (with a copy to Owner Participant), Lessee may replace any Engine leased hereunder with another engine (the "EXCHANGED ENGINE") meeting the requirements of ss. 10.2.2. Such Exchanged Engine shall be deemed to be a "Replacement Engine", and Lessor anD Lessee shall comply with the provisions of ss. 10.3 with regard to the Exchanged Engine and the Engine so replaced. 10.3 CONDITIONS TO ANY REPLACEMENT 10.3.1 DOCUMENTS Before or at the time of conveyance of title to any Replacement Airframe or Replacement Engine to Lessor, Lessee shall take each of the following actions: (a) furnish Lessor with a full warranty (as to title) bill of sale duly conveying to Lessor such Replacement Airframe or Replacement Engine, in form and substance reasonably satisfactory to Lessor and Owner Participant, and cause such Replacement Airframe to be duly registered in the name of Lessor pursuant to the Transportation Code (or such other applicable Law of a jurisdiction other than the United States where the Aircraft is registered in accordance with ss. 7.1.2); (b) cause (1) a supplement to this Lease, subjecting such Replacement Airframe or Replacement Engine to this Lease, duly executed by Lessee, to be delivered to Lessor for execution, and, upon such execution, to be filed for recordation with the FAA pursuant to the Transportation Code (or such other applicable Law of a jurisdiction other than the United States where the Aircraft is registered in accordance with ss. 7.1.2), (2) A supplement to the Mortgage, subjecting such Replacement Airframe or Replacement Engine to the Mortgage, to be delivered to Lessor for execution, and, upon execution, to be filed for recordation with the FAA pursuant to the Transportation Code (or such other applicable Law of a jurisdiction other than the United States where the Aircraft is registered in accordance with ss. 7.1.2), and (3) such Financing Statements and other filings, as OwneR Participant or Mortgagee reasonably request, duly executed by Lessee and (to the extent applicable) Lessor and Mortgagee (and Lessor and Mortgagee shall execute and deliver the same), to be filed in such locations as any such party reasonably requests; (c) furnish such evidence of compliance with the insurance provisions of ss. 11 with respect to sucH Replacement Airframe or Replacement Engine as Owner Participant reasonably requests; (d) furnish an opinion or opinions of Lessee's counsel (which may be Lessee's legal department) reasonably satisfactory to Owner Participant and addressed to Lessor, Owner Participant, and Mortgagee to the effect that (1) such full warranty bill of sale referred to in ss. 10.3.1(a) constitutes an effective instrumenT for the conveyance of title to the Replacement Airframe or Replacement Engine, and (2) in the case of a Replacement Airframe or of a Replacement Engine substituted under ss. 10.2.3 in the absence of an Event of Loss, (aa) Lessor and Mortgagee, as assignee of Lessor, will be entitled to the benefits of Section 1110 with respect to the Replacement Airframe, and (bb) as to the U.S. federal income tax consequences to Owner Participant of the replacement; (e) furnish an opinion of Lessee's aviation law counsel reasonably satisfactory to Owner Participant and addressed to Lessor, Owner Participant, and Mortgagee as to the due registration of any such Replacement Airframe and the due filing for recordation of each supplement to this Lease and each supplement to the Mortgage with respect to such Replacement Airframe or Replacement Engine under the Transportation Code (or such other applicable Law of a jurisdiction other than the United States where the Aircraft is registered in accordance with ss. 7.1.2); (f) with respect to the replacement of the Airframe and any Engine(s) installed thereon at the time of the Event of Loss, if requested by Owner Participant and at Lessee's expense, furnish a certified report of a qualified independent aircraft appraiser, such report and such appraiser to be reasonably satisfactory to Owner Participant, certifying that such Replacement Airframe and any such Replacement Engine complies with the current value, estimated residual value, utility, and remaining economic useful life requirements set forth in ss. 10.1.3(b); and (g) take such other actions and furnish such other certificates and documents as Lessor or Owner Participant may reasonably request in order that such Replacement Airframe or Replacement Engine be duly and properly titled in Lessor, leased hereunder and subjected to the Lien of the Trust Indenture to the same extent as initially required under the Operative Agreements with respect to the Airframe or Engine so replaced. Lessor and Lessee understand and agree that if, at the time of any replacement of the Airframe or any Engine(s) as contemplated in this ss. 10, the Airframe was registered in a jurisdiction other than the UniteD States, then the requirements set forth above in this ss. 10.3.1 relating to compliance with the requirements oF the Transportation Code or the FAA shall be deemed to refer to the comparable applicable Law of, and the Aviation Authority of, such other jurisdiction. 10.3.2 OTHER OBLIGATIONS (a) Lessor and Lessee agree that, when and after any Replacement Airframe becomes the Airframe hereunder, and when and after any Replacement Engine becomes an Engine hereunder, this Lease shall continue to be, and shall be treated as, a lease for U.S. federal income tax purposes of such Replacement Airframe and such Replacement Engine. Without limiting the foregoing, Lessee and Lessor intend that Lessor shall, in all events, be entitled to the benefits of Section 1110 with respect to any Replacement Airframe or Replacement Engine, and Lessee and Lessor shall cooperate and take such action as the other may reasonably request so as to ensure that Lessor shall be entitled to such benefits. (b) No Event of Loss to an Engine, or to an Airframe, shall result in, or otherwise allow or permit (other than as provided in ss. 10.1.2(b)), any reduction, deferral, discharge, or other change in the timing oR amount of any Rent payable by Lessee hereunder, and (subject to such ss. 10.1.2(b)) Lessee shall pay all such RenT and other amounts as though such Event of Loss had not occurred. 10.4 CONVEYANCE TO LESSEE Upon compliance by Lessee with the applicable terms of ss.ss. 10.1.3, 10.2, and 10.3.1, Lessor will transFer to Lessee the Airframe or Engine(s), as applicable, with respect to which such Event of Loss occurred, in accordance with ss. 4.5. 10.5 APPLICATION OF PAYMENTS Any amounts, other than insurance proceeds in respect of damage or loss not constituting an Event of Loss (the application of which is provided for in ss. 11), received at any time by Lessor, Lessee, or any PermitteD Sublessee from any Government Entity or any other Person in respect of any Event of Loss will be paid over to Lessor (or to Mortgagee if Mortgagee has not notified Lessee that the Lien of the Mortgage has been duly discharged, except with respect to Excluded Payments) to be held in accordance with ss. 4.5 and applied as follows: 10.5.1 REPLACEMENT OF AIRFRAME AND ENGINES If such amounts are received with respect to the Airframe or any Engine(s) installed thereon at the time of such Event of Loss, upon Lessee's compliance with the applicable terms of ss. 10.1.3 with respect to the EvenT of Loss for which such amounts are received, such amounts shall (subject to ss. 10.9) be paid over to, or retaineD by, Lessee. 10.5.2 LOSS OF ENGINE If such amounts are received with respect to an Engine (other than an Engine installed on the Airframe when the Airframe suffers an Event of Loss), upon Lessee's compliance with the applicable terms of ss. 10.2.2 witH respect to the Event of Loss for which such amounts are received, such amounts shall (subject to ss. 10.9) be paiD over to, or retained by, Lessee. 10.5.3 PAYMENT OF LOSS If such amounts are received, in whole or in part, with respect to the Airframe, and Lessee makes, has made or is deemed to have made the election set forth in ss. 10.1.2, such amounts shall be applied as follows: (a) FIRST, if the sum described in ss. 10.1.2 has not then been paid in full by Lessee, such amountS shall be paid to Lessor (or to Mortgagee if Mortgagee has not notified Lessee that the Lien of the Mortgage has been duly discharged, except with respect to Excluded Payments) to the extent necessary to pay in full such sum; and (b) SECOND, the remainder, if any, shall (subject toss. 10.9) be paid to Lessee. 10.6 REQUISITION OF AIRCRAFT FOR USE If any Government Entity requisitions the use of the Airframe and the Engines or engines installed thereon, and if the requisition does not constitute an Event of Loss, Lessee shall promptly notify Lessor and Mortgagee of such requisition, and all of Lessee's obligations under this Lease shall continue to the same extent as if such requisition had not occurred; PROVIDED, that, if the Airframe and Engines or engines installed thereon are not returned to Lessor by Lessee at the end of the Term or within 30 days thereafter, then Lessee shall be deemed to have made the election set forth in ss. 10.1.2 with the effect that Lessee shall be obligated to pay thE Stipulated Loss Value and all other amounts payable pursuant to ss. 10.1.2 with respect to the Aircraft as if aN Event of Loss had occurred as of the end of the Term. If such requisition does not constitute an Event of Loss, Lessee shall be obligated to return the Airframe and Engine(s) or engine(s) to Lessor pursuant to, and in all other respects to comply with the provisions of, ss. 5 promptly upon their return by such Government Entity, anD Lessee shall pay (or cause to be paid) to Lessor upon such return an amount equal to the average daily Basic Rent payable by Lessee during the Term for each day after the end of the Term to but excluding the day of such return, up to a maximum of 30 days, which payment may be made from any payments received by Lessor or Lessee from any Government Entity for the use of the Aircraft (notwithstanding any language to the contrary contained in ss. 10.8). 10.7 REQUISITION OF AN ENGINE FOR USE If any Government Entity requisitions for use any Engine but not the Airframe, Lessee will replace such Engine by complying with ss. 10.2 and ss. 10.3 to the same extent as if an Event of Loss with respect to that EngIne had occurred, and any payments received by Lessor or Lessee from such Government Entity with respect to such requisition shall be paid or retained in accordance with ss. 10.5.2. 10.8 APPLICATION OF PAYMENTS All payments received by Lessor or Lessee, or any Permitted Sublessee, from any Government Entity for the use of the Airframe and Engine(s) or engine(s) installed thereon during the Term shall be paid over to, or retained by, Lessee, and all payments received by Lessor or Lessee from any Government Entity for the use of the Airframe and Engine(s) or engine(s) installed thereon after the Term shall be paid over to, or retained by, Lessor; PROVIDED, that, if such requisition constitutes an Event of Loss, then all such payments shall be paid over to Lessor (or to Mortgagee if Mortgagee has not notified Lessee that the Lien of the Mortgage has been discharged), and held as provided in ss. 10.5. 10.9 APPLICATION OF PAYMENTS DURING DEFAULT Any amount described in this ss. 10 that is payable or creditable to, or retainable by, Lessee shall noT be paid or credited to, or retained by, Lessee if a Special Default or Lease Event of Default exists when such payment, credit, or retention would otherwise occur, but shall instead be held by or paid over to Lessor (or to Mortgagee if Mortgagee has not notified Lessee that the Mortgage has been discharged) as security for Lessee's obligations under this Lease and the other Lessee Operative Agreements, and shall be invested pursuant to ss. 4.4 hereof, unless and until such amount is applied, at the option of Lessor, or upon Lessee's written request to Lessor, from time to time during the existence of a Lease Event of Default, to Lessee's obligations under this Lease as and when due (any such application shall be made to such Lessee obligations as Lessor determines in its sole discretion). If and when no Special Default and no Lease Event of Default exists, such amount shall be paid to Lessee to the extent not previously applied in accordance with this ss. 10.9. 11. INSURANCE 11.1 LESSEE'S OBLIGATION TO INSURE Lessee shall comply with, or cause to be complied with, each of the provisions of Annex D, which provisions are hereby incorporated by this reference as if set forth in full herein. 11.2 INSURANCE FOR OWN ACCOUNT Nothing in ss. 11 shall limit or prohibit (a) Lessee from maintaining the policies of insurance requireD under Annex D with higher limits than those specified in Annex D, or (b) Lessor, Mortgagee, or Owner Participant from obtaining insurance for its own account (and any proceeds payable under such separate insurance shall be payable as provided in the policy relating thereto); PROVIDED, that no insurance may be obtained or maintained that would limit or otherwise adversely affect the coverage of or increase the cost of any insurance required to be obtained or maintained by Lessee pursuant to this ss. 11 and Annex D. 11.3 INDEMNIFICATION BY GOVERNMENT IN LIEU OF INSURANCE During the period of any Government Entity's requisition for use of the Aircraft or any Engine, Lessor, Mortgagee, and each Participant shall accept, in lieu of insurance against any risk with respect to the Aircraft described in Annex D, indemnification from, or insurance provided by, the U.S. Government, or upon Owner Participant's written consent, other Government Entity, against such risk in an amount that, when added to the amount of insurance (including permitted self-insurance), if any, against such risk that Lessee (or any Permitted Sublessee) may continue to maintain, in accordance with this ss. 11, during the period of such requisition, shalL be at least equal to the amount of insurance against such risk otherwise required by this ss. 11. 11.4 APPLICATION OF INSURANCE PROCEEDS As between Lessor and Lessee, all insurance proceeds received as a result of the occurrence of an Event of Loss to the Aircraft or any Engine under policies required to be maintained by Lessee pursuant to this ss. 11 will be applied in accordance with ss. 10.5. All proceeds of insurance required to be maintained by Lessee, iN accordance with ss. 11 and ss. B of Annex D, in respect of any property damage or loss not constituting an Event of Loss to the Aircraft, the Airframe, or any Engine will be applied to pay (or to reimburse Lessee) for repairs or for replacement property incorporated in accordance with ss. 8.1, and any balance remaining after such repairs oR replacement with respect to such damage or loss shall be paid over to, or retained by, Lessee. 11.5 APPLICATION OF PAYMENTS DURING DEFAULT Any amount described in this ss. 11 that is payable or creditable to, or retainable by, Lessee shall noT be paid or credited to, or retained by, Lessee if a Special Default or Lease Event of Default exists when such payment, credit, or retention would otherwise occur, but shall instead be held by or paid over to Lessor (or to if Mortgagee has not notified Lessee that the Lien of the Mortgage has been discharged) as security for Lessee's obligations under this Lease, and shall be invested pursuant to ss. 4.4 unless and until such amount is applied, aT Lessor's option, or upon Lessee's written request to Lessor, from time to time during the existence of a Lease Event of Default, to Lessee's obligations under this Lease and the other Lessee Operative Agreements as and when due (any such application to be made to such obligations of Lessee as Lessor determines in its sole discretion). If and when no Special Default and Lease Event of Default exists, such amount shall be paid to Lessee to the extent not previously applied in accordance with this ss. 11.5. 12. INSPECTION (a) At all reasonable times Lessor, Mortgagee, Owner Participant, or their authorized representatives (the "INSPECTING PARTIES") may (not more than once every 12 months by each such Person, unless a Lease Event of Default exists or during the last 12 months of the Base Term and any Renewal Term, then such inspection right shall not be so limited) inspect the Aircraft and the Aircraft Documents, and any such Inspecting Party may make copies of the Aircraft Documents not reasonably deemed confidential by Lessee or a Permitted Sublessee. (b) Any inspection of the Aircraft hereunder shall be limited to a visual, walk-around inspection that may include going on board the Aircraft and visually examining the contents of any open panels, bays, or other components of the Airframe or Engines, but shall not include the opening of any unopened panels, bays, or other components of the Aircraft, and no such inspection shall interfere with Lessee's or any Permitted Sublessee's maintenance or operation of the Aircraft, the Airframe, or any Engine. (c) Lessor, Owner Participant and Mortgagee shall not have any duty or liability to make, or any duty or liability by reason of not making, any such visit, inspection or survey. (d) Each Inspecting Party shall bear its own expenses in connection with any such inspection (including the cost of any copies made in accordance with ss. 12(a)), except following a Lease Event of Default, iN which case Lessee will bear the costs of inspection and pay the same on demand. (e) Upon Lessor's request, during the last 12 months of the Base Term and any Renewal Term, Lessee will give 10 Business Days' prior written notice to Lessor and Owner Participant of any scheduled maintenance checks, inspections, surveys, or repair visits. During such period, Owner Participant or its representative may attend any and all such maintenance checks, inspections, surveys, or repair visits. 13. ASSIGNMENT; MERGER; SUCCESSOR OWNER TRUSTEE 13.1 IN GENERAL This Lease and the other Lessee Operative Agreements shall bind and benefit Lessor and Lessee and their successors and permitted assigns. Except as otherwise expressly permitted by the terms of the Lease or any other Lessee Operative Agreement, Lessee will not, without the prior written consent of Owner Participant and Mortgagee, assign any of its rights under this Lease. 13.2 MERGER OF LESSEE 13.2.1 IN GENERAL Lessee shall not consolidate with or merge into any other Person under circumstances in which Lessee is not the surviving corporation, or convey, transfer, or lease in one or more transactions all or substantially all of its assets to any other Person, unless: (a) such Person is organized, existing, and in good standing under the Laws of the United States, any state of the United States, or the District Columbia, and, upon consummation of such transaction, such Person will be a U.S. Air Carrier; (b) such Person executes and delivers to Lessor, Owner Participant and Mortgagee a duly authorized, legal, valid, binding, and enforceable agreement, reasonably satisfactory in form and substance to Owner Participant, containing an effective assumption by such Person of the due and punctual performance and observance of each covenant, agreement, and condition in the Lessee Operative Agreements to be performed or observed by Lessee; (c) such Person makes such filings and recordings with the FAA pursuant to the Transportation Code as shall be necessary to evidence such consolidation or merger; (d) Lessee furnishes Lessor and Owner Participant an opinion of counsel reasonably satisfactory to Owner Participant (and, while the Policy is in effect, reasonably satisfactory to Policy Provider) to the effect that such consolidation or merger has satisfied at the closing of such consolidation or merger items (a), (b) and (c) above; (e) immediately after giving effect to such consolidation or merger, no Special Default or Lease Event of Default exists; (f) unless Owner Participant otherwise consents, immediately after giving effect to such consolidation or merger, such Person will have a tangible net worth of at least the lesser of (i) 100% of Lessee's tangible net worth immediately prior to such consolidation or merger, and (ii) the greater of (aa) the tangible net worth of Lessee as of March 31, 2000, and (bb) 65% of Lessee's tangible net worth immediately prior to such consolidation or merger; and (g) upon such consolidation or merger becoming effective, Lessor will enjoy the same degree of protection under Section 1110 with respect to the Aircraft as Lessor enjoyed prior to such merger. 13.2.2 EFFECT OF MERGER Upon any such consolidation or merger of Lessee with or into, or the conveyance, transfer, or lease by Lessee of all or substantially all of its assets to, any Person in accordance with this ss. 13.2, such Person wilL succeed to, and be substituted for, and may exercise every right and power of, Lessee under the Lessee Operative Agreements with the same effect as if such Person had been named as "Lessee" therein. No such consolidation, merger, conveyance, transfer, or lease shall have the effect of releasing Lessee or such Person from any of Lessee's obligations, liabilities, covenants, or undertakings under the Lessee Operative Agreements. 13.3 ASSIGNMENT AS SECURITY FOR LESSOR'S OBLIGATIONS In order to secure the indebtedness evidenced by the Equipment Notes, Lessor agrees in the Mortgage to assign this Lease to Mortgagee and to mortgage the Aircraft to Mortgagee, subject to the reservations and conditions therein set forth. Lessee hereby accepts and consents to the assignment of Lessor's right, title, and interest in and to this Lease pursuant to the terms of the Mortgage. In accordance with ss. 3.3(c), Lessee agreeS to pay directly to Mortgagee (or, after receipt by Lessee of notice from Mortgagee of the discharge of the Lien of the Mortgage, to Lessor), all amounts of Rent (other than Excluded Payments) due or to become due hereunder and assigned to Mortgagee, and Lessee agrees that Mortgagee's right to such payments hereunder shall be absolute and unconditional and shall not be affected by any circumstance, including the circumstances set forth in ss. 16 hereof. Notwithstanding the foregoing assignment of this Lease, Lessee's obligations to Lessor to perform the terms and conditions of this Lease shall remain in full force and effect. 13.4 SUCCESSOR OWNER TRUSTEE If any successor is appointed to serve as Owner Trustee pursuant to the terms of the Participation Agreement and the Trust Agreement, such successor shall, upon written notice by such successor to Lessee, succeed to all the rights, powers, and title of Lessor hereunder, and shall be deemed to be "Lessor" and the owner of the Aircraft and the other assets of the Trust Estate for all purposes hereof, without the need for any consent or approval by Lessee and without in any way altering the terms of this Lease or Lessee's obligations hereunder. An appointment and designation of a successor as Owner Trustee shall not exhaust the right to appoint and designate further successors or additional trustees as Owner Trustees pursuant to the Participation Agreement and the Trust Agreement, and such right may be exercised repeatedly as long as this Lease shall be in effect. 14. LEASE EVENTS OF DEFAULT The existence of any one or more of the following circumstances, conditions, acts, or events, for any reason whatsoever and whether any such circumstance, condition, act, or event is voluntary or involuntary or comes about or is effected by operation of Law or pursuant to or in compliance with any judgment, decree, order, rule, or regulation of any Government Entity, shall constitute a Lease Event of Default so long as it shall not have been remedied: 14.1 PAYMENTS Lessee fails to pay any amount of Basic Rent, Stipulated Loss Value, or Termination Value within five Business Days after it becomes due; or Lessee fails to pay any Supplemental Rent (other than Stipulated Loss Value or Termination Value) when due and such failure continues for a period in excess of ten Business Days from and after the date of any written notice to Lessee from Lessor of the failure to make such payment when due; PROVIDED, that any such failure to pay any Excluded Payment shall not constitute a Lease Event of Default until Owner Participant gives written notice to Lessee and Mortgagee that such failure constitutes a Lease Event of Default and such failure has continued for a period in excess of ten Business Days after such notice. 14.2 INSURANCE Lessee fails to carry and maintain, or cause to be carried and maintained, insurance on and in respect of the Aircraft in accordance with the provisions of ss. 11. 14.3 OTHER COVENANTS Lessee fails to observe or perform (or cause to be observed and performed) in any material respect any other covenant, agreement, or obligation of Lessee in any Lessee Operative Agreement (other than those contained in the Tax Indemnity Agreement), and such failure continues unremedied for a period of 30 days from and after the date of written notice thereof to Lessee (or the Guarantor, as the case may be) from Lessor, Owner Participant, or Mortgagee, unless such failure is capable of being corrected and Lessee is diligently proceeding to correct such failure, and such failure poses no imminent and material risk of Lessor, Owner Participant, or Mortgagee losing their respective interests in the Aircraft, in which case there shall be no Lease Event of Default unless and until such failure continues unremedied for a period of 270 days after receipt of such notice; PROVIDED, that in all events Lessee must remedy such failures within 90 days of Lessee's obtaining access to the Aircraft. 14.4 REPRESENTATIONS AND WARRANTIES Any representation or warranty made by Lessee in any Lessee Operative Agreement (other than Lessee's representations and warranties in the Tax Indemnity Agreement) (a) proves to have been untrue or inaccurate in any material respect as of the date made, (b) is material at the time in question, and (c) remains uncured (to the extent of the adverse impact of such incorrectness on the interest of the Participants or Lessor) for a period in excess of 30 days from and after the date of written notice thereof from Lessor, Owner Participant, or Mortgagee to Lessee (or Guarantor, as the case may be); provided that clause (c) above will not apply to Lessee's representations as to the financial condition of Lessee. 14.5 BANKRUPTCY AND INSOLVENCY (a) Lessee or Guarantor consents to the appointment of or the taking of possession by a receiver, trustee, or liquidator of itself or of substantially all of its property, or Lessee or Guarantor admits in writing its inability to pay its debts generally as they come due, or does not pay its debts generally as they become due or makes a general assignment for the benefit of creditors, or Lessee or Guarantor files a voluntary petition in bankruptcy or a voluntary petition or an answer seeking reorganization, liquidation or other relief in a case under any bankruptcy Laws or other insolvency Laws (as in effect at such time), or Lessee or Guarantor seeks relief by voluntary petition, answer, or consent under the provisions of any other bankruptcy or other similar Law providing for the reorganization or winding-up of corporations (as in effect at such time); or (b) an order, judgment, or decree is entered by any court of competent jurisdiction appointing, without Lessee's or Guarantor's consent, a receiver, trustee, or liquidator of Lessee or Guarantor or of substantially all of the property of Lessee or Guarantor, or substantially all of Lessee's or Guarantor's property is sequestered, and any such order, judgment, or decree of appointment or sequestration remains in force undismissed, unstayed, and unvacated for a period of 90 days after the date of entry thereof; or (c) a petition against Lessee or Guarantor in a case under any bankruptcy Laws or other insolvency Laws (as in effect at such time) is filed and not withdrawn or dismissed within 90 days thereafter, or if, under the provisions of any Law providing for reorganization or winding-up of corporations that applies to Lessee or Guarantor, any court of competent jurisdiction assumes jurisdiction, custody, or control of Lessee or Guarantor or of substantially all of its property, and such jurisdiction, custody or control remains in force unrelinquished, unstayed, and unterminated for a period of 90 days. 14.6 REPUDIATION OR INVALIDITY OF GUARANTEE Either (a) Guarantor repudiates its obligations, in whole or in part, under the Guarantee; or (b) the Guarantee ceases to be in full effect, is determined to be invalid, or becomes unenforceable for any reason. 15. REMEDIES AND WAIVERS 15.1 REMEDIES If any Lease Event of Default exists, Lessor may, at its option and at any time and from time to time, exercise any one or more of the following remedies as Lessor in its sole discretion shall elect: 15.1.1 RETURN AND REPOSSESSION Lessor may cause Lessee, upon giving written notice to Lessee, to return promptly, and Lessee shall return promptly, the Airframe and Engines as Lessor shall so demand, to Lessor or its order in the manner and condition required by, and otherwise in accordance with, all the provisions of ss. 5, as if the Airframe or EnginE were being returned at the end of the Term or Lessor, at its option, may enter upon the premises where the Airframe or any Engine, or any Part thereof, is located and take immediate possession of and remove the same by summary proceedings or otherwise, all without liability accruing to Lessor for or by reason of such entry or taking of possession, whether for the restoration of damage to property caused by such taking or otherwise. 15.1.2 SALE AND USE Lessor may sell the Airframe or any Engine at public or private sale, at such time(s) and place(s), and to such Person(s) (including Mortgagee or any Participant), as Lessor determines; or Lessor may otherwise dispose of, hold, use, operate, lease to others, or keep idle the Airframe or any Engine, as Lessor, in its sole discretion, shall determine, all free and clear of any rights of Lessee and without any duty to account to Lessee with respect to such action or inaction or for any proceeds with respect thereto, except as hereinafter set forth in this ss. 15, and except to the extent that such proceeds would constitute, under applicable Law, a mitigation oF Lessor's damages suffered or incurred as a result of the subject Lease Event of Default. Lessor shall give to Lessee at least 15 days' prior written notice of the date fixed for any public sale of the Airframe or any Engine or of the date on or after which will occur the execution of any contract providing for any private sale. 15.1.3 CERTAIN LIQUIDATED DAMAGES Whether or not Lessor shall have exercised, or shall thereafter at any time exercise, any of its rights under ss. 15.1.1 or ss. 15.1.2 with respect to the Airframe or any Engine, or any Part thereof, Lessor, by writTen notice to Lessee specifying a payment date (which shall be the first Stipulated Loss Value Date occurring not less than 10 days after the date of such notice), may demand that Lessee to pay to Lessor, and Lessee shall pay to Lessor, on the payment date so specified and in the manner and in funds of the type specified in ss. 3.3, aS liquidated damages for loss of a bargain and not as a penalty (in lieu of the Basic Rent (as applicable) for the Aircraft in respect of all periods commencing on or after the date specified for payment in such notice), the following amounts: (a) all unpaid Basic Rent due at any time before the Stipulated Loss Value Date specified in such notice; plus (b) whichever of the following amounts Lessor, in its sole discretion specifies in such notice: (1) an amount equal to the excess (if any) of the present value, computed as of the Stipulated Loss Value Date specified in such notice, discounted to such date at a rate equal to the Debt Rate, compounded quarterly, of all unpaid Basic Rent during the then-remaining portion of the Base Term (or, if a Renewal Term has commenced, of all unpaid Basic Rent during the remaining portion of such Renewal Term) over the Fair Market Rental Value of the Aircraft for the remainder of the Term, after discounting such Fair Market Rental Value to present value (at a rate per annum equal to the Debt Rate, compounded quarterly) as of the Stipulated Loss Value Date specified in such notice, or (2) an amount equal to the excess (if any) of the Stipulated Loss Value for the Aircraft, computed as of the Stipulated Loss Value Date specified in such notice, over the Fair Market Sales Value of the Aircraft, as of the Stipulated Loss Value Date specified in such notice; plus (c) interest on the amounts specified in the foregoing clause (a) at the Past-Due Rate from and including the date on which any such amount was due to the date of payment of such amount; plus (d) interest on the amount specified in the foregoing clause (b)(1) or (b)(2), according to Lessor's election, at the Past-Due Rate from and including the Stipulated Loss Value Date specified in such notice to the date of payment of such amount. 15.1.4 LIQUIDATED DAMAGES UPON SALE If, pursuant to ss. 15.1.2 or applicable Law, Lessor has sold the Airframe or any Engine, then, in lieu oF exercising its rights under ss. 15.1.3 with respect to the Aircraft, the Airframe, or any Engine (as applicable), Lessor may, if Lessor so elects, upon giving written notice to Lessee, demand that Lessee to pay to Lessor, and Lessee shall pay to Lessor, on the date of such sale and in the manner and in funds of the type specified in ss. 3.3, as liquidated damages for loss of a bargain and not as a penalty (in lieu of the Basic Rent for thE Aircraft in respect of all periods commencing on or after the date of such sale), the following amounts: (a) all unpaid Basic Rent due at any time before the Stipulated Loss Value Date on or immediately preceding the date of such sale; plus (b) an amount equal to the excess, if any, of (1) the Stipulated Loss Value of the Aircraft, computed as of the Stipulated Loss Value Date referred to in the foregoing clause (a), over (2) the proceeds of such sale; plus (c) if the date of such sale is not a Stipulated Loss Value Date, an amount equal to interest, at the rate per annum equal to the SLV Rate, on the amount of Stipulated Loss Value referred to in clause (b)(1) above, from and including the Stipulated Loss Value Date referred to in the foregoing clause (a) to the date of such sale; plus (d) all brokerage and other out-of-pocket fees and expenses incurred by Lessor, Mortgagee, and any Participant in connection with such sale; plus (e) interest on the amounts specified in the foregoing clause (a) at the Past-Due Rate from and including the date on which any such amount was due to the date of payment of such amount; plus (f) interest on the sum of the amounts specified in the foregoing clauses (b), (d) and (e) at the Past-Due Rate from and including the date of such sale to the date of payment of such amounts. 15.1.5 RESCISSION Lessor may (a) at its option, rescind or terminate this Lease as to the Aircraft, the Airframe, or any Engine, or any Part thereof, or (b) exercise any other right or remedy that may be available to it under applicable Law or proceed by appropriate court action to enforce the terms hereof or to recover damages for the breach hereof. 15.1.6 OTHER REMEDIES In addition to the foregoing remedies (but without duplication of amounts otherwise paid under this ss. 15), Lessee shall be liable for any and all unpaid Rent due hereunder before, during, or after (except aS otherwise provided herein) the exercise of any of the foregoing remedies and for all reasonable attorneys' fees and other costs and expenses of Lessor, Mortgagee, Owner Participant, and the Note Holders, including interest on overdue Rent at the rate as herein provided, incurred by reason of the existence of any Lease Event of Default or the exercise of Lessor's remedies with respect thereto, including all reasonable costs and expenses incurred in connection with the return of the Airframe or any Engine in accordance with the terms of ss. 5, or in placing thE Airframe or any Engine in the condition and airworthiness required by ss. 5. 15.2 LIMITATIONS UNDER CRAF Notwithstanding the provisions of ss. 15.1, during any period that the Aircraft, the Airframe, or anY Engine is subject to CRAF in accordance with the provisions of ss. 7.2.3 and in the possession of the U.S. Government, Lessor shall not, as a result of any Lease Event of Default, exercise its remedies hereunder in such manner as to limit Lessee's control under this Lease (or any Permitted Sublessee's control under any Permitted Sublease) of the Aircraft, the Airframe, or such Engine, unless Lessor or Mortgagee gives at least 30 days' (or such other period as may then apply under CRAF) written notice of default hereunder by registered or certified mail to Lessee (and any Permitted Sublessee) with a copy to the Contracting Officer Representative or Representatives for the Military Airlift Command of the United States Air Force to whom notices must be given under the contract governing Lessee's (or any Permitted Sublessee's) participation in CRAF with respect to the Aircraft, the Airframe, or any Engine. 15.3 RIGHT TO PERFORM FOR LESSEE If Lessee (a) fails to make any payment of Rent required to be made by it hereunder or (b) fails to perform or comply with any of its agreements contained herein and such failure under this clause (b) continues for a period of 30 days after the earlier of Lessor, Owner Participant, or Mortgagee giving written notice thereof to Lessee, or (c) fails to maintain the insurance required hereunder and such failure under this clause (c) continues for 10 days after such notice, then Lessor, Owner Participant, or Mortgagee may (but shall not be obligated to) make such payment or perform or comply with such agreement, and the amount of such payment and the amount of the expenses of Lessor, Owner Participant, or Mortgagee incurred in connection with such payment or the performance of or compliance with such agreement (as applicable), together with interest thereon at the Past-Due Rate, shall be deemed Supplemental Rent, payable by Lessee upon demand by Lessor, Owner Participant, or Mortgagee, whichever is entitled thereto. No such payment, performance, or compliance shall be deemed to waive any Lease Default or otherwise relieve Lessee of its obligations with respect thereto. 15.4 DETERMINATION OF FAIR MARKET RENTAL VALUE AND FAIR MARKET SALES VALUE For the purpose of this ss. 15, the Fair Market Rental Value or the Fair Market Sales Value of thE Aircraft, the Airframe, or any Engine shall be determined on an "as is, where is" basis and shall take into account customary brokerage and other out-of-pocket fees and expenses which typically would be incurred in connection with a re-lease or sale of such an aircraft, airframe, or engine. Any such determination shall be made by an Appraiser selected by Lessor, and the costs and expenses associated therewith shall be borne by Lessee; PROVIDED, that, if Lessor does not obtain possession of the Aircraft pursuant to this ss. 15, an AppraiseR shall not be appointed, and Fair Market Rental Value and Fair Market Sales Value for purposes of this ss. 15 shalL be zero. 15.5 REMEDIES CUMULATIVE Nothing contained in this Lease shall be construed to limit in any way any right, power, remedy, or privilege of Lessor hereunder or under any other Operative Agreement or now or hereafter existing at law or in equity. Each and every right, power, remedy, and privilege hereby given to, or retained by, Lessor in this Lease shall be in addition to and not in limitation of every other right, power, remedy, and privilege given under the Operative Agreements or now or hereafter existing at law or in equity. Each and every right, power, remedy, and privilege of Lessor under this Lease and any other Operative Agreement may be exercised from time to time or simultaneously and as often and in such order as may be deemed expedient by Lessor. All such rights, powers, remedies, and privileges shall be cumulative and not mutually exclusive, and the exercise of one shall not be deemed a waiver of the right to exercise any other. Lessee hereby waives to the extent permitted by applicable Law any right which it may have to require Lessor to choose or elect remedies. 16. LESSEE'S OBLIGATIONS; NO SETOFF, COUNTERCLAIM, ETC. (a) Lessee's obligation to pay all Rent payable hereunder shall be absolute and unconditional, and shall not be affected by any event or circumstance, including: (1) any setoff, counterclaim, recoupment, defense, or other right that Lessee may have against Lessor, Mortgagee, any Participant, any Note Holder, or any other Person for any reason whatsoever; (2) any defect in the title, airworthiness, condition, design, operation, or fitness for use of, or any damage to or loss or destruction of, the Aircraft, the Airframe, or any Engine, or any interruption or cessation in the use or possession thereof by Lessee for any reason whatsoever; (3) any insolvency, bankruptcy, reorganization, or similar proceedings by or against Lessee or any other Person; or (4) any other circumstance, happening, or event whatsoever, whether or not similar to any of the foregoing. (b) If for any reason whatsoever this Lease shall be terminated in whole or in part by operation of law or otherwise except as specifically provided herein, Lessee nonetheless agrees to pay an amount equal to each Rent payment at the time such payment would have become due and payable in accordance with the terms hereof had this Lease not been terminated in whole or in part. Lessee hereby waives, to the extent permitted by applicable Law, any and all rights that it may now have or that at any time hereafter may be conferred upon it, by statute or otherwise, to terminate, cancel, quit, or surrender this Lease, except in accordance with the express terms hereof. (c) Nothing set forth in this ss. 16 shall be construed to prohibit Lessee from separately pursuinG any claim that it may have from time to time against Lessor or any other Person with respect to any matter (other than the absolute and unconditional nature of Lessee's obligations hereunder to pay Rent, and other than the matters specified in paragraphs (a) and (b) above). 17. RENEWAL AND PURCHASE OPTIONS 17.1 NOTICES GENERALLY (a) Unless otherwise provided by this ss. 17, at least 270 days and no more than 365 days before thE Scheduled Expiration Date for the Base Term or then-current Renewal Term, Lessee may provide irrevocable written notice to Lessor (a "PRELIMINARY NOTICE"), with a copy of such notice to Owner Participant, that Lessee intends to exercise the option either to extend the leasing of the Aircraft for a Renewal Term pursuant to ss. 17.2 or tO purchase the Aircraft on the Scheduled Expiration Date pursuant to ss. 17.3. (b) If Lessee gives a Preliminary Notice, then Lessee shall provide a further notice, at least 30 days before the following Scheduled Expiration Date, specifying which option it intends to elect, pursuant to ss. 17.2.1 or ss. 17.3.1 (as applicable). If Lessee fails to give such further notice at least 30 days before sUch Scheduled Expiration Date, Lessee shall be deemed to have elected its option to purchase the Aircraft pursuant to ss. 17.3.1. 17.2 RENEWAL OPTIONS 17.2.1 RENEWAL NOTICE (a) If Lessee has given a Preliminary Notice, as specified in ss. 17.1, and subject to the terms anD conditions of this ss. 17.2, Lessee may exercise its option to extend the leasing of the Aircraft hereunder untiL the following Scheduled Expiration Date, on the same terms (except as contemplated by this ss. 17) as in the LesseE Operative Agreements with respect to the Base Term, by delivering a notice (a "RENEWAL NOTICE") to Lessor not less than 30 days before the Scheduled Expiration Date. (b) Notwithstanding anything to the contrary in any Operative Agreement: (1) No Preliminary Notice or Renewal Notice shall be binding on Lessor or oblige Lessor to extend the leasing of the Aircraft hereunder for a Renewal Term if any Special Default or Lease Event of Default exists on and as of the date that such Renewal Term would otherwise commence. (2) A Renewal Notice shall be revocable by Lessee until 10 Business Days after the Renewal Rent is determined in accordance with ss. 17.2.2, and unless revoked by written notice by Lessee to LessoR shall thereafter become irrevocable and shall constitute an unconditional obligation of Lessee to extend the leasing of the Aircraft hereunder for the Renewal Term to which such Renewal Notice relates. If Lessee revokes a Renewal Notice as indicated above, Lessee will be deemed to have irrevocably elected its option to purchase the Aircraft pursuant to ss. 17.3.1. (3) Lessee shall not be entitled to give any Renewal Notice if it (aa) has not delivered a Preliminary Notice to Lessor, (bb) has delivered a Purchase Notice to Lessor, or (cc) has previously delivered four Renewal Notices to Lessor. 17.2.2 RENEWAL RENT (a) During each Renewal Term, Lessee shall pay to Lessor on each Payment Date, in the manner and in the funds of the type specified in ss. 3.3, Renewal Rent in arrears. (b) The Renewal Rent payable by Lessee on each Payment Date during each Renewal Term shall be the Fixed Rate (or, if less, the Applicable Percentage of the Fair Market Rental Value). Any such Fair Market Rental Value shall be determined not more than 120 days and not less than 100 days before the first day of such Renewal Term by mutual agreement of Lessor and Lessee or, if they do not agree, by an appraisal in accordance with ss. 17.4. 17.2.3 STIPULATED LOSS AND TERMINATION VALUES (a) For any Renewal Term, Stipulated Loss Value Dates and Termination Value Dates shall be extended throughout such Renewal Term on the same days and for the same months as during the Base Term. (b) Stipulated Loss Value and Termination Value amounts that are payable during any such Renewal Term shall be determined at the same time that the Renewal Rent for such Renewal Term is determined under ss. 17.2.2. Stipulated Loss Values and Termination Values for any such Renewal Term shall, commencing on the firsT day of such Renewal Term, be equal to the Fair Market Sales Value of the Aircraft on such day, and shall decline ratably on a monthly basis to the salvage value of the Aircraft as of the last day of its remaining useful life. (c) For purposes of calculating Stipulated Loss Value and Termination Value amounts applicable during any Renewal Term, the "salvage value" and "useful life" shall be determined by mutual agreement of Lessor and Lessee, or, if they do not agree, by an appraisal in accordance with ss. 17.4. 17.3 PURCHASE OPTIONS 17.3.1 PURCHASE NOTICE (a) Provided that at the time of such election no Special Default or Lease Event of Default exists, Lessee may, subject to ss. 17.1 and this ss. 17.3, elect to purchase the Aircraft: (1) on the EBO Date as shown on Schedule 5 at the price indicated thereon; (2) on any Purchase Date, at a purchase price equal to the Fair Market Sales Value of the Aircraft computed as of the Purchase Date; or (3) (aa) on any Payment Date occurring after the Tax Attribute Period, if a Burdensome Indemnity Payment not waived by Owner Participant shall become due and owing, if Lessee did not cause such indemnity with the intent of permitting such purchase and if such purchase would eliminate such indemnity on a future basis, or (bb) on any Payment Date after the EBO Date, if Lessee has committed to (but not commenced) a Significant Expenditure, then (whether as to clause (aa) or (bb)) at a purchase price equal to the greater of (x) the Fair Market Sales Value of the Aircraft computed as of such Payment Date (not including any portion of the Fair Market Sales Value of the Aircraft attributable to any Significant Expenditure) and (y) the Termination Value for the Aircraft computed as of such Payment Date. (b) Lessee may exercise such option to purchase the Aircraft, by delivery of a written notice (a "PURCHASE NOTICE") to Lessor (with a copy of such Purchase Notice to Owner Participant) not less than 60 days and no more than 365 days before the EBO Date (for a purchase under ss. 17.3.1(a)(1)), not less than 30 days and nO more than 365 days before the Purchase Date (for a purchase under ss. 17.3.1(a)(2)), and not less than 120 days anD no more than 365 days before the Payment Date specified in such Purchase Notice (for a voluntary termination purchase under ss. 17.3.1(a)(3)). (c) Notwithstanding anything to the contrary in any Operative Agreement: (1) Any Purchase Notice delivered or deemed to have been delivered pursuant to ss. 17.3.1(a)(1) or (2) shall be irrevocable and shall constitute an unconditional obligation of Lessee tO purchase the Aircraft under this ss. 17.3; and any Purchase Notice delivered pursuant to ss. 17.3.1(a)(3), shall be revocable until 10 Business Days after the determination of the Fair Market Sales Value in accordance with ss. 17.3.2, and unless so revoked by written notice by Lessee to Lessor (with a copy tO Owner Participant) shall thereafter become irrevocable and shall constitute an unconditional obligation of Lessee to purchase the Aircraft under this ss. 17.3. (2) Lessee shall not be entitled to give any Purchase Notice pursuant toss. 17.3.1(a)(2) if it has not delivered a Preliminary Notice. 17.3.2 DETERMINATION OF FAIR MARKET SALES VALUE The Fair Market Sales Value of the Aircraft shall be determined not more than 120 days and not less than 100 days before the applicable Purchase Date or Payment Date by mutual agreement of Lessor and Lessee, or, if they shall be unable to agree, by an appraisal in accordance with ss. 17.4. 17.3.3 PAYMENTS BY LESSEE (a) If Lessee elects to purchase the Aircraft pursuant to clause (1) of ss. 17.3.1(a), then on thE EBO Date Lessee shall pay to Lessor in immediately available funds: (1) all unpaid Basic Rent due before the EBO Date; plus (2) the EBO Price; plus (3) all Supplemental Rent then due (including any Make-Whole Amount then due), and any sales or transfer tax then due in connection with such purchase. (b) If Lessee elects to purchase the Aircraft pursuant to clause (2) of ss. 17.3.1(a), then on thE applicable Purchase Date Lessee shall pay to Lessor in immediately available funds: (1) all unpaid Basic Rent due on or before such Purchase Date; plus (2) the applicable purchase price for the Aircraft; plus (3) all Supplemental Rent then due, and any sales or transfer tax then due in connection with such purchase. (c) If Lessee elects to purchase the Aircraft pursuant to clause (3) of ss. 17.3.1(a), then on thE Payment Date on which Lessee elects to purchase the Aircraft, Lessee shall pay to Lessor in immediately available funds: (1) all unpaid Basic Rent due on or before such Payment Date; plus (2) the purchase price of the Aircraft pursuant to such clause (3); plus (3) all Supplemental Rent then due (including any Make-Whole Amount then due), and any sales or transfer tax then due in connection with such purchase. 17.3.4 TITLE Upon full and final payment by Lessee of (a) the applicable amount payable under ss. 17.3.3, (b) on aN after-tax basis, all out-of-pocket fees and expenses (including reasonable fees and expenses of counsel) incurred by Lessor, each Participant, and Mortgagee in connection with such purchase and invoiced to Lessee prior thereto, and (c) all other amounts then due and payable by Lessee under the Operative Agreements, Lessor will transfer to Lessee title to the Aircraft in accordance with ss. 4.5. 17.3.5 INSTALLMENT EBO PURCHASE Lessee and Lessor acknowledge that at Lessee's election the EBO Price may be payable in installments as provided in Schedule 5. Lessor and Lessee agree that if Lessee elects to purchase the Aircraft pursuant to ss. 17.3.1(a)(1) and elects to pay the EBO Price in installments, Lessee agrees to provide security to Lessor tO secure the unpaid balance of the EBO Price, which security shall be required to be in an amount and otherwise in form and substance reasonably satisfactory to Lessor and Owner Participant. Subject to the foregoing, upon payment of the initial installment of the EBO Price as set forth in Schedule 5 [with such payment being sufficient to pay all amounts referenced in ss. 2.10(b) of the Mortgage] together with all amounts otherwisE payable pursuant to ss. 17.3.3(a) and ss. 17.3.4, Lessor will transfer title to the Aircraft in accordance with ss. 4.5. 17.3.6 ASSUMPTION OF EQUIPMENT NOTES Lessor and Lessee agree that, if Lessee elects to purchase the Aircraft pursuant to ss. 17.3.1(a)(3) oF this Lease, Lessee may elect to assume the Equipment Notes pursuant to ss. 2.14 of the Mortgage and ss. 11.6 of The Participation Agreement. 17.4 APPRAISALS Whenever Fair Market Rental Value or Fair Market Sales Value of the Aircraft is required to be determined by an appraisal under this ss. 17, Lessee and Lessor shall appoint a mutually-satisfactory Appraiser tO conduct such appraisal. If Lessee and Lessor fail to agree upon a satisfactory Appraiser, then each shall promptly appoint a separate Appraiser, and such Appraisers shall jointly determine such amount. If either Lessee or Lessor does not so appoint an Appraiser, the determination of the single Appraiser appointed shall be final. If two Appraisers are appointed and within seven days after the appointment of the latter of such two Appraisers, they do not agree upon such amount, such two Appraisers shall, within eight days after such latter appointment, appoint a third Appraiser, and such amount shall be determined by such three Appraisers, who shall make their separate appraisals within seven days following the appointment of the third Appraiser, and any determination so made shall be conclusive and binding upon Lessor and Lessee. If no such third Appraiser is appointed within such eight-day period, either Lessor or Lessee may apply to the American Arbitration Association to make such appointment, and both parties shall be bound by such appointment. The foregoing appraisal procedure shall in any event be completed no less than 125 days before the end of the Base Term or any Renewal Term (unless such procedure is undertaken in connection with ss. 15 or ss. 17.3.1(a), in which case it shall be completed promptlY). If three Appraisers are appointed and the difference between the determination which is further from the middle determination and the middle determination is more than 125% of the difference between the middle determination and the third determination, then such further determination shall be excluded, the remaining two determinations shall be averaged, and such average shall be final and binding upon Lessor and Lessee. Otherwise, the average of all three determinations shall be final and binding upon Lessor and Lessee. The fees and expenses of all such Appraisers and such appraisal procedure shall be borne equally by Lessee and Lessor. 18. MISCELLANEOUS 18.1 AMENDMENTS No provision of this Lease may be amended, supplemented, waived, modified, discharged, terminated, or otherwise varied orally, but only by an instrument in writing that specifically identifies the provision of this Lease that it purports to amend, supplement, waive, modify, discharge, terminate, or otherwise vary and is signed by Lessor and Lessee. Each such amendment, supplement, waiver, modification, discharge, termination, or variance shall be effective only in the specific instance and for the specific purpose for which it is given. No provision of this Lease shall be varied or contradicted by oral communication, course of dealing or performance, or other manner not set forth in an agreement, document, or instrument in writing and signed by Lessor and Lessee. 18.2 SEVERABILITY If any provision hereof shall be held invalid, illegal, or unenforceable in any respect in any jurisdiction, then, to the extent permitted by Law, (a) all other provisions hereof shall remain in full force and effect in such jurisdiction, and (b) such invalidity, illegality, or unenforceability shall not affect the validity, legality, or enforceability of such provision in any other jurisdiction. If, however, any Law pursuant to which such provisions are held invalid, illegal, or unenforceable may be waived, Lessor and Lessee hereby waive such Law to the full extent permitted, to the end that this Lease shall be deemed to be a valid and binding agreement in all respects, enforceable in accordance with its terms. 18.3 THIRD-PARTY BENEFICIARY This Lease is not intended to provide, and shall not provide, any Person not a party hereto (other than Mortgagee, the Participants, the Mortgage Indemnitees, and the Persons referred to in ss. 4.6) with any rights oF any nature whatsoever against either of the parties hereto, and no Person not a party hereto (other than Mortgagee, the Participants, the Mortgage Indemnitees, and the Persons referred to in ss. 4.6) shall have anY right, power, or privilege in respect of this Lease, or have any benefit or interest arising out of this Lease. 18.4 REPRODUCTION OF DOCUMENTS This Lease (including all annexes, schedules, and exhibits hereto) and all agreements, instruments, and documents relating hereto, including (a) consents, waivers, and modifications that may hereafter be executed, and (b) financial statements, certificates, and other information previously or hereafter furnished to any party hereto, may be reproduced by such party by any photographic, photostatic, microfilm, micro-card, miniature photographic, or other similar process, and such party may destroy any original documents so reproduced. Any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made by such party in the regular course of business), and any enlargement, facsimile, or further reproduction of such reproduction likewise is admissible in evidence. 18.5 COUNTERPARTS This Lease and any amendments, waivers, consents, or supplements hereto may be executed in any number of counterparts (or upon separate signature pages bound together into one or more counterparts), each fully-executed set of which when so executed shall be deemed to be an original, and all of which counterparts, taken together, shall constitute one and the same instrument. The single fully-executed original of this Lease marked "Original" on the signature page hereof is the original for chattel paper purposes, and all other counterparts are duplicates for chattel paper purposes and are marked "duplicate" on the signature page hereof. No security interest in this Lease may be perfected by the possession of any counterpart other than the "Original". 18.6 NOTICES Unless otherwise expressly permitted by the terms hereof, all notices, requests, demands, authorizations, directions, consents, waivers, and other communications required or permitted to be made, given, furnished, or filed hereunder shall be made, given, furnished, or filed, and shall become effective, in the manner prescribed in ss. 15.7 of the Participation Agreement. 18.7 GOVERNING LAW THIS LEASE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY, AND PERFORMANCE. THIS LEASE IS BEING DELIVERED IN THE STATE OF NEW YORK. 18.8 NO WAIVER No failure on the part of Lessor to exercise, and no delay by Lessor in exercising, any of its rights, powers, remedies, or privileges under this Lease or provided at Law, in equity or otherwise shall impair, prejudice, or constitute a waiver of any such right, power, remedy, or privilege or be construed as a waiver of any breach hereof or default hereunder or as an acquiescence therein, nor shall any single or partial exercise of any such right, power, remedy, or privilege preclude any other or further exercise thereof by Lessor or the exercise of any other right, power, remedy, or privilege by Lessor. No notice to or demand on Lessee in any case shall, unless otherwise required under this Lease, entitle Lessee to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of Lessor to any other or further action in any circumstances without notice or demand. 18.9 ENTIRE AGREEMENT This Lease, together with the other Operative Agreements, on and as of the date hereof constitute the entire agreement of the parties hereto with respect to the subject matter hereof and thereof, and all prior understandings or agreements, whether written or oral, between the parties hereto with respect to such subject matter are hereby superseded in their entirety. [THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK.] IN WITNESS WHEREOF, Lessor and Lessee have executed this Lease Agreement N___AT. FIRST SECURITY BANK, NATIONAL ASSOCIATION, NOT IN ITS INDIVIDUAL CAPACITY, EXCEPT AS EXPRESSLY PROVIDED HEREIN, BUT SOLELY AS TRUSTEE UNDER THE TRUST AGREEMENT, as Lessor By: ---------------------------------------------------------- Name: Title: AMERICAN TRANS AIR, INC., as Lessee By: ---------------------------------------------------------- Name: Title: [This is the ORIGINAL counterpart of the Lease for chattel paper purposes, and the receipt hereof is acknowledged by X , -- [print], [title], WILMINGTON TRUST COMPANY. [or] [This is a DUPLICATE executed counterpart, and is NOT the original counterpart, of the Lease, for chattel paper purposes.] AIRCRAFT DESCRIPTION The Aircraft is a Boeing model 737-800 aircraft, consisting of (1) an airframe bearing FAA registration no. N___AT and manufacturer's serial no. __________, (2) two CFM International model CFM56-7 engines (each of which has 750 or more rated takeoff horsepower or its equivalent), bearing manufacturer's serial nos. __________ and __________, and (3) all appliances, parts, instruments, appurtenances, accessories, furnishings, and other equipment or property incorporated in such airframe and engines. RETURN ACCEPTANCE SUPPLEMENT N___AT This Supplement, dated __________, ____, is entered into between First Security Bank, National Association, a national banking association, not in its individual capacity but solely as Owner Trustee under Trust Agreement N___AT, dated as of __________________, ____, with the Owner Participant named therein (such Owner Trustee, in its capacity as trustee, being referred to as "LESSOR"), and American Trans Air, Inc. ("Lessee"), an Indiana corporation. Lessor and Lessee have entered into Lease Agreement N___AT (the "LEASE"), dated as of [_____________, ____], relating to the Boeing model 737-800 aircraft described below. Terms defined in the Lease have the same meanings when used in this Supplement. Lessor and Lessee hereby agree as follows: 1. Lessor and Lessee are executing this Return Acceptance Supplement to confirm that, on the date hereof, Lessee returned the following Airframe and Engines to Lessor: Airframe: U.S. registration no. N___AT; manufacturer's serial no. __________; and Engines: two CFM International engines, bearing manufacturer's serial nos. __________ and ----------. 2. This Return Acceptance Supplement is being delivered in _____________________. 3. Lessor and Lessee agree that the Lease is terminated, except for the provisions thereof that expressly survive termination. IN WITNESS WHEREOF, Lessor and Lessee have executed this Return Acceptance Supplement N___AT. FIRST SECURITY BANK, NATIONAL ASSOCIATION, NOT IN ITS INDIVIDUAL CAPACITY, EXCEPT AS EXPRESSLY PROVIDED HEREIN, BUT SOLELY AS TRUSTEE UNDER THE TRUST AGREEMENT, as Lessor By: ---------------------------------------------------------- Name: Title: AMERICAN TRANS AIR, INC., as Lessee By: ---------------------------------------------------------- Name: Title: CERTAIN TERMS DEFINED TERM DEFINITION Commencement Date __________, 200_ Fixed Rate $__________ per quarterly Payment Date [60% OF AVERAGE BASIC RENT DURING THE BASE TERM] Minimum Liability Insurance Amount (CONFIDENTIAL MATERIAL OMITTED) Past-Due Rate (CONFIDENTIAL MATERIAL OMITTED) Scheduled Expiration Date (a) for the Base Term, the 20th anniversary of the Delivery Date, and (b) for a Renewal Term, the day before the first anniversary of the first day of that Renewal Term Similar Aircraft Boeing model 737-800 aircraft (other than the Aircraft) SLV Rate (CONFIDENTIAL MATERIAL OMITTED) Threshold Amount (CONFIDENTIAL MATERIAL OMITTED) BASIC RENT PAYMENTS PERCENTAGE OF PAYMENT DATE LESSOR'S COST BASIC RENT ALLOCATIONS FROM (BUT ALLOCATION OF NOT INCLUDING) THROUGH BASIC RENT - -------------------------------------------------------------------------------- STIPULATED LOSS VALUE STIPULATED STIPULATED PREPAID BASIC DEFERRED BASIC LOSS VALUE DATE LOSS VALUE RENT AMOUNT RENT AMOUNT - -------------------------------------------------------------------------------- TERMINATION VALUE TERMINATION TERMINATION VALUE PREPAID BASIC DEFERRED BASIC VALUE DATE RENT AMOUNT RENT AMOUNT - -------------------------------------------------------------------------------- EBO PRICE SCHEDULE Unadjusted Adjusted EBO EBO Price Rent Adjustment Amount (Percentage of (Percentage of (Percentage of EBO Date Lessor's Cost) Lessor's Cost) Lessor's Cost) PERMITTED COUNTRIES Argentina* Australia Austria Bahamas Belgium Bermuda Brazil* Canada Chile* Denmark Ecuador* Egypt* Finland France Germany Greece* Hungary* Iceland India* Indonesia* Ireland Italy** Jamaica* Japan Liechtenstein* Luxembourg Malaysia* Malta* Mexico** Monaco Morocco* Netherlands New Zealand Norway Paraguay* Peoples Republic of China* Philippines* Portugal Republic of China (Taiwan)* Singapore* South Africa* South Korea* Spain Sweden Switzerland Thailand* United Kingdom Uruguay* Venezuela* United States of America *SUBLEASING AND RE-REGISTRATION PERMITTED ONLY WITH OWNER PARTICIPANT'S PRIOR WRITTEN CONSENT, WHICH CONSENT OWNER PARTICIPANT MAY WITHHOLD IN ITS SOLE AND ABSOLUTE DISCRETION. **APPROVED FOR SUBLEASING BUT LESSEE MAY NOT RE-REGISTER IN SUCH COUNTRY WITHOUT OWNER PARTICIPANT'S PRIOR WRITTEN CONSENT, WHICH CONSENT OWNER PARTICIPANT MAY WITHHOLD IN ITS SOLE AND ABSOLUTE DISCRETION.. PLACARDS Leased from First Security Bank, National Association, as owner trustee and mortgaged to Wilmington Trust Company, as trustee ANNEX B RETURN CONDITIONS This Annex B shall apply to the return of the Aircraft by or on behalf of Lessee under the Lease, whether at a Scheduled Expiration Date, upon the exercise of Lessee's rights under ss. 9 of the Lease, upon thE exercise of Lessor's remedies following the occurrence of a Lease Event of Default, or otherwise. However, this Annex B shall not apply (1) if an Event of Loss to the Aircraft occurs (unless the Aircraft is replaced under ss. 10.1.3 of the Lease), or (2) if Lessee buys the Aircraft in accordance with ss. 17 of the Lease. The terms defined in Annex A to Lease Agreement N___AT, when capitalized as in Annex A, have the same meanings when used in this "Return Conditions" Annex. Annex A also contains rules of usage that control construction in this "Return Conditions" Annex. (CONFIDENTIAL MATERIAL OMITTED) ANNEX C MAINTENANCE The terms defined in Annex A to Lease Agreement N___AT, when capitalized as in Annex A, have the same meanings when used in this "Maintenance" Annex. Annex A also contains rules of usage that control construction in this "Maintenance" Annex. A. MAINTENANCE. ----------- Lessee shall maintain, service, repair, and overhaul the Aircraft (or cause the Aircraft to be maintained, serviced, repaired, and overhauled) in accordance with (1) maintenance standards required by, or substantially equivalent to those required by, the FAA or the central civil aviation authority of Canada, Japan, and the JAA for the Aircraft (the "MAINTENANCE PROGRAM"), so as (aa) to keep the Aircraft in as good operating condition as originally delivered hereunder, ordinary wear and tear excepted, and (bb) to keep the Aircraft in such operating condition as may be necessary to enable the applicable airworthiness certificate for the Aircraft to be maintained under the regulations of the FAA or other Aviation Authority then having jurisdiction over the operation of the Aircraft, other than during (x) temporary periods of storage in accordance with applicable regulations, (y) maintenance and modification permitted hereunder, and (z) periods when the FAA or such other Aviation Authority has revoked or suspended the airworthiness certificates for Similar Aircraft; and (2) except during periods when a Permitted Sublease is in effect, the same standards as Lessee uses with respect to similar aircraft of similar size in its fleet operated by Lessee in similar circumstances and, during any period in which a Permitted Sublease is in effect, the same standards used by the Permitted Sublessee with respect to similar aircraft of similar size in its fleet and operated by the Permitted Sublessee in similar circumstances. Lessee further agrees that the Aircraft will be maintained, used, serviced, repaired, overhauled, or inspected in compliance with applicable Laws with respect to the maintenance of the Aircraft and in compliance with each applicable airworthiness certificate, license, and registration relating to the Aircraft issued by the Aviation Authority, other than minor or nonrecurring violations with respect to which corrective measures are taken upon discovery thereof and except to the extent Lessee or Permitted Sublessee is contesting in good faith the validity or application of any such Law or requirement relating to any such certificate, license, or registration in any reasonable manner which does not create a material risk of sale, loss, or forfeiture of the Aircraft, the Airframe, or any Engine or the interest of any Participant therein or a material risk of criminal liability or material civil penalty against Lessor, Owner Participant, or Mortgagee. Lessee shall cause the Aircraft Documents to be maintained in English and promptly furnish Lessor and Owner Participant with information necessary for filing with applicable governmental aviation authorities. B. REPLACEMENT OF PARTS. -------------------- Except as otherwise provided herein, Lessee will promptly replace (or cause to be replaced) all Parts that are from time to time incorporated or installed in or attached to the Aircraft, and that become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair, or permanently rendered unfit for use for any reason whatsoever. In addition, Lessee may remove (or permit to be removed) any Parts in the ordinary course of maintenance, service, repair, overhaul, or testing, whether or not such Parts are worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair, or permanently rendered unfit for use; PROVIDED, that, except as otherwise provided herein, Lessee will replace or cause the replacement of such Parts as promptly as practicable. All replacement Parts shall be free and clear of all Liens, except for Permitted Liens and pooling arrangements to the extent permitted by ss. C below and shall be in good operating condition and (except in thE case of replacement property installed on the basis of operational exigencies) have a value and utility not less than the value and utility of the Parts replaced (assuming such replaced Parts were in the condition required under this Lease). Except as otherwise provided herein, all Parts at any time removed from the Aircraft shall remain the property of Lessor, no matter where located, until they are replaced by Parts that have been incorporated or installed in or attached to the Aircraft and that meet the requirements for replacement Parts specified above. As soon as a replacement Part is incorporated or installed in or attached to the Aircraft as above provided, without further act, (1) title to the replaced Part shall vest in Lessee (or if a Permitted Sublease is then in effect, in the Permitted Sublessee) free and clear of all Lessor Liens and all rights of Lessor, and the replaced Part shall no longer be deemed a Part hereunder, (2) title to such replacement Part shall vest in Lessor, subject only to Permitted Liens and pooling arrangements to the extent permitted by ss. C below and except in the case of replacement property temporarily installed on an emergency basis, and (3) such replacement Part shall become subject to this Lease and the Mortgage and be deemed part of the Aircraft for all purposes hereof and thereof to the same extent as the Parts originally incorporated or installed in or attached to such Aircraft. C. POOLING OF PARTS. ---------------- Any Part removed from the Aircraft may be subjected by Lessee or a Permitted Sublessee to a normal pooling arrangement customary in the airline industry and entered into in the ordinary course of business of Lessee or such Permitted Sublessee, so long as a Part replacing such removed Part shall be incorporated or installed in or attached to the Aircraft in accordance with ss. B of this Annex C as promptly as practicable afteR the removal of such removed Part. In addition, any replacement Part when incorporated or installed in or attached to the Aircraft may be owned by any third party subject to such a normal pooling arrangement, so long as Lessee or Permitted Sublessee, as promptly thereafter as reasonably possible, either (1) causes title to such replacement Part to vest in Lessor in accordance with ss. B of this Annex C, free and clear of all Liens (excepT Permitted Liens), or (2) replaces (or causes to be replaced) such replacement Part by incorporating or installing in or attaching to the Aircraft a further replacement Part owned by Lessee or a Permitted Sublessee free and clear of all Liens (except Permitted Liens) and by causing title to such further replacement Part to vest in Lessor in accordance with ss. B of this Annex C. D. ALTERATIONS, MODIFICATIONS, AND ADDITIONS. ----------------------------------------- Lessee shall make (or cause to be made) such alterations and modifications in and additions to the Aircraft as may be required from time to time to meet the applicable standards of the FAA or other Aviation Authority having jurisdiction over the operation of the Aircraft, to the extent made mandatory in respect of the Aircraft (a "MANDATORY MODIFICATION"); PROVIDED, that Lessee or any Permitted Sublessee may, in good faith and by appropriate procedure, contest the validity or application of any law, rule, regulation, or order in any reasonable manner which does not have more than a DE MINIMIS risk of adversely affecting Lessor's interest in the Aircraft (and, so long as any Equipment Notes are outstanding, the Mortgagee) and does not involve more than a DE MINIMIS risk of sale, forfeiture, or loss of the Aircraft or the interest of any Participant therein, more than a DE MINIMIS risk of material civil penalty, or any risk of criminal liability being imposed on Lessor, Owner Participant, Mortgagee, or the holder of any Equipment Note. In addition, Lessee may make or permit to be made such alterations and modifications in and additions to the Aircraft (each an "OPTIONAL MODIFICATION") as Lessee or any Permitted Sublessee deems desirable in the proper conduct of its business, including removal of Parts which Lessee deems are obsolete or no longer suitable or appropriate for use in the Aircraft (PROVIDED, that Lessee's right to remove obsolete Parts will be limited to Parts having an aggregate original cost not exceeding 1% of Lessor's Cost of the Aircraft with Lessor having the right to request such parts be shipped to Owner Participant upon removal at Lessee's expense; PROVIDED, that no such Optional Modification shall (1) diminish the fair market value, estimated residual value, utility, or economic useful life of the Aircraft or any Engine below its fair market value, estimated residual value, utility, or economic useful life immediately before such Optional Modification (assuming the Aircraft or such Engine was in the condition required by the Lease immediately before such Optional Modification), (2) cause the Aircraft to cease to have the applicable standard airworthiness certificate, or (3) cause the Aircraft to become "limited use property" within the meaning of Rev. Proc. 79-48. Except as otherwise provided herein, title to all Parts (other than Removable Parts (as defined below)) incorporated or installed in or attached to the Aircraft as the result of such Optional Modification shall, without further act, vest in Lessor and become subject to this Lease and the Mortgage. Notwithstanding anything to the contrary in this ss. D, Lessee or a Permitted Sublessee may, at any time during the Term, removE any Part (such Part being referred to herein as a "REMOVABLE PART") if (aa) such Part is in addition to, and not in replacement of or substitution for, any Part originally incorporated or installed in or attached to the Aircraft at the time of delivery thereof to Lessee or any Part in replacement of, or substitution for, any such Part, (bb) such Part is not required to be incorporated or installed in or attached to the Aircraft pursuant to the terms of ss. A of this Annex C or the first sentence of this ss. D or pursuant to the terms of any insuraNCE policies required to be carried hereunder or any applicable law, and (cc) such Part can be removed from the Airframe or Engine without in any material respect diminishing the fair market value, estimated residual value, utility, or remaining economic useful life that the Airframe or Engine would have had at the time of removal had such removal not occurred, assuming that such Airframe or Engine was in the condition and repair required to be maintained by the terms hereof and such Removable Part had not been incorporated or installed in or attached to the Aircraft. Removable Parts may be leased from or financed by third parties other than Lessor. Title to any Removable Part shall not vest in Lessor or be subject to the Lien of the Mortgage; except that any Part not removed before the return to Lessor hereunder of the Airframe or Engine on which it is incorporated, installed, or attached shall become the property of Lessor. E. RECORDS. ------- Lessee shall maintain (or cause to be maintained) all Aircraft Documents. All Aircraft Documents that are specific to the Aircraft shall be the property of Lessor, but shall become the property of Lessee upon Lessee's purchase of the Aircraft pursuant to the terms of this Lease or upon the occurrence of an Event of Loss and Lessee's compliance with ss. 10. ANNEX D INSURANCE The terms defined in Annex A to Lease Agreement N___AT, when capitalized as in Annex A, have the same meanings when used in this "Insurance" Annex. Annex A also contains rules of usage that control construction in this "Insurance" Annex. A. LIABILITY INSURANCE 1. Except as provided in ss. A2 below, Lessee will carry or cause to be carried at all times, at nO expense to Lessor, Owner Participant, or Mortgagee, comprehensive airline legal liability (including passenger liability, property damage, and contractual liability insurance) with respect to the Aircraft which is (a) in an amount not less than the greater of (x) the amount of comprehensive airline legal liability insurance from time to time applicable to aircraft owned or leased and operated by Lessee of the same type and operating on similar routes as the Aircraft, and (y) the Minimum Liability Insurance Amount per occurrence; (b) of the type and covering the same risks as from time to time applicable to aircraft, operated by Lessee and similarly-situated carriers, of the same type as the Aircraft; and (c) maintained in effect with insurers of internationally recognized responsibility in the international aviation industry (such insurers being referred to herein as "APPROVED INSURERS"). 2. During any period that the Aircraft is on the ground and not in operation, Lessee may carry or cause to be carried, in lieu of the insurance required by ss. A1 above, insurance otherwise conforming with thE provisions of ss. A1 except that (a) the amounts of coverage shall not be required to exceed the amounts of publiC liability and property damage insurance from time to time applicable to aircraft owned or operated by Lessee of the same type as the Aircraft which are on the ground and not in operation, and (b) the scope of the risks covered and the type of insurance shall be the same as from time to time shall be applicable to aircraft owned or operated by Lessee of the same type which are on the ground and not in operation. B. HULL INSURANCE 1. Except as provided in ss. B2 below, Lessee will carry or cause to be carried at all times, at nO expense to Lessor, Owner Participant, or Mortgagee, with Approved Insurers "all-risk" ground and flight aircraft hull insurance covering the Aircraft (including the Engines when they are installed on the Airframe or any other airframe) which is of the type as from time to time applicable to aircraft operated by Lessee of the same type as the Aircraft for an amount denominated in United States Dollars not less than the Stipulated Loss Value of the Aircraft Any policies of insurance carried in accordance with this ss. B1 covering the Aircraft and any policieS taken out in substitution or replacement for any such policies (a) shall name Mortgagee (or, if the Lien of the Mortgage has been discharged, Lessor) as exclusive loss payee for any proceeds to be paid under such policies up to an amount equal to the Stipulated Loss Value, and (b) shall provide that (aa) in the event of a loss involving proceeds in excess of the Threshold Amount, the proceeds in respect of such loss up to an amount equal to the Stipulated Loss Value for the Aircraft shall be payable to Mortgagee (or, if the Lien of the Mortgage has been discharged, to Lessor), except in the case of a loss with respect to an Engine installed on an airframe other than the Airframe, in which case Lessee (or any Permitted Sublessee) shall endeavor to arrange for any payment of insurance proceeds in respect of such loss to be held for the account of Mortgagee (or, if the Lien of the Mortgage has been discharged, Lessor), whether such payment is made to Lessee (or any Permitted Sublessee) or any third party [and, if Mortgagee (or Lessor) receives such a payment otherwise than in respect of an Event of Loss, then, upon receipt of evidence reasonably satisfactory to Mortgagee (or Lessor) that the damage giving rise to such payment has been repaired or that such payment is then required to pay for repairs then being made, Mortgagee (or Lessor) shall pay the amount of such payment to Lessee or its order], and (bb) the entire amount of any loss involving proceeds of the Threshold Amount or less or the amount of any proceeds of any loss in excess of the Stipulated Loss Value for the Aircraft shall be paid to Lessee or its order unless a Lease Event of Default exists and the insurers have been notified thereof by Lessor or the Mortgagee. In the case of a loss with respect to an engine (other than an Engine) installed on the Airframe, Lessor shall hold any payment to it of any insurance proceeds for that loss for the account of Lessee or any other third party who is entitled to receive such proceeds. 2. During any period that the Aircraft is on the ground and not in operation, Lessee may carry or cause to be carried, in lieu of the insurance required by ss. B1 above, insurance otherwise conforming with thE provisions of ss. B1, except that the scope of the risks and the type of insurance shall be the same as from timE to time applicable to aircraft owned by Lessee of the same type similarly on the ground and not in operation, PROVIDED, that Lessee shall maintain insurance against risk of loss or damage to the Aircraft in an amount equal to the Stipulated Loss Value of the Aircraft during such period that the Aircraft is on the ground and not in operation. C. WAR-RISK, HIJACKING, AND ALLIED PERILS INSURANCE If Lessee (or any Permitted Sublessee) operates or proposes to operate the Aircraft, the Airframe, or any Engine (1) in any area of recognized hostilities, or (2) on international routes and Lessee (or such Permitted Sublessee) maintains war-risk, hijacking, or allied perils insurance for other aircraft that it operates on such routes or in such areas, Lessee shall maintain or cause to be maintained war-risk, hijacking, and allied perils insurance of substantially the same type carried by similar United States commercial air carriers operating the same or comparable models of aircraft on similar routes or in such areas, and in no event in an amount less than the Stipulated Loss Value. D. GENERAL PROVISIONS Any policies of insurance carried in accordance with ss.ss. A, B, and C, including any policies taken out IN substitution or replacement for such policies: (1) shall name Lessor, each Participant, the Liquidity Provider (if any), and Mortgagee (and in respect of liability insurances, to the extent they are available without unreimbursed additional cost to Lessee, each of their respective successors, assigns, directors, agents, officers, and employees) as additional insureds (the "ADDITIONAL INSUREDS"), as their interests may appear; (2) shall apply worldwide and have no territorial restrictions or limitations (except only in the case of war, hijacking, and allied perils insurance required under ss. C, which shall apply to thE fullest extent available in the international insurance market); (3) shall provide that, in respect of the interests of the Additional Insureds in such policies, the insurance shall not be invalidated or impaired by any act or omission (including misrepresentation and nondisclosure) by Lessee (or any Permitted Sublessee) or any other Person (including use for illegal purposes of the Aircraft or any Engine), and shall insure the Additional Insureds regardless of any breach or violation of any representation, warranty, declaration, term, or condition contained in such policies by Lessee (or any Permitted Sublessee); (4) shall provide that, if the insurers cancel such insurance for any reason whatsoever, or if it is allowed to lapse for nonpayment of premium, or if any material change is made in the insurance which adversely affects the interest of any of the Additional Insureds, such cancellation, lapse, or change shall not be effective as to the Additional Insureds for 30 days (seven days in the case of war risk, hijacking, and allied perils insurance) after receipt by the Additional Insureds of written notice by such insurers of such cancellation, lapse or change, PROVIDED, that if any notice period specified above is not reasonably obtainable, such policies shall provide for as long a period of prior notice as shall then be reasonably obtainable; (5) shall waive any rights of recourse, subrogation, setoff (including for unpaid premiums), recoupment, counterclaim, or other deduction, whether by attachment or otherwise, against each Additional Insured; (6) shall be primary without right of contribution from any other insurance that may be available to any Additional Insured; (7) shall provide that all of the liability insurance provisions thereof, except the limits of liability, shall operate in all respects as if a separate policy had been issued covering each party insured thereunder; (8) shall provide that none of the Additional Insureds shall be liable for any insurance premium; and (9) shall contain a 50/50 Clause per Lloyd's Aviation Underwriters' Association Standard Policy Form AVS 103; PROVIDED, that any such endorsements may be subject to any limitations on endorsements generally prevailing in the airline insurance marketplace at the time (E.G., AVN67B). E. REPORTS AND CERTIFICATES; OTHER INFORMATION On or before the Delivery Date and on or before each renewal date of the insurance policies required hereunder (and no less often than on an annual basis), Lessee will furnish or cause to be furnished to Lessor, Owner Participant, and Mortgagee insurance certificates describing in reasonable detail the insurance maintained hereunder and a report, signed by Lessee's or a Permitted Sublessee's regular independent insurance broker (the "INSURANCE BROKER"), stating the opinion of such Insurance Broker that (1) all premiums for the insurance then due have been paid, and (2) such insurance complies with the terms of this Annex D. To the extent that such agreement is reasonably obtainable, Lessee will also cause the Insurance Broker to agree to notify Lessor, Owner Participant, and Mortgagee in writing of any default in the payment of any premium and of any other act or omission on the part of Lessee of which the Insurance Broker has knowledge and which might invalidate or render unenforceable, in whole or in part, any insurance on the Aircraft or Engines or cause the cancellation or termination of such insurance, and to notify Lessor, Owner Participant, and Mortgagee in writing at least 30 days (seven days for war-risk and allied perils coverage, or such shorter period therefor as may be available in the international insurance market, as applicable) before the cancellation, lapse, or materially adverse change of any insurance maintained pursuant to this Annex D. F. RIGHT TO PAY PREMIUMS Each Additional Insured shall have the rights but not the obligations of an additional named insured. No Additional Insured shall have any obligation to pay any premium, commission, assessment, or call due on any such insurance (including reinsurance). Notwithstanding the foregoing, in the event of cancellation of any required insurance due to the nonpayment of premium, each of Lessor, Owner Participant, and Mortgagee shall have the option, in its sole discretion, to pay any such premium and to maintain such coverage, as Lessor, Owner Participant, or Mortgagee may require, until the scheduled expiry date of such insurance and, in such event, Lessee shall, upon demand, reimburse Lessor, Owner Participant, and Mortgagee for amounts that they so pay. G. DEDUCTIBLES; SELF-INSURANCE Lessee may self-insure by way of deductible, premium adjustment, franchise provisions, or otherwise (including, with respect to insurance maintained pursuant to ss. B, insuring for a maximum amount which is lesS than the Stipulated Loss Value of the Aircraft) the insurance covering the risks required to be insured against pursuant to ss. 11 and this Annex D under a program applicable to all aircraft in Lessee's fleet, but in no casE shall the aggregate amount of self-insurance (including any applicable deductible) in regard to ss. 11 and thiS Annex D during any policy year, with respect to the Aircraft, exceed (CONFIDENTIAL MATERIAL OMITTED). In addition, Lessee (and any Permitted Sublessee) may self-insure to the extent that any applicable deductible per aircraft that does not exceed industry standards for major U.S. airlines. LEASE AGREEMENT N___AT dated as of __________, 200_ between FIRST SECURITY BANK, NATIONAL ASSOCIATION, NOT IN ITS INDIVIDUAL CAPACITY, EXCEPT AS EXPRESSLY PROVIDED HEREIN, BUT SOLELY AS OWNER TRUSTEE, Lessor and AMERICAN TRANS AIR, INC., Lessee One Boeing model 737-800 aircraft bearing United States registration no. N___AT and manufacturer's serial no. _____, including two CFM International model CFM56-7 engines bearing manufacturer's serial nos. _____ and _____ - ------------------------------------------------------------- THIS LEASE HAS BEEN EXECUTED IN COUNTERPARTS; SEE SS. 18.5 FOR INFORMATION CONCERNING THE RIGHTS OF HOLDERS OF THE VARIOUS COUNTERPARTS. CONTENTS 1. DEFINITIONS AND CONSTRUCTION................................................1 2. DELIVERY AND ACCEPTANCE.....................................................1 2.1 Delivery and Lease of Aircraft...........................................1 2.2 Acceptance by Lessee.....................................................1 3. TERM AND RENT...............................................................1 3.1 Term 1 3.2 Rent 1 3.3 Payments.................................................................4 4. DISCLAIMER; CERTAIN AGREEMENTS OF LESSOR; SECTION 1110 MATTERS..............4 4.1 Disclaimer of Warranties.................................................4 4.2 Certain Agreements of Lessor.............................................5 4.3 Quiet Enjoyment..........................................................5 4.4 Investment of Funds Held as Security.....................................5 4.5 Title Transfers by Lessor................................................6 4.6 Lessor's Interest in Certain Engines.....................................7 4.7 Lease For U.S. Federal Income Tax Law Purposes; Section 1110 of Bankruptcy Code...........................................................7 5. RETURN OF AIRCRAFT..........................................................7 5.1 Compliance with Annex B..................................................7 5.2 Parking and Related Matters..............................................7 5.3 Return of Other Engines..................................................8 5.4 Fuel 8 6. LIENS 8 7. REGISTRATION; OPERATION; POSSESSION AND SUBLEASING..........................9 7.1 Registration and Operation...............................................9 7.2 Possession..............................................................11 7.3 Certain Limitations on Subleasing or Other Relinquishment of Possession.15 8. MAINTENANCE; REPLACEMENT AND POOLING OF PARTS; ALTERATIONS, MODIFICATIONS, AND ADDITIONS; OTHER LESSEE COVENANTS.................. ....16 8.1 Maintenance; Replacement and Pooling of Parts; Alterations, Modifications, and Additions................................................16 8.2 Information, Certificates, Notices, and Reports.........................16 9. VOLUNTARY TERMINATION UPON OBSOLESCENCE....................................18 9.1 Right of Termination....................................................18 9.2 Election by Lessor to Sell..............................................19 9.3 Retention of Aircraft by Lessor.........................................21 10. LOSS, DESTRUCTION, REQUISITION, ETC.......................................22 10.1 Event of Loss to the Aircraft..........................................22 10.2 Event of Loss to an Engine; Engine Exchanges...........................25 10.3 Conditions to any Replacement..........................................26 10.4 Conveyance to Lessee...................................................28 10.5 Application of Payments................................................28 10.6 Requisition of Aircraft for Use........................................29 10.7 Requisition of an Engine for Use.......................................29 10.8 Application of Payments................................................30 10.9 Application of Payments During Default.................................30 11. INSURANCE.................................................................30 11.1 Lessee's Obligation to Insure..........................................30 11.2 Insurance for Own Account..............................................30 11.3 Indemnification by Government in Lieu of Insurance.....................31 11.4 Application of Insurance Proceeds......................................31 11.5 Application of Payments During Default.................................31 12. INSPECTION................................................................32 13. ASSIGNMENT; MERGER; SUCCESSOR OWNER TRUSTEE...............................33 13.1 In General.............................................................33 13.2 Merger of Lessee.......................................................33 13.3 Assignment as Security for Lessor's Obligations........................34 13.4 Successor Owner Trustee................................................34 14. LEASE EVENTS OF DEFAULT...................................................34 14.1 Payments...............................................................35 14.2 Insurance..............................................................35 14.3 Other Covenants........................................................35 14.4 Representations and Warranties.........................................35 14.5 Bankruptcy and Insolvency..............................................36 14.6 Repudiation or Invalidity of Guarantee.................................36 15. REMEDIES AND WAIVERS......................................................37 15.1 Remedies...............................................................37 15.2 Limitations Under CRAF.................................................40 15.3 Right to Perform for Lessee............................................40 15.4 Determination of Fair Market Rental Value and Fair Market Sales Value..41 15.5 Remedies Cumulative....................................................41 16. LESSEE'S OBLIGATIONS; NO SETOFF, COUNTERCLAIM, ETC........................41 17. RENEWAL AND PURCHASE OPTIONS..............................................42 17.1 Notices Generally......................................................42 17.2 Renewal Options........................................................42 17.3 Purchase Options.......................................................44 17.4 Appraisals.............................................................46 18. MISCELLANEOUS.............................................................47 18.1 Amendments.............................................................47 18.2 Severability...........................................................48 18.3 Third-Party Beneficiary................................................48 18.4 Reproduction of Documents..............................................48 18.5 Counterparts...........................................................48 18.6 Notices................................................................49 18.7 Governing Law..........................................................49 18.8 No Waiver..............................................................49 18.9 Entire Agreement.......................................................49 ANNEXES, EXHIBITS, AND SCHEDULES ANNEX A Definitions ANNEX B Return Conditions ANNEX C Maintenance ANNEX D Insurance EXHIBIT A Aircraft Description EXHIBIT B Form of Return Acceptance Supplement SCHEDULE 1 Certain Terms SCHEDULE 2 Basic Rent Payments SCHEDULE 2A Basic Rent Allocations SCHEDULE 3 Stipulated Loss Value Schedule SCHEDULE 4 Termination Value Schedule SCHEDULE 5 EBO Price Schedule SCHEDULE 6 Permitted Countries SCHEDULE 7 Placards LEASE AGREEMENT N___AT This Lease Agreement N___AT (this "LEASE") dated as of __________, 200_, between (1) First Security Bank, National Association, a national banking association, not in its individual capacity (except as expressly provided herein) but solely as Owner Trustee ("LESSOR"), and (2) American Trans Air, Inc. ("LESSEE"), an Indiana corporation. Lessor and Lessee agree as follows: 1. DEFINITIONS AND CONSTRUCTION The terms defined in Annex A, when capitalized as in Annex A, have the same meanings when used in this Lease. Annex A also contains rules of usage that control construction in this Lease. 2. DELIVERY AND ACCEPTANCE 2.1 DELIVERY AND LEASE OF AIRCRAFT Lessor hereby leases the Aircraft to Lessee for the Term, and Lessee hereby leases the Aircraft from Lessor for the Term. 2.2 ACCEPTANCE BY LESSEE Lessee hereby confirms to Lessor that Lessee has duly and irrevocably accepted delivery of the Aircraft for all purposes of this Lease. 3. TERM AND RENT 3.1 TERM The Aircraft shall be leased hereunder for the Term, unless this Lease or the leasing of the Aircraft is earlier terminated in accordance with any provision of this Lease. 3.2 RENT 3.2.1 BASIC RENT; ADJUSTMENTS TO BASIC RENT AND CERTAIN OTHER AMOUNTS (a)......During the Base Term, Lessee shall pay to Lessor, on each Payment Date, Basic Rent in the amount equal to the percentage of Lessor's Cost specified in Schedule 2 for such Payment Date. The amounts and periods of Lessee's liability for Basic Rent shall be as allocated in accordance with Schedule 2A. Such Basic Rent payments and such allocations shall be adjusted pursuant to ss. 3.2.1(b). During any Renewal Term, Lessee shall pay to Lessor, on each Payment Date, Basic Rent equal to the Renewal Rent for that Renewal Term, determined pursuant to ss. 17.2.2. (b)......Basic Rent, Basic Rent allocations, Stipulated Loss Values, Termination Values, and EBO Price shall be subject to adjustment as follows: (1) If Transaction Expenses paid by Lessor pursuant to ss. 9.2 of the Participation Agreement are determined to be other than 2.0% of Lessor's Cost, then the Basic Rent percentages in Schedule 2, the Basic Rent allocations in Schedule 2A, the Stipulated Loss Value percentages in Schedule 3, the Termination Value percentages in Schedule 4, and the EBO Price shall be recalculated (upwards or downwards) by Owner Participant, on or before the 120th day after the Delivery Date using the same methods and assumptions used to calculate original Basic Rent, EBO Price, Stipulated Loss Value, and Termination Value percentages, in order (aa) to maintain Owner Participant's Net Economic Return, and (bb) to the extent possible consistent with clause (aa) of this ss. 3.2.1(b)(1), to minimize the Net Present Value of Rents to Lessee. (2) Notwithstanding the foregoing, in no event shall any adjustment to the EBO Price be made such that the EBO Price is less than the greatest of (aa) the adjusted Stipulated Loss Value as of the EBO Date, (bb) the estimated fair market value of the Aircraft on the EBO Date as set forth in the Appraisal referred to in ss. 5.1.2(m) of the Participation Agreement, and (cc) the sum of the present values of (i) Basic Rent payable, as adjusted, during the Base Term after the EBO Date, and (ii) the appraised fair market value of the Aircraft at the end of the Base Term as estimated in the Appraisal referred to in ss. 5.1.2(m) of the Participation Agreement, each discounted back to the EBO Date (using a discount rate of 16.5 %). (c) All adjustments pursuant to ss. 3.2.1(b) shall be made as promptly as practicable after either Owner Participant or Lessee gives notice to the other that an event has occurred that requires an adjustment. Owner Participant and Lessee shall give prompt notice to the other of any event requiring an adjustment. Any recalculation of the percentages of Basic Rent payments, Basic Rent allocations, Stipulated Loss Value, Termination Value, and EBO Price shall be prepared by Owner Participant, subject to verification at the request of Lessee in accordance with this ss. 3.2.1(c), on the basis of the same methodology and assumptions used by Owner Participant in determining the percentages of Basic Rent, Stipulated Loss Value, Termination Value, and EBO Price as of the Delivery Date, except as such assumptions have been modified to reflect the events giving rise to adjustments hereunder and taking into account the law applicable at the time of such adjustment. Promptly after an adjustment is made hereunder, Owner Participant shall deliver to Lessee a description of such adjustment, setting forth in reasonable detail the calculation thereof. All adjustments (1) shall be made so as to avoid characterization of the Lease as a "disqualified leaseback or long-term agreement" within the meaning of Code ss. 467 and Treasury Regulations thereunder, and (2) shall be in compliance with the requirements of ss. 4(1) and ss. 4(6) of Revenue Procedure 75-21 and ss.ss. 4.02(5), 4.07(l), and 4.07(2) of Revenue Procedure 75-28, except to the extent that on the Delivery Date the Lease constituted a "disqualified leaseback or long-term agreement" or was not in compliance with the Revenue Procedure sections referred to in clause (2). In connection with any such adjustments to payments and allocations of Basic Rent, appropriate corresponding adjustments shall be made to the percentages set forth on Schedules 3 and 4 in the columns headed "Deferred Basic Rent Amount" and "Prepaid Basic Rent Amount". All of the foregoing adjustments shall be set forth in an amendment to this Lease. (d) If Lessee believes that any calculations by Owner Participant pursuant to ss. 3.2.1(c) are in error, and if, after consultation, Lessee and Owner Participant do not agree on an adjustment, then a nationally-recognized firm of accountants selected by Lessee and reasonably satisfactory to Owner Participant shall verify such calculations. Owner Participant will make available to such firm (but not to Lessee or any representative of Lessee) the methodology and assumptions referred to in ss. 3.2.1(c) and any modifications thereto made to reflect the events giving rise to adjustments hereunder (subject to the execution by such firm of a confidentiality agreement, reasonably acceptable to Owner Participant, prohibiting disclosure of such methodology and assumptions to any third party). The determination by such firm of accountants shall be final. Lessee will pay the reasonable costs and expenses of such verification by such accountants, except that if it results in (1) a decrease in Basic Rent which decreases the remaining Net Present Value of Rents by ten or more basis points from the remaining Net Present Value of Rents as recalculated by Owner Participant, or (2) a material reduction in Stipulated Loss Values, Termination Values, or the EBO Price, then Owner Participant will pay such costs and expenses. 3.2.2 SUPPLEMENTAL RENT Lessee shall pay to Lessor, or to whomever is entitled to it, any and all Supplemental Rent when and as it becomes due and owing. Lessee will also pay to Lessor, or to whomever is entitled to it, as Supplemental Rent, to the extent permitted by applicable Law, interest at the Past-Due Rate on any part of any amount of Rent (including Supplemental Rent) not paid by 11:00 a.m., New York time, on the date when due (so long as, in the case of any Person not a party to the Participation Agreement, Lessee had received timely notice of the account to which such payment was required to be made), for the period from and including the date on which the same was due to (but excluding) the date of payment in full. 3.3 PAYMENTS (a) Payments of Rent by Lessee shall be paid by wire transfer of immediately available Dollars, not later than 11:00 a.m., New York City time, on the date when due, to the account of Lessor specified in Schedule 1 to the Participation Agreement (or to such other account in the United States as Lessor specifies to Lessee in writing at least 10 Business Days before such payment of Rent is due), or, in the case of any payment of Supplemental Rent expressly payable to a Person other than Lessor, to the Person that shall be entitled thereto, to such account in the United States as such Person specifies from time to time to Lessee at least 10 Business Days before such payment of Rent is due. (b) Except as otherwise expressly provided herein, whenever any payment of Rent shall be due on a day that is not a Business Day, such payment shall be made on the next day that is a Business Day, and, if such payment is made on such next Business Day, no interest shall accrue on the amount of such payment during such extension. (c) All computations of interest under this Lease shall be made on the basis of a year of 360 days composed of twelve 30-day months. 4. DISCLAIMER; CERTAIN AGREEMENTS OF LESSOR; SECTION 1110 MATTERS 4.1 DISCLAIMER OF WARRANTIES LESSOR LEASES AND LESSEE TAKES THE AIRCRAFT "AS-IS, WHERE-IS." LESSEE ACKNOWLEDGES AND AGREES THAT, AS BETWEEN LESSEE AND LESSOR AND OWNER PARTICIPANT, (A) LESSEE HAS SELECTED THE AIRCRAFT AND MANUFACTURER THEREOF, AND (B) NEITHER LESSOR NOR OWNER PARTICIPANT MAKES, HAS MADE, OR SHALL BE DEEMED TO HAVE MADE, AND EACH WILL BE DEEMED TO HAVE EXPRESSLY DISCLAIMED, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO: (1) THE AIRWORTHINESS, VALUE, CONDITION, DESIGN, OPERATION, MERCHANTABILITY, OR FITNESS FOR USE OR FOR ANY PARTICULAR PURPOSE OF THE AIRFRAME, ANY ENGINE, OR ANY PART THEREOF; (2) THE QUALITY OF THE MATERIAL OR WORKMANSHIP WITH RESPECT TO THE AIRFRAME, ANY ENGINE, OR ANY PART THEREOF; (3) THE ABSENCE OF LATENT OR ANY OTHER DEFECT IN THE AIRFRAME, ANY ENGINE, OR ANY PART THEREOF, WHETHER OR NOT DISCOVERABLE; (4) THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK, OR COPYRIGHT, OR THE LIKE; OR (5) THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, OR ANY OTHER IMPLIED REPRESENTATION OR WARRANTY WHATSOEVER WITH RESPECT TO THE AIRFRAME, ANY ENGINE, OR ANY PART THEREOF. 4.2 CERTAIN AGREEMENTS OF LESSOR Unless an Event of Default exists, Lessor agrees to make available to Lessee such rights as Lessor may have under any warranty with respect to the Aircraft made, or made available, by Airframe Manufacturer or Engine Manufacturer, or any of their subcontractors or suppliers, pursuant to and in accordance with the terms of the Purchase Agreement Assignment. 4.3 QUIET ENJOYMENT So long as no Event of Default exists, Lessor shall not interfere with Lessee's rights hereunder to continued possession, use, and operation of, and quiet enjoyment of, the Aircraft during the Term. 4.4 INVESTMENT OF FUNDS HELD AS SECURITY 4.4.1 INVESTMENT Any money required to be paid to or retained by Lessor that is required to be paid to Lessee or applied as provided herein shall, until paid to Lessee as provided herein or applied as provided herein, be invested by Lessor from time to time as directed in writing by Lessee (or, if Lessee does not so direct, by or as directed by Lessor in its sole discretion) and at Lessee's risk and expense in Cash Equivalents so long as such Cash Equivalents specified by Lessee or Lessor (as applicable) can be acquired by Lessor using its reasonable best efforts. 4.4.2 PAYMENT OF GAIN OR LOSS Any net gain (including interest received) realized as the result of investments pursuant to ss. 4.4.1 (net of any fees, commissions, and other reasonable expenses incurred in connection with such investment) shall be held and applied in the same manner as the principal amount is to be held and applied hereunder. Lessee will promptly pay to Lessor, on demand, the amount of any loss realized as the result of any such investment (together with any fees, commissions, and other reasonable expenses incurred in connection with such investment), such amount so paid to be held and applied by Lessor as contemplated in ss. 4.4.1. 4.4.3 LIMITATION OF LIABILITY All investments under this ss. 4.4 shall be at Lessee's risk and expense, and Lessor shall not be liable for any loss resulting from any investment made under this ss. 4.4 other than by reason of its willful misconduct or gross negligence. Any such investment may be sold (without regard to its maturity) by Lessor without instructions whenever such sale is necessary to make a distribution required by this Lease. 4.5 TITLE TRANSFERS BY LESSOR If Lessor shall be required to transfer title to the Aircraft, the Airframe, or any Engine to Lessee or any other Person pursuant to this Lease, then (a) Lessor shall (1) transfer to Lessee or such other Person (as applicable) all of Lessor's right, title and interest in and to the Aircraft, the Airframe, or such Engine (as applicable), free and clear of all Lessor Liens attributable to Lessor, FSB, or Owner Participant, (2) assign to Lessee or such other Person (as applicable), if and to the extent permitted under the Purchase Agreement, all warranties of Airframe Manufacturer and Engine Manufacturer with respect to the Aircraft, the Airframe, or such Engine, and (3) assign to Lessee or such other Person (as applicable), if and to the extent permitted, all claims, if any, for damage to the Aircraft, the Airframe, or such Engine, in each case free of Lessor Liens attributable to Lessor, FSB, or Owner Participant, and without recourse or warranty of any kind whatsoever (except as to the transfer described in clause (1) above and as to the absence of such Lessor Liens), and (b) Lessor shall promptly deliver to Lessee or such other Person (as applicable), a bill of sale and agreements of assignment, evidencing such transfer and assignment, and such other instruments of transfer, all in form and substance reasonably satisfactory to Lessee (or such other Person, as applicable), as Lessee (or such other Person, as applicable) may reasonably request and furnish to Lessor. 4.6 LESSOR'S INTEREST IN CERTAIN ENGINES Lessor hereby agrees for the benefit of each lessor, conditional seller, or secured party of any engine (other than an Engine) leased, purchased, or owned by Lessee or any Permitted Sublessee subject to a lease, conditional sale, or other security agreement that Lessor will not acquire or claim, as against such lessor, conditional seller, or secured party, any right, title, or interest in such engine as the result of the installation of such engine on the Airframe at any time while such engine is subject to such lease, conditional sale, or other security agreement and owned by such lessor or conditional seller or subject to a security interest in favor of such secured party. 4.7 LEASE FOR U.S. FEDERAL INCOME TAX LAW PURPOSES; SECTION 1110 OF BANKRUPTCY CODE (a) Lessee and Lessor agree that this Lease is, and shall be treated as, a lease for U.S. federal income tax purposes of the Aircraft, Airframe, Engines, and Parts. (b) Lessee and Lessor intend that Lessor shall be entitled to the benefits of Section 1110 with respect to the right to take possession of the Aircraft, Airframe, Engines, and Parts as provided in this Lease. 5. RETURN OF AIRCRAFT 5.1 COMPLIANCE WITH ANNEX B Lessee shall comply with each of the provisions of Annex B, which provisions are hereby incorporated by this reference as if set forth in full herein. 5.2 PARKING AND RELATED MATTERS If Lessor gives written notice to Lessee, not less than 10 days nor more than 120 days before the end of the Term, requesting parking of the Aircraft upon its return hereunder, Lessee will assist Lessor in procuring (or cause Lessor to be provided with) outdoor parking facilities for the Aircraft for a storage period up to 30 days, starting on the date of such return, and upon Lessor's request to Lessee made at least 10 days before the end of such initial 30-day period, for an additional 90-day period commencing upon expiration of such initial period, at such storage facility in the 48 contiguous states of the United States as Lessee selects. Such storage shall be at Lessor's risk, and Lessor shall pay all applicable storage fees, except that Lessee shall pay the parking fees for the initial 30-day storage period; PROVIDED FURTHER that Lessee's obligation to provide parking shall be subject to Lessor's entering into an agreement with the storage facility, before the storage period begins, providing that Lessor shall bear all maintenance charges and other costs incurred, and that Lessee's obligations hereunder will be solely for the payment of parking fees for the initial 30-day period pursuant to the terms of this ss. 5.2. Unless Lessor and Lessee otherwise agree, the location of such parking will also constitute the return location for the Aircraft. 5.3 RETURN OF OTHER ENGINES If any Engine owned by Lessor is not installed on the Airframe at the time of return hereunder, Lessee shall return the Airframe hereunder with a Replacement Engine meeting the requirements of, and in accordance with, ss. 10 and Annex B. Thereupon, Lessor will transfer to Lessee the Engine constituting part of such Aircraft but not installed on such Airframe at the time of the return of the Airframe. 5.4 FUEL Upon the return of the Airframe upon any termination of this Lease, Lessor shall pay Lessee, as compensation for any fuel or oil contained in the fuel or oil tanks of such Airframe, the value of such fuel or oil at the price paid by Lessee for such fuel or oil. However, if the Aircraft is being returned in connection with the exercise of remedies pursuant to ss. 15, Lessor shall have no obligation to make such payment to Lessee until Lessor shall have been paid all amounts due to it pursuant to ss. 15. 6. LIENS Lessee shall not, directly or indirectly, create, incur, assume, or suffer to exist any Lien on or with respect to the Aircraft, the Airframe, any Engine, or any Part, title to any of the foregoing, or any interest therein, or Lessee's rights in and to this Lease or any Permitted Sublease, except (a) the rights of Lessor, Owner Participant, and Lessee under the Operative Agreements, and of any Permitted Sublessee under any Permitted Sublease; (b) Lessor Liens; (c) the rights of others under agreements or arrangements to the extent permitted by ss. 7.2, ss. 7.3, or Annex C; (d) Liens for Taxes either not yet due or being contested in good faith by appropriate proceedings if such Liens and such proceedings do not involve more than a DE MINIMIS risk of the sale, forfeiture, or loss of the Aircraft, the Airframe, any Engine, or the interest of Owner Participant therein; (e) materialmen's, mechanics', workers', repairers', employees', or other like Liens arising in the ordinary course of business for amounts the payment of which either is not yet delinquent for more than 60 days or is being contested in good faith by appropriate proceedings, if such Liens and such proceedings do not involve any more than a DE MINIMIS risk of the sale, forfeiture, or loss of the Aircraft, the Airframe, any Engine, or the interest of Owner Participant therein; (f) Liens arising out of any judgment or award against Lessee, if, within 60 days after the entry thereof, that judgment or award is discharged or vacated, or has its execution stayed pending appeal, or is discharged, vacated, or reversed within 60 days after the expiration of such stay, and if during any such 60-day period there is not, or any such judgment or award does not involve, more than a DE MINIMIS risk of the sale, forfeiture, or loss of the Aircraft, the Airframe, any Engine, or the interest of Owner Participant therein; and (g) any other Lien with respect to which Lessee or any Permitted Sublessee provides a bond, cash collateral, or other security adequate in the reasonable opinion of Lessor. Lessee shall promptly take or cause to be taken such action as may be necessary duly to discharge (by bonding or otherwise) any Lien not excepted above that arises in respect of the Aircraft, the Airframe, any Engine, or any Part during the Term. 7. REGISTRATION; OPERATION; POSSESSION AND SUBLEASING 7.1 REGISTRATION AND OPERATION 7.1.1 REGISTRATION AND RECORDATION Subject to Lessor's and Owner Participant's compliance with their obligations under ss. 13 of the Participation Agreement, Lessee shall cause the Aircraft to be, and at all times during the Term to remain, duly registered with the FAA under the Transportation Code or with such other country of registry as shall be permitted under ss. 7.1.2 hereof, in the name of Lessor as owner and lessor (except to the extent that such registration under the Transportation Code is prevented or lost because of Lessor's or Owner Participant's failure to comply with the citizenship requirements for registration of the Aircraft under the Transportation Code). Lessor shall execute and deliver all such documents as Lessee or any Permitted Sublessee reasonably requests for the purpose of effecting and continuing such registration. Each of the registrations and recordations referenced in this ss. 7.1.1 will be at Lessee's cost and expense, except as otherwise provided in this Lease. 7.1.2 REREGISTRATION After the Tax Attribute Period (or before such date, provided Lessee pre-pays on a lump-sum basis any liability due under the Tax Indemnity Agreement as a result of such registration on the assumption that such registration would continue for the remainder of the term of the Permitted Sublease described in ss. 7.6.11(a)(3) of the Participation Agreement, if no Special Default or Event of Default exists, Lessee may, by written notice to Lessor (with a copy of such notice to Owner Participant), request to change the country of registration of the Aircraft. Any such change in registration shall be effected only in compliance with, and subject to all of the conditions set forth in, ss. 7.6.11 of the Participation Agreement. 7.1.3 MARKINGS If permitted by applicable Law, on or reasonably promptly after the Delivery Date, Lessee will cause to be affixed to, and maintained in, the cockpit of the Airframe and on each Engine, in each case in a clearly visible location, a placard of a reasonable size and shape bearing the legend set forth in Schedule 6. Such placards may be removed temporarily, if necessary, in the course of maintenance of the Airframe or Engines. If any such placard is damaged or becomes illegible, Lessee shall promptly replace it with a placard complying with the requirements of this ss. 7.1.3. 7.1.4 COMPLIANCE WITH LAWS Lessee shall not, and shall not allow any other Person to, operate, use, maintain, service, repair, overhaul, improve, or modify the Aircraft (a) in violation of any Law binding on or applicable to the Aircraft, the Airframe, or any Engine, or (b) in violation of any airworthiness certificate, license, or registration of any Government Entity relating to the Aircraft, the Airframe, or any Engine, except (1) immaterial or non-recurring violations with respect to which corrective measures are taken promptly by Lessee or a Permitted Sublessee (as applicable) upon discovery thereof, and (2) to the extent Lessee or any Permitted Sublessee is contesting the validity or application of any such Law or requirement relating to any such certificate, license, or registration in good faith in any reasonable manner which does not involve more than a DE MINIMIS risk of the sale, forfeiture, or loss of the Aircraft, the Airframe, any Engine or the interest of Owner Participant therein, any risk of criminal liability or of material civil penalty against Lessor or Owner Participant. 7.1.5 OPERATION Lessee agrees not to operate, use, or locate the Aircraft, the Airframe, or any Engine, or allow the Aircraft, the Airframe, or any Engine to be operated, used, or located, (a) in any area excluded from coverage by any insurance required by the terms of ss. 11, except in the case of a requisition by the U.S. Government where the U.S. Government provides an indemnity in lieu of such insurance, or insurance from the U.S. Government, covering such area, in accordance with ss. 11.3, or (b) in any recognized area of hostilities unless fully covered in accordance with Annex D by war-risk insurance as required by the terms of ss. 11 (including ss. 11.3), unless in any case referred to in this ss. 7.1.5 the Aircraft is only temporarily operated, used, or located in such area as a result of an emergency, equipment malfunction, navigational error, hijacking, weather condition, or other similar unforeseen circumstances, so long as Lessee diligently and in good faith proceeds to remove the Aircraft from such area. 7.2 POSSESSION Lessee will not, without the prior written consent of Lessor and Owner Participant, sublease or otherwise in any manner deliver, transfer, or relinquish possession of the Aircraft, the Airframe, or any Engine, or install any Engine, or permit any Engine to be installed, on any airframe other than the Airframe; PROVIDED, that, subject to the provisions of ss. 7.3, Lessee may, without such prior written consent: 7.2.1 INTERCHANGE AND POOLING Subject or permit any Permitted Sublessee to subject (a) the Airframe to normal interchange agreements (provided that (1) any such interchange agreement does not contemplate that Lessee (or a Permitted Sublessee) will be out of possession of the Airframe for more than five consecutive days at a time (absent weather, maintenance, or other exigencies), and (2) the party to such interchange agreement is a Permitted Air Carrier, not in bankruptcy, organized and having its principal place of business in a country with which the United States then maintains normal diplomatic relations and which recognizes and gives effect to the rights, title, and interests of Lessor in the Airframe), or (b) any Engine (but only if such Engine is then installed upon an aircraft) to normal interchange agreements or pooling agreements or arrangements, in each case customary in the commercial airline industry and entered into by Lessee or such Permitted Sublessee in the ordinary course of business; PROVIDED, that (1) no such agreement or arrangement shall require any transfer of Lessor's title to the Airframe or such Engine, and (2) if Lessor's title to any such Engine is nevertheless divested under any such agreement or arrangement, then such Engine shall be deemed to have suffered an Event of Loss as of the date of such divestiture, and Lessee shall be required to replace such Engine with a Replacement Engine meeting the requirements of, and in accordance with, ss. 10. 7.2.2 TESTING AND SERVICE Deliver or permit any Permitted Sublessee to deliver possession of the Aircraft, the Airframe, any Engine, or any Part (a) to the manufacturer thereof or to any third-party maintenance provider, for testing, service, repair, maintenance, or overhaul work on the Aircraft, Airframe, any Engine, or any Part, or, to the extent required or permitted by the terms of Annex C, for alterations or modifications in or additions to the Aircraft, the Airframe, or any Engine, or (b) to any Person for the purpose of transport to a Person referred to in the preceding clause (a). 7.2.3 TRANSFER TO U.S. GOVERNMENT Transfer or permit any Permitted Sublessee to transfer possession of the Aircraft, the Airframe, or any Engine to the U.S. Government pursuant to CRAF or otherwise, in which event Lessee shall promptly notify Lessor in writing of any such transfer of possession (and, in the case of any transfer pursuant to CRAF, in such notification shall identify by name, address, and telephone numbers the Contracting Office Representative(s) for the Military Airlift Command of the United States Air Force to whom notices must be given and to whom requests or claims must be made to the extent applicable under CRAF). 7.2.4 INSTALLATION OF ENGINES ON OWNED AIRCRAFT Install or permit any Permitted Sublessee to install an Engine on an airframe owned by Lessee or such Permitted Sublessee free and clear of all Liens except (a) Permitted Liens, (b) Liens that do not apply to the Engines, and (c) the rights of third parties under normal interchange or pooling agreements and arrangements of the type permitted under ss. 7.2.1. 7.2.5 INSTALLATION OF ENGINES ON OTHER AIRFRAMES Install or permit any Permitted Sublessee to install an Engine on an airframe leased to Lessee or such Permitted Sublessee, or purchased or owned by Lessee or such Permitted Sublessee subject to a security agreement, conditional sale, or other secured financing arrangement, but only if (a) such airframe is free and clear of all Liens except (1) the rights of the parties to such lease or secured financing arrangement, covering such airframe, and (2) Liens of the type permitted by clauses (a) and (b) of ss. 7.2.4, and (b) Lessee or such Permitted Sublessee has received from the lessor, secured party, or conditional seller, in respect of such airframe, a written agreement (which may be a copy of the lease, security agreement, conditional sale agreement, or other agreement covering such airframe), whereby such Person agrees that it will not acquire or claim any right, title, or interest in, or Lien on, such Engine by reason of the installation of such Engine on such airframe at any time while such Engine is subject to this Lease or is owned by Lessor. 7.2.6 INSTALLATIONS OF ENGINES ON FINANCED AIRCRAFT Install or permit any Permitted Sublessee to install an Engine on an airframe owned by Lessee or such Permitted Sublessee, leased to Lessee or such Permitted Sublessee, or purchased or owned by Lessee or such Permitted Sublessee subject to a conditional sale or other security agreement under circumstances where neither ss. 7.2.4 nor ss. 7.2.5 applies; PROVIDED, that any such installation shall be deemed an Event of Loss with respect to such Engine, and Lessee shall comply with ss. 10.2 in respect thereof. Until ss. 10.2 has been fully complied with, Lessor's interest in such Engine shall continue in full force and effect. 7.2.7 SUBLEASING With respect to the Aircraft, the Airframe, or any Engine, if no Special Default or Event of Default exists, enter into a sublease with any Permitted Air Carrier, but only if: (a) Lessee provides written notice to Lessor (with a copy to Owner Participant) (such notice in the event of a sublease to a U.S. Air Carrier to be given promptly after entering into any such sublease, and, in the case of a sublease to any other Permitted Air Carrier, 10 Business Days in advance of entering into such sublease); (b) at the time that Lessee enters into such sublease, such Permitted Air Carrier shall not be subject to any bankruptcy, insolvency, liquidation, reorganization, dissolution, or similar proceeding, and shall not have substantially all of its property in the possession of any liquidator, trustee, receiver, or similar Person; (c) any such sublease (1) shall not extend beyond the expiration of the Base Term or any Renewal Term then in effect or irrevocably committed to by Lessee, or contain a purchase option, unless expressly subject to Lessee's exercise of its renewal or purchase options in accordance with the terms of ss. 17, and in any event subject to the requirements of clause (4) of this ss. 7.2.7(c), (2) shall not contain any purchase option exercisable at a date earlier than such date permitted under ss. 17.3, (3) shall explicitly require that sublessee or sublessor (or both with specified allocations) will fully comply with the Lease's maintenance, operation, possession, inspection, and insurance requirements, and (4) shall be expressly subject and subordinate to all the terms of this Lease and to Lessor's rights, powers, and remedies hereunder, including Lessor's rights under ss. 15 to repossess the Aircraft and to terminate such sublease if an Event of Default exists; (d) in connection with a sublease to a Permitted Foreign Air Carrier, (1) the United States maintains diplomatic relations with the country of domicile of such Permitted Foreign Air Carrier, and (2) Lessee furnishes to Lessor and Owner Participant a favorable opinion of counsel, reasonably satisfactory to Lessor and Owner Participant, located in the country of domicile of such Permitted Foreign Air Carrier, that (aa) the terms of such sublease are legal, valid, and binding obligations of the parties thereto, enforceable under the laws of such jurisdiction, (bb) it is not necessary for Owner Participant or Lessor to register or qualify to do business in such jurisdiction, if not already so registered or qualified, as a result of the proposed sublease, (cc) Lessor's title to, the Aircraft, Airframe, and Engines will be recognized in such jurisdiction, (dd) the Laws of such jurisdiction of domicile require fair compensation by the government of such jurisdiction, payable in a currency freely convertible into Dollars, for the loss of title to the Aircraft, Airframe, or Engines in the event of the requisition by such government of such title (unless Lessee provides insurance in the amounts required with respect to hull insurance under ss. 11 covering the requisition of title to the Aircraft, Airframe, or Engines by the government of such jurisdiction so long as the Aircraft, Airframe, or Engines are subject to such sublease), (ee) such Permitted Air Carrier's agreement that its rights under the sublease are subject and subordinate to all the terms of this Lease is enforceable against such Permitted Air Carrier under applicable Law, and (ff) such sublease will subject Lessor and Owner Participant to no greater tort liability than in the United States of America, OR, if such sublease will subject Lessor or Owner Participant to greater tort liability than in the United States of America, Lessee (or Permitted Sublessee) has provided insurance to insure against such additional liability; (e) Lessee furnishes to Lessor and Owner Participant evidence reasonably satisfactory to Lessor that the insurance required byss. 11 remains in effect; (f) all necessary documents are duly filed, registered, or recorded in such public offices as are required fully to preserve the title of Lessor, in the Aircraft, Airframe, and Engines; (g) Lessee shall reimburse Lessor and Owner Participant for all of their reasonable out-of-pocket fees and expenses (including reasonable fees and disbursements of counsel) incurred in connection with any such sublease; (h) no such sublease shall be made to a "tax exempt entity" as defined in ss. 168(h)(2) of the Code, including a Permitted Foreign Air Carrier, before the end of the Tax Attribute Period unless Lessee prepays on a lump-sum basis any liability due under the Tax Indemnity Agreement as a result of such sublease based upon the assumption that such sublease were to continue for the remainder of the term of such sublease; (i) no such sublease will adversely affect Lessor's protection under Section 1110; (j) no such sublease shall permit the Permitted Sublessee thereunder to sub-sublease or transfer the Airframe or any Engine, except for transfers by a Permitted sublessee permitted by the foregoing provisions of this ss. 7.2, and except that a Permitted Sublessee who is a manufacturer may sub-sublease to any Person to whom a sublease would be permitted under this ss. 7.2.7; PROVIDED, that (1) such sub-sublease shall not permit any sub-sub-subleasing of the Aircraft, the Airframe, or any Engine, and (2) such sub-sublease must meet the requirement of a Permitted Sublease; (k) if the term of such Sublease is greater than one year, Lessee will assign such Sublease to Lessor as security for Lessee's obligations hereunder. 7.3 CERTAIN LIMITATIONS ON SUBLEASING OR OTHER RELINQUISHMENT OF POSSESSION Notwithstanding anything to the contrary in ss. 7.2: (a) The rights of any Person who receives possession of the Aircraft in accordance with ss. 7.2 shall be subject and subordinate to all the terms of this Lease, and to Lessor's rights, powers, and remedies hereunder, including (1) Lessor's right to repossess the Aircraft pursuant to ss. 15, (2) Lessor's right to terminate and avoid such sublease, delivery, transfer, or relinquishment of possession if an Event of Default exists, and (3) the right to require such Person to deliver the Aircraft, Airframe, and Engines forthwith if an Event of Default exists. (b) Lessee shall remain primarily liable hereunder for the performance of all the terms of this Lease to the same extent as if such transfer had not occurred, and no transfer of possession of the Aircraft, the Airframe, any Engine, or any Part shall in any way discharge or diminish any of Lessee's obligations to Lessor hereunder or under any other Operative Agreement. (c) Lessee shall ensure that no sublease, delivery, transfer, or relinquishment permitted under ss. 7.2 shall affect the United States registration of the Aircraft, unless also made in accordance with the provisions of ss. 7.1.2. (d) Any event that constitutes or would, with the passage of time, constitute an Event of Loss under clause (3), (4), or (5) of the definition of such term (as set forth in Annex A) shall not be deemed to violate the provisions of ss. 7.2. (e) No Wet Lease shall constitute a delivery, transfer, or relinquishment of possession for purposes of ss. 7.2, nor shall it be prohibited by the terms hereof. 8. MAINTENANCE; REPLACEMENT AND POOLING OF PARTS; ALTERATIONS, MODIFICATIONS, AND ADDITIONS; OTHER LESSEE COVENANTS 8.1 MAINTENANCE; REPLACEMENT AND POOLING OF PARTS; ALTERATIONS, MODIFICATIONS, AND ADDITIONS At all times during the Term, Lessee shall comply with (or cause to be complied with) each of the provisions of Annex C, which provisions are hereby incorporated by this reference as if set forth in full herein. 8.2 INFORMATION, CERTIFICATES, NOTICES, AND REPORTS 8.2.1 FINANCIAL INFORMATION Lessee will furnish to Lessor and Owner Participant: (a) within 90 days after the end of each of the first three fiscal quarters in each fiscal year of Lessee, a consolidated balance sheet of Lessee and Guarantor as of the end of such quarter, and related statements of income and cash flows for the period commencing at the end of the previous fiscal year and ending with the end of such quarter, setting forth in each case in comparative form the corresponding figures for the corresponding period in the preceding fiscal year, prepared in accordance with GAAP; PROVIDED, that while Lessee or Guarantor is subject to the reporting requirements of the Securities Exchange Act of 1934, a copy of Lessee's or Guarantor's report on Form 10-Q for such fiscal quarter (excluding exhibits) will satisfy this clause (a). (b) within 120 days after the end of each fiscal year of Lessee, a consolidated balance sheet of Lessee and Guarantor as of the end of such fiscal year and related statements of income and cash flows of Lessee and Guarantor for such fiscal year, in comparative form with the preceding fiscal year, prepared in accordance with GAAP, together with a report of Lessee's and Guarantor's independent certified public accountants with respect to their audit of such financial statements; PROVIDED, that while Lessee or Guarantor is subject to the reporting requirements of the Securities Exchange Act of 1934, a copy of Lessee's or Guarantor's report on Form 10-K for such fiscal year (excluding exhibits) will satisfy this clause (b). 8.2.2 ANNUAL CERTIFICATE Within 120 days after the close of each fiscal year of Lessee, Lessee shall deliver to Lessor and Owner Participant an Officer's Certificate of Lessee to the effect that such officer is familiar with or has reviewed or caused to be reviewed the relevant terms of this Lease and the other Lessee Operative Agreements, and that such officer does not have knowledge of the existence as at the date of such certificate of any Event of Default (or, if any Event of Default exists, specifying the nature and period of existence thereof and the action Lessee has taken or is taking or proposes to take with respect thereto). 8.2.3 INFORMATION FOR FILINGS Lessee shall promptly furnish to Owner Participant or Lessor such information (other than with respect to the citizenship of Owner Participant and Lessor) within Lessee's or any Permitted Sublessee's possession, or reasonably available to or obtainable by Lessee or such Permitted Sublessee, as may be required to enable Lessor to file in a timely manner any reports required to be filed by it as lessor under the Lease or to enable Owner Participant to file in a timely manner any reports required to be filed by it as the beneficiary of the Trust Estate, in either case, with any Government Entity because of, or in connection with, the interest of Owner Participant or Lessor in the Aircraft, this Lease, or any other part of the Trust Estate; PROVIDED, that, with respect to any such information which Lessee reasonably deems commercially sensitive or confidential, Owner Participant or Lessor (as applicable) shall afford Lessee a reasonable opportunity (to the extent reasonably obtainable) to seek from any such Government Entity a waiver of the obligation of Owner Participant or Lessor to file any such information, or shall consent to the filing of such information directly by Lessee in lieu of filing by Owner Participant or Lessor, and if any such waiver or consent is evidenced to the reasonable satisfaction of Owner Participant or Lessor (as applicable), then Lessee shall not be required to furnish such information to Owner Participant or Lessor. 8.2.4 OTHER INFORMATION Lessee shall provide to Owner Participant from time to time such other information or data as Owner Participant reasonably requests concerning the Aircraft, Lessee's financial condition, or otherwise relating to the transactions or matters contemplated in the Operative Agreements, in each case to the extent within Lessee's or any Permitted Sublessee's possession, or reasonably available to or obtainable by Lessee or such Permitted Sublessee. 9. VOLUNTARY TERMINATION UPON OBSOLESCENCE 9.1 RIGHT OF TERMINATION (a) Provided there is then no Special Default or Event of Default, Lessee shall have the right at its option to terminate this Lease during the Base Term, effective only on a Termination Date occurring on or after the seventh anniversary of the Delivery Date, if: (1) Lessee makes a good faith determination that the Aircraft either has become economically obsolete or is surplus to Lessee's requirements, and Lessee's Chief Financial Officer or Treasurer so certifies in writing to Lessor; and (2) Lessee provides Lessor (with a copy to Owner Participant) with written notice of Lessee's exercise of such termination option not less than 180 days and not more than 360 days before the Termination Date specified in such notice. (b) Lessor shall notify Lessee of Lessor's intention to sell or retain the Aircraft, as provided in this ss. 9, not less than 120 days before the Termination Date specified in the written notice pursuant to ss. 9.1(a)(2). Any failure by Lessor to give such notice of its election shall be deemed to be an election to sell the Aircraft, as provided in this ss. 9. (c) In the event of any termination pursuant to this ss. 9, Lessee shall not acquire additional 737-800 aircraft during the 24 months following such termination, except to replace any lost or damaged aircraft or under short-term operating leases, and Lessee shall notify Lessor in the event Lessee plans to enter into such an operating lease to discuss the possible re-lease of the Aircraft from Lessor to Lessee under such short-term operating lease. 9.2 ELECTION BY LESSOR TO SELL 9.2.1 BIDS; CLOSING OF SALE Unless Lessor has notified Lessee of Lessor's election to retain the Aircraft, Lessee, as agent for Lessor, shall, until the date ten Business Days before the Termination Date, use commercially reasonable efforts to obtain bids for a cash purchase of the Aircraft, and Lessor may, if it desires to do so, also seek to obtain such bids. If Lessee receives any bid, Lessee shall promptly, and in any event at least ten Business Days before the Termination Date, certify to Lessor in writing the amount and terms of such bid, and the name and address of the Person (who shall not be Lessee or any Affiliate of Lessee or any Person with whom Lessee or any such Affiliate has an arrangement for the future use of the Aircraft by Lessee or any such Affiliate) submitting such bid. If Lessor receives any bid on or before the date ten Business Days before the Termination Date, Lessor shall, at least ten Business Days before the Termination Date, certify to Lessee in writing the amount and terms of such bid, and the name and address of the Person submitting such bid. 9.2.2 CLOSING OF SALE (a) On the Termination Date (1) Lessee shall deliver the Airframe and Engines or engines constituting part of the Aircraft to the bidder (if any) who shall have submitted the highest cash bid on or before the date ten Business Days before such Termination Date, in the same manner as if delivery were made to Lessor pursuant to ss. 5 and Annex B and in full compliance with the terms thereof, and shall duly transfer to Lessor title to any such engines not owned by Lessor, all in accordance with the terms of ss. 5 and Annex B, and (2) Lessor shall simultaneously therewith transfer the Airframe and Engines or engines to such bidder, in the manner described in ss. 4.5, against cash paid to Lessor in the amount of such highest bid and in the manner and in funds of the type specified in ss. 3.3. (b) All proceeds of any sale described in ss. 9.2.2(a) shall be paid to and retained by Lessor and, on such Termination Date, and as a condition precedent to such sale and the delivery of the Aircraft and Engines or engines to such bidder, Lessee shall pay to Lessor, in the manner and in funds of the type specified in ss. 3.3: (1) all unpaid Basic Rent due at any time before such Termination Date; plus (2) the excess (if any) of the Termination Value for the Aircraft, computed as of such Termination Date, over the proceeds of such sale; plus (3) as provided in ss. 3.2.2, interest on the amounts specified in the foregoing clause (1) at the Past-Due Rate from and including the date on which any such amount was due to the date of payment of such amount in full. As a further condition precedent to such sale and delivery, Lessee shall pay all Supplemental Rent due by Lessee to Lessor, or Owner Participant under this Lease (including (aa) all interest charges provided for hereunder or under any other Lessee Operative Agreement with respect to the late payment of any amounts so payable, (bb) all reasonable and previously-invoiced out-of-pocket fees and expenses (including reasonable fees and expenses of counsel, but excluding brokerage commissions payable to any Person not retained by Lessee) incurred by Lessor and Owner Participant in connection with such sale and the related termination of this Lease), (cc) all previously-invoiced commissions payable to any Person retained by Lessee in connection with such sale, and (dd) all sales, transfer, or similar Taxes then due with respect to such sale). To the extent not invoiced or due on the Termination Date, Lessee shall pay in due course the obligations described in the foregoing clauses (cc), (dd), and (ee). (c) Upon and subject to any such sale and receipt of proceeds by Lessor, and full and final payment of all amounts described in ss. 9.2.2(b), and compliance by Lessee with all the other provisions of this ss. 9.2, (1) Lessor will transfer to Lessee, in accordance with ss. 4.5, any Engines constituting part of the Aircraft but which were not then installed on the Airframe and sold therewith; and (2) the obligation of Lessee to pay Basic Rent, on or after the Payment Date with reference to which Termination Value is computed, shall cease, and the Term shall end effective as of the date of such sale. (d) A sale of the Aircraft pursuant to this ss. 9.2.2 shall take place only on a Termination Date. Subject to ss. 9.3, if no sale shall have occurred on or as of the proposed Termination Date, this Lease shall continue in full force and effect, and all of Lessee's obligations shall continue, including its obligation to pay Rent, in each case, as if the notice under ss. 9.1 shall not have been given and, subject to ss. 9.2.3(a), Lessee may give another notice pursuant to ss. 9.1. (e) Lessor shall be under no duty to solicit bids, to inquire into the efforts of Lessee to obtain bids, or otherwise to take any action in connection with any such sale other than to transfer to the purchaser named in the highest bid referred to above (or to such purchaser and, in the case of Engines described in ss. 9.2.2(c), to Lessee) the Airframe and Engines or engines against receipt of the payments described in ss. 9.2.2(b) 9.2.3 WITHDRAWAL OF NOTICE OF TERMINATION (a) So long as Lessor has not elected to retain the Aircraft pursuant to ss. 9.1, Lessee may withdraw any notice given pursuant to ss. 9.1 at any time on or before the date five Business Days before the proposed Termination Date, whereupon this Lease shall continue in full force and effect and all of Lessee's obligations shall continue, including its obligation to pay Rent, in each case as if the notice under ss. 9.1 were not given, and Lessee may give another notice pursuant to ss. 9.1; PROVIDED, that Lessee shall not be entitled to give more than three termination notices pursuant to ss. 9.1 during the Term. (b) Lessee shall pay, on an after-tax basis, all reasonable out-of-pocket fees and expenses of Lessor (including reasonable fees and expenses of counsel) and Owner Participant in connection with any notice of termination withdrawn by Lessee or in connection with any notice of termination pursuant to which a sale of the Aircraft fails to occur. 9.3 RETENTION OF AIRCRAFT BY LESSOR (a) If Lessor elects to retain the Aircraft in accordance withss. 9.1, on the Termination Date: (1) Lessee shall deliver the Airframe and Engines or engines constituting part of the Aircraft to Lessor pursuant to ss. 5 and Annex B and in full compliance with the terms thereof, and shall duly transfer to Lessor title to any such engines not owned by Lessor, all in accordance with the terms of ss. 5 and Annex B; (2) Lessee shall pay to Lessor, in the manner and in funds of the type specified inss. 3.3: (aa) all unpaid Basic Rent due at any time before such Termination Date; plus (bb) as provided in ss. 3.2.2, interest on the amounts specified in the foregoing clause (aa) at the Past-Due Rate from and including the date on which any such amount was due to the date of payment of such amount in full; and (4) Lessee shall also pay all Supplemental Rent due and payable by Lessee to Lessor or Owner Participant under this Lease, including all interest charges provided for hereunder or under any other Lessee Operative Agreement with respect to the late payment of any amounts so payable, and the reasonable out-of-pocket fees and expenses incurred by Lessor and Owner Participant in connection with such termination and delivery of the Airframe and Engine or engines (excluding brokerage commissions and similar expenses payable to any Person(s) not retained by Lessee). (b) Upon full and final payment to Lessor and Owner Participant of the amounts described in ss. 9.3(a)(1), and (3) and (4), and compliance by Lessee with all the applicable provisions of ss. 9.3(a)(2), (1) Lessor will transfer to Lessee, in accordance with ss. 4.5, any Engines constituting part of the Aircraft but which were not then installed on the Airframe and sold therewith; and (2) Lessee's obligation to pay Basic Rent otherwise due on or after the Termination Date shall cease, and the Term for the Aircraft shall end effective as of such Termination Date. 10. LOSS, DESTRUCTION, REQUISITION, ETC. 10.1 EVENT OF LOSS TO THE AIRCRAFT 10.1.1 NOTICE AND ELECTION (a) If an Event of Loss to the Airframe (and any Engine(s) installed thereon) occurs, Lessee shall promptly (and in any event within 15 days after such occurrence) notify Lessor and Owner Participant of such Event of Loss. Within 60 days after such occurrence, Lessee shall give to Lessor (with a copy to Owner Participant) written notice of Lessee's election to make payment in respect of such Event of Loss, as provided in ss. 10.1.2, or to replace the Airframe and any such Engine(s) as provided in ss. 10.1.3. (b) Lessee's failure to give the notice of election described in ss. 10.1.1(a) shall be deemed to be an election of the option set forth in ss. 10.1.2. In addition, Lessee shall not be entitled to elect the option set forth in ss. 10.1.3 if, at the time Lessor receives such notice from Lessee or on the replacement date, a Special Default or an Event of Default exists. (c) For purposes of ss. 10.1.2, an Event of Loss to the Airframe shall be deemed to constitute an Event of Loss to the Aircraft. For purposes of ss. 10.1.3, any Engine not actually suffering an Event of Loss shall not be required to be replaced. 10.1.2 PAYMENT OF LOSS AND TERMINATION OF LEASE (a) If Lessee elects, in accordance with ss. 10.1.1, to make payment in respect of any such Event of Loss, then Lessee shall pay, in the manner and in funds of the type specified in ss. 3.3, the following amounts: (1) on the date (the "LOSS PAYMENT DATE") that is the earlier of (x) the Stipulated Loss Value Date first following the 75th day following the date of the occurrence of such Event of Loss, and (y) the Stipulated Loss Value Date first following the fourth Business Day following the receipt of the insurance proceeds with respect to such occurrence (but in any event not earlier than the date of Lessee's election under ss. 10.1.1 to make payment under this ss. 10.1.2), Lessee shall pay to Lessor: (aa) all unpaid Basic Rent due at any time before the Loss Payment Date; plus [(bb) all Basic Rent due on the Loss Payment Date; plus] (cc) the Stipulated Loss Value computed as of the Stipulated Loss Value Date immediately preceding the Loss Payment Date (or, if the Loss Payment Date is a Stipulated Loss Value Date, the Loss Payment Date), plus (dd) if the Loss Payment Date is not a Stipulated Loss Value Date, an additional amount equal to interest, at the rate per annum equal to the SLV Rate, on the amount of the excess referred to in clause (cc) above for each day from and including the Stipulated Loss Value Date referred to in clause [(cc)] to but excluding the Loss Payment Date; plus (ee) as provided in ss. 3.2.2, interest on the amount specified in the foregoing clause (aa) at the Past-Due Rate from and including the date on which any such amount was due to the date of payment of such amount in full; and (2) on or before the date required for payment of the amounts specified in clause 10.1.2(a)(1), Lessee shall also pay to Lessor and Owner Participant all other amounts due and payable by Lessee to Lessor and Owner Participant under this Lease, the Participation Agreement, or any other Lessee Operative Agreement and, on an after-tax basis, all out-of-pocket fees and expenses (including reasonable fees and expenses of counsel) incurred by Lessor and each Owner Participant in connection with such Event of Loss. (b) Upon payment in full of all amounts described in the foregoing ss. 10.1.2(a)(1), (1) Lessee's liability for use of the Aircraft and obligation to pay Basic Rent hereunder with respect to the Aircraft shall terminate, (2) the Term for the Aircraft shall end, and (3) Lessor will transfer the Aircraft to Lessee, as-is and where-is, and subject to any insurer's salvage rights, but otherwise in the manner described in ss. 4.5. 10.1.3 REPLACEMENT OF AIRFRAME AND ENGINES (a) If Lessee elects, in accordance with ss. 10.1.1, to replace the Airframe and any Engine(s) suffering the Event of Loss, then Lessee shall, as promptly as possible and in any event within 120 days after the occurrence of such Event of Loss, convey or cause to be conveyed to Lessor, in compliance with ss. 10.3 and as replacement for the Airframe and any such Engine(s), title to a Replacement Airframe (which shall comply with ss. 10.1.3(b)), and for each such Engine a Replacement Engine, in each case free and clear of all Liens other than Permitted Liens (PROVIDED, that if such conveyance occurs after the end of the Term, Lessee shall pay rent for the Aircraft from the end of the Term until return thereof pursuant to ss. 5 at a daily rate equal to the average daily Basic Rent or Renewal Rent, as applicable, over the Base Term or then-expiring Renewal Term, as applicable). If Lessee makes such election, but for any reason does not effect such replacement within such time period and in compliance with the requirements set forth in ss. 10.3, then Lessee shall be deemed to have initially made the election set forth in ss. 10.1.2 with the effect that Lessee shall pay, in the manner and in funds of the type specified in ss. 3.3, the amounts required under, and in accordance with, ss. 10.1.2 (except that the time period for payment referenced in ss. 10.1.2(a)(1) shall, for the purposes of this ss. 10.1.3(a), in all cases be on the Stipulated Loss Value Date first following the 120th day following the date of the occurrence of such Event of Loss). (b) Any such Replacement Airframe shall be an airframe manufactured by the Airframe Manufacturer that is the same model as the Airframe to be replaced thereby, or an improved model, and that has a current value, estimated residual value, utility, and remaining economic useful life (without regard to hours or cycles remaining until the next regular maintenance check, provided no Special Default or Event of Default then exists) at least equal to the Airframe to be replaced thereby (assuming that such Airframe had been maintained in accordance with this Lease), immediately prior to such Event of Loss and that has a year of manufacture no earlier than that of the Airframe to be replaced. Any such Replacement Engine shall meet the requirements of, and be conveyed by Lessee to Lessor in accordance with, ss. 10.2 (other than the notice requirement set forth in ss. 10.2.1). 10.2 EVENT OF LOSS TO AN ENGINE; ENGINE EXCHANGES 10.2.1 NOTICE If an Event of Loss to an Engine occurs under circumstances in which no Event of Loss to the Airframe occurs, Lessee shall promptly (and in any event within 15 days after such occurrence) notify Lessor of such Event of Loss. 10.2.2 REPLACEMENT OF ENGINE Lessee shall, promptly and in any event within 60 days after the occurrence of such Event of Loss, convey or cause to be conveyed to Lessor, in compliance with ss. 10.3 and as replacement for the Engine with respect to which any Event of Loss occurred, title to a Replacement Engine, free and clear of all Liens other than Permitted Liens. Such Replacement Engine shall be an engine manufactured by Engine Manufacturer that is the same model as the Engine to be replaced thereby, or an improved model, and that is suitable for installation and use on the Airframe, and that has a current value, estimated residual value, utility, and remaining economic useful life (without regard to hours and cycles remaining until overhaul, provided no Special Default or Event of Default then exists) at least equal to the Engine to be replaced thereby (assuming that such Engine had been maintained in accordance with the Lease) immediately prior to such Event of Loss. 10.2.3 ENGINE EXCHANGE Upon not less than five Business Days' prior written notice to Lessor (with a copy to Owner Participant), Lessee may replace any Engine leased hereunder with another engine (the "EXCHANGED Engine") meeting the requirements of ss. 10.2.2. Such Exchanged Engine shall be deemed to be a "Replacement Engine", and Lessor and Lessee shall comply with the provisions of ss. 10.3 with regard to the Exchanged Engine and the Engine so replaced. 10.3 CONDITIONS TO ANY REPLACEMENT 10.3.1 DOCUMENTS Before or at the time of conveyance of title to any Replacement Airframe or Replacement Engine to Lessor, Lessee shall take each of the following actions: (a) furnish Lessor with a full warranty (as to title) bill of sale duly conveying to Lessor such Replacement Airframe or Replacement Engine, in form and substance reasonably satisfactory to Lessor and Owner Participant, and cause such Replacement Airframe to be duly registered in the name of Lessor pursuant to the Transportation Code (or such other applicable Law of a jurisdiction other than the United States where the Aircraft is registered in accordance with ss. 7.1.2); (b) cause (1) a supplement to this Lease, subjecting such Replacement Airframe or Replacement Engine to this Lease, duly executed by Lessee, to be delivered to Lessor for execution, and, upon such execution, to be filed for recordation with the FAA pursuant to the Transportation Code (or such other applicable Law of a jurisdiction other than the United States where the Aircraft is registered in accordance with ss. 7.1.2), and (2) such Financing Statements and other filings, as Owner Participant reasonably request, duly executed by Lessee and (to the extent applicable) Lessor (and Lessor shall execute and deliver the same), to be filed in such locations as any such party reasonably requests; (c) furnish such evidence of compliance with the insurance provisions of ss. 11 with respect to such Replacement Airframe or Replacement Engine as Owner Participant reasonably requests; (d) furnish an opinion or opinions of Lessee's counsel (which may be Lessee's legal department) reasonably satisfactory to Owner Participant and addressed to Lessor and Owner Participant to the effect that (1) such full warranty bill of sale referred to in ss. 10.3.1(a) constitutes an effective instrument for the conveyance of title to the Replacement Airframe or Replacement Engine, and (2) in the case of a Replacement Airframe or of a Replacement Engine substituted under ss. 10.2.3 in the absence of an Event of Loss, (aa) Lessor will be entitled to the benefits of Section 1110 with respect to the Replacement Airframe, and (bb) as to the U.S. federal income tax consequences to Owner Participant of the replacement; (e) furnish an opinion of Lessee's aviation law counsel reasonably satisfactory to Owner Participant and addressed to Lessor and Owner Participant as to the due registration of any such Replacement Airframe and the due filing for recordation of each supplement to this Lease with respect to such Replacement Airframe or Replacement Engine under the Transportation Code (or such other applicable Law of a jurisdiction other than the United States where the Aircraft is registered in accordance with ss. 7.1.2); (f) with respect to the replacement of the Airframe and any Engine(s) installed thereon at the time of the Event of Loss, if requested by Owner Participant and at Lessee's expense, furnish a certified report of a qualified independent aircraft appraiser, such report and such appraiser to be reasonably satisfactory to Owner Participant, certifying that such Replacement Airframe and any such Replacement Engine complies with the current value, estimated residual value, utility, and remaining economic useful life requirements set forth in ss. 10.1.3(b); and (g) take such other actions and furnish such other certificates and documents as Lessor or Owner Participant may reasonably request in order that such Replacement Airframe or Replacement Engine be duly and properly titled in Lessor, leased hereunder and subjected to the Lien of the Trust Indenture to the same extent as initially required under the Operative Agreements with respect to the Airframe or Engine so replaced. Lessor and Lessee understand and agree that if, at the time of any replacement of the Airframe or any Engine(s) as contemplated in this ss. 10, the Airframe was registered in a jurisdiction other than the United States, then the requirements set forth above in this ss. 10.3.1 relating to compliance with the requirements of the Transportation Code or the FAA shall be deemed to refer to the comparable applicable Law of, and the Aviation Authority of, such other jurisdiction. 10.3.2 OTHER OBLIGATIONS (a) Lessor and Lessee agree that, when and after any Replacement Airframe becomes the Airframe hereunder, and when and after any Replacement Engine becomes an Engine hereunder, this Lease shall continue to be, and shall be treated as, a lease for U.S. federal income tax purposes of such Replacement Airframe and such Replacement Engine. Without limiting the foregoing, Lessee and Lessor intend that Lessor shall, in all events, be entitled to the benefits of Section 1110 with respect to any Replacement Airframe or Replacement Engine, and Lessee and Lessor shall cooperate and take such action as the other may reasonably request so as to ensure that Lessor shall be entitled to such benefits. (b) No Event of Loss to an Engine, or to an Airframe, shall result in, or otherwise allow or permit (other than as provided in ss. 10.1.2(b)), any reduction, deferral, discharge, or other change in the timing or amount of any Rent payable by Lessee hereunder, and (subject to such ss. 10.1.2(b)) Lessee shall pay all such Rent and other amounts as though such Event of Loss had not occurred. 10.4 CONVEYANCE TO LESSEE Upon compliance by Lessee with the applicable terms of ss.ss. 10.1.3, 10.2, and 10.3.1, Lessor will transfer to Lessee the Airframe or Engine(s), as applicable, with respect to which such Event of Loss occurred, in accordance with ss. 4.5. 10.5 APPLICATION OF PAYMENTS Any amounts, other than insurance proceeds in respect of damage or loss not constituting an Event of Loss (the application of which is provided for in ss. 11), received at any time by Lessor, Lessee, or any Permitted Sublessee from any Government Entity or any other Person in respect of any Event of Loss will be paid over to Lessor to be held in accordance with ss. 4.5 and applied as follows: 10.5.1 REPLACEMENT OF AIRFRAME AND ENGINES If such amounts are received with respect to the Airframe or any Engine(s) installed thereon at the time of such Event of Loss, upon Lessee's compliance with the applicable terms of ss. 10.1.3 with respect to the Event of Loss for which such amounts are received, such amounts shall (subject to ss. 10.9) be paid over to, or retained by, Lessee. 10.5.2 LOSS OF ENGINE If such amounts are received with respect to an Engine (other than an Engine installed on the Airframe when the Airframe suffers an Event of Loss), upon Lessee's compliance with the applicable terms of ss. 10.2.2 with respect to the Event of Loss for which such amounts are received, such amounts shall (subject to ss. 10.9) be paid over to, or retained by, Lessee. 10.5.3 PAYMENT OF LOSS If such amounts are received, in whole or in part, with respect to the Airframe, and Lessee makes, has made or is deemed to have made the election set forth in ss. 10.1.2, such amounts shall be applied as follows: (a) FIRST, if the sum described in ss. 10.1.2 has not then been paid in full by Lessee, such amounts shall be paid to Lessor to the extent necessary to pay in full such sum; and (b) SECOND, the remainder, if any, shall (subject toss. 10.9) be paid to Lessee. 10.6 REQUISITION OF AIRCRAFT FOR USE If any Government Entity requisitions the use of the Airframe and the Engines or engines installed thereon, and if the requisition does not constitute an Event of Loss, Lessee shall promptly notify Lessor of such requisition, and all of Lessee's obligations under this Lease shall continue to the same extent as if such requisition had not occurred; PROVIDED, that, if the Airframe and Engines or engines installed thereon are not returned to Lessor by Lessee at the end of the Term or within 30 days thereafter, then Lessee shall be deemed to have made the election set forth in ss. 10.1.2 with the effect that Lessee shall be obligated to pay the Stipulated Loss Value and all other amounts payable pursuant to ss. 10.1.2 with respect to the Aircraft as if an Event of Loss had occurred as of the end of the Term. If such requisition does not constitute an Event of Loss, Lessee shall be obligated to return the Airframe and Engine(s) or engine(s) to Lessor pursuant to, and in all other respects to comply with the provisions of, ss. 5 promptly upon their return by such Government Entity, and Lessee shall pay (or cause to be paid) to Lessor upon such return an amount equal to the average daily Basic Rent payable by Lessee during the Term for each day after the end of the Term to but excluding the day of such return, up to a maximum of 30 days, which payment may be made from any payments received by Lessor or Lessee from any Government Entity for the use of the Aircraft (notwithstanding any language to the contrary contained in ss. 10.8). 10.7 REQUISITION OF AN ENGINE FOR USE If any Government Entity requisitions for use any Engine but not the Airframe, Lessee will replace such Engine by complying with ss. 10.2 and ss. 10.3 to the same extent as if an Event of Loss with respect to that Engine had occurred, and any payments received by Lessor or Lessee from such Government Entity with respect to such requisition shall be paid or retained in accordance with ss. 10.5.2. 10.8 APPLICATION OF PAYMENTS All payments received by Lessor or Lessee, or any Permitted Sublessee, from any Government Entity for the use of the Airframe and Engine(s) or engine(s) installed thereon during the Term shall be paid over to, or retained by, Lessee, and all payments received by Lessor or Lessee from any Government Entity for the use of the Airframe and Engine(s) or engine(s) installed thereon after the Term shall be paid over to, or retained by, Lessor; PROVIDED, that, if such requisition constitutes an Event of Loss, then all such payments shall be paid over to Lessor and held as provided in ss. 10.5. 10.9 APPLICATION OF PAYMENTS DURING DEFAULT Any amount described in this ss. 10 that is payable or creditable to, or retainable by, Lessee shall not be paid or credited to, or retained by, Lessee if a Special Default or Event of Default exists when such payment, credit, or retention would otherwise occur, but shall instead be held by or paid over to Lessor as security for Lessee's obligations under this Lease and the other Lessee Operative Agreements, and shall be invested pursuant to ss. 4.4 hereof, unless and until such amount is applied, at the option of Lessor, or upon Lessee's written request to Lessor, from time to time during the existence of an Event of Default, to Lessee's obligations under this Lease as and when due (any such application shall be made to such Lessee obligations as Lessor determines in its sole discretion). If and when no Special Default and no Event of Default exists, such amount shall be paid to Lessee to the extent not previously applied in accordance with this ss. 10.9. 11. INSURANCE 11.1 LESSEE'S OBLIGATION TO INSURE Lessee shall comply with, or cause to be complied with, each of the provisions of Annex D, which provisions are hereby incorporated by this reference as if set forth in full herein. 11.2 INSURANCE FOR OWN ACCOUNT Nothing in ss. 11 shall limit or prohibit (a) Lessee from maintaining the policies of insurance required under Annex D with higher limits than those specified in Annex D, or (b) Lessor or Owner Participant from obtaining insurance for its own account (and any proceeds payable under such separate insurance shall be payable as provided in the policy relating thereto); PROVIDED, that no insurance may be obtained or maintained that would limit or otherwise adversely affect the coverage of or increase the cost of any insurance required to be obtained or maintained by Lessee pursuant to this ss. 11 and Annex D. 11.3 INDEMNIFICATION BY GOVERNMENT IN LIEU OF INSURANCE During the period of any Government Entity's requisition for use of the Aircraft or any Engine, Lessor, and Owner Participant shall accept, in lieu of insurance against any risk with respect to the Aircraft described in Annex D, indemnification from, or insurance provided by, the U.S. Government, or upon Owner Participant's written consent, other Government Entity, against such risk in an amount that, when added to the amount of insurance (including permitted self-insurance), if any, against such risk that Lessee (or any Permitted Sublessee) may continue to maintain, in accordance with this ss. 11, during the period of such requisition, shall be at least equal to the amount of insurance against such risk otherwise required by this ss. 11. 11.4 APPLICATION OF INSURANCE PROCEEDS As between Lessor and Lessee, all insurance proceeds received as a result of the occurrence of an Event of Loss to the Aircraft or any Engine under policies required to be maintained by Lessee pursuant to this ss. 11 will be applied in accordance with ss. 10.5. All proceeds of insurance required to be maintained by Lessee, in accordance with ss. 11 and ss. B of Annex D, in respect of any property damage or loss not constituting an Event of Loss to the Aircraft, the Airframe, or any Engine will be applied to pay (or to reimburse Lessee) for repairs or for replacement property incorporated in accordance with ss. 8.1, and any balance remaining after such repairs or replacement with respect to such damage or loss shall be paid over to, or retained by, Lessee. 11.5 APPLICATION OF PAYMENTS DURING DEFAULT Any amount described in this ss. 11 that is payable or creditable to, or retainable by, Lessee shall not be paid or credited to, or retained by, Lessee if a Special Default or Event of Default exists when such payment, credit, or retention would otherwise occur, but shall instead be held by or paid over to Lessor as security for Lessee's obligations under this Lease, and shall be invested pursuant to ss. 4.4 unless and until such amount is applied, at Lessor's option, or upon Lessee's written request to Lessor, from time to time during the existence of an Event of Default, to Lessee's obligations under this Lease and the other Lessee Operative Agreements as and when due (any such application to be made to such obligations of Lessee as Lessor determines in its sole discretion). If and when no Special Default and Event of Default exists, such amount shall be paid to Lessee to the extent not previously applied in accordance with this ss. 11.5. 12. INSPECTION (a) At all reasonable times Lessor, Owner Participant, or their authorized representatives (the "INSPECTING PARTIES") may (not more than once every 12 months by each such Person, unless an Event of Default exists or during the last 12 months of the Base Term and any Renewal Term, then such inspection right shall not be so limited) inspect the Aircraft and the Aircraft Documents, and any such Inspecting Party may make copies of the Aircraft Documents not reasonably deemed confidential by Lessee or a Permitted Sublessee. (b) Any inspection of the Aircraft hereunder shall be limited to a visual, walk-around inspection that may include going on board the Aircraft and visually examining the contents of any open panels, bays, or other components of the Airframe or Engines, but shall not include the opening of any unopened panels, bays, or other components of the Aircraft, and no such inspection shall interfere with Lessee's or any Permitted Sublessee's maintenance or operation of the Aircraft, the Airframe, or any Engine. (c) Lessor and Owner Participant shall not have any duty or liability to make, or any duty or liability by reason of not making, any such visit, inspection or survey. (d) Each Inspecting Party shall bear its own expenses in connection with any such inspection (including the cost of any copies made in accordance with ss. 12(a)), except following an Event of Default, in which case Lessee will bear the costs of inspection and pay the same on demand. (e) Upon Lessor's request, during the last 12 months of the Base Term and any Renewal Term, Lessee will give 10 Business Days' prior written notice to Lessor and Owner Participant of any scheduled maintenance checks, inspections, surveys, or repair visits. During such period, Owner Participant or its representative may attend any and all such maintenance checks, inspections, surveys, or repair visits. 13. ASSIGNMENT; MERGER; SUCCESSOR OWNER TRUSTEE 13.1 IN GENERAL This Lease and the other Lessee Operative Agreements shall bind and benefit Lessor and Lessee and their successors and permitted assigns. Except as otherwise expressly permitted by the terms of the Lease or any other Lessee Operative Agreement, Lessee will not, without the prior written consent of Owner Participant, assign any of its rights under this Lease. 13.2 MERGER OF LESSEE 13.2.1 IN GENERAL Lessee shall not consolidate with or merge into any other Person under circumstances in which Lessee is not the surviving corporation, or convey, transfer, or lease in one or more transactions all or substantially all of its assets to any other Person, unless: (a) such Person is organized, existing, and in good standing under the Laws of the United States, any state of the United States, or the District Columbia, and, upon consummation of such transaction, such Person will be a U.S. Air Carrier; (b) such Person executes and delivers to Lessor and Owner Participant a duly authorized, legal, valid, binding, and enforceable agreement, reasonably satisfactory in form and substance to Owner Participant, containing an effective assumption by such Person of the due and punctual performance and observance of each covenant, agreement, and condition in the Lessee Operative Agreements to be performed or observed by Lessee; (c) such Person makes such filings and recordings with the FAA pursuant to the Transportation Code as shall be necessary to evidence such consolidation or merger; (d) Lessee furnishes Lessor and Owner Participant an opinion of counsel reasonably satisfactory to Owner Participant to the effect that such consolidation or merger has satisfied at the closing of such consolidation or merger items (a), (b) and (c) above; (e) immediately after giving effect to such consolidation or merger, no Special Default or Event of Default exists; (f) unless Owner Participant otherwise consents, immediately after giving effect to such consolidation or merger, such Person will have a tangible net worth of at least the lesser of (i) 100% of Lessee's tangible net worth immediately prior to such consolidation or merger, and (ii) the greater of (aa) the tangible net worth of Lessee as of March 31, 2000, and (bb) 65% of Lessee's tangible net worth immediately prior to such consolidation or merger; and (g) upon such consolidation or merger becoming effective, Lessor will enjoy the same degree of protection under Section 1110 with respect to the Aircraft as Lessor enjoyed prior to such merger. 13.2.2 EFFECT OF MERGER Upon any such consolidation or merger of Lessee with or into, or the conveyance, transfer, or lease by Lessee of all or substantially all of its assets to, any Person in accordance with this ss. 13.2, such Person will succeed to, and be substituted for, and may exercise every right and power of, Lessee under the Lessee Operative Agreements with the same effect as if such Person had been named as "Lessee" therein. No such consolidation, merger, conveyance, transfer, or lease shall have the effect of releasing Lessee or such Person from any of Lessee's obligations, liabilities, covenants, or undertakings under the Lessee Operative Agreements. 13.3 SUCCESSOR OWNER TRUSTEE If any successor is appointed to serve as Owner Trustee pursuant to the terms of the Participation Agreement and the Trust Agreement, such successor shall, upon written notice by such successor to Lessee, succeed to all the rights, powers, and title of Lessor hereunder, and shall be deemed to be "Lessor" and the owner of the Aircraft and the other assets of the Trust Estate for all purposes hereof, without the need for any consent or approval by Lessee and without in any way altering the terms of this Lease or Lessee's obligations hereunder. An appointment and designation of a successor as Owner Trustee shall not exhaust the right to appoint and designate further successors or additional trustees as Owner Trustees pursuant to the Participation Agreement and the Trust Agreement, and such right may be exercised repeatedly as long as this Lease shall be in effect. 14. EVENTS OF DEFAULT The existence of any one or more of the following circumstances, conditions, acts, or events, for any reason whatsoever and whether any such circumstance, condition, act, or event is voluntary or involuntary or comes about or is effected by operation of Law or pursuant to or in compliance with any judgment, decree, order, rule, or regulation of any Government Entity, shall constitute an Event of Default so long as it shall not have been remedied: 14.1 PAYMENTS Lessee fails to pay any amount of Basic Rent, Stipulated Loss Value, or Termination Value within five Business Days after it becomes due; or Lessee fails to pay any Supplemental Rent (other than Stipulated Loss Value or Termination Value) when due and such failure continues for a period in excess of ten Business Days from and after the date of any written notice to Lessee from Lessor of the failure to make such payment when due. 14.2 INSURANCE Lessee fails to carry and maintain, or cause to be carried and maintained, insurance on and in respect of the Aircraft in accordance with the provisions of ss. 11. 14.3 OTHER COVENANTS Lessee fails to observe or perform (or cause to be observed and performed) in any material respect any other covenant, agreement, or obligation of Lessee in any Lessee Operative Agreement, and such failure continues unremedied for a period of 30 days from and after the date of written notice thereof to Lessee (or the Guarantor, as the case may be) from Lessor or Owner Participant, unless such failure is capable of being corrected and Lessee is diligently proceeding to correct such failure, and such failure poses no imminent and material risk of Lessor or Owner Participant losing their respective interests in the Aircraft, in which case there shall be no Event of Default unless and until such failure continues unremedied for a period of 270 days after receipt of such notice; PROVIDED, that in all events Lessee must remedy such failures within 90 days of Lessee's obtaining access to the Aircraft. 14.4 REPRESENTATIONS AND WARRANTIES Any representation or warranty made by Lessee in any Lessee Operative Agreement (other than Lessee's representations and warranties in the Tax Indemnity Agreement) (a) proves to have been untrue or inaccurate in any material respect as of the date made, (b) is material at the time in question, and (c) remains uncured (to the extent of the adverse impact of such incorrectness on the interest of Owner Participant or Lessor) for a period in excess of 30 days from and after the date of written notice thereof from Lessor or Owner Participant to Lessee (or Guarantor, as the case may be); provided that clause (c) above will not apply to Lessee's representations as to the financial condition of Lessee. 14.5 BANKRUPTCY AND INSOLVENCY (a) Lessee or Guarantor consents to the appointment of or the taking of possession by a receiver, trustee, or liquidator of itself or of substantially all of its property, or Lessee or Guarantor admits in writing its inability to pay its debts generally as they come due, or does not pay its debts generally as they become due or makes a general assignment for the benefit of creditors, or Lessee or Guarantor files a voluntary petition in bankruptcy or a voluntary petition or an answer seeking reorganization, liquidation or other relief in a case under any bankruptcy Laws or other insolvency Laws (as in effect at such time), or Lessee or Guarantor seeks relief by voluntary petition, answer, or consent under the provisions of any other bankruptcy or other similar Law providing for the reorganization or winding-up of corporations (as in effect at such time); or (b) an order, judgment, or decree is entered by any court of competent jurisdiction appointing, without Lessee's or Guarantor's consent, a receiver, trustee, or liquidator of Lessee or Guarantor or of substantially all of the property of Lessee or Guarantor, or substantially all of Lessee's or Guarantor's property is sequestered, and any such order, judgment, or decree of appointment or sequestration remains in force undismissed, unstayed, and unvacated for a period of 90 days after the date of entry thereof; or (c) a petition against Lessee or Guarantor in a case under any bankruptcy Laws or other insolvency Laws (as in effect at such time) is filed and not withdrawn or dismissed within 90 days thereafter, or if, under the provisions of any Law providing for reorganization or winding-up of corporations that applies to Lessee or Guarantor, any court of competent jurisdiction assumes jurisdiction, custody, or control of Lessee or Guarantor or of substantially all of its property, and such jurisdiction, custody or control remains in force unrelinquished, unstayed, and unterminated for a period of 90 days. 14.6 REPUDIATION OR INVALIDITY OF GUARANTEE Either (a) Guarantor repudiates its obligations, in whole or in part, under the Guarantee; or (b) the Guarantee ceases to be in full effect, is determined to be invalid, or becomes unenforceable for any reason. 15. REMEDIES AND WAIVERS 15.1 REMEDIES If any Event of Default exists, Lessor may, at its option and at any time and from time to time, exercise any one or more of the following remedies as Lessor in its sole discretion shall elect: 15.1.1 RETURN AND REPOSSESSION Lessor may cause Lessee, upon giving written notice to Lessee, to return promptly, and Lessee shall return promptly, the Airframe and Engines as Lessor shall so demand, to Lessor or its order in the manner and condition required by, and otherwise in accordance with, all the provisions of ss. 5, as if the Airframe or Engine were being returned at the end of the Term or Lessor, at its option, may enter upon the premises where the Airframe or any Engine, or any Part thereof, is located and take immediate possession of and remove the same by summary proceedings or otherwise, all without liability accruing to Lessor for or by reason of such entry or taking of possession, whether for the restoration of damage to property caused by such taking or otherwise. 15.1.2 SALE AND USE Lessor may sell the Airframe or any Engine at public or private sale, at such time(s) and place(s), and to such Person(s) (including Owner Participant), as Lessor determines; or Lessor may otherwise dispose of, hold, use, operate, lease to others, or keep idle the Airframe or any Engine, as Lessor, in its sole discretion, shall determine, all free and clear of any rights of Lessee and without any duty to account to Lessee with respect to such action or inaction or for any proceeds with respect thereto, except as hereinafter set forth in this ss. 15, and except to the extent that such proceeds would constitute, under applicable Law, a mitigation of Lessor's damages suffered or incurred as a result of the subject Event of Default. Lessor shall give to Lessee at least 15 days' prior written notice of the date fixed for any public sale of the Airframe or any Engine or of the date on or after which will occur the execution of any contract providing for any private sale. 15.1.3 CERTAIN LIQUIDATED DAMAGES Whether or not Lessor shall have exercised, or shall thereafter at any time exercise, any of its rights under ss. 15.1.1 or ss. 15.1.2 with respect to the Airframe or any Engine, or any Part thereof, Lessor, by written notice to Lessee specifying a payment date (which shall be the first Stipulated Loss Value Date occurring not less than 10 days after the date of such notice), may demand that Lessee to pay to Lessor, and Lessee shall pay to Lessor, on the payment date so specified and in the manner and in funds of the type specified in ss. 3.3, as liquidated damages for loss of a bargain and not as a penalty (in lieu of the Basic Rent (as applicable) for the Aircraft in respect of all periods commencing on or after the date specified for payment in such notice), the following amounts: (a) all unpaid Basic Rent due at any time before the Stipulated Loss Value Date specified in such notice; plus (b) whichever of the following amounts Lessor, in its sole discretion specifies in such notice: (1) an amount equal to the excess (if any) of the present value, computed as of the Stipulated Loss Value Date specified in such notice, discounted to such date at a rate equal to the SLV Rate compounded quarterly, of all unpaid Basic Rent during the then-remaining portion of the Base Term (or, if a Renewal Term has commenced, of all unpaid Basic Rent during the remaining portion of such Renewal Term) over the Fair Market Rental Value of the Aircraft for the remainder of the Term, after discounting such Fair Market Rental Value to present value (at a rate per annum equal to the SLV Rate, compounded quarterly) as of the Stipulated Loss Value Date specified in such notice, or (2) an amount equal to the excess (if any) of the Stipulated Loss Value for the Aircraft, computed as of the Stipulated Loss Value Date specified in such notice, over the Fair Market Sales Value of the Aircraft, as of the Stipulated Loss Value Date specified in such notice; plus (c) interest on the amounts specified in the foregoing clause (a) at the Past-Due Rate from and including the date on which any such amount was due to the date of payment of such amount; plus (d) interest on the amount specified in the foregoing clause (b)(1) or (b)(2), according to Lessor's election, at the Past-Due Rate from and including the Stipulated Loss Value Date specified in such notice to the date of payment of such amount. 15.1.4 LIQUIDATED DAMAGES UPON SALE If, pursuant to ss. 15.1.2 or applicable Law, Lessor has sold the Airframe or any Engine, then, in lieu of exercising its rights under ss. 15.1.3 with respect to the Aircraft, the Airframe, or any Engine (as applicable), Lessor may, if Lessor so elects, upon giving written notice to Lessee, demand that Lessee to pay to Lessor, and Lessee shall pay to Lessor, on the date of such sale and in the manner and in funds of the type specified in ss. 3.3, as liquidated damages for loss of a bargain and not as a penalty (in lieu of the Basic Rent for the Aircraft in respect of all periods commencing on or after the date of such sale), the following amounts: (a) all unpaid Basic Rent due at any time before the Stipulated Loss Value Date on or immediately preceding the date of such sale; plus (b) an amount equal to the excess, if any, of (1) the Stipulated Loss Value of the Aircraft, computed as of the Stipulated Loss Value Date referred to in the foregoing clause (a), over (2) the proceeds of such sale; plus (c) if the date of such sale is not a Stipulated Loss Value Date, an amount equal to interest, at the rate per annum equal to the SLV Rate, on the amount of Stipulated Loss Value referred to in clause (b)(1) above, from and including the Stipulated Loss Value Date referred to in the foregoing clause (a) to the date of such sale; plus (d) all brokerage and other out-of-pocket fees and expenses incurred by Lessor and Owner Participant in connection with such sale; plus (e) interest on the amounts specified in the foregoing clause (a) at the Past-Due Rate from and including the date on which any such amount was due to the date of payment of such amount; plus (f) interest on the sum of the amounts specified in the foregoing clauses (b), (d) and (e) at the Past-Due Rate from and including the date of such sale to the date of payment of such amounts. 15.1.5 RESCISSION Lessor may (a) at its option, rescind or terminate this Lease as to the Aircraft, the Airframe, or any Engine, or any Part thereof, or (b) exercise any other right or remedy that may be available to it under applicable Law or proceed by appropriate court action to enforce the terms hereof or to recover damages for the breach hereof. 15.1.6 OTHER REMEDIES In addition to the foregoing remedies (but without duplication of amounts otherwise paid under this ss. 15), Lessee shall be liable for any and all unpaid Rent due hereunder before, during, or after (except as otherwise provided herein) the exercise of any of the foregoing remedies and for all reasonable attorneys' fees and other costs and expenses of Lessor and Owner Participant, including interest on overdue Rent at the rate as herein provided, incurred by reason of the existence of any Event of Default or the exercise of Lessor's remedies with respect thereto, including all reasonable costs and expenses incurred in connection with the return of the Airframe or any Engine in accordance with the terms of ss. 5, or in placing the Airframe or any Engine in the condition and airworthiness required by ss. 5. 15.2 LIMITATIONS UNDER CRAF Notwithstanding the provisions of ss. 15.1, during any period that the Aircraft, the Airframe, or any Engine is subject to CRAF in accordance with the provisions of ss. 7.2.3 and in the possession of the U.S. Government, Lessor shall not, as a result of any Event of Default, exercise its remedies hereunder in such manner as to limit Lessee's control under this Lease (or any Permitted Sublessee's control under any Permitted Sublease) of the Aircraft, the Airframe, or such Engine, unless Lessor gives at least 30 days' (or such other period as may then apply under CRAF) written notice of default hereunder by registered or certified mail to Lessee (and any Permitted Sublessee) with a copy to the Contracting Officer Representative or Representatives for the Military Airlift Command of the United States Air Force to whom notices must be given under the contract governing Lessee's (or any Permitted Sublessee's) participation in CRAF with respect to the Aircraft, the Airframe, or any Engine. 15.3 RIGHT TO PERFORM FOR LESSEE If Lessee (a) fails to make any payment of Rent required to be made by it hereunder or (b) fails to perform or comply with any of its agreements contained herein and such failure under this clause (b) continues for a period of 30 days after the earlier of Lessor or Owner Participant, giving written notice thereof to Lessee, or (c) fails to maintain the insurance required hereunder and such failure under this clause (c) continues for 10 days after such notice, then Lessor or Owner Participant may (but shall not be obligated to) make such payment or perform or comply with such agreement, and the amount of such payment and the amount of the expenses of Lessor or Owner Participant incurred in connection with such payment or the performance of or compliance with such agreement (as applicable), together with interest thereon at the Past-Due Rate, shall be deemed Supplemental Rent, payable by Lessee upon demand by Lessor or Owner Participant, whichever is entitled thereto. No such payment, performance, or compliance shall be deemed to waive any Default or otherwise relieve Lessee of its obligations with respect thereto. 15.4 DETERMINATION OF FAIR MARKET RENTAL VALUE AND FAIR MARKET SALES VALUE For the purpose of this ss. 15, the Fair Market Rental Value or the Fair Market Sales Value of the Aircraft, the Airframe, or any Engine shall be determined on an "as is, where is" basis and shall take into account customary brokerage and other out-of-pocket fees and expenses which typically would be incurred in connection with a re-lease or sale of such an aircraft, airframe, or engine. Any such determination shall be made by an Appraiser selected by Lessor, and the costs and expenses associated therewith shall be borne by Lessee; PROVIDED, that, if Lessor does not obtain possession of the Aircraft pursuant to this ss. 15, an Appraiser shall not be appointed, and Fair Market Rental Value and Fair Market Sales Value for purposes of this ss. 15 shall be zero. 15.5 REMEDIES CUMULATIVE Nothing contained in this Lease shall be construed to limit in any way any right, power, remedy, or privilege of Lessor hereunder or under any other Operative Agreement or now or hereafter existing at law or in equity. Each and every right, power, remedy, and privilege hereby given to, or retained by, Lessor in this Lease shall be in addition to and not in limitation of every other right, power, remedy, and privilege given under the Operative Agreements or now or hereafter existing at law or in equity. Each and every right, power, remedy, and privilege of Lessor under this Lease and any other Operative Agreement may be exercised from time to time or simultaneously and as often and in such order as may be deemed expedient by Lessor. All such rights, powers, remedies, and privileges shall be cumulative and not mutually exclusive, and the exercise of one shall not be deemed a waiver of the right to exercise any other. Lessee hereby waives to the extent permitted by applicable Law any right which it may have to require Lessor to choose or elect remedies. 16. LESSEE'S OBLIGATIONS; NO SETOFF, COUNTERCLAIM, ETC. (a) Lessee's obligation to pay all Rent payable hereunder shall be absolute and unconditional, and shall not be affected by any event or circumstance, including: (1) any setoff, counterclaim, recoupment, defense, or other right that Lessee may have against Lessor, Owner Participant, or any other Person for any reason whatsoever; (2) any defect in the title, airworthiness, condition, design, operation, or fitness for use of, or any damage to or loss or destruction of, the Aircraft, the Airframe, or any Engine, or any interruption or cessation in the use or possession thereof by Lessee for any reason whatsoever; (3) any insolvency, bankruptcy, reorganization, or similar proceedings by or against Lessee or any other Person; or (4) any other circumstance, happening, or event whatsoever, whether or not similar to any of the foregoing. (b) If for any reason whatsoever this Lease shall be terminated in whole or in part by operation of law or otherwise except as specifically provided herein, Lessee nonetheless agrees to pay an amount equal to each Rent payment at the time such payment would have become due and payable in accordance with the terms hereof had this Lease not been terminated in whole or in part. Lessee hereby waives, to the extent permitted by applicable Law, any and all rights that it may now have or that at any time hereafter may be conferred upon it, by statute or otherwise, to terminate, cancel, quit, or surrender this Lease, except in accordance with the express terms hereof. (c) Nothing set forth in this ss. 16 shall be construed to prohibit Lessee from separately pursuing any claim that it may have from time to time against Lessor or any other Person with respect to any matter (other than the absolute and unconditional nature of Lessee's obligations hereunder to pay Rent, and other than the matters specified in paragraphs (a) and (b) above). 17. RENEWAL AND PURCHASE OPTIONS 17.1 NOTICES GENERALLY (a) Unless otherwise provided by this ss. 17, at least 270 days and no more than 365 days before the Scheduled Expiration Date for the Base Term or then-current Renewal Term, Lessee may provide irrevocable written notice to Lessor (a "PRELIMINARY NOTICE"), with a copy of such notice to Owner Participant, that Lessee intends to exercise the option either to extend the leasing of the Aircraft for a Renewal Term pursuant to ss. 17.2 or to purchase the Aircraft on the Scheduled Expiration Date pursuant to ss. 17.3. (b) If Lessee gives a Preliminary Notice, then Lessee shall provide a further notice, at least 30 days before the following Scheduled Expiration Date, specifying which option it intends to elect, pursuant to ss. 17.2.1 or ss. 17.3.1 (as applicable). If Lessee fails to give such further notice at least 30 days before such Scheduled Expiration Date, Lessee shall be deemed to have elected its option to purchase the Aircraft pursuant to ss. 17.3.1. 17.2 RENEWAL OPTIONS 17.2.1 RENEWAL NOTICE (a) If Lessee has given a Preliminary Notice, as specified in ss. 17.1, and subject to the terms and conditions of this ss. 17.2, Lessee may exercise its option to extend the leasing of the Aircraft hereunder until the following Scheduled Expiration Date, on the same terms (except as contemplated by this ss. 17) as in the Lessee Operative Agreements with respect to the Base Term, by delivering a notice (a "RENEWAL NOTICE") to Lessor not less than 30 days before the Scheduled Expiration Date. (b) Notwithstanding anything to the contrary in any Operative Agreement: (1) No Preliminary Notice or Renewal Notice shall be binding on Lessor or oblige Lessor to extend the leasing of the Aircraft hereunder for a Renewal Term if any Special Default or Event of Default exists on and as of the date that such Renewal Term would otherwise commence. (2) A Renewal Notice shall be revocable by Lessee until 10 Business Days after the Renewal Rent is determined in accordance with ss. 17.2.2, and unless revoked by written notice by Lessee to Lessor shall thereafter become irrevocable and shall constitute an unconditional obligation of Lessee to extend the leasing of the Aircraft hereunder for the Renewal Term to which such Renewal Notice relates. If Lessee revokes a Renewal Notice as indicated above, Lessee will be deemed to have irrevocably elected its option to purchase the Aircraft pursuant to ss. 17.3.1. (3) Lessee shall not be entitled to give any Renewal Notice if it (aa) has not delivered a Preliminary Notice to Lessor, (bb) has delivered a Purchase Notice to Lessor, or (cc) has previously delivered four Renewal Notices to Lessor. 17.2.2 RENEWAL RENT (a) During each Renewal Term, Lessee shall pay to Lessor on each Payment Date, in the manner and in the funds of the type specified in ss. 3.3, Renewal Rent in arrears. (b) The Renewal Rent payable by Lessee on each Payment Date during each Renewal Term shall be the Fixed Rate (or, if less, the Applicable Percentage of the Fair Market Rental Value). Any such Fair Market Rental Value shall be determined not more than 120 days and not less than 100 days before the first day of such Renewal Term by mutual agreement of Lessor and Lessee or, if they do not agree, by an appraisal in accordance with ss. 17.4. 17.2.3 STIPULATED LOSS AND TERMINATION VALUES (a) For any Renewal Term, Stipulated Loss Value Dates and Termination Value Dates shall be extended throughout such Renewal Term on the same days and for the same months as during the Base Term. (b) Stipulated Loss Value and Termination Value amounts that are payable during any such Renewal Term shall be determined at the same time that the Renewal Rent for such Renewal Term is determined under ss. 17.2.2. Stipulated Loss Values and Termination Values for any such Renewal Term shall, commencing on the first day of such Renewal Term, be equal to the Fair Market Sales Value of the Aircraft on such day, and shall decline ratably on a monthly basis to the salvage value of the Aircraft as of the last day of its remaining useful life. (c) For purposes of calculating Stipulated Loss Value and Termination Value amounts applicable during any Renewal Term, the "salvage value" and "useful life" shall be determined by mutual agreement of Lessor and Lessee, or, if they do not agree, by an appraisal in accordance with ss. 17.4. 17.3 PURCHASE OPTIONS 17.3.1 PURCHASE NOTICE (a) Provided that at the time of such election no Special Default or Event of Default exists, Lessee may, subject to ss. 17.1 and this ss. 17.3, elect to purchase the Aircraft: (1) on the EBO Date as shown on Schedule 5 at the price indicated thereon; (2) on any Purchase Date, at a purchase price equal to the Fair Market Sales Value of the Aircraft computed as of the Purchase Date; or (3) (aa) on any Payment Date occurring after the Tax Attribute Period, if a Burdensome Indemnity Payment not waived by Owner Participant shall become due and owing, if Lessee did not cause such indemnity with the intent of permitting such purchase and if such purchase would eliminate such indemnity on a future basis, or (bb) on any Payment Date after the EBO Date, if Lessee has committed to (but not commenced) a Significant Expenditure, then (whether as to clause (aa) or (bb)) at a purchase price equal to the greater of (x) the Fair Market Sales Value of the Aircraft computed as of such Payment Date (not including any portion of the Fair Market Sales Value of the Aircraft attributable to any Significant Expenditure) and (y) the Termination Value for the Aircraft computed as of such Payment Date. (b) Lessee may exercise such option to purchase the Aircraft, by delivery of a written notice (a "PURCHASE NOTICE") to Lessor (with a copy of such Purchase Notice to Owner Participant) not less than 60 days and no more than 365 days before the EBO Date (for a purchase under ss. 17.3.1(a)(1)), not less than 30 days and no more than 365 days before the Purchase Date (for a purchase under ss. 17.3.1(a)(2)), and not less than 120 days and no more than 365 days before the Payment Date specified in such Purchase Notice (for a voluntary termination purchase under ss. 17.3.1(a)(3)). (c) Notwithstanding anything to the contrary in any Operative Agreement: (1) Any Purchase Notice delivered or deemed to have been delivered pursuant to ss. 17.3.1(a)(1) or (2) shall be irrevocable and shall constitute an unconditional obligation of Lessee to purchase the Aircraft under this ss. 17.3; and any Purchase Notice delivered pursuant to ss. 17.3.1(a)(3), shall be revocable until 10 Business Days after the determination of the Fair Market Sales Value in accordance with ss. 17.3.2, and unless so revoked by written notice by Lessee to Lessor (with a copy to Owner Participant) shall thereafter become irrevocable and shall constitute an unconditional obligation of Lessee to purchase the Aircraft under this ss. 17.3. (2) Lessee shall not be entitled to give any Purchase Notice pursuant to ss. 17.3.1(a)(2) if it has not delivered a Preliminary Notice. 17.3.2 DETERMINATION OF FAIR MARKET SALES VALUE The Fair Market Sales Value of the Aircraft shall be determined not more than 120 days and not less than 100 days before the applicable Purchase Date or Payment Date by mutual agreement of Lessor and Lessee, or, if they shall be unable to agree, by an appraisal in accordance with ss. 17.4. 17.3.3 PAYMENTS BY LESSEE (a) If Lessee elects to purchase the Aircraft pursuant to clause (1) of ss. 17.3.1(a), then on the EBO Date Lessee shall pay to Lessor in immediately available funds: (1) all unpaid Basic Rent due before the EBO Date; plus (2) the EBO Price; plus (3) all Supplemental Rent then due, and any sales or transfer tax then due in connection with such purchase. (b) If Lessee elects to purchase the Aircraft pursuant to clause (2) of ss. 17.3.1(a), then on the applicable Purchase Date Lessee shall pay to Lessor in immediately available funds: (1) all unpaid Basic Rent due on or before such Purchase Date; plus (2) the applicable purchase price for the Aircraft; plus (3) all Supplemental Rent then due, and any sales or transfer tax then due in connection with such purchase. (c) If Lessee elects to purchase the Aircraft pursuant to clause (3) of ss. 17.3.1(a), then on the Payment Date on which Lessee elects to purchase the Aircraft, Lessee shall pay to Lessor in immediately available funds: (1) all unpaid Basic Rent due on or before such Payment Date; plus (2) the purchase price of the Aircraft pursuant to such clause (3); plus (3) all Supplemental Rent then due, and any sales or transfer tax then due in connection with such purchase. 17.3.4 TITLE Upon full and final payment by Lessee of (a) the applicable amount payable under ss. 17.3.3, (b) on an after-tax basis, all out-of-pocket fees and expenses (including reasonable fees and expenses of counsel) incurred by Lessor and Owner Participant in connection with such purchase and invoiced to Lessee prior thereto, and (c) all other amounts then due and payable by Lessee under the Operative Agreements, Lessor will transfer to Lessee title to the Aircraft in accordance with ss. 4.5. 17.3.5 INSTALLMENT EBO PURCHASE Lessee and Lessor acknowledge that at Lessee's election the EBO Price may be payable in installments as provided in Schedule 5. Lessor and Lessee agree that if Lessee elects to purchase the Aircraft pursuant to ss. 17.3.1(a)(1) and elects to pay the EBO Price in installments, Lessee agrees to provide security to Lessor to secure the unpaid balance of the EBO Price, which security shall be required to be in an amount and otherwise in form and substance reasonably satisfactory to Lessor and Owner Participant. Subject to the foregoing, upon payment of the initial installment of the EBO Price as set forth in Schedule 5 together with all amounts otherwise payable pursuant to ss. 17.3.3(a) and ss. 17.3.4, Lessor will transfer title to the Aircraft in accordance with ss. 4.5. 17.4 APPRAISALS Whenever Fair Market Rental Value or Fair Market Sales Value of the Aircraft is required to be determined by an appraisal under this ss. 17, Lessee and Lessor shall appoint a mutually-satisfactory Appraiser to conduct such appraisal. If Lessee and Lessor fail to agree upon a satisfactory Appraiser, then each shall promptly appoint a separate Appraiser, and such Appraisers shall jointly determine such amount. If either Lessee or Lessor does not so appoint an Appraiser, the determination of the single Appraiser appointed shall be final. If two Appraisers are appointed and within seven days after the appointment of the latter of such two Appraisers, they do not agree upon such amount, such two Appraisers shall, within eight days after such latter appointment, appoint a third Appraiser, and such amount shall be determined by such three Appraisers, who shall make their separate appraisals within seven days following the appointment of the third Appraiser, and any determination so made shall be conclusive and binding upon Lessor and Lessee. If no such third Appraiser is appointed within such eight-day period, either Lessor or Lessee may apply to the American Arbitration Association to make such appointment, and both parties shall be bound by such appointment. The foregoing appraisal procedure shall in any event be completed no less than 125 days before the end of the Base Term or any Renewal Term (unless such procedure is undertaken in connection with ss. 15 or ss. 17.3.1(a), in which case it shall be completed promptly). If three Appraisers are appointed and the difference between the determination which is further from the middle determination and the middle determination is more than 125% of the difference between the middle determination and the third determination, then such further determination shall be excluded, the remaining two determinations shall be averaged, and such average shall be final and binding upon Lessor and Lessee. Otherwise, the average of all three determinations shall be final and binding upon Lessor and Lessee. The fees and expenses of all such Appraisers and such appraisal procedure shall be borne equally by Lessee and Lessor. 18. MISCELLANEOUS 18.1 AMENDMENTS No provision of this Lease may be amended, supplemented, waived, modified, discharged, terminated, or otherwise varied orally, but only by an instrument in writing that specifically identifies the provision of this Lease that it purports to amend, supplement, waive, modify, discharge, terminate, or otherwise vary and is signed by Lessor and Lessee. Each such amendment, supplement, waiver, modification, discharge, termination, or variance shall be effective only in the specific instance and for the specific purpose for which it is given. No provision of this Lease shall be varied or contradicted by oral communication, course of dealing or performance, or other manner not set forth in an agreement, document, or instrument in writing and signed by Lessor and Lessee. 18.2 SEVERABILITY If any provision hereof shall be held invalid, illegal, or unenforceable in any respect in any jurisdiction, then, to the extent permitted by Law, (a) all other provisions hereof shall remain in full force and effect in such jurisdiction, and (b) such invalidity, illegality, or unenforceability shall not affect the validity, legality, or enforceability of such provision in any other jurisdiction. If, however, any Law pursuant to which such provisions are held invalid, illegal, or unenforceable may be waived, Lessor and Lessee hereby waive such Law to the full extent permitted, to the end that this Lease shall be deemed to be a valid and binding agreement in all respects, enforceable in accordance with its terms. 18.3 THIRD-PARTY BENEFICIARY This Lease is not intended to provide, and shall not provide, any Person not a party hereto (other than Owner Participant and the Persons referred to in ss. 4.6) with any rights of any nature whatsoever against either of the parties hereto, and no Person not a party hereto (other than Owner Participant and the Persons referred to in ss. 4.6) shall have any right, power, or privilege in respect of this Lease, or have any benefit or interest arising out of this Lease. 18.4 REPRODUCTION OF DOCUMENTS This Lease (including all annexes, schedules, and exhibits hereto) and all agreements, instruments, and documents relating hereto, including (a) consents, waivers, and modifications that may hereafter be executed, and (b) financial statements, certificates, and other information previously or hereafter furnished to any party hereto, may be reproduced by such party by any photographic, photostatic, microfilm, micro-card, miniature photographic, or other similar process, and such party may destroy any original documents so reproduced. Any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made by such party in the regular course of business), and any enlargement, facsimile, or further reproduction of such reproduction likewise is admissible in evidence. 18.5 COUNTERPARTS This Lease and any amendments, waivers, consents, or supplements hereto may be executed in any number of counterparts (or upon separate signature pages bound together into one or more counterparts), each fully-executed set of which when so executed shall be deemed to be an original, and all of which counterparts, taken together, shall constitute one and the same instrument. The single fully-executed original of this Lease marked "Original" on the signature page hereof is the original for chattel paper purposes, and all other counterparts are duplicates for chattel paper purposes and are marked "duplicate" on the signature page hereof. No security interest in this Lease may be perfected by the possession of any counterpart other than the "Original". 18.6 NOTICES Unless otherwise expressly permitted by the terms hereof, all notices, requests, demands, authorizations, directions, consents, waivers, and other communications required or permitted to be made, given, furnished, or filed hereunder shall be made, given, furnished, or filed, and shall become effective, in the manner prescribed in ss. 15.7 of the Participation Agreement. 18.7 GOVERNING LAW THIS LEASE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY, AND PERFORMANCE. THIS LEASE IS BEING DELIVERED IN THE STATE OF NEW YORK. 18.8 NO WAIVER No failure on the part of Lessor to exercise, and no delay by Lessor in exercising, any of its rights, powers, remedies, or privileges under this Lease or provided at Law, in equity or otherwise shall impair, prejudice, or constitute a waiver of any such right, power, remedy, or privilege or be construed as a waiver of any breach hereof or default hereunder or as an acquiescence therein, nor shall any single or partial exercise of any such right, power, remedy, or privilege preclude any other or further exercise thereof by Lessor or the exercise of any other right, power, remedy, or privilege by Lessor. No notice to or demand on Lessee in any case shall, unless otherwise required under this Lease, entitle Lessee to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of Lessor to any other or further action in any circumstances without notice or demand. 18.9 ENTIRE AGREEMENT This Lease, together with the other Operative Agreements, on and as of the date hereof constitute the entire agreement of the parties hereto with respect to the subject matter hereof and thereof, and all prior understandings or agreements, whether written or oral, between the parties hereto with respect to such subject matter are hereby superseded in their entirety. [THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK.] IN WITNESS WHEREOF, Lessor and Lessee have executed this Lease Agreement N___AT. FIRST SECURITY BANK, NATIONAL ASSOCIATION, NOT IN ITS INDIVIDUAL CAPACITY, EXCEPT AS EXPRESSLY PROVIDED HEREIN, BUT SOLELY AS TRUSTEE UNDER THE TRUST AGREEMENT, as Lessor By: ---------------------------------------- Name: Title: AMERICAN TRANS AIR, INC., as Lessee By: Name: Title: [This is the ORIGINAL counterpart of the Lease for chattel paper purposes] [or] [This is a DUPLICATE executed counterpart, and is NOT the original counterpart, of the Lease, for chattel paper purposes.] AIRCRAFT DESCRIPTION The Aircraft is a Boeing model 737-800 aircraft, consisting of (1) an airframe bearing FAA registration no. N___AT and manufacturer's serial no. __________, (2) two CFM International model CFM56-7 engines (each of which has 750 or more rated takeoff horsepower or its equivalent), bearing manufacturer's serial nos. __________ and __________, and (3) all appliances, parts, instruments, appurtenances, accessories, furnishings, and other equipment or property incorporated in such airframe and engines. RETURN ACCEPTANCE SUPPLEMENT N___AT This Supplement, dated __________, ____, is entered into between First Security Bank, National Association, a national banking association, not in its individual capacity but solely as Owner Trustee under Trust Agreement N___AT, dated as of __________________, ____, with the Owner Participant named therein (such Owner Trustee, in its capacity as trustee, being referred to as "LESSOR"), and American Trans Air, Inc. ("LESSEE"), an Indiana corporation. Lessor and Lessee have entered into Lease Agreement N___AT (the "LEASE"), dated as of [_____________, ____], relating to the Boeing model 737-800 aircraft described below. Terms defined in the Lease have the same meanings when used in this Supplement. Lessor and Lessee hereby agree as follows: 1. Lessor and Lessee are executing this Return Acceptance Supplement to confirm that, on the date hereof, Lessee returned the following Airframe and Engines to Lessor: Airframe: U.S. registration no. N___AT; manufacturer's serial no. __________; and Engines: two CFM International engines, bearing manufacturer's serial nos. __________ and __________. 2. This Return Acceptance Supplement is being delivered in _____________________. 3. Lessor and Lessee agree that the Lease is terminated, except for the provisions thereof that expressly survive termination. IN WITNESS WHEREOF, Lessor and Lessee have executed this Return Acceptance Supplement N___AT. FIRST SECURITY BANK, NATIONAL ASSOCIATION, NOT IN ITS INDIVIDUAL CAPACITY, EXCEPT AS EXPRESSLY PROVIDED HEREIN, BUT SOLELY AS TRUSTEE UNDER THE TRUST AGREEMENT, as Lessor By: -------------------------------------------------------- Name: Title: AMERICAN TRANS AIR, INC., as Lessee By: -------------------------------------------------------- Name: Title: CERTAIN TERMS DEFINED TERM DEFINITION Commencement Date __________, 200_ Fixed Rate $__________ per quarterly Payment Date [60% OF AVERAGE BASIC RENT DURING THE BASE TERM] Minimum Liability Insurance Amount (CONFIDENTIAL MATERIAL OMITTED) Past-Due Rate (CONFIDENTIAL MATERIAL OMITTED) Scheduled Expiration Date (a) for the Base Term, the 20th anniversary of the Delivery Date, and (b) for a Renewal Term, the day before the first anniversary of the first day of that Renewal Term Similar Aircraft Boeing model 737-800 aircraft (other than the Aircraft) SLV Rate ___________% per annum Threshold Amount (CONFIDENTIAL MATERIAL OMITTED) BASIC RENT PAYMENTS PERCENTAGE OF PAYMENT DATE LESSOR'S COST BASIC RENT ALLOCATIONS FROM (BUT ALLOCATION OF NOT INCLUDING) THROUGH BASIC RENT - ----------------------------------------------------------------------- STIPULATED LOSS VALUE STIPULATED STIPULATED PREPAID BASIC DEFERRED BASIC LOSS VALUE DATE LOSS VALUE RENT AMOUNT RENT AMOUNT TERMINATION VALUE TERMINATION TERMINATION VALUE PREPAID BASIC DEFERRED BASIC VALUE DATE RENT AMOUNT RENT AMOUNT - ------------------------------------------------------------------------------ EBO PRICE SCHEDULE Unadjusted Adjusted EBO EBO Price Rent Adjustment Amount (Percentage of (Percentage of (Percentage of EBO Date Lessor's Cost) Lessor's Cost) Lessor's Cost) PERMITTED COUNTRIES Argentina* Australia Austria Bahamas Belgium Bermuda Brazil* Canada Chile* Denmark Ecuador* Egypt* Finland France Germany Greece* Hungary* Iceland India* Indonesia* Ireland Italy** Jamaica* Japan Liechtenstein* Luxembourg Malaysia* Malta* Mexico** Monaco Morocco* Netherlands New Zealand Norway Paraguay* Peoples Republic of China* Philippines* Portugal Republic of China (Taiwan)* Singapore* South Africa* South Korea* Spain Sweden Switzerland Thailand* United Kingdom Uruguay* Venezuela* United States of America *SUBLEASING AND RE-REGISTRATION PERMITTED ONLY WITH OWNER PARTICIPANT'S PRIOR WRITTEN CONSENT, WHICH CONSENT OWNER PARTICIPANT MAY WITHHOLD IN ITS SOLE AND ABSOLUTE DISCRETION. **APPROVED FOR SUBLEASING BUT LESSEE MAY NOT RE-REGISTER IN SUCH COUNTRY WITHOUT OWNER PARTICIPANT'S PRIOR WRITTEN CONSENT, WHICH CONSENT OWNER PARTICIPANT MAY WITHHOLD IN ITS SOLE AND ABSOLUTE DISCRETION.. PLACARDS Leased from First Security Bank, National Association, as owner trustee ANNEX B RETURN CONDITIONS This Annex B shall apply to the return of the Aircraft by or on behalf of Lessee under the Lease, whether at a Scheduled Expiration Date, upon the exercise of Lessee's rights under ss. 9 of the Lease, upon the exercise of Lessor's remedies following the occurrence of an Event of Default, or otherwise. However, this Annex B shall not apply (1) if an Event of Loss to the Aircraft occurs (unless the Aircraft is replaced under ss. 10.1.3 of the Lease), or (2) if Lessee buys the Aircraft in accordance with ss. 17 of the Lease. The terms defined in Annex A to Lease Agreement N___AT, when capitalized as in Annex A, have the same meanings when used in this "Return Conditions" Annex. Annex A also contains rules of usage that control construction in this "Return Conditions" Annex. (CONFIDENTIAL MATERIAL OMITTED) ANNEX C MAINTENANCE The terms defined in Annex A to Lease Agreement N___AT, when capitalized as in Annex A, have the same meanings when used in this "Maintenance" Annex. Annex A also contains rules of usage that control construction in this "Maintenance" Annex. A. MAINTENANCE. ----------- Lessee shall maintain, service, repair, and overhaul the Aircraft (or cause the Aircraft to be maintained, serviced, repaired, and overhauled) in accordance with (1) maintenance standards required by, or substantially equivalent to those required by, the FAA or the central civil aviation authority of Canada, Japan, and the JAA for the Aircraft (the "MAINTENANCE PROGRAM"), so as (aa) to keep the Aircraft in as good operating condition as originally delivered hereunder, ordinary wear and tear excepted, and (bb) to keep the Aircraft in such operating condition as may be necessary to enable the applicable airworthiness certificate for the Aircraft to be maintained under the regulations of the FAA or other Aviation Authority then having jurisdiction over the operation of the Aircraft, other than during (x) temporary periods of storage in accordance with applicable regulations, (y) maintenance and modification permitted hereunder, and (z) periods when the FAA or such other Aviation Authority has revoked or suspended the airworthiness certificates for Similar Aircraft; and (2) except during periods when a Permitted Sublease is in effect, the same standards as Lessee uses with respect to similar aircraft of similar size in its fleet operated by Lessee in similar circumstances and, during any period in which a Permitted Sublease is in effect, the same standards used by the Permitted Sublessee with respect to similar aircraft of similar size in its fleet and operated by the Permitted Sublessee in similar circumstances. Lessee further agrees that the Aircraft will be maintained, used, serviced, repaired, overhauled, or inspected in compliance with applicable Laws with respect to the maintenance of the Aircraft and in compliance with each applicable airworthiness certificate, license, and registration relating to the Aircraft issued by the Aviation Authority, other than minor or nonrecurring violations with respect to which corrective measures are taken upon discovery thereof and except to the extent Lessee or Permitted Sublessee is contesting in good faith the validity or application of any such Law or requirement relating to any such certificate, license, or registration in any reasonable manner which does not create a material risk of sale, loss, or forfeiture of the Aircraft, the Airframe, or any Engine or the interest of Owner Participant therein or a material risk of criminal liability or material civil penalty against Lessor or Owner Participant. Lessee shall cause the Aircraft Documents to be maintained in English and promptly furnish Lessor and Owner Participant with information necessary for filing with applicable governmental aviation authorities. B. REPLACEMENT OF PARTS. -------------------- Except as otherwise provided herein, Lessee will promptly replace (or cause to be replaced) all Parts that are from time to time incorporated or installed in or attached to the Aircraft, and that become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair, or permanently rendered unfit for use for any reason whatsoever. In addition, Lessee may remove (or permit to be removed) any Parts in the ordinary course of maintenance, service, repair, overhaul, or testing, whether or not such Parts are worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair, or permanently rendered unfit for use; PROVIDED, that, except as otherwise provided herein, Lessee will replace or cause the replacement of such Parts as promptly as practicable. All replacement Parts shall be free and clear of all Liens, except for Permitted Liens and pooling arrangements to the extent permitted by ss. C below and shall be in good operating condition and (except in the case of replacement property installed on the basis of operational exigencies) have a value and utility not less than the value and utility of the Parts replaced (assuming such replaced Parts were in the condition required under this Lease). Except as otherwise provided herein, all Parts at any time removed from the Aircraft shall remain the property of Lessor, no matter where located, until they are replaced by Parts that have been incorporated or installed in or attached to the Aircraft and that meet the requirements for replacement Parts specified above. As soon as a replacement Part is incorporated or installed in or attached to the Aircraft as above provided, without further act, (1) title to the replaced Part shall vest in Lessee (or if a Permitted Sublease is then in effect, in the Permitted Sublessee) free and clear of all Lessor Liens and all rights of Lessor, and the replaced Part shall no longer be deemed a Part hereunder, (2) title to such replacement Part shall vest in Lessor, subject only to Permitted Liens and pooling arrangements to the extent permitted by ss. C below and except in the case of replacement property temporarily installed on an emergency basis, and (3) such replacement Part shall become subject to this Lease and be deemed part of the Aircraft for all purposes hereof and thereof to the same extent as the Parts originally incorporated or installed in or attached to such Aircraft. C. POOLING OF PARTS. ---------------- Any Part removed from the Aircraft may be subjected by Lessee or a Permitted Sublessee to a normal pooling arrangement customary in the airline industry and entered into in the ordinary course of business of Lessee or such Permitted Sublessee, so long as a Part replacing such removed Part shall be incorporated or installed in or attached to the Aircraft in accordance with ss. B of this Annex C as promptly as practicable after the removal of such removed Part. In addition, any replacement Part when incorporated or installed in or attached to the Aircraft may be owned by any third party subject to such a normal pooling arrangement, so long as Lessee or Permitted Sublessee, as promptly thereafter as reasonably possible, either (1) causes title to such replacement Part to vest in Lessor in accordance with ss. B of this Annex C, free and clear of all Liens (except Permitted Liens), or (2) replaces (or causes to be replaced) such replacement Part by incorporating or installing in or attaching to the Aircraft a further replacement Part owned by Lessee or a Permitted Sublessee free and clear of all Liens (except Permitted Liens) and by causing title to such further replacement Part to vest in Lessor in accordance with ss. B of this Annex C. D. ALTERATIONS, MODIFICATIONS, AND ADDITIONS. ----------------------------------------- Lessee shall make (or cause to be made) such alterations and modifications in and additions to the Aircraft as may be required from time to time to meet the applicable standards of the FAA or other Aviation Authority having jurisdiction over the operation of the Aircraft, to the extent made mandatory in respect of the Aircraft (a "MANDATORY MODIFICATION"); PROVIDED, that Lessee or any Permitted Sublessee may, in good faith and by appropriate procedure, contest the validity or application of any law, rule, regulation, or order in any reasonable manner which does not have more than a DE MINIMIS risk of adversely affecting Lessor's interest in the Aircraft and does not involve more than a DE MINIMIS risk of sale, forfeiture, or loss of the Aircraft or the interest of Owner Participant therein, more than a DE MINIMIS risk of material civil penalty, or any risk of criminal liability being imposed on Lessor or Owner Participant. In addition, Lessee may make or permit to be made such alterations and modifications in and additions to the Aircraft (each an "OPTIONAL MODIFICATION") as Lessee or any Permitted Sublessee deems desirable in the proper conduct of its business, including removal of Parts which Lessee deems are obsolete or no longer suitable or appropriate for use in the Aircraft (PROVIDED, that Lessee's right to remove obsolete Parts will be limited to Parts having an aggregate original cost not exceeding 1% of Lessor's Cost of the Aircraft with Lessor having the right to request such parts be shipped to Owner Participant upon removal at Lessee's expense; PROVIDED, that no such Optional Modification shall (1) diminish the fair market value, estimated residual value, utility, or economic useful life of the Aircraft or any Engine below its fair market value, estimated residual value, utility, or economic useful life immediately before such Optional Modification (assuming the Aircraft or such Engine was in the condition required by the Lease immediately before such Optional Modification), (2) cause the Aircraft to cease to have the applicable standard airworthiness certificate, or (3) cause the Aircraft to become "limited use property" within the meaning of Rev. Proc. 79-48. Except as otherwise provided herein, title to all Parts (other than Removable Parts (as defined below)) incorporated or installed in or attached to the Aircraft as the result of such Optional Modification shall, without further act, vest in Lessor and become subject to this Lease. Notwithstanding anything to the contrary in this ss. D, Lessee or a Permitted Sublessee may, at any time during the Term, remove any Part (such Part being referred to herein as a "REMOVABLE PART") if (aa) such Part is in addition to, and not in replacement of or substitution for, any Part originally incorporated or installed in or attached to the Aircraft at the time of delivery thereof to Lessee or any Part in replacement of, or substitution for, any such Part, (bb) such Part is not required to be incorporated or installed in or attached to the Aircraft pursuant to the terms of ss. A of this Annex C or the first sentence of this ss. D or pursuant to the terms of any insurance policies required to be carried hereunder or any applicable law, and (cc) such Part can be removed from the Airframe or Engine without in any material respect diminishing the fair market value, estimated residual value, utility, or remaining economic useful life that the Airframe or Engine would have had at the time of removal had such removal not occurred, assuming that such Airframe or Engine was in the condition and repair required to be maintained by the terms hereof and such Removable Part had not been incorporated or installed in or attached to the Aircraft. Removable Parts may be leased from or financed by third parties other than Lessor. Title to any Removable Part shall not vest in Lessor; except that any Part not removed before the return to Lessor hereunder of the Airframe or Engine on which it is incorporated, installed, or attached shall become the property of Lessor. E. RECORDS. ------- Lessee shall maintain (or cause to be maintained) all Aircraft Documents. All Aircraft Documents that are specific to the Aircraft shall be the property of Lessor, but shall become the property of Lessee upon Lessee's purchase of the Aircraft pursuant to the terms of this Lease or upon the occurrence of an Event of Loss and Lessee's compliance with ss. 10. ANNEX D INSURANCE The terms defined in Annex A to Lease Agreement N___AT, when capitalized as in Annex A, have the same meanings when used in this "Insurance" Annex. Annex A also contains rules of usage that control construction in this "Insurance" Annex. A. LIABILITY INSURANCE 1. Except as provided in ss. A2 below, Lessee will carry or cause to be carried at all times, at no expense to Lessor or Owner Participant, comprehensive airline legal liability (including passenger liability, property damage, and contractual liability insurance) with respect to the Aircraft which is (a) in an amount not less than the greater of (x) the amount of comprehensive airline legal liability insurance from time to time applicable to aircraft owned or leased and operated by Lessee of the same type and operating on similar routes as the Aircraft, and (y) the Minimum Liability Insurance Amount per occurrence; (b) of the type and covering the same risks as from time to time applicable to aircraft, operated by Lessee and similarly-situated carriers, of the same type as the Aircraft; and (c) maintained in effect with insurers of internationally recognized responsibility in the international aviation industry (such insurers being referred to herein as "APPROVED INSURERS"). 2. During any period that the Aircraft is on the ground and not in operation, Lessee may carry or cause to be carried, in lieu of the insurance required by ss. A1 above, insurance otherwise conforming with the provisions of ss. A1 except that (a) the amounts of coverage shall not be required to exceed the amounts of public liability and property damage insurance from time to time applicable to aircraft owned or operated by Lessee of the same type as the Aircraft which are on the ground and not in operation, and (b) the scope of the risks covered and the type of insurance shall be the same as from time to time shall be applicable to aircraft owned or operated by Lessee of the same type which are on the ground and not in operation. B. HULL INSURANCE 1. Except as provided in ss. B2 below, Lessee will carry or cause to be carried at all times, at no expense to Lessor or Owner Participant, with Approved Insurers "all-risk" ground and flight aircraft hull insurance covering the Aircraft (including the Engines when they are installed on the Airframe or any other airframe) which is of the type as from time to time applicable to aircraft operated by Lessee of the same type as the Aircraft for an amount denominated in United States Dollars not less than the Stipulated Loss Value of the Aircraft Any policies of insurance carried in accordance with this ss. B1 covering the Aircraft and any policies taken out in substitution or replacement for any such policies shall provide that (a) in the event of a loss involving proceeds in excess of the Threshold Amount, the proceeds in respect of such loss up to an amount equal to the Stipulated Loss Value for the Aircraft shall be payable to Lessor, except in the case of a loss with respect to an Engine installed on an airframe other than the Airframe, in which case Lessee (or any Permitted Sublessee) shall endeavor to arrange for any payment of insurance proceeds in respect of such loss to be held for the account of Lessor, whether such payment is made to Lessee (or any Permitted Sublessee) or any third party [and, if or Lessor receives such a payment otherwise than in respect of an Event of Loss, then, upon receipt of evidence reasonably satisfactory to Lessor that the damage giving rise to such payment has been repaired or that such payment is then required to pay for repairs then being made, Lessor shall pay the amount of such payment to Lessee or its order], and (b) the entire amount of any loss involving proceeds of the Threshold Amount or less or the amount of any proceeds of any loss in excess of the Stipulated Loss Value for the Aircraft shall be paid to Lessee or its order unless an Event of Default exists and the insurers have been notified thereof by Lessor. In the case of a loss with respect to an engine (other than an Engine) installed on the Airframe, Lessor shall hold any payment to it of any insurance proceeds for that loss for the account of Lessee or any other third party who is entitled to receive such proceeds. 2. During any period that the Aircraft is on the ground and not in operation, Lessee may carry or cause to be carried, in lieu of the insurance required by ss. B1 above, insurance otherwise conforming with the provisions of ss. B1, except that the scope of the risks and the type of insurance shall be the same as from time to time applicable to aircraft owned by Lessee of the same type similarly on the ground and not in operation, PROVIDED, that Lessee shall maintain insurance against risk of loss or damage to the Aircraft in an amount equal to the Stipulated Loss Value of the Aircraft during such period that the Aircraft is on the ground and not in operation. C. WAR-RISK, HIJACKING, AND ALLIED PERILS INSURANCE If Lessee (or any Permitted Sublessee) operates or proposes to operate the Aircraft, the Airframe, or any Engine (1) in any area of recognized hostilities, or (2) on international routes and Lessee (or such Permitted Sublessee) maintains war-risk, hijacking, or allied perils insurance for other aircraft that it operates on such routes or in such areas, Lessee shall maintain or cause to be maintained war-risk, hijacking, and allied perils insurance of substantially the same type carried by similar United States commercial air carriers operating the same or comparable models of aircraft on similar routes or in such areas, and in no event in an amount less than the Stipulated Loss Value. D. GENERAL PROVISIONS Any policies of insurance carried in accordance with ss.ss. A, B, and C, including any policies taken out in substitution or replacement for such policies: (1) shall name Lessor and Owner Participant (and in respect of liability insurances, to the extent they are available without unreimbursed additional cost to Lessee, each of their respective successors, assigns, directors, agents, officers, and employees) as additional insureds (the "ADDITIONAL INSUREDS"), as their interests may appear; (2) shall apply worldwide and have no territorial restrictions or limitations (except only in the case of war, hijacking, and allied perils insurance required under ss. C, which shall apply to the fullest extent available in the international insurance market); (3) shall provide that, in respect of the interests of the Additional Insureds in such policies, the insurance shall not be invalidated or impaired by any act or omission (including misrepresentation and nondisclosure) by Lessee (or any Permitted Sublessee) or any other Person (including use for illegal purposes of the Aircraft or any Engine), and shall insure the Additional Insureds regardless of any breach or violation of any representation, warranty, declaration, term, or condition contained in such policies by Lessee (or any Permitted Sublessee); (4) shall provide that, if the insurers cancel such insurance for any reason whatsoever, or if it is allowed to lapse for nonpayment of premium, or if any material change is made in the insurance which adversely affects the interest of any of the Additional Insureds, such cancellation, lapse, or change shall not be effective as to the Additional Insureds for 30 days (seven days in the case of war risk, hijacking, and allied perils insurance) after receipt by the Additional Insureds of written notice by such insurers of such cancellation, lapse or change, PROVIDED, that if any notice period specified above is not reasonably obtainable, such policies shall provide for as long a period of prior notice as shall then be reasonably obtainable; (5) shall waive any rights of recourse, subrogation, setoff (including for unpaid premiums), recoupment, counterclaim, or other deduction, whether by attachment or otherwise, against each Additional Insured; (6) shall be primary without right of contribution from any other insurance that may be available to any Additional Insured; (7) shall provide that all of the liability insurance provisions thereof, except the limits of liability, shall operate in all respects as if a separate policy had been issued covering each party insured thereunder; (8) shall provide that none of the Additional Insureds shall be liable for any insurance premium; and (9) shall contain a 50/50 Clause per Lloyd's Aviation Underwriters' Association Standard Policy Form AVS 103; PROVIDED, that any such endorsements may be subject to any limitations on endorsements generally prevailing in the airline insurance marketplace at the time (E.G., AVN67B). E. REPORTS AND CERTIFICATES; OTHER INFORMATION On or before the Delivery Date and on or before each renewal date of the insurance policies required hereunder (and no less often than on an annual basis), Lessee will furnish or cause to be furnished to Lessor and Owner Participant insurance certificates describing in reasonable detail the insurance maintained hereunder and a report, signed by Lessee's or a Permitted Sublessee's regular independent insurance broker (the "INSURANCE BROKER"), stating the opinion of such Insurance Broker that (1) all premiums for the insurance then due have been paid, and (2) such insurance complies with the terms of this Annex D. To the extent that such agreement is reasonably obtainable, Lessee will also cause the Insurance Broker to agree to notify Lessor and Owner Participant in writing of any default in the payment of any premium and of any other act or omission on the part of Lessee of which the Insurance Broker has knowledge and which might invalidate or render unenforceable, in whole or in part, any insurance on the Aircraft or Engines or cause the cancellation or termination of such insurance, and to notify Lessor and Owner Participant in writing at least 30 days (seven days for war-risk and allied perils coverage, or such shorter period therefor as may be available in the international insurance market, as applicable) before the cancellation, lapse, or materially adverse change of any insurance maintained pursuant to this Annex D. F. RIGHT TO PAY PREMIUMS Each Additional Insured shall have the rights but not the obligations of an additional named insured. No Additional Insured shall have any obligation to pay any premium, commission, assessment, or call due on any such insurance (including reinsurance). Notwithstanding the foregoing, in the event of cancellation of any required insurance due to the nonpayment of premium, each of Lessor and Owner Participant shall have the option, in its sole discretion, to pay any such premium and to maintain such coverage, as Lessor or Owner Participant may require, until the scheduled expiry date of such insurance and, in such event, Lessee shall, upon demand, reimburse Lessor or Owner Participant for amounts that they so pay. G. DEDUCTIBLES; SELF-INSURANCE Lessee may self-insure by way of deductible, premium adjustment, franchise provisions, or otherwise (including, with respect to insurance maintained pursuant to ss. B, insuring for a maximum amount which is less than the Stipulated Loss Value of the Aircraft) the insurance covering the risks required to be insured against pursuant to ss. 11 and this Annex D under a program applicable to all aircraft in Lessee's fleet, but in no case shall the aggregate amount of self-insurance (including any applicable deductible) in regard to ss. 11 and this Annex D during any policy year, with respect to the Aircraft, exceed (CONFIDENTIAL MATERIAL OMITTED). In addition, Lessee (and any Permitted Sublessee) may self-insure to the extent that any applicable deductible per aircraft that does not exceed industry standards for major U.S. airlines. ANNEX A DEFINITIONS GENERAL PROVISIONS (a) In each Operative Agreement, unless otherwise expressly provided, a reference to: (1) each of "Lessee", "Lessor", "Loan Participant", "Owner Trustee", "Owner Participant", "Mortgagee", "Note Holder", and any other Person includes any successor in interest to it and any permitted transferee, permitted purchaser, or permitted assignee of it; (2) any agreement or other document (including any annex, schedule, or exhibit thereto, or any other part thereof) includes that agreement or other document as amended, supplemented, or otherwise modified and any agreement or other document entered into in substitution or replacement therefor from time to time, and in each case in accordance with its terms and in accordance with the Operative Agreements; (3) any provision of any Law includes any such provision as amended, modified, supplemented, substituted, reissued, or reenacted before the Delivery Date, and thereafter from time to time; (4) "Agreement", "this Agreement", "hereby", "herein", "hereto", "hereof", "hereunder", and words of similar import, when used in any Operative Agreement, refer to such Operative Agreement as a whole and not to any particular provision of such Operative Agreement; (5) "including", "include", and terms or phrases of similar import means "including [etc.], without limitation"; (6) "or" is conjunctive and not disjunctive; and (7) a reference to a "section" or "ss.", an "Exhibit", an "Annex", or a "Schedule" in any Operative Agreement, or in any annex thereto, is a reference to a section of, or an exhibit, an annex, or a schedule to, such Operative Agreement or such annex, respectively. (b) Each exhibit, annex, and schedule to each Operative Agreement is incorporated in, and is a part of, such Operative Agreement. (c) Unless otherwise defined or specified in any Operative Agreement, all accounting terms therein shall be construed and all accounting determinations thereunder shall be made in accordance with GAAP. (d) Headings used in any Operative Agreement are for convenience only, and shall not in any way affect the construction of, or be taken into consideration in interpreting, such Operative Agreement. (e) For purposes of each Operative Agreement, the existence of a Lease Event of Default, Lease Default, or Special Default referred to in ss. 14.5 of the Lease shall not prohibit Lessee from taking any action or exercising any right that is conditioned on the non-existence of any Lease Event of Default, Lease Default, or Special Default if such Lease Event of Default, Lease Default, or Special Default consists of the institution of reorganization proceedings with respect to Lessee under Chapter 11 of the Bankruptcy Code, and the trustee or debtor-in-possession in such proceedings (1) has agreed to perform its obligations under the Lease with the approval of the applicable court and thereafter continues to perform such obligations in accordance with Section 1110, or (2) has assumed the Lease with the approval of the relevant court and thereafter continues to perform its obligations under the Lease. DEFINED TERMS ACTUAL KNOWLEDGE: (a) as it applies to Owner Trustee or Mortgagee, actual knowledge of a responsible officer in the Corporate Trust Department or the Corporate Trust Office, respectively, and (b) as it applies to Owner Participant or Lessee, actual knowledge of a Vice President or more senior officer of Owner Participant or Lessee (respectively), or any other officer of Owner Participant or Lessee (respectively) having responsibility for the Transactions; PROVIDED, that each of Lessee, Owner Participant, Owner Trustee, and Mortgagee shall be deemed to have "Actual Knowledge" of any matter as to which it has received notice from Lessee, Owner Participant, any Note Holder, Owner Trustee, or Mortgagee, given pursuant to ss. 15.7 of the Participation Agreement. ADDITIONAL INSURED: defined inss. D of Annex D to the Lease. AFFILIATE of any Person: any other Person directly or indirectly controlling, controlled by, or under common control with such Person. For purposes of this definition, "control" means the power, directly or indirectly, to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract, or otherwise, and "controlling", "controlled by", and "under common control with" have correlative meanings, PROVIDED, that neither Owner Participant nor the Mortgagee will be deemed to be an "Affiliate" of Lessor or Owner Trustee (and vice versa), and none of Owner Trustee or Owner Participant will be deemed to be an "Affiliate" of the Mortgagee (and vice versa). AIRCRAFT: the Airframe and Engines. AIRCRAFT BILL OF SALE: a warranty bill of sale granting title to the Aircraft, which bill of sale Seller is to deliver to Owner Trustee on the Delivery Date. AIRCRAFT DESCRIPTION EXHIBIT: Exhibit A to the Lease or Exhibit A to the Mortgage. AIRCRAFT DOCUMENTS: all technical data, manuals, and log books, and all inspection, modification, and overhaul records and other service, repair, maintenance, and technical records that the relevant Aviation Authority, the Lease, or the Maintenance Program requires be maintained with respect to the Aircraft, including all required additions, renewals, revisions, and replacements of any such materials, in each case in whatever form and by whatever means or medium (including microfiche, microfilm, paper, or computer disk) such materials are maintained or retained by or on behalf of Lessee (PROVIDED, that all such materials shall be maintained in the English language). AIRFRAME: (1) the aircraft (excluding Engines or engines from time to time installed thereon) manufactured by Airframe Manufacturer and identified by Airframe Manufacturer's model number, United States registration number, and Airframe Manufacturer's serial number set forth in the Aircraft Description Exhibit, or (2) any Replacement Airframe, including in either case any and all Parts incorporated or installed in or attached or appurtenant to such airframe, and any and all Parts removed from such airframe, unless title to such Parts does not vest in Lessor in accordance with ss. 8.1 and Annex C of the Lease. Upon substitution of a Replacement Airframe under and in accordance with the Lease, such Replacement Airframe shall become subject to the Lease and shall be the "Airframe" for all purposes of the Operative Agreements, and the replaced Airframe shall cease to be subject to the Lease and shall cease to be the "Airframe". AIRFRAME MANUFACTURER: The Boeing Company, a Delaware corporation. ALLOCATED EETC EXPENSES means the Pro Rata Portion of the specified fees and expenses of each of the following incurred in connection with the issuance of the Pass-Through Certificates on the Issuance Date: (i) the placement fee and reimbursed expenses of ____________________ and the other institutions, if any, acting as initial purchasers of the Pass-Through Certificates, (ii) the upfront fee and reimbursed expenses of Wilmington Trust Company, as the Subordination Agent, the Pass-Through Trustees, and the Paying Agents, (iii) the upfront fee and reimbursed expenses of First Security Bank, National Association, as Escrow Agent, (iv) the upfront fee of ____________________, as the Depository, (v) the upfront fee of ____________________, as the Liquidity Provider, (vi) the fees and expenses of ____________________, special counsel to the initial purchasers and the Liquidity Provider, (vii) the fees and expenses of Richards Layton Finger, special counsel to the Pass-Through Trustees, Paying Agents, and Subordination Agent, [and the fees and expenses of ____________________, special counsel to Policy Provider,] (ix) the fees and expenses of Troutman Sanders LLP, special counsel to Lessee, (x) the fees and expenses of Cravath, Swaine & Moore, securities counsel to Lessee, (xi) the fees of the appraisers utilized for the Offering Memorandum, (xiii) the fees of the appraisers utilized by Policy Provider, (xiv) the fees and expenses of Moody's Investors Service, Inc. and Standard & Poor's Rating Services, (xv) the fees and expenses of Ernst & Young LLP, and (xvi) the initial quarterly premium due to Policy Provider under the Policy Provider Agreement. As used in this definition, "Pro Rata Portion" means one-[tenth]. AMORTIZATION AMOUNT for any Equipment Note, as of any Payment Date: the amount determined by multiplying the percentage set forth opposite such Payment Date on the Amortization Schedule by the Original Amount of such Equipment Note. AMORTIZATION SCHEDULE for an Equipment Note: the amortization schedule for that Equipment Note delivered pursuant toss. 2.02 of the Mortgage. APPLICABLE PERCENTAGE: means (A) for the [first one-year Renewal Term][first two one-year Renewal Terms], (1) 100% if, at the time that the first Renewal Term begins, Lessee provides Owner Participant with an opinion of counsel reasonably satisfactory to Owner Participant to the effect that, due to a Change in Tax Law or clarification of law, if the Applicable Percentage had been 100% on the Closing Date no Renewal Term would have been included in the Lease Term under Code ss. 467 and the Treasury Regulations thereunder and (2) otherwise, 105%; and (B) for any subsequent Renewal Term, 100%. APPRAISER: a firm of internationally-recognized, independent aircraft appraisers. AVERAGE LIFE DATE for any Equipment Note: the date which follows the time of determination by a period equal to the Remaining Weighted Average Life of such Equipment Note. The "REMAINING WEIGHTED AVERAGE LIFE" (calculated in days) for any Equipment Note on a given date is (1) the sum of (a) each then-remaining scheduled payment of principal of such Equipment Note, TIMES (b) the number of days from and including such determination date to but excluding the date on which such payment of principal is scheduled to be made, DIVIDED BY (2) the then-outstanding principal amount of such Equipment Note. AVIATION AUTHORITY: the FAA or, if the Aircraft is registered with any other Government Entity under and in accordance withss. 7.1.2 of the Lease, such other Government Entity. BANKRUPTCY CODE: the United States Bankruptcy Code, 11 U.S.C.ss. 101 ET SEQ. BASE TERM: the period beginning on and including the Commencement Date and ending on the Scheduled Expiration Date therefor, or such earlier date on which the Term terminates in accordance with the provisions of the Lease. BASIC RENT: the rent (including, to the extent applicable, Renewal Rent) payable or allocable, as applicable, for the Aircraft pursuant to ss. 3.2.1(a) of the Lease. BENEFICIAL OWNER of an Equipment Note: a Person who, by reason of direct ownership, contract, share ownership, or otherwise, has the right to receive or participate in receiving, directly or indirectly, payments of principal, interest, or Make-Whole Amount for that Equipment Note; PROVIDED, that a Person shall not be a Beneficial Owner of an Equipment Note solely because another Person in whom such a Person owns common stock or other equity securities is a registered holder or Beneficial Owner of such Equipment Note unless such Person is an Affiliate of such other Person. BILLS OF SALE: the FAA Bill of Sale and the Aircraft Bill of Sale. BURDENSOME INDEMNITY PAYMENT: an indemnity payment pursuant to the Tax Indemnity Agreement or ss. 9 of the Participation Agreement which would cause the aggregate net present value of all losses paid or payable by Lessee as of the determination date, discounted quarterly at the Debt Rate, to the determination date, to exceed 2.5% of Lessor's Cost. BUSINESS DAY: any day other than a Saturday, Sunday, or other day on which commercial banks are authorized or required by law to close in New York, NY, Indianapolis, IN, Wilmington, DE, or Salt Lake City, UT, or, so long as any Equipment Note remains outstanding, the city and state in which the Mortgagee maintains its Corporate Trust Office or receives and disburses funds. CASH EQUIVALENTS: the following securities (which shall mature within 90 days of the date of purchase thereof): (1) direct obligations of the U.S. Government; (2) obligations fully guaranteed by the U.S. Government; (3) certificates of deposit issued by, or bankers' acceptances of, or time deposits or a deposit account with, Owner Trustee, Mortgagee, or any bank, trust company, or national banking association incorporated or doing business under the laws of the United States or any state thereof having a combined capital and surplus and retained earnings of at least $500,000,000 and having a rate of "C" or better from the Thomson BankWatch Service; or (4) commercial paper of any issuer doing business under the laws of the United States or one of the states thereof and in each case having a rating assigned to such commercial paper by Standard & Poor's or Moody's at least equal to A1 or P1, respectively. CITIZEN OF THE UNITED STATES: defined inss. 40102(a)(15) of the Transportation Code and in the FARs. CLOSING: the closing of the transactions contemplated by the Participation Agreement on the Delivery Date. CODE: the Internal Revenue Code of 1986; PROVIDED, that when used in relation to a Plan, "Code" shall be interpreted in accordance with the regulations and rulings issued thereunder. COLLATERAL: the property in which a security interest is created in favor of the Loan Trustee under the "Granting Clause" of the Mortgage. COMMENCEMENT DATE: defined in Schedule 1 to the Lease. COMMITMENT for any Participant: that Participant's commitment to participate in the payment of Lessor's Cost, as reflected in Schedule 2 of the Participation Agreement. COMMITMENT TERMINATION DATE: defined in Schedule 3 to the Participation Agreement. CONSENT AND AGREEMENT: Manufacturer Consent and Agreement N___AT, dated the Delivery Date, of Airframe Manufacturer. CONTINUOUS STAY PERIOD: defined inss. 4.04(a) of the Mortgage. CORPORATE TRUST DEPARTMENT or TRUST OFFICE: Owner Trustee's principal corporate trust office, located from time to time at Owner Trustee's address for notices under the Participation Agreement, or such other office at which Owner Trustee's corporate trust business shall be administered and which Owner Trustee specifies by notice in writing to Lessee, Mortgagee, and each Note Holder. CORPORATE TRUST OFFICE: Mortgagee's principal office, located at Mortgagee's address for notices under the Participation Agreement, or such other office at which Mortgagee's corporate trust business shall be administered and which Mortgagee specifies by notice in writing to Lessee, Owner Trustee, and each Note Holder. CRAF: the Civil Reserve Air Fleet Program established pursuant to 10 U.S.C.ss. 9511 - 13, or any similar substitute program. DEBT: any liability for borrowed money, or any liability for the payment of money in connection with any letter of credit transaction, or any other liabilities evidenced or to be evidenced by bonds, debentures, notes, or other similar instruments. DEBT RATE: (1) for any Series, the rate as defined in the Mortgage, and (2) for any other purpose, with respect to any period, the weighted average interest rate per annum during such period borne by the outstanding Equipment Notes, excluding any interest payable at the Past-Due Rate (or, if no Equipment Notes are outstanding, such weighted average interest rate on the Delivery Date). DELAYED DELIVERY DATE: a delayed Delivery Date notified to each Participant, Owner Trustee and Mortgagee by Lessee pursuant to ss. 4.3 of the Participation Agreement, which delayed Delivery Date shall be a Business Day not later than the Commitment Termination Date. DELIVERY DATE: __________, 200_ (which is the date when the Aircraft is delivered to and accepted by Lessee under the Lease and when the Closing occurs). DOLLARS, UNITED STATES DOLLARS, or $: the lawful currency of the United States. DOT: the Department of Transportation of the United States, or any Government Entity succeeding to the functions of such Department of Transportation. EBO DATE: as specified in Schedule 5 to the Lease. EBO PRICE: as specified in Schedule 5 to the Lease, as adjusted pursuant toss. 3.2.1 of the Lease. ELIGIBLE ACCOUNT: an account established by and with an Eligible Institution at Mortgagee's request, which institution agrees, for all purposes of the UCC (including UCC Article 8), that (1) such account shall be a "securities account" (as defined in UCC ss. 8-501), (2) all property (other than cash) credited to such account shall be treated as a "financial asset" (as defined in UCC ss. 8-102(9)), (3) Mortgagee shall be the "entitlement holder" (as defined in UCC ss. 8-102(7)) of such account, (4) it will comply with all entitlement orders issued by Mortgagee to the exclusion of Lessee and Owner Trustee, and (5) the "securities intermediary jurisdiction" (under UCC ss. 8-110(e)) shall be the state of New York. ELIGIBLE INSTITUTION: the corporate trust department of (1) Wilmington Trust Company, acting solely in its capacity as a "securities intermediary" (as defined in UCC ss. 8-102(14)), or (2) a depository institution organized under the laws of the United States of America or any one of the states thereof or the District of Columbia (or any U.S. branch of a foreign bank), which has a long-term unsecured debt rating from Moody's and Standard & Poor's of at least A-3 or its equivalent. ENFORCEMENT DATE: defined inss. 4.03 of the Mortgage. ENGINE: (1) each of the engines manufactured by Engine Manufacturer and identified by Engine Manufacturer's model number and Engine Manufacturer's serial number in the Aircraft Description Exhibit and originally installed on the Airframe on delivery thereof pursuant to the Lease, or (2) any Replacement Engine, in any case whether or not from time to time installed on the Airframe or installed on any other airframe or aircraft, including (for both clauses (1) and (2)) any and all Parts incorporated or installed in or attached or appurtenant to such engine, and any and all Parts removed from such engine, unless title to such Parts does not vest in Lessor in accordance with ss. 8.1 and Annex C of the Lease. Upon substitution of a Replacement Engine under and in accordance with the Lease, such Replacement Engine shall become subject to the Lease and shall be an "Engine" for all purposes of the Operative Agreements, and the replaced Engine shall cease to be subject to the Lease and shall cease to be an "Engine". ENGINE MANUFACTURER: CFM International. [ENGINE MANUFACTURER WARRANTY AGREEMENT: Engine Manufacturer Warranty Agreement N___AT, dated the Delivery Date, among Engine Manufacturer, Owner Trustee and Lessee.] EQUIPMENT NOTE: any equipment note issued under the Mortgage in the form specified in ss. 2.01 and Exhibit B thereof (as such form may be varied pursuant to the terms of the Mortgage), or any Equipment Note issued under the Mortgage in exchange for or replacement of any Equipment Note. EQUIPMENT NOTE REGISTER: defined inss. 2.08 of the Mortgage. ERISA: the Employee Retirement Income Security Act of 1974. ESCROW AGENT: ________________________________________. ESCROW AGREEMENT: each of the two Escrow and Paying Agent Agreements, among Escrow Agent, Paying Agent, certain initial purchasers of the Pass-Through Certificates named therein, and one of the Pass-Through Trustees, dated as of the Issuance Date, each of which relates to one of the Pass-Through Trusts, PROVIDED, that, for purposes of any obligation of Lessee, no amendment, modification, or supplement to, or substitution or replacement of, any such Escrow Agreement shall be effective unless Lessee consents to it. EVENT OF LOSS with respect to the Aircraft, the Airframe, or any Engine: any of the following circumstances, conditions, or events with respect to such property, which shall have occurred for any reason whatsoever: (1) the destruction of such property, damage to such property beyond economic repair, or rendition of such property permanently unfit for normal use by Lessee; (2) the actual or constructive total loss of such property, or any damage to such property, or requisition of title or use of such property, which results in an insurance settlement with respect to such property on the basis of a total loss or constructive or compromised total loss; (3) any theft, hijacking, or disappearance of such property for 90 consecutive days or more or, if earlier, the fifth day following the end of the Term; (4) any seizure, condemnation, confiscation, taking, or requisition (including loss of title) of such property by any Government Entity or purported Government Entity (other than a requisition of use by the U.S. Government) for 180 consecutive days or, if earlier, at the end of the Term; (5) any seizure, condemnation, confiscation, taking, or requisition of use of such property by the U.S. Government that continues until the 30th day after the last day of the Term; and (6) as a result of any law, rule, regulation, order, or other action by the Aviation Authority or by any Government Entity of the government of registry of the Aircraft or by any Government Entity otherwise having jurisdiction over the operation or use of the Aircraft, the use of the Aircraft, the Airframe, or any Engine in the normal course of Lessee's business of passenger air transportation is prohibited for 180 consecutive days, unless, before the expiration of such 180-day period, Lessee undertakes and is diligently carrying forward such steps as are necessary or desirable to permit the normal use of such property by Lessee, but in any event if such use is prohibited for a continuous period of 360 days, PROVIDED, that such prohibition shall not create an Event of Loss if such prohibition applies to other B737-800 aircraft (or CFM 56-7 engines) in Lessee's fleet and also applies to Boeing 737-800 aircraft (or CFM 56-7 engines) not owned or operated by Lessee and, before the expiration of such 360-day period, Lessee conforms at least one unit of such property in its fleet to the requirements of any such law, rule, regulation, order, or other action, begins regular commercial use of the same in such jurisdiction, and is diligently carrying forward, in a manner which does not discriminate against such property in so conforming such property, steps which are necessary or desirable to permit the normal use of the Aircraft by Lessee, but in any event if such use is prohibited for a continuous period of 540 days or such use is prohibited at the expiration of the Term. EXCESS AMOUNT: defined inss. 2.03(b) of the Mortgage. EXCLUDED PAYMENTS: (1) indemnity payments paid or payable by Lessee to or in respect of Owner Participant or FSB, their Affiliates, successors, and permitted assigns, and their directors, officers, employees, and agents pursuant to ss. 9 of the Participation Agreement, or any corresponding payments payable as Supplemental Rent under the Lease, (2) proceeds of public liability insurance paid or payable as a result of insurance claims made, or losses suffered, by Owner Participant or FSB (or the other Persons specified in clause (1)), that are payable directly to Owner Participant or FSB (or any such other Person) for its own account, (3) proceeds of insurance maintained with respect to the Aircraft by Owner Participant or any Affiliate thereof for its own account or benefit (whether directly or through Owner Trustee) and permitted under ss. 11.2 of the Lease, (4) all payments required to be made under the Tax Indemnity Agreement by Lessee, (5) any Transaction Expenses paid or payable by Lessee to Owner Trustee (to the extent for its sole benefit) or Owner Participant pursuant to the Lease or the Participation Agreement, (6) any amount payable to Owner Participant by any transferee as the purchase price of Owner Participant's interest in the Trust Estate, (7) any interest that pursuant to the Operative Agreements may from time to time accrue in respect of any of the amounts described in clauses (1) through (6) above, (8) all payments made by Guarantor in respect of any of the foregoing, (9) any right to enforce the payment of any amount described in clauses (1) through (8) above (PROVIDED, that the rights referred to in this clause (9) shall not include the exercise of any remedies provided for in the Lease, other than the right to sue for specific performance of any covenant to make such payment or to sue for damages for the breach of any such covenant), and (10) any right to exercise any election or option or make any decision or determination, or to give or receive any notice, consent, waiver, or approval, or to take any other action in respect of, but in each case only to the extent relating to, any Excluded Payments. EXPENSES: any and all liabilities, obligations, losses, damages, settlements, penalties, claims, actions, suits, costs, demands, judgments, expenses, and disbursements (including reasonable fees, disbursements, and reasonable out of pocket costs and expenses of legal counsel, accountants, appraisers, inspectors, or other professionals, and costs of investigation). FAA: the Federal Aviation Administration of the United States, or any Government Entity succeeding to the functions of such Federal Aviation Administration. FAA BILL OF SALE: a bill of sale for the Aircraft on AC Form 8050-2 (or any other FAA-approved form), delivered to Owner Trustee on the Delivery Date by Seller. FAA COUNSEL: Crowe & Dunlevy. FAA-FILED DOCUMENTS: the Lease, the Mortgage, the Trust Agreement, the FAA Bill of Sale, and an application for registration of the Aircraft with the FAA in Owner Trustee's name. FARS: the Federal Aviation Regulations issued or promulgated pursuant to the Transportation Code from time to time. FAIR MARKET RENTAL VALUE: the fair market rental value in Dollars for the Aircraft that would apply in an arm's-length transaction between an informed and willing lessee under no compulsion to lease, and an informed and willing lessor under no compulsion to lease, for the applicable period, assuming that (1) except as provided in ss. 15.4 of the Lease, the Aircraft has been maintained in accordance with, and is in the condition required by, the Lease, (2) rent would be paid quarterly, and (3) except as provided in ss. 15.4 of the Lease, the Aircraft would be leased during any such period on the same terms and conditions (except for Basic Rent amount) as during the Base Term. FAIR MARKET SALES VALUE: the fair market sales value in Dollars for the Aircraft that would apply in an arm's-length transaction between an informed and willing buyer under no compulsion to buy, and an informed and willing seller under no compulsion to sell, in a transaction that would close on or about the relevant time of determination, assuming that (1) except as provided in ss. 15.4 of the Lease, the Aircraft has been maintained in accordance with the Lease, and is in the condition required by the Lease, and (2) the Aircraft will be delivered to such informed and willing buyer in the return condition required by the Lease. FINANCING STATEMENTS: UCC-1 (and, where appropriate, UCC-3) financing statements (1) covering the Collateral, by Owner Trustee, as debtor, showing Mortgagee as secured party, for filing in Utah and each other jurisdiction where (in Mortgagee's opinion) filing is necessary to perfect its Lien on the Collateral, and (2) covering the Aircraft, as a precautionary matter, by Lessee, as lessee, showing Owner Trustee as lessor and Mortgagee as assignee of Owner Trustee, for filing in Indiana and each other jurisdiction where (in Owner Trustee's or Mortgagee's opinion) filing is reasonably desirable. FIXED RATE: defined in Schedule 1 to the Lease. FSB: First Security Bank, National Association, a national banking association, not in its capacity as trustee under the Trust Agreement, but in its individual capacity. GAAP: generally accepted accounting principles as set forth in the statements of financial accounting standards issued by the Financial Accounting Standards Board of the American Institute of Certified Public Accountants, as varied by any applicable financial accounting rules or regulations issued by the SEC, and applied on a basis consistent with prior periods except as disclosed in the pertinent Person's financial statements. GOVERNMENT ENTITY: (1) any federal, state, provincial, or similar government, and any body, board, department, commission, court, tribunal, authority, agency, or other instrumentality of any such government or otherwise exercising any executive, legislative, judicial, administrative, or regulatory functions of such government, or (2) any other government entity having jurisdiction over any matter contemplated by the Operative Agreements or relating to the observance or performance of the obligations of any of the parties to the Operative Agreements. GTA: the General Terms Agreement, as defined in the Purchase Agreement Assignment. GUARANTEE: Guarantee N___AT, dated the Delivery Date, issued by Guarantor in favor of Owner Trustee, FSB, Mortgagee, WTC, and each Participant. GUARANTOR: AmTran, Inc., an Indiana corporation. INDEMNITEE: (1) FSB and Owner Trustee, (2) WTC and Mortgagee, (3) each separate or additional trustee appointed pursuant to the Trust Agreement or the Mortgage, (4) each Participant, (5) the Trust Estate and the Collateral, (6) each Affiliate of the Persons described in clauses (1) through (4), (7) the directors, officers, employees, and agents of each of the Persons described in clauses (1) through (4) and in clause (6), (8) the successors and permitted assigns of the Persons described in clauses (1) through (4), and in clauses (6) and (7), and (9) the Pass-Through Indemnitees; provided, that the Pass-Through Indemnitees are Indemnitees only for purposes of ss. 9.1 of the Participation Agreement. If any Indemnitee is Airframe Manufacturer or Engine Manufacturer or any subcontractor or supplier of either thereof, such Person shall be an Indemnitee only in its capacity as Owner Participant, Loan Participant, or Note Holder. INTERCREDITOR AGREEMENT: the Intercreditor Agreement among the Pass-Through Trustees, each Liquidity Provider, Policy Provider, and Subordination Agent, dated as of the Issuance Date, PROVIDED, that, for purposes of any obligation of Lessee, no amendment, modification, or supplement to, or substitution or replacement of, such Intercreditor Agreement shall be effective unless Lessee consents to it. IRS: the Internal Revenue Service of the United States, or any Government Entity succeeding to the functions of such Internal Revenue Service. ISSUANCE DATE: __________, 200_. JAA: the Joint Aviation Authority of the European Union. LAW: (1) any constitution, treaty, statute, law, decree, regulation, order, rule, or directive of any Government Entity, and (2) any judicial or administrative interpretation or application of, or decision under, any of the foregoing. LEASE or LEASE AGREEMENT: Lease Agreement N___AT, dated the Delivery Date, between Owner Trustee and Lessee. LEASE DEFAULT: (1) any condition, circumstance, act, or event that, with the giving of notice or the lapse of time, would constitute a Lease Event of Default, or (2) any Lease Event of Default. LEASE EVENT OF DEFAULT: any one or more of the conditions, circumstances, acts, or events set forth inss. 14 of the Lease. LESSEE: American Trans Air, Inc., an Indiana corporation. LESSEE ADVISOR: Capstar Partners, LLC, in its capacity as special advisor to Lessee. LESSEE OPERATIVE AGREEMENTS: the Participation Agreement, the Lease, the Tax Indemnity Agreement, the Purchase Agreement Assignment [, the Engine Manufacturer Warranty Agreement,] and each other agreement between Lessee and any other party to the Participation Agreement, relating to the Transactions, delivered on the Delivery Date. LESSEE PERSON: Lessee, any sublessee, assignee, successor, or other user or Person in possession of the Aircraft, the Airframe, or an Engine with or without color of right, or any Affiliate of any of the foregoing (excluding any Tax Indemnitee or any related Tax Indemnitee with respect thereto, or any Person using or claiming any rights with respect to the Aircraft, the Airframe, or an Engine directly by or through any of the Persons in this parenthetical phrase, but not excluding any Person claiming directly or indirectly through or under the Lease). LESSEE'S ADVISOR(S): defined in Schedule 3 to the Participation Agreement. LESSOR: Owner Trustee in its capacity as lessor under the Lease. LESSOR LIEN, with respect to any Person, on any property (including the Trust Estate, the Collateral, the Aircraft, Airframe, Engines, Parts, or Aircraft Documents) or any payments: any Lien on such property or payments that results from (1) claims against such Person (if such Person is a trustee, whether in its individual capacity or in its capacity as a trustee) not related to any of the Transactions, (2) acts or omissions of such Person (if such Person is a trustee, whether in its individual capacity or in its capacity as a trustee) in violation of its obligations under any of the terms of the Operative Agreements, or not related to the Transactions, (3) Taxes against such Person (if such Person is a trustee, whether in its individual capacity or in its capacity as a trustee) or any of its Affiliates that Lessee is not required to indemnify under the Participation Agreement, or (4) claims against such Person arising out of its transfer of all or part of its interest in the Aircraft, the Trust Estate, or the Operative Agreements, other than a Transfer required by the terms of the Operative Agreements or attributable to the existence of a Lease Event of Default. LESSOR'S COST: the amount paid by Owner Trustee to Seller to purchase the Aircraft pursuant to the Purchase Agreement Assignment and the Participation Agreement, as designated by Dollar amount in Schedule 3 to the Participation Agreement. LIEN: any mortgage, pledge, lien, charge, claim, encumbrance, lease, or security interest affecting the title to or any interest in property. LIQUIDITY FACILITIES: the two Revolving Credit Agreements (consisting of a separate Revolving Credit Agreement with Liquidity Provider with respect to each Pass-Through Trust) between Subordination Agent, as borrower, and Liquidity Provider, each dated as of the Issuance Date, PROVIDED, that, for purposes of any obligation of Lessee, no amendment, modification, or supplement to, or substitution or replacement of, any such Liquidity Facility shall be effective unless Lessee consents to it. LIQUIDITY PROVIDER: ______________, as "Class G Liquidity Provider" and "Class C Liquidity Provider" (as such terms are defined in the Intercreditor Agreement), or any Replacement Liquidity Provider. LOAN TRUSTEE: Wilmington Trust Company, a Delaware banking corporation, not in its individual capacity but solely as loan trustee under the Mortgage. LOAN PARTICIPANT: a Note Holder. LOSS PAYMENT DATE: defined inss. 10.1.2(a)(1) of the Lease. MAINTENANCE PROGRAM: defined in Annex C to the Lease. MAJORITY IN INTEREST OF NOTE HOLDERS as of a particular date of determination: the holders of a majority in unpaid Original Amount of all Equipment Notes outstanding as of such date (excluding any Equipment Notes held by Owner Trustee, Lessee, or Owner Participant or any Affiliate of any such party or any interests of Owner Trustee or Owner Participant therein by reason of subrogation pursuant to ss. 4.03 of the Mortgage (unless all Equipment Notes then outstanding are held by Owner Trustee, Lessee, Owner Participant, or any Affiliate of any thereof)); PROVIDED, that for the purposes of directing any action, casting any vote, or giving any consent, waiver, or instruction hereunder, any Note Holder may (in its sole discretion) allocate any fractional portion of the principal amount of its Equipment Note(s) in favor of or in opposition to any such action, vote, consent, waiver, or instruction. MAKE-WHOLE AMOUNT with respect to any Equipment Note: an amount (as determined by an independent investment bank of national standing) equal to the excess, if any, of (a) the present value of the remaining scheduled payments of principal and interest to maturity of such Equipment Note, computed by discounting such payments on a quarterly basis on each Payment Date (assuming a 360-day year of twelve 30-day months), using a discount rate equal to the Treasury Yield, over (b) the outstanding principal amount of such Equipment Note plus accrued interest to the determination date. For purposes of this definition, "TREASURY YIELD" means, at the determination date for any Equipment Note, the interest rate (expressed as a decimal and, in the case of United States Treasury bills, converted to a bond equivalent yield) determined to be the per annum rate equal to the quarterly yield to maturity for United States Treasury securities maturing on the Average Life Date of such Equipment Note and trading in the public securities markets either (1) as determined by interpolation between the most-recent weekly average yield to maturity for two series of United States Treasury securities, trading in the public securities markets, (aa) one maturing as close as possible to, but earlier than, the Average Life Date of such Equipment Note, and (bb) the other maturing as close as possible to, but later than, the Average Life Date of such Equipment Note, in each case as published in the most-recent H.15(519), or (2) if a weekly average yield to maturity for United States Treasury securities maturing on the Average Life Date of such Equipment Note is reported on the most-recent H.15(519), such weekly average yield to maturity as published in such H.15(519) "H.15(519)" means the weekly statistical release designated as such, or any successor publication, published by the Board of Governors of the Federal Reserve System. The determination date for a Make-Whole Amount shall be the third Business Day before the applicable payment or redemption date, and the "MOST-RECENT H.15(519)" means the H.15(519) published before the close of business on the third Business Day before the applicable payment or redemption date. MATERIALLY ADVERSE CHANGE with respect to any Person: any event, condition, or circumstance that materially adversely affects such Person's business, prospects, or consolidated financial condition, or its ability to observe or perform its obligations, liabilities, and agreements under the Operative Agreements. MINIMUM LIABILITY INSURANCE AMOUNT: defined in Schedule 1 to the Lease. MOODY'S: Moody's Investors Service, Inc. MORTGAGE: Trust Indenture and Mortgage N___AT, dated the Delivery Date, between Owner Trustee and Mortgagee. MORTGAGE AGREEMENTS: the Participation Agreement, the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement, the Engine Manufacturer Warranty Agreement, the Bills of Sale, and any other contract, agreement, or instrument from time to time assigned or pledged under the Mortgage. MORTGAGE DEFAULT: (1) any condition, circumstance, act, or event that, with the giving of notice or the lapse of time, would constitute a Mortgage Event of Default, or (2) any Mortgage Event of Default. MORTGAGE EVENT OF DEFAULT: any one or more of the conditions, circumstances, acts, or events set forth inss. 4.02 of the Mortgage. MORTGAGE INDEMNITEE: (1) WTC and Mortgagee, (2) each separate or additional trustee appointed pursuant to the Mortgage, (3) Subordination Agent, (4) each Liquidity Provider, (5) Policy Provider, (6) each Pass-Through Trustee, (7) Paying Agent, (8) Escrow Agent, (9) each Loan Participant, (10) each of their respective successors and assigns, and (11) each of the directors, officers, employees, and agents of such Persons . MORTGAGED PROPERTY: defined inss. 3.03 of the Mortgage. MORTGAGEE: Wilmington Trust Company, a Delaware banking corporation, not in its individual capacity but solely as loan trustee under the Mortgage. MORTGAGEE AGREEMENTS: the Participation Agreement, the Mortgage, and each other agreement between Mortgagee and any other party to the Participation Agreement, relating to the Transactions, delivered on the Delivery Date. MORTGAGEE EVENT: (1) in the event of a reorganization proceeding involving Lessee under Chapter 11 of the Bankruptcy Code, (a) the trustee in such proceeding or Lessee does not assume or agree to perform its obligations under the Lease, as contemplated under Section 1110, during the 60-day period under ss. 1110(a)(1)(A) of the Bankruptcy Code (or such longer period as may apply under ss. 1110(b) of the Bankruptcy Code), or (b) at any time after agreeing to perform or assuming such obligations, such trustee or Lessee ceases to perform such obligations with the result that the Continuous Stay Period comes to an end, or (2) either the Equipment Notes become due and payable pursuant to ss. 4.04(b) of the Mortgage, or Mortgagee takes action or notifies Owner Trustee that it intends to take action to foreclose the Lien of the Mortgage or otherwise commence the exercise of any significant remedy in accordance with ss. 4.04(a) of the Mortgage. NET ECONOMIC RETURN: Owner Participant's net after-tax book yield, using the "multiple investment sinking fund" method of analysis, and aggregate and present value (discounted at 6% per annum) of the net after-tax cash flow, computed both through the EBO Date (assuming Lessee's exercise of the early buy-out option in ss. 17.3.1(a)(1) of the Lease) and through the end of the Base Term, and computed on the basis of the same methodology and assumptions as the initial Owner Participant used in determining Basic Rent payments and allocations, Stipulated Loss Value percentages, and Termination Value percentages, as of the Delivery Date, as such assumptions are adjusted for events that have been the basis for adjustments to Basic Rent pursuant to ss. 3.2.1(b) of the Lease or events giving rise to indemnity payments pursuant to ss. 5 of the Tax Indemnity Agreement; PROVIDED, that, even if the initial Owner Participant transfers its interest, Net Economic Return shall be calculated as if the initial Owner Participant had retained its interest; PROVIDED FURTHER, that, notwithstanding the preceding proviso, solely for purposes of ss. 11 of the Participation Agreement and calculating any adjustments to Basic Rent payments and allocations, Stipulated Loss Values, EBO Price, and Termination Values in connection with a refunding pursuant to such ss. 11 at a time when Owner Participant is a transferee (other than an Affiliate of the initial Owner Participant), the after-tax yield (but not the after-tax cash flow) component of Net Economic Return shall be calculated on the basis of the methodology and assumptions used by the transferee Owner Participant as of the date when it acquires its interest. NET PRESENT VALUE OF RENTS: the present value, as of the date of determination, discounted at 10% per annum, compounded quarterly to the date of determination, of all unpaid Basic Rent payments during the then-remaining portion of the Base Term, expressed as a percentage of Lessor's Cost. NET WORTH for any Person: the excess of its total assets over its total liabilities. NEW DEBT: debt securities in an aggregate principal amount specified in the Re-Funding Information, with such principal amount not to exceed the then-outstanding principal balance due under the then-existing Equipment Notes being re-funded. NON-U.S. PERSON: any Person, other than a United States person as defined in Codess. 7701(a)(30). NOTE HOLDER: a registered holder of one or more Equipment Notes. NOTE PURCHASE AGREEMENT: the Note Purchase Agreement, dated as of the Issuance Date, among American Trans Air, Inc., Subordination Agent, Escrow Agent, Paying Agent, and Pass-Through Trustee under each Pass-Through Trust Agreement, providing for the issuance and sale of Equipment Notes. OFFICER'S CERTIFICATE of any party to the Participation Agreement: a certificate signed by the Chairman, the President, any Vice President (including those with varying ranks such as Executive, Senior, Assistant, or Staff Vice President), the Treasurer, or the Secretary of such party. OPERATIVE AGREEMENTS: the Participation Agreement, the Trust Agreement, the Purchase Agreement Assignment, the Guarantee, the Consent and Agreement, the Engine Manufacturer Warranty Agreement, the Lease, the Mortgage, the Bills of Sale, the Tax Indemnity Agreement, and the Equipment Notes. OPERATIVE INDENTURE: an indenture under which notes have been issued and purchased by the Pass-Through Trustees pursuant to the Note Purchase Agreement. OP JURISDICTION: defined in Schedule 3 to the Participation Agreement. ORIGINAL AMOUNT of an Equipment Note: the stated original principal amount of such Equipment Note and, with respect to all Equipment Notes, the aggregate stated original principal amounts of all such equipment notes. OWNER PARTICIPANT: the Person executing the Participation Agreement as "Owner Participant"; except that, after an Owner Participant Transfers its interest to a successor Owner Participant, such transferor shall not be an "Owner Participant" (except as provided in ss. 10.2 of the Participation Agreement) and the successor Owner Participant shall be the "Owner Participant". OWNER PARTICIPANT AGREEMENTS: the Participation Agreement, the Tax Indemnity Agreement, the Trust Agreement and each other agreement between Owner Participant and any other party to the Participation Agreement relating to the Transactions, delivered on the Delivery Date. OWNER PARTICIPANT'S PERCENTAGE: the percentage of Lessor's Cost allocated to Owner Participant in Schedule 2 to the Participation Agreement. OWNER TRUSTEE: First Security Bank, National Association, a national banking association, not in its individual capacity, except as expressly provided in any Operative Agreement, but solely as Owner Trustee under the Trust Agreement. OWNER TRUSTEE AGREEMENTS: the Participation Agreement, the Lease, the Trust Agreement, the Mortgage, the Equipment Notes, the Purchase Agreement Assignment, [the Engine Manufacturer Warranty Agreement,] and each other agreement between Owner Trustee and any other party to the Participation Agreement, relating to the Transactions, delivered on the Delivery Date. PARTICIPANT: Owner Participant or a Loan Participant. PARTICIPATION AGREEMENT: Participation Agreement N___AT, dated the Delivery Date, among Lessee, Owner Participant, Owner Trustee, Pass-Through Trustees, Subordination Agent, and Mortgagee. PARTS: all appliances, parts, components, instruments, appurtenances, accessories, furnishings, seats, and other equipment of whatever nature (other than (1) Engines or engines, and (2) any items leased by Lessee from a third party other than Lessor) from time to time installed or incorporated in or attached or appurtenant to the Airframe or any Engine. PASS-THROUGH AGREEMENTS: the Pass-Through Trust Agreements, the Note Purchase Agreement, the Deposit Agreements, the Escrow Agreements, the Intercreditor Agreement, the Policy and the Policy Provider Agreements, the Liquidity Facilities, and the Fee Letters referred to in ss. 2.3 of each of the Liquidity Facilities, PROVIDED, that no amendment, modification, or supplement to, or substitution or replacement of, any such Fee Letter shall be effective for purposes of any obligation of Lessee, unless Lessee consents to it. PASS-THROUGH CERTIFICATES: the pass-through certificates issued by the Pass-Through Trusts (including any pass-through certificates for which such pass-through certificates may be exchanged). PASS-THROUGH INDEMNITEES: (1) Subordination Agent, Paying Agent, Escrow Agent, Liquidity Provider, Policy Provider, and Pass-Through Trustees, (2) each Affiliate of a Person described in the preceding clause (1), (3) the directors, officers, employees, and agents of the Persons described in clauses (1) and (2), and (4) the successors and permitted assigns of the Persons described in clauses (1), (2), and (3). PASS-THROUGH TRUST: each of the two separate pass-through trusts created under the Pass-Through Trust Agreements. PASS-THROUGH TRUST AGREEMENT: each of the two separate pass-through trust agreements, dated as of the Issuance Date, by and between Lessee and a Pass-Through Trustee. PASS-THROUGH TRUSTEE: Wilmington Trust Company, a Delaware banking corporation, not in its individual capacity but solely in its capacity as trustee under each Pass-Through Trust Agreement. PASS-THROUGH TRUSTEE AGREEMENTS: the Participation Agreement, the Pass-Through Trust Agreements, the Note Purchase Agreement, the Deposit Agreements, the Escrow Agreements, and the Intercreditor Agreement. PAST-DUE RATE: defined in Schedule 1 to the Lease. PAYING AGENT: Wilmington Trust Company, as Paying Agent under each of the Escrow Agreements. PAYMENT DATE: each __________, __________, __________, and __________ during the Term, commencing with the first such date to occur after the Commencement Date. PAYMENT PERIOD: each of the consecutive quarterly periods (or such applicable shorter period beginning on the Delivery Date or the first day of a Renewal Term) during the Term and ending on a Payment Date, the first such period commencing on and including the Delivery Date. PERMITTED AIR CARRIER: (1) any manufacturer of commercial airframes or commercial aircraft engines, or any Affiliate thereof, (2) any Permitted Foreign Air Carrier, (3) any Person approved in writing by Owner Participant, or (4) any U.S. Air Carrier. PERMITTED COUNTRY: any country listed on Schedule 5 to the Lease, subject to the notes set forth on such Schedule. PERMITTED FOREIGN AIR CARRIER: any air carrier that (1) has its principal executive offices in a Permitted Country, and (2) is authorized to conduct commercial airline operations and to operate jet aircraft similar to the Aircraft under the applicable Laws of such Permitted Country. PERMITTED INSTITUTION: any bank, trust company, insurance company, financial institution, or corporation or limited liability company (other than, without Lessee's consent, a commercial air carrier, a commercial aircraft operator, a freight forwarder, an airframe manufacturer (other than Airframe Manufacturer) or aircraft engine manufacturer (other than Engine Manufacturer), or an Affiliate of any of the foregoing), in each case with a combined capital and surplus or net worth of at least $50,000,000. PERMITTED LIEN: any Lien described in clauses (a) through (g) ofss. 6 of the Lease. PERMITTED SUBLEASE: a sublease permitted underss. 7.2.7 of the Lease. PERMITTED SUBLESSEE: the sublessee under a Permitted Sublease. PERSON or PERSON: an individual, firm, business, partnership, joint venture, trust, trustee, Government Entity, organization, association, corporation, limited liability company, government agency, governmental committee, governmental department, governmental authority, and other body or organization, corporate or incorporate, whether having distinct legal status or not, or any member of any of the same. PLAN: any employee benefit plan within the meaning of ERISAss. 3(3), or any plan within the meaning of Codess. 4975(e)(1). POLICY: defined inss. 1.1 of the Intercreditor Agreement. POLICY PROVIDER: [AIG]. POLICY PROVIDER AGREEMENT: defined inss. 1.1 of the Intercreditor Agreement. PRELIMINARY NOTICE: defined inss. 17.1 of the Lease. PTT PERCENTAGE with respect to each Pass-Through Trustee: the percentage of Lessor's Cost allocated to such Pass-Through Trustee in Schedule 2 to the Participation Agreement. PURCHASE AGREEMENT: shall mean Purchase Agreement No. _____ by and between Lessee and the Airframe Manufacturer, dated as of __________, 2000, including the exhibits and letter agreements appended thereto and incorporated therein (except Letter Agreement Nos. __________, __________, and ----------). PURCHASE AGREEMENT ASSIGNMENT: Purchase Agreement and Engine Warranties Assignment N___AT, dated the Delivery Date, between Lessee and Owner Trustee. PURCHASE DATE: the last Business Day of the Base Term or a Renewal Term, as specified in any Purchase Notice. PURCHASE NOTICE: defined inss. 17.3.1 of the Lease. QIB: defined inss. 2.08 of the Mortgage. RE-FUNDING CERTIFICATE: a certificate of an authorized representative of Owner Participant delivered pursuant to ss. 11.1.1 of the Participation Agreement, setting forth (1) the Re-Funding Date and (2) the following information, subject to the limitations in ss. 11 of the Participation Agreement: (a) the principal amount of debt to be issued by Owner Trustee on the Re-Funding Date which amount cannot exceed the outstanding balance of the existing Debt and (b) the proposed revised schedules of Basic Rent payments and allocations, Stipulated Loss Value percentages, Termination Value percentages, the EBO Price, and the proposed Amortization Schedules, calculated in accordance with ss. 3.2.1 of the Lease. RE-FUNDING DATE: the proposed date on which the outstanding Equipment Notes will be redeemed and refinanced pursuant to ss. 11 of the Participation Agreement. RE-FUNDING INFORMATION: the information set forth in the Re-Funding Certificate (other than the Re-Funding Date), as revised by any verification procedures demanded by Lessee pursuant to ss. 3.2.1(d) of the Lease. REGISTRATION RIGHTS AGREEMENT: the Exchange and Registration Rights Agreement dated the Issuance Date by and among Guarantor, Lessee, and certain initial purchasers of the Pass-Through Certificates named therein, providing for, among other things, the exchange offer with respect to such Pass-Through Certificates to be registered under the Securities Act or the shelf registration of such Pass-Through Certificates for a period specified therein. REMOVABLE PARTS: defined inss. D of Annex C to the Lease. RENEWAL NOTICE: defined inss. 17.2.1 of the Lease. RENEWAL RENT: the basic rent payable for a Renewal Term, determined pursuant toss. 17.2.2 of the Lease. RENEWAL TERM: a one-year term for which the Lease is extended by Lessee (if applicable) pursuant toss. 17 of the Lease. RENT: Basic Rent and Supplemental Rent. REPLACEMENT AIRFRAME: an airframe substituted for the Airframe pursuant toss. 10 of the Lease. REPLACEMENT ENGINE: an engine substituted for an Engine pursuant to the Lease. REPLACEMENT LIQUIDITY PROVIDER: defined in the Intercreditor Agreement. RETURN ACCEPTANCE SUPPLEMENT: a Return Acceptance Supplement, dated as of the date the Aircraft is returned to Lessor pursuant toss. 5 of the Lease, entered into by Lessor and Lessee, substantially in the form of Exhibit B to the Lease. SCHEDULED DELIVERY DATE: the expected Delivery Date that Lessee notifies to each Participant, Owner Trustee, and Mortgagee pursuant to ss. 4.1 of the Participation Agreement, which must be a Business Day not later than the Commitment Termination Date. SCHEDULED EXPIRATION DATE: defined in Schedule 1 to the Lease. SEC: the Securities and Exchange Commission of the United States, or any Government Entity succeeding to the functions of the Securities and Exchange Commission. SECTION 1110: Bankruptcy Codess. 1110. SECTION 1110 PERIOD: defined inss. 4.04(a) of the Mortgage. SECURED OBLIGATIONS: defined inss. 2.06 of the Mortgage. SECURITIES ACT: the Securities Act of 1933. SECURITY: a "security" as defined inss. 2(1) of the Securities Act. SELLER: _______________ [Lessee] [Airframe Manufacturer] [other]. SENIOR HOLDER: defined inss. 2.16(c) of the Mortgage. SERIES: Series G or Series C. SERIES C or SERIES C EQUIPMENT NOTES: Equipment Notes issued under the Mortgage and designated as "Series C" thereunder, in the Original Amount and maturities and bearing interest as specified in Schedule I to the Mortgage under the heading "Series C". SERIES G or SERIES G EQUIPMENT NOTES: Equipment Notes issued under the Mortgage and designated as "Series G" thereunder, in the Original Amount and maturities and bearing interest as specified in Schedule I to the Mortgage under the heading "Series G". SIGNIFICANT EXPENDITURE: expenditures in excess of $5,000,000 for non-severable improvements to the Aircraft which constitute "Mandatory Modifications" as defined inss. D of Annex C to the Lease. SIMILAR AIRCRAFT: defined in Schedule 1 to the Lease. SLV RATE: defined in Schedule 1 to the Lease. SPECIAL DEFAULT: (1) Lessee's failure to pay any amount of Basic Rent, Stipulated Loss Value, or Termination Value when due, or (2) any Lease Default referred to inss. 14.5 of the Lease. STANDARD & POOR'S: Standard & Poor's Ratings Services. STIPULATED LOSS VALUE for the Aircraft: (1) during the Base Term, Lessor's Cost multiplied by the percentage in Schedule 3 to the Lease (as adjusted from time to time in accordance with ss. 3.2.1 of the Lease) for the pertinent Stipulated Loss Value Date, and (2) during any Renewal Term, the amount determined pursuant to ss. 17.2.3 of the Lease. Notwithstanding anything to the contrary in any Operative Agreement, Stipulated Loss Value shall always be sufficient to pay in full, as of the date of payment thereof (assuming timely payment of the Equipment Notes before such date), the unpaid principal amount of all Equipment Notes outstanding as of such date, together with accrued and unpaid interest on all Equipment Notes as of such date (without regard to any interest accrued on the Equipment Notes at a rate exceeding the Debt Rate). If the event giving rise to an obligation to pay any Stipulated Loss Value occurs and the actual date that the loss of tax benefits resulting from such event shall be earlier or later than the date assumed in calculating the federal income tax consequences reflected in the applicable Stipulated Loss Value, such Stipulated Loss Value shall be appropriately adjusted upwards or downwards to reflect the actual date of such loss. STIPULATED LOSS VALUE DATE for any month: the day in that month specified in Schedule 3 to the Lease or, if that day is not a Business Day, the following Business Day. SUBORDINATION AGENT: Wilmington Trust Company, as subordination agent under the Intercreditor Agreement. SUBORDINATION AGENT AGREEMENTS: the Participation Agreement, the Liquidity Facilities, and the Intercreditor Agreement. SUPPLEMENTAL RENT: without duplication, (1) all Expenses, Transaction Expenses, and all other amounts, liabilities, indemnities, and obligations (other than Basic Rent, but including any Make-Whole Amount) that Lessee assumes or becomes obligated to pay or agrees to pay under any Lessee Operative Agreement to or on behalf of Lessor or any other Person, including Stipulated Loss Value, Termination Value, and indemnity payments under ss. 9 of the Participation Agreement, but excluding any amount as to which Lessee is obligated to pay a pro rata share pursuant to clause (5) of this definition, (2) (a) to the extent not payable (whether or not in fact paid) under ss. 6(a) or ss. 6(b), as applicable, of the Note Purchase Agreement (as originally in effect or amended with Owner Participant's consent), the fees payable to (x) Liquidity Provider under ss. 2.3 of each Liquidity Facility, multiplied by a fraction the numerator of which is the then-outstanding aggregate principal amount of all the series of Equipment Notes, and the denominator of which is the then-outstanding aggregate principal amount of all "Series G Equipment Notes" and "Series C Equipment Notes" (each as defined in the Note Purchase Agreement) and (y) Policy Provider under ss. 3.02(d)(i) of the Policy Provider Agreement and the related Policy Fee Letter (as defined in the Policy Provider Agreement) multiplied by a fraction the numerator of which shall be the then-outstanding aggregate principal amount of the Series G Equipment Notes and the denominator of which shall be the then outstanding aggregate principal amount of all "Series G Equipment Notes" (as defined in the Note Purchase Agreement); (b) (x) the amount equal to interest on any Downgrade Advance (other than any Applied Downgrade Advance) payable under ss. 3.7 of each Liquidity Facility minus Investment Earnings from such Downgrade Advance, multiplied by (y) the fraction specified in the foregoing clause (a)(x); (c) (x) the amount equal to interest on any Non-Extension Advance (other than any Applied Non-Extension Advance) payable under ss. 3.7 of each Liquidity Facility minus Investment Earnings on such Non-Extension Advance multiplied by (y) the fraction specified in the forgoing clause (a)(x); (d) if any payment default exists with respect to interest on any series of Equipment Notes, (x) an amount equal to interest on any Unpaid Advance, Applied Downgrade Advance, or Applied Non-Extension Advance payable under ss. 3.7 of each Liquidity Facility (or if Policy Provider has made a payment in respect of such Advance to the Liquidity Provider or, in the case of the Series G Equipment Notes, if Policy Provider has made a payment equivalent to such an Advance, as would have been payable under ss. 3.7 of the Liquidity Facility in respect of the Class G Certificates had such Advance been made) plus any interest at the Past-Due Rate actually payable (whether or not in fact paid) in respect of the overdue scheduled interest on the Equipment Notes in respect of which such Unpaid Advance, Applied Downgrade Advance, or Applied Non-Extension Advance was made by the applicable Liquidity Provider (or, in the case of the Series G Equipment Notes, an equivalent payment was made by Policy Provider) multiplied by (y) a fraction the numerator of which is the sum of all then-overdue interest on the Equipment Notes (other than interest becoming due and payable solely as a result of acceleration of any Equipment Notes), and the denominator of which shall be the sum of all then-overdue interest on all "Series G Equipment Notes" and "Series C Equipment Notes" (each as defined in the Note Purchase Agreement) (other than interest becoming due and payable solely as a result of acceleration of any such "Equipment Notes"); and (e) Lessor's pro rata share of any other amounts owed to Liquidity Provider by Subordination Agent as borrower under each Liquidity Facility (other than amounts due as repayment of advances thereunder or as interest on such advances), except to the extent payable pursuant to clause (a), (b), (c), or (d) above, (3) Lessor's pro rata share of all compensation and reimbursement of expenses, disbursements, and advances payable under the Pass-Through Trust Agreements, (4) Lessor's pro rata share of all compensation and reimbursement of expenses and disbursements (including payments of indemnities) payable either (a) to Subordination Agent under the Intercreditor Agreement, except with respect to any income or franchise taxes incurred by Subordination Agent in connection with the transactions contemplated by the Intercreditor Agreement, or (b) by Lessee to Policy Provider under the Policy Provider Agreement, (5) Lessor's pro rata share of any amount payable under ss. 9.1 (and, if attributable thereto, ss. 9.5) of the Participation Agreement to any Pass-Through Indemnitee to the extent such amount relates to, results from, or arises out of or in connection with (a) the Pass-Through Agreements or the enforcement of any of the terms of any of the Pass-Through Agreements, (b) the offer, sale, or delivery of the Pass-Through Certificates or any interest therein or represented thereby, or (c) any breach of or failure to perform or observe, or any other noncompliance with, any covenant or agreement or other obligation to be performed by Lessee under any Pass-Through Agreement, or the falsity of any representation or warranty of Lessee in any Pass-Through Agreement, and (6) if Lessee requests any amendment to any Operative Agreement or Pass-Through Agreement, Lessor's pro rata share of all reasonable fees and expenses (including fees and disbursements of counsel) of Escrow Agents and Paying Agents in connection therewith payable by Pass-Through Trustees under the Escrow Agreements. As used herein, (1) "LESSOR'S PRO RATA SHARE" means as of any time a fraction, the numerator of which is the then-outstanding principal balance of Equipment Notes, and the denominator of which is the aggregate then-outstanding principal balance of all "Equipment Notes" (as each such term is defined in each of the Operative Indentures), "(2) "Policy" means the Certificate Guaranty Insurance Policy (including the endorsement attached thereto and constituting a part thereof) issued by Policy Provider pursuant to the Policy Provider Agreement, and (3) "Policy Provider Agreement" means the Insurance and Indemnity Agreement dated as of the Policy issuance date among Lessee, Subordination Agent, and Policy Provider. For purposes of this definition, "Applied Downgrade Advance", "Applied Non-Extension Advance", "Cash Collateral Account", "Downgrade Advance", "Final Advance", "Investment Earnings", "Non-Extension Advance", and "Unpaid Advance" have the same meanings as in each Liquidity Facility. TAX ATTRIBUTE PERIOD: the period from the Delivery Date through December 31, 20__ [DELIVERY DATE YEAR PLUS SEVEN] or such longer period of depreciation as may be allowable by reason of an indemnifiable event under the Tax Indemnity Agreement; TAX INDEMNITEE: (1) FSB and Owner Trustee, (2) WTC and Mortgagee, (3) each separate or additional trustee appointed pursuant to the Trust Agreement or the Mortgage, (4) each Participant, (5) the Trust Estate and the Collateral, (6) Policy Provider, and (7) the successors, assigns, and agents of the foregoing. For purposes of this definition, the term "Owner Participant" shall include any member of an affiliated group (within the meaning of Code ss. 1504) of which Owner Participant is a member at the pertinent time, if consolidated, joint, or combined returns are filed for such affiliated group for federal, state, or local income tax purposes. TAX INDEMNITY AGREEMENT: Tax Indemnity Agreement N___AT, dated the Delivery Date, between Lessee and Owner Participant. TAXES: all fees (including license, recording, documentation, and registration fees), taxes, including income, gross receipt franchise sales, use, rental, turnover, business, occupational, excise, value-added, tangible and intangible property and stamp taxes, levies, imposts, duties, charges, assessments, or withholdings of any nature whatsoever imposed by any Taxing Authority, and any penalties, additions to tax, fines, or interest thereon or additions thereto. TAXING AUTHORITY: any federal, state, or local government or other taxing authority in the United States or its possessions, any foreign government or political subdivision or taxing authority thereof, any international taxing authority, or any territory or possession of the United States or taxing authority thereof. TERM: the term, commencing on the Delivery Date, for which the Aircraft is leased pursuant to ss. 3 of the Lease, consisting of the Base Term and any Renewal Term(s); PROVIDED, that, if at the scheduled end of the Term the Aircraft or Airframe is being used, or was within the previous six months being used, by the U.S. Government pursuant to CRAF, the Term shall be deemed extended for the period necessary to accommodate usage of the Aircraft or Airframe pursuant to CRAF plus six months thereafter, and Lessee shall be obligated to pay Basic Rent for any such extension period at a quarterly rate equal to the average of the Basic Rent paid during the Base Term or the applicable Renewal Term (whichever ended immediately before such extension). TERMINATION DATE: any Payment Date occurring after the seventh anniversary of the Delivery Date on which the Lease terminates in accordance withss. 9 of the Lease. TERMINATION VALUE for the Aircraft: Lessor's Cost multiplied by the percentage in Schedule 4 to the Lease (as adjusted from time to time in accordance with ss. 3.2.1 of the Lease) for the pertinent Termination Value Date. Notwithstanding anything to the contrary in any Operative Agreement, Termination Value shall always be sufficient to pay in full, as of the date of payment thereof (assuming timely payment of the Equipment Notes before such date), the unpaid principal amount of all Equipment Notes outstanding as of such date, together with accrued and unpaid interest on all such Equipment Notes as of such date (without regard to any interest accrued on the Equipment Notes at a rate exceeding the Debt Rate). If the event giving rise to an obligation to pay any Termination Value occurs and the actual date that the loss of tax benefits resulting from such event shall be earlier or later than the date assumed in calculating the federal income tax consequences reflected in the applicable Termination Value, such Termination Value shall be appropriately adjusted upwards or downwards to reflect the actual date of such loss. TERMINATION VALUE DATE for any month: the day in such month specified in Schedule 4 to the Lease or, if such day is not a Business Day, the following Business Day. THRESHOLD AMOUNT: defined in Schedule 1 to the Lease. TRANSACTION EXPENSES: (1) the reasonable and actual fees and disbursements incurred in connection with the negotiation, execution, and delivery of the Operative Agreements of (a) Richards, Layton & Finger, special counsel for Mortgagee, such information to be furnished by Mortgagee, (b) Ray, Quinney & Nebeker, special counsel for Owner Trustee under the Trust Agreement, such information to be furnished by Owner Trustee, (c) FAA Counsel, such information to be furnished by Lessee, (d) Dewey Ballantine LLP, special counsel to Owner Participant (as defined in Schedule 3 to the Participation Agreement), such information to be furnished by Owner Participant, (e) ____________________, special counsel to the Loan Participants, such information to be furnished by Lessee, (f) Troutman Sanders LLP, special counsel to Lessee, such information to be furnished by Lessee, and (g) Lessee Advisor, such information to be furnished by Lessee, (2) all fees, taxes, and other charges payable in connection with the recording or filing of instruments and financing statements, such information to be furnished by Lessee, (3) the initial fee and reasonable and actual disbursements of Owner Trustee under the Trust Agreement, such information to be furnished by Owner Trustee, (4) the initial fee and reasonable and actual disbursements of Mortgagee under the Mortgage, such information to be furnished by Mortgagee, (5) the fee of the Appraiser with respect to the appraisal of the Aircraft referred to in ss. 5.1.2(l) of the Participation Agreement, such information to be furnished by Owner Participant, and (6) the equity placement fee and reasonable disbursements of Lessee's Advisor(s), such information to be furnished by Lessee, and the Allocated EETC Expenses. TRANSACTIONS: the transactions contemplated by the Operative Agreements. TRANSFER: the transfer, sale, assignment, or other conveyance of all or any interest in any property, right, or interest. TRANSFEREE: a Person to whom Owner Participant, Owner Trustee, Loan Participant, or Note Holder purports or intends to Transfer any or all of its right, title, or interest in the Trust Estate or in its Equipment Note and the Collateral, as described in ss. 10.1.1(a), ss. 10.1.2, or ss. 10.1.3 (but excluding participants in any participation referred to in ss. 10.1.3) of the Participation Agreement. TRANSPORTATION CODE: subtitle VII of title 49, United States Code. TRUST: the trust created by the Trust Agreement. TRUST AGREEMENT: Trust Agreement N___AT, dated as of __________ 1, 200_, between Owner Participant and FSB. TRUST ESTATE: all Owner Trustee's estate, right, title, and interest in and to the Aircraft, the Lease, the Purchase Agreement, [and the Engine Manufacturer Warranty Agreement,] including all Basic Rent and Supplemental Rent (including insurance proceeds and requisition, indemnity, or other payments of any kind for of with respect to the Aircraft), but excluding any Excluded Payment. UCC: the Uniform Commercial Code as in effect in any applicable jurisdiction. UNITED STATES or U.S.: the United States of America; PROVIDED, that for geographic purposes, "United States" means the 50 states and the District of Columbia of the United States of America. U.S. AIR CARRIER: any United States air carrier who is a Citizen of the United States holding an air carrier operating certificate issued by the Secretary of Transportation pursuant to chapter 447 of the Transportation Code for aircraft capable of carrying 10 or more individuals or 6000 pounds or more of cargo, and as to whom there is in force an air carrier operating certificate issued pursuant to FAR Part 121, or who may operate as an air carrier by certification or otherwise under any successor or substitute provisions therefor or in the absence thereof. U.S. GOVERNMENT: the federal government of the United States, or any instrumentality or agency thereof the obligations of which are guaranteed by the full faith and credit of the federal government of the United States. U.S. PERSON: any Person described in Codess. 7701(a)(30). WEIGHTED AVERAGE LIFE TO MATURITY with respect to any specified Debt, at the time of the determination thereof: the number of years obtained by dividing the Remaining Dollar Years of such Debt by the then-outstanding principal amount of such Debt. "REMAINING DOLLAR YEARS" means the amount obtained by (1) multiplying the amount of each then-remaining principal payment on such Debt by the number of years (calculated at the nearest one-twelfth) that will elapse between the date of determination of the Weighted Average Life to Maturity of such Debt and the date of that required payment, and (2) totaling the products obtained in clause (1). WET LEASE: any arrangement whereby Lessee or a Permitted Sublessee agrees to furnish the Aircraft, the Airframe, or any Engine to a third party pursuant to which the Aircraft, Airframe, or Engine is at all times in the operational control of Lessee or a Permitted Sublessee, PROVIDED, that Lessee's obligations under the Lease shall continue in full force and effect notwithstanding any such arrangement. WTC: Wilmington Trust Company, Delaware banking corporation, not in its capacity as Mortgagee under the Mortgage, but in its individual capacity. ANNEX A DEFINITIONS GENERAL PROVISIONS (a) In each Operative Agreement, unless otherwise expressly provided, a reference to: (1) each of "Lessee", "Lessor", "Owner Trustee", "Owner Participant", and any other Person includes any successor in interest to it and any permitted transferee, permitted purchaser, or permitted assignee of it; (2) any agreement or other document (including any annex, schedule, or exhibit thereto, or any other part thereof) includes that agreement or other document as amended, supplemented, or otherwise modified and any agreement or other document entered into in substitution or replacement therefor from time to time, and in each case in accordance with its terms and in accordance with the Operative Agreements; (3) any provision of any Law includes any such provision as amended, modified, supplemented, substituted, reissued, or reenacted before the Delivery Date, and thereafter from time to time; (4) "Agreement", "this Agreement", "hereby", "herein", "hereto", "hereof", "hereunder", and words of similar import, when used in any Operative Agreement, refer to such Operative Agreement as a whole and not to any particular provision of such Operative Agreement; (5) "including", "include", and terms or phrases of similar import means "including [etc.], without limitation"; (6) "or" is conjunctive and not disjunctive; and (7) a reference to a "section" or "ss.", an "Exhibit", an "Annex", or a "Schedule" in any Operative Agreement, or in any annex thereto, is a reference to a section of, or an exhibit, an annex, or a schedule to, such Operative Agreement or such annex, respectively. (b) Each exhibit, annex, and schedule to each Operative Agreement is incorporated in, and is a part of, such Operative Agreement. (c) Unless otherwise defined or specified in any Operative Agreement, all accounting terms therein shall be construed and all accounting determinations thereunder shall be made in accordance with GAAP. (d) Headings used in any Operative Agreement are for convenience only, and shall not in any way affect the construction of, or be taken into consideration in interpreting, such Operative Agreement. (e) For purposes of each Operative Agreement, the existence of an Event of Default, Default, or Special Default referred to in ss. 14.5 of the Lease shall not prohibit Lessee from taking any action or exercising any right that is conditioned on the non-existence of any Event of Default, Default, or Special Default if such Event of Default, Default, or Special Default consists of the institution of reorganization proceedings with respect to Lessee under Chapter 11 of the Bankruptcy Code, and the trustee or debtor-in-possession in such proceedings (1) has agreed to perform its obligations under the Lease with the approval of the applicable court and thereafter continues to perform such obligations in accordance with Section 1110, or (2) has assumed the Lease with the approval of the relevant court and thereafter continues to perform its obligations under the Lease. DEFINED TERMS ACTUAL KNOWLEDGE: (a) as it applies to Owner Trustee, actual knowledge of a responsible officer in the Corporate Trust Department, respectively, and (b) as it applies to Owner Participant or Lessee, actual knowledge of a Vice President or more senior officer of Owner Participant or Lessee (respectively), or any other officer of Owner Participant or Lessee (respectively) having responsibility for the Transactions; PROVIDED, that each of Lessee, Owner Participant, and Owner Trustee, shall be deemed to have "Actual Knowledge" of any matter as to which it has received notice from Lessee, Owner Participant, or Owner Trustee, given pursuant to ss. 15.7 of the Participation Agreement. ADDITIONAL INSURED: defined inss. D of Annex D to the Lease. AFFILIATE of any Person: any other Person directly or indirectly controlling, controlled by, or under common control with such Person. For purposes of this definition, "control" means the power, directly or indirectly, to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract, or otherwise, and "controlling", "controlled by", and "under common control with" have correlative meanings, PROVIDED, that Owner Participant will not be deemed to be an "Affiliate" of Lessor or Owner Trustee (and vice versa). AIRCRAFT: the Airframe and Engines. AIRCRAFT BILL OF SALE: a warranty bill of sale granting title to the Aircraft, which bill of sale Seller is to deliver to Owner Trustee on the Delivery Date. AIRCRAFT DESCRIPTION EXHIBIT: Exhibit A to the Lease. AIRCRAFT DOCUMENTS: all technical data, manuals, and log books, and all inspection, modification, and overhaul records and other service, repair, maintenance, and technical records that the relevant Aviation Authority, the Lease, or the Maintenance Program requires be maintained with respect to the Aircraft, including all required additions, renewals, revisions, and replacements of any such materials, in each case in whatever form and by whatever means or medium (including microfiche, microfilm, paper, or computer disk) such materials are maintained or retained by or on behalf of Lessee (PROVIDED, that all such materials shall be maintained in the English language). AIRFRAME: (1) the aircraft (excluding Engines or engines from time to time installed thereon) manufactured by Airframe Manufacturer and identified by Airframe Manufacturer's model number, United States registration number, and Airframe Manufacturer's serial number set forth in the Aircraft Description Exhibit, or (2) any Replacement Airframe, including in either case any and all Parts incorporated or installed in or attached or appurtenant to such airframe, and any and all Parts removed from such airframe, unless title to such Parts does not vest in Lessor in accordance with ss. 8.1 and Annex C of the Lease. Upon substitution of a Replacement Airframe under and in accordance with the Lease, such Replacement Airframe shall become subject to the Lease and shall be the "Airframe" for all purposes of the Operative Agreements, and the replaced Airframe shall cease to be subject to the Lease and shall cease to be the "Airframe". AIRFRAME MANUFACTURER: The Boeing Company, a Delaware corporation. APPLICABLE PERCENTAGE: means (A) for the [first one-year Renewal Term][first two one-year Renewal Terms], (1) 100% if, at the time that the first Renewal Term begins, Lessee provides Owner Participant with an opinion of counsel reasonably satisfactory to Owner Participant to the effect that, due to a Change in Tax Law or clarification of law, if the Applicable Percentage had been 100% on the Closing Date no Renewal Term would have been included in the Lease Term under Code ss. 467 and the Treasury Regulations thereunder and (2) otherwise, 105%; and (B) for any subsequent Renewal Term, 100%. APPRAISER: a firm of internationally-recognized, independent aircraft appraisers. AVIATION AUTHORITY: the FAA or, if the Aircraft is registered with any other Government Entity under and in accordance withss. 7.1.2 of the Lease, such other Government Entity. BANKRUPTCY CODE: the United States Bankruptcy Code, 11 U.S.C.ss. 101 ET SEQ. BASE TERM: the period beginning on and including the Commencement Date and ending on the Scheduled Expiration Date therefor, or such earlier date on which the Term terminates in accordance with the provisions of the Lease. BASIC RENT: the rent (including, to the extent applicable, Renewal Rent) payable or allocable, as applicable, for the Aircraft pursuant to ss. 3.2.1(a) of the Lease. BILLS OF SALE: the FAA Bill of Sale and the Aircraft Bill of Sale. BURDENSOME INDEMNITY PAYMENT: an indemnity payment pursuant to the Tax Indemnity Agreement or ss. 9 of the Participation Agreement which would cause the aggregate net present value of all losses paid or payable by Lessee as of the determination date, discounted quarterly at the SLV Rate, to the determination date, to exceed 2.5% of Lessor's Cost. BUSINESS DAY: any day other than a Saturday, Sunday, or other day on which commercial banks are authorized or required by law to close in New York, NY, Indianapolis, IN, or Salt Lake City, UT. CASH EQUIVALENTS: the following securities (which shall mature within 90 days of the date of purchase thereof): (1) direct obligations of the U.S. Government; (2) obligations fully guaranteed by the U.S. Government; (3) certificates of deposit issued by, or bankers' acceptances of, or time deposits or a deposit account with, Owner Trustee, or any bank, trust company, or national banking association incorporated or doing business under the laws of the United States or any state thereof having a combined capital and surplus and retained earnings of at least $500,000,000 and having a rate of "C" or better from the Thomson BankWatch Service; or (4) commercial paper of any issuer doing business under the laws of the United States or one of the states thereof and in each case having a rating assigned to such commercial paper by Standard & Poor's or Moody's at least equal to A1 or P1, respectively. CITIZEN OF THE UNITED STATES: defined inss. 40102(a)(15) of the Transportation Code and in the FARs. CLOSING: the closing of the transactions contemplated by the Participation Agreement on the Delivery Date. CODE: the Internal Revenue Code of 1986; PROVIDED, that when used in relation to a Plan, "Code" shall be interpreted in accordance with the regulations and rulings issued thereunder. COMMENCEMENT DATE: defined in Schedule 1 to the Lease. COMMITMENT: Owner Participant's commitment to participate in the payment of Lessor's Cost, as reflected in Schedule 2 of the Participation Agreement. COMMITMENT TERMINATION DATE: defined in Schedule 3 to the Participation Agreement. CONSENT AND AGREEMENT: Manufacturer Consent and Agreement N___AT, dated the Delivery Date, of Airframe Manufacturer. CORPORATE TRUST DEPARTMENT or TRUST OFFICE: Owner Trustee's principal corporate trust office, located from time to time at Owner Trustee's address for notices under the Participation Agreement, or such other office at which Owner Trustee's corporate trust business shall be administered and which Owner Trustee specifies by notice in writing to Lessee. CRAF: the Civil Reserve Air Fleet Program established pursuant to 10 U.S.C.ss. 9511 - 13, or any similar substitute program. DEBT: any liability for borrowed money, or any liability for the payment of money in connection with any letter of credit transaction, or any other liabilities evidenced or to be evidenced by bonds, debentures, notes, or other similar instruments. DELAYED DELIVERY DATE: a delayed Delivery Date notified to each Participant and Owner Trustee by Lessee pursuant to ss. 4.3 of the Participation Agreement, which delayed Delivery Date shall be a Business Day not later than the Commitment Termination Date. DELIVERY DATE: __________, 200_ (which is the date when the Aircraft is delivered to and accepted by Lessee under the Lease and when the Closing occurs). DOLLARS, UNITED STATES DOLLARS, or $: the lawful currency of the United States. DOT: the Department of Transportation of the United States, or any Government Entity succeeding to the functions of such Department of Transportation. EBO DATE: as specified in Schedule 5 to the Lease. EBO PRICE: as specified in Schedule 5 to the Lease, as adjusted pursuant toss. 3.2.1 of the Lease. ELIGIBLE INSTITUTION: the corporate trust department of (1) Wilmington Trust Company, acting solely in its capacity as a "securities intermediary" (as defined in UCC ss. 8-102(14)), or (2) a depository institution organized under the laws of the United States of America or any one of the states thereof or the District of Columbia (or any U.S. branch of a foreign bank), which has a long-term unsecured debt rating from Moody's and Standard & Poor's of at least A-3 or its equivalent. ENGINE: (1) each of the engines manufactured by Engine Manufacturer and identified by Engine Manufacturer's model number and Engine Manufacturer's serial number in the Aircraft Description Exhibit and originally installed on the Airframe on delivery thereof pursuant to the Lease, or (2) any Replacement Engine, in any case whether or not from time to time installed on the Airframe or installed on any other airframe or aircraft, including (for both clauses (1) and (2)) any and all Parts incorporated or installed in or attached or appurtenant to such engine, and any and all Parts removed from such engine, unless title to such Parts does not vest in Lessor in accordance with ss. 8.1 and Annex C of the Lease. Upon substitution of a Replacement Engine under and in accordance with the Lease, such Replacement Engine shall become subject to the Lease and shall be an "Engine" for all purposes of the Operative Agreements, and the replaced Engine shall cease to be subject to the Lease and shall cease to be an "Engine". ENGINE MANUFACTURER: CFM International. [ENGINE MANUFACTURER WARRANTY AGREEMENT: Engine Manufacturer Warranty Agreement N___AT, dated the Delivery Date, among Engine Manufacturer, Owner Trustee and Lessee.] ERISA: the Employee Retirement Income Security Act of 1974. EVENT OF LOSS with respect to the Aircraft, the Airframe, or any Engine: any of the following circumstances, conditions, or events with respect to such property, which shall have occurred for any reason whatsoever: (1) the destruction of such property, damage to such property beyond economic repair, or rendition of such property permanently unfit for normal use by Lessee; (2) the actual or constructive total loss of such property, or any damage to such property, or requisition of title or use of such property, which results in an insurance settlement with respect to such property on the basis of a total loss or constructive or compromised total loss; (3) any theft, hijacking, or disappearance of such property for 90 consecutive days or more or, if earlier, the fifth day following the end of the Term; (4) any seizure, condemnation, confiscation, taking, or requisition (including loss of title) of such property by any Government Entity or purported Government Entity (other than a requisition of use by the U.S. Government) for 180 consecutive days or, if earlier, at the end of the Term; (5) any seizure, condemnation, confiscation, taking, or requisition of use of such property by the U.S. Government that continues until the 30th day after the last day of the Term; and (6) as a result of any law, rule, regulation, order, or other action by the Aviation Authority or by any Government Entity of the government of registry of the Aircraft or by any Government Entity otherwise having jurisdiction over the operation or use of the Aircraft, the use of the Aircraft, the Airframe, or any Engine in the normal course of Lessee's business of passenger air transportation is prohibited for 180 consecutive days, unless, before the expiration of such 180-day period, Lessee undertakes and is diligently carrying forward such steps as are necessary or desirable to permit the normal use of such property by Lessee, but in any event if such use is prohibited for a continuous period of 360 days, PROVIDED, that such prohibition shall not create an Event of Loss if such prohibition applies to other B737-800 aircraft (or CFM 56-7 engines) in Lessee's fleet and also applies to Boeing 737-800 aircraft (or CFM 56-7 engines) not owned or operated by Lessee and, before the expiration of such 360-day period, Lessee conforms at least one unit of such property in its fleet to the requirements of any such law, rule, regulation, order, or other action, begins regular commercial use of the same in such jurisdiction, and is diligently carrying forward, in a manner which does not discriminate against such property in so conforming such property, steps which are necessary or desirable to permit the normal use of the Aircraft by Lessee, but in any event if such use is prohibited for a continuous period of 540 days or such use is prohibited at the expiration of the Term. EXPENSES: any and all liabilities, obligations, losses, damages, settlements, penalties, claims, actions, suits, costs, demands, judgments, expenses, and disbursements (including reasonable fees, disbursements, and reasonable out of pocket costs and expenses of legal counsel, accountants, appraisers, inspectors, or other professionals, and costs of investigation). FAA: the Federal Aviation Administration of the United States, or any Government Entity succeeding to the functions of such Federal Aviation Administration. FAA BILL OF SALE: a bill of sale for the Aircraft on AC Form 8050-2 (or any other FAA-approved form), delivered to Owner Trustee on the Delivery Date by Seller. FAA COUNSEL: Crowe & Dunlevy. FAA-FILED DOCUMENTS: the Lease, the Trust Agreement, the FAA Bill of Sale, and an application for registration of the Aircraft with the FAA in Owner Trustee's name. FARS: the Federal Aviation Regulations issued or promulgated pursuant to the Transportation Code from time to time. FAIR MARKET RENTAL VALUE: the fair market rental value in Dollars for the Aircraft that would apply in an arm's-length transaction between an informed and willing lessee under no compulsion to lease, and an informed and willing lessor under no compulsion to lease, for the applicable period, assuming that (1) except as provided in ss. 15.4 of the Lease, the Aircraft has been maintained in accordance with, and is in the condition required by, the Lease, (2) rent would be paid quarterly, and (3) except as provided in ss. 15.4 of the Lease, the Aircraft would be leased during any such period on the same terms and conditions (except for Basic Rent amount) as during the Base Term. FAIR MARKET SALES VALUE: the fair market sales value in Dollars for the Aircraft that would apply in an arm's-length transaction between an informed and willing buyer under no compulsion to buy, and an informed and willing seller under no compulsion to sell, in a transaction that would close on or about the relevant time of determination, assuming that (1) except as provided in ss. 15.4 of the Lease, the Aircraft has been maintained in accordance with the Lease, and is in the condition required by the Lease, and (2) the Aircraft will be delivered to such informed and willing buyer in the return condition required by the Lease. FINANCING STATEMENTS: UCC-1 (and, where appropriate, UCC-3) financing statements covering the Aircraft, as a precautionary matter, by Lessee, as lessee, showing Owner Trustee as lessor, for filing in Indiana and each other jurisdiction where (in Owner Trustee's opinion) filing is reasonably desirable. FIXED RATE: defined in Schedule 1 to the Lease. FSB: First Security Bank, National Association, a national banking association, not in its capacity as trustee under the Trust Agreement, but in its individual capacity. GAAP: generally accepted accounting principles as set forth in the statements of financial accounting standards issued by the Financial Accounting Standards Board of the American Institute of Certified Public Accountants, as varied by any applicable financial accounting rules or regulations issued by the SEC, and applied on a basis consistent with prior periods except as disclosed in the pertinent Person's financial statements. GOVERNMENT ENTITY: (1) any federal, state, provincial, or similar government, and any body, board, department, commission, court, tribunal, authority, agency, or other instrumentality of any such government or otherwise exercising any executive, legislative, judicial, administrative, or regulatory functions of such government, or (2) any other government entity having jurisdiction over any matter contemplated by the Operative Agreements or relating to the observance or performance of the obligations of any of the parties to the Operative Agreements. GTA: the General Terms Agreement, as defined in the Purchase Agreement Assignment. GUARANTEE: Guarantee N___AT, dated the Delivery Date, issued by Guarantor in favor of Owner Trustee, FSB, and each Owner Participant. GUARANTOR: AmTran, Inc., an Indiana corporation. INDEMNITEE: (1) FSB and Owner Trustee, (2) each separate or additional trustee appointed pursuant to the Trust Agreement, (3) each Owner Participant, (4) the Trust Estate, (5) each Affiliate of the Persons described in clauses (1) through (3), (6) the directors, officers, employees, and agents of each of the Persons described in clauses (1) through (3) and in clause (5) and (7) the successors and permitted assigns of the Persons described in clauses (1) through (3), and in clauses (5) and (6). If any Indemnitee is Airframe Manufacturer or Engine Manufacturer or any subcontractor or supplier of either thereof, such Person shall be an Indemnitee only in its capacity as Owner Participant. IRS: the Internal Revenue Service of the United States, or any Government Entity succeeding to the functions of such Internal Revenue Service. JAA: the Joint Aviation Authority of the European Union. LAW: (1) any constitution, treaty, statute, law, decree, regulation, order, rule, or directive of any Government Entity, and (2) any judicial or administrative interpretation or application of, or decision under, any of the foregoing. LEASE or LEASE AGREEMENT: Lease Agreement N___AT, dated the Delivery Date, between Owner Trustee and Lessee. DEFAULT: (1) any condition, circumstance, act, or event that, with the giving of notice or the lapse of time, would constitute an Event of Default, or (2) any Event of Default. EVENT OF DEFAULT: any one or more of the conditions, circumstances, acts, or events set forth inss. 14 of the Lease. LESSEE: American Trans Air, Inc., an Indiana corporation. LESSEE ADVISOR: Capstar Partners, LLC, in its capacity as special advisor to Lessee. LESSEE OPERATIVE AGREEMENTS: the Participation Agreement, the Lease, the Tax Indemnity Agreement, the Purchase Agreement Assignment [, the Engine Manufacturer Warranty Agreement,] and each other agreement between Lessee and any other party to the Participation Agreement, relating to the Transactions, delivered on the Delivery Date. LESSEE PERSON: Lessee, any sublessee, assignee, successor, or other user or Person in possession of the Aircraft, the Airframe, or an Engine with or without color of right, or any Affiliate of any of the foregoing (excluding any Tax Indemnitee or any related Tax Indemnitee with respect thereto, or any Person using or claiming any rights with respect to the Aircraft, the Airframe, or an Engine directly by or through any of the Persons in this parenthetical phrase, but not excluding any Person claiming directly or indirectly through or under the Lease). LESSEE'S ADVISOR(S): defined in Schedule 3 to the Participation Agreement. LESSOR: Owner Trustee in its capacity as lessor under the Lease. LESSOR LIEN, with respect to any Person, on any property (including the Trust Estate, the Aircraft, Airframe, Engines, Parts, or Aircraft Documents) or any payments: any Lien on such property or payments that results from (1) claims against such Person (if such Person is a trustee, whether in its individual capacity or in its capacity as a trustee) not related to any of the Transactions, (2) acts or omissions of such Person (if such Person is a trustee, whether in its individual capacity or in its capacity as a trustee) in violation of its obligations under any of the terms of the Operative Agreements, or not related to the Transactions, (3) Taxes against such Person (if such Person is a trustee, whether in its individual capacity or in its capacity as a trustee) or any of its Affiliates that Lessee is not required to indemnify under the Participation Agreement, or (4) claims against such Person arising out of its transfer of all or part of its interest in the Aircraft, the Trust Estate, or the Operative Agreements, other than a Transfer required by the terms of the Operative Agreements or attributable to the existence of an Event of Default. LESSOR'S COST: the amount paid by Owner Trustee to Seller to purchase the Aircraft pursuant to the Purchase Agreement Assignment and the Participation Agreement, as designated by Dollar amount in Schedule 3 to the Participation Agreement. LIEN: any mortgage, pledge, lien, charge, claim, encumbrance, lease, or security interest affecting the title to or any interest in property. LOSS PAYMENT DATE: defined inss. 10.1.2(a)(1) of the Lease. MAINTENANCE PROGRAM: defined in Annex C to the Lease. MATERIALLY ADVERSE CHANGE with respect to any Person: any event, condition, or circumstance that materially adversely affects such Person's business, prospects, or consolidated financial condition, or its ability to observe or perform its obligations, liabilities, and agreements under the Operative Agreements. MINIMUM LIABILITY INSURANCE AMOUNT: defined in Schedule 1 to the Lease. MOODY'S: Moody's Investors Service, Inc. NET ECONOMIC RETURN: Owner Participant's net after-tax book yield, using the "multiple investment sinking fund" method of analysis, and aggregate and present value (discounted at 6% per annum) of the net after-tax cash flow, computed both through the EBO Date (assuming Lessee's exercise of the early buy-out option in ss. 17.3.1(a)(1) of the Lease) and through the end of the Base Term, and computed on the basis of the same methodology and assumptions as the initial Owner Participant used in determining Basic Rent payments and allocations, Stipulated Loss Value percentages, and Termination Value percentages, as of the Delivery Date, as such assumptions are adjusted for events that have been the basis for adjustments to Basic Rent pursuant to ss. 3.2.1(b) of the Lease or events giving rise to indemnity payments pursuant to ss. 5 of the Tax Indemnity Agreement; PROVIDED, that, even if the initial Owner Participant transfers its interest, Net Economic Return shall be calculated as if the initial Owner Participant had retained its interest; PROVIDED FURTHER, that, notwithstanding the preceding proviso, solely for purposes of ss. 11 of the Participation Agreement and calculating any adjustments to Basic Rent payments and allocations, Stipulated Loss Values, EBO Price, and Termination Values in connection with a refunding pursuant to such ss. 11 at a time when Owner Participant is a transferee (other than an Affiliate of the initial Owner Participant), the after-tax yield (but not the after-tax cash flow) component of Net Economic Return shall be calculated on the basis of the methodology and assumptions used by the transferee Owner Participant as of the date when it acquires its interest. NET PRESENT VALUE OF RENTS: the present value, as of the date of determination, discounted at 10% per annum, compounded quarterly to the date of determination, of all unpaid Basic Rent payments during the then-remaining portion of the Base Term, expressed as a percentage of Lessor's Cost. NET WORTH for any Person: the excess of its total assets over its total liabilities. NON-U.S. PERSON: any Person, other than a United States person as defined in Codess. 7701(a)(30). OFFICER'S CERTIFICATE of any party to the Participation Agreement: a certificate signed by the Chairman, the President, any Vice President (including those with varying ranks such as Executive, Senior, Assistant, or Staff Vice President), the Treasurer, or the Secretary of such party. OPERATIVE AGREEMENTS: the Participation Agreement, the Trust Agreement, the Purchase Agreement Assignment, the Guarantee, the Consent and Agreement, the Engine Manufacturer Warranty Agreement, the Lease, the Bills of Sale, and the Tax Indemnity Agreement. OP JURISDICTION: defined in Schedule 3 to the Participation Agreement. OWNER PARTICIPANT: the Person executing the Participation Agreement as "Owner Participant"; except that, after an Owner Participant Transfers its interest to a successor Owner Participant, such transferor shall not be an "Owner Participant" (except as provided in ss. 10.2 of the Participation Agreement) and the successor Owner Participant shall be the "Owner Participant". OWNER PARTICIPANT AGREEMENTS: the Participation Agreement, the Tax Indemnity Agreement, the Trust Agreement and each other agreement between Owner Participant and any other party to the Participation Agreement relating to the Transactions, delivered on the Delivery Date. OWNER TRUSTEE: First Security Bank, National Association, a national banking association, not in its individual capacity, except as expressly provided in any Operative Agreement, but solely as Owner Trustee under the Trust Agreement. OWNER TRUSTEE AGREEMENTS: the Participation Agreement, the Lease, the Trust Agreement, the Purchase Agreement Assignment, [the Engine Manufacturer Warranty Agreement,] and each other agreement between Owner Trustee and any other party to the Participation Agreement, relating to the Transactions, delivered on the Delivery Date. PARTICIPATION AGREEMENT: Participation Agreement N___AT, dated the Delivery Date, among Lessee, Owner Participant, Owner Trustee, and FSB. PARTS: all appliances, parts, components, instruments, appurtenances, accessories, furnishings, seats, and other equipment of whatever nature (other than (1) Engines or engines, and (2) any items leased by Lessee from a third party other than Lessor) from time to time installed or incorporated in or attached or appurtenant to the Airframe or any Engine. PAST-DUE RATE: defined in Schedule 1 to the Lease. PAYMENT DATE: each __________, __________, __________, and __________ during the Term, commencing with the first such date to occur after the Commencement Date. PAYMENT PERIOD: each of the consecutive quarterly periods (or such applicable shorter period beginning on the Delivery Date or the first day of a Renewal Term) during the Term and ending on a Payment Date, the first such period commencing on and including the Delivery Date. PERMITTED AIR CARRIER: (1) any manufacturer of commercial airframes or commercial aircraft engines, or any Affiliate thereof, (2) any Permitted Foreign Air Carrier, (3) any Person approved in writing by Owner Participant, or (4) any U.S. Air Carrier. PERMITTED COUNTRY: any country listed on Schedule 5 to the Lease, subject to the notes set forth on such Schedule. PERMITTED FOREIGN AIR CARRIER: any air carrier that (1) has its principal executive offices in a Permitted Country, and (2) is authorized to conduct commercial airline operations and to operate jet aircraft similar to the Aircraft under the applicable Laws of such Permitted Country. PERMITTED INSTITUTION: any bank, trust company, insurance company, financial institution, or corporation or limited liability company (other than, without Lessee's consent, a commercial air carrier, a commercial aircraft operator, a freight forwarder, an airframe manufacturer (other than Airframe Manufacturer) or aircraft engine manufacturer (other than Engine Manufacturer), or an Affiliate of any of the foregoing), in each case with a combined capital and surplus or net worth of at least $50,000,000. PERMITTED LIEN: any Lien described in clauses (a) through (g) ofss. 6 of the Lease. PERMITTED SUBLEASE: a sublease permitted underss. 7.2.7 of the Lease. PERMITTED SUBLESSEE: the sublessee under a Permitted Sublease. PERSON or PERSON: an individual, firm, business, partnership, joint venture, trust, trustee, Government Entity, organization, association, corporation, limited liability company, government agency, governmental committee, governmental department, governmental authority, and other body or organization, corporate or incorporate, whether having distinct legal status or not, or any member of any of the same. PLAN: any employee benefit plan within the meaning of ERISAss. 3(3), or any plan within the meaning of Codess. 4975(e)(1). PRELIMINARY NOTICE: defined inss. 17.1 of the Lease. PURCHASE AGREEMENT: shall mean Purchase Agreement No. _____ by and between Lessee and the Airframe Manufacturer, dated as of __________, 2000, including the exhibits and letter agreements appended thereto and incorporated therein (except Letter Agreement Nos. __________, __________, and ----------). PURCHASE AGREEMENT ASSIGNMENT: Purchase Agreement and Engine Warranties Assignment N___AT, dated the Delivery Date, between Lessee and Owner Trustee. PURCHASE DATE: the last Business Day of the Base Term or a Renewal Term, as specified in any Purchase Notice. PURCHASE NOTICE: defined inss. 17.3.1 of the Lease. REMOVABLE PARTS: defined inss. D of Annex C to the Lease. RENEWAL NOTICE: defined inss. 17.2.1 of the Lease. RENEWAL RENT: the basic rent payable for a Renewal Term, determined pursuant toss. 17.2.2 of the Lease. RENEWAL TERM: a one-year term for which the Lease is extended by Lessee (if applicable) pursuant toss. 17 of the Lease. RENT: Basic Rent and Supplemental Rent. REPLACEMENT AIRFRAME: an airframe substituted for the Airframe pursuant toss. 10 of the Lease. REPLACEMENT ENGINE: an engine substituted for an Engine pursuant to the Lease. RETURN ACCEPTANCE SUPPLEMENT: a Return Acceptance Supplement, dated as of the date the Aircraft is returned to Lessor pursuant toss. 5 of the Lease, entered into by Lessor and Lessee, substantially in the form of Exhibit B to the Lease. SCHEDULED DELIVERY DATE: the expected Delivery Date that Lessee notifies to each Owner Participant, and Owner Trustee pursuant to ss. 4.1 of the Participation Agreement, which must be a Business Day not later than the Commitment Termination Date. SCHEDULED EXPIRATION DATE: defined in Schedule 1 to the Lease. SEC: the Securities and Exchange Commission of the United States, or any Government Entity succeeding to the functions of the Securities and Exchange Commission. SECTION 1110: Bankruptcy Codess. 1110. SECURITIES ACT: the Securities Act of 1933. SECURITY: a "security" as defined inss. 2(1) of the Securities Act. SELLER: _______________ [Lessee] [Airframe Manufacturer] [other]. SIGNIFICANT EXPENDITURE: expenditures in excess of $5,000,000 for non-severable improvements to the Aircraft which constitute "Mandatory Modifications" as defined inss. D of Annex C to the Lease. SIMILAR AIRCRAFT: defined in Schedule 1 to the Lease. SLV RATE: defined in Schedule 1 to the Lease. SPECIAL DEFAULT: (1) Lessee's failure to pay any amount of Basic Rent, Stipulated Loss Value, or Termination Value when due, or (2) any Default referred to inss. 14.5 of the Lease. STANDARD & POOR'S: Standard & Poor's Ratings Services. STIPULATED LOSS VALUE for the Aircraft: (1) during the Base Term, Lessor's Cost multiplied by the percentage in Schedule 3 to the Lease (as adjusted from time to time in accordance with ss. 3.2.1 of the Lease) for the pertinent Stipulated Loss Value Date, and (2) during any Renewal Term, the amount determined pursuant to ss. 17.2.3 of the Lease. If the event giving rise to an obligation to pay any Stipulated Loss Value occurs and the actual date that the loss of tax benefits resulting from such event shall be earlier or later than the date assumed in calculating the federal income tax consequences reflected in the applicable Stipulated Loss Value, such Stipulated Loss Value shall be appropriately adjusted upwards or downwards to reflect the actual date of such loss. STIPULATED LOSS VALUE DATE for any month: the day in that month specified in Schedule 3 to the Lease or, if that day is not a Business Day, the following Business Day. SUPPLEMENTAL RENT: all Expenses, Transaction Expenses, and all other amounts, liabilities, indemnities, and obligations (other than Basic Rent) that Lessee assumes or becomes obligated to pay or agrees to pay under any Lessee Operative Agreement to or on behalf of Lessor or any other Person, including Stipulated Loss Value, Termination Value, and indemnity payments under ss. 9 of the Participation Agreement. TAX ATTRIBUTE PERIOD: the period from the Delivery Date through December 31, 20__ [DELIVERY DATE YEAR PLUS SEVEN] or such longer period of depreciation as may be allowable by reason of an indemnifiable event under the Tax Indemnity Agreement; TAX INDEMNITEE: (1) FSB and Owner Trustee, (2) each separate or additional trustee appointed pursuant to the Trust Agreement, (3) each Owner Participant, (4) the Trust Estate, and (5) the successors, assigns, and agents of the foregoing. For purposes of this definition, the term "Owner Participant" shall include any member of an affiliated group (within the meaning of Code ss. 1504) of which Owner Participant is a member at the pertinent time, if consolidated, joint, or combined returns are filed for such affiliated group for federal, state, or local income tax purposes. TAX INDEMNITY AGREEMENT: Tax Indemnity Agreement N___AT, dated the Delivery Date, between Lessee and Owner Participant. TAXES: all fees (including license, recording, documentation, and registration fees), taxes, including income, gross receipt franchise sales, use, rental, turnover, business, occupational, excise, value-added, tangible and intangible property and stamp taxes, levies, imposts, duties, charges, assessments, or withholdings of any nature whatsoever imposed by any Taxing Authority, and any penalties, additions to tax, fines, or interest thereon or additions thereto. TAXING AUTHORITY: any federal, state, or local government or other taxing authority in the United States or its possessions, any foreign government or political subdivision or taxing authority thereof, any international taxing authority, or any territory or possession of the United States or taxing authority thereof. TERM: the term, commencing on the Delivery Date, for which the Aircraft is leased pursuant to ss. 3 of the Lease, consisting of the Base Term and any Renewal Term(s); PROVIDED, that, if at the scheduled end of the Term the Aircraft or Airframe is being used, or was within the previous six months being used, by the U.S. Government pursuant to CRAF, the Term shall be deemed extended for the period necessary to accommodate usage of the Aircraft or Airframe pursuant to CRAF plus six months thereafter, and Lessee shall be obligated to pay Basic Rent for any such extension period at a quarterly rate equal to the average of the Basic Rent paid during the Base Term or the applicable Renewal Term (whichever ended immediately before such extension). TERMINATION DATE: any Payment Date occurring after the seventh anniversary of the Delivery Date on which the Lease terminates in accordance withss. 9 of the Lease. TERMINATION VALUE for the Aircraft: Lessor's Cost multiplied by the percentage in Schedule 4 to the Lease (as adjusted from time to time in accordance with ss. 3.2.1 of the Lease) for the pertinent Termination Value Date. If the event giving rise to an obligation to pay any Termination Value occurs and the actual date that the loss of tax benefits resulting from such event shall be earlier or later than the date assumed in calculating the federal income tax consequences reflected in the applicable Termination Value, such Termination Value shall be appropriately adjusted upwards or downwards to reflect the actual date of such loss. TERMINATION VALUE DATE for any month: the day in such month specified in Schedule 4 to the Lease or, if such day is not a Business Day, the following Business Day. THRESHOLD AMOUNT: defined in Schedule 1 to the Lease. TRANSACTION EXPENSES: (1) the reasonable and actual fees and disbursements incurred in connection with the negotiation, execution, and delivery of the Operative Agreements of (a) Ray, Quinney & Nebeker, special counsel for Owner Trustee under the Trust Agreement, such information to be furnished by Owner Trustee, (b) FAA Counsel, such information to be furnished by Lessee, (c) Dewey Ballantine LLP, special counsel to Owner Participant (as defined in Schedule 3 to the Participation Agreement), such information to be furnished by Owner Participant, (d) Troutman Sanders LLP, special counsel to Lessee, such information to be furnished by Lessee, and (e) Lessee Advisor, such information to be furnished by Lessee, (2) all fees, taxes, and other charges payable in connection with the recording or filing of instruments and financing statements, such information to be furnished by Lessee, (3) the initial fee and reasonable and actual disbursements of Owner Trustee under the Trust Agreement, such information to be furnished by Owner Trustee, (4) the fee of the Appraiser with respect to the appraisal of the Aircraft referred to in ss. 5.1.2(l) of the Participation Agreement, such information to be furnished by Owner Participant, and (5) the equity placement fee and reasonable disbursements of Lessee's Advisor(s), such information to be furnished by Lessee. TRANSACTIONS: the transactions contemplated by the Operative Agreements. TRANSFER: the transfer, sale, assignment, or other conveyance of all or any interest in any property, right, or interest. TRANSFEREE: a Person to whom Owner Participant or Owner Trustee purports or intends to Transfer any or all of its right, title, or interest in the Trust Estate, as described in ss. 10.1.1(a), ss. 10.1.2, or ss. 10.1.3 (but excluding participants in any participation referred to in ss. 10.1.3) of the Participation Agreement. TRANSPORTATION CODE: subtitle VII of title 49, United States Code. TRUST: the trust created by the Trust Agreement. TRUST AGREEMENT: Trust Agreement N___AT, dated as of __________ 1, 200_, between Owner Participant and FSB. TRUST ESTATE: all Owner Trustee's estate, right, title, and interest in and to the Aircraft, the Lease, the Purchase Agreement, [and the Engine Manufacturer Warranty Agreement,] including all Basic Rent and Supplemental Rent (including insurance proceeds and requisition, indemnity, or other payments of any kind for of with respect to the Aircraft), but excluding any Excluded Payment. UCC: the Uniform Commercial Code as in effect in any applicable jurisdiction. UNITED STATES or U.S.: the United States of America; PROVIDED, that for geographic purposes, "United States" means the 50 states and the District of Columbia of the United States of America. U.S. AIR CARRIER: any United States air carrier who is a Citizen of the United States holding an air carrier operating certificate issued by the Secretary of Transportation pursuant to chapter 447 of the Transportation Code for aircraft capable of carrying 10 or more individuals or 6000 pounds or more of cargo, and as to whom there is in force an air carrier operating certificate issued pursuant to FAR Part 121, or who may operate as an air carrier by certification or otherwise under any successor or substitute provisions therefor or in the absence thereof. U.S. GOVERNMENT: the federal government of the United States, or any instrumentality or agency thereof the obligations of which are guaranteed by the full faith and credit of the federal government of the United States. U.S. PERSON: any Person described in Codess. 7701(a)(30). WET LEASE: any arrangement whereby Lessee or a Permitted Sublessee agrees to furnish the Aircraft, the Airframe, or any Engine to a third party pursuant to which the Aircraft, Airframe, or Engine is at all times in the operational control of Lessee or a Permitted Sublessee, PROVIDED, that Lessee's obligations under the Lease shall continue in full force and effect notwithstanding any such arrangement. -----END PRIVACY-ENHANCED MESSAGE-----